AIA Advocate for Absolute Returns : Economic Forecast

Association of Investor Awareness - Week of 08/27/2009

Research & Editorial Staff — Thu, 27 Aug 2009 19:06:00 GMT

In This Issue:

The Outlook Is Better For An Improving Economy
Profit Growth Can Be Misleading
Big Companies Still Have An Advantage
Emerging Countries Are Making A Strong Recovery
Two Long Term Dividend Payers Look Good
Fasten Your Seat Belts, Oil Prices Are Roaring Back
The Bottom Line This Week

It's been a bear market for bears recently as their many doom-and-gloom pronouncements have gone wanting. The old bull just won't quit, despite all the logical arguments that predict his demise. It's a good lesson that paying attention to what is actually happening in the stock market is more profitable than following theories. Mother Market always has the last word.

The numbers tell the story. Since our last letter on July 29, the Dow and the Nasdaq have gone up 5.2% and 2.9% respectively. In only one of the four weeks did the market slide into negative territory, and then by less than 1%. By contrast, the best week registered a 7.3% gain. That's the sort of tailwind we like to have.

The Outlook Is Better For An Improving Economy

Of course, the rally could come to grief overnight. Stocks are rising on the expectation that the economy is finally coming out of recession, and companies will again make oodles of money. The unofficial office pool index suggests that most people on Wall Street think growth rates will be higher than Grandpa Bernanke at the Fed is predicting.

One accomplished tea leaf reader we talked to said his off-the-record prediction is that growth may exceed 4% next year. That would be quite a jump from two points behind the zero line, which is where the economy is today.

Profit Growth Can Be Misleading

Even if the economy doesn't win the long jump next year, most well-run companies should continue to see their profits increase. That's because nearly all of them have been on lean-and-mean programs that have cut costs to the bone. So even though revenues have been abysmal, profits have been on an upswing.

Of course, lean-and-mean can only go so far. At some point, all the useful cuts will have been made and profits must come from actually selling more goods. That change will mark the real beginning of a recovery.

Big Companies Still Have An Advantage

The big blue chips have a king-sized advantage when it comes to selling more products, even if the optimists are wrong and the U.S. economy just dribbles along. The global economy, where most mega companies do most of their business, is still doing well – and it should do even better next year. If so, the multinationals will once again prove that big is the size to be in the 21^st century world.

The stronger global economy will also help many U.S. firms that don't have facilities overseas. Many exporters are beginning to see their order books fill up as foreign firms ramp up their operations to meet their expected needs. As a significant side benefit, rising exports will help the U.S. trade balance, which has been suffering mightily for several years.

Emerging Countries Are Making A Strong Recovery

Speaking of the global economy, nobody is doing better than the emerging market countries. You may remember them from a few years ago when they were also on a roll. However, the high achievers plunged when their main customer, the U.S., slipped into the red.

Now many developing countries are growing quickly again. This time around, the countries are tapping into their own regional markets rather than putting all their efforts into winning U.S. orders. Fortunately for the local suppliers, the approximately 2.5 billion people in developing countries want just as many plastic salad shooters and cars as their American counterparts.

Doing best of all are the BRIC countries (Brazil, Russia, India, and China). The first two are in the catbird's seat for growth because they are major suppliers of energy and raw materials to industrial countries of all sizes.

From an investor's standpoint, emerging markets still look good for long-term portfolios because they are many years away from reaching their peaks.

To that end, we once again recommend the iShares MSCI Emerging Markets Index ETF (EEM) http://finance.yahoo.com/q/bc?s=EEM. When we first presented the fund on June 26 it was $32.32. The price is now $36.47, a 12.8% gain. We think more is on the way, but we can expect some bumps along the road. Emerging markets will always be volatile, which is why we think the best way to invest is with a diversified fund.

Two Long Term Dividend Payers Look Good

Closer to home, we continue to recommend stocks that pay rising dividends. Although fears about inflation are continuing to make the rounds, deflationary forces are still at work in our economy. As long as that situation continues –which we think will be longer than most people think— the buying power of dividends will increase.

If you purchased a selection of the blue chip companies we have been recommending in recent months, you probably don't need to make additions to your dividend portfolio. But if you want to gild the lily, we think you should add Sysco Corp. (SSY) to the group. http://finance.yahoo.com/q/bc?s=SYY

Sysco is the leading supplier of food to colleges, hospitals, corporate cafeterias, hotels, and restaurants in the U.S. The company has been winning many orders because it can operate more efficiently than its customers can do on their own. At the same time, Sysco can usually provide a better and more diverse menu.

We think Sysco has excellent prospects for several years of growth. The company has been strengthening its business capabilities by purchasing other food suppliers in its field. As a result, Sysco will be coming out of the recession much better equipped to generate new business than any of its rivals.

Sysco also shines in the dividend department. The company currently boasts a 3.8% yield which should increase by 10% annually for the next few years. The stock price is also likely to do well.

Another stock with an attractive yield is Abbott Laboratories (ABT) a 121 year old company that produces and sells healthcare products throughout the world. http://finance.yahoo.com/q/bc?s=ABT

Abbott, of course, is best known for its many successful pharmaceuticals. But the company also offers a variety of diagnostic products that are in widespread use. In addition, Abbott produces infant formula and adult nutritional drinks – and it supplies stents, vessel closure devices, and related products for coronary applications.

One of the reasons we think that Abbott is attractive is the stock is down due to all the worries about a national health care program. If such a plan is passed, there is a possibility that drug prices will be forced down. However, we think the large increase in the number of people who will receive care will more than make up for the shortfall.

Abbott's yield currently stands at 3.5%. As with Sysco, Abbott Labs will probably continue to increase its annual payout, as it has been doing for 37 straight years. Nearer term, the stock should make an attractive catch-up move once the outlook for national health care clarifies.

Fasten Your Seat Belts, Oil Prices Are Roaring Back

Although it has not yet caused gasoline prices to shoot up, the price of oil has more than doubled since its low point earlier this year. In fact, at about $75 a barrel, oil is about half way back to its all-time high of $149 that it set during the late, great economic boom.

The main reason oil prices have been rising strongly is China and other developing countries have been buying all they can find. The countries are stockpiling as much as possible because they think that supplies will become tight again as the global economy improves. We think they are right.

China is not just buying oil, it is also buying producers. The country has become Brazil's biggest customer, and is rumored to be in negotiations to purchase the largest oil company in Venezuela.

In Africa, where there are few local oil companies with which to do business, China's approach is to extract the oil itself by setting up its own operations. Local governments and warlords are happy to give China a free hand to do whatever it wants in exchange for their piece of the action.

The price of oil is like the proverbial tide that lifts all boats. When it goes up so do the profits for companies that sell it. Since ExxonMobil (XOM) has a delightfully large amount of the stuff, we think it is the company to buy. http://finance.yahoo.com/q/bc?s=XOM

The Bottom Line This Week

Like the Energizer bunny, the stock rally just keeps going. The downside with both the bunny and the rally is, when the end comes it will be sudden. Therefore, we think this would be a good time to take some profits off the table, and to put stop loss orders on everything else.

Two new companies that look very good to us are Sysco Corporation and Abbott Laboratories. Because they are in defensive sectors, the stocks should not be as sensitive to a market correction as their more aggressive cousins. We also like the dividends the two companies pay, and the prospects for more.

With oil prices on a tear again, this appears to be a good time to buy more ExxonMobil, a stock we recommended on several occasions.

Until Next Time

The AIA "Advocate For Absolute Returns", a publication of The Association for Investor Awareness, Inc., tracks market trends, industry news, the SEC, global trade and finance and Washington developments for you because they affect your investments. But who doesn't? Many sources report these issues as abstract facts. We feel that's not enough. The AIA Advocate's job is to warn you of what's important and how these developments translate to ground-level forces and threats that directly affect your wealth as well as your current investment opportunities. Not just information, but information you can use. Until next Thursday...

Association of Investor Awareness - Week of 06/25/2009

Research & Editorial Staff — Thu, 25 Jun 2009 14:32:00 GMT

In This Issue:

Mixed Economic Signals Worry Investors
Another Kind Of Bailout Is Also A Concern
A New Economic Reality Is Emerging
For Efficient Companies, Slow Growth Can Be Profitable
Your Best Strategy Now
Three Analysts And A Fool Have Recommended This Stock
The Bottom Line This Week

In our last issue we remarked that "the rally may be getting short of breath." Shortly thereafter, the huffing and puffing began in earnest. On Monday of this week, definite wheezing sounds were heard as the bull dropped to its knees just short of pushing the market into positive territory for the year. Perhaps the old boy was out of shape after letting the bear take over for six months.

In any event, since May 28 the Dow dropped 0.8% while the Nasdaq managed to squeak ahead a miniscule 0.8%. More importantly, both measures slipped 3.0% and 1.7% last week – and they are even lower now.

Mixed Economic Signals Worry Investors

It is not possible at this early juncture to know if the bear has returned. However, we can say that many of the economic "green shoots" that have attracted so much attention of late are beginning to look a bit wilted.

Sales of existing homes are typical of the economic signals that are making investors nervous. Sales increased 2.4% in May, which suggests that the housing market is finally turning around. At the same time, however, home prices dropped again and are now 16.8% lower than they were a year ago. Economists can't decide if the increasing sales offset the negative consequences of declining prices. Until the matter is settled, many investors are taking a time out.

There are also mixed signals about inflation and interest rates. On the one hand, rising oil and commodity prices are clearly inflationary. Ditto for the money supply that is shooting up due to all the king-sized bailouts from Uncle Sugar.

But at the same time, wages are dropping, layoffs are increasing, household wealth is plummeting, and several states are on the edge of bankruptcy – all of which point to continued deflation. Since the tug of war between inflationary and deflationary forces could go either way, many investors are sitting on their money.

Lastly, investors were counting on a solid global turnaround in the coming months. Those hopes were put in question when the World Bank reported that growth would contract 2.9% this year instead of expanding 1.7% as previously predicted. Oops! Even if the numbers are not spot on, the reversal in the outlook is disconcerting.

Another Kind Of Bailout Is Also A Concern

It's not just investors who are nervous about the economy. The grand poobahs at America's largest companies are also moving their chairs closer to the door. In fact, many company officers are leaving the party altogether.

According to TrimTabs, a respected group of investment analysts, in June insiders at S&P 500 companies unloaded $2.6 billion worth of shares, vs a paltry $120 million purchases – and the month isn't even over yet. That lopsided ratio indicates that many executives believe the business outlook is not very good. Although company insiders are not always right, their track records are much better than from Wall Street number crunchers who aren't on the front lines.

A New Economic Reality Is Emerging

Of course, the disappointing green shoots news is no surprise to our readers. We have been arguing for months that "a recovery will probably be more modest" than most analysts and investors expect. Instead, the economy is probably just settling into a lower pace of activity where it may remain for years.

The biggest impediment to a strong rebound is this recession isn't just another contraction in the business cycle. Instead, the economy is adjusting to major structural changes in banking, credit, trade, manufacturing, consumer credit, and many other conditions – all of which are scaling down.

For example, many homeowners and realtors think that rising home sales indicate that the housing market will soon be moving up again. That may be true in many markets. However, rebounds to anywhere near pre-collapse levels are almost certainly out of the question for several years.

Likewise, manufacturers will probably need to rehire some workers to replace inventories that have been drawn down over the past year or so. But another all-out production boom is very unlikely. The outlooks are similar for the other engines of growth.

The biggest change is occurring on the social front. The madcap spending binge of a few years ago is being replaced by the desire to be frugal and put money away for the future. Even people with good incomes are changing their spending habits. The old phrase "He who dies with the most toys wins," is being replaced with "A penny saved is a penny earned." Since consumer spending is two thirds of the economy, the new thrift indicates that growth will be very modest for some time to come.

For Efficient Companies, Slow Growth Can Be Profitable

Some readers may wonder how any companies can possibly prosper given the big economic problems that dominate the news.

The answer is that the front pages don't tell the whole story of what is happening in America. The economy has a lot more going for it than banking, housing, and auto making. Although earnings are down in nearly every industry, most companies are still in the black.

That's especially true for multinational firms that do a substantial amount of business in countries with stronger growth rates than in the U.S.

Your Best Strategy Now

Thanks to the rally, we have seen excellent gains in our blue chip stocks. Although the upturn may have a second wind and continue for another few weeks, we think the possible rewards are not worth the risk. Accordingly, this would appear to be a good time to take some profits off the table.

Stocks that you intend to keep for the long haul you should protect with stop loss orders. If you are a conservative investor, using a tight stop of 10% might be in order, although choosing 15% would give prices more wiggle room.

More aggressive investors should consider using a 20% or a 25% stop to protect against a large loss in case the market is blindsided by an unforeseen event.

All investors who use stop loss orders should make them trailing stops that will follow any additional price rises every step of the way. The most effective trailing stops are based upon a percent of the price, but you can also choose fixed prices if they suit your needs better.

We also think you should make use of a correction to buy high quality stocks that fall significantly in price. All the high quality stocks that we have been recommending of late should be on your list including: ConAgra Foods (CAG) http://finance.yahoo.com/q/bc?s=CAG, ExxonMobil (XOM), http://finance.yahoo.com/q/bc?s=XOM, Hormel Foods (HRL) http://finance.yahoo.com/q/bc?s=HRL, Colgate Palmolive (CL) http://finance.yahoo.com/q/bc?s=CL, and Procter & Gamble (PG) http://finance.yahoo.com/q/bc?s=PG. We think the blue chip group is as close to being a sure long term bet as Wall Street ever offers.

A bit more aggressive, but with prospects to match, are Alcoa (AA) http://finance.yahoo.com/q/bc?s=AA, Deere (DE) http://finance.yahoo.com/q/bc?s=DE, General Electric (GE) http://finance.yahoo.com/q/bc?s=GE, and Caterpillar (CAT http://finance.yahoo.com/q/bc?s=CAT. All the companies are tied to the global economy, they are very efficient, and they can prosper even in a slow growth environment.

A new investment that we believe has excellent prospects is the iShares MSCI Emerging Markets Index ETF (EEM) http://finance.yahoo.com/q/bc?s=EEM. Emerging nations are growing much more strongly than in the U.S., and they should continue to do so. The BRIC countries in particular (Brazil, Russia, India, and China), are developing their large internal markets and are becoming less dependent upon exports to Europe and the U.S. The BRIC countries are also signing currency exchange agreements with each other to reduce their dependence on the U.S. dollar – but that's a story and an opportunity we must leave for next time.

THREE ANALYSTS AND A FOOL HAVE RECOMMENDED THIS STOCK

Last month we reported on a significantly undervalued China stock we had been following for quite some time. Those of you who took a position in Universal Travel Group (NYSE Amex: UTA) http://finance.yahoo.com/q?s=UTA have been rewarded with a very nice upward move of 44%, with Wednesday's close at $10.10.

Since moving to the American Stock Exchange, UTA has been showing up on more radar screens than a 757. The Company was profiled by "The Motley Fool CAPS" on June 23, 2009. One comment that caught our attention was..."Universal Travel has outpaced the other 11 stocks in the CAPS Travel Services sector by orders of magnitude. Shares of the growing travel company are up nearly 50% over the past month (and up more than 223% year to date),compared to the 6% increase across the sector since late May."

You may recall that Universal Travel specializes in online and customer representative services. The Company offers packaged tours, air ticketing, hotel reservation and agency services. They racked up some great numbers from 2005 through 2008: 202% Compound Annual Growth Rate (CAGR) ... they have no long-term debt ... $16.2 million in cash ... $30.2 million in working capital... and earnings of $14.5 million for the full year ending 12/31/08.

By our calculations, they have earned $1.20 ttm, and at a closing price of $10.10 on 6/23/09, they are still trading at less than a 8.5 P/E multiple. Comparable industry multiples range from 25 to 43 times earnings...even with its recent share price increase, Universal Travel has a lot of upward potential.

Three independent analysts have issued recommendations on UTA in the past eight months...the latest indicating a price target in the $16 to $18 range. We think that could be conservative, given the average P/E multiple of 34 might suggest a price approaching $40 per share. Given the Company's YOY growth of top and bottom lines, that's certainly possible in the next 12 to 18 months.

Go to http://cnutg.ir.stockpr.com/ for more details.

The Bottom Line This Week

The green shoots that most investors have been expecting are here, but they are developing more slowly than expected. We think the reason is the U.S. economy is adjusting to a lower level of growth instead of making a traditional post recession rebound.

Fortunately, well-established companies are adept at squeezing profits from slack markets. At the top of that list are our top-rated blue chip companies. All of them may be purchased if a correction makes their prices attractive again.

Investors who will accept extra risk in return for the prospect of higher profits should look to emerging markets where growth rates remain high. Among them, the BRIC countries appear to offer the greatest long-term potential, with China leading the pack.

In the interest of full disclosure, John M. Casson, Executive Director of AIA is president of Casson Media Group, Inc. (CMG), an affiliated company. CMG has received cash compensation and allocated $2500 for the transmission of this publication as part of a comprehensive corporate communications services agreement for Universal Travel Group. Although the Research and Editorial Staff of AIA conducts independent research and analysis, you should be aware of this potential conflict of interest.

Association of Investor Awareness - Week of 01/08/2009

Research & Editorial Staff — Thu, 08 Jan 2009 18:52:00 GMT

In This Issue:

It's Time To Start Looking Beyond Current Woes
A Big Cash Horde Is Always Bullish
When It Comes To Rebounds, Too Early Beats Too Late
Eight Blue Chips Many Pros Are Buying
The Bottom Line This Week

There's nothing like the start of a new year to shake investors out of a funk. It happened again a few days ago when the market rallied as the first of January approached. The week the calendar turned over, the Dow and the Nasdaq went up an impressive 6.1% and 6.7% respectively. It was an encouraging end to a dismal year that saw the two indices plunge 33.8% and 40.5% - the third worst performance in recent memory.

Alas, it is far too early to declare an end to the bear market. With manufacturing and home sales dropping to very low levels, it is clear that the economy is still sinking. But as we will discuss later, that doesn't mean that a recovery is off the table for late 2009.

Meanwhile, stocks stumbled during the first three days of this week. By Wednesday afternoon, the market had given up 265 of its hard-won points from the short bout of New Year enthusiasm.

It's Time To Start Looking Beyond Current Woes

Although the market is continuing to be volatile, the uptrend may have longer legs than events this week would suggest. As we reported in a recent issue, investors seem to be losing some of their sensitivity to bad news. Either everyone is so numb that nothing registers anymore, or investors believe the economy is bottoming out and some cautious buying is in order.

We suspect that the latter is the case. The investment press is starting to report that many Wall Street pros with noses for value are starting to launch bottom fishing expeditions. Although nobody is putting everything they have into the market, the amounts being invested are growing steadily.

One of the intrepid investors is Steve Leuthold of the Leuthold Group, a respected institutional research firm in Minneapolis. www.leutholdgroup.com Mr. Leuthold has been a bear for quite some time because he was one of the first analysts to realize the economy was heading for trouble. Recently, however, Mr. Leuthold said, "The stock market is presenting you with one of the great buying opportunities of your lifetime – perhaps the greatest. Stop trying to pick the bottom."

Another good analyst who is starting to pick up bargains is Jim Powell of the Global Changes & Opportunities Report. (www.powellreport.com) In his January newsletter, Mr. Powell wrote, "The CEO's of America's better companies are not jetting around the country in their Gulfstreams asking taxpayers to bail them out. Instead, they are adapting to today's tougher business conditions. Workforces are being slashed, wages are being rolled back, expansion plans are being put on hold, pensions are being cut, and businesses are otherwise becoming lean and mean. Those changes are causing a lot of pain in America, but they are also allowing many companies to earn profits in this damaged economy." Looking particularly good to Mr. Powell are oversold blue chip stocks with global operations.

Not every investment professional is taking long-term positions. Laszlo Birinyi of Birinyi Associates, a money management and research firm in Westport, Conn. is batting for yards rather than touchdown passes. In an interview in the January 5 Barron's, Mr. Birinyi said "We are willing to set up for 10% or 15% gains, especially in a short time period because we've seen the markets reverse so often and so swiftly."

A Big Cash Horde Is Always Bullish

When stocks started to plunge last year, billions of dollars were taken out of the market and were placed in cash accounts. The American Association of Individual Investors estimates that cash now represents 42% of portfolios, an unprecedented amount.

Unfortunately, cash isn't earning good returns anymore – as you are probably painfully aware. The interest rate on 90-day T-Bills is essentially zero. Even 10 year Treasuries are paying only 2.50%. As one retiree said recently, "I went from a comfortable meat and potatoes income to barely getting enough money to buy dog food."

Not surprisingly, investors are more than a little anxious to find a better home for their dollars. When the stock market starts to look attractive again, the flood of money back to Wall Street could give us one of the greatest bull markets in history.

When It Comes To Rebounds, Too Early Beats Too Late

We don't know when the economic tide will turn back up. As we said in recent issues, there is a good chance that we could see some relief towards the end of the year. But even if the market as a whole takes longer to rebound, many individual stocks should start to recover some of the ground they lost during the plunge. In fact, some have already started to rise – as many price charts quickly reveal.

As to the broader market, prices typically begin to recover from a steep downturn from six to nine months before economic growth resumes. That means investors must have the fortitude to buy what they want while the economy is still on the ropes.

It is also typical for new bull markets to deliver most of their gains within a few months –or sometimes weeks- after getting underway. That's another reason that investors should be positioned before a rebound begins.

Eight Blue Chips Many Pros Are Buying

We are not inclined to report what stocks other analysts are recommending, no matter how well known they may be. However, we make exceptions when the luminaries share our foresight, clarity of thinking, and brilliant analysis. Here then –in no particular order- are eight stocks that many pros have been buying, and a few reasons why they are attractive.

Johnson & Johnson (JNJ), an old favorite of ours, is up a bit in price but it still looks attractive with a 13.8% P/E and a 3% yield. http://finance.yahoo.com/q/pr?s=JNJ Earnings will be lower than usual this year but this global supplier of healthcare products has great long-term prospects. JNJ is a Dividend Aristocrat that has increased its payout in each of the past 25 years.

Kinder Morgan Energy Partners (KMP), another of our selections, is an energy storage and pipeline master limited partnership (MLP) that yields a whopping 8.6%. http://finance.yahoo.com/q/pr?s=KMP The issue is down with energy prices, but that appears to be a mistake. The volume of fuels being transported is remaining high.

Consolidated Edison (ED) is a major utility that operates in New York, New Jersey, and eastern Pennsylvania. http://finance.yahoo.com/q/pr?s=ED Since the company's customers have a good history of paying their bills in good times and bad, the yield seems secure. The company's location in normally high-growth areas means it should see more business when the economy begins to recover. This Dividend Aristocrat currently yields 6%.

Deere< (DE) is a well-known maker of farm equipment that does business worldwide. http://finance.yahoo.com/q/pr?s=DE What is less known about Deere is it also makes construction equipment that should be in demand as President-elect Obama's infrastructure projects go into gear. The yield is a modest 2.7% but the prospect for excellent capital gains makes Deere very attractive.

Transocean (RIG) is a world-class deep ocean drilling company whose shares dropped steeply as energy prices tumbled. http://finance.yahoo.com/q/pr?s=RIG However, energy prices are only down because global economic growth has declined. When it recovers, energy will shoot back up again. In fact, oil is already starting to rise. As with Deere, Transocean is primarily a capital gains play.

VF Corporation (VFC) is an anomaly in the clothing industry because its higher end outdoor products held up well as the recession set in. http://finance.yahoo.com/q/pr?s=VFC Although investors are starting to notice that they oversold this stock, the P/E is still just 9.9. The yield is 4.1%. The company also has a top management team that has accumulated $600 million in cash, some of which it may spend on acquisitions this year.

United Parcel Service (UPS) also saw its business hold up well when the recession set in. That's partly because Internet sales remained healthy and UPS is the web's biggest product delivery company. http://finance.yahoo.com/q/pr?s=UPS Of course, UPS is also a good play on the broad economy which is probably why Warren Buffett took a position in the stock. Meanwhile, the yield is a competitive 3.2%.

General Electric (GE) is a somewhat more aggressive play than the previous stocks because the company is suffering both from the economic slowdown and the credit crunch. http://finance.yahoo.com/q/pr?s=GE Still, most value analysts think the stock is oversold for its long-term growth potential. GE is selling for just 8.3 times earnings. The stock yields 7.3%

The Bottom Line This Week

We continue to think the economy will remain weak for the first two or three quarters of the year and then slowly start to move back up. Once there are tangible signs that the outlook is improving, the stock market should start to recover from today's abysmal levels. To catch the move, you must take positions while the recession is still in place and most investors remain glued to the bench.

Some noted investors are already starting to take positions in high quality companies that should benefit greatly from an economic recovery. This week we listed eight such stocks that seem particularly likely to increase in value over the next several years.

Association of Investor Awareness - Week of 01/01/2009

Research & Editorial Staff — Thu, 01 Jan 2009 16:18:00 GMT

In This Issue:

The New Year Should Bring Investors Some Relief
Consumers Have More Money Than Holiday Sales Suggest
Most Corporations Are In Good Financial Shape
Economy Gains From Cheaper Dollars, Oil, And Interest Rates
The Faster The Pain, The Quicker The Gain?
If You Don’t Play, You Can’t Win
The Bottom Line This Week

Investors who hoped that Santa might bring them some cheer over Christmas were sorely disappointed. The usually-jolly old gentlemen dropped off a rather large bag of coal. Even that gift was worth a lot less than would have been true a few months ago.

In any event, when the stock market closed on Christmas week, the Dow and the Nasdaq were down another 0.7% and 2.2% respectively. The mood brightened over the weekend when unemployment claims dropped unexpectedly. During the last three trading days of 2008, the market went up 260 points. We suspect that the occasion will be celebrated with a little extra bubbly on New Years Eve.

Of course, Wall Street’s revelers will need to overlook the fact that the S&P 500 went down a dismal 41% during 2008. It wasn’t the worst annual performance in history, but it was the worst in the memory of most investors living now.

The New Year Should Bring Investors Some Relief

On the brighter side, we continue to think that 2009 will be a better year than 2008. Although we can expect to see many stock prices drop to new lows, and many venerable companies go bankrupt, many analysts think the worst of the crisis is probably behind us.

There are even some indications that the economy will begin a partial recovery in 2009. The downward momentum will almost certainly continue during the first quarter when growth is likely to shrink by 4% or so. However, by the third quarter growth should start to slowly improve, although it is likely to remain below water. But by the fourth quarter, the GDP may tiptoe into the black – but not by much.

Consumers Have More Money Than Holiday Sales Suggest

The biggest positive for the economy is consumers are in better shape than the recent retail sales figures would indicate. In the December 26 issue of the Wall Street Journal, Zachary Karabell, president of River Twice Research, www.rivertwice.com pointed out that the U.S. credit system didn’t allow consumers to take on the ruinous leverage that the lenders themselves used. As a result, household wealth is still about $45 trillion. (That’s trillion with a "T".) In addition, a third of U.S. households have no mortgage, much less a sub-prime mortgage.

Consumers also seem to be determined to get out of debt. During the holiday season, most Americans used their credit cards less than in previous years. Their restraint hurt merchants, but the savings will allow the public to spend more in the future. When fears subside, there will be money available to jump start the economy.

Lastly, by the end of 2009 consumers will need to replace many items that will be nearing the end of their useful lives. Everything from clothes to cars will be on the list. Delayed spending led the economy back from many past recessions, and it’s likely to do it again.

Most Corporations Are In Good Financial Shape

Contrary to popular belief, most companies didn’t participate in the debt binge that triggered the credit crisis. Unlike the downturns of the 1980’s and in 2002, corporate debt is low and cash reserves are high. When consumers decide to open their pocketbooks a bit wider, companies will be able to respond quickly to meet the increasing demand.

Companies are also beginning to adjust to the new financial reality. As we have seen during other tough economic periods, businesses are trimming fat as fast as they can. The new "lean and mean" measures are hurting the economy now, but they will lead to improved profits later.

Economy Gains From Cheaper Dollars, Oil, And Interest Rates

As you probably recall, the declining value of the U.S. dollar contributed significantly to the late boom by making U.S products less expensive overseas. But when the economy finally started to fall apart, the dollar jumped back up as millions of investors around the world flocked to safe U.S. Treasuries.

Now the dollar is moving back down again. Although the decline is unlikely to trigger anything like the recent period of growth, it will help many U.S. exporters. That will be welcome news for investors who have been increasing their positions in the blue chip multinational companies that we have been recommending for many months.

Lower oil prices are providing another stimulus for growth. The Energy Information Administration is estimating that regular gasoline will average $2.03 a gallon in 2009. That’s a 38% decrease from the $3.27 we endured in 2008. Richard DeKaser, chief economist at National City Corporation, believes the reduction will add 1% to whatever growth rate the 2009 economy creates on its own.

The Fed’s ultra-low interest rates will also stimulate growth, particularly in the housing market. Wells Fargo is already offering some 30-year loans at 4.9%. Mortgage rates may sink to 4.5% within a few months. If so, home sales in many oversold markets may recover much faster than most investors expect.

The Faster The Pain, The Quicker The Gain?

When the credit crisis got underway there was a heated debate about what, if anything, the government should do about it. Many economists thought that Washington should stay out of the mess. They argued that the country would be better off having a terrible –but short- downturn that would clear out the bad debts, kill off the weak companies, and quickly lead to a recovery.

The recession isn’t the problem. The boom is the problem, the recession is the cure.

Peter Schiff, President of Euro Pacific Capital www.europac.net

That option appeared to have been taken off the table when the federal rescue funds began to flow. However, the pace of the downturn remained very high. As a result, more analysts are beginning to think that an equally surprising rebound may be on the way.

We have been saying the same thing about oversold stocks. Our analysis indicates that a rebound in many blue chips will occur even if the economy remains weak. If the economy does better than expected, the same should be true of America’s strongest companies.

If You Don’t Play, You Can’t Win

Investors are understandably nervous about venturing into the stock market after suffering big losses in 2008. But for people who stay on the bench, those losses will be locked in. Only by taking advantage of today’s low stock prices will it be possible to turn the gut wrenching declines of the past year into attractive gains.

In truth, investors who stay on the sidelines will probably do worse than we just indicated. That’s because returns from fixed income investments are so low, investors who stick with them won’t even keep up with inflation. On the other hand, stocks of successful companies typically stay ahead of inflation and deliver real wealth to their investors.

A look back at the Crash of 1929, the Crash of 1987, and several mini-crashes tells the tale. After each collapse, most investors retired to the sidelines to lick their wounds. When the emergencies ended, the sideliners were still in the hole.

Wiser investors looked at the high quality companies that were selling for half or less of their former values - and they bought them. When America started to move forward again, these investors made huge gains.

Now we have another once-in-a-lifetime opportunity to buy the cream of America's companies at prices nobody ever expected to see again. We are convinced that if you stand aside from the fear that grips the markets, and you buy the best-of-the-best companies, you will be handsomely rewarded.

The Bottom Line This Week

The year that just ended will go down in history as one of the toughest the U.S. economy and stock market ever had. Although there is a chance that 2009 will be even worse, we think a partial recovery is far more likely.

As a result, we are confident that our advice to invest in high-quality blue chip stocks will result in excellent long-term profits. The best stocks to buy are from companies that provide products and services that meet the basic needs of people all over the world.

Companies with good dividends are the most attractive of all because they will pay investors to wait for the bigger gains that are expected. Please review recent issues of the AIA Advocate for our recommendations.

We wish everyone a Healthy, Happy, and Prosperous New Year!

Association of Investor Awareness - Week of 12/11/2008

Research & Editorial Staff — Thu, 11 Dec 2008 17:35:00 GMT

In This Issue:

The Long-Awaited Bear Rally May Be Starting
Although Weak, Some Hopeful Economic Signs Are Emerging
Credit Is Slowly Opening Up Again
If Fear Subsides, The Outlook Will Improve Immediately
A Recovery Will Bring Unwelcome Inflation
The Bottom Line This Week

As we reported in our previous issue, the sharp stock market advance over the Thanksgiving holiday came to a crashing end on December 1. However, prices have been stronger since then. Although the gains weren't enough to fully erase the earlier plunge, the Dow and the Nasdaq managed to end last week down just 2.2% and 1.7% respectively. From Monday to Wednesday of the current week, the market managed to make some additional gains.

It's significant that the price increases occurred while more bad economic news was breaking. A manufacturing decline, an auto sales plunge, and more job losses should have pushed stocks down several more notches. The fact that investors largely ignored the negatives may indicate that the bear market is close to a bottom.

The Long-Awaited Bear Rally May Be Starting

Many analysts believe that the market's apparent strength indicates that investors may be looking beyond the current situation and are seeing signs that a recovery is on the way.

Our response is that severe bear markets always have strong rebounds that usually become traps for the unwary. In 1933, for example, there was a big rally that investors believed was the recovery they expected after the 1929 disaster. Unfortunately, the rally collapsed within a few months and created another round of big losses for investors.

Although Weak, Some Hopeful Economic Signs Are Emerging

That is not to say that there isn't any light appearing at the end of the dark tunnel. But as the old joke goes, the light may be on a locomotive that's speeding our way.

In this case, the "locomotive" to worry about is declining corporate earnings as job losses and slow economic growth begin to take a greater toll on business activity. Most optimists acknowledge the weak outlook, but they believe it is fully discounted in today's low stock prices.

Another major worry is the prospect of further job losses. However, many analysts are quick to point out that a 6.7% unemployment rate isn't out of line for a recession where a 10% rate is often seen. Again, the optimists say, the market has more than discounted the outlook.

As for overtly positive news, as we reported last week Black Friday sales were much better than expected. Nobody is expecting a consumer spending turnaround anytime soon. But stocks appear to be priced for a much lower spending rate than we may actually see.

Many analysts are also encouraged that productivity (the amount of value produced per hour by workers) is on the rise. Clearly, workers who are keeping their jobs are working more hours, or are working more efficiently. When productivity grows, output can increase even when employment declines. We may finish the year with a higher GDP than in 2007 even though employment is lower.

Credit Is Slowly Opening Up Again

The brightest ray of economic sunshine to break through the clouds is on the credit front. Banks are starting to loan money again, albeit cautiously. As you may have noticed, many lenders are now running ads for mortgages, refinancing, auto loans, and the like. It's not a flood, but the tide does appear to be turning around.

Of course, the heady days of easy money are probably gone forever. But, that's as it should be. All we need for the economy to get going again is for banks to return to the lending standards they had before the credit madness began in the late 1990's.

If Fear Subsides, The Outlook Will Improve Immediately

From all the headlines about collapsing home values, rising unemployment, excess consumer debt, and the like, it would be easy to think that most Americans are in financial trouble. But that's simply not the case. Fear, not true hardship, is the biggest reason consumer spending has plunged.

Some of us at The AIA Advocate are old enough to remember the role that a climate of fear had in the severe recession of 1980-81. Even people with secure government jobs wouldn't spend more money than was absolutely necessary. As a result, auto dealers, real estate agents, homebuilders, and so on often went bankrupt in towns that were awash in wealth.

The bright side of the fear picture is it can end as quickly as it began. Americans are predisposed to be optimistic, not down in the dumps all the time. When good news begins to replace the frightening headlines we are seeing now, the economy will start to recover.

A Recovery Will Bring Unwelcome Inflation

However, there is a downside to a recovery that you should know about. So much money has been pumped into our economic system in an attempt to restore credit and prevent bankruptcies that inflation will almost certainly accompany a rebound. Some analysts think inflation is likely to be such a powerful force that investors should play that event rather than an earnings recovery.

Although we believe an earnings rebound will be the biggest money-maker for most investors, taking inflation into account is also a good idea. That's especially true since today's strong dollar will buy a lot of inflation investments at very low prices.

Gold looks especially attractive now. At its current $771 price, the yellow metal is off 23.3% from the $1006 high it reached in March of this year. There is every reason to think that gold will move back up as the value of the dollar declines due to inflation.

A shortage of U.S. gold coins continues, but premiums will come down as the Mint catches up with demand. Meanwhile, premiums for Canadian Maple Leafs and South African Krugerrands remain reasonable.

Alternately, you can buy the SPDR Gold Trust (GLD), a popular exchange traded fund. http://finance.yahoo.com/q/pr?s=GLD We continue to think the ETF is the best way for most investors to buy gold.

Silver is down 52.3% from its $20.92 high set in March. However, silver is largely an industrial metal that is priced to a great extent by the level of economic activity. Since growth is likely to be slow when inflation first begins to be a problem, gold should be a better performer.

Swiss francs continue to look very good longer term. Besides being a good hedge against the dollar, the Swiss currency has a positive effect on overall investment performance. In the latest issue of Review & Focus, Chuck Butler of EverBank World Markets, Everbank.com had this to say about foreign currencies:

Had an investor invested $100,000 in stocks during [the past year], they would have experienced a 39% loss, or a final dollar value of $60,577.29. But if they had added a 20% allocation of gold, and a 20% allocation of currencies (a combo of Swiss, euro, and Japan), their overall portfolio performance would have been a final dollar value of $74,450.82. While the portfolio was still at a loss, the overall value ends up almost $14,000 higher, a 14% improvement vs. the S&P alone.

Treasury Inflation Protection Securities (or TIPS) are also looking very attractive again. These special government bonds have their principal adjusted twice a year to compensate for the rate of inflation.

With TIPS, if you purchase a $1,000 bond and the inflation rate turns out to be 8.0% for the year, its value will be adjusted to $1,080. Consequently, your purchasing power will remain the same as it was when you bought the bond. You are also protected in the unlikely event of continued deflation because your final payment cannot be less than the original par value of the bond.

If inflation rises, not only will your principal be adjusted upwards, your twice-yearly interest payments will also go up. So, if inflation occurs throughout the life of your bond, every interest payment will be higher than the previous payment. If deflation occurs, your interest payments will decline.

Investors can buy TIPS directly from the U.S. Treasury Department's Bureau of the Public Debt. The bonds are available in 5-year, 10-year, and 20-year maturities. Uncle Sam will hold your TIPS in a Treasury Direct Account set up in your name. You can get the necessary information and forms using the link: http://www.treasurydirect.gov/indiv/products/prod_tips_glance.htm

If you don't wish to lock up your money for fixed periods of time, you should consider a TIPS fund. We particularly like the Vanguard Inflation-Protected Securities Fund Investor Shares (VIPSX). http://finance.yahoo.com/q/bc?s=VIPSX&t=2y As with most Vanguard products, the TIPS fund carries no load and has a very low 0.20% expense ratio, vs .86% average for its competitors.

The Bottom Line This Week

The financial turmoil that has been hammering the economy and the stock market is likely to continue well into 2009. However, there are some tentative indications that a gradual rebound may begin before the year ends.

Because of the unprecedented amount of money the Fed is pumping into the economy to fight the downturn, a recovery will almost certainly be accompanied by higher inflation. Gold and hard foreign currencies such as the Swiss franc should be good hedges against the declining value of the dollar. TIPS should also prove to be very effective protection against inflation.

Association of Investor Awareness - Week of 12/04/2008

Research & Editorial Staff — Thu, 04 Dec 2008 15:52:00 GMT

In This Issue

Black Friday May Suggest A More Optimistic Outlook
Most Insiders Are Not Selling
Bear Market History: How We Compare
Get Paid While You Wait
The Bottom Line This Week

Last week when everyone was stuffing themselves with turkey and other goodies, the urge to consume in abundance spilled over to Wall Street. By the time the market closed on Friday, the Dow and the Nasdaq were up an impressive 9.7% and 10.9% respectively. It was the first five day rally we've seen in over a year.

The enthusiasm for stocks wasn't completely due to holiday cheer. Investors got wind of the fact that Black Friday sales were likely to be better than was first expected. As it turned out, instead of a miniscule 0.9% sales increase, Joe and Sally MidAmerica gave the retail industry a 3% boost. Shoppers were so eager to spend money, they trampled several people who got in their way, one of whom died.

As we are sure you know by now, the enthusiasm didn't survive the weekend. The terrorist attack in Mumbai plus a dismal economic report sent the market down 680 points on Monday. Stocks recovered 442 points on Tuesday and Wednesday but the rebound seems unlikely to last very long.

Black Friday May Suggest A More Optimistic Outlook

The jury is still out regarding the significance of the unexpected spending bounce we saw last Friday. It could have been a one-day shopping spree that won't be repeated. However, the surprise increase could also indicate that Americans aren't as frightened about the future as most economists believe. If so, the economic downturn may not be as severe as the end-of-the-world pundits predict.

Critics argue that the spending boost only occurred because retailers slashed prices for popular merchandise. However, during the tough recession of the early 1980s, deep discounts had little effect on spending.

The bottom line is that consumer spending accounts for two thirds of U.S. economic growth. If the Fed can convince Americans that the outlook for our country isn't as bad as many analysts predict, it won't be.

Most Insiders Are Not Selling

It is also encouraging that most corporate insiders are refusing to sell their shares at today's prices. In Barron's this week, Michael Santoli reported that company officials "are seeing things as just plain bad" as opposed to seeing them as awful. Although "bad" is a long way from "good", the less grim outlook means that stocks may be priced properly for what is on the way. If so, the market may be closer to a bottom than the super bears are saying.

Alas, Santoli also reported that company insiders are not doing any madcap buying. If that decision also has predictive value, we should not expect a rebound anytime soon.

Bear Market History: How We Compare

In a November 30 article in Seeking Alpha, Benjamin Taylor of Brick Financial Management http://www.brickfinancial.com/ compared the current bear market to those from the past. Here is a summary of his findings:

As can be seen, the average length of the bear markets studied was 13.9 months, vs 13 months so far this time. The average decline was -31.7% vs -52% now.

Perhaps most importantly, the percent of the previous high that was recovered when the bull returned averaged 90.7%. Because the current bear market is hitting stocks harder than any of the previous nine declines, we should see a correspondingly greater rebound.

Get Paid While You Wait

Whether or not we are close to a bear market bottom, many top quality stocks are already very attractive. We continue to believe you should be nibbling at the best of them in anticipation of their eventual recovery.

Many readers who agree with our strategy are nevertheless concerned about having their money tied up for what could be an extended period while they wait for nirvana. The way to put those concerns to rest is to buy stocks that will pay you to wait for them to perform as expected. If the stocks yield more than you can earn in the fixed income market, so much the better.

Of course, dividends can be cut – and often are during economic downturns. To help insure that your yields won't go down, we think you should stick with companies that supply basic human needs that don't ride the economic cycle.

To that end, we have compiled a list of blue chip defensive stocks that supply affordable food, water, and healthcare products to people throughout the world. Each of them offers a higher yield than is available from most U.S. Treasury bonds. We think the stocks will make rewarding contributions to long-term portfolios.

ConAgra (CAG) is a packaged foods company that sells meals, snacks, and desserts throughout the world. http://finance.yahoo.com/q/bc?s=CGA Brands include Banquet, Chef Boyardee, Egg Beaters, Healthy Choice, LaChoy, Hunts, Marie Callenders, Swiss Miss, VanCamp, and Wesson – to name only a few. The stock is down 50% from its high and currently pays 5.2%. That's a lot to like about ConAgra.

Heinz (HNZ) needs little introduction to most people who are familiar with the company's condiments, soups, sauces, beans, and other staples. http://finance.yahoo.com/q/bc?s=HNZ Although the product line is not exciting, the company's success is another matter. Heinz yields 4.3%.

Hershey (HSY) is best known for its line of chocolate products, but the company also makes many other treats. http://finance.yahoo.com/q/bc?s=HSY At first glance, it might appear that such goodies are extravagances that won't do well when the economy is contracting. However, Hershey's products are affordable treats that lift most people's spirits without picking their pockets. The company is doing well and offers a 3.3% yield.

McCormick & Company (MKC) is a 120 year old American firm that produces spices, herbs, seasonings, sauces, and flavor products to both individual consumers and major food processors. http://finance.yahoo.com/q/bc?s=MKC The company raised its dividend for over 15 consecutive years, which is an excellent track record. McCormick just raised its dividend and currently pays 3.2%.

The York Water Company (YORW) is a 192 year old company that supplies water to nearly 60,000 residential and industrial customers in Pennsylvania. http://finance.yahoo.com/q/bc?s=YORW Because the company got a start when America was still young, it was able to acquire large water resources that are now extremely valuable. Many natural resource experts think water will be in greater demand than oil within a few years. York is doing quite well already. The company raised its dividend recently and currently pays a 4.5% yield.

Eli Lilly (LLY) is a well known pharmaceutical company that sells its products worldwide. http://finance.yahoo.com/q/bc?s=LLY Although drugs are relatively insensitive to economic conditions, the stock was caught up in the broad Wall Street sell off and is down 41% from its recent high. We like the company's long-term prospects and its present 5.5% yield.

Johnson & Johnson (JNJ) needs little discussion because we featured it recently. http://finance.yahoo.com/q/bc?s=JNJ Since then JNJ announced it will buy Mentor, a leader in cosmetic surgery gear, a smart move in our opinion. Johnson & Johnson is on the S&P list of "Dividend Aristocrats" (see our November 6 issue) and currently yields 3.1%.

AT&T (T) doesn't qualify as a defensive stock, but it comes close. http://finance.yahoo.com/q/bc?s=T The company's wireless and long-distance telecom services have become so important to countless people and businesses, we have no doubt that the company will weather the economic storm and surge ahead when it ends. AT&T has gone through many severe economic cycles and helped create many family fortunes. Meanwhile, the company pays a very attractive 5.6% dividend.

The Bottom Line This Week

Jeff Kearns on Bloomberg (www.bloomberg.com) recently reported that the CBOE Volatility Index –known simply as the VIX- indicates that investors are in for at least seven more months of stomach-churning stock market swings. Although the ride won't be much fun, we are confident that investors who use the drops to buy high quality stocks will make outstanding long-term profits.

The key to success is to stick with multinational blue chips with a long history of surviving economic downturns. You can increase your odds further by selecting companies that pay attractive dividends. Many of the stocks we have been featuring in recent weeks fit the bill and should be considered top candidates for your portfolio.

Association of Investor Awareness - Week of 10/23/2008

Research & Editorial Staff — Thu, 23 Oct 2008 17:11:00 GMT

In This Issue:

It's Too Early For A Sustained Rebound
But, There Are Finally Some Signs Of Relief
What Everybody Knows Is Often Wrong
Another Contrary Economic Outlook
Cheaper Energy: The World's Biggest "Tax" Cut
This High Yield Investment Looks Good
The Bottom Line This Week

Mother Market took pity on investors last week when she tossed a few points our way. Actually, it was more than just a few. The total for Monday and Thursday came to a whopping 1338. Since she took back "only" 937 points, the Dow and the Nasdaq ended the period up a welcome 4.8% and 3.8% respectively.

When the closing bell finally rang on Friday and the week's gains were locked safely away, some of us let out a happy little "hurray." However, our killjoy number cruncher pointed out that with so many wild swings happening every week it was inevitable that the market would occasionally end on a high point. In other words, the bounce could have just been a random event. Rats!

On Monday of this week the market jumped another 413 points, but it gave back 746 points on the following two days. Oh well, the mini-rally was fun while it lasted.

It's Too Early For A Sustained Rebound

Although we were disappointed, we were not surprised that the bounce didn't last very long. There are still too many buyers around to think the bear market has run its course. As we said two weeks ago, the real recovery is unlikely to arrive until the last of the bulls have been chased away. That day is probably still several months ahead of us.

History also suggests that valuations need to rise before a sustained rebound will occur. To be sure, there are now some very attractive stocks on the bargain table. Chubb (CB) has a P/E of 7.2 and a 3.0% dividend yield. Pfizer's (PFE) numbers are 13 and 7.6%. For Merck (MRK) the teasers are 12.3 and 4.9%. It's becoming a long list.

However, most stocks have merely gone from sky high to fairly priced, which suggests they have further to fall. In most bear markets, the P/E ratios for the Dow blue chip stocks usually drop to 10 or less before they make a major rebound. At the present time, the Dow's P/E is 15.7.

But, There Are Finally Some Signs Of Relief

Nevertheless, some encouraging developments are starting to appear. An increasing number of banks are beginning to loan money to their most credit-worthy customers. Banks are also beginning to loan money to each other which helps make credit available where it is needed most.

In addition, many pension funds, insurance companies, universities, and corporations are starting to provide funds to businesses. Interest rates are also coming down a bit. It all points to a slow restoration of the credit system upon which our economy depends.

However, there is another problem with the credit crisis that is rarely discussed. In today's slow economy, many companies are putting their expansion plans on hold. As a result, the demand for credit is falling. If that trend continues, it won't make much difference if more money becomes available.

What Everybody Knows Is Often Wrong

When it comes to economics and investing, what "everybody knows" is often wrong. In fact, the greater the consensus about a particular outlook, the more likely it is that just the opposite will occur.

Oil prices are a recent case in point. Only three months ago, everyone from Nobel economists to Joe and Sally MidAmerica was certain that high priced oil was here to stay. Many of the most experienced people on Wall Street were equally certain that oil would reach $200 a barrel by the end of the year. Those outlooks seemed completely reasonable at the time.

Nevertheless, oil prices soon collapsed. Today oil is selling for only $70 a barrel, a 53% decline from its peak.

Another Contrary Economic Outlook

A small but growing number of economists are now beginning to think the widespread doomsday outlook for the credit crunch and the economy is also dead wrong. We spotlighted the idea last week when we wrote about Casey B. Mulligan, a professor of economics at the University of Chicago who said, "...the economy doesn't really need saving. It's stronger than we think." And, "The non-financial sectors of our economy won't suffer much from even a prolonged banking crisis, because the general economic importance of banks has been highly exaggerated."

This week, Gene Epstein at Barron's wrote a two page article titled "Sorry, Chicken Little" that also cast doubt on the growing belief that the economy is doomed. He acknowledged that a recession seems inevitable due to the credit crisis and lower home values. But Mr. Epstein also said, "...it's possible that the downturn could prove to be one of the briefest and mildest on record." Talk about a contrary opinion!

Cheaper Energy: The World's Biggest "Tax" Cut

Mr. Epstein's main argument is the huge plunge in oil prices represents a massive booster shot for the economy that will soon begin to take effect. Not only is cheaper energy a benefit by itself, it should also bring down many other prices.

The first recipient of energy relief will be the American consumer who now has more money to spend than was true a few weeks ago. In many households, the savings totals several hundred dollars a month. As people begin to spend some of the money, inventories will be reduced, manufacturers will need to ramp up again, wages and employment will benefit, and so on.

To that happy outlook we will add that a reduction in scary news about bailouts and rescue packages should also help increase consumer spending. As we mentioned in a previous issue, Joe and Sally are mostly staying away from the mall because they are scared, not because they have no money.

The Fed is also trying to get Congress to play Santa Claus by sending another round of checks to individual Americans. The stimulus package we had earlier this year had a measurable impact even though most people put most of it into savings. With the holiday season right around the corner, the better part of a second helping of federal money will probably be spent.

Lastly, the economy will also receive a modest boost if the Fed lowers interest rates another half percent, as is widely expected. Such a reduction would leave the rate at 1%, a level that proved to be a magic charm when Alan Greenspan used it in 2003. This time around, the impact of cheaper money may be less because lending is slow for reasons other than interest rates. Still, a reduction would be an added stimulus to growth.

We are not trying to be Pollyanna. Huge economic problems remain, and they will take a toll. However, the end of the world may need to be postponed. If so, a stock market recovery may be closer than most analysts expect.

This High Yield Investment Looks Good

One investment that won't be helped by ultra-low interest rates is fixed income returns. Consequently, if your bonds and CD's will soon come due, they should be rolled over to longer term securities to lock in today's higher returns.

Alternately, readers might consider putting some of their money in high quality investments that have good dividend yields. We think one of the most attractive is Kinder Morgan Energy Partners LP (KMP). http://finance.yahoo.com/q/bc?s=KMP

Kinder Morgan is a master limited partnership that owns and operates over 25,000 miles of oil, natural gas, and fuel pipelines in the U.S. The company also has 150 terminals that store and transport petroleum, petrochemicals, coal and other bulk items by rail and truck.

Although energy prices are off sharply, KMP owns very little of what it pumps. As a result, KMP's price held up well while energy was dropping from $149 to $70. The price did drop sharply when the stock market fell out of bed recently, but it is now rebounding strongly.

Kinder Morgan is attractive because it currently yields 7.9%. Moreover, dividends have been increased for 12 years in a row and have been paid since KMP was formed in 1992. That's an excellent track record.

The kicker is that Kinder Morgan should also appreciate in price in the coming years. All in all, KMP appears to be ideally suited for the current conditions in the stock and fixed income markets.

The Bottom Line This Week

The dark cloud that hangs over the economy and the stock market opened up a bit over the past week. Although many serious problems remain, there are reasons to be optimistic that they are slowly being resolved. Some analysts think the process will take less time than is generally believed.

Meanwhile, several investments offer dividend yields that will keep investors warm while they wait for brighter days to come. Kinder Morgan Energy Partners LP looks especially attractive.

Association of Investor Awareness - Week of 10/16/2008

Research & Editorial Staff — Thu, 16 Oct 2008 17:12:00 GMT

The Biggest Danger Now Is A Series Of Bear Traps
The Financial Crisis Has Further To Run
Some Bear Market Investments Have Promise
How Long The Bear Might Stick Around
A Contrary Economic Outlook
Another Shameless Plug For Blue Chip Stocks
The Bottom Line This Week

Stock volatility has become so extreme, we had to redraw the charts. Although there have been up and down days as large as those we have seen recently, never before have they come in such quick succession.

Last week, as everyone from New Guinea to New York must know by now, the Dow and the Nasdaq fell 18.2% and 15.3% respectively. That would have been tough enough by itself, but what made the week even more hectic is it contained a 679 point jump that many investors believed was the start of a reversal.

The market leaped forward again this Monday with a breath taking 936 point surge when U.S and European leaders decided on a coordinated financial rescue plan. Stocks took a breather on Tuesday. Then it plunged 733 points the next day on poor consumer spending data. We must expect more whiplash days as the credit crisis continues to unfold.

The Biggest Danger Now Is A Series Of Bear Traps

Although big market swings aren't much fun, they do show that investors are reluctant to quit the game. As we mentioned last week, however, bear markets rarely hit bottom until investors become so discouraged that they want nothing more to do with stocks. Until then, rebounds are likely to be traps for the unwary. Only when rallies become rare, can we begin to feel confident that the bear market has run its course.

The Financial Crisis Has Further To Run

The biggest reason we are not expecting a sustained stock market recovery any time soon is the credit crisis is far from over. Even with the billions (and possibly trillions) of dollars the government plans to inject into the financial service system, a turnaround will take months. In the meantime, more banks, S&L's, and hedge funds are likely to fail. The losses will almost certainly kill any stock rebounds that may get started.

The best strategy to use in a bear market is to buy high value stocks when the market is falling, and sell any lower value stocks when it is rallying. That way, when the bear cycle finally comes to an end, your portfolio will be heavily weighted with stocks that are likely to perform well during the next expansion.

Some Bear Market Investments Have Promise

More aggressive investors can also find profits while the market is dropping. Selling stocks or ETF's short is one way to go, but the strategy is risky. If the market goes up rather than down --and it gets away from you-- losses can be very high. If you do make short sales, you must be certain to protect your positions with stop-loss orders.

For most investors, the safest way to dance with the bear is with a fund that is structured to move contrary to the S&P 500 index. We think the most attractive is the Rydex Inverse S&P 500 Strategy Fund (RYURX) http://finance.yahoo.com/q/pr?s=RYURX . When Wall Street sinks, the Inverse S&P Fund will make you smile.

The ProFunds UltraBear Fund (URPIX) is equally broad in scope as the Inverse S&P Fund, but it is much more aggressive. http://finance.yahoo.com/q/pr?s=URPIX UltraBear also acts contrary to the S&P 500 - but it seeks to double the size of the moves. The fund uses the same investment vehicles as its more conservative cousin, but it purchases more of everything to gain extra leverage. Of course, the lever swings both ways: The UltraBear fund will decline quickly if the S&P 500 index rises. Neither of the Rydex funds charge a load.

The best strategy to use with a bear market fund is to buy it during the first big rally and hold it for the duration of the downturn. Trying to jump in and out of the fund with each market change is rarely successful. Staying with the dominant trend almost always pays the greatest rewards.

How Long The Bear Might Stick Around

As we said earlier, we doubt that the bear market will be going away anytime soon. But just how long might it be before the bull returns? More importantly, how long is it likely to take before the bull replaces the bear's losses?

In an attempt to shed some light on the subject, value investor Ali Khan took a look at the four biggest bear markets we had over the past 30 years. www.investmentplayground.net We put his research into a table that shows what we might expect from the current tug of war between the bear and the bull.

Bear Market	Duration	Percent Decline	Time To A Full Recovery
Jan 1973 - Oct 1974	21 months	57%	3.5 years
Aug 1987 - Dec 1987	105 days	35%	21 months
9/11 Terror Attack	28 days	21%	105 days
Mar 2002 - Sep 2002	173 days	29%	15 months
Average of first 4	234 days	35.5%	20 months
Oct 2007 - ?	264 days so far	40% so far	?

As you can see, the current bear market has already lasted 30 days longer and has fallen 4.5% deeper than the average. However, the crisis that triggered the current downturn was far greater in monetary terms than the previous four. It is most comparable to the severe bear market of 1973-74 when the market dropped 57%. If we see a repeat of that tough downturn, stocks will drop another 17%.

Of course, history rarely repeats itself. However, as Mark Twain observed, it often rhymes.

A Contrary Economic Outlook

You may recall that on several occasions during the past year we remarked that the economy was doing better than analysts expected. Even during the third quarter, when a recession was a forgone conclusion by nearly everyone, we noted that mainstream America was actually doing fairly well.

A few days ago, Casey B. Mulligan, a professor of economics at the University of Chicago, made a similar observation when he said, "...the economy doesn't really need saving. It's stronger than we think."

Prof. Mulligan made the case that "The non-financial sectors of our economy won't suffer much from even a prolonged banking crisis, because the general economic importance of banks has been highly exaggerated." He pointed out that pension funds, university endowments, venture capitalists, and corporations also provide large sums of money to businesses.

In addition, the average corporation gets about 25% of the funds it needs from its own cash reserves. If necessary, companies could get as much as three times that amount by cutting their dividends.

The professor also pointed out that banking services aren't about to vanish. To be sure, some banks are failing - but others are taking their places. If the survivors don't loan money, they won't last very long themselves. In any event, most businesses won't be hurt if the credit freeze lasts for a few quarters.

We think Dr. Mulligan is correct about the economy. His outlook certainly fits the pattern we have been seeing ourselves. If his prediction is correct, the stock market rebound could come a lot sooner than almost anyone expects.

Another Shameless Plug For Blue Chip Stocks

Whenever good times return, we are confident that the blue chips we have been recommending will be at the head of the Wall Street parade. As we have been reporting throughout this difficult period, many of our leading stocks are already doing better than expected.

Three of our companies that surprised investors over the past few days were General Electric (GE), Intel (INTC) and IBM. GE's profits fell 22% but they were above expectations. Intel turned in a 12% profit jump. IBM also said it will soon report an earnings increase.

But, as we mentioned earlier, wait to buy until rallies collapse and prices drop from the bargain basement to the liquidation table.

The Bottom Line This Week

Although the economy appears to be doing better than is generally believed, a recession seems likely that may last into the first quarter of 2009, and possibly further.

Rather than grumble about the slowdown, we think investors should use it to their advantage. Bear market funds such as the Rydex Inverse S&P 500 Strategy Fund look good for the near and medium terms. When their time at bat ends, many multinational blue chips are likely to score home runs.

Week of 10/09/2008

Research & Editorial Staff — Thu, 09 Oct 2008 14:47:00 GMT

Bargains Are Starting To Appear
A Bottom Fishing Check List
The Bear Isn't Finished Yet
Big Drops Lead To Big Rebounds
Financial Stocks Attract More Attention
There Is One More Shoe To Fall
The Biggest Question: Will The Bailout Work?
The Bottom Line This Week

Wall Street's thrill ride continued over the past week as investors made king-sized moves after every drop in the economic outlook. By the time the closing bell rang on Friday, the Dow and the Nasdaq were down 7.3% and 10.8% respectively. A good time was definitely not enjoyed by all.

Once again, investors saved their biggest gyrations for the following Monday when the market plunged some 800 points. Fortunately, the market regained 430 points before the end of the day. Stocks resumed their slide on Tuesday and Wednesday when they fell a total of 689 points.

Bargains Are Starting To Appear

It is encouraging to see that most of the big market drops are starting to attract bargain hunters, including big hitters such as Warren Buffett. That's not surprising since many stocks are clearly oversold when measured against their long-term potential.

We were delighted to see that one of the stocks Mr. Buffett picked for a multi-billion dollar investment was General Electric, a company we started to accumulate in February. Other stocks the value investors are buying include Burlington Northern, Cisco Systems, Coca-Cola, IBM, Kraft Foods, Hewlett-Packard, Intel, Procter & Gamble, and Pfizer – all of which have been recommended in The AIA Advocate.

A Bottom Fishing Check List

In times like these when the bear is still raging, successful bargain hunters don't take undue risks. Although they venture into the storm, they only buy stocks when the odds of winning appear to be solidly in their favor.

The first thing the bottom fishers look for is lots of cash and very little debt. With a strong balance sheet, a company can make it through a tough period even if it lasts quite a bit longer than expected.

The odds of success rise higher if the companies provide products and services that people need even when times are bad. Food, drug, and basic retailers are favorite choices.

Of course, stock fundamentals must also be right. A good rule of thumb is to find companies with price to earnings ratios that are close to their historic lows. For example, the P/E for SuperValu (SVU) is currently an attractive 7.3. By contrast, the P/E for Amazon.com (AMZN) is a stratospheric 42.6.

It's also highly desirable to get some income while waiting for the big payoff. Comparing SuperValu and Amazon again we find a 3.3% dividend and none at all, respectively.

The Bear Isn't Finished Yet

With all the fear we see in the market today, we doubt that stocks will turn around any time soon. First there needs to be a stomach churning washout, an ugly process Wall Street calls capitulation. It occurs when investors become so discouraged they keep selling stocks no matter how cheap they are becoming. When the last of the stragglers are out of the market, stocks will finally stop sinking.

Once a floor has been reached, smart money will begin to come in from the sidelines where it was waiting patiently for months. The influx of cash will solidify the market bottom and lay the groundwork for a recovery.

Currently, the market's partial rebounds after every drop indicate that the capitulation phase of the downturn is still to come. When it finally arrives, we hope you look beyond the carnage and remember the event marks the end of the bear market.

Big Drops Lead To Big Rebounds

Although the final stock market shakeout is still on the way, we continue to think you should begin to do some cautious value buying. Dr. Steve Sjuggerud of DailyWealth (www.dailywealth.com) looked at 150 years of stock data and found that over the past 70 years, there was only one time that the market turned in a worse 12-month performance than the period that's currently ending. (Assuming that stocks finish October about where they are now.)

Dr. Sjuggerud also found that when stocks had a terrible 12 months, they usually followed up by having 12 very good months. The only exceptions were after the dot-com bust and the Great Depression. However, stocks were at record highs during those two times, which is certainly not the case today.

There is one caveat: the relationship between year-long declines and recoveries only applies for the worst 12 months in a bear market. We may not be there yet.

Financial Stocks Attract More Attention

We were pleased to see the article, Financial Stocks, Yes Financial Stocks, To Consider in Barron's this week. As you undoubtedly recall, we have been recommending the group since the meltdown slashed their prices over the summer.

The only place we would differ with the Barron's article is with the stocks that were mentioned. Since many additional banks and S&L's are likely to fail before the blood bath is over --and it is impossible to know with certainty which ones they will be-- we think picking individual issues is not the best way to proceed.

Instead, we continue to recommend the Fidelity Select Financial Services Fund (FIDSX). http://finance.yahoo.com/q/bc?s=FIDSX When the sector rebounds, so will the fund, no matter how many firms don't make it through the shakeout.

There Is One More Shoe To Fall

Right now, the world is understandably focused on the financial service industry. In its shadow, however, another giant sector is starting to look weak: consumer spending. Because consumers account for about 2/3 of our economic growth, if they curtail their spending significantly the downturn will intensify.

Unfortunately, Joe and Sally MidAmerica are starting to grip their pocketbooks more tightly. The big three automakers saw their sales decline about 30% last month. Most shopping malls are also seeing sharp reductions. If the trend continues through the winter holidays, we could see the first quarterly drop in consumer spending in nearly two decades.

The bright spot in the consumer picture is most Americans are being frugal because they are scared, not because they don't have the means to buy what they want. If the federal rescue program appears to be working, millions of Americans will breathe a sigh of relief and go shopping again.

The Biggest Question: Will The Bailout Work?

We believe the government's efforts to turn the credit crisis around can work, but only if it is greatly expanded. Here's what most economists think should be done:

First, the big banks aren't the only financial service firms that are in trouble. Many regional banks, credit unions, savings & loans, and hedge funds are also on shaky ground. Collectively, they are worth more than the giant firms that are in the news every day, and they also need a lifeline.

In addition, the collapse of subprime, no-document, and ninja (no income, no job, no assets) mortgages started the credit crisis, but they aren't its only problem. Also at risk are countless short term loans that individuals and businesses make to each other. Bank to bank loans are also drying up. All these sources of capital are essential to the smooth functioning of our economy, and must resume.

It appears the government is starting to include additional financial service firms and types of loans in its rescue program. On Tuesday, Fed Chairman Bernanke announced a plan to buy large amounts of short-term debt in an effort to get lenders to make credit available again. On Wednesday, the Fed also lowered interest rates ½ point. Other measures are undoubtedly on the way.

The final bailout cost, of course, will be well above the initial $700 billion allocated for the rescue effort. In fact, the language in the law clearly states that $700 billion is the limit that can be spent "at any one time." Some economists think the total bill could be three times the initial figure. By this time next year we should know what the final tally is likely to be, and whether the massive spending is having the desired effect. Keep your fingers crossed.

The Bottom Line This Week

The financial service crisis appears to be moving faster than the government can keep up. One analyst referred to the rescue program as a "whack a mole" strategy. However, the money that Washington is spending should begin to take effect within a few weeks.

Meanwhile, some stock bargains are appearing. We think investors should start to make some cautious purchases over the next several months. Financial, food, drug, and basic retailers look the most attractive now.

Week of 10/02/2008

Research & Editorial Staff — Thu, 02 Oct 2008 16:38:00 GMT

A Nasty, But Not A Calamitous, Stock Plunge
Our Contrary Opinion
A Cure For The Crisis Is Already Being Applied
It's Time To Do Some Cautious Buying
Stock Buyers Should Sip, Not Gulp
The Bottom Line This Week

People who enjoy excitement must envy investors right now. Not even thrill seekers who travel to New Zealand for the world's highest bungee jump have anything on us. When it comes to big bounces, Wall Street is the place to be.

On Monday of this week, we completed the jumping part of the stock market's bungee experience. The rebound on Tuesday was nearly as exhilarating. Wednesday, thank goodness, was a quiet day of recuperation.

Of course the rubber cord could break at any time, in which case the game will be over. However, that seems very unlikely. If a crash was in the works, we think it would have happened on Monday when deep pessimism was rampant.

The market action we are having now is all the more exciting because there was no hint of it last week. The Dow dropped a tepid 2.2% while the Nasdaq just about doubled it with a 4.0% decline. It was barely enough to be a good warm-up for this week's main event.

A Nasty, But Not A Calamitous, Stock Plunge

On Monday, as everyone must know by now, the Dow and the Nasdaq plummeted 778 points and 200 points respectively. Pundits, of course, were quick to point out that the Dow's move was the "biggest stock plunge in history!"

That's true, but as Paul Harvey liked to say, "Heeeeere's the rest of the story:"

In percentage terms the Dow's plunge represented just under a 7% drop. By contrast, the Dow fell 23% on October 19, 1987, which was over three times the size of the hiccup we had this week.

Pundits also gleefully point out that the drop erased all the gains stocks made in the past eight years. Well, that's also true. However, eight years ago was the top of the tech and dot-com bubbles, which was hardly a proper place to begin a measurement. If we start from the market's bottom after the bubbles burst, stocks are up nearly 40%, plunge and all.

Our Contrary Opinion

Many articles about the financial crisis predict it will lead to a near-total meltdown of the U.S. economy. Credit will be unavailable, business will grind to a halt, consumers will stop spending money, and civilization as we know it will end. It's about the darkest outlook possible.

For such a scenario, the Monday-Tuesday stock decline seems mild. If the world is really in as much trouble as so many dire projections suggest, a much larger drop would have been likely. Either the outlook for the economy isn't anywhere near as bad as many writers believe, or investors don't understand the gravity of the problem.

We doubt the latter is the case. On the contrary, history shows that investors have a much better grasp of the future than professionals. That's not surprising because investors put money on their predictions, which tends to focus the mind.

Lastly, if we look at the market action on Monday and Tuesday together, we have another reason not to take poison. Our arithmetic shows the 778 point drop and the 485 point rebound left us with a 293 point decline, which was far from a disaster.

A Cure For The Crisis Is Already Being Applied

We are not in any way suggesting that the financial turmoil isn't serious. It is the most threatening event we have seen in many years. But we think Congress and market forces will restructure our financial system without killing the American dream.

In fact, the process has already started. In January, the Fed arranged for Bank of America to acquire Countrywide. Six months later BOA took over Merrill Lynch. In March, JP Morgan Chase was persuaded to rescue Bear Stearns.

Earlier this month, Uncle Ben Bernanke also paired JP Morgan Chase with Washington Mutual. On Monday of this week, Citigroup took over Wachovia. More "strategic alliances" are undoubtedly on the way, particularly with regional banks that are also having liquidity problems.

Even before the financial crisis hit, banking insiders predicted that a wave of consolidation was on the way. Guess who was expected to lead the charge? The list was headed by none other than Bank of America, JP Morgan Chase, and Citigroup. Recent events simply appear to have accelerated the buyout cycle. It also gave the buyers much better prices.

It's Time To Do Some Cautious Buying

Speaking of better prices, the best time to buy stocks is when everybody else wants to sell them. As uber-investor Warren Buffett once said, "We simply attempt to be fearful when others are greedy, and to be greedy only when others are fearful." He went on to say, "You must have a willingness to do something when everyone else is petrified. You must learn the lesson of following logic over emotion."

With the advice of "The Sage Of Omaha" in mind, we suggest that you consider the following blood-in-the-streets investments:

Financial Services

The low prices the large financial service firms paid for their acquisitions should lead to king-sized profits once the current troubles are over. But, with the financial crisis dominating the headlines, the leading bank companies are currently dirt cheap.

As a result, we are even more bullish on the long-term outlook for the Fidelity Select Financial Services Fund (FIDSX). http://finance.yahoo.com/q/bc?s=FIDSX Remember, this is a managed fund, which means its portfolio will hone in on the winners as they emerge. The fund already holds substantial positions in Morgan Stanley, JP Morgan Chase, Bank of America, and Citigroup. All of them are in the Wall Street doghouse because they also purchased many bad mortgages and ran into trouble. But the surviving banks are now starting to make up for their mistakes.

The Fidelity fund is down 46.5% from its October 2007 high, and it is off 26.2% this year. We think the steep discount makes the fund attractive for long-term portfolios. It should be a particularly good performer in retirement accounts.

Bond Funds

Bond funds also look good. On Monday, market psychologist Brett Steenbarger of TraderFeed (www.traderfeed.blogspot.com) pointed out that the iShares Investment Grade Corporate Bond Fund (LQD) lost 20% of its value over the past three weeks. http://finance.yahoo.com/q/bc?s=LQD Investors are worried that the companies whose bonds are in the fund will not be able to make their interest payments. We think that threat is greatly overstated for investment grade bonds.

To see how irrational bond fears have become, the iShares High Yield Corporate Bond Fund (HYG) is also down 20%. It's ridiculous to price the two very different classes of bonds the same way. It's all the more reason to think the investment grade fund is a classic case of the baby being thrown out with the bathwater.

Multinational Blue Chips

We will also repeat our recommendation of the iShares Dow Jones Select Dividend Index (DVY) that tracks the 100 highest-yielding stocks in the Dow Jones Total Market Index. http://finance.yahoo.com/q/bc?s=DVY&t=1y

When investors start to tiptoe back into the market following a scare, the first place they go is to high-yielding blue chip stocks. As a result, big stocks should be especially good performers at the same time they offer investors a high degree of safety.

Stock Buyers Should Sip, Not Gulp

If you decide to do some cautious bottom fishing, please proceed slowly. The financial crisis is far from over. We may see several more scares in the coming weeks. If you hold some cash back from your first venture into the market, you may see even better prices later on.

In any event, the best investment strategy during times of great turmoil is to buy a little bit after every significant market decline. That will leave your ultimate returns far higher than will be true for people who chase the rallies.

The Bottom Line This Week

The past three weeks have not been much fun. However, Mother Market has a way of rewarding investors who stick with her system over the long term. The greatest returns go to people who find the courage to buy stocks when they are out of favor and they are the least expensive, as is the case today.

Three investments that currently look very attractive are the Fidelity Select Financial Services Fund, the iShares Investment Grade Corporate Bond Fund, and the iShares Dow Jones Select Dividend Index. All of them have been top performers in the past, and they will almost certainly be top performers in the future.

AIA Advocate for Absolute Returns : Economic Forecast

Association of Investor Awareness - Week of 08/27/2009

The Outlook Is Better For An Improving Economy

Profit Growth Can Be Misleading

Big Companies Still Have An Advantage

Emerging Countries Are Making A Strong Recovery

Two Long Term Dividend Payers Look Good

Fasten Your Seat Belts, Oil Prices Are Roaring Back

The Bottom Line This Week

Until Next Time

Association of Investor Awareness - Week of 06/25/2009

Mixed Economic Signals Worry Investors

Another Kind Of Bailout Is Also A Concern

A New Economic Reality Is Emerging

For Efficient Companies, Slow Growth Can Be Profitable

Your Best Strategy Now

THREE ANALYSTS AND A FOOL HAVE RECOMMENDED THIS STOCK

The Bottom Line This Week

Association of Investor Awareness - Week of 01/08/2009

It's Time To Start Looking Beyond Current Woes A Big Cash Horde Is Always Bullish When It Comes To Rebounds, Too Early Beats Too Late Eight Blue Chips Many Pros Are Buying The Bottom Line This Week

It's Time To Start Looking Beyond Current Woes

A Big Cash Horde Is Always Bullish

When It Comes To Rebounds, Too Early Beats Too Late

Eight Blue Chips Many Pros Are Buying

The Bottom Line This Week

Association of Investor Awareness - Week of 01/01/2009

The New Year Should Bring Investors Some Relief

Consumers Have More Money Than Holiday Sales Suggest

Most Corporations Are In Good Financial Shape

Economy Gains From Cheaper Dollars, Oil, And Interest Rates

The Faster The Pain, The Quicker The Gain?

The recession isn’t the problem. The boom is the problem, the recession is the cure.

If You Don’t Play, You Can’t Win

The Bottom Line This Week

We wish everyone a Healthy, Happy, and Prosperous New Year!

Association of Investor Awareness - Week of 12/11/2008

The Long-Awaited Bear Rally May Be StartingAlthough Weak, Some Hopeful Economic Signs Are EmergingCredit Is Slowly Opening Up AgainIf Fear Subsides, The Outlook Will Improve ImmediatelyA Recovery Will Bring Unwelcome InflationThe Bottom Line This Week

The Long-Awaited Bear Rally May Be Starting

Although Weak, Some Hopeful Economic Signs Are Emerging

Credit Is Slowly Opening Up Again

If Fear Subsides, The Outlook Will Improve Immediately

A Recovery Will Bring Unwelcome Inflation

The Bottom Line This Week

Association of Investor Awareness - Week of 12/04/2008

Black Friday May Suggest A More Optimistic OutlookMost Insiders Are Not SellingBear Market History: How We CompareGet Paid While You WaitThe Bottom Line This Week

Black Friday May Suggest A More Optimistic Outlook

Most Insiders Are Not Selling

Bear Market History: How We Compare

Get Paid While You Wait

The Bottom Line This Week

Association of Investor Awareness - Week of 10/23/2008

It's Too Early For A Sustained ReboundBut, There Are Finally Some Signs Of ReliefWhat Everybody Knows Is Often WrongAnother Contrary Economic OutlookCheaper Energy: The World's Biggest "Tax" CutThis High Yield Investment Looks GoodThe Bottom Line This Week

It's Too Early For A Sustained Rebound

But, There Are Finally Some Signs Of Relief

What Everybody Knows Is Often Wrong

Another Contrary Economic Outlook

Cheaper Energy: The World's Biggest "Tax" Cut

This High Yield Investment Looks Good

The Bottom Line This Week

Association of Investor Awareness - Week of 10/16/2008

The Biggest Danger Now Is A Series Of Bear TrapsThe Financial Crisis Has Further To RunSome Bear Market Investments Have PromiseHow Long The Bear Might Stick AroundA Contrary Economic OutlookAnother Shameless Plug For Blue Chip StocksThe Bottom Line This Week

The Biggest Danger Now Is A Series Of Bear Traps

The Financial Crisis Has Further To Run

Some Bear Market Investments Have Promise

How Long The Bear Might Stick Around

A Contrary Economic Outlook

Another Shameless Plug For Blue Chip Stocks

The Bottom Line This Week

Week of 10/09/2008

Bargains Are Starting To AppearA Bottom Fishing Check ListThe Bear Isn't Finished YetBig Drops Lead To Big ReboundsFinancial Stocks Attract More AttentionThere Is One More Shoe To FallThe Biggest Question: Will The Bailout Work?The Bottom Line This Week

Bargains Are Starting To Appear

A Bottom Fishing Check List

The Bear Isn't Finished Yet

Big Drops Lead To Big Rebounds

Financial Stocks Attract More Attention

There Is One More Shoe To Fall

The Biggest Question: Will The Bailout Work?

The Bottom Line This Week

Week of 10/02/2008

A Nasty, But Not A Calamitous, Stock PlungeOur Contrary OpinionA Cure For The Crisis Is Already Being AppliedIt's Time To Do Some Cautious BuyingStock Buyers Should Sip, Not GulpThe Bottom Line This Week

It's Time To Start Looking Beyond Current Woes
A Big Cash Horde Is Always Bullish
When It Comes To Rebounds, Too Early Beats Too Late
Eight Blue Chips Many Pros Are Buying
The Bottom Line This Week

The Long-Awaited Bear Rally May Be Starting
Although Weak, Some Hopeful Economic Signs Are Emerging
Credit Is Slowly Opening Up Again
If Fear Subsides, The Outlook Will Improve Immediately
A Recovery Will Bring Unwelcome Inflation
The Bottom Line This Week

Black Friday May Suggest A More Optimistic Outlook
Most Insiders Are Not Selling
Bear Market History: How We Compare
Get Paid While You Wait
The Bottom Line This Week

It's Too Early For A Sustained Rebound
But, There Are Finally Some Signs Of Relief
What Everybody Knows Is Often Wrong
Another Contrary Economic Outlook
Cheaper Energy: The World's Biggest "Tax" Cut
This High Yield Investment Looks Good
The Bottom Line This Week

The Biggest Danger Now Is A Series Of Bear Traps
The Financial Crisis Has Further To Run
Some Bear Market Investments Have Promise
How Long The Bear Might Stick Around
A Contrary Economic Outlook
Another Shameless Plug For Blue Chip Stocks
The Bottom Line This Week

Bargains Are Starting To Appear
A Bottom Fishing Check List
The Bear Isn't Finished Yet
Big Drops Lead To Big Rebounds
Financial Stocks Attract More Attention
There Is One More Shoe To Fall
The Biggest Question: Will The Bailout Work?
The Bottom Line This Week

A Nasty, But Not A Calamitous, Stock Plunge
Our Contrary Opinion
A Cure For The Crisis Is Already Being Applied
It's Time To Do Some Cautious Buying
Stock Buyers Should Sip, Not Gulp
The Bottom Line This Week