Trader Mark submits:It's quite remarkable that the 2 countries who dominate the world's financial mechanisms are in the same dire straits. Both followed almost identical policies of financial oligarchy - while both countries have countless "regulation" on the books, obviously they were mostly useless in retrospect. When real regulation and supervision was introduced anytime in the past 10, 15 years, the cries of "don't stifle financial innovation!" rang out. Then that was followed by "if you regulate us, all our bankers will move to New York" (if you were in the UK) or "if you regulate us, all our bankers will move to London!" (if you were in the U.S).Personally I would have been thrilled if most of our bankers had moved to London 10-15 years ago ... and instead we would have had a "non innovative" financial system ala Canada. Just imagine how much more money we'd have in our pockets, and how much less debt our future generations would have to deal with. But I don't run our country - our oligarchs do.Complete Story »

  Scott's Investments submits:John Hussman had a unique Weekly Market Comment for this week. Having spent some time studying Japanese Buddhism, this week's article was of special interest to me. I often read investing guidelines and suggestions from professional traders and money managers that have, in my opinion, strong parallels to Zen Buddhism. This may surprise both the investor and the Buddhist, as oftentimes the two are not associated with each other. A friend observed that Hussman's article for this week sounds a bit personally desperate given his recent poor performance, almost as if we are sitting in on a personal therapy session. Hussman has been wrong for weeks, if not months, if you measure success by the correlation of his market analysis with the corresponding movements in equity markets. He is now calling stocks overvalued and chose not to participate in the bulk of the equity rally since March. However, I think an investor would be mistaken to use his comments as a gauge for making daily or weekly investment decisions. My impression is that he is looking at full economic and investing cycles and choses to participate (go long) when conditions are most favorable, reduce positions or hedge when conditions are less favorable, and fully hedge, short, or sit in fixed income/cash when conditions are least favorable. Thus, it may be best to use his analysis for perspective and to help gather your thoughts for where we are historically and to get a sense of when the macro-odds are most/least in your favor, rather then to make your weekly buy/sell decisions on individual equities. Rather then rehash all of Hussman's article, here are two Thich Nhat Hanh quotes from the article which I believe have relevance for investors: The best way of preparing for the future is to take good care of the present, because we know that if the present is made up of the past, then the future will be made up of the present. All we need to be responsible for is the present moment. Only the present is within our reach. To care for the present is to care for the future.Suppose the mind consciousness is observing an elephant walking. During the time of observation, the object of mind consciousness may not be the elephant in and of itself. It may only be a mental construction of the elephant based on previous images of elephants that have been imprinted in store consciousness.Complete Story »

  Don Fishback submits: One of the key factors with ODDS Correlation Trader is that it is based on adaptive indicators. The reason is that relationships change over time. A classic example most of us are familiar with is oil. At times, lower oil prices are good for stocks, as the lower oil price reduces inflation, which improves consumer purchasing power and reduces business expenses. During times like this, oil and stocks are inversely correlated; as oil goes down, stocks go up.Complete Story »

  Wade Slome submits: Jeremy Siegel, Wharton University Professor and author of Stocks for the Long Run, is defending his long-term thesis that stocks will outperform bonds over the long. Mr. Siegel in his latest Financial Times article vigorously defends his optimistic equity belief despite recent questions regarding the validity and accuracy of his long-term data (see my earlier article).Complete Story »

  Trader Mark submits:Our foray into Perfect World (PWRD) hit a roadblock as the stock has seen another 5% of downside; thus triggering our stop loss levels. I had offered 75% of our shares if the stock broke below $39.80, so we're down to roughly a 0.4% allocation now after increasing our position under $42. We mentioned a small gap just above $40 we were willing to see filled, but the stock actually fell into the mid/upper $38s Tuesday morning. It's currently back near $39.75 as I type this, but at this point, the chart is far less appetizing barring a quick jump back over $42, so we'll monitor the action with a smaller weighting. Volume is quite high on this selloff; I am not sure if its the specific news that is driving it down, or the type of investors who have piled into the stock the last few months (the momo types). With earnings not too far off, and my strategy of not being heavily exposed to individual stocks when they are about to report, we just might hold off playing in this sandbox for the remainder of the month unless we see that quick reversal (which would coincide with the S&P 500 breakout over 1080 I am sure).Complete Story »

  Washington's Blog submits: As MIT economics professor and former IMF chief economist Simon Johnson points out, the official White House position is that: (1) The government created the mega-giants, and they are not the product of free market competition.Complete Story »

  Kurt Wulff (McDep Associates) submits: Buy-recommended Petrobras (PBR) offers unlevered appreciation potential of 37% to a McDep Ratio of 1.0 where stock price would equal Net Present Value (NPV) of $58 a share. The President of Brazil, Mr. Lula da Silva, has proposed an equity injection into Petrobras as part of a new model to regulate areas currently unleased in the offshore Pre-Salt trend. The federal government would pay for its one-third in oil while other shareholders would pay cash. A new government company, Petrosal, would own the government’s share of new leases while Petrobras would be the operator and have a minimum interest of 30%.The details to assure fair treatment to all parties remain to be determined and the proposal is subject to legislative approval or rejection, apparently within 90 days. The multi-billion dollar stock offering would be in the first half of 2010. Petrobras is unlikely to be treated negatively in the new regulatory regime as the president’s chief of staff and candidate to succeed him in an upcoming election, Ms. Dilma Rousseff, is Chair of Petrobras.Complete Story »

  Christopher Holt submits: Monday we argued that value-added, not “absolute returns”, should be the key metrics in judging the recent success of hedge funds. Implicit in that argument is the assumption that hedge fund investors turn to the asset class for its diversification properties. After all, losing less than the markets in 2008 was only commendable if it was not achieved by simply un-levering a market ETF.Today, we learned of a recent survey of institutional investors that found just that. According to Preqin (see other interesting research from this rather prolific organization), over half of institutional investors surveyed said they invested in hedge funds for diversification purposes. The runner-up reason was “to improve the risk/return profile” of their portfolio” – another reference to the diversification properties of hedge funds.Complete Story »

  Hard Assets Investor submits: By Brad ZiglerReal-time Monetary Inflation (last 12 months): 2.4 percent*Gold traders finally had their breakout when the COMEX December contract closed above the $1,038.80 level set in March 2008. The move was a long time coming, as an interim low near $710 had to be negotiated in November. Now, metal traders are aggressively probing uncharted territory on the upside.Complete Story »

  Dobromir Stoyanov submits:Most companies use debt for a variety of reasons in their operations. It could be either short term or long-term obligations. If there’s anything the 2007-2009 financial crisis has taught us, it is that excessively leveraged companies could easily blow up after a chain of negative events. Thus it pays to know what the debt situation for a particular company you are investing in actually is.Some investors typically focus on debt to total assets to gain a perspective on the amount of the leverage the company has. While this method is widely accepted by some investors, I believe that it has some shortcomings, which might prevent investors from seeing the bigger picture. Most importantly comparing debt to total assets does not tell whether a company could service its debt obligations or not.Complete Story »

  Larry Dignan (ZDNet) submits: Intel (INTC) spent a lot of time talking about inventories on its fiscal third quarter conference call. The industry is stocking up on Intel chips ahead of server refreshes and the launch of Windows 7. The nagging worry for many analysts: Will businesses and consumers show up to drive the upgrade cycle? The chip giant’s quarter was a blowout no matter how you slice it. Earnings, gross margins and revenue were well ahead of estimates. And Intel is managing inventories well. In fact, executives said inventory levels were a little lighter than they would like.Complete Story »

  Erick Schonfeld submits: Earlier this month, a couple reports came out suggesting that Bing’s search market share took a hit in September. Hitwise reported that Bing’s share of U.S. searches was down 5 percent (in absolute terms, it was a half-point drop to 8.9 percent share). StatCounter marked an even steeper 12 percent decline (or a full 1.1 percent drop to 8.5 percent share). The headlines followed. But now comScore says all of that’s bunk.Complete Story »

  Harlan Levy submits: Sam Stovall is Standard & Poor’s’ chief investment strategist, as well as author of the new book The Seven Rules of Wall Street and the column “Stovall’s Sector Watch,” a page on www.businessweek.com. He is frequently quoted in The New York Times and the Wall Street Journal and often appears on CNBC and other business TV networks.Complete Story »

  J Clinton Hill submits:On Tuesday, gold made a new break out above last week’s historic high of $1062.70. If this move proves to be sustainable, then the implications for its future price direction are obviously bullish. Gold normally exhibits such aggressive upward momentum during periods of inflation and/or geopolitical stability. Neither conditions exist. Fundamentally, there is no inflation at this stage of the economic business cycle as the high priests at central banks have yet to fully exorcise the demon of deflation. Geopolitically, things could be more stable. Tensions in the Middle East and central Asia remain tenuous and unresolved. However, members of the G-20 can hardly afford nor are willing to tolerate any further escalation of global conflicts.Complete Story »