Monday, November 19, 2012

50 Truths About Investing


By: Morgan Housel
Sorry, but ...

1. Saying "I'll be greedy when others are fearful" is much easier than actually doing it.

2. The gulf between a great company and a great investment can be extraordinary.

3. Markets go through at least one big pullback every year, and one massive one every decade. Get used to it. It's just what they do.

4. There is virtually no accountability in the financial pundit arena. People who have been wrong about everything for years still draw crowds.

5. As Erik Falkenstein says: "In expert tennis, 80% of the points are won, while in amateur tennis, 80% are lost. The same is true for wrestling, chess, and investing: Beginners should focus on avoiding mistakes, experts on making great moves."

6. There are tens of thousands of professional money managers. Statistically, a handful of them have been successful by pure chance. Which ones? I don't know, but I bet a few are famous.  (more)

Buy This Low-Risk Utility Stock on a Pullback

PPL Corp. (NYSE:PPL) — This energy and utility holding company engages in the generation, transmission, distribution and sale of electricity to wholesale and retail customers in the United States and United Kingdom.
Earnings estimates for 2013 have been raised to $2.45 versus $2.41 in 2012, and its capital investment program supports an average growth rate of 8% from 2012 through 2016, according to S&P.
The stock is in a broad sideways consolidation with support at $27 to $27.50 and resistance at its 200-day moving average at $28.40. With a dividend yield of over 5% and potential for earnings and dividend increases, it is a good candidate for safety and total long-term return. Try to buy it on a pullback to support at $27 to $27.50.
Trade of the Day – PPL Corp. (NYSE:PPL)

Belinda Mays – Becoming Self-Sufficient In The Greater Depression

from FinancialSurvivalNet
Belinda Mays had a problem. The Great Recession hit and her career in commercial real estate was suddenly over. She needed to find something else to do and fast. Her position was not unlike many of you out there. After a short time period, she got over her grief and anger; she did a personal inventory and discovered a number of personal skills and assets that formed the basis of her business. Thus was born The Success Project, and she’s never looked back. We can all learn a great deal from Belinda about following our dreams and our passions.
Click Here to Listen to the Audio

Chart of the Day - Healthcare Trust of America (HTA)

The "Chart of the Day" is Healthcare Trust of America (HTA), which showed up on Thursday's Barchart "All-Time High" list. Healthcare Trust of America posted an all-time Thursday at $11.68 and closed up +3.15%. TrendSpotter has been long Healthcare Trust since Nov 2 at $10.12. In recent news on the stock, the company announced Thursday that it will be added to the MSCI US REIT Index (RMZ) effective Monday, December 3, 2012, as a result of MSCI's Semi-Annual Index Review. Healthcare Trust of America, with a market cap of $447 million, is a full-service real estate company focused on acquiring, owning and operating high-quality medical office buildings that are located on the campuses of nationally recognized healthcare systems in the major U.S. metropolitan areas. Since its formation in 2006, HTA has built a portfolio of properties that totals approximately $2.5 billion based on purchase price and is comprised of approximately 12.5 million square feet of gross leasable area located in 27 states.

Gerald Celente on the Jeff Rense Show – November 14, 2012

This 'Loser' Stock is on the Verge of a Major Technical Reversal

If you followed the recent presidential debates, you may have heard presidential candidate, Mitt Romney, attack the luxury electric car maker, Tesla Motors (NASDAQ: TSLA), calling the company a "loser."

On the heels of President Obama's re-election, the comment seems ironic. Not only did Tesla recently report upbeat third-quarter results, but its flagship Model S luxury sports sedan just won a prestigious industry award. It was named "Automobile of the Year" by Automobile Magazine.

With President Obama's clean energy policy plans, the electric vehicle company should continue to shine. Obama wants to see at least 1 million hybrid and electric vehicles on the road by 2015. And Tesla is working hard to help make this goal a reality.

The car company is currently producing more than 200 cars a week, or more than 10,000 cars a year. According to management, this production level is the critical threshold needed to generate positive operating cash flow. Resolving important production issues, the company now plans to further ramp up production to 400 cars per week by December 2013.

In addition, Tesla plans to install "fast-charging stations" on all major routes throughout the United States by the end of 2013. These solar-powered stations will recharge Tesla vehicles, enabling them to run for about 250 miles per charge. According to Tesla's CEO Elon Musk, these charging stations will be a major breakthrough in electric vehicle technology, and it will take about as long to recharge the car as it would to stop for gasoline and a bathroom break in gas-powered vehicle.

With all these positives, the so-called "loser" looks quite appealing.

Although shares have been on a major downtrend since March 2012 -- falling about 33% from their late March high of $39.95 to a mid-October low of $26.86 -- the stock appears to be on the verge of a major technical reversal.
TSLA Chart
Upon hitting support at the $26.86 level, shares have been moving up. At $31.38 at the time of this writing, the stock appears ready to test the major downtrend line. If Tesla can bullishly break resistance, marked by the downtrend line, the stock could pop, and shares would likely surge up to the next significant resistance level. No significant resistance occurs until around $36.42, a high in late 2010.

The bullish technical outlook is supported by an upbeat fundamental outlook. Due to increased deliveries of the company's flagship Model S sedan, management projects full-year 2012 revenue will be in the range of $400 million to $440 million, a gain of at least 95% from last year.

With increasing demand for energy-efficient vehicles, analysts' project first-quarter 2013 revenue will jump a whopping 1,100% to $30 million, from $362 million in the comparable year-ago period.
Although the earnings outlook is not as optimistic, analysts do expect a positive outcome in the coming quarters.

For full-year 2012, analysts' project earnings will fall to -$3.07 per share, from -$2.21 per share last year. However, as the company carries out its plans to increase manufacturing efficiencies and cut costs, analysts expect the earnings story to dramatically turn around. Earnings are expected to go from -$0.76 per share in the first quarter of 2012 to -$0.16 per share in the first quarter of 2013. And full-year 2013 earnings are estimated to come in at +$0.16.

Risks to consider: While electric vehicles are making in-roads with energy-conscious consumers, Tesla is not yet a well-known car company. In order to win over more drivers, Tesla will need to establish greater brand awareness, beating out better-known competitors like Ford (NYSE: F) and Toyota (NYSE: TM) -- both of which offer hybrid vehicles. Tesla is a relatively new company (founded in 2003), and as its cars continue to earn prestigious accolades, greater consumer brand awareness should follow, boosting future sales.

Recommended Trade Setup:
-- Buy TSLA at $31.38 or below
-- Set stop-loss at $26.82, slightly below current resistance
-- Set initial price target at $36.42 for a potential 16% gain by mid-2013

The Under $3 Stock Everyone Hates is Signaling a 'Buy'

Shares of Groupon (NASDAQ: GRPN) have done nothing but fall since going public a year ago, losing 85% of their value.

So, why on earth would I suggest buying it?

For starters, shares are their cheapest ever. After a bearish earnings release and cautious forecast on Nov. 8, GRPN lost nearly a quarter of its value the next day. Technically, the stochastics indicator says the stock is dramatically oversold. There is also bullish divergence in MACD, a positive sign for the stock.

In other words, the baby may have been thrown out with the bathwater. I think the shares are likely to try to fill the gap formed the day after the earnings release and rally back toward the $4 level. And the downside risk can be limited with a stop-loss about $0.50 below current levels, making the risk-to-reward ratio a very attractive 2:1.

Fundamentally, what I also like about the "deal of the day" coupon website, is its shift in business model. And I'm not the only one who does. In the recently ended third quarter, private investment firm Tiger Global Management put $6 million into Groupon shares.

At the height of Groupon's allure, search giant Google (NASDAQ: GOOG) was willing to shell out $6 billion to acquire the coupon company. The deal ultimately fell through on antitrust concerns. Several competing daily deal sites then sprung up, such as Amazon's (NASDAQ: AMZN) Local and eBay's (NASDAQ: EBAY) Daily Deals. It seems Groupon's business model was just too easy to replicate.

Now, attempting to set itself apart from the competition, Groupon is expanding from a pure coupon site to a software solutions company that serves multiple clients, from online deal-seekers to small businesses.

Through the Groupon Payments app, customers can easily purchase their items directly through Groupon, via credit card. Groupon charges a fee every time a credit card is swiped. The online payment system is somewhat akin to PayPal, or the increasingly popular mobile phone card reader, Square, now used by Starbucks (NASDAQ: SBUX).

Groupon has also implemented an iPad-based point-of-sale solution for restaurants, called "Breadcrumb." The app enables servers to take orders online, search for menu items, process payments, split customer bills and view sales data in real-time. The software is designed so every time a customer pays the restaurant with their credit card, Groupon gets a cut.

As Groupon diversifies beyond daily coupon deals, it appears to be creating a more sustainable, more diverse and less replicable business model. Worst case, if none of these new directions prove successful, the company could be an attractive takeover target. It has a huge subscriber that, in itself, is likely worth multi-millions.

From a technical perspective, what I first want to point out is the stochastics indicator (an overbought/oversold measure) is at its most oversold level in the past several months. Further, the rally during the past several days puts it at the threshold of a buy signal.
MACD also displays bullish divergence. Note how in September, when the shares were bottoming at around $4, MACD hit a low. Now that the shares have touched a low of $2.60, MACD is much stronger, a technical signal called bullish divergence. This indicator often foreshadows a turnaround.

The gap formed by the post-earnings release in the Nov. 9 trading session is almost $1 in height. The shares closed at $3.92 on Nov. 8 and opened at $3 on Nov. 9, ultimately careening to a low of $2.71 for the day. Volume was 116 million shares, nearly 8 times the 15.3 million average daily share volume of the past three months. That suggests massive institutional selling and leaves room for savvy traders to scoop up the shares on the cheap.

After a management change was announced this week, the stock has been putting in slightly higher bottoms and peaks. It appears to be finding support around the $2.60 level.

I believe GRPN could ultimately trade back to about $4 and attempt to close the gap before finding serious resistance. If the stock breaks the $2.60 low by very much, I will admit I'm wrong and accept my trading loss.

This possible technical turnaround story is supported by bullish analyst forecasts. For the full 2012 year, analysts' project deal-seeking consumers will help push Groupon's revenue up 44%, to $2.3 billion, compared to $1.6 billion a year ago. In the first quarter of 2013, analysts' expect revenue will expand 18% to $661.4 million, compared to $559.3 million in the year-earlier quarter.

The earnings outlook is also optimistic. Due to international demand, analysts expect full-year 2012 earnings will turn positive, from -$0.72 in 2011 to +$0.17 this year. For the first quarter of 2013, earnings are expected to increase 50% to $0.03, from $0.02 in the comparable year-ago period. For the full year, analysts project 2013 earnings will be $0.24, a 41% increase from the $0.17 expected in 2012.

In addition to an upbeat fundamental growth outlook, the company is currently fairly valued. Groupon's 5-year expected PEG ratio (price to earnings divided by growth rate) is 0.63. In general, a PEG of 1 or under shows attractive valuation.

I am willing to bet the sell-off in GRPN's shares is overdone and a rally is more likely than a continued sell-off, so I plan to go long GRPN.

US Weekly Economic Calendar

time (et) report period Actual forecast previous
10 am Existing home sales Oct.   4.80 mln 4.75 mln
10 am Home builders' index Nov.   -- 41
8:30 am Housing starts Oct.   835,000 872,000
8:30 am Weekly jobless claims 11-17
N/A 439,000
9 am Markit flash PMI Nov.   50.5 51.0
9:55 UMich consumer sentiment Nov.   -- 84.9
10 am Leading indicators Oct.   0.0% 0.6%
  Thanksgiving Day
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