Students Will Help Save Apple

Take a look around and it's hard not to get depressed by all the negative economic news. Home prices keep sliding. Credit is drying up. Inflation fears are on the rise. And consumer confidence is lower than it's been since the early 1990s.

You would think all of this would eat into the business at Apple (AAPL). The company's computers tend to be pricier than those from Dell (DELL) or Hewlett-Packard (HPQ), while its iPods and iPhones are the sort of discretionary purchases that consumers often cut out during an economic slowdown.

Paul Kedrosky thinks Apple is about to take a hit from the slowing economy. The Kauffman Foundation senior fellow who edits the business and economics blog Infectious Greed recently argued on Yahoo's (YHOO) Tech Ticker that since Apple's products are "aspirational," consumers can do without them and opt instead for cheaper alternatives from others, or bypass electronics purchases altogether. He's expecting Apple to miss its earnings targets for the current quarter and to lower its outlook for the quarter after that.

I think he's way off. So we've agreed to wager $50 on Apple's earnings announcement coming up in mid-October. He is betting that Apple will miss consensus estimates for the current quarter of $1.11 and say that gross margins for the next quarter will be less than 30%. I think Apple will at least meet the consensus and will keep its margin guidance higher than that. If Kedrosky is right on either metric, I'll write a $50 check to the National Resources Defense Council. If I win, he'll send $50 to the Susan G. Komen Breast Cancer Foundation.
Computer Sales Matter

Kedrosky's assumption seems reasonable until you start looking at what's really driving Apple. For all the attention the iPhone has been getting, Apple's performance in the quarter ending Sept. 30 will largely be determined by sales of its computers.

And in this back-to-school season, college kids are buying Macs in numbers never seen before. A recent survey by Student Monitor, a New Jersey outfit that tracks the buying habits of college students, found that 13% of all undergrads expect to buy a new notebook this fall. Of those, 43% say they plan to get a MacBook or MacBook Pro, nearly double those who said they expected to get a Dell notebook, and seven times as many as those who plan to buy from HP, says Eric Weil, the firm's managing partner. While students prefer Dell for desktop computers, that's small consolation: Students favor notebooks over desktops by a factor of nearly 5 to 1.

Ask among the college students you know and you'll probably find lots of new Mac-users like Joe Praetorius of Springs, Texas. The 17-year old is headed first to Houston's Media Tech Institute to study sound engineering, and then on to Boston's Berklee School of Music after that. I heard that the Mac was best for sound engineering and editing, he says. Gina Elliott, of Bronxville NY, who's headed to Georgetown University got her first Mac earlier this year after finding Windows, which she'd used for her entire computer-using life, irritating. I was really frustated with Windows. Things were difficult to find and it took a long time to figure things out. Just this week, she convinced her Mom to switch.

Back-to-school time has always been important for Apple. In 2007 the company sold nearly 2.2 million Macs in its fourth quarter ended Sept. 30, up 34% from the year-earlier period. Those computers brought in $3.1 billion during the 2007 quarter, half of all the company's revenue.

Another blowout quarter is in the offing: Analyst Gene Munster of Piper Jaffray (PJC) wrote in a research note on Aug. 25 that the latest numbers from market researcher NPD suggest Apple could sell as many as 2.9 million Macs this quarter. That would mean a surge of 34% from the same quarter a year ago. On the iPod and iPhone front, NPD data, Munster says, suggest sales in the ballpark of 11 million and 4 million units, respectively. Add it all up and you have the makings of a quarter where Apple could beat Wall Street consensus numbers by 8¢, and report earnings per share as high as $1.19. Advantage me.
Getting "Help" from Microsoft

Moreover, Apple has of late been defying trends in the computer industry. It has been winning share of the personal computer market, reaching 8.5% in the U.S. behind Dell and HP, according to the most recent Gartner (IT) report. In the second quarter, it saw its year-on-year growth rate in unit shipments hit 38%. That's three times the rate of growth at Dell, seven times faster than HP, and nine times faster than the PC industry as a whole.

And what is fueling that growth? Microsoft (MSFT) is certainly doing its part. The perception that Windows Vista is a buggy mess, fueled by Apple's "Mac vs. PC" TV ads, are causing Microsoft some damage. As The Wall Street Journal reported on Aug. 21, it's about to try to fight back with a $300 million ad campaign that will include appearances by celebrities including Jerry Seinfeld, Will Ferrell, and Chris Rock.

Students want to buy products that are cool, and the perception about Windows at the moment is anything but. The iPod tends to entice people from Windows over to the Mac, and the iPhone will only add to that trend. In 2006, Needham analyst Charles Wolf conducted a survey that demonstrated that Windows users who were also iPod owners were nearly twice as likely to consider a Mac as their next computer. This trend came to be known as the iPod Halo Effect. The Mac's ability to run Windows via Boot Camp or virtualization software such as Parallels or Fusion (VMW), he found, only increased their intent. Selling 45 million iPhones, as some analysts expect Apple will do by the end of 2009, will only compound this trend, and now that the phone is available in 44 countries, it will widen the Mac's potential international footprint.
Guarded on Guidance

Finally, I'd be remiss if I didn't address the negative guidance that Apple gave last quarter. Gross margins, Chief Financial Officer Peter Oppenheimer said in July , will be lower than before, dropping below 32%. The reason? A back-to-school promotion that takes place every year, and a mysterious "new product transition." Kedrosky expects Apple to repeat that guidance when it next reports earnings in October, but with "more gusto."

New products at Apple always drive new sales. The conventional wisdom suggests that a new line of notebooks, and maybe a new version of the iPod Nano, is on the way, perhaps as soon as the second week of September. Kedrosky thinks that's too late for the back-to-school crowd, but I disagree. While many schools will start on Sept. 2, classes at lots of state schools don't get under way until late September. I think there will be plenty of freshmen armed with financial aid and scholarship checks headed to the bookstore to order a new notebook during the final three weeks of the month.

We'll see who's right when Apple reports its quarterly and full-year earnings in October. I feel pretty confident Paul will be the one writing the check.

Has Dell's Comeback Hit a Roadblock?

Dell's turnaround plan veered off course during the summer. The PC maker reported on Aug. 28 that its fiscal second-quarter profits slumped 17% on aggressive price cuts, and the company warned of up-and-down profit margins for the next several quarters. The disappointing results came during a strong earnings season for other tech firms, and investors pushed down Dell's (DELL) share price 10% in extended trading.

Chief Executive Michael Dell called the tepid earnings "self-inflicted" during a conference call with analysts and vowed to improve the situation. "Whenever you're restarting growth, it's an imprecise process," said Dell, who returned as CEO at the beginning of 2007 to try to reverse nearly two years of declining market share and slower growth. "There were certainly parts of our business where we were too aggressive."

Now investors have to wonder whether a four-month runup in the price of Dell's shares may be coming to an end. Since May 1, Dell's share price had shot up 33%. They closed on Aug. 28, before the earnings announcement, at 25.21, down 42¢, or 1.6%. That compares with a decline of 1% since May 1 for rival Hewlett-Packard's (HPQ) shares, and a 0.75% dip in Apple's (AAPL) share price. Dell's shares hit a 52-week high of 30.77 last October.
Slugging It Out

Since returning, Michael Dell has pushed for better product designs and expanded overseas operations in an attempt to win back customers for consumer notebook and desktop PCs. Nonetheless, Dell is still slugging it out with competitors on price. That's draining operating profit margins, which fell to 5.3% on an adjusted basis during the quarter that ended Aug. 1, compared with 6.1% a year ago, according to Shaw Wu, a senior analyst at American Technology Research.

"Price is really their only effective weapon," says Wu, who has a neutral rating on Dell shares. "Their products aren't that differentiated. They can paint their products in different colors or sell them in different geographies, but a lot of the other players do the same thing."

The second-quarter earnings fell short of Wall Street's expectations. Dell's net income fell to $616 million, or 31¢ per share, compared with earnings a year earlier of $746 million, or 33¢ per share. Wall Street analysts had expected Dell to earn 36¢ on revenues of $15.95 billion. Sales actually did better than expected, rising 11% to $16.4 billion, from $14.77 billion a year ago.

Margins were squeezed by promotional spending that was needed to compete for space on retail shelves. Store sales is a relatively new area for Dell, which expanded rapidly in the 1990s and earlier this decade by selling directly to businesses and customizing computers to order. But industry growth is now coming from the consumer market. Dell, which lost its position as the No. 1 PC supplier to HP, has had to adapt. Dell's consumer business grew 28% in the quarter, to $2.7 billion; consumer sales now account for 17% of its overall revenues.
The Profit Decline

Aggressive price cuts on notebook computers in Europe contributed to the decline in profits. "Conservative" IT spending by U.S. companies has now spread to Europe and parts of Asia, said Dell Chief Financial Officer Brian Gladden, who arrived in May from General Electric (GE). Investors should expect profit margins to be "nonlinear" for the next several quarters, he added.

Exacerbating the pressure on Dell, the results come amid a generally strong earnings season for computer makers. HP on Aug. 19 reported third-quarter profits that beat analysts' expectations, and issued an upbeat fourth-quarter forecast, boosting its stock. On July 22, Apple beat earnings and sales expectations, but forecast thinner profit margins for the rest of the year and into 2009.

It wasn't all bad news for Dell. The company brought operating expenses down to 12.2% of revenues during the second quarter, from 13.9% a year ago. That was part of a cost-cutting goal of eliminating $3 billion in spending each year by fiscal 2009. Dell shed 1,500 jobs during the quarter and has cut its workforce by 8,500 since the beginning of fiscal 2007.

Dell is also expanding its product line with more machines designed to serve niche market segments. "They're trying to go after finer market opportunities in hopes of wringing out more market share," says Richard Shim, a research manager at IDC. In mid-August, Dell released a lineup of new notebooks for business customers, and its CEO said a fresh batch of business desktops is on the way. In July, Dell told that the company was looking forward to a "big second half" to the year .
Fierce Competition

The company is outgrowing the overall market. Dell's worldwide PC shipments rose 21.4% during the April-through-June period, compared with 15.3% growth industrywide, according to IDC. Dell now holds a 16.4% share of the worldwide PC market, compared with 18.9% for HP.

But Wall Street is starting to wonder if market share gains are coming at the expense of profits. Its competitors' must-have products and services—Apple's Macs, iPods, and iPhones; HP's printers; and IBM's software and consulting services—make them less susceptible to the vicissitudes of retail price wars, says American Technology Research's Wu.

Multitasking Chips Point to Future Cell Phones

Many venture firms shy away from investing in semiconductor startups because of the inordinately high cost and risk involved relative to other sectors, but some firms are still determinedly pursuing silicon by backing wireless chips containing radios that can work on multiple types of networks. The trend is being fueled by a robust market for wireless devices, as well as the increasing number of wireless networks available for specific purposes.

The iPhone is a good example of a wireless device that utilizes several special-purpose chips, with more than 19 in total and at least five radios, which send and receive the wireless signals that allow a phone to communicate with a variety of networks, from Wi-Fi for data to GPS for location information. Even connecting to the cellular network requires more than one radio, be it to handle older 2G networks or the latest 3G or 3.5G options. For companies designing handsets to run across several networks, the sheer number of them and their frequency bands means adding more chips can get complicated—and expensive.

So if a company can use software to combine multiple radios that talk to a variety of wireless networks on a chip, a handset maker could, in turn, put one chip in a phone and rather than have the phone optimized for certain networks, ship it anywhere in the world, optimizing simplicity and minimizing cost. After all, consumers buying wireless Internet devices (such as, say, the Kindle) aren't interested in which network it runs on, only that their device works.

That's one of the reasons BitWave Semiconductor, which received $10 million in second-round funding this month from Apex Venture Partners, TVM Capital, and ECentury Capital Partners, was so attractive. The company expects to ship a programmable multimode transceiver (which is one small part of the overall radio) this month. Another programmable multimode transceiver startup, Sirific, was purchased this spring by venture-backed Icera, which is building a software-based baseband chip for mobile devices.
Multimode Chips

Others are not building programmable chips, but are focused on multimode chips that use additional hardware to work on different networks. Wavesat, which has raised an undisclosed amount from Skypoint Capital, BDC Venture Capital, Innovatech Montreal, Monet Capital, and Sunsino Ventures Group, is making a WiMAX and Long Term Evolution (LTE) chip that could fit into a wide variety of devices. Other startups raising capital include Altair Semiconductor, which raised $18 million last December from Bessemer Venture Partners, BRM Capital, Giza Venture Capital, and Jerusalem Venture Partners for a total of $26 million. Altair offers a low-power WiMAX chip, but plans to add LTE capabilities for a dual-mode chip within the next year or two.

"I believe there's a long-term secular trend toward handsets doing more—not just calling, but music, video, and data with more and more functionality thrown on them," says Wayne Boulais, a general partner with Apex Ventures and an investor in BitWave. At the same time, these are pricey components for a handset maker to buy, so integrated radios make it cheaper. For BitWave and other firms building such multitasking chips, using a programmable approach makes the high cost of putting money in silicon slightly less risky for the investor.

"It can take a long time to create a design that works. And in an investment area where the costs are at the front end to make them, being able to design into multiple different applications mitigates the risk that the market may end up moving on you once you get the hardware out," Boulais says.
For Cheaper Phones with More Features

Major vendors are doing this as well, with Broadcom and NXP putting as many radios on a chip as possible and other vendors trying to at least create a smaller package of multiple chips. It's also one of the motivations behind the proposed joint venture between STMicroelectronics and Ericsson's mobile-platform group announced this month.

Not all multimode software radios will land in devices. Vanu, a Boston-based company, is building a software-defined radio that could reside in a base station on a cell tower, making it possible for one base station to serve several types of cellular networks. Vanu raised $32 million this week from Norwest Venture Partners, Tata Capital, and Charles River Ventures. The round follows a $9 million first round last summer.

As consumers, we may not care how many chips our cell phones pack unless we lose our ability to access the Web or GPS our location, but these trends playing out in silicon should eventually get us to cheaper phones with more features. Multitasking can be a good thing.

Investors Looking For Returns Overseas May Need to Think Again

Putting some of your investments in foreign assets had been a winning move for several years. Outsized returns were seemingly easy to find among a number of emerging markets. Even older, more established markets like Japan and Europe were profit-friendly as long as they were anywhere but here. The overseas investment theme has been so consistently emphasized by many professional investors and portfolio managers that it has become a seldom-challenged strategy.

What is not evident, and often not well-defined, is the extra risk associated with foreign investing. And I am not talking about corrupt dictators. Even investing in stable, transparent markets like Europe and Japan creates extra risk - currency risk.

Understanding currency movements has not been a priority since the direction of the US dollar has been favorable for investing abroad. A decline in the value of the dollar in relation to other currencies makes foreign assets more valuable to US investors. While overseas stock markets were soaring there was an extra currency bonus to US investors from the falling dollar.

But that investment thesis may be due for a review.

It is common knowledge that stock markets here in the US have struggled with fallout from the credit crisis and weakening economy. But foreign markets have also struggled, and in many cases the declines have been worse: British stocks are down 18.4% since October 2007 highs, German 21.3%, and French 25.2%. In Asia, Japanese stocks have declined 27.5%, Hong Kong 36.2% and Singapore 30.3%. In the US, the Dow Jones Industrial Average was off 18.5%.

Those declines themselves are enough to give investors pause, but a second hit comes from a strengthening US dollar. Since recent lows the dollar is up 7.7% against the Euro and 12.2% vs. the Japanese Yen. Those nasty market declines above are quoted in local currencies. That means if you held a French market ETF (exchange traded fund) your total decline, in US dollar terms, was 31%! Or 36% in Japan!

There are considerable reasons to believe that the dollar will continue to climb. A large part of its downward trend over the past year and a half was the belief that economic weakness would remain an exclusive problem for the United States (remember when this was supposed to be only a subprime mortgage problem?). That proved to be far from the case as economic growth has slowed all over the globe. Just last week the British economy showed growth of 0.0% - an economic halt. Forecasts for European growth have been cut dramatically and, with the increasing impact of inflation, Asian governments now fear sustained weakness and worldwide recession.

How does all that impact the dollar?

1. It makes the US look like a relatively safe place to invest. While we still have problems, in a storm safety becomes a priority.
2. Central banks typically reduce interest rates in response to weakness. Since the US Federal Reserve has already decreased rates, and is sending signals that it may raise rates, lower foreign interest rates make US investments more attractive.
3. Many foreign markets were dependent on Wall Street cash to keep them moving higher. It is far easier to keep a market moving higher with momentum than it is to restart it once that market has dramatically reversed course. Without tons of cash coming from investment banks those overseas markets may have a tough time reproducing the returns that attracted so many investors in the first place.
4. Inflation is affecting foreign, and especially emerging markets, more than the US. We think inflation is high here (with gas prices through the roof) but the fact is that inflation in Asia and South America is already higher and threatens those regions disproportionately. Since inflation is hostile to investments, regions with lower, stable inflation are preferred.

Those four factors increase demand for the dollar that, in turn, increases the price of the dollar.
For investors with money in foreign investments it may make sense to rethink the exposure. Domestic, multinational companies can gain access to fast-growing overseas markets. There is still currency risk to their profits, but they have finance departments hedging those currency movements. So the ultimate question may be whether or not you would rather manage the currency risk yourself or have companies' finance departments do it.

Legality of Offshore Investments

Having an offshore banking account, corporation or trust are common themes in legal thrillers, spy novels and eastern European politics. There is a reason to be concerned about the legality of such accounts, for although many people would like to include them in their estate planning, a legal misstep regarding the use of any of these asset management tools could result in thousands of dollars lost in back tax payments and legal problems with none other than the IRS in addition to the possibility of spending time in prison. With that in mind, it is not surprising that many Americans shy away from offshore banking altogether.

As any good tax attorney will be able to explain to you there is a difference between tax avoidance and tax evasion. Tax avoidance is the use of legally employable strategies to reduce the amount of tax one has to pay. Tax evasion, on the other hand, is the use of illegal means to do the same thing. So the goal of any transaction that you would like to undertake offshore is to make certain that you are a tax avoider and not a tax evader. A lawyer will never be a willing party to tax evasion, if that lawyer is behaving within the cannon of professional ethics as well as the accepted norms of safeguarding their client's best interest.

To begin with it is illegal to have a secret bank account in another country that you don't tell the IRS about. It is also illegal to move unreported cash even if it is your money. The penalty for either of these offenses makes bank robbery look like a more attractive option.

However, with our own country continuing to advance the goal of globalization, of course it is legal to invest in, and to interact with, foreign markets and there are some tremendous incentives to do so. The key to taking advantage of these opportunities is to start modestly and remember that if it sounds too good to be true then it probably is too good to be true. Secondly, it is your duty as an American citizen to report your financial activities to the IRS. So divest yourself of notions of secrecy in the absolute and think in terms of tax savings rather than not paying taxes. If someone tells you that they can help you avoid paying any tax whatsoever, they are offering to help you engage in a criminal enterprise. And if you already are a criminal of some sort then perhaps you should look into the matter, but for the vast majority of those reading this article, don't endanger a life spent being a law abiding citizen by buying into an outrageous scheme.

As I said before, U.S. citizens and permanent residents are required to disclose their banking accounts abroad, where they are located and what the account numbers are, on a form called a TDF 90-22.1. However, there are exceptions to having to file this report and taxpayers are confused about the definition of these exceptions as well as the meaning of key terms within the document. One excellent way to begin to understand what must be reported, and when, is to look to the Jacobs Report. The Jacobs report which can be found at RealEstatePost and it is an extensive document filled with the applicable law and IRS instructions as well as the accumulated wisdom of many web sites and foreign bank reports.

Remember, the cardinal rule when beginning your inquiry into offshore banking is to find out about these matters in detail. You need to check into things yourself and keep in mind that if a deal sounds too good to be true then it is. In addition, keep in mind the fact that you want to be a tax avoider not a tax evader. Consult your estate planner and a tax specialist because the laws in many of the nations that provide tax havens have changed somewhat since the beginning of the War with Afghanistan and Iraq, because the U.S. is looking for hidden terrorist cash reserves and that has changed the way discretion is handled in many tax haven nations that are friendly with our government.

The Economy: Housing Hope, Consumer Gloom

The housing market may be loosening up a bit, but the consumer mood is the darkest it has been since the Carter Administration, according to two economic reports released May 16.

U.S. housing starts rebounded 8.2%, to a 1.032 million-unit annual pace in April, from a revised 0.954 million rate in March (from 0.947 million previously). February's 1.075 million pace was revised up to 1.107 million. The consensus forecast of economists was for a drop to 940,000. Housing starts are still down 30.6% from a year ago.

The April increase was entirely in multifamily starts (up 40.5%). Single-family starts dropped 1.7%, to 692,000. The increase was concentrated in the Midwest (up 24.4%) and the West (up 18.5%). Starts were down 12.7% in the East and up 3.6% in the South. Building permits rose 4.9%, to 978,000.

Housing Will Continue to Stunt Growth

Starts continue to do better than expected, which is good news for U.S. economic growth, notes S&P Economics. "We do not think the [housing] problem is over, however, and still expect declines through the summer," wrote S&P economist Beth Ann Bovino in a May 16 note.

John Ryding, chief U.S. economist at Bear Stearns (BSC), advised against reading too much into the rise in permits and said in an e-mail note that the decline in housing starts over the last three months shows housing will continue to be a significant drag on growth in the second quarter.

For the other April housing reports, Action Economics continues to expect declines of 0.6% for existing home sales to a 4.900 million-unit annual rate, a 1.1% drop in new home sales to a 0.520 million pace, and a 0.9% drop in construction spending.

Inflation Indexes Take Off

But any fledgling optimism regarding the housing market was tempered with a bleak preliminary reading in the Reuters/University of Michigan report on consumer sentiment for May. The headline index fell to 59.5—its weakest level since June, 1980—from 62.6 in April. The current economic conditions index fell to 71.7, from 77.0 previously. The economic outlook index fell to 51.7, from 53.3.

The inflation indexes, which measure consumers' expectations of future prices, really took off, notes Action Economics, with the one-year median inflation rate rising to 5.2%, from 4.8% in April (it was 3.4% in January). The five- to 10-year inflation index edged up to 3.3% from April's 3.2% (it was 3.0% in January).

The government's stimulus plan failed to bolster the sentiment readings, notes Action Economics, and raised the risk that "consumers will fail to spend their way out of recession."

Stocks fell in mid-morning trading May 16 after the gloomy sentiment report, while the dollar slipped slightly. Treasury yields reversed lower after traders saw the inflation component of the report.

Movers: AIG, Lehman, Healthways, LDK Solar, Noven Pharma

Fitch Ratings has placed its ratings of American International Group (AIG) and its insurance and financial services subsidiaries on Rating Watch Negative. Previously, Fitch had a Negative Rating Outlook on AIG and the majority of its insurance-related subsidiaries rated by Fitch, and a Stable Rating Outlook on AIG's financial services subsidiaries, including AIG Capital Corp. (AIGCC), International Lease Finance Corp. (ILFC), and American General Finance Inc. (AGF). Also, Credit Suisse lowers third quarter estimate, cuts target, rates AIG neutral.

Lehman Brothers (LEH) shares were lower on unconfirmed reports that a top Korean regulator voiced concern about state-run Korea Development Bank (KDB) possibly purchasing an interest in a global bank. Separately, unconfirmed reports suggest that internal unrest may lead to LEH chairman, CEO Richard Fuld relinquishing executive duties this year. On Friday, LEH shares rose sharply on reports that Korean Development Bank said LEH is one of its options for an acquisition. S&P maintains hold.

Healthways (HWAY) affirms its previously issued fiscal year 2008 guidance of $1.50-$1.55 EPS on $720-$740 million revenue. It sees $0.34-$0.37 first quarter fiscal year 2009 EPS, but says while this guidance anticipates solid EPS growth year-over-year, sequential-quarter performance reflects decline in revenue due to impact of certain contract renegotiations, reduced revenues associated with winding down of a previously discussed contract terminating at end of calendar year 2008, full-quarter effect of small contract losses due to health plan consolidation. Jefferies downgrades to underperform from buy.

JPMorgan Chase & Co. (JPM) says in an 8-K filing today that it held approximately $1.2 billion par value of Fannie Mae and Freddie Mac perpetual preferred stock. JPM estimates that such preferred stocks have declined in value by approximately $600 million in the third quarter to date, based on current market values. S&P cuts 2008 EPS estimate, but keeps strong buy.

Quest Energy Partners, L.P. (QELP), Quest Resource (QRCP) and Quest Midstream Partners accept the resignation of Jerry Cash as Chairman and CEO of all three entities, effective immediately. Resignation follows discovery, in connection with an inquiry from Oklahoma Department of Securities, of questionable transfers of company funds to an entity controlled by Cash. Initial indications are that the amount in question appears to involve about $10 million.

LDK Solar (LDK) says its wafer plant reached milestone of 1.0 GW annualized capacity. It sees 2009 revenue of $2.8-$3.0 billion and wafer shipments of 1.45 GW to 1.55 GW. S&P reiterates hold.

Noven Pharmaceuticals (NOVN) says Daytrana, its transdermal patch for treatment of symptoms of Attention Deficit Hyperactivity Disorder (ADHD), and licensed globally to Shire (SHPGY), is the subject of voluntary recall of two lots of the product because the patches in these lots do not meet the product's release liner removal specification and, as a result, patients and caregivers could have difficulties removing the release liner when they peel the patch open.

says purchasers of the company have verbally informed it that they will not close deal at agreed upon $11.40/share price despite fact that GILT informed them on Aug. 5 that all conditions precedent to closing have been met. Says purchasers' new verbal proposals were rejected by GILT's board. GILT has told purchasers that they have 72 hours to complete deal; if conditions are not met, GILT shall seek all remedies at its disposal, including legal action. Separately, GILT posts $0.03, vs. $0.13, second quarter EPS on 6.7% revenue drop.

Advanced Micro Devices (AMD) announces that Broadcom (BRCM) will acquire its digital TV (DTV) business for approximately $192.8 million. "AMD is executing a strategic plan to transform the company, becoming leaner and more focused while seeking to create a business model to deliver sustainable profitability," said Dirk Meyer, President and Chief Executive Officer of AMD.

Barron's reports that People's United Financial (PBCT) dodged the credit crisis by steering clear of subprime loans and has one of the highest credit ratios around. It has $2.5 billion in cash. That cash level will fall with an acquisition, which CEO Philip Sherringham is eager to make. With a purchase, he says, "the bank's earnings could potentially double over the next two to three years." The article also said shares could increase by about 20%, as it is on the hunt to buy other banks.

Premier Exhibitions (PRXI) says Bruce Eskowitz, who served as President and CEO and as a Director, and Brian Wainger, who served as Vice President, Chief Legal Counsel and Corporate Secretary, have resigned. In addition, James Yaffe and Jonathan Miller have resigned as members of the Board of Directors. CFO Harold "Bud" Ingalls was elected to the Board of Directors. PRXI also announces that will restructure its marketing program and plans to outsource much of its marketing efforts.

Grey Wolf (GW) and Precision Drilling Trust (PDS) announce that their Board of Trustees and Board of Directors, respectively, unanimously approved a definitive merger agreement pursuant to which PDS will acquire GW. Terms: GW shareholders will receive $5.00 in cash and 0.1883 newly-issued PDS trust units for each GW common share, for aggregate consideration of $1.12 billlion in cash and 42 million units.

Wachovia reportedly downgrades the U.S. trucking sector to market weight from overweight. Also reportedly downgrades Werner Enterprises (WERN) and Knight Transportation (KNX) to market perform from outperform.

Stocks: Back to the July Lows?

The muted rally off the mid-summer lows for the major indexes appears to be complete, and we think this sets the market up for a critical test of the bear market lows.

Overall, we believe the market remains skittish as a lack of conviction by institutions is keeping funds sidelined, and the only movements in stocks seem to be rotational in nature as money flows from group to group. Crude oil bounced sharply higher off some key supports, while treasury bond yields tested their recent lows.

We think the price and internal action in stocks since the July 15 bottom is not good. Overall, volume during the rally was weak, although when we moved into August, it is the lowest-volume month of the year. Advancing volume, which is a good indicator of demand for shares by institutions, was very poor during the rally and is not indicative of buying thrusts that we sometimes see off of bear market or major corrective lows.

The advance-decline line of NYSE advancing volume minus declining volume hit a recent peak on July 23, and has been drifting sideways ever since. The NYSE advance-decline line peaked on August 11 and has since turned lower, and did not confirm the price action of the S&P 500. The advance-decline line of volume on the Nasdaq has acted better than the NYSE during the rally, but in no way reached the peak seen in early June. In addition, since the end of July, we have seen four days where the market declined on an increase in volume, a clear indication that institutions are distributing stock and is possible evidence the rally is in trouble.

Another, longer-term concern for the stock market is the clear and present contraction in liquidity, both in the banking system and its effects on the economy, and in margin debt and its historic effect on stock prices. We are of the belief that monetary policy and the growth, or lack thereof the money supply, is a major contributor to the success of the economy and the stock market. If we were an economist, we would be classified as a monetarist. When money is easy, and credit is flowing, we think this can add appreciably to stock market valuations. Unfortunately, when credit is too easy and the spigots are open, this has many times led to bubbles in asset prices, as in technology stocks, real estate prices and stocks, the Japanese stock market in the late 80's, emerging markets in 2007, and the infamous tulip mania of the 1600's.

For assets, we believe as long as the money supply is growing and credit is easy, prices can go ever higher. However, when the pump is turned off, we think prices are subject to falls. The expansion of margin debt is one of the many fuels that helped the stock market rise going back to at least the 1940's (when our charts run out of data). The trend of margin debt, has many times mirrored the stock market very well, and we think margin debt is a driver of the long-term movements in equities. Therefore, we think it is a good coincident indicator for the overall U.S. market.

The monthly data shows NYSE margin debt peaking in September 2007, just prior to the market top in October. Margin debt, or investor leverage, had been rising since October/November 2002, right at the bottom of the last bear market. Prior to that, margin peaked in April, 2000, right after the Nasdaq peaked. You can never really pinpoint a peak in margin debt, however, it appears that many times, the slope of margin debt will get very steep before the ultimate peak in leverage. The slope steepened towards the end of 2006 as investors rushed into foreign stocks, and more specifically, emerging markets. The slope steepened in 1999 during the "get me in at any price" technology bubble. The slope of margin debt was also very steep in the late 1960’s as well as the early 1970’s, prior to the market peaks in 1968 and 1973.

Since the latest peak in September, 2007, NYSE margin debt has traced out a series of lower highs and lower lows, broke below its 40-week exponential average, and forced a bearish crossover of the 17-week and 43-week exponential averages. While there is no telling when the trend in liquidity will turn up, we won't have much faith or conviction in the stock market either until the trend stops going lower.

Crude oil dribbled down to support early this week and then exploded to the upside on Thursday, catching many by surprise and aiding the S&P Strategy Team's contrarian upgrade of the energy sector last week. Who says you can't catch a falling knife? While luck helps once in awhile, our call back into energy stocks was based on the huge sell off in oil stocks, and our belief that crude oil was "approaching" a bottom from a technical perspective.

The early week decline took oil prices down to two fairly important pieces of technical support, and the more supports in one area, the more likely the market is to at least bounce when it hits these levels. The 200-day exponential average is sitting right at $112, while a bullish trendline, off the lows since August, 2006, is sitting right at $111.

While we thought a bounce was possible, we did not expect to see the fireworks on Thursday, Aug. 21, with crude finishing higher by over $5 per barrel. This is only the sixth time during the almost seven year bull market for crude oil that prices rose $5 per barrel or more in a single day, and they all have come this year. The big daily spikes, so far this year, have all been near a short- to intermediate-term peak in prices.

While we thought that crude could drop all the way to the $100 to $110 range before the correction ends, and think this could still occur, it now appears to us that crude has put in an initial floor. We expect the current rally to run out of gas in the $125 zone, where minor chart resistance lies, the 65-day average sits, and a 38.2% retracement of the decline targets. We then would expect crude to trade in the $110 to $130 area for a couple months, as a base and reversal formation is traced out.

Fannie Mae and Freddie Mac: A Damage Report

Talk of a government bailout of Fannie Mae (FNM) and Freddie Mac (FNM) has reached a crescendo recently, including market rumors of a surprise government recapitalization of the mortgage finance companies over the Labor Day weekend, which the Treasury Dept. has denied. In view of a potential rescue of the troubled firms , it may be time for a damage report. Here is an assessment of how much wealth holders of the agencies' stocks and debt have lost since the housing crisis began to wreak havoc on the government-sponsored enterprises—and the potential financial damage that may lie ahead for investors.

Losses for holders of the GSEs' common stock are straightforward—roughly $100 billion in market cap has vanished since the start of 2008, with Fannie and Freddie shares down about 85% over the past eight months. Losses for investors in the mortgage giants' preferred shares, which continue to pay hefty dividends, are harder to calculate. Fannie and Freddie each have multiple issues of preferred stock, which vary based on initial share price, number of shares issued, and dividend rates. For example, all of Freddie Mac's preferreds issued in 2007 were priced at $25, while those issued in prior years were priced at $50. The share counts vary, however, and the preferreds now trade at various prices.

Here too, the losses have been significant. Freddie Mac's most recent preferred shares, issued on Nov. 29, 2007, at $25, closed at $12.87 on Aug. 27, translating to a loss of $2.91 billion for those who bought them at the original price.
The Intervention Question

Ultimately, the losses to shareholders will be determined by how Treasury decides to treat the companies' equity if it intervenes to recapitalize the agencies. The market for preferreds is pricing in the risk of some form of government intervention, with some issues trading for as little as 50 cents on the dollar, compared with around 92 cents on the dollar at the end of June, says Sam Caldwell, an analyst who covers regional banks for Keefe, Bruyette & Woods (KBW).

It's mainly individual investors who have borne the brunt of the losses on the agencies' common stock, but regional banks, insurance companies, and other financial institutions have taken the hit on the devalued preferreds, and those with a substantial portion of their capital tied up in these securities can ill afford to have all their value wiped out under a government bailout. Fannie and Freddie preferreds account for at least 32% of the tangible capital held by two regional banks—Gateway Financial Holdings and Midwest Banc Holdings—and 5% or more for a slew of others, according to an Aug. 25 report by Caldwell.

While he believes large-cap banks have limited exposure to agency preferreds, Caldwell found 38 banks with aggregate exposure of $1.3 billion, and 81 other banks that said they didn't hold any preferreds.

A day of reckoning for losses on the agencies' preferreds could be Sept. 30, when firms will need to mark down the value of the assets on their balance sheets to fair market value. A few regional banks have already taken writedowns for other-than-temporary impairment on the preferreds they hold. Earlier this week, JPMorgan Chase (JPM) said the value of its preferreds has been halved to $600 million this quarter and hinted it will take a charge on those assets when it reports third-quarter earnings.

"What's good for JPMorgan should be good for the rest of the industry," says one analyst who covers regional banks and asks not to be named.
Writedowns for Many

The accounting firm KPMG has been more aggressive about directing clients to write down the value of impaired assets than some of its peers, so all financial institutions that use KMPG as their auditor would be expected to take writedowns at the end of September, says Caldwell. And certainly, if the preferreds continue to trade underwater and the government hasn't made any decision on a bailout, all firms that have invested in the agencies' preferreds would have to take a writedown by the end of this year, he adds.

At least the preferred holders are still getting the dividend they expected when they bought the shares. Earlier this month, Fannie's board slashed the quarterly dividend on its common stock to 5 cents from 35 cents a share to preserve $1.9 billion in capital through 2009. Freddie sliced its 50 cent quarterly dividend to 25 cents in late 2007.

The implications for debt issued by the two agencies are harder to figure.

The housing bill that President Bush signed into law at the end of July made explicit the federal government's guarantee of $5.2 trillion in U.S. mortgages backed by Fannie and Freddie, so that debt is presumably free of risk.

Although no one has any doubt that the debt Fannie and Freddie issue to finance their own operating costs, all of which seems to be actively traded, would be made whole, the securitized mortgages the agencies have packaged and sold to investors are a different story, says Bill Larkin, a portfolio manager for fixed income at Cabot Money Management, based in Salem, Mass.

"The fear here is that the market participants—most of the stuff was purchased by foreign central banks—will see the risk and stop purchasing it. If that happens, then [mortgage] rates would rise [substantially]," he says.
Guaranteed to Guarantee

If the government does intervene, bondholders' principal and accrued interest would be protected, but that doesn't mean they would be able to trade the debt easily, he says. Strategists agree that the Treasury wouldn't risk the sanctity of a global banking system by not guaranteeing that debt.

Fannie and Freddie need to refinance about $250 billion in debt in September, and the market will be watching to see how successful they are. Neither agency has had difficulty attracting subscribers to its monthly bond auctions, which makes Larkin think they won't have a problem rolling over the debt that matures next month.

Outside of a bailout, the agencies' subordinated debt would be at risk only if the credit ratings were downgraded to junk, which would force many financial institutions to sell their holdings at big losses, says Larkin. In an Aug. 18 story, Barrons estimated that there is a total of $19 billion of GSE subordinated debt that would be at risk under a government bailout.

The ratings on the subordinated debt are hovering just above investment grade. On Aug. 22, Moody's Investor Service (MCO) lowered its rating outlook on the agencies' AA2 subordinated debt to negative from stable but affirmed their senior debt ratings at AAA. Moody's also downgraded Fannie's and Freddie's preferred stock ratings to BAA3 from A1, Standard & Poor's Ratings Services on Aug. 26 affirmed its AAA/A-1+ rating on Freddie's senior unsecured debt with a stable outlook but lowered the subordinated debt rating to BBB+, and the preferred stock rating to BBB- from A-, also placing those ratings on CreditWatch Negative.
Reason for Hope

Michael Wallace, global market strategist at Action Economics, says some of the subordinate debt holders still have reason for hope that Fannie and Freddie can successfully recapitalize on their own. If the government intervenes, though, "it's anybody's guess what anything will be worth."

Despite the increased chatter about an impending bailout, most analysts see no pressing need for one as long as the GSEs hold ample amounts of excess capital on their balance sheets. As of last week, Fannie's excess core capital—above the amount required by regulators—was $9.4 billion and Freddie's was $2.7 billion. And with $10 billion in mortgage paydowns a month, each company would be able to free up $1 billion of core capital every quarter if they opted not to reinvest these paydowns, according to a Citigroup report published Aug. 21. A point of further irony: Despite mounting foreclosures, Fannie's and Freddie's profitability has been improving lately with margins between their assets and their borrowing costs the widest they've been in many years, Citigroup said.

Larkin says it is highly unlikely the Bush Administration will do anything to damage the private-enterprise component of the GSEs.
"Political Football"

"The last thing [they] want to do is create another giant division of the U.S. government. That's why things are quiet now. This is a political football," he says. In addition, if the government makes a move that ends up harming the agencies, the Administration wold be chastised for making home mortgages less affordable.

Wallace at Action Economics disagrees. He believes Republicans don't like the quasi-governmental structure of Fannie and Freddie, which doesn't jibe with their view of free markets, and says if the government does take them over, it could just as easily dispose of them, change their mandates, or sell off their assets.

All told, the damage to the agencies' equity and debt investors is hard to quantify, but it will certainly run in the hundreds of billions of dollars. Dan Seiver, a finance professor at San Diego State University, provides one final bit of perspective: However much stock and bond investors stand to lose in the end, it will probably be dwarfed by the total wealth that American homeowners have seen evaporate since the credit crisis started—an amount he estimates will be in the trillions.

Profits in Hedge Fund Investing

Most people understand what a mutual fund is and think a hedge fund investment is the same thing. They are correct in that a hedge fund is a group of investors that pool their money, just like a mutual fund. Hedge funds, however, don't have the same type of regulation that the mutual fund has. In fact, you have to have a specific amount of wealth to invest in a hedge fund and a required amount of investment savvy. A hedge fund investment is not a public offering, but often a private limited partnership with the fund manager as the general partner.

Hedge funds do things because it is a private investment, which regular mutual funds can't do. One example is the ability to sell short. This is a risky technique especially if it's a naked short sale. The short sale is when you sell a stock in hopes of purchasing it later at a cheaper price to fill the sale.

A naked sale is one where you sell a stock you don't own. To comply with government regulations you must be able to borrow it from someone before you sell it. The reason that it's so risky is that the price could skyrocket after you sell the stock. Then you must pay huge amounts to fulfill your obligations to the buyer.

When large hedge funds use the techniques, often they drive the price down artificially in the sale of the stock and minutes later, can make a quick profit with the purchase and delivery of the cheaper stock. This is one way a hedge fund investment brings higher income than the traditional mutual fund.

The original purpose of a hedge fund was to hedge against the market's swings. The combination of different types of investments provided an equation against falling markets. The change came as hedge funds became more popular. Today, they provide not just a hedge against loss but an edge for gain.

The typical hedge fund investment contains derivatives that are high yield and debt from companies considered risks, so they have to pay more to borrow, or their loans sell at discounted rates which means the yield on the return is higher. If you use a $1,000 loan as an example, with the company loan rate at 8%, that is a decent comfortable return. Now, if that same company gets behind on the loan and the lending institution panics, they might sell it at a 50 percent reduction of the balance to the hedge fund. This in effect means that not only does the fund get 16 percent interest, but if the company actually pays the loan in full, they make a 100 percent gain on that money.

If you have plenty of money already, you may be the perfect candidate for a hedge fund investment. These types of investments are supplementary to normal investments. They attempt to defeat bear markets and bring in money while they also take advantage of the bull market and yield a higher return. There are risks in a hedge fund, ones that the average investor would never take. With the onset of a bear market, the technique of short selling is one of the best ways to hedge the bad market and take the lemon that the economy handed you and make lemonade.

Sysco (SYY) Sings a Sweet Q4 Tune

On August 11, before the market open, Sysco Corp. reported Q4 earnings of $0.55 per share or $334.1 million vs. $303.4 million ($0.49 per share) a year ago, an increase of 10%. Revenue increased to $9.73 billion or 5.4% vs. $9.2 billion a year ago. Analysts expected $0.52 per share, beating estimates by $0.03 per share. Analysts also expected revenue of $9.87 billion, missing revenue forecasts. SYY spiked in the morning and maintained momentum throughout the day to close at $31.15, up $1.28 or 4.3% on 9.91 million shares traded (highest daily volume in four years).

SYY estimated that in FY 2008, they experienced a 6% inflation rate in the cost of goods sold. However, in Q4 SYY was able to increase productivity and control expenses which helped to offset higher commodity costs. Revenue growth should continue to slow down as restaurants, SYY's important end market, get a grip on higher food and energy costs. The benefit for SYY is that they do not fully rely on dining establishments and have a diverse customer base with no single customer accounting for more than 10% of sales. Weak consumer spending, inflation, particularly fuel costs, and a continued slow down in restaurant sales and the overall difficult economic environment will have an impact on SYY's operating margins going forward.

Fundamental highlights include SYY's ROI (17.4%, trailing 12-months [TTM] vs. industry avg. 14.7%), ROE (33.1%, TTM vs. industry avg. 20.9%), ROA (11.3%, TTM vs. 10.9%) and positive earnings growth (13.3%, TTM vs. industry avg. 5.5%). However, concern must be noted in SYY's gross margins (19.2%, TTM vs. industry avg. 25.6%).

There are currently 8 analysts that cover SYY, but there have not been any recent revisions. The current rating consensus is 2 "Buy", 6 "Hold", and 0 "Sell" ratings. Expect analyst recommendations to come out in the near future that may move the stock in the short-term.

In FY 2008 until March of this year, SYY has repurchased 17 million shares at a total cost of $536 million. As for insiders, in the past 12 months, there were 0 purchases and 66,872 shares sales. Institutions, in the past 12 months, have sold 20.8 million shares or a net -4.7% change in ownership. However, in the past 3 months, institutions have purchased 15.4 million shares or a net change of +3.3%.

On the day of earnings, SYY broke out of several resistance levels including the 50-day, 200-day, and previous congestion areas. SYY formed an ascending triangle since June and has broken out to the upside on massive volume. SYY may find support at the $30-$31 as it has several times this year. SYY is a possible long candidate if general market conditions improve.

Fluor (FLR) Fires Up, Doubles Net Income

On Monday, August 11 after-hours, Fluor Corp. reported $209.3 million or $1.13 per share, an increase of 119%. A year earlier, FLR reported net income of $95.6 million or $0.53 per share. These results included a gain of $79 million or $0.26 per share from the sale of its joint interest in the Greater Gabbard Offshore Wind Farm. Every unit posted positive growth, while operating margins rose 6.8%. Analysts were expecting $0.82 per share, effectively beating estimates. After-hours, shares rose 6% to $81. However, on Tuesday, August 12, shares of FLR gapped up to $80.74, sold off strongly hitting a low of $67.10 before slightly recovering to close at $71.64. Shares fell $4.54 or 6%.

Operating profit doubled to $392 million, compared to $187 million in Q2 07. Revenue rose 37% to $5.77 billion up from $4.2 billion in Q2 '07, primarily in its oil and gas unit whose operating profit jumped 68%. Profit for the power unit jumped to $25 million and earnings rose 18% in the government segment.

New projects awarded increased by 10% to $6.4 billion. New awards in Q2 by unit: 47% - oil and gas, 38% - industrial, 11% - global services, 3% - power, and 1% - government. There continues to be strong global demand for FLR's oil and gas projects, mining and transportation, power generation, and alternative energy. I expect further strength in the energy sector, mainly for power generation, coal plants, oil and gas, and nuclear energy. The obvious risks for FLR include, but are not limited to, a continuous drop in oil prices, labor and credit issues, and possible project delays. The recent correction in oil prices should not deter capital investment into oil and gas projects for the long-term.

On July 3, Fitch revised their long-term issuer default rating to "A-" and giving FLR a "Positive" outlook rating from a "Stable" rating as a result of FLR's operating performance, low leverage and improving liquidity, and a growing backlog in its oil and gas unit. FLR's short-term issuer default rating is affirmed at "F2". 54% of FLR's backlog is international, with 43% coming from EAME. (Europe, Africa, Middle East), giving FLR a strong global presence.

FLR raised their full-year's earnings forecast by $.035 to $3.65 - $3.80 per share up from $3.30 - $3.45 per share. Analysts expected earnings of $3.29 per share for the year.

Currently 16 analysts publish reports on FLR. To date, nine analysts rate FLR as a "Buy", five rate as "Hold", and one rates as "Sell". There is a lot of variance between analysts, but the general consensus is "Buy/Hold" with price targets ranging from $85 to $111.

• August 8 - Morgan Joseph upgraded FLR to "Buy" from "Hold" and raised their target price to $97 from $94. The firm noted that as long as oil stays above $70, energy projects can move forward.
• August 8 - Morgan Keegan also upgraded FLR to "Buy" from "Hold" while setting their price target to $94.
• August 11 - D.A. Davidson & Co. remained "Neutral" on FLR, reducing their price target from $95 to $85.
• August 12 - Citigroup downgraded FLR to "Hold" from "Buy".
• August 12 - FBR reiterated their "Outperform" rating and raise their price target to $111 from $103.
• August 12 - Lehman raised their price target to $103 from $98 noting that FLR is the only engineering & construction company that provides enough diversity across the sector's end markets.
• August 13 - UBS maintained their "Buy" rating, but reduced their price target from $107.5 to $103.
• August 18 - Stanford Research upgraded FLR to "Hold" from "Buy".

In light of positive earnings, in the past 6 months, insiders made 0 purchases and made 49 sales totaling 198,000 shares. Consider this: Alan Boeckmann, Chairman & CEO of Flour Corp., has sold approximately 127,530 shares so far in the past 6 months. Insiders may sell for a variety of reasons, business-related or not, but sales must be taken into consideration in evaluating management.

On a technical level, the response to the positive earnings report is less than appealing. The massive intra-day sell off shows that investors could not maintain the same enthusiasm as they did after-hours the day before. This is hard to believe, but the market is always right in determining price. 14.54 million shares traded on the day after earnings, its highest daily volume since May 13. The volume pattern indicates that the stock is indeed under distribution. Having broken through the 200-day MA, I expect consolidation around the $70 - $77 range. I also expect a pullback from extremely oversold levels soon. I would also watch for a 50-day/200-day MA crossover which is bearish. FLR is in a strong downtrend and the MACD & RSI also indicate a bearish trend. I suggest no trades, long or short at this level, since the risk/reward is not favorable for either.

DoublingStocks - Is it a Scam? Read Our Detailed Reviews

DoubleStocks is not an eBook, but rather a newsletter one receives roughly every week. This newsletter is backed by "Intelligent Software" called Marl.

Marl is a stock-picking robot that was designed by 2 computer geeks and apparently analyzes every stock out there, giving Carl and Michael (aka Marl's inventors) content for their "never wrong" newsletter. By using certain math formulas, proven methods and individual stock history, Marl can correctly predict the outcome of most stocks on the market.

Marl searches its online database for the best stocks to invest in, and displays the outcome on table format in the newsletter.

How Exactly does DoublingStocks work?

Not only does Marl predict which stocks to buy, but it also states the stocks entry point and target price/selling point.

Is DoublingStocks a Scam?

Note: DoublingStocks is a Legal Product.

DoublingStocks claims a 84% success rate and I confirm this to be true. But what I can also reveal to you is that many traders (probably because it is so cheap) believe this product to be a scam- These traders believe Marl to be a fake, and say you, as the subscriber, are being used to help pump the stock value of unheard companies that pay DoublingStocks to promote their stock.

If this scam is true, DoublingStocks still manages to boast a 84% success rate due to 1000's of their subscribers investing in a company overnight- therefore it is obvious that the company's stock price will rise.

So I find myself in 2 minds about this product: If you want to make cash, it will definitely work, but if you believe it to be a scam-stay away. At the end of the day, the ball is in your court... just keep it rolling.

Don't Force Trades

Every trader has tried to force trades at one point or another. They make trades because they feel they need to. However forcing trades can be the fastest way to lose money in the stock market.

Anyone who has ever been involved in the stock market has had one of those I wish moments. I wish I would have bought Microsoft, I wish I would have got into stock XYZ before this big jump, we all get them.

The problem with that is it gives you a sense of missing an opportunity. This in turn makes you want to be fully invested in the market at all times so you do not miss any great opportunities. Bad idea!

You should never let something like that affect your trading. Getting into a position just to be in a position will hurt you more then it will help you. Anytime you enter a position you should have a good reason. It should give you a signal that it is going to move in your direction before you enter it.

Only getting into stocks that give you a trigger becomes even more important when the markets are hard to trade. During this time you probably do not want to be fully invested in the markets. In fact if the markets are running wild making a $400 gain one day and a $600 point drop the next you may want to sit out of the markets altogether.

If you still have the urge to be in something it is important to only take trades you feel are top of the line. Taking trades with strong fundamentals, strong technicals, and look like they are the Holy Grail. This will save you from taking a lot of losing trades when the market is trying to figure out what it wants to do.

When the market is clearly trending money you may want to be a little more aggressive but still remember to follow your rules. It is easy to get caught up in the feeding frenzy of a trending market. That can hurt you when the market turns around.