406 Days Until This Market Crashes…

by Robert Williams, Publisher Friday, November 20, 2009

David Fessler has a sector that warrants your attention. But first, I want to officially raise a red flag in another market.

Something’s amiss in the municipal bond market. Year-to-date, “munies” have behaved more like momentum stocks than their intended purpose of providing a safe yield.

Consider this: A handful of closed-end muni funds have averaged a 46% return so far this year.

The rally, of course, was borne out of the financial crisis, when investors and institutions alike went furiously scrambling to safety.

The novice move was into cash. But the smart money flowed strategically into the bond market. And a lot of the action was in municipal bonds. (The junk bond market is similarly overheated.)

What’s noteworthy, however, is that when the market’s

Where’s That Cracking Sound Coming From?

by Robert Williams, Publisher
Wednesday, November 18, 2009

When I saw the latest cover of BusinessWeek – “Why the Commercial Real Estate Crisis Looks So Scary” – I immediately fired off a text to my friend and Investment U colleague, David Fessler.

“We scooped ‘em by six whole months,” I texted.

Dave’s been tracking (and cautioning us about) the commercial real estate market for the better part of a year now. (You can read Dave’s June article on the commercial real estate fallout or his April article on the commercial real estate sector.)

“Last year, commercial real estate sales fell off a cliff, plunging 73%… But it’s going to get worse… much, much worse,” asserted Dave, months ago.

He nailed it. The market is indeed cracking.

BusinessWeek reported that $6.4 billion worth of commercial real

…

Biotech Stocks: The Market’s Best Bargain Right Now…

by Robert Williams, Publisher

Last week, I told you that we had collectively moved over $5 trillion in cash from the sidelines to the markets, serving as the rally’s fuel, so to speak.

With all that cash back in play, it’s the economy that now must provide the impetus for the market to push higher. More specifically, we need corporate earnings to grow again. And the only way that’s going to happen is if the economy cooperates.

The prevailing price-to-earnings ratio (P/E) for the market is 23. Which, if you look at the chart below, has us already near the upper range, historically speaking. (Going back to 1900, the average P/E is 16.38.)

If you do the math, the

Is Warren Buffett Signaling a Housing Recovery?

by Robert Williams, Publisher Thursday, November 5, 2009

Warren Buffett is teaming-up with Goldman Sachs as the investment bank attempts to buy $3 billion of tax credits from taxpayer-owned mortgage firm Fannie Mae.

According to The Wall Street Journal, investments in low-income housing tax credits has waned dramatically in the face of the credit crisis.

Credits are being sold for between 65 cents and 79 cents on the dollar. By comparison – at the height of the real estate boom – developers were fetching 95 cents on the dollar.

(Property developers receive tax credits – worth between 30% and 60% of a project’s cost – to encourage building in low-income areas and to hold rents down. They typically then sell the credits to large financial institutions for the tax benefits they offer.)

Although Buffett and Sachs surely intend

CEOs: Put Your Money Where Your Mouth Is

by Robert Williams, Publisher

It’s well documented. Insider buying is a terrific way to gauge a stock’s investment appeal. (Investment legends, like Peter Lynch, have long sung the praises of insider buying.)

I mean, can you get a better vote of confidence from a CEO than one that’s willing to open his own checkbook for shares?

Probably not.

That being said, such buying alone should never warrant entry. Other factors are always “in play,” too.

For example, what warrants a “significant” buy on behalf of an insider? Well, with access to the right information, you can track the amount an insider antes up relative to his salary.

You’d also be interested in knowing whether the “buy” is merely an exercising of stock options, or a genuine purchase of shares.

My point

Did You Hear That Big Thud?

by Robert Williams, Publisher

It’s incredible how fast the tables can turn sometimes. Eighteen months ago, at the height of the Agriboom, supply shortages turned our nation’s farms into virtual ATMs.

Farmers couldn’t grow their respective crops fast enough. Farm incomes were pushed about 30% higher than the average wage for all workers. And thanks to the accompanying rise in property values, the average net worth of a full-time farmer mushroomed to $830,000. (U.S. farmers earned a record $80.4 billion after expenses in 2008.)

Even colleges with Agricultural majors saw big upticks in enrollment.

Well, proving again that trends typically swing back to their historical means, we recently got the latest data on farming. And it isn’t good for farmers.

The U.S. Department of Agriculture expects farm income this year –

The Frontline of the Global Recovery

by Robert Williams, Publisher

In an effort to keep a step ahead of the recovery, we’re looking very closely at the emerging markets. Particularly those in Asia.

It’s prudent, of course. Asian policymakers helped the global economy avert a Depression-like tailspin by cutting interest rates to unprecedented lows and doling out more than $950 billion of stimulus measures.

And their course of action is paying off. Data indicates that the region is leading the resurgence.

But all Asian markets are not created equal.

Our “boots on the ground” India expert, Karim Rahemtulla, thinks India holds the most promise when investing in emerging markets. And he’s got three compelling reasons to support his case.

Ahead of the tape,

Robert Williams

A Sector Where Few Dare to Go…

by Robert Williams, Publisher

Have you heard the chatter coming out of the retail sector? Last week, Citigroup upgraded Macy’s (NYSE: M) to a “Buy.” And yesterday, Moody’s raised its broad outlook on U.S. retailers from “Negative” to “Stable.”

The respective upgrades serve as further proof that the economy is improving, which puts the onus on the Fed to figure out an exit strategy.

The Fed used unprecedented measures, including lowering short-term interest rates to near zero and buying a wide range of securities, to stabilize financial markets.

However, soon it’ll be time for Bernanke’s gang to reverse course. That means raising interest rates, withdrawing support from the credit markets and selling the securities it accumulated.

And when news of such action hits the wire, stocks – especially retailers – will likely be

Why I Won’t Pay a Penny Over $70 for Oil

by Robert Williams, Publisher

For the third consecutive month, The International Energy Agency (IEA) released an upward revision of its forecast for world oil demand. It juiced up August’s estimate by 500,000 barrels a day, citing better-than-expected economic growth in developing Asian economies and North America.

So this rejuvenated demand for oil will have a barrel trading north of $90 in the weeks ahead, right? (The current market price for a barrel of oil is about $72.)

Not so fast. Two factors will likely hold price down through the end of the year.

Factor #1: When the financial crisis hit, and oil demand waned, suppliers began storing the massive inventory excess on tankers. OPEC said that, “Some 60

What’s the “Fair Price” of Gold?

by Robert Williams, Publisher

The world’s been awaiting gold’s big push higher since Wall Street started unraveling over a year ago. Remember, gold is considered the foremost safe-haven investment during turbulent times because of its intrinsic value.

But since the Dow topped out in November 2007, gold has merely danced between $725/ounce and $1,000/ounce.

Last week, however, the yellow metal breached (and closed) above the $1,000/ounce level – thanks to the broad weakness in the U.S. dollar – for the first time in 18 months.

So that got me thinking. What’s a fair price for gold?

Consider this…

On the strength of the extraordinary inflation in the 1970s, gold traded for $800/ounce by 1980. At the time, the Dow sat at 800, which represented