Aug 02, 2011
Debt Ceiling Done, What's Next?
The debt ceiling deal is done and now it’s onto the next “crisis.”
The deal went down to the arbitrarily assigned deadline and, although details are still coming out, we know a few critical things already.
The key is these cuts aren’t really cuts at all.
The always discerning folks at the Cato Institute showed how deep these “cuts” really go in Budget Deal Doesn’t Cut Spending:
As you can see, the cuts are really just cuts in expected spending.
If you wanted to buy a $30,000 car and instead chose to buy a quality used care for $10,000, did you really save any money?
In the real world…no, of course you didn’t.
In Washington…that’s a savings.
The rest of the remaining details will come out over the next few weeks. And if you were expecting a bit of seriousness from Washington on spending, you will surely be disappointed.
But the market is already predicting how deep these cuts will really be. The defense budget, one of the few areas to really see cuts, shows the market isn’t buying the rhetoric. Shares of two top defense contractors, Lockheed Martin (NYSE:LMT) and Northrop Grumman (NYSE:NOC), are both down just over 4% today compared to the overall market decline of 3%. These two stocks would have been hit march harder if their #1 customer was really cutting back sharply.
But it is all passed. Now, for your portfolio’s sake, it’s time to look forward. So here’s what’s coming up, what it means for your money, and the moves to start making now to get prepared.
Jul 25, 2011
Forget the Debt Ceiling, This is the Real Debt Problem
By Andrew Mickey, Q1 Publishing
The last few weeks have brought weakening economic numbers, stellar earnings reports, political theatrics, record gold prices, and the first hint at a potential QE3.
All the “good” news has pushed the Dow back to just 10% below its all-time highs from October 2007.
In times like these, when fear of missing out outweighs fear of a market downturn, we have to reiterate this all will end badly.
But, it’s not likely to end badly soon. Here’s why it will last far longer than most expect and the warning signs to look for when the bubble-in-everything will start to deflate.
Jul 11, 2011
The Eventual Debt Limit Deal is Doomed to Fail
The deadline to raise the debt limit is now just a few weeks away.
Both sides have completed their focus groups, refined the key words they want to endlessly repeat (i.e. “millionaires and billionaires” or “corporate jets”), and have staked out their positions.
The winner in this battle will be, as in most political compromises, no one.
The eventual debt limit deal is doomed to completely fail. Sure, it will provide some short-term relief. Maybe it will even reduce the pervasive and growth-sapping uncertainty holding back GDP growth. But any positive benefits will be short-lived.
Whether taxes are raised, two or three trillion dollars of spending is cut, or some combination thereof, the eventual debt limit deal will in hindsight be viewed as a total failure because it will have failed to bring spending in line with tax collections.
Investors realizing this now – at the height of the debate - have the chance to position themselves to safely sidestep the consequences.
May 28, 2011
Krill Oil Stocks: Krill Oil Boom Pushes Handful of Stocks to New Highs
There’s a new type of oil that’s causing a major stir in the markets.
This oil boom has nothing to do with crude oil or energy though. But it still has the potential to be just as profitable.
I’m talking about krill oil.
Krill are tiny shrimp-like crustaceans. They are usually between one and five centimeters long. They are found in extremely cold water like the frigid waters of the northern Pacific and offshore Antarctica.
The tiny creatures produce a unique kind of oil that has proven to have numerous medicinal benefits.
Krill oil supplements have proven to reduce cholesterol, relieve arthritis pain, attention deficit disorder, and other chronic problems. And krill oil-based drugs in development have proven effective in the same areas.
Now, I’m not a doctor. But I do know what makes an extremely successful product. And krill oil has it all.
Krill oil has a small, loyal, and quickly growing following. Krill oil is cheaper alternative to many high-priced prescription drugs. And it has attracted the interest of a few major food and medicine companies. They have already started exploring the idea of incorporating krill oil into their well-established brands.
The combination is quickly coming together to create a sizeable investment opportunity for investors looking into the krill boom now.
May 27, 2011
Should You Buy into the Social Networking Bubble?
There’s nothing that attracts more investors – and eventually costs them more money – than a hot new growth sector.
Right now the hot new thing is social networking.
The stunning growth of Facebook over the years has whetted Wall Street’s appetite for any and all things social networking-related.
Last week’s screaming IPO of LinkedIn (NASDAQ:LNKD) and the lengthy run-up of Renren (NYSE:RENN) – touted as the “Facebook of China” – are perfect examples.
The smashing success of these two has many investors believing the social networking boom has reignited the dot-com bubble. And they’re thinking unbelievable valuations and expectations are just over the horizon.
Once you stepping away from the frenzy, however, you’ll see a much different picture emerging. One that reveals more realistic expectations and a sizeable trading opportunity, just not the one most investors are plowing their money into right now.