Stocks To Watch For September 23, 2013

Some of the stocks that may grab investor focus today are:

Shares of BlackBerry (NASDAQ: BBRY) tumbled 17.06% on Friday after the company issued weak second-quarter outlook and announced its plans to lower 4,500 jobs. BlackBerry shares closed at $8.73 on Friday.

News Corp (NASDAQ: NWS) reported a profit of $506 million, or $0.87 per share for the year ended June 30, versus a year-ago loss of $2.08 billion, or $3.58 per share. Its revenue rose 2.7% to $8.89 billion. However, analysts were expecting earnings of $0.57 per share on revenue of $8.96 billion. News Corp shares fell 1.28% to close at $16.91 on Friday.

Wall Street expects Red Hat (NYSE: RHT) to post its Q2 earnings at $0.33 per share on revenue of $372.07 million. Red Hat shares fell 0.69% to close at $53.22 on Friday.

AT&T (NYSE: T) closed its acquisition of Atlantic Tele-Network's retail wireless assets. AT&T also projects to post record Q3 smartphone sales. AT&T shares declined 1.42% to close at $34.31 on Friday.

Shares of Darden Restaurants (NYSE: DRI) dipped 7.14% on Friday after the company reported a downbeat first-quarter profit and announced the retirement of its president and chief operating officer. Darden shares closed at $45.78 on Friday.

A Surprising Opportunity for Possible Yield

Even as markets deal with the infantile reaction to Ben Bernanke’s awkward comments about the end of QE, one thing is clear: The economy, however shaky, continues to improve.

And despite record bond fund outflows and high-profile hemorrhaging at famous equity firms, bank loan funds continue to thrive. Investors poured nearly $15 billion into bank loan mutual funds in the first quarter of 2013, according to Morningstar. 

“There are two reasons you’re hearing about them,” says Mark Okada (left), chief investment officer of Highland Capital and portfolio manager for the Highland Floating Rate Opportunities Fund (HFRAX). “The first is ongoing concern about monetary policy and interest rate risk across the portfolio. The second is that in an improving economy, investors need access to that economy, and it’s something the asset class offers.”

As to the former, Okada says it protects against downside risk from interest rates. Short-term rates are “not going up anytime soon,” he argues, meaning attendant coupons won’t rise, either. And when long-term rates begin to rise, the asset class typically outperforms fixed income.

As to the latter, because it’s below-investment-grade debt, it depends on the health of the underlying issuer, the particular industry and, hence, the overall economy. Below investment grade also translates to bigger spreads and more room for investors to maneuver, Okada adds.

“As the economy improves, they’re getting a credit spread that’s built into the asset class. So why is the asset class good?” he rhetorically asks. “How else can you get access to the improving economy? Equities are volatile; high-yield bonds have a spread premium, but it’s low and it’s largely offset by interest rate risk. Bank loan funds take interest rate risk off the table and don’t have the volatility of equities, high-yield bonds and certainly not emerging-market debt.”

Okada notes that surprisingly, “there’s no upside in bank loan funds.” Value comes from a return of principal plus the coupon, so the key is to identify problems before they happen (which is pretty much every manager’s objective and easier said than done).

 “What we’ve learned is that if a credit analyst is covering less than 30 issues, they know those issues and are on top of them,” he says. “It’s counterintuitive, but we add alpha and beat the market because we sell better than anybody else, rather than looking to buy at the right time.”

The key is those 30 issues. Many more and the only thing the investor captures is downside risk.

“At a certain point, diversification is not your friend,” Okada concludes. “You might not believe it, but a concentrated portfolio is actually less risky because it’s about better issues, not more issues."

---

Check out FINRA Whacks Wells Fargo, Merrill Lynch $5M Over Unsuitable Floating-Rate Bank Loan Funds on AdvisorOne.

What to Look For This Earnings Season? - Ahead of Wall ...

Monday, July 8, 2013

Friday's strong jobs report shed a positive light on the labor market and likely increased the odds of Fed 'tapering' in the coming months. The bond market's move towards pricing in such an outcome has thankfully not become a problem for the stock market, at least not yet. We will know more later this week as minutes of the last FOMC meeting get released. But at this stage, the stock market is taking the 100 basis point jump in benchmark yields since early May in the stride.

Thankfully for us, the focus shifts from the Fed this week to the 2013 Q2 earnings season with the earnings reports from Alcoa (AA) later today and Yum Brands (YUM), J.P. Morgan (JPM) and Wells Fargo (WFC) later this week. Expectations remain low enough that companies wouldn't face much difficulty coming ahead of them. About two-thirds of companies beat earnings expectations in a typical quarter any way and there is no reason to think that the Q2 earnings season will be any different. My sense is that earnings growth and earnings surprises in the Q2 reporting cycle would be along the lines of what we saw in Q1.

Current expectations are for +0.4% growth in total earnings in Q2, down from +3.9% in early April, while total S&P 500 earnings increased by +2.8% in Q1. Nine of the 16 Zacks sectors are expected to show negative earnings growth in Q2. The growth picture in is even more underwhelming when Finance is excluded from the data. Outside of Finance, total earnings for the S&P 500 would be down -3.2% in Q2.

But even more significant than growth rates and surprises will be guidance. Guidance is always important, but it will likely be far more important this time around given the elevated expectations for the second half of the year. Total earnings are expected to be up +5.1% in 2013 Q3 and by +11.7% in Q4, giving us a second-half growth pace of +9.2% from the same period the year before, which comes after +2.7% earnings growth in the first half. Importantly, the gr! owth expectations for the second half are not due to easy comparisons – the level of total earnings expected in 2013 Q3 and Q4 represent new all-time high quarterly records.

My sense is that estimates need to come down in a big way. The market hasn't cared much in the recent past about negative revisions as aggregate earnings estimates have been coming down for over a year now. But if we are entering a post-QE world, as I believe we are, then it will likely be difficult to overlook negative earnings estimate revisions going forward. How the market responds to negative guidance over and the resulting negative revisions will tell us a lot about what to expect going forward.

Sheraz Mian
Director of Research

Pfizer to Reorganize Into 3 Business Segments

Pfizer (NYSE: PFE  ) plans to internally separate its commercial operations into three separate business segments, the company announced today. Two of those segments will include what the company calls innovative business lines, and a third will include its value lines.

One of the innovative segments will include products that cover several therapeutic areas, including inflammation and immunology, CV/metabolic, neuroscience and pain, rare diseases, and women's and men's health. Those products will have market exclusivity beyond 2015.

The other innovative segment will include vaccines, oncology, and consumer health care, with each of those areas operating as a separate global business.

The value business segment will include products that have lost market exclusivity, as well as products that are mature, patient-protected, and expected to lose exclusivity through 2015 in most major markets. Those products will be positioned to provide lower-cost treatments to patients.

The value business line will also include biosimilar products and those that come about from current and future collaborations, such as with Mylan in Japan, Teuto in Brazil, and Hisun in China.

The three segments will be operating in developed as well as developing markets. In countries that don't require consultation with employee organizations, such as unions, the changes will take place in January. In other countries, the changes will take place after the necessary consultation.

Meet the Surprising Company That’s Helping the iPad Destroy PCs

Is there any good news left for PC makers? New data supplied to TechCrunch from ad platform Karbon says iPad video traffic is up 150% over the past six months. Researchers NPD and IDC both peg tablets as outselling laptops no later than next year. And now, as if to prepare for the shift, longtime PC peripherals maker Logitech (NASDAQ: LOGI  ) has introduced a wired iPad keyboard.

The news comes at an opportune time for Apple (NASDAQ: AAPL  ) shareholders, who have seen their company's stock suffer in a news vacuum. CEO Tim Cook probably didn't help matters when he refused to even hint at new products at the recent All Things Digital tech conference, says Tim Beyers of Motley Fool Rule Breakers and Motley Fool Supernova.

For Apple investors, Tim says Logitech's move is reflective of a welcome movement toward alternative computing devices and away from PCs. Few companies are better positioned to profit from the shift than the iEmpire, which made its own change six years ago when the late Steve Jobs dumped "Computer" from Apple's corporate moniker.

Do you agree? Please watch the video to get Tim's full take, and then let us know whether you're using an iPad or other tablet as a PC replacement -- and if so, how.

Five stocks enter, one stock leaves
It's incredible to think just how much of our digital and technological lives are almost entirely shaped and molded by just a handful of companies. Find out "Who Will Win the War Between the 5 Biggest Tech Stocks?" in The Motley Fool's latest free report, which details the knock-down, drag-out battle being waged by the five kings of tech. Click here to keep reading.

Consistency supports Bed Bath & Beyond

Stockholders of Bed Bath & Beyond (BBBY) have become accustomed to the company's consistent growth. Over the last 16 quarters, the company has averaged sales gains of 11% and per-share-profit growth of 30%.

At the end of February, Bed Bath & Beyond operated 42 million square feet of selling space, up 16% from a year earlier. Its 1,471 locations included more than 1,000 of its namesake stores in all 50 states, as well as Puerto Rico and Canada.

Growth has slowed in recent quarters — no surprise given the series of stresses U.S. consumers have absorbed — but should pick up in coming months.

Standard & Poor's projects a 34% increase in housing starts this year, building on a 28% increase last year. More housing starts should translate into greater demand for such goods as linens and housewares.

The consensus projects sales growth of 7% and per-share-profit growth of 10% in the year ending February 2014. If the economy keeps improving and Bed Bath & Beyond can approach the high end of its same-store-sales guidance (up 2% to 4% for the current fiscal year), the consensus should prove conservative.

In the last fiscal year, Bed Bath & Beyond generated $1.19 billion in operating cash flow and spent more than $1 billion repurchasing its own shares, including $305 million in the February quarter alone.

The company has reduced its share count 6% over the last year and 15% over the last three. At the end of February, the retailer had $2.4 billion left on its repurchase authorization, enough to reduce the share count 16% at current prices.

Despite its consistent profit growth and a price gain of 25% so far this year, Bed Bath & Beyond trades at 15 times trailing earnings, 7% below its five-year median P/E ratio and 19% below the median specialty retailer. The stock is a Long-Term Buy.

TheStreet Acquires DealFlow Assets

TheStreet's (NASDAQ: TST  ) asset list is slightly longer following the financial media company's latest acquisition. The company announced that it bought several properties from DealFlow Media in order to compliment its offerings. Those assets are The DealFlow Report and The Life Settlements Report, both newsletters, and PrivateRaise, a database.

The terms of the acquisition were not disclosed, although TheStreet said in a press release that the financial impact of the acquisition "is not expected to be material."

All three assets will be folded into The Deal, TheStreet's institutional platform.

More Expert Advice from The Motley Fool

The Motley Fool's chief investment officer has selected his No. 1 stock for the next year. Find out which stock in our brand-new free report: "The Motley Fool's Top Stock for 2013." I invite you to take a copy, free for a limited time. Just click here to access the report and find out the name of this under-the-radar company.

4 Stocks Making Moves

The following video is from Wednesday's Investor Beat, in which host Chris Hill and analysts Jason Moser and Lyons George dissect the hardest-hitting investing stories of the day.

In this installment, our analysts discuss four stocks making big moves. CarMax (NYSE: KMX  ) hits an all-time high after fourth-quarter profits rise. PriceSmart (NASDAQ: PSMT  ) jumps after the retailer reports better-than-expected results. Fastenal (NASDAQ: FAST  ) falls after it reports weaker-than-expected revenues. And 3D Systems (NYSE: DDD  ) racks up big gains after one of its competitors gets an upgrade. 

3D Systems is at the leading edge of a disruptive technological revolution, with the broadest portfolio of 3-D printers in the industry. However, despite years of earnings growth, 3D Systems' share price has risen even faster, and today the company sports a dizzying valuation. To help investors decide whether the future of additive manufacturing is bright enough to justify the lofty price tag on the company's shares, The Motley Fool has compiled a premium research report on whether 3D Systems is a buy right now. In our report, we take a close look at 3D Systems' opportunities, risks, and critical factors for growth. You'll also find reasons to buy or sell the stock today. To start reading, simply click here now for instant access.

The relevant video segment can be found between 2:57 and 6:50.

It Ain’t Over Yet: Dow Tumbles 270 Points as IMF Spooks Stocks

Blame the IMF.

EPA

Investors were in selloff mode today after the International Monetary Fund cut its global economic growth forecast today. The S&P 500 fell 1.5% to 1,935.08 today, while the Dow Jones Industrial Average dropped 272.58 points, or 1.6%, to 16,719.33. The Nasdaq Composite declined 1.6% to 4,385.20 and the small-company Russell 2000 tumbled 1.7% at 1,076.31.

For a market already suffering from growth fears, the IMF did nobody any favors. It reduced its 2015 global-growth forecast to 3.8% today from 4% in July, and warned of the possibility that the euro area could fall into recession…again. It left its 2015 US growth forecast unchanged at 3.1%.

Gluskin Sheff’s David Rosenberg explains why the stock slump might not be over yet:

There have actually been no fewer than 13 mini-corrections since the bull market began in March 2009. On Average, the S&P 500 declines 8.7% over a 34 day span (the median is -7.2% over 28 days). The forward P/E multiple corrects down by 1.3 point and the trailing by 2.0 point – both the mean and the median are basically in agreement on this. High-Yield bonds spreads widen out an average of 83 basis points (median is 62 basis points). The 1o-year US treasury note yield in these risk-off phases fall 40 basis points (both average and median). Relative strength in the Small-Cap stocks is -300 points on average and -200 basis points on a median basis and equity market sentiment as per Market Vane bullishness has retreated nine percentage points by the time the capitulation low in the S&P 500 is turned in – this is the case whether you look at the history either on an average or median basis.

So far, the S&P 500, even with all the ups and downs since the mid-September peak, has corrected but 2%, even though it may feel worse than that given the volatility. The VIX has only jumped 20%, p less than half what one would like to see at an interim market trough. Both the trailing and forward P/E multiples have corrected by 30-40 basis points – again, a fraction of what we typically see when it comes time to start dipping more toes in the equity pool.

MKM Partners’ Jonathan Krinsky thinks the S&P 500 could be headed for 1,905:

We continue to harp on the market cap issue because we feel it is extremely important at the current juncture…There are many different ways to express this issue, but perhaps one that doesn't get enough attention is a simple ratio of the S&P 500 Equal Weight Index (SPW) vs. the regular market cap weighted SPX. This is the exact same index of course, just weighted differently.

This ratio has generally been in an uptrend for the last two years, during which time the S&P 500 hasn't so much as touched its 200-day moving average, or DMA. In the last few weeks however, this ratio not only broke its 200 DMA, but it has been making multi-month lows….weakness in this ratio has either coincided or preceded weakness in the S&P 500. This makes sense as it shows how money is moving up the market cap scale which is perceived as safer.

As we discussed in a note last week, there were some fairly oversold readings (% of stocks above 20 DMA) on the market which should have led to a relief rally, but we did not think that "THE" low was likely in. Based on the declining slope of the Russell 2k's 200 DMA, as well as the fact that the S&P 400 Mid-cap Index is now below its 200 DMA, we still feel that the August lows of 1905 on the SPX are in play. That would also roughly coincide with the rising 200 DMA (1903) which has not been tested in nearly two years. On an intra-day peak to trough basis that would still be less than a 6% correction off the all-time highs of 2019.

The upshot: The correction ain’t over yet.

Dark Pools Pervade Wall Street

I'm not usually the kind of guy to say, "I told you so."

But you know what? I'm saying it.

I told you so.

Dark pools - private markets unavailable to the public - and high-frequency trading are manipulative schemes run amok.

They weren't always. Both were the result of unintended consequences. But that's all behind them. In front of them now are civil and criminal lawsuits.

Late yesterday, New York State Attorney General Eric Schneiderman charged Barclays Plc. with fraud over how it markets its dark pool and how it operates it.

In a press conference yesterday after the market had closed, the AG said, "Barclays dramatically increased the market share of its dark pool through a series of false statements to clients and investors about how and for whose benefit Barclays operates its dark pool. Contrary to Barclays' representations that it implemented special safeguards to protect clients from aggressive or predatory high frequency traders, Barclays is accused of operating its dark pool to favor high frequency traders."

But that's not all Barclays did. Keep reading, and I'll explain all...

Dark Pools: Diving In

Barclays not only omitted pertinent information and facts about high-frequency traders' (HFT) access to their dark pool, but they falsified written material and presentation slides in a way that smacks of blatant fraud.

The promised protections were missing, among them limiting "predatory" players from the dark pool. And Barclays also allowed anyone into the dark pool.

Far worse, their own HFT desks were in the pool picking off clients.

The marketing material was obviously influential in attracting clients. Barclays' dark pool became the largest in the United States. There are some 50 dark pools operating in America - that's on top of 11 public exchanges.

And you can bet your bottom dollar there was money involved. According to market research firm TABB Group, the top three dark pools operated by Barclays, Credit Suisse, and UBS earned about $800 million in commissions in 2013.

That's just commissions, folks. There's no clarity on how much they made on their high-frequency trading, much of which was earned by reading their clients' dark pool orders and front-running them. My guess is that they made billions off their dark trading.

And here's what I'm predicting is headed our way next:

There are going to be more charges against more dark pool operators because they pretty much all work the same way. It's how the game is played. What's staggering to me is the stupidity of institutional money managers who go into these dark pools not understanding what the game is and how they're being teed-up.

As a result of what's coming to light (they should have just been reading my stuff all these years), money managers, on behalf of "the public" whose money they manage, mutual fund managers, pension asset managers, and hedge funds, too, are going to sue for the billions they've lost to this hand-in-glove scheming.

It's hand in glove because these money managers get you into their dark pools to protect you from high-frequency trader access and then front-run your orders.

They themselves are the wolves in the henhouse.

Maybe, just maybe, the end result of this will be that some of the inequities that have been built into the market systems we believe (well, not me, I don't believe) are fair and orderly and transparent might just become more so.

We all better hope so, because it's not just about fair and transparent. It's about how the market has been undermined and how it could collapse one day, literally, and trillions of dollars could be lost in a matter of days. And worse, whatever remaining confidence people have in the markets would evaporate and devastate U.S. capital markets and the economy.

If these schemes aren't wiped clean, and the market crashes because of the mechanical mayhem inherent in the operating machinery that we rely on, don't say I didn't tell you so.

More from Shah Gilani: The public has been hoodwinked by central banks and governments into thinking deflation is bad, when in fact it's a healthy corrective counterbalancing of excesses that build up in free-market economies. Here's the truth about deflation - and how the fearmongers are really screwing us over...

Sell These 5 Toxic Stocks Before It's Too Late

BALTIMORE (Stockpickr) -- The big indices gave back nearly a full percentage point each on average yesterday, reminding investors that the sideways churn isn't over yet. Just when the broad market was grasping at new highs, it got swatted lower in a move much like the one back at the start of April.

>>5 Big Stocks to Trade for Gains This Summer

That prolonged sideways price action is frustrating, but it's not particularly ominous -- unless you own some toxic names in your portfolio. Frankly, the biggest gains this year haven't come from picking the right stocks; they've come from not owning the wrong ones.

Today, we're taking a closer look at five large-cap names that look toxic in May.

Just to be clear, the companies I'm talking about today aren't exactly junk. By that, I mean they're not next up in line at bankruptcy court. But that's frankly irrelevant; from a technical analysis standpoint, sellers are shoving around these toxic stocks right now. For that reason, fundamental investors need to decide how long they're willing to take the pain if they want to hold onto these firms in the weeks and months ahead. And for investors looking to buy one of these positions, it makes sense to wait for more favorable technical conditions (and a lower share price) before piling in.

>>5 Stocks Insiders Love Right Now

For the unfamiliar, technical analysis is a way for investors to quantify qualitative factors, such as investor psychology, based on a stock's price action and trends. Once the domain of cloistered trading teams on Wall Street, technicals can help top traders make consistently profitable trades and can aid fundamental investors in better planning their stock execution.

So without further ado, let's take a look at five toxic stocks you should be unloading.

PowerShares QQQ Trust

First up is "The Qs": the PowerShares QQQ Teust (QQQ), a $40 billion ETF that tracks the performance of the Nasdaq 100 Index. QQQ has been a popular trading vehicle for the last couple of years, primarily because it's tracked the Nasdaq's performance during a span where high-momentum tech names have worked really well. But since March, the opposite has been true, and this ETF has corrected to the tune of 5%.

Materially lower ground could be in the cards now, thanks to a classical bearish setup in shares. Here's what to look out for.

QQQ is currently forming a textbook head and shoulders top, a bearish reversal pattern that indicates exhaustion among buyers. The setup is formed by two swing highs that top out at approximately the same level (the shoulders), separated by a higher high (the head). The sell signal comes on a move through QQQ's neckline, which is right at $84. Put more simply, if QQQ can't catch a bid above $84, it becomes a sell.

It's important to remember that this stock's setup is conditional. It doesn't become toxic until that $84 neckline gets violated. In the meantime, this big index ETF has ample opportunities to change its course. That said, investors should at least be keeping a close eye on that $84 level in May. If shares break down though it, look out below.

Fluor

$12 billion engineering services firm Fluor (FLR) is another name that's looking toxic in May. In fact, shares have been forming a bearish price setup since all the way back in January, making it a longer-term trade with equally long-term trading implications when it triggers. That means FLR could be in store for a pretty rough summer.

Fluor is currently forming a descending triangle setup, a bearish trade that's formed by horizontal support below shares (in this case at $74), and downtrending resistance to the topside. Basically, as FLR bounces in between those two technically-significant price levels, it's getting squeezed closer and closer to a breakdown below that $74 price floor. When that happens, it's time to be a seller.

Momentum, measured by 14-day RSI, adds some extra evidence to Fluor's downside setup. Our momentum gauge has been making lower highs going all the way back to last September. Since momentum is a leading indicator of price, that doesn't bode well for FLR's longs right now.

FedEx

We're seeing the exact same setup in shares of FedEx (FDX). After rallying more than 38% amid strength in the transports sector, a descending triangle is indicating that FDX might be getting ready to roll over. The support level to watch is $130 – if FedEx breaks down below it, it's time to sell the shipping giant.

Why the significance at $130? Whenever you're looking at any technical price pattern, it's critical to keep buyers and sellers in mind. Patterns like head and shoulders setups and descending triangles are a good way to quickly describe what's going on in a stock, but they're not the reason it's tradable. Instead, it all comes down to supply and demand for shares.

That horizontal $130 support level in FDX is the spot where there's previously been an excess of demand for shares; in other words, it's a price where buyers have been more eager to step in and buy shares at a lower price than sellers were to sell. That's what makes a breakdown below support so significant -- the move means that sellers are finally strong enough to absorb all of the excess demand at the at price level.

For the best risk/reward tradeoff, wait for the next move lower before selling FDX.

Agilent Technologies

You don't have to be an expert technical trader to figure out what's going on in shares of measurement equipment manufacturer Agilent Technologies (A); this chart is about as simple as they get. Agilent is currently forming a textbook downtrending channel, and that makes this a toxic name in May.

The setup is formed by a pair of parallel trend lines: a resistance line above shares, and a support line below them. Those two lines on the chart provide traders with the high-probability range for Agilent's shares to stay within. When it comes to trend channels, up is good and down is bad; it's really as simple as that. And with shares moving lower off of trend line resistance for a fourth time since January, now's the time to sell this toxic stock.

Another indicator, relative strength (not to be confused with RSI), is the side signal that's pointing to downside in Agilent in May. Relative strength has been trending lower since February, indicating that this $18 billion stock is continually underperforming the broad market this year.

Walgreen

Last up is Walgreen (WAG), a name that's shown investors some outstanding performance this past year. In the trailing 12 months, Walgreen has rallied more than 39%, outperforming the S&P 500 by more than double. But after climbing higher for so long, WAG is starting to look "toppy" this month. Here's how to trade it.

Walgreen is currently forming a double top setup, a bearish reversal pattern that looks just like it sounds. The double top is formed by a pair of swing highs that max out at approximately the same price level. The sell signal comes when the trough that separates the two highs gets violated. For WAG, that breakdown level is right at $62.50, a price level that shares are moving back down toward this week.

Like the other conditional trades on this list, until the breakdown below $62.50 happens, downside isn't a high probability trade -- yet. When and if $62.50 gets taken out, though, you'll want to be a seller. If you decide to short WAG on the break, keep a protective stop at the 50-day moving average.

To see this week's trades in action, check out the Toxic Stocks portfolio on Stockpickr.

-- Written by Jonas Elmerraji in Baltimore.

RELATED LINKS:

>>3 Stocks Breaking Out on Big Volume

>>5 Rocket Stocks to Beat a Sideways Market

>>5 Tech Stocks Entering Breakout Mode

Follow Stockpickr on Twitter and become a fan on Facebook.

At the time of publication, author had no positions in stocks mentioned.

Jonas Elmerraji, CMT, is a senior market analyst at Agora Financial in Baltimore and a contributor to

TheStreet. Before that, he managed a portfolio of stocks for an investment advisory returned 15% in 2008. He has been featured in Forbes , Investor's Business Daily, and on CNBC.com. Jonas holds a degree in financial economics from UMBC and the Chartered Market Technician designation.

Follow Jonas on Twitter @JonasElmerraji

Advisers warming to real assets as stock market volatility picks up

The latest bout of stock market volatility is helping to make the case again for diversifying into assets that investors can actually touch and feel.

Physical real estate, real estate investment trusts and infrastructure master limited partnerships are the most common forms of the real assets that are hitting the radar screens of savvy financial advisers.

Much like the broader alternative investments universe, real asset investments are becoming an increasingly popular for reducing portfolio volatility.

As the data illustrate, most real asset investments are more about non-correlated exposure than white-hot performance.

(Don't miss: The perfect storm: Why alts make sense)

So far this year, real estate mutual funds tracked by Morningstar Inc. gained an average of nearly 10%, while the S&P 500 has been virtually flat.

Last year, when the S&P 500 gained 30%, the category gained 2.3%.

Morningstar doesn't have a specific category for master-limited partnership funds, but a screen of funds with MLP in the name found that the average return this year was 2.8%.

The MLP fund universe had an average gain of 24.4% last year.

“The main thing about real assets is you're getting the diversification of lower correlation to traditional assets, but you're also typically getting some inflation protection,” said James Cunnane, chief investment officer of the MLP & energy Infrastructure team at Advisory Research Investment Inc.

Even with inflation in the U.S. at barely discernable levels, the Fed's unwinding of quantitative easing and the looming threat of higher interest rates make the case for real assets an increasingly logical argument.

“The longer-term attraction of real assets is definitely the inflation sensitivity, because with higher inflation, you will be better off in real assets,” said Keith Black, managing director of curriculum and exams at the Chartered Alternative Investment Analyst Association.

“Another part of the attraction is that we're talking about real assets,” he added. “After the financial crisis, people realized that the stocks and bonds they owned were just paper assets.”

As a subcategory of alternative investments, real assets are sometimes overshadowed by the higher-profile hedge funds and private equity investments, but there are components of the financial advice community that are heavily committed to real asset exposure.

An as-yet released study by Cohen & Steers Inc. estimates that 90% of advisers are alre! ady using real assets for their client portfolios.

But despite the widespread use of real assets, advisers are only using real assets in 20% of their client base, according to the report, which was based on a survey of 660 financial advisers.

For those accounts containing real assets, the allocation is typically between 5% and 9%, illustrating a serious commitment to the asset class.

“It was a little surprising to us to find that among advisers using real assets, they are only using it in about one out of five of their client portfolios,” said Vince Childers, manager of the Cohen & Steers Real Asset Fund (RAPIX).

The research also found that only 40% of advisers are treating real assets as a core holding, with the majority using the asset class for tactical purposes.

Mr. Childers acknowledged his obvious bias when suggesting that investors should have between 10% and 20% allocated to real assets.

“We think people are under-allocated to real assets,” he said, citing an ability to hold value in an inflationary environment.

“But people need to understand that the portfolio diversification benefits go beyond inflationary scenarios,” he added. “In periods like we've seen recently, when stocks and bonds are not diversifying each other very well, that's the sweet spot for real assets.”

The broadest definition of real assets can include everything from direct ownership in real estate to fine art, but the Cohen & Steers study primarily focused on real estate, REITs, infrastructure MLPs and natural resource equities.

The survey found that more than 80% of respondents recognize direct real estate ownership as a real asset, but only about 30% are using direct real estate as a real asset investment.

REITs, which are used by 75% of the respondents, stood out as the most popular means of gaining real asset exposure. Interestingly, less than 35% of the respondents recognized REITs as a real asset.

Nearly 70% of respondents recognized prec! ious meta! ls as a real asset, but less than 40% say they are using precious metals as a real asset allocation.

Looking past what might appear to be some confusion or lack of communication surround real asset nomenclature, it is more important to focus on the growing appetite for the benefits that real assets can bring to a portfolio.

“People are worried about interest rates going up,” Jerry Swank, founder of Cushing Asset Management, said while discussing a new partnership to manage MLP and energy-related mutual funds with MainStay Investments.

“Don't underestimate this humongous energy renaissance going on in the U.S.,” he added. “We have a decade or more of growth in that area ahead of us.”

Just like there are multiple stripes of hedge funds and alternative strategy mutual funds, a real asset allocation should be built around diversification.

While an MLP fund allocation can hopefully catch the energy infrastructure renaissance, the REIT space is poised to benefit from increased demand for housing and office space.

“Right now we're seeing improving fundamentals in real estate, but they're still not building enough to make up for what hasn't been built over the past five years,” said Calvin Schnure, senior economist at the National Association of Real Estate Investment Trusts.

“Things that affect real estate are different than the things that affect stocks,” he added. “Improved job growth and consumer spending will benefit REITs because that translates almost one-for-one to an increased need for office space, because job growth means vacancy rates will fill faster.”

Workers recover last Corvette from Ky. sinkhole

BOWLING GREEN, Ky. (AP) — The last of eight classic Corvettes gobbled up by a giant sinkhole in Kentucky has been recovered, but the mood was somber as the mangled car was pulled to the surface.

The 2001 Mallett Hammer Z06 Corvette was buried in dirt and rocks, dozens of feet below the surface of the National Corvette Museum in Bowling Green. The man who donated the car to the museum, Kevin Helmintoller, says the vehicle looks like a piece of tin foil.

STORY: Museum to display cars eaten by sinkhole

STORY: Watch sinkhole swallow 8 Corvettes

The prized cars were swallowed by the sinkhole that opened up in February beneath part of the museum.

Museum spokeswoman Katie Frassinelli says the damage was progressively worse as each car was pulled out.

The museum will display the cars through August. The ones deemed fixable will be shipped to Michigan for repairs.

What if the Data Are Wrong?

We've been closely tracking Canada's export activity not only because the Bank of Canada (BoC) is currently fixated on it, but also because many of our recommendations in the resource sector are dependent upon it. 

To be sure, the BoC hopes to resuscitate Canada's ailing manufacturing industry, while the major players in the resource space are already working toward diversifying their markets, particularly as the US is in the midst of an energy renaissance thanks to the shale boom.

But Canada is a few years away from being able to ship its energy products to emerging Asia. In the meantime, the US is still Canada's largest trading partner by far, so much of the commentary regarding the BoC's expectation that exports will soon drive Canada's economy again necessarily focuses on the US economy.

Although many of the recent data regarding Canada's export activity have been mixed or even downright gloomy, this week economists with CIBC World Markets published an intriguing analysis suggesting that official data may have been understating export activity.

In the most recent issue of Canadian Edge, we unpacked Canada's international merchandise trade data for December, which showed the trade deficit widening to CAD1.7 billion from the prior month's revised deficit of CAD1.5 billion. That number fell significantly short of the consensus forecast, which had called for the deficit to narrow to CAD650 million.

Though exports were up 0.9 percent month over month, imports grew by 1.2 percent from a higher base. Energy products were the main underperformers in the export sector, with their total value declining 4.5 percent sequentially and 0.1 percent year over year.

But even with this disappointing result, energy products still accounted for nearly CAD9 billion, or about 21.5 percent, of total exports for December. Exports of crude oil and crude bitumen were singled out as the pri! mary culprit in the energy space, with exports falling 5 percent, to just under CAD6 billion, on lower volumes.

Interestingly, economists with CIBC World Markets wonder whether Statistics Canada (StatCan), the government agency that tracks and reports most of the country's economic data, may be employing a methodology that's understating Canada's oil trade. They note that the US Census Bureau, the US Energy Information Administration, and Canada's National Energy Board (NEB) all report data that show rising volumes for Canada's energy exports, with the latter agency's data showing a 12 percent rise year to date through October versus the prior-year period.

But instead of relying on US import data for its calculations, StatCan instead aggregates data from Canada's provincial energy departments. As a result, its figures tend to be lower, which meant it reported a rise in export volumes that was about 33 percent lower during the aforementioned period than the one reported by the NEB.

CIBC says that if the NEB's data are indeed correct and had been used instead when calculating export activity, it would have reduced the country's trade deficit by CAD1 billion per month during the fourth quarter. That almost merits an exclamation point, because it means that Canada would have come much closer to a trade surplus during that time. In the fourth quarter, the country's trade deficit averaged CAD1.36 billion, so shaving CAD1 billion from that number would have meant an average monthly trade deficit of just CAD360 million.

If StatCan's methodology is problematic here, then at the very least CIBC does not believe it's affecting other important data, such as the agency's calculation of gross domestic product (GDP). The economists say StatCan's production data are largely in line with those reported by the NEB.

So while Canada's export-oriented manufacturers are still struggling, it's possible that export activity in the country's energy sector has been ! substanti! ally better than what's been reported.

J.C. Penney Gets a Boost from Improved Holiday Sales

Justin Sullivan/Getty Images NEW YORK -- J.C. Penney said Tuesday that a key revenue measure rose 2 percent during its November-January quarter, which includes the crucial holiday shopping season. It's the first time since early 2011 that the department store chain has recorded a quarterly sales gain. It's encouraging news for J.C. Penney (JCP), shares of which have been battered by investor pessimism that it can recover from a steep sales slump. Under former CEO Ron Johnson, who was ousted last April after 17 months on the job, J.C. Penney's sales plummeted and it recorded massive losses. The Plano, Texas-based company then brought back Mike Ullman as CEO. He is trying to attract shoppers by restoring the frequent sales events and basic merchandise ditched by Johnson in his quest to target younger, wealthier consumers. Shares have lost about 86 percent of their value since early February 2012 when enthusiasm was high over Johnson's transformation plan. In Tuesday morning trading, the stock added 12 cents, or 2.1 percent, to $5.80. "While 2013 brought a lot of change and challenges to J.C. Penney, the steady improvements in our business show that the company's turnaround is on track," said Ullman in a statement Tuesday. He noted that the sales measure, revenue at stores opened at least a year, rose in the fiscal fourth quarter despite bad weather in many parts of the U.S. During the nine-week holiday period in November and December, the sales metric rose 3.1 percent at J.C. Penney. That's important because the holiday season can account for 20 to 40 percent of a retailer's annual sales. But this winter, many retailers discounted heavily to bring in shoppers in a slow economic recovery, hurting profits. It's not clear how much the holiday sales gains at J.C. Penney came at the expense of profits. Investors will find out when the company reports its final fourth-quarter results, on Feb. 26. The company's most recent monthly sales figures have shown some improvement after a long decline. Sales at stores open at least a year edged up 0.9 percent in October, the first monthly increase since December 2011. The metric jumped 10.1 percent in November. But the company has not broken out December sales, saying in early January only that it was "pleased with its performance for the holiday period," and that the holiday season showed "continued progress in its turnaround efforts." At the time, it backed its outlook for the fourth quarter and said the sales measure and profit margins will likely improve from month to month.

The first thing you should do in 2014

With 2013 come and gone, millions of people will resolve to make the most of their money in the coming year. Yet with the stock market moving sharply lower to begin the new year, many investors might well miss out on taking a vital step toward ensuring their long-term financial security by opening an IRA for 2014 as soon as possible.

One of the most important things you can do to start 2014 off on the right foot is to start thinking about saving for retirement. That's a tall order for many people, especially those with decades to go before they can even start dreaming of retiring. But if you want to retire rich, you have to look ahead, and having an IRA is a vital tool you can use to bring that goal closer to reality.

Why it's important to act now

Those who've followed this column know that I traditionally beat on the IRA soapbox at the beginning of most years. Last year, uncertainty about recently enacted tax rates gave some investors good reasons to wait on funding their IRA. But now that the tax-law picture has firmed up, IRAs look more attractive than ever in many ways.

In particular, the fiscal-cliff compromise that took effect at the beginning of 2013 raised tax rates on high-income taxpayers, reestablishing the 39.6% tax bracket and adding new taxes of 3.8% on investment income and 0.9% on wage income above certain high-income thresholds. Even preferential rates on capital gains rose from 15% to 20% for top-bracket taxpayers. As a result, the tax deferral benefits from IRAs are more valuable than ever for many.

Now it's true that you have plenty of time to make an IRA contribution for 2014. Indeed, you can still make a contribution to an IRA for 2013 until April 15. But the bull market of the past five years has emphasized just how important it is to put time on your side by getting money into an IRA sooner rather than later. At the same time, IRAs also make it easier for you to manage your risk than taxable accounts.

The value of high-growth stocks in IRAs

Investing in high-growth stocks within an IRA highlights the full potential that tax-deferred retirement accounts provide. For instance, Max Levchin, a well-known entrepreneur in the technology industry who was the co-founder of eBay's PayPal division, demonstrated the value of a Roth IRA a couple years ago when the social-network company Yelp came public. SEC filings showed that Levchin's Roth IRA owned more than 13.25 million shares of Yelp, and based on valuations at the time, the Roth IRA likely earned a gain of about $100 million when Yelp went public. Since then, Yelp has tripled in price, meaning potentially greater gains for any shares that Levchin has kept in his Roth.

Yet the other side of the coin gives another advantage of IRAs: You can sell your shares of high-flying growth stocks at any time without tax consequences. That can help IRA investors avoid traps that others traditionally fall into after long bull markets.

For instance, during the 1990s tech boom, millions of investors rode tech stocks to riches. Yet for those who held those stocks in taxable accounts, the prospect of losing a huge chunk of their capital gains to taxes led many to avoid selling shares. As a result, many investors ended up riding tech stocks all the way back down, never reaping any profit from the boom at all. By contrast, investors in an IRA were free to sell whenever they decided the tech boom was over, with no immediate tax consequences.

Some investors see similar signs of overpricing in today's market. In particular, tech and social-media stocks have become a target of those arguing that a new bubble has formed. In particular, Twitter (ticker: TWTR) has enjoyed phenomenal gains in the couple of months since it went public, more than doubling from its IPO price and climbing substantially higher from where it traded on its first day as a public company. Similarly, Facebook (FB) and LinkedIn (LNKD ) have produced stellar growth in boosting advertising revenue, especially with Facebook having ! demonstra! ted its success in the mobile ad space. Yet with these stocks carrying pricey valuations that reflect investors' high expectations for their future, anything short of perfection going forward could cause dramatic corrections -- corrections that those investing in taxable accounts will fear protecting themselves from because of the tax liability involved.

Don't wait

Obviously, if you don't yet have an IRA with winning stocks in it, then you can't take full advantage of every opportunity that IRAs give you. But the sooner you establish an IRA, the sooner you'll be able to consider all of these winning strategies while leaving yourself able to take action if downturns change your investing mindset.

The Motley Fool is a USA TODAY content partner offering financial news, analysis and commentary designed to help people take control of their financial lives. Its content is produced independently of USA TODAY.

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Is The Best Buy Stock Run Over?

The shares of Best Buy Co. Inc. (NYSE: BBY) are up almost 250% this year. The company’s management has staged a turnaround, at least partially. But the progress is not great enough for Best Buy to have its current market capitalization of $14 billion. After all, its earnings from continuing operations last quarter were only $44 million. Even if that number soars, it likely will not be enough to justify the $14 billion valuation.

The theory behind the increased value of Best Buy is that its revenue is no longer shrinking, and it may recover this holiday season. In its most recently reported quarter, Best Buy had revenue of $9.4 billion, about flat with last year’s same quarter. Same-store sales for the period rose only 0.3%. The number only looks good because in the year-ago quarter same-store sales were off 5.1%.

Part of the enthusiasm about Best Buy is the strategic plan of new CEO Hubert Joly: drop prices below the competition and offer better in-store services. The problem with the first part of the program is that the move is likely to lower margins. The problem with the second is that consumers are used to shopping for consumer electronics at Amazon.com Inc. (NASDAQ: AMZN), where there is no service. The lack of service at Amazon is replaced by the convenience of shopping from home and the ability to browse a seemingly infinite number of consumer electronics products across a nearly limitless number of prices. A physical store has no means to match that.

So, the new wisdom about the high valuation of Best Buy is that it has beaten, or at least matched, Amazon in the prices and service aspects of consumer electronic sales. Yet, there is scant evidence of that. It will not be until holiday sales numbers are turned in by the two companies that Best Buy can be considered a winner, even on the most modest level. And “modest” is the problem. Even a small improvement in Best Buy’s revenue says nothing other than Amazon is not trampling it with quite the same force as a year or two ago. That does not mean the beating ever entirely ended.

Best Buy’s turnaround is nothing more than marching in place, which is not enough to cement a better future.

Holiday shopping spree not for everyone

NEW YORK (AP) — Many Americans are watching the annual holiday spending ritual from the sidelines this year.

Money is still tight for some. Others are fed up with commercialism of the holidays. Still others are waiting for bigger bargains.

And people like Lark-Marie Anton Menchini are more thoughtful about their purchases. The New York public relations executive says in the past she'd buy her children up to eight Christmas gifts each, but this year they're getting three apiece. The leftover money is going toward their college savings.

"We told them Santa is ... being very conscious of how many gifts he puts on his sleigh," Menchini, 36, says.

Despite an improving economy, most workers are not seeing meaningful wage increases. And some of those who can splurge say the brash commercialism around the holidays — many more stores are opening for business on Thanksgiving — is a turnoff.

But perhaps the biggest factor is that shoppers are less motivated than ever by holiday sales. Since the Great Recession, retailers have been dangling more discounts throughout the year, so Americans have learned to hold out for even deeper holiday savings on clothes, electronics and more. To stay competitive and boost sales, retailers are slashing prices further during their busiest season of the year, which is cutting into their own profit margins.

There aren't reliable figures on how many people plan to shop during the holidays. But early data points to a shift in holiday spending.

The National Retail Federation estimates that sales during the start to the official start to season — the four-day weekend that began on Thanksgiving Day — dropped 2.9% from last year to $57.4 billion. That would mark the first decline in the seven years the trade group has tracked spending.

And during the week afterward — which ended on Sunday — sales fell another 2.9% compared with a year ago, according to data tracker ShopperTrak, which did not give dollar amounts. Meanwhile, the nu! mber of shoppers in stores plunged nearly 22%.

The numbers are sobering for retailers, which depend on making up to 40% of their revenue in the last two months of the year. They suggest shifts in the attitudes of U.S. shoppers that could force stores to reshape their strategies:

SHOPPERS WANT DEALS

Stores slashed prices during the recession to get financially-strapped shoppers in stores and to better compete with the cheaper prices of online retailers like Amazon. But shoppers got used to those deals and now won't buy without them. The constant discounting has blunted the "wow" factor of sales during the holidays.

For instance, some retailers were offering discounts of 40% or more on the day after Thanksgiving known as Black Friday. But Jennifer Ambrosh, 40 was unimpressed with the "deals" she saw on that day. "There's a lot of hype, but ... the deals aren't that good," Ambrosh, an accountant, says.

Overall, the retail federation expects spending in November and December to rise 3.9% to $602.1 billion. But to get that growth, analysts say retailers will need to discount heavily, which eats away profits.

There are signs that profits for the quarter that includes the holiday season are being hurt by the discounting. Wal-Mart and American Eagle Outfitters are among 47 retailers that have slashed their outlooks for either the quarter or the year.

Overall, retailers' earnings growth is expected to be up 2.1%, according to research firm Retail Metrics. That would be the worst performance since profit fell 6.7% in the second quarter of 2009 when the country was in a recession.

SCRUTINIZING PURCHASES

The recession not only taught Americans to expect bargains. It also showed them that they could make do with less. And in the economic recovery, many have maintained that frugality.

So whereas in a better economy, Americans would make both big and small purchases, in this economy they're being more thoughtful and making choices about what to buy.

Ana! lysts say! that hasn't boded well for retailers that sell clothing, shoes and holiday items. That's because Americans are buying more big-ticket items over the holidays.

Government figures show that retail sales were up 0.7% in November, the biggest gain in five months. But the increase was led by autos, appliances and electronics.

Auto sales jumped 1.8%, furniture purchases rose 1.2% and sales at electronics and appliances stores rose 1.1%. Meanwhile, sales at department stores and clothing chains were weak.

Americans are leaning toward big purchases for two reasons. They want to take advantage of low interest rates. And since many paid down debt since the recession, they feel more comfortable using credit cards again for such purchases.

But they won't do that and buy smaller items. "This is still a weak, fragile shopper," says Craig Johnson, president of Customer Growth Partners, a retail consultancy.

Retailers including Macy's and Target in recent months have said that shoppers' focus on big-ticket items has put a damper on sales of discretionary items, and the retail federation says it has hurt holiday sales in particular.

HOLIDAY CONSUMERISM

Black Friday used to be the official kickoff to the buying season, but more than a dozen chains opened on Thanksgiving this year.

That didn't sit well with some shoppers who viewed it as an encroachment on family time. Some threatened to boycott stores that opened on the holiday, while others decided to forgo shopping altogether.

In a poll of 6,200 shoppers conducted for the retail federation prior to the start of the season, 38% didn't plan to shop during the Thanksgiving weekend, up from 34.8% the year before.

Ruth Kleinman, 30, isn't planning to shop the entire season in part because she's disheartened by the holiday openings. The New Yorker says the holiday season "has really disintegrated."

While some shoppers didn't approve, analysts say stores will need to open on the holiday to appeal to the masses! . Overall! sales declined over the holiday weekend, but several retailers said there were big crowds on Thanksgiving. "Customers clearly showed that they wanted to be out shopping," says Amy von Walter, a Best Buy spokeswoman.

Analysts say stores will need to redefine Thanksgiving as a family tradition beyond sitting at the table eating turkey to make more shoppers comfortable.

"They have to show that they're maintaining a family tradition in new ways," says Marshal Cohen, chief retail analyst at market research firm NPD Group.

AP Business Writer Mae Anderson in New York contributed to this report.

Record-Low H.K. Home Sales Spur Realtor Loss: Chart of the Day

The tumble in Hong Kong's home sales to a record low signals further declines in Midland (1200) Holdings Ltd., the city's largest listed realtor, according to Bocom International Holdings Co.

The CHART OF THE DAY shows the three-month average of residential transactions in Hong Kong fell to 3,693 units in September, the lowest since at least 1996, according to government data compiled by Bloomberg. Sales have plunged even as Centaline Property Agency Ltd.'s housing-price gauge holds within 3.1 percent of a record high. The lower panel shows Midland had 9,576 employees at the end of June, according to the latest company statement, the most ever and triple the amount a decade ago, alongside the company's stock price.

Shares of Midland, which arranges about 30 percent of all property sales in Hong Kong, slid 67 percent since April 2010. The company had a net loss of HK$95 million ($12 million) in the six months to June 30, the biggest since the second half of 2008, as operating expenses exceeded sales. The stock will continue to be under pressure unless the property market recovers, said Alfred Lau, an analyst at Bocom in Hong Kong.

"This year will likely be loss-making for the company and that would eat into cash flow and the company's ability to pay dividends," said Lau, who has a sell rating on the stock and a 12-month target price that's 14 percent below yesterday's close.

Residential sales have declined as government taxes and the prospect of rising interest rates deter buyers in the world's most expensive property market. The number of real estate agents in Hong Kong surged 68 percent to 36,225 in September from January 2008 as home prices doubled, according to government data. The number of Midland employees in the city has fallen by "double digits" this year through September, Deputy Chairman Angela Wong said by phone.

Midland's managers "have to cut jobs and they have to cut shops," said Nicole Wong, a property analyst at CLSA! Asia-Pacific Markets in Hong Kong. "There is no other way out." Brokerages from UBS AG to Bank of America Corp. and Jefferies Group LLC predicted this month the city's home values will fall at least 20 percent through next year.

Tibergien calls for lower temperatures in “fee-only” debate

The debate over what constitutes a "fee-only" adviser has reached fever pitch and risks spinning out of control, according to one industry executive.

“Everybody just has to step back and lower the temperature,” Mark Tibergien, chief executive of Pershing Advisor Solutions LLC, said at an InvestmentNews adviser workshop in Chicago. “Professionals don't like to be scolded or called out as a sinner.”

Last week the CFP Board replaced the listing “fee-only” with “none provided” in the compensation method of CFP profiles on its website and asked advisers to review the board's definition of "fee-only" before restoring that aspect of their profile. The CFP Board has been mired in controversy regarding misrepresentation of how some CFPs generate revenue.

The approach the CFP Board of Standards has taken in the debate has moved the discussion away from the central issue of clients' knowing how their adviser is paid and could lead to some oddball conclusions about what constitutes a conflict, Mr. Tibergien said.

“It seems to me that people have been dinged because of being affiliated with a firm, as opposed to the reality of their business,” he said. “The real issue is whether there is fee transparency and whether advisers are free of conflict.”

By being "evangelical about the issue," the CFP Board could turn the debate in a strange direction,” he added.

For instance, an adviser managing a large foundation who is paid a fee based on assets under management could be in conflict with the foundation's overall mission of giving away money to charities, which would reduce the amount of assets being managed, Mr. Tibergien said. That would not be a productive direction for the industry to go.

James Twining, founder of Financial Plan Inc. and a CFP professional, said his firm's “fee-only” designation was called into question because it has an insurance agency affiliate. The firm's compliance attorney told him that the firm is "fee-only" and Mr. Twining said he will seek to approach the issue by donating any commissions it gets from that affiliate to charity.

He has attempted to send his clients to other insurance companies when they need long-term-care or life insurance, but hasn't been able to find one that he trusts to make good decisions for his clients.

Susquehanna Upgrades Broadcom; Raises PT (BRCM)

Susquehanna reported on Tuesday that it has raised its rating on Broadcom Corporation (BRCM).

The firm has upgraded BRCM from “Neutral” to “Positive,” and has lifted the company’s price target from $33 to $35. This price target suggests a 23% upside from the stock’s current price of $26.91.

Analyst Chris Caso commented: “Our downgrade of BRCM in May was predicated on already high Street expectations on handsets and no notable improvement in networking to drive upside. We think expectations and the stock price have now been sufficiently reset ahead of what we expect to be catalysts in 2014 – including the iPhone 6 product cycle, potential improvement in networking and the impact from the recent Renesas acquisition. In addition, after several years of overspending on their handset initiatives, we think we are now closer to the point where the company either captures a return on that investment or is forced to moderate spending – either of which benefit profitability. We see the upcoming December analyst meeting as a potential intermediate catalyst.”

Broadcom shares were up 38 cents, or 1.41%, during pre-market trading Tuesday. The stock is down 19% YTD.

IRS Agent Faked Pastor's Letter To Claim Charity Deduction

Here's one for the "What was that Internal Revenue Service agent thinking?" book.

At the explicit direction of Congress, since 2007 the rules for deducting cash contributions to charity have been extra strict—you even need a receipt to deduct that $20 bill put in your church's Sunday offering plate.  Giving fake documents and fibbing to the IRS to support a deduction has, of course, been a no-no for a lot longer.  Yet when IRS Revenue Agent Margaret Payne had her own 2008 and 2009 tax returns examined, she faked receipts to back up her claimed cash donations, U.S. Tax Court Chief Special Trial Judge Peter J. Panuthos concluded in a decision he issued this week.

Reached this morning at her desk at the IRS in Manhattan, Payne called the decision "completely unfair and biased,'' but declined further comment. The IRS declined any comment on the case on privacy grounds. The decision can't be appealed under a special Tax Court procedure for small cases in which taxpayers are allowed to represent themselves, as Payne did.

Here, as told in Judge Panuthos' 12-page-decision, is the sorry story: During the audit, Payne, then a 28 year IRS veteran, gave an IRS examiner copies of two year-end letters, purportedly signed by Pastor Lemuel M. Mobley of the Living Stone Baptist Church in Brooklyn, stating she had donated $6,047 to LSBC in 2008 and $14,000 in 2009.  But when the examiner met with Mobley, he said he didn't even know Payne (his congregation had only 50 to 75 members) and that the letters were a "cut and paste job" on church letterhead, with his name forged and even misspelled.

Later, after talking to a long-time congregation member who was an IRS secretary and Payne friend, as well as to Payne herself, Mobley changed part of his story.  In a letter to the IRS, he claimed that he knew Payne by a different name and that she had given the money to the church. Yet in that same letter he repeated his assertion that the letters Payne had originally given the examiner were forged, writing:   "She pieced together a financial statement and stated to me that she had one of her children to sign my name…..She stated that she was sorry for what she had done. She asked for forgiveness and I forgave her for what she had done to me as well as to the church. I did not give her or anyone else permission to sign my name on any document.''

Judge Panuthos wasn't nearly so forgiving of a woman he pointed out had graduated from college with majors in accounting and finance, completed some graduate work in forensic accounting and had been a Revenue Agent (in other words, an IRS examiner or auditor) for 20 years. In a scathing opinion upholding $6,500 in back taxes and $1300 in penalties against Payne, he described the case as full of "inconsistencies, contradicting testimony, fabricated documents, and simple untruths," and observed that the three witnesses (Payne, Mobley and  the IRS secretary) had each "not only contradicted the testimony of the others but also contradicted his or her own testimony and documents. ''

Panuthos concluded Payne had engaged in a "misguided and inept attempt to support claimed charitable contribution deductions through a fictional account of the past," and that the IRS secretary was probably in on the scheme too. He wrote: "It appears highly probable that petitioner (Payne), in concert with her longtime friend and fellow IRS employee, cut and pasted stationery from LSBC and provided the same to the IRS agent examining the returns in an attempt to support the claimed deductions."

The Judge also made fast work of any suggestion Payne had probable cause for avoiding the 20% penalty for negligence or disregard of rules, saying he was satisfied her underpayment resulted from a "very deliberate and knowing attempt to reduce her tax liabilities."

Investment ideas for home makers

It is essential for women, be it working women or homemakers to keep themselves and their family financially secure. In the olden days, women generally had a habit of keeping savings in the containers in their kitchen, but today that is not going to get our savings anywhere when confronted with ever-growing inflation. It is wise to choose to invest and wiser to choose the best investment in order to keep our family and ourselves financially secure. A good Investment gives better returns than merely saving in a bank deposit or in our piggy bank and helps us to cope up with inflationary pressures.

Women and investment? Homemakers and Investments?
Not a good combination, most people would say. Definitely not, many people think homemakers make very bad investors, as they do not have knowledge about the share markets and the technical aspects of investing. Looking from a fundamental analysis point of view, they are the ones who could be good investors as they make all purchase decisions for the entire family and they are aware which company performs better for what reason. They need not have to make decisions by looking at the balance sheet of the company; they are the main consumers of most of the products around. This is a strength, which can help them analyze stocks and invest in shares and equity. They are uniquely qualified to buy and sell shares.

How does a homemaker choose appropriate investment options?
The best way to plan your investment is to know your goals. Try to take a piece of paper and write down what you would like to achieve in your life time, you might want to have a house of your own, probably a luxurious car, a world tour etc. these things that are not immediate but needs to be achieved some day. These are your long-term goals. There are a few other things that you need to achieve in another two years/ three years or more, for example higher studies, marriage, purchase a two wheeler etc., these are your short term goals, remember your short term goals keep changing as you move on in your life. Your short-term goals today are not going to be the same when you become a mother. The article discusses in detail about the investment options for homemakers at different stages of life.

Where to invest in your 20s
In your 20s, you are likely to be in your college or at your first job, so your income is definitely going to be very less. You can choose to invest them in a recurring saving deposit or bank deposits where you can earn low but regular and fixed returns. You can also choose to invest your money in mutual funds because the risk involved is lesser and you can invest very small amounts of money. Once you have started earning good money in your late 20s you can start investing your money in equities where the risk and returns are higher.

Where to invest in your 30s
In your 30s as homemakers, you might not have plenty of money to invest in, but make sure you have a term insurance for yourselves and your family. A health insurance will help keep you more secure during times of emergency. Try to cut down unwanted expenses and invest in education funds for your childrens' higher education, take up a suitable retirement plan for yourselves and your spouse. Avoid endowment plans; they carry higher charges and may not give high returns.

Avoid buying gold ornaments, they are only going to eat away your money in the form of wastage and making charges, instead, invest in gold-based funds and buy gold in the form of coins/bars.

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3 Top Ranked International ETFs Still Worth Buying - ETF ...

2013 has been a very rocky year for international investing. Emerging markets have struggled across the board, while developed markets began the year on a solid note, but lost their footing and are now facing a period of uncertainty with earnings season approaching.

This situation could definitely continue in the near term as the dollar remains strong and concerns are ever-present over the longevity of the Fed's bond buying program. These two items are making it very hard for some to risk their capital in foreign markets, as many are instead looking to keep their investment in the domestic sphere instead.

While many have likely abandoned international investments as a result of this trend, there are still plenty of good values out there. In particular, there are several top ranked ETFs which could be well-positioned to outperform in the months ahead.

That is because a trio of these ETFs have actually been able to fight through the bearish trend and still trade in positive territory for the trailing three month period. While this might not sound like much of an accomplishment, it is important to remember that in the same time frame EFA has added just 0.9% while broad emerging market funds like EEM and VWO are nearing a double digit loss for the period (see 4 ETFs on the Move After Bernanke Press Conference).

Clearly some have been able to break out of this downward channel and hold their own, suggesting that all funds haven't been sucked into the whirlpool of negative returns. So before you write off all international ETFs for the time being, consider taking a closer look at these resilient, top ranked ETFs first:

PowerShares Golden Dragon China Portfolio (PGJ)

Many China ETFs, such as the ultra-popular FXI, have been facing severe weakness lately. This is because there have been a number of poor data points for the country's economy in a number of key sectors.

However, not all China ETFs have succumbed to this weakness, as a few have managed t! o perform rather admirably. In particular, PGJ has done quite well, adding significantly over the past three months.

Part of the reason for this outperformance is PGJ's focus on ADRs and technology firms for its exposure. This has eliminated some of the panic selling issues that we have seen in Chinese markets, while the big holdings in technology, health care and consumer discretionary have been far better choices than the rocky Chinese financial market.

Given this, a look to PGJ might not be a bad idea for international ETF investors, and especially those looking for a China allocation. The fund sees decent volume and is actually cheaper than FXI despite holding more securities in its portfolio (roughly three times more firms in the basket).

Currently PGJ has a Zacks ETF Rank #2 or Buy, suggesting that this outperformance could continue (see all the Top Ranked ETFs).

First Trust Switzerland AlphaDEX Fund (FSZ)

Europe has actually been a decent performer during the recent slump, as many of the funds targeting this region have held up rather well. In fact, several major countries, like France, Germany, and the UK, have all seen price increases in the last three months, suggesting they have avoided the worst from the recent slump.

Beyond these markets, another interesting choice is in Switzerland. The country maintains some level of currency independence—still pegged to the euro despite having its own currency, the franc—while it isn't dragged down by broader euro zone woes.

This allows the country to potentially outperform some of its counterparts, or if the euro zone continues to come back, rise as well. This has certainly been the case lately, as some Swiss ETFs have paced the broad American market during the trailing three month time frame.

One of our favorites in this regard is FSZ, an ETF from First Trust. The fund uses the AlphaDEX methodology to select stocks, so while it is a bit pricier than most, it does potentially elimin! ate the w! orst rated stocks, allowing FSZ to possibly outperform (see 3 European ETFs Holding Their Ground).

FSZ also has a Zacks ETF Rank of 2 or Buy, suggesting that their process has done quite well lately, and that more outperformance could be ahead for this fund.

iShares MSCI Malaysia Index Fund (EWM)

Many Southeast Asian markets were up to start 2013, but Malaysia, thanks to electoral uncertainty, struggled. Many thought that the ruling party was going to lose its majority, but the results were strongly in favor of the Prime Minister Najib Razak and his coalition, which won another five year term.

Thanks to this reduction of uncertainty, the Malaysia ETF soared, posting solid gains immediately following the event. And since EWM had missed much of the run up to start the year, it wasn't as hit by the recent sell-off which devastated the country's counterparts in the Philippines and Thailand.

It also helps that Malaysia has a very balanced ETF, and decent sector diversification, though financials do take up about 30% of the portfolio. However, the big technology focus of the economy, along with decent sized exports of oil products, has helped it to avoid the worst of the slowdown as well.

Plus the timing of the election couldn't have been better, and likely saved EWM from the broader regional issues this time around (read Time to Buy the Top Ranked Malaysia ETF?).

This fund also is a top performer from the Zacks ETF Rank perspective, as it has a Rank of #1 or Strong Buy, suggesting that it will continue to be a good choice in the space.

Bottom Line

Global markets have been extremely weak, as talk of Fed tapering and a strong dollar have pushed down demand for international assets. And with the specter of the Fed hanging over the market—especially with the decent U.S. economy-- this issue may be present for a bit longer.

Still, there have been several international markets which have fought through this trend and have actu! ally been! doing pretty well in this environment. These top ranked ETFs could thus be great choices for investors seeking to stay in global markets, but are looking to avoid the worst and stick with the best positioned funds out there.



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Author is long EWM

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Congress Betrays Taxpayers - Again

It just so happens I have both a "trick" and a "treat" for you today.

First, the "trick."

Wednesday the House passed a bill titled The Swaps Regulatory Improvement Act.

The trick is, it's not about improving the who-really-knows-how-many trillions of dollars swaps (derivatives) market.

Instead, the bill aims to reduce restrictions under section 716 of the Dodd-Frank Act. Section 716 requires banks to spin off risky swaps out of depository institutions to subsidiaries and affiliates.

Here's what Rep. Jeb Hensarling (R-TX), chairman of the House Financial Services Committee, said on the House floor Wednesday: "Section 716 requires financial institutions to 'push out' almost all of their derivatives business into separate entities, this not only increases transaction costs, which are ultimately paid by the consumers, it also makes our financial system less secure by forcing swap trading out of regulated institutions."

WHAT? Now that's tricky!

Transaction costs? Those are borne by the traders at the banks and hedge funds that trade those financial weapons of mass destruction, not "CONSUMERS." Consumers don't trade this stuff; these are not consumer products. Consumers will only pay for these weapons of mass destruction if the banks that taxpayers - the consumers of the crap banks spew out when they fail - have to bail out the banks that trade this stuff!

But it passed.

The House measure passed by a bipartisan vote of 292-122, including 70 Democrats.

The trick was neatly exposed by Rep. Maxine Waters (D-CA), the top Democrat on the banking panel. She fumed, "This legislation will effectively allow banks to undertake derivatives trading with depositors' money. If the banks lose money on this sophisticated trading, systemic risk could creep back into our financial system, once again putting the economy - and the American taxpayers - at risk."

Now that's scary.

Next, this could be a big treat for you and me... depending on how it eventually plays out...

It's about JPMorgan Chase's record $13 billion settlement, the one that's supposed to consolidate a lot of government actions against the "too big to fail" (TBTF) bank... the settlement that's now looking like it won't happen.

Here's what the hang-up is...

JPM is being sued by Deutsche Bank National Trust Co. on behalf of securitization trusts seeking as much as $10 billion in damages. The case that began in 2009 alleges that JPM is responsible for crappy MBS (mortgage-backed securities) they originated, packaged, and sold to the trusts that are represented by DBNT.

JPMorgan is saying, "That wasn't us! That crap was stuff that Washington Mutual was responsible for. We only bought WaMu because we are good Americans and their failure back when the crisis was beginning would have hurt a lot of little peeps, so get off our backs." That's just their preamble. They continue their defense by saying, "Your beef isn't with us, your beef is with the FDIC. They are responsible for WaMu's legacy liabilities."

Ten billion dollars is a lot of money.

The FDIC is saying, "Go shove off, you losers. You bought the failed bank, the largest bank to ever fail in the U.S., with its $307 billion in assets and all those branches in California and the West for $1.9 billion to get access to all their branches and customers, where you didn't have a presence. Altruism? Shove it."

JPM is saying back to the FDIC, "No, you shove it!"

So what's really going on?

John Douglas, counsel at the law firm of Davis Polk & Wardwell and a former FDIC general counsel, said in an American Banker article Thursday, "This dispute has its origins in the purchase and assumption agreement between JPM Chase and the FDIC [that was] signed in 2008, where the FDIC takes the position that JPM assumed all liabilities of WaMu, and JPM asserts it has no liability for the pre-failure errors of WaMu related to these mortgage loans."

That's the back story. Now fast forward to the $13 billion settlement.

Of the $13 billion, $5.1 billion goes to settle claims by the Federal Housing Finance Agency over mortgages securities bought by Fannie Mae and Freddie Mac. The big settlement appears to protect the FDIC in its "corporate capacity" from future JPMorgan indemnification claims. But it could leave unresolved future claims on the WaMu receivership managed by the FDIC.

In other words, if JPM settles in the big picture deal and pays the claims related to WaMu that it's saying should be paid by the FDIC, the lawyers for Deutsche Bank will argue that JPM and not the FDIC has to pay them.

The "treat" for me - and a lot of you and other peeps who aren't big JPM fans - would be if they actually settle for the $13 billion and in doing so expose themselves in the Deutsche case and remove the FDIC from harm's way. That would be a treat, not because the bank might have to pay billions more (though that's okay with me on account of the fact it further exposes them and other banks to similar lawsuits for the pain they inflicted across the globe), but because it relieves the FDIC of having to potentially pay.

Because who backs the FDIC if they run out of money? The taxpayers.

Enough said.

More from Shah: The First Thing Yellen Should Do to Save America

Why This Philip Morris Earnings Report Is Crucial

Philip Morris International (NYSE: PM  ) will release its quarterly report on Thursday, and projections suggest that it will manage to deliver decent results for investors. But shareholders don't seem convinced about Philip Morris earnings, as they've recently sent the stock down substantially from its May highs.

Many investors have gravitated to Philip Morris in the belief that by doing all of its business overseas, it won't ever have to worry about cigarette warnings and other regulatory measures that its U.S. peers face. But increasingly, it's becoming evident that other countries are looking for ways to control tobacco in the same way the U.S. does. Let's take an early look at what's been happening with Philip Morris over the past quarter and what we're likely to see in its quarterly report.

Stats on Philip Morris

Analyst EPS Estimate	$1.41
Change From Year-Ago EPS	3.7%
Revenue Estimate	$8.19 billion
Change From Year-Ago Revenue	0.9%
Earnings Beats in Past 4 Quarters	2

Source: Yahoo! Finance.

Will Philip Morris earnings go up in smoke this quarter?
Analysts have cut back on their earnings calls about Philip Morris lately, cutting their June-quarter estimates by $0.08 per share and their full-year 2013 consensus by double that amount. The stock has also reflected that uncertainty, falling 5% since early April.

Ever since its spinoff from Altria (NYSE: MO  ) , Philip Morris has benefited from higher growth prospects from its international sales. At the same time that Altria, Lorillard, and (NYSE: LO  ) other U.S. tobacco companies have struggled to keep their revenues moving higher, the argument is that other countries with less regulation offer better environments to foster sales growth for Philip Morris. That's true to an extent, although the edge that Philip Morris has had over its peers has narrowed considerably in recent years and is slated to continue to shrink in the future.

But Philip Morris has its own challenges to face. Last quarter, the company reported considerable underground cigarette trading in areas of southeastern Asia that cut into its overall sales volumes. Moreover, although the U.K. government delayed a decision on a potential ban on putting branding images on cigarette packs, the company nevertheless faces increased regulatory threats. The U.K. said that it wanted to see the effects of a similar measure in Australia before moving forward, suggesting that if the measure proves successful, Philip Morris could see it come up in other countries around the world. The European Union also imposed a ban on menthol cigarettes recently, upping the pressure on tobacco companies generally.

The other area where Philip Morris earnings could take a hit is in currency impacts. With all of its revenue coming from overseas, Philip Morris suffers when the dollar is strong, as adverse currency exchange rates can produce a substantial hit to its bottom line. Currency impacts tend to even out over time, but not being prepared for short-term fluctuations can result in a nasty surprise for unaware investors.

When Philip Morris reports earnings, be sure to watch the status of ongoing regulatory activity around the world, especially Australia. If results are starting to get hurt due to labeling regulation, it could be just the first step toward similar regulations elsewhere -- and that could pull the stock further downward in the quarters to come.

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1 Analyst Gets Bullish on Apple

Raymond James analyst Tavis McCourt seemed slightly fed up. Sentiment for Apple (NASDAQ: AAPL  ) stock is "horrible, in the institutional investor community, and ultimately we view this as feedstock for outperformance," he said. Upgrading his rating from outperform to strong buy, McCourt reiterated his $600 price target for the stock on Monday. Could McCourt be right? After all, $600 is a pretty hefty premium to today's prices.

What's next in mobile computing?
McCourt calls it phase two: When the growth of smartphone and tablet markets begins to subside, and smartphone chipsets and ecosystems start invading televisions and automobiles, and gaining "uses not currently thought of for computing devices." With the help of its vertical integration, McCourt believes that the Cupertino-based tech giant is positioned to take a large share of industry profits as it enters the second phase of the "mobile computing revolution." 

Valuation matters
All of this sounds great, but aren't there plenty of other companies positioned to benefit from this second phase, too? Vertically integrated or not, $600 is a lofty target.

McCourt's $600 price target isn't a random bullish target. In fact, it's not too far from the average analyst target of about $539. McCourt is simply being objective. The stock is cheap, he argues. He sees the Street's negative sentiment toward Apple as a good thing -- poor expectations are mostly already priced into the stock. In order for the stock to take a major hit, he explains, "trends at Apple would have to erode meaningfully." 

Just how cheap is Apple?
Using a reverse discounted cash flow valuation, and a 10% discount rate, the growth rate assumed by the market for Apple's free cash flow going forward is just 1.4%. In other words, at today's price for Apple's shares, the market expects competition and eroding margins to prevent the business from growing even at the historical rate of inflation.

To add some context, it's useful to compare Apple with another megacap cash cow: McDonald's (NYSE: MCD  ) . Ironically, Apple and McDonalds share some common characteristics as stocks. Like Apple, McDonald's growth seems to be slowing. In the company's first quarter, global comparable sales decreased 1% from the year-ago quarter. Revenue increased just 1%. Furthermore, the stock's dividend yield just barely tops Apple's; both are close to 3%. 

As far as valuation goes, however, Apple and McDonald's are as different as night and day.

Valuation Metric

Apple

McDonald's

Free cash flow growth rate assumed by the market	1.4%	17.4%
Price/free cash flow	8.9	25.5
Price/forward earnings	9	15.6

Why is McDonald's stock so much more expensive than Apple's? Chances are it's because the market is confident in McDonald's cash flow going forward. Apple, on the other hand, may leave investors nervous. Investors are asking tough questions: Can the company sustain its meteoric levels of free cash flow? How much further will the company's margins continue to fall?

But is Apple truly deserving of a valuation so inferior to McDonald's? The company's conservative valuation levels the playing field, making the stock's risk/reward profile a convincing value proposition. The market's serious concerns are arguably already priced into the stock.

The price for Apple stock is awfully cheap. Does this mean the stock is going to immediately appreciate? No. But if there is an undervalued company in the S&P 500 that looks likely to earn investors solid returns over the long haul, Apple definitely fits the bill.

With expectations for Apple stock so low, the market has seemed to largely forget about Apple's history of cranking out revolutionary products... and then creatively destroying them with something better. Does this mean Apple can never pull it off again? Or is Apple still capable of disrupting markets? Read about the future of Apple in the free report, "Apple Will Destroy Its Greatest Product." Can Apple really disrupt its own iPhones and iPads? Find out by clicking here.