Thursday, October 28, 2010

Some Reorganizing

I've opened two new blogger blogs for EzBacktest and FreeStocksTicker.

The idea is for both these blogs to concentrate all new feature and release announcements and to somehow have url-s that make more sense:




Gloom and Doom: Retirement Disaster Ahead

The point of the following article is to show we aren't saving enough, but there are more interesting things to deduct from it too, I'll sum a bit after a brief quote:
Warning: Retirement Disaster Ahead
Don't let the rally in the stock and bond markets fool you. Many Americans are still hurtling toward a retirement disaster. Few realize it. Even many of those running the big pension funds don't know.

That's the conclusion of John West and Rob Arnott at Research Affiliates, an investment management firm, in Newport Beach, Calif. In their latest report, "Hope Is Not A Strategy," they have some numbers to back it up.

"I worry a lot about people reaching their golden years and discovering, 'Oh, I should've saved more,' and 'Oh, I don't qualify for Social Security anymore because it's means tested,'" says Mr. Arnott, a widely respected market strategist. "We're headed for a retirement train wreck," he adds, "and it's going to get really ugly over the next 15 years."

Alarmist? Perhaps. But follow the math.

The returns you will get from your stock funds can only come from four things, they note: dividends, earnings growth, inflation and changes in valuation.

The meat of the article is at the part following were I stopped quoting, specifically:
* Low average dividends from stocks
* Inflation implication for stocks prices isn't promising (those who believe hyper inflation is coming will disagree)
* Market average valuation seems overpriced in P/E terms, unlike 70-s and 30-s. (Suggesting market unlikely to rally higher without proven growth)
* Low bond yields suggest very mild long term returns on bond investments (yet the risks aren't priced in due to government intervention)

- All of the items in the brackets are my addition.

So an investor with 60% of his portfolio in stocks and 40% in bonds, a standard, if conservative, allocation, can expect a weighted average return from here of only about 4.1%.

To put this in context, they notice that the typical big pension fund is still expecting to earn about 7% to 8% a year.

When you strip out 2% inflation, that means pension fund managers are expecting 5-6% percent a year in real, inflation-adjusted terms.

But by Mr. West and Mr. Arnott's numbers, investors can only expect about 2.1%.

Suggested lesson:
Bottom line? Neither pension funds nor private investors seem to have fully absorbed the grim lessons of the past decade. Returns are going to be much lower. People need to save more, much more, for their retirement. If the market rally this year has given them false hope, it will have turned out to be a curse more than a blessing.

Interesting reading.

Monday, October 25, 2010

Back from Hong Kong

I was away on my employer's behalf - I'm not a business mogul and won't pretend to blog as such. My impression from the visit is that it's a bustling robust and growing city. Locals complain that real estate is beyond their reach due to influx of corruption money from main-land China. Locals believe that the recession is way behind them and they are facing a steady growth path. Interesting that during my stay there China raised interest rates and the global markets took the opportunity to correct for one day.

On a related note, CNBC provides us with a slideshow of growth companies they recommend looking out in China:
The 10 Fastest Growing Chinese Companies

One thing is sure, it seems there's a lot of new money flowing through China, and that the country's systems haven't adjusted yet - causing major distortions and bubbles. Buyer beware.


Thursday, October 14, 2010

McWedding for 400 bucks in Hong Kong

You can guess what the dinner choices might be... I bet McHaters in the west wouldn't approve.

Consumerist: McDonald's Offering $400 Wedding Packages
With folks now getting hitched in Walmarts, Taco Bells and Home Depot, it would make sense that McDonald's would eventually get around to adding weddings to their menu. And that's exactly what the fast food chain is doing in Hong Kong, where happy couples will soon be able to say "I do" under the Golden Arches.

Starting in January, Hong Kong McDonald's will begin selling a package that includes the ceremony, reception, wedding cake and catering for up to 100 people -- all for around $400.


For Profit Higher Education Stocks Crushed, Updated: Enrollment nearly halted due to Government intervention

Not a good day for America.

Apollo Outlook Weighs on School Stocks
Shares of Apollo Group(APOL_) plummeted more than 20% in the first minutes of trading Thursday, dragging much of the for-profit education sector with it.

Apollo Group, parent company of The University of Phoenix and other for-profit schools, posted better-than-expected quarterly earnings after the closing bell Wednesday, but warned that enrollment would be down more than 40% in fiscal 2011's first and second quarters.

Apollo also warned it would fall out of compliance with what is called the 90:10 rule in fiscal 2012. The rule stipulates that no more than 90% of a for-profit education provider's revenue may be generated from Department of Education's federal student aid program.

Free falling stocks: APOL, COCO, WPO, CECO, DV, STRA, ESI, EDMC

Apollo and others will fail to comply with the 90:10 because the government took over the private lending industry with the healthcare bill. Try as I might to avoid expressing a political point of view on this, I can't: Whoever wrote the Healthcare bill knew he started a domino effect against the free market in industries other than just the health care.

Even if the stock market rises 50% this year, it's highly risky to invest in individual stocks and sectors with this administration.

Hope for better days.

Update: For-profit schools reel as rules affect enrollment
-- The nation's largest for-profit college is changing admission practices to satisfy new government regulations aimed at preventing students from leaving school with staggering debt they can't repay, but the result may be that fewer lower-income students will gain entry to class.
Intentional meddling by the government. You want higher education? Your unelected officials decided that you're too poor to get ahead in life. Unbelievable!


Friday, October 8, 2010

100 Commission free ETFs at TD Ameritrade

Following Fidelity and Schwab. Sooner or later - free or near zero trade commissions for all...

TD Ameritrade Launches Over 100 Commission Free ETFs
TD Ameritrade Holding Corp. (AMTD: 16.25 ,-0.16 ,-0.98%) announced the launch of over 100 commission-free exchange-traded funds, heating up competition with rivals including Charles Schwab Corp. (SCHW: 14.04 ,-0.09 ,-0.64%), which took similar steps beginning last year.

The Omaha, Neb. online brokerage said the ETFs will be available to both retail investors and independent registered investment advisers. ETFs, which trade like stocks, have gained in popularity in recent years as the investment tools track a particular index, sector, industry or even commodity.

The commission-free ETF announcement underscores a broader pricing war among online brokerages. Last year, Schwab, E*Trade Financial Corp. (ETFC: 14.67 ,+0.06 ,+0.41%) and Fidelity Investments all cut their trading commissions. TD Ameritrade has said it has no plans to change its flat fee of $9.99 per trade for all customers.

Pricing battles are also prominent in the ETF space, with Schwab, Vanguard Group, and Fidelity all offering some degree of commission-free trades in an effort to capture market share.


If investors elect to trade out of the ETFs within 30 days, Tomczyk said the customers would be charged a $19.99 fee, but noted that such a fee "works very similar to how an index mutual fund operates."


Short term trading fee for ETFs, and they collect no payment from the ETF companies, odd.


Thursday, October 7, 2010

Glenn Beck Interviewed by Varney on Fox Business Channel

My two cents:

* Fox Business channel is way too invested in a political point of view. They completely lack a balance in the political arena - considering they choose to talk about politics so much. Should a business channel discuss politics? Yes but not all the time.

* I choose not to take political point of views in this site. It's just the kind of controversial topic I don't wish to get my real name and my freeware products involved in. You be the judge of what you see in the following video.

Just to be clear, it was Jim Cramer who claimed that gold is going to 2000, on CNBC:


Wednesday, October 6, 2010

What September Rally? S&P 500 Price in Gold In Downtrend

I mentioned this a month ago, early September. This market does not seem bullish to me.

S&P 500 Priced in Gold

The S&P 500 may be trading at its highest levels in close to five months, but relative to the price of gold it looks like anything but a rally. Back in October 2009, the price of the S&P 500 was actually higher than the price of gold. Over the last year, though, gold has pulled ahead while stocks have gone nowhere. Today, the S&P 500 is trading at 1,157 while the price of gold is trading at 1,337 per ounce, for a ratio of 0.86.

I think I should add a 'price in gold chart' tool to EzBacktest...


Tech bubble popping? What - you didn't know there's a market bubble?

It's almost hard to believe, when the market is well below it's highs before the Lehman crash - but for certain stocks - it has been a huge run up. Some justified, other manufactured. As the economy's 'stimulated' growth subsides, speculators might be running for the hills again.

Pop! Cloud Computing Bubble Bursts; Storage, Software Stocks Battered On Warnings From Equinix, Autonomy
Looks like the cloud-computing bubble is losing some air.

In a move likely at least partly spurred by a warning and subsequent massive sell-off in shares of data center operator Equinix (EQIX), the Street this morning is engaged in a wholesale dumping of the enterprise software and data storage sectors. Also contributing to the pressure on the stocks: a warning this morning by U.K.-listed Autonomy (AU.L). An infrastructure software provider, the company said Q3 revenue will be at the top of its previous range. But the company also indicated that current Street revenue forecasts for the full year are too high, and that there is still “volatility” in corporate IT spending.

Autonomy CEO Mike Lynch said in a statement that the company was “pleased to be at the top end of our range during our traditionally seasonally weakest quarter, but were disappointed not to be in a position to report revenues above this range. There are unique challenges to the summer months with a consequent September catch-up, but we are also noticing customers still showing volatility around their view of the current macro economic situation.”

Lynch also said the company’s internal model suggests current consensus estimates are about 3% too high.

The general thinking, I suspect, is that the intensifying price pressures and increased churn Equinix described - and the uncertainty Autonomy noted - are symptomatic of a broader tightening of the screws by corporate IT buyers everywhere. In short, there are new fears that the corporate IT spending in general is showing a little softening. And with the shares of many stocks in networking and enterprise software sporting fat gains, some of those related to speculation about potential acquisitions, there were plenty of profits for investors to take.

Piper Jaffray analyst Mark Murphy noted in an interview with Tech Trader Daily this morning that the massive sell-off in EQIX “shows you what can go wrong when a company is just slightly light

Read the whole thing. A list of stocks crashing right now mentioned: EQIX, ISLN, RDWR, TDC, CVLT, VMW, CRM, RHT, TIBX, CTXS.


Monday, October 4, 2010

IMF: West stuck in 'near' depression

Was the word 'near' inserted to avoid global panic?

IMF admits that the West is stuck in near depression
If you strip away the political correctness, Chapter Three of the IMF's World Economic Outlook more or less condemns Southern Europe to death by slow suffocation and leaves little doubt that fiscal tightening will trap North Europe, Britain and America in slump for a long time.

1930-s here we come.

'We have nothing to fear but fear itself' - and reality. Reality is pretty scary I'd say.