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Monthly Archives: June 2011

APPALLING YEAR TO DATE RETURNS FROM CHINASCAMS

Where is Congress?

No. Ticker YTD Return Industry
1 SCEI -80.79 Chinese Burritos
2 SBAY -78.42 Chinese Burritos
3 HEAT -76.33 Chinese Burritos
4 CBEH -74.90 Chinese Burritos
5 CHBT -73.74 Chinese Burritos
6 CVVT -72.33 Chinese Burritos
7 GFRE -71.47 Chinese Burritos
8 DGW -69.62 Chinese Burritos
9 CSKI -69.01 Chinese Burritos
10 SHZ -67.50 Chinese Burritos
11 OINK -67.36 Chinese Burritos
12 KNDI -66.41 Chinese Burritos
13 CHGS -66.21 Chinese Burritos
14 CCIH -66.01 Chinese Burritos
15 CNIT -63.92 Chinese Burritos
16 FEED -63.27 Chinese Burritos
17 CNAM -62.89 Chinese Burritos
18 BORN -62.88 Chinese Burritos
19 CNET -62.25 Chinese Burritos
20 KGJI -62.01 Chinese Burritos
21 MCOX -61.54 Chinese Burritos
22 XNY -61.46 Chinese Burritos
23 CHC -60.62 Chinese Burritos
24 SCOK -60.40 Chinese Burritos
25 DANG -60.10 Chinese Burritos
26 NEWN -60.03 Chinese Burritos
27 DHRM -59.60 Chinese Burritos
28 PUDA -57.89 Chinese Burritos
29 CIIC -57.83 Chinese Burritos
30 SIHI -57.09 Chinese Burritos
31 BSPM -56.74 Chinese Burritos
32 SEED -55.96 Chinese Burritos
33 CCSC -55.00 Chinese Burritos
34 HSFT -54.67 Chinese Burritos
35 GU -54.59 Chinese Burritos
36 AOB -53.33 Chinese Burritos
37 MY -53.22 Chinese Burritos
38 AMCN -52.98 Chinese Burritos
39 CGA -52.22 Chinese Burritos
40 SORL -51.70 Chinese Burritos
41 CHLN -50.36 Chinese Burritos
42 SUTR -49.54 Chinese Burritos
43 SPU -49.25 Chinese Burritos
44 CMFO -49.07 Chinese Burritos
45 CCCL -48.91 Chinese Burritos
46 XING -48.76 Chinese Burritos
47 CAAS -48.68 Chinese Burritos
48 CHNG -48.28 Chinese Burritos
49 LFT -47.68 Chinese Burritos
50 OSN -47.26 Chinese Burritos

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Bill Gross: US Is in Even Worse Shape Financially Than Greece

When adding in all of the money owed to cover future liabilities in entitlement programs the US is actually in worse financial shape than Greece and other debt-laden European countries, Pimco’s Bill Gross told CNBC Monday.

Much of the public focus is on the nation’s public debt, which is $14.3 trillion. But that doesn’t include money guaranteed for Medicare, Medicaid and Social Security, which comes to close to $50 trillion, according to government figures.

The government also is on the hook for other debts such as the programs related to the bailout of the financial system following the crisis of 2008 and 2009, government figures show.

Taken together, Gross puts the total at “nearly $100 trillion,” that while perhaps a bit on the high side, places the country in a highly unenviable fiscal position that he said won’t find a solution overnight.

“To think that we can reduce that within the space of a year or two is not a realistic assumption,” Gross said in a live interview. “That’s much more than Greece, that’s much more than almost any other developed country. We’ve got a problem and we have to get after it quickly.”

Read the rest here.

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I Think You’ll See that my Forecasting Record is Not Great.

“Most critiques of Krugman as a public intellectual begin with what is apparently an obligatory disclaimer, usually in the very first sentence — something to the effect that Krugman is a very accomplished and well-respected economist. Then comes the “But . . .” and the critique proceeds in earnest, often scathingly.

But why concede this honor to Krugman? So what if he won the Nobel Prize? The real test of Krugman’s mettle as an economist is the accuracy of his economic forecasting. The fact is that, with about three decades of evidence now in, Krugman’s track record, to use a technical term favored by economists, sucks.

He’s not always candid about this. But once, under the pressure of a televised debate with conservative talk-show host Bill O’Reilly, Krugman blurted out an understated if truthful self-evaluation: “Compare me . . . compare me, uh, with anyone else, and I think you’ll see that my forecasting record is not great.”

The most egregious example of “not great” is Krugman’s utterly incorrect 1982 prediction that inflation would soar. He made this prediction from no less lofty a perch than the White House, as staff member of the Council of Economic Advisers in the first Reagan administration. In a memo titled “The Inflation Time Bomb” Krugman wrote with co-author Lawrence Summers, “We believe that it is reasonable to expect a significant reacceleration of inflation . . . at least 5 percentage points to future increases in consumer prices. . . . This estimate is conservative.”

It also turned out to be hilariously, side-splittingly, knee-slappingly, rolling-on-the-floor wrong. Except for a tiny uptick the very next month, inflation didn’t rise; it fell. Four years later, it had fallen to 1.18 percent, a rate so low as to border on deflation.”

Read the rest here.

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Biggest ETF Winners and Losers (2 weeks)

No. Ticker 2-week Return Market Cap
1 SOXS 25.68 12,628,071
2 SRTY 22.38 26,859,269
3 TZA 22.19 566,495,110
4 CZI 20.50
5 DUST 20.21
6 CVOL 19.41 0.00
7 BXDC 19.36 0.00
8 MWN 18.51 13,143,779
9 TYP 17.26 55,187,309
10 ERY 16.38 32,635,171
11 DRV 16.20 112,467,012
12 ZSL 15.28 61,055,280
13 SKK 15.17 12,481,165
14 SSG 15.12 23,833,725
15 TWM 14.64 509,350,415
16 BGZ 14.03 313,326,207
17 FAZ 13.95 1,209,974,941
18 SMN 13.93 142,969,691
19 SDD 13.30 19,411,490
20 SPXU 13.27 242,799,747
21 TVIX 13.24 0.00
22 LHB 13.19 6,136,541
23 MZZ 12.74 38,448,784
24 SDK 12.67 6,763,420
25 SJH 12.64 8,013,066

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No. Ticker 2-week Return Market Cap
1 SOXL -22.43 29,942,027
2 TNA -19.84 404,028,599
3 CZM -19.47 27,276,532
4 NUGT -17.92
5 URA -17.74 0.00
6 AGQ -17.14 176,030,000
7 MWJ -17.05 41,300,000
8 DRN -16.02 175,266,000
9 TYH -15.86 179,104,000
10 ERX -15.45 295,104,492
11 UKK -14.73 19,331,581
12 TQQQ -14.41 74,196,500
13 USD -14.08 70,620,424
14 FAS -13.86 1,752,132,790
15 UWM -13.63 255,822,211
16 BGU -13.57 214,903,020
17 PSLV -13.21 0.00
18 UYM -13.13 299,193,750
19 CII -13.01 628,740,000
20 UPRO -12.93 183,900,269
21 SAA -12.92 52,356,158
22 LBJ -12.49 29,865,027
23 PHK -12.08 1,500,000,000
24 UVT -12.01 19,809,547
25 MVV -11.97 115,386,278

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ChinaScams Get Mauled Again

Where is the SEC?

No. Ticker % Change Industry
1 SCEI -23.03 Chinese Burritos
2 DANG -18.80 Chinese Burritos
3 RENN -14.55 Chinese Burritos
4 YOKU -14.28 Chinese Burritos
5 BORN -13.65 Chinese Burritos
6 NQ -13.36 Chinese Burritos
7 CHC -10.74 Chinese Burritos
8 SHZ -9.90 Chinese Burritos
9 CYD -9.31 Chinese Burritos
10 JOBS -9.30 Chinese Burritos
11 VISN -8.80 Chinese Burritos
12 SCR -8.58 Chinese Burritos
13 KGJI -8.28 Chinese Burritos
14 TRIT -6.79 Chinese Burritos
15 CBPO -6.70 Chinese Burritos
16 ALN -6.67 Chinese Burritos
17 SSRX -6.45 Chinese Burritos
18 PWRD -5.59 Chinese Burritos
19 GRO -5.26 Chinese Burritos
20 OINK -4.67 Chinese Burritos

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Turns Out Tech May Be Cheaper Than Talk

Tech has not been this under loved in 25 years. Of course this is all based on forward looking estimates; which people may not trust given all the market headwinds.

Full article

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Investing in rentals could be good move

by Amy Hoak
Monday, June 13, 2011

As home prices fall and rents rise, some investors are plunking their money into real estate, chasing the cash flow that comes along with becoming a landlord.

“For the first time in a long time, you can buy that home and can get a cash-on-cash return immediately,” said William King, director of valuation services for Veros Real Estate Solutions, a supplier of housing data to the country’s largest banks, as well as government organizations. “There are a lot of places in the country where an investor can buy a single-family home, rent it, and get a positive cash flow.”

In fact, investors bought 20% of all the homes sold in April, according to the National Association of Realtors. Some of them are buying with cash.

But even if they do finance part of the purchase, they’re able to turn around a profit much quicker than they would have been able to in the past, King said. And the return on rentals can be much better than returns on other investments these days, he added.

In the past, investors would subsidize their monthly payments on a property with the rent they were able to collect, and the big payoff was the price appreciation he or she would accumulate, he said. Now, investors can come in with a 25% or 30% down payment, finance the rest, and the rent they collect often can cover the mortgage payment, taxes and insurance — with additional cash left over, he said.

“Investors are looking at these properties on a monthly income generating basis,” said Alex Villacorta, director of research & analytics at Clear Capital, a firm that provides data for real-estate asset valuation and risk assessment to financial services companies. “They can start to realize instant profit margins, even as the market goes down more.”

“There’s a turning point where the cost of owning a home is less than the cost of renting,” he said. “When that disparity grows … we will see a push from investors to pick up investment properties.”

In general, that investors are beginning to snap up rental properties is a good thing for the stabilization of housing markets, King said. It’s also one of the ways that a floor on real-estate prices can be established; as more investors spot opportunities in residential markets, prices could bottom.

“Once investors come into a community, you’re seeing the beginning of the end of the decline,” King said.

What to Look For

Before investing in a rental, make sure you’ve considered the harsh realities of becoming a landlord, said Mike Litzner, broker and owner of Century 21 American Homes, which has locations in Long Island, Queens, Nassau and Suffolk Counties. He’s also a landlord.

“There are some people who think it’s glamorous, but when you get the wrong tenants, it can be a nightmare,” he said. That said, when you get the right tenants and the properties perform as expected, it can be a “tremendous” way to make a buck — and he believes the “smart money” is now working its way into the marketplace.

Before considering any purchase, decide if you have it in you to be a landlord. You have to be willing to set expectations and consequences to ensure rents are paid on time, and you have to ready for the possibility of evicting non-paying tenants, he said. Plus, you’re responsible for the upkeep of the property, no matter how your tenants treat it.

From there, it’s a numbers game. Get a sense of what rents are in the area you’re considering, the vacancy rate, and consider your costs of financing, Villacorta said. Don’t forget the other costs of owning a property, including taxes and upkeep. Some investors may want to enlist the help of a real-estate agent to assist with analyzing the market.

Remember, often the best investment is a home you wouldn’t necessarily buy to live in yourself, Litzner said. These days, foreclosures can be snapped up at bargain prices, and as long as you have the means to make required repairs, they can represent good opportunities.

“Don’t buy the most expensive house in the neighborhood,” King said, “and look at the broader community. Where are the renters going to come from, and what do they do?” Areas near colleges and military installations can be good places to invest; and think about what renters typically look for, including access to public transportation, he said.

Some of the houses bought in the worst conditions ended up being the best investments for Litzner, who was able to put some sweat equity into the homes before renting them out. It’s also important that investors have multiyear plans for the properties they buy, planning the financials at least 5 years into the future, he said.

Best Markets

Many investors sink their money into properties not far from where they live. Those are likely the communities they’re most familiar with, and from a management perspective, you’re never far from the tenants you’re dealing with.

But some markets are better than others to invest in right now.

A recent report from Inman News, an online real-estate industry publication, named the 10 best markets for home investors. These are markets with traits including high affordability, low prices, high share of foreclosure sales, high population growth, improving unemployment rate, and high return on investment in the next 10 years.

The following are their top 10 markets:

1. Indianapolis-Carmel, Ind.

2. Winchester, Va.-W.Va.

3. Gainesville, Fla.

4. Tucson, Ariz.

5. Tallahassee, Fla.

6. Hagerstown-Martinsburg, Md.-W.Va.

7. Salt Lake City

8. Richmond, Va.

9. Gainesville, Ga.

10. Winston-Salem, N.C.

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