El costo de la guerra: Cost of war

Finally__the_End_of_War____by_enricoagostoni

In short, far from “de-escalating,” the Crisis in Crimea is starting to look permanent — and indeed, may expand beyond the borders of Crimea. This bad news helped stocks on the S&P 500 and Dow Jones Industrial Average suffer their worst declines in nearly two months — and this could be only the beginning.

Two weeks ago, at the start of this crisis, we ran down five ways the conflict between Ukraine and Russia could affect your portfolio. Two weeks into the crisis, with new facts in hand, we’re back to update that advice with five more predictions. Here goes.

Manufacturing
Trade between Russia and the U.S. passed $38 billion in value last year, and much of that could be at risk if the Obama administration follows through on threats to punish Russia’s land-grab in Crimea with trade sanctions. Even worse for investors, Russia has promised to retaliate against such sanctions, potentially hurting U.S. companies that have made direct investments in the country.

Major U.S. manufacturers such as Ford (NYSE: F  ) and General Motors have invested more than $10 billion directly in Russia. Ford, for example, manufactures Focus and Mondeo automobiles at its plant in St. Petersburg and is in the process of building a new $274 million engine plant in the Russian region of Tatarstan. GM set up its first factory in St. Pete as well — a $300 million, 98,000-cars-annually assembly plant — and up until this crisis began, it was expanding its joint venture with AvtoVAZ in Togliatti.

Banking
One of the likeliest targets for U.S. trade sanctions would be cutting ties with Russian banks in an attempt to constrict Russia’s access to foreign capital. This holds immediate implications for banking giant Citigroup (NYSE: C  ) . The U.S. bank with the most exposure to the country, Citigroup serves more than 3,000 institutional customers in Russia, has a retail customer base of 1 million and operates 50 bank branches in a dozen Russian cities. Citigroup earns about $300 million annually in Russia — for now.

Oil and gas
Closer to Crimea proper, a consortium of companies including Italian energy producer Eni(NYSE: E  ) recently signed a $4 billion investment deal with Ukraine to develop underwater gas fields off the western coast of Crimea. A “production sharing agreement,” this deal was made with the Ukrainian government as a party, however. If Crimea is leaving Ukraine, the legal validity of the deal could be questioned — and Eni could lose its 50% stake in the project.

Steel — again
ArcelorMittal 
(NYSE: MT  ) is a bit trickier. Last time we looked at the stock, we mentioned how its operations might be disrupted by conflict in eastern Ukraine, hurting global steel supplies and driving up prices. Instead — the opposite may happen. Last week, Arcelor warned that while it’s still producing plenty of steel, steel usage in Ukraine has dropped like a rock, as companies delay construction projects to see how the conflict with Russia plays out.

Result: Arcelor’s steel is being diverted to international markets, potentially increasing supply and driving prices down. (Curiouser and curiouser, indeed.)

Military suppliers
Finally, we turn to the defense contractors. This week, Ukrainian leaders made impassioned pleas to the U.S. for military assistance. Asked to supply guns and ammo, the Obama administration agreed only to send food aid, fearing that sending weapons to Ukraine might offend Russia.

But as we saw with Arcelor, this situation is fluid. The U.S. has a history of providing surplus weaponry to bolster the militaries of allied nations — offering two dozen old F-16 fighter jets to Romania in 2010, for example, and sending 400 used M1A1 Abrams main battle tanks to Greece in 2011 — all free of charge.

But “free” isn’t always what it seems. In the F-16 deal, for example, Romania was expected to spend $1.3 billion upgrading its fighter jets to modern standards. That’s money in the bank forLockheed Martin (NYSE: LMT  ) . Potentially, if Russia fails to back down in Ukraine, we could soon see Congress approve similar sales of military hardware — to Ukraine, to Georgia (which has had issues with Russia in the past), and to other border states such as Estonia or Latvia, which also wish to strengthen their defenses.

The risk to investors? Shorting defense contractors in the middle of a new cold war.

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En resumen , lejos de ” de- escalada “, la crisis en Crimea está empezando a parecer permanente – y, de hecho , puede expandirse más allá de las fronteras de Crimea. Esta mala noticia ayudó a las poblaciones en el S & P 500 y el Dow Jones Industrial Average sufren sus peores caídas en casi dos meses – y esto podría ser sólo el comienzo.

Hace dos semanas , en el inicio de esta crisis , nos encontramos a cinco formas en que el conflicto entre Ucrania y Rusia podría afectar a su cartera. Dos semanas después de la crisis, con nuevos hechos en la mano , estamos de vuelta para actualizar ese consejo con cinco predicciones más . Aquí va .

fabricación
El comercio entre Rusia y los EE.UU. aprobó $ 38 mil millones en valor el año pasado, y gran parte de que podría estar en riesgo si el gobierno de Obama sigue a través de amenazas de castigar a Rusia – apropiación de tierras en Crimea con sanciones comerciales. Peor aún para los inversores , Rusia ha prometido tomar represalias en contra de tales sanciones , lo que podría lastimar a las empresas estadounidenses que han realizado inversiones directas en el país.

Los principales fabricantes estadounidenses como Ford ( NYSE : F ) y General Motors han invertido más de $ 10 mil millones directamente en Rusia. Ford , por ejemplo , fabrica Focus y Mondeo automóviles en su planta de San Petersburgo y está en el proceso de construcción de un nuevo $ 274 millones la planta de motores en la región rusa de Tatarstán. GM estableció su primera fábrica en St. Pete , así – una planta de ensamblaje de $ 300.000.000 98000 -cars- anualmente – y hasta comenzó esta crisis, se estaba expandiendo su empresa conjunta con AvtoVAZ en Togliatti .

banca
Uno de los objetivos más probables para las sanciones comerciales de Estados Unidos estaría cortando los lazos con los bancos rusos en un intento de constreñir el acceso de Rusia al capital extranjero. Esto tiene implicaciones inmediatas para el gigante bancario Citigroup ( NYSE : C) . El banco de los EE.UU. con la mayor exposición al país , Citigroup sirve a más de 3.000 clientes institucionales en Rusia , tiene una base de clientes al por menor de 1 millón y opera 50 sucursales bancarias en una docena de ciudades rusas. Citigroup gana alrededor de $ 300 millones anuales en Rusia – por ahora.

Petróleo y gas
Más cerca de Crimea adecuada , un consorcio de compañías como productor de energía italiana Eni ( NYSE: E) ha firmado recientemente un acuerdo de $ 4 mil millones de inversión con Ucrania para desarrollar campos de gas bajo el agua frente a la costa occidental de la península de Crimea. Un “acuerdo de reparto de la producción , ” este acuerdo se hizo sin embargo con el gobierno de Ucrania como partido, . Si Crimea está dejando de Ucrania , la validez jurídica del acuerdo podría ser cuestionada – y Eni podría perder su participación del 50 % en el proyecto .

Acero – de nuevo
ArcelorMittal ( NYSE : MT) es un poco más complicado . La última vez que nos fijamos en la acción, le mencionó que sus operaciones podrían verse afectados por el conflicto en el este de Ucrania , afectando a los suministros de acero a nivel mundial y aumentando los precios . En lugar de ello – podría ocurrir lo contrario . La semana pasada, Arcelor advirtió que mientras aún está produciendo un montón de acero , el uso de acero en Ucrania ha caído como una roca, ya que las empresas retrasen los proyectos de construcción para ver cómo el conflicto con Rusia se desarrolla.

Resultado : acero de Arcelor se está desviando a los mercados internacionales , lo que podría aumentar la oferta y bajar los precios . ( Curioso y más curioso , por cierto. )

proveedores militares
Por último , nos volvemos a los contratistas de defensa . Esta semana , los líderes ucranianos hicieron súplicas apasionadas a los EE.UU. para la asistencia militar. Preguntado suministrar armas de fuego y munición, el gobierno de Obama estuvo de acuerdo sólo para enviar ayuda alimentaria , por temor a que el envío de armas a Ucrania podría ofender a Rusia.

Pero como hemos visto con Arcelor , esta situación es fluida . Los EE.UU. tiene una historia de proporcionar excedentes de armamento para reforzar los ejércitos de las naciones aliadas – ofreciendo dos docenas de antiguos F- 16 aviones de combate a Rumania en 2010, por ejemplo, y el envío de 400 carros de combate M1A1 Abrams utilizado a Grecia en el año 2011 – todos de forma gratuita .

Pero el “libre ” no es siempre lo que parece . En el acuerdo de F- 16, por ejemplo , se espera que Rumania gastar $ 1.3 mil millones de actualizar sus aviones de combate a los estándares modernos . Eso es dinero en el banco forLockheed Martin ( NYSE : LMT ) . Potencialmente, si Rusia no puede dar marcha atrás en Ucrania , pronto podríamos ver que el Congreso apruebe las ventas similares de equipos militares – a Ucrania, en Georgia (que ha tenido problemas con Rusia en el pasado) , y para otros estados fronterizos como Estonia o Letonia, que también desean fortalecer sus defensas.

El riesgo para los inversores? El cortocircuito de los contratistas de defensa en el medio de una nueva guerra fría.

 

 

Habilidades de hacer oro: Investing strategies

Miami City Buildings at Night

Hedge Fund Strategy – Equity Long-Short

An equity long-short strategy is an investing strategy, used primarily by hedge funds, that involves taking long positions in stocks that are expected to increase in value and short positions in stocks that are expected to decrease in value.

You may know that taking a long position in a stock simply means buying it: If the stock increases in value, you will make money. On the other hand, taking a short position in a stock means borrowing a stock you don’t own (usually from your broker), selling it, then hoping it declines in value, at which time you can buy it back at a lower price than you paid for it and return the borrowed shares.

Hedge funds using equity long-short strategies simply do this on a grander scale. At its most basic level, an equity long-short strategy consists of buying an undervalued stock and shorting an overvalued stock. Ideally, the long position will increase in value, and the short position will decline in value. If this happens, and the positions are of equal size, the hedge fund will benefit. That said, the strategy will work even if the long position declines in value, provided that the long position outperforms the short position. Thus, the goal of any equity long-short strategy is to minimize exposure to the market in general, and profit from a change in the difference, or spread, between two stocks.

That may sound complicated, so let’s look at a hypothetical example. Let’s say a hedge fund takes a $1 million long position in Pfizer and a $1 million short position in Wyeth, both large pharmaceutical companies. With these positions, any event that causes all pharmaceutical stocks to fall will lead to a loss on the Pfizer position and a profit on the Wyeth position. Similarly, an event that causes both stocks to rise will have little effect, since the positions balance each other out. So, the market risk is minimal. Why, then, would a portfolio manager take such a position? Because he or she thinks Pfizer will perform better than Wyeth.

Equity long-short strategies such as the one described, which hold equal dollar amounts of long and short positions, are called market neutral strategies. But not all equity long-short strategies are market neutral. Some hedge fund managers will maintain a long bias, as is the case with so-called “130/30” strategies. With these strategies, hedge funds have 130% exposure to long positions and 30% exposure to short positions. Other structures are also used, such as 120% long and 20% short. (Few hedge funds have a long-term short bias, since the equity markets tend to move up over time.)

Equity long-short managers can also be distinguished by the geographic market in which they invest, the sector in which they invest (financial, health care or technology, for example) or their investment style (value or quantitative, for example). Buying and selling two related stocks—for example, two stocks in the same region or industry—is called a “paired trade” model. It may limit risk to a specific subset of the market instead of the market in general.

Equity long-short strategies have been used by sophisticated investors, such as institutions, for years. They became increasingly popular among individual investors as traditional strategies struggled in the most recent bear market, highlighting the need for investors to consider expanding their portfolios into innovative financial solutions.

Equity long-short strategies are not without risks. These strategies have all the generic hedge fund risks: For example, hedge funds are typically not as liquid as mutual funds, meaning it is more difficult to sell shares; the strategies they use could lead to significant losses; and they can have high fees. Additionally, equity long-short strategies have some unique risks. The main one is that the portfolio manager must correctly predict the relative performance of two stocks, which can be difficult. Another risk results from what is referred to in the industry as “beta mismatch.” While this is more complicated that we can explain in detail here, essentially, it means that

when the stock market declines sharply, long positions could lose more than short positions.

In summary, equity long-short strategies may help increase returns in difficult market environments, but also involve some risk. As a result, investors considering these strategies may want to ensure that their hedge funds follow strict rules to evaluate market risks and find good investment opportunities.

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Hedge Fund Strategy – Capital a Largo Corto

Una estrategia de largo-corto equidad es una estrategia de inversión, utilizado principalmente por los fondos de cobertura, que consiste en tomar posiciones largas en acciones que se espera que aumente en posiciones de valor y cortas en las poblaciones que se espera que disminuya su valor.

Usted puede saber que tomar una posición larga en una acción significa simplemente comprarlo: si los aumentos en las existencias en el valor, que van a ganar dinero. Por otra parte, tomando una posición corta en una acción significa pedir prestado una acción que usted no es dueño (por lo general de su corredor), la venta, entonces la esperanza de que declina en valor, momento en el que pueda volver a comprar a un precio inferior de lo que pagó por ella y regresar las acciones prestadas.

Los fondos de cobertura utilizando la equidad estrategias long-short simplemente hacen esto en una escala mayor . En su nivel más básico, un patrimonio estrategia a largo corto consiste en la compra de una acción infravalorada y cortocircuito una acción sobrevaluada . Lo ideal sería que la posición larga se incrementará en el valor, y la posición corta disminuirá en valor. Si esto sucede , y las posiciones son de igual tamaño, el fondo de cobertura se beneficiará . Dicho esto, la estrategia funcionará incluso si la posición larga disminuye en valor, siempre que la posición larga supera a la posición corta . Por lo tanto , el objetivo de cualquier estrategia a largo corto equidad es reducir al mínimo la exposición al mercado en general, y el beneficio de un cambio en la diferencia , o spread , entre dos poblaciones.

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Esto puede sonar complicado , así que vamos a ver un ejemplo hipotético. Digamos que un fondo de cobertura toma una posición larga $ 1000000 en Pfizer y una posición corta $ 1 millón en Wyeth, tanto las grandes empresas farmacéuticas. Con estas posiciones, cualquier evento que hace que todas las acciones farmacéuticas bajen dará lugar a una pérdida en la posición Pfizer y una ganancia en la posición de Wyeth. Del mismo modo, un evento que causa ambas poblaciones en aumento tendrá poco efecto , ya que las posiciones se equilibran entre sí . Por lo tanto, el riesgo de mercado es mínimo. ¿Por qué , entonces, sería un gestor de cartera tomar una posición? Debido a que él o ella piensa que Pfizer obtendrá mejores resultados que Wyeth.

Equidad estrategias de largo-corto , como el descrito , que mantenga la misma cantidad en dólares de las posiciones largas y cortas , se llaman estrategias neutrales de mercado. Pero no todos los de renta variable estrategias long-short son de mercado neutral. Algunos gestores de fondos de cobertura se mantienen un sesgo mucho tiempo, como es el caso de los llamados ” 130/30 ” estrategias . Con estas estrategias , los hedge funds tienen una exposición del 130% a las posiciones largas y la exposición 30 % a las posiciones cortas . También se utilizan otras estructuras , tales como 120 % de largo y 20 % a corto . ( Fondos de cobertura Pocos tienen un sesgo de corto a largo plazo , ya que los mercados de acciones tienden a subir con el tiempo. )

Equidad gerentes largo-corto también se pueden distinguir por el mercado geográfico en el que invierten , el sector en el que invierten ( , cuidado de la salud financiera o de la tecnología , por ejemplo) o su estilo de inversión (valor o cuantitativa , por ejemplo). Compra y venta de dos acciones -por ejemplo , relacionados con dos poblaciones de la misma región o industria – que se llama un modelo de ” comercio emparejado ” . Puede limitar el riesgo a un subconjunto específico del mercado en lugar de la del mercado en general.

Equidad estrategias long-short han sido utilizados por inversionistas sofisticados , como las instituciones , desde hace años. Se convirtieron en cada vez más popular entre los inversores individuales como las estrategias tradicionales luchaban en el mercado a la baja más reciente, destacando la necesidad de los inversores a considerar la ampliación de su cartera en soluciones financieras innovadoras.

Equidad estrategias a largo cortas no están exentos de riesgos. Estas estrategias tienen todos los riesgos genéricos de fondos de cobertura : Por ejemplo, los fondos de cobertura por lo general no son tan líquidos como fondos de inversión, lo que significa que es más difícil de vender acciones , las estrategias que utilizan podrían dar lugar a pérdidas significativas , y que pueden tener altas tarifas . Adicionalmente , la equidad estrategias long-short tienen algunos riesgos únicos. La principal es que el gestor de la cartera debe predecir correctamente el comportamiento relativo de dos poblaciones , lo que puede ser difícil. Otro riesgo resulta de lo que se conoce en la industria como ” falta de coincidencia beta . ” Si bien esto es más complicado que podemos explicar en detalle aquí, en esencia , significa que.

cuando el mercado de valores disminuye drásticamente , las posiciones largas podrían perder más de las posiciones cortas .

En resumen , la equidad estrategias a largo cortos pueden ayudar a aumentar la rentabilidad en entornos de mercado difíciles, pero también implican cierto riesgo. Como resultado, los inversores que estén considerando estas estrategias pueden querer asegurarse de que sus fondos de cobertura siguen reglas estrictas para evaluar los riesgos de mercado y encontrar buenas oportunidades de inversión .

Banqueros Automáticos:The computers that run the stock market

Citadel Securities has quietly become one of the largest forces in U.S. stock trading.

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From the 35th floor of a downtown Chicago office tower, Citadel executes one out of every eight stock trades in the United States. At roughly 900 million shares a day, more stocks move through Citadel’s systems than the New York Stock Exchange, which trades roughly 700 million shares a day.

If you own a 401(k) or have ever used an online broker, your trades have almost certainly passed through Citadel.

The most notable thing about the firm’s trading floor is how eerily quiet it can be.

About 40 people “run” the trading floor, but they are simply overseeing computers that use algorithms to fill and route stock orders.

Related: High speed traders pay for an edge

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Welcome to the new world of trading: More and more, high speed computer programs are replacing thousands of floor brokers once seen running and yelling across the floor of the NYSE.

Citadel’s “floor” brokers don’t do a lot of running. They sit together behind rows of computer terminals, clicking away on keyboards to ensure the firm’s computers are operating correctly and are connected to all the right exchanges.

In essence, Citadel’s proprietary computer programs have become the new eyes, ears, and brains of the U.S. stock market.

About 20 programmers create the computer algorithms that decide how to execute each order, and what to send to public exchanges or so-called dark pools.

Dark pools may sound like the favorite haunts of Star Wars villains, but they are simply venues where buyers and sellers can submit bids without disclosing them to the public markets. Citadel operates a dark pool called Apogee out of its New York office.

Citadel’s programmers are constantly making adjustments as computers “learn” customer behavior to make the process more efficient.

“All the decisions are made by the computers,” Jamil Nazarali, Citadel’s head of electronic execution, told CNNMoney during an exclusive behind-the-scenes tour. “The people here are not making any decisions with respect to whether an order should be filled or at what price it should be filled. That’s all done in an automated way.”

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Split second decisions: Citadel’s computers execute a buy or sell order nearly instantaneously.

When Citadel’s computers do not to fill an order internally, the trade is pushed along to one of 13 public exchanges or one of more than 20 dark pools.

By law, Citadel must match or give a better price than what’s been quoted on a public exchange, said Nazarali.

But some industry watchers question whether Citadel’s prescient computer programs are always giving customers the best price.

Nazarali says they do: “As a market maker, I have a regulatory obligation to fill all customers orders on my book before I trade.”

He said Citadel’s systems actually create an even playing field between high-speed traders and retail traders who place orders through brokers like TD Ameritrade (AMTD)because they all have access to the same technology.

The industry’s primary regulator, FINRA, recently asked some market makers and dark pool operators to provide information on how they fill trading orders. Regulators are worried about high-speed traders get an edge over other investors in certain trading venues. It’s unclear if Citadel was part of that group, and FINRA declined to comment.

Trading is definitely faster, but whether it’s better and cheaper for the average retail investor remains to be seen.

Principal regulador de la industria, FINRA, recientemente pidió a algunos creadores de mercado y operadores de piscinas oscuras para proporcionar información sobre cómo se llenan las órdenes de operaciones. Los reguladores están preocupados por los operadores de alta velocidad consiguen una ventaja sobre otros inversores en determinados centros de negociación. No está claro si la ciudadela era parte de ese grupo, y FINRA declinó hacer comentarios.

El comercio es definitivamente más rápido, pero si es mejor y más barato para el inversor minorista medio aún está por verse.

देवताओं और गोल्ड: Metacapital Mortgage Opportunities

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                                            Manager: Deepak Narula

Management Firm: Metacapital Management

Location: U.S.

Strategy: Mortgage-backed arbitrage

Assets, in billions: $1.5

YTD total return: 37.8%

2011 return: 23.6%

(Reuters) – Deepak Narula, one of the hedge fund industry’s best known mortgage bond traders, said he sees a much tougher year ahead for investors but sees opportunities in certain mortgage trades.

Next year will “be a more challenging year” than 2013 because of “much greater uncertainty around how the Fed will behave,” and because of lofty bond and equity valuations, Narula, the founder of $1.45 billion hedge fund Metacapital Management, said on Wednesday.

This year Narula’s main fund has struggled to produce gains, though an investor recently told Reuters the portfolio has been able to reduce losses in the last few months. However, the firm’s $240 million Rising Rates fund, launched in May, has climbed about 14 percent year-to-date.

Last year, Metacapital’s flagship fund soared more than 40 percent, as structured credit funds rose about 19 percent on averaged. “Absent some large shock to the system” that causes initial cheapening of assets “those returns are history,” Narula said.

Those funds have only risen about 8 percent on average this year.

Managers who invested in residential mortgage-backed securities throughout 2012 and the beginning of 2013 benefited mightily from the Federal Reserve’s efforts to keep interest rates low, which pushed up the prices of mortgage bonds.

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Deepak Narula has given us some sound advice – you want to be careful going against the mission of the Federal Reserve.

And, his hedge fund earned a 38 percent return last year, the number one hedge fund performer according to Bloomberg News.

“To revive the housing market, the Fed has thrown a lot of firepower at agency mortgage-backed securities. Policy makers have worked hard to let homeowners refinance. They’ve been clear that that’s their mission-and you want to be careful going against that mission.”

George Soros, who bet against the British pound in the 1990s and made millions of dollars, I’m sure, would agree.

In addition, three of the top five funds in the Bloomberg Markets list of top performing hedge funds also were investors in mortgage securities.

“Betting on mortgage securities outpaced every other strategy, with an average return of 20.2 percent against an industry average of just 1.3 percent,” states the Bloomberg report.

But, hedge funds are not the only ones that benefited from the Federal Reserve action. Check out these two posts: “Is it too late to get into the housing rebound?” and “Is it too late to get into the housing rebound? Part Two“.

Three cheers for saving the middle class!

Nothing seems to work better as a way to make money than to work with a government policy or program. Ask the people who started up Solyndra!

The major problem with betting against a government policy or program … don’t be too early.

Narula has not always been successful in playing the mortgage market. He started his fund Metacapital in 2002. He saw the danger in the market for subprime mortgages as early as 2005 and start shorting them. Subprime mortgages did tank, but not until three years later.

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In 2006 his fund had to return money to investors and in 2007 he had to close the fund. He was “right,” but then again, he was “wrong.”

As he states, “If you are too early, you are wrong.”

But, betting “with” government policy works on the upside as well.

Over the past fifty years or so, the federal government, supported by the Federal Reserve, created credit by the millions of dollars in order to keep unemployment at low levels and to foster home ownership for the middle class and below. We had a sustained period of “credit inflation.”

Three things happen in a period of credit inflation: people take on more and more risk; people build up more and more financial leverage; and people engage in financial innovation. The last fifty years is known for all three of these things happening.

And, during this period, more and more people went to work in the financial and more and more companies added financial subsidiaries. By the early2000s, a substantially greater percentage of Americans worked in the financial sector than ever before. And, many manufacturing companies, likeGeneral Electric (GE) and General Motors (GM), earned more than fifty percent of their profits from their financial subsidiaries.

The “mission” of the federal government and the Federal Reserve System was to provide the economy with high levels of employment and greater degrees of home ownership.

The mental attitude of the leaders of American finance and industry? Well, as summarized by Charles (Chuck) Prince, the CEO of Citigroup, “”As long as the music is playing, you’ve got to get up and dance.”

Those that left the dance floor “too soon” were “right” that things were getting too risky and might fall apart. But, as Narula said, “If you are too early, you are wrong.”

Your government creates opportunities to make money … and to make lots of it. The big money to earn will, however, not go to those that will help to reduce the imbalance in the income/wealth curve. As we have seen, the past fifty years of credit inflation have done more to create the imbalances that now exist than reduce them.

And, government “missions” will continue to do so in the future.

So, one way to make money is to determine what is the federal government or the Federal Reserve “mission” and bet “with” the mission. That is, find out what these people are trying to do and develop an investment strategy that “uses” this mission. We know that the federal government and the Federal Reserve, in their well-meaning way, will continue on with their policies for a long time.

The Federal Reserve says that short-term interest rates will remain low until 2015. Really?

George Soros can tell you that when a government positions itself in this way, opportunities exist.

But, remember what Narula said – to be too early is to be wrong. Also, if you try and get into the game too late or stick around the game for too long, you will be wrong.

Timing is important.

Three cheers for Deepak Narula!

Location Type Single Location
State of Incorporation New York
Annual Revenue Estimate 120000
Employees 2
SIC Code 6722, Management Investment Offices, Open-End
NAICS Code 525910, Open-End Investment Funds
Business Categories

El oro y la creencia más allá del petróleo dioses muertos ‘: John D. Rockefeller

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This is a rare example of how principle,business and investing can work. It is the secret behind Warren Buffet and some of the top Hedge Fund Managers. It is not about the money Warren Buffett quoted in speech to his company before others could speak his words. John D. Rockefeller was one of the best examples of this:

John Davison Rockefeller (July 8, 1839 – May 23, 1937) was an American business magnate and philanthropist. He was a co-founder of theStandard Oil Company, which dominated the oil industry and was the first great U.S. business trust. Rockefeller revolutionized the petroleum industry, and along with other key contemporary industrialists such as Andrew Carnegie, defined the structure of modern philanthropy. In 1870, he co-founded Standard Oil Company and aggressively ran it until he officially retired in 1897.

In spite of his father’s absences and frequent family moves, young John was a well-behaved, serious, and studious boy. His contemporaries described him as reserved, earnest, religious, methodical, and discreet. He was an excellent debater and expressed himself precisely. He also had a deep love of music and dreamed of it as a possible career.Early on, he displayed an excellent mind for numbers and detailed accounting.

His father, William Avery Rockefeller, was a “pitch man” — a “doctor” who claimed he could cure cancers and charged up to $25 a treatment. He was gone for months at a time traveling around the West from town to town and would return to wherever the family was living with substantial sums of cash. His mother, Eliza Davison Rockefeller, was very religious and very disciplined. She taught John to work, to save, and to give to charities.

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By the age of 12, he had saved over $50 from working for neighbors and raising some turkeys for his mother. At the urging of his mother, he loaned a local farmer $50 at 7% interest payable in one year. When the farmer paid him back with interest the next year Rockefeller was impressed and said of it in 1904: “The impression was gaining ground with me that it was a good thing to let the money be my servant and not make myself a slave to the money…”

From 1852 Rockefeller attended Owego Academy in Owego, New York, where the family had moved in 1851. Rockefeller excelled at mental arithmetic and was able to solve difficult arithmetic problems in his head — a talent that would be very useful to him throughout his business career. In other subjects Rockefeller was an average student but the quality of the education was very high.

In 1853, the Rockefellers moved to Cleveland, Ohio, and John attended high school from 1853 to 1855. He was very good at math and was on the debating team. The school encouraged public speaking and even though Rockefeller was only average, it was a skill that would prove to useful to him.

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It was the logic of this competitive structure that determined Rockefeller and Flagler’s course of action.

  1. They built high-quality, larger, better-planned refineries. They built permanent facilities using the best materials available.
  2. They owned their own cooperage (barrel making) plant, their own white-oak timber and drying facilities, and bought their own hoop iron. Consequently, they cut the cost of a barrel from about $3.00 to less than $1.50.
  3. They manufactured their own sulfuric acid (which was used in the purification process) and devised technology to recover it for re-use.
  4. They owned their own drayage service, consisting of at least 20 wagons in 1868.
  5. They owned their own warehouses in New York City and their own boats on the Hudson and East Rivers to transport their oil.
  6. They were the first to ship oil via tank cars (albeit big wooden tubs mounted in pairs on flat cars — later to evolve into the modern form of a tank car). And they owned their own fleet of tank cars.
  7. They built huge holding tanks near their refineries for storing crude and refined oil, with the equipment for drawing off the oil from the tank cars into the holding tanks.
  8. Their huge size made it economical to build the necessary physical plant to handle all the “waste” products from the refining of kerosene. They began manufacturing high quality lubricating oil that quickly replaced lard oil as a lubricant for machinery. Gasoline, which many refiners surreptitiously dumped into the Cuyahoga River at night (the river often caught fire), Rockefeller and Flagler used as fuel. They manufactured benzene (used as a cleaning fluid; a solvent for fat, gums, and resin; and to make varnish), paraffin (insoluble in water, used for making candles, waterproofing paper, preservative coatings, etc.), and petrolatum (used as a basis for ointments and as a protective dressing; as a local application in inflammation of mucous membrane; as an intestinal lubricant, etc. — white petrolatum later marketed under the brand name Vaseline). They shipped naphtha (volatile inflammable liquid used as a solvent in dry cleaning and in wax preparations, varnish and paint making, burning fluid for illumination, and as a fuel for motors) to gas plants and other users.

 

 

Una habilidad para cortar diamantes: Top stock picks part 1

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Kimberly Scott 
Waddell & Reed New Concepts

Ticker: (HAIN)
Category: Health & nutrition

Burgeoning trends at a reasonable price. That’s Kimberly Scott’s philosophy. Her Waddell & Reed New Concepts Fund (UNECX) has averaged 11.5% returns over the past decade, better than 95% of its peers, and these days she favors Hain Celestial. The case starts with the exploding appeal of the kind of natural and organic foods the company sells. It ain’t just Whole Foods (WFMFortune 500) either, she notes; traditional grocers are devoting more shelf space to the category. Plus, Scott says, Hain has been smart about adding innovative brands like the British baby-food maker Ella’s Kitchen, acquired in May, to its existing lineup. (Wal-Mart (WMTFortune 500) began stocking Ella’s squeezable pouches at its 4,000 U.S. stores last month.) Hain’s earnings have been mounting at close to 40% for the past three years, and analysts project another three to five years of 15% EPS increases. What’s more, Scott says, Hain Celestial is the “rare” growth company with a focus on squeezing productivity and profits from its manufacturing operations and supply chain. The upshot: Her “conservative” projections have the stock, currently trading around $85, reaching $135 in the next four years. –S.M.

Don Yacktman 
Yacktman/Yacktman Focused

Ticker: (PEPFortune 500)
Category: Consumer

Slow and steady has always been the recipe for Don Yacktman’s world-beating results. (His $13.5 billion namesake (YACKX) and $11.7 billion Focused Fund (YAFFX)have both returned about 11% a year for a decade, crushing the S&P (SPX) by 3.2 percentage points a year.) His strategy: Buy great companies when they’re out of favor and hold them, more or less forever. With the market regularly hitting new highs, Yacktman and son and co-manager Stephen are craving comfort food. “We’re focused on defense more than offense,” Stephen says, and PepsiCo promises just about the best “risk-adjusted” returns out there. Between dividends and stock buybacks, the company is paying shareholders 4.5% to 5% in cash. Add in anticipated growth from price increases and 2% to 3% unit volume increases and you can expect to earn 9% to 10%, Stephen argues. Given Pepsi’s stranglehold on the snack-food aisle and its forward thinking about healthy alternatives, that return won’t be nibbled away over time. “Think of it like buying an undervalued triple-A bond,” says Don. “It’s not very exciting, but that’s the point: You sleep at night when the wind blows.” –S.M.

source:

money.cnn.com

Gold found in the clouds

Invest in the cloud

Invest in cloud computing companies for long term golden returns.

Due to the strong demand for cheap software, cloud computing companies are enjoying great market momentum. This has attracted hundreds of competitors, from start-ups to traditional tech giants. At least 13 new players have gone public in the last 18 months, with most of them surpassing the $1 billion market cap milestone in a few months. But only cloud companies that innovate their product portfolio constantly, and build economic moats, will be able to survive the competitive landscape.

 

Consumers may be more familiar with cloud service offerings. This includes Google Drive, offered by Google (GOOG), SkyDrive by Microsoft (MSFT), Box.com, and DropBox.

Some of the other big players investors might want to start with are grouped below.

Networking [Read descriptions for all companies mentioned]

1. Cisco Systems, Inc. (CSCOEarningsAnalystsFinancials): The networking giant grew through acquisitions. The company is turning its focus on SDN. UBS argued that innovation in hardware will happen through SDN. Performance, latency, and resiliency are elements that will improve.

 

Software

Cloud computing supported virtualization initiatives, since hardware and storage became very inexpensive. A leader in this field:

2. VMware, Inc. (VMWEarningsAnalystsFinancials): Valued with a POP (price of profit) of 34 at the time of writing, shares dipped sharply below $100 after issuing a profit warning at the beginning of 2013.

 

In the software services industry:

3. Amazon.com Inc. (AMZNEarningsAnalystsFinancials): The book retailer, which now sells practically everything for consumers, also sells AWS (Amazon Web Services). This allows companies ranging from all sizes (small to large) to rent hosted computing and storage. The company is extending its reach by bundling content through Amazon Prime, and reaching more users by selling tablet device hardware almost at-cost.
4. Salesforce.com (CRMEarningsAnalystsFinancials): The high price of shares of Salesforce.com is supported by quarterly results that pleased investors. Last quarter (Q4), the company won many large deals. Deals between 7- and 8-figures rose by 50% compared to last year. The company plans to acquire companies aggressively. This will add to the already 3 million apps developed on Heroku and on the force.com site.
5. Oracle Corporation (ORCLEarningsAnalystsFinancials): benefits from the growth in cloud demand, although the most recent quarter was disappointing. Oracle experienced a drop in hardware product sales, which dropped 23% from last year. The company is introducing SPARC M5 and T5 servers, which the company claims is 10x faster than older models.
6. International Business Machines Corp. (IBMEarningsAnalystsFinancials): Big Blue benefits from selling consulting services for cloud solutions. IBM also makes Power 780 servers that compete with those offered by Oracle.

Computer Associates Technologies  (NASDAQ: CA  ) , Amazon.com (NASDAQ: AMZN  ) , and NetSuite (NYSE: N  )  are the best-performing stocks year to date in the cloud computing index. What makes each of these three companies special? How did they manage to build strong economic moats in a fierce landscape? More importantly, after experiencing more than a 40% increase in stock price, can they still be considered attractive investment opportunities?

 

Sources:

http://www.fool.com/

http://wire.kapitall.com/

Beyond the moon and new horizons:Best Blue Chip Stocks

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Blue chips bring stability to an otherwise unstable world. Thank to dividends I am confident in their ability to return on income no matter how small that is. This means a high performing blue chip is legendary. These are the legendary stocks of 2013 some might still have potential for this year. The companies have consistent growth and some are undervalued. Placement of these would be 50% or more of a portfolio to bring in structure to a long term strategy.

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Leader in branded foods

Nestlé (NSRGY.PK) is a bit like Philip Morris except that its products are more healthful for consumers. Every day this Swiss multinational corporation, the world’s largest food and beverage maker, sells its brands to a billion customers worldwide.

ExxonMobil (XOM) seems to emerge stronger from each wicked commodity cycle. The global footprint of this energy colossus and its integration of production and refining operations help to smooth out the volatility. But the real key is a culture of disciplined capital allocation, says Kurt Wulff, an independent energy consultant in Needham, Mass.

AGNC Key Stats

Name: American Capital Agency
Website: http://www.agnc.com Sector: REITs Number of ETFs Holding AGNC: 31 (see which ones) Total Market Value Held by ETFs: $135,765,289.07 Total Market Capitalization: $4.9 Billion % of Market Cap. Held by ETFs: 2.76%

SCCO Key Stats

Name: Southern Copper
Website: http://www.southernperu.com Sector: Non-Precious Metals & Non-Metallic Mining Number of ETFs Holding SCCO: 40 (see which ones) Total Market Value Held by ETFs: $170,562,046.55 Total Market Capitalization: $22.5 Billion % of Market Cap. Held by ETFs: 0.76%

NS Key Stats

Name: NuStar Energy L.P. Website: http://www.nustarenergy.com Sector: Oil & Gas Refining & Marketing Number of ETFs Holding NS: 2 (see which ones) Total Market Value Held by ETFs: $307,714 Total Market Capitalization: $3.5 Billion % of Market Cap. Held by ETFs: 0.01%

T Key Stats

Name: AT&T Inc Website: http://www.att.com Sector: Communications Services Number of ETFs Holding T: 94 (see which ones) Total Market Value Held by ETFs: $4,323,274,885.77 Total Market Capitalization: $167.9 Billion % of Market Cap. Held by ETFs: 2.57%

SCCO — 8.8% Yield

 

Read more at http://www.kiplinger.com/article/investing/T038-C000-S002-7-blue-chips-to-hold-forever.html?page=2&si=1#hzrFCZgAyMHaZpqT.99