Posts Tagged ‘stocks’

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Merrill Acquisition Lands Bank of America in Hot Water

Sunday, December 13th, 2009

The Merrill Lynch deal probably sounded good at the time. But Bank of America (NYSE:BAC) is still taking it on the chin from this ill-conceived idea. First, their stock plummeted. Then, their CEO was essentially forced out. Now, the company and some top execs will be facing charges from the Securities and Exchange Commission.

While no formal charges have been filed as of yet, SEC Enforcement Director Robert Khuzami stated that the agency would “vigorously pursue (its) charges against Bank of America and…prove (its) case in court”. The SEC claims that BofA held back from disclosing Merrill Lynch’s true financial position and its record bonus payments to shareholders, who then approved the merger. The SEC also charges that CEO Ken Lewis held back from telling investors that then-Treasury Secretary Hank Paulson and Fed Chief Ben Bernanke had pressured him into closing the Merrill deal.

For the SEC, which is still licking its wounds from Madoff-gate, this is a golden opportunity to reassert its regulatory control over a financial sector that has been free-wheeling for twenty years. For Bank of America, it’s another setback for a company that was just beginning to reclaim its financial footing. No successor for outgoing CEO Lewis has been named, but the next person who takes the top job at BofA would do well to be a little more transparent.

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TheStreet.com – Winners and Losers on Dec 10, 2009

Sunday, December 13th, 2009

The Street.com posted an interesting story this past Thursday about the winners and losers of the day. While consumer stocks and commodities continue to lead the indices in gains (per expectation of many investors), the most interesting subtext was the story told by two particular stocks, Alcoa and Barrick Gold Corp. With the hype surrounding the gold market these days, seeing the stock drop from its one-year high of near $48 on December 2 to $41 on December 10 seems troublesome. Alcoa, on the other hand, looks strong after apparently striking an energy supplies deal with the Italian government—although after hours, the story changed.

BARRICK’S TUMBLE. A sharp drop in gold prices since earlier this month has investors concerned over gold stocks, at least in the short term. However, Barrick’s troubles may continue to mount. It was reported on December 4 that Barrick’s new Cortez Hills gold mine in Nevada may be temporarily halted for environmental testing. As the U.S. dollar continued to ride the data suggest consumer confidence this holiday season, Barrick continued its tumble. Meanwhile, the World Gold Council announced on Thursday the appointment of a new chairman, Ian Telfer, to replace Greg Wilkins, Barrick’s vice president. As the Credit Suisse Group pulled ahead, Barrick’s fell an additional 0.7 on Thursday.

ALCOA’S GAINS. One of Thursday’s biggest winners was Alcoa, which enjoyed a healthy jump following an up-and-down week. While it has yet in December to match last month’s highs, Alcoa showed 3% gain on the news that the Italian government had struck a deal with the company. The deal on energy supplies, touted by the Italian government, would have certainly affected last month’s decision to temporarily close two aluminum smelters in Italy due to concerns about competitive rates looking forward. Interestingly, by day’s end Alcoa had denied the report from the Italian government, explaining that forward motion had been made in talks but no formal agreement was set. After hours, Alcoa continued to gain.

ASSESSMENT. It is far too early to determine what will become of gold prices, and trying to decide on the basis of consumer confidence leading into the holidays is futile. The best bet for investors is to stay the course on gold until the market shows clearer signs of a strengthening dollar or consistently falling gold prices. Barrick’s tumble seems more to do with the company than with gold itself. Alcoa’s gains, on the other hand, are baffling in that the company began looking up in a pretty substantial way a day before any announcement was made. It may well be that Alcoa is gaining back some of the strength it displayed last month—the stock has peaked once or twice a month since August (excepting a smaller bump last month) and, bullish minds might suggest, could push back toward its mid-September highs.

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2010 stock picks and trading tips

Sunday, December 13th, 2009

Resolve this New Year to trade smarter, to pick better, to stay in it for the long haul. And resolve, as the New Year rolls around, to make investments that, unlike the volatile market, will remains strong in an unpredictable world economy. If you’re not sure what you’re getting into moving toward January 2010, take heart—plenty of investors are in the same boat! However, there are near certainties in the market, as touch and go as it may seem, that you can bank on. Don’t break your resolution early due to a lack of preparation! Here’s a list of our tips and picks for 2010.

TIP 1—RESEARCH! Oftentimes, individuals who are new to trading will make picks on the basis of what the guy on TV says, a friend’s recommendation, or a prominent website’s position. The fact is, market veterans do the same. Don’t fall into the trap. Research your picks for 2010, and learn about the investment history of companies that you’re on the fence about.

TIP 2—TREND TRACKING. The stocks simply do not change overnight. A series of highs and lows, investment decisions, company history, and unexpected news can make or break a company poised for success. Look closely at where market confidence lies over a period of time, and choose wisely on the basis of trends you’ve followed for a time.

TIP 3—GET ORGANIZED. If your investments are not laid out in a way that you understand, and if they’re not easy to manage, you stand to lose money in the New Year. Use a tax manager to ensure that you’re not making costly mistakes, keep your trades in a spreadsheet, and make sure that you update your positions daily or weekly. Don’t let a lack of organization cause you to make poor decisions.

PICK 1—GENERAL ELECTRIC (GE). GE is a safe bet for any person looking toward the long term. While it had a substantial downturn in March (like most stocks), it has remained steady over the last few months of 2009 and is poised for growth.

PICK 2—GOOGLE (GOOG). Google is another market standard that, after severe losses following the downturn, will pick up as it introduces more technology, courts a worldwide user base, and innovates the way the web is viewed. Don’t expect Google to go away any time soon.

PICK 3—BEST BUY (BBY). Who says technology isn’t going anywhere? The past half decade has separated the wheat from the chaff where tech retailers are concerned, and Best Buy has proven its dominance on the consumer end.

PICK 4—NUANCE COMMUNICATIONS (NUAN). In 2010, Nuance will be hot. This communications company has a stake in voice recognition tech which, believe it or not, will become more important over the next couple of years. A great long-term choice.

PICK 5—FLIR SYSTEMS (FLIR). Flir is coming back up! After a dramatic downturn, this company involved in infrared technology and thermal imaging looks to make 2010 a banner year. Rising orders make Flir a decent gamble for the New Year.

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Cramer’s position on tech a smart stance

Sunday, December 13th, 2009

On last Wednesday’s episode of Mad Money, Jim Cramer spent a little time talking tech stocks. Due to a slight pullback, some analysts were concerned that another tech bubble was going burst. Cramer, however, saw it differently and recommended that his viewers take advantage by buying in. In making his picks, I think Cramer definitely got it right.

It’s true that Amazon (NASDAQ:AMZN), Apple (NASDAQ:AAPL), and Google (NASDAQ:GOOG) took a little bit of a dip lately. But, these stocks are all trading around their year-highs and they have all increased exponentially over the past year. They are also all trading at very high levels compared to more classically-modeled companies. So, a slight decline on these will naturally look bad, since they have so far to fall. But, these corrections are no different in percentage than other sectors have been experiencing. All three of these companies have shown a willingness to adapt to the changing marketplace, and because of that, I think they will continue to be profitable for some time.

Almost ten years after the dot-com bubble, some traders are still wary of tech stocks. But, I think the market’s a little wiser as a result of the internet crash. Instead of every tech company being viewed as an instant money machine, a few well-managed corporations have risen to the top, just as in other sectors. So the risk of another catastrophic implosion is much smaller. Cramer wisely advises investors to use tech stock dips like this to venture into the waters. I think this is an excellent idea. Since tech is somewhat volatile, a savvy buyer who jumps in while the water’s warm can become profitable rather quickly.

Let’s not kid ourselves. Technology is not going anywhere anytime soon and our dependence on it is, in fact, growing by the year. If you’re a trader looking for a relatively stable investment strategy, don’t fear the tech sector. Now that the initial internet hysteria has calmed down, tech stocks are maturing into a safe, long-term investing vehicle.

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