Thursday, April 11, 2013

Dow Dogs Are Outperforming This Year

by David Templeton, Horan Capital Advisors
An investment strategy some investors follow at the beginning of each year is investing in the Dogs of the Dow. As noted in prior posts, the Dow Dog strategy consists of selecting the ten stocks that have the highest dividend yield from the stocks in the Dow Jones Industrial Index (DJIA) after the close of business on the last trading day of the year. Once the ten stocks are determined, an investor would invest an equal dollar amount in each of the ten stocks and hold them for the entire year. The strategy has generated mixed results over the years.
For the Dow Dog investor this year though, the dogs are outperforming the Dow Index as well as the S&P 500 Index (10.5% return YTD) as noted in the below table. As of the market’s close today, the Dow Dogs have returned 15.9% versus the Dow Industrial Index return of 11.5%.
Screen Shot 2013-04-09 at 9.29.34 AM
Source: Dogs of the Dow

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The Secret Energy Trade Investors Are Ignoring

Energy has been one of the worst-performing sectors in the S&P 500 during the past year.

While the broader market is up an impressive 13%, the energy sector has gained just 2.5%. That performance looks even worse when compared with the market’s most bullish sectors, with health care up 29% and so-called consumer defensive stocks (which include makers and retailers of food and household and personal goods) up 23%.

But overall weakness in energy stocks is masking a lone group of standouts from the lackluster sector: refineries.

In fact, this group of stocks hasn't just been strong relative to its energy peers -- it has been one of the best-performing industries in the entire market in the past year. Take a look at the chart of two leading companies.
This growth is being driven by a phenomenon known as the crack spread. 
The crack spread is the profit a refiner can expect to realize from converting a barrel of oil into gasoline. This spread has been extremely profitable in the past year because of a profound divergence in the price of Brent crude from Norway and West Texas Intermediate crude. (more)
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The Perfectly Legal Way to Pay Zero Tax for Generations

Most people think of tax shelters as being available only to massive corporations and the ultra-rich. But if you have a job, you have access to a tool that can help you and your family avoid having to pay any taxes on your investment income not just throughout the rest of your life but for your heirs' lifetimes as well. Best of all, it's never been easier to take advantage of these benefits. All it takes is opening a Roth IRA.

How you can become like a big corporation
Back in 2011, the Institute on Taxation & Economic Policy collaborated with the Citizens for Tax Justice to create a list of what it called "Corporate Taxpayers & Corporate Tax Dodgers" covering the preceding three years. Noting factors like accelerated depreciation, deductions for stock options, offshore tax shelters, and industry-specific tax breaks, the report identified many companies that not only avoided paying income tax over that three-year period but also got net refunds back from the U.S. Treasury. Corning (NYSE: GLW  ) and Honeywell (NYSE: HON  ) were among the 30 companies that had negative tax liability from 2008 to 2010, according to the report, while Wells Fargo (NYSE: WFC  ) and AT&T (NYSE: T  ) received the largest amounts in what the report called "tax subsidies" -- representing the difference between what those companies paid in tax versus what they would have paid under the 35% corporate tax rate. Through perfectly legal means, these companies all managed to hold the IRS at bay. (more)

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McAlvany Weekly Commentary

Japanese Currency Attack: Welcome to the Next World War

About this Week’s Show:
-Bank of Japan sets course for inflation
-Savers forced to risk all
-Gold to add $400. on central bank printing

Read | Subscribe@iTunes

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Bitcoin Soars to Record $265, Then Crashes 50% to $130

bitcoinJust a few hours ago Bitcoin was soaring to new all-time highs at $265, a double since Monday.   In the last 2 hours however, the virtual currency has collapsed over 25%, and just broke below $200.
*Update: Bitcoin has now crashed over 50% plunging into the $120′s, with free-fall in progress

25% intra-day volatility is one good way to ensure no new businesses begin accepting the virtual currency as an alternative to US dollars.

And free-fall continues, Bitcoin now down over 50% on the day!:
bitcoin crash
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Chart of the Day - XL Company Switzerland GMBH (XL)

The Chart of the day is XL Company Switzerland GNBH (XL).  The stock is on today's New High list and was at the top of the list when sorted for Barchart technical buy signals.  With 100% Barchart technical buy signals, 10 new highs and a gain of 4.82% this month; the stock also has a Trend Spotter buy signal.

The Company is a global insurance and reinsurance company providing property, casualty, and specialty products to industrial, commercial, and professional firms, insurance companies and other enterprises on a worldwide basis. The Company is organized into three operating segments - Insurance, Reinsurance and Life Operations.

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Robert Shiller Calls Bond Market “Dangerous”

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