Top Stocks For 2014, Best Stocks To Buy 2014: January 2015

1/29/2015

PIABA seeks more Capitol Hill influence in 2014

piaba, brokers, expungement, records, finra, sec

A group of lawyers that represents investors in claims against brokers wants to have more influence in the halls of Congress.

“We're taking a more active role in trying to impact legislation,” said Jason Doss, president of the Public Investors Arbitration Bar Association. “No other organization has the practical experience to talk about the real-life impact on investors when they're given bad investment advice.”

On March 14, PIABA will hold its first ever Capitol Hill Day. The initiative will involve PIABA members meeting with their representatives and senators to highlight measures and issues at the top of the group's agenda, such as a bill that would end mandatory arbitration clauses in brokerage contracts with customers.

Another issue that the group is trying to put on the radar of lawmakers is the so-called expungement process, or the method by which brokers can get wrongdoing cleared from their records in a database run by the Financial Industry Regulatory Authority Inc.

A PIABA study released in October found that expungement was granted more than 90% of the time between May 2007 and December 2011 when it was requested by brokers as part of a stipulated award or settlement.

That report has caught the attention of three senators worried about investor protection.

In the latest reaction, Sen. Jack Reed, D-R.I., and Sen. Charles Grassley, R-Ia., wrote a Dec. 16 letter to Finra chairman and chief executive Rick Ketchum asking the broker-dealer regulator to respond to the five recommendations in the PIABA letter for improving the expungement process.

“A 90% figure sticks out like a sore thumb,” Mr. Grassley said in an interview. “It seems to me that this is an incredibly high percentage. It's almost willy-nilly.”

In October, Sen. Edward Markey, D-Mass., also sent a letter to Finra expressing concerns about expungement.

“[Expungement] is getting a much closer look now that the PIABA study has come out and shown how frequently customer complaints are being expunged,” said Christine Lazaro, chair of the PIABA legislation committee and director of the Securities Arbitration Clinic at St. John's University School of Law.

In a Nov. 13 letter responding to Mr. Markey, Mr. Ketchum wrote that expungement was not requested in the large majority of the 18,000 arbitration cases initiated during the time period of the PIABA study. Over that same time, Finra executed fewer than 850 court orders for expungement that confirmed arbitrator recommendations. Finra also has recently issued guidance to its more than 6,000 arbitrators on the appropriate use of expungement.

In their letter to Mr. Ketchum, Sens. Reed and Grassley asked him whether Finra required congressional authority to im! prove the expungement process. That's a step PIABA also is considering.

“PIABA is looking into whether legislation would provide the best solution to expungement,” said Mr. Doss, owner of an eponymous firm. “We're hopeful that if there is such a solution, we'll have it ready by the March Capitol Hill Day.”

But an expungement bill may not be necessary, Mr. Grassley said.

“A lot of times, if our oversight works…it doesn't always take legislation to change things,” Mr. Grassley said. “Right now, I'm going to give [Finra] the benefit of the doubt.”

3 Stocks Under $10 Making Big Moves

DELAFIELD, Wis. (Stockpickr) -- At Stockpickr, we track daily portfolios of stocks that are the biggest percentage gainers and the biggest percentage losers.

>>5 Stocks Ready to Break Out

Stocks that are making large moves like these are favorites among short-term traders because they can jump into these names and try to capture some of that massive volatility. Stocks that are making big-percentage moves either up or down are usually in play because their sector is becoming attractive or they have a major fundamental catalyst such as a recent earnings release. Sometimes stocks making big moves have been hit with an analyst upgrade or an analyst downgrade.

Regardless of the reason behind it, when a stock makes a large-percentage move, it is often just the start of a new major trend -- a trend that can lead to huge profits. If you time your trade correctly, combining technical indicators with fundamental trends, discipline and sound money management, you will be well on your way to investment success.

>>5 Hated Earnings Stocks You Should Love

With that in mind, let's take a closer look at a several stocks under $10 that are making large moves to the upside today.

Stereotaxis

Stereotaxis (STXS) designs, manufactures and markets cardiology instrument control system in the U.S. and internationally. This stock closed up 10.9% to $3.64 in Tuesday's trading session.

Tuesday's Range: $3.26-$4.05

52-Week Range: $1.10-$9.90

Tuesday's Volume: 3.92 million

Three-Month Average Volume: 1.37 million

From a technical perspective, STXS ripped sharply higher here right above some near-term support at $3.11 and back above its 50-day moving average of $3.61 with heavy upside volume. This move briefly pushed shares of STXS into breakout territory, since the stock flirted with some near-term overhead resistance at $3.88. Shares of STXS closed just below that level at $3.64. Shares of STXS are now starting to move within range of triggering an even bigger breakout trade. That trade will hit if STXS manages to take out Tuesday's high of $4.05 to some more near-term overhead resistance at $4.30 with high volume.

Traders should now look for long-biased trades in STXS as long as it's trending above Tuesday's low of $3.26 and then once it sustains a move or close above those breakout levels with volume that hits near or above 1.37 million shares. If that breakout hits soon, then STXS will set up to re-test or possibly take out its next major overhead resistance levels at $5 to $6.24.

Quantum Fuel Systems Technologies Worldwide

Quantum Fuel Systems Technologies Worldwide (QTWW) designs, develops and produces compressed natural gas storage tanks and packaged fuel systems and other advanced fuel and propulsion systems for alternative fuel vehicle applications. This stock closed up 3.8% to $6.73 in Tuesday's trading session.

Tuesday's Range: $6.11-$6.75

52-Week Range: $1.85-$7.64

Tuesday's Volume: 710,000

Three-Month Average Volume: 799,041

From a technical perspective, QTWW trended higher here right above its 50-day moving average of $5.81 with decent upside volume. This stock had been downtrending over the last month, with shares dropping from its high of $7.64 to its recent low of $5.85. During that move, shares of QTWW have been making mostly lower highs and lower lows, which is bearish technical price action. That said, the downside volatility for QTWW now looks over in the short-term and the stock looks ready to reverse its downtrend and enter a new uptrend.

Traders should now look for long-biased trades in QTWW as long as it's trending above Tuesday's low of $6.11 or above its 50-day at $5.81, and then once it sustains a move or close above Tuesday's high of $6.75 with volume that hits near or above 799,041 shares. If we get that move soon, then QTWW will set up to re-test or possibly take out its next major overhead resistance levels at $7.20 to $7.43. Any high-volume move above those levels will then give QTWW a chance to re-test or possibly take out its 52-week high at $7.64.

Prana Biotechnology

Prana Biotechnology (PRAN) researches and develops therapeutic drugs for the treatment of neurological disorders in Australia. This stock closed up 8.8% to $6.88 in Tuesday's trading session.

Tuesday's Range: $6.29-$6.90

52-Week Range: $2.03-$7.48

Tuesday's Volume: 701,000

Three-Month Average Volume: 676,562

From a technical perspective, PRAN spiked sharply higher here right above some near-term support at $6 with above-average volume. This stock has been uptrending strong for the last two months and change, with shares moving higher from its low of $3.44 to its recent high of $7.48. During that uptrend, shares of PRAN have been consistently making higher lows and higher highs, which is bullish technical price action. That move has now pushed shares of PRAN within range of triggering a big breakout trade. That trade will hit if PRAN manages to take out Tuesday's high of $6.90 to its 52-week high of $7.48 with high volume.

Traders should now look for long-biased trades in PRAN as long as it's trending above some near-term support levels at $6 or at $5.50 and then once it sustains a move or close above those breakout levels with volume that hits near or above 676,562 shares. If that breakout hits soon, then PRAN will set up to enter new 52-week-high territory, which is bullish technical price action. Some possible upside targets off that breakout are $9 to $10.

To see more stocks that are making notable moves higher today, check out the Stocks Under $10 Moving Higher portfolio on Stockpickr.

-- Written by Roberto Pedone in Delafield, Wis.

1/28/2015

Honoring Advisors Who Serve(d): Veterans Day, 2013

Since it's Veterans Day, it’s obviously a good time to rerun this Advisors Who Serve(d) slideshow that ran on Fourth of July and Memorial Day. ThinkAdvisor honored those advisors and partners to advisors—and one famous non-advisor who influences the advisory world, PIMCO’s Bill Gross—who served in the armed forces of the United States.

This is the third year we’ve published this slideshow that is meant, in a small way, to thank all those who served their country. This slideshow features seven “new” advisors from this year and four from Advisors Who Serve(d) slideshows in the years before.

We’ve created a special landing page for you to view our previous slideshows as well. The seven new people on the following pages responded to our call this year to share the particulars of their service—some in the past and some still serving—and, in most instances, some photos of themselves when they were in service.

Most telling to us, however, were the vets’ responses to how their military service helped prepared them for their advisory careers. We began this series of slideshows in 2011 because anecdotally there seemed to be a large percentage of advisors, both men and women, who had served in one of the branches of the military over the years but in many cases had not received the appreciation they were due for their service.

The comments of this group on their military experiences speak for themselves—profound and humorous, patriotic and often self-deprecating, but humbly proud of their service as well.

(Check out previous Advisors Who Serve(d) installments from 2011 and 2012 for Memorial Day and Fourth of July.)

Name: John Grover Wilson

Title/Company: Managing Director, Senior Investment Advisor — Raymond James & Associates

Branch: USAF-retired

Rank held at beginning of service and at end: Lt. at beginning, Col. at the end

Service Dates: 1968-1992

Work you did: Fighter Pilot, F-4, RF-4 and others

Brief story that stands out from your service time: Hold the Air Medal (2) and Distinguished Flying Cross from serving in Vietnam. I’m presently the Chief Chaplain of the Volunteer State Veterans Honor Guard. In my spare time, I presided over 250 military funerals with honor. I am presently on the steering committee for the Medal of Honor Society Conference in 2014 to be held in Knoxville. Flew two tours in SEA. Funny story: I was a White House Social Aide during the Nixon administration.

Name: David S. Chang

Title/Company: President, CEO — WealthBridge

Branch: Army

Rank held at beginning of service and at end: Cadet; Major

Service Dates: 1998-2008 (Active duty) 2009 to Present (Hawaii Army National Guard)

Work you did: West Point Cadet, Armor Officer, Ground Scout Platoon Leader, Military Intelligence Officer

Brief story that stands out from your service time: I spent 15 months in Northern Iraq. The work hours were grueling but what made life bearable were the soldiers I served with, we were all one big happy family. I knew that my XO (executive officer) went to high school with Rachael Ray. He knew I was a big fan of hers, especially since I am an eater! During Christmas my XO brought me up to the front of our commanders and staff after a normal meeting and surprised me with an autographed photo of Rachael Ray made out to me! It was one of the best Christmas gifts I got, I am very appreciative that he took the time to reach out to her and she in turn took time to write to me. It was a definite morale booster!

Name: John Thomas Deutsch

Title/Company: Senior VP, Investments — Raymond James & Associates

Branch: U.S. Navy

Rank held at beginning of service and at end: Seaman to CWO(4)

Service Dates: 1962-1985

Work you did: Avionics Commissioned Warrant Officer W-4

Brief story that stands out from your service time: Too many great shipmates and funny stories for one to stand out but, late in my career, I served on the USS Coral Sea CV-43. Our Battle Group as well as the Nimitz’s were stationed in the Indian Ocean in support of the Iranian hostages rescue attempt on Aug. 24, 1980. Tragically, the operation was unsuccessful and ended with the loss of aircraft and eight US service members. Memorably, I was walking on the flight deck with support attack aircraft fully loaded out after midnight when our Captain, Dick Dunleavy, announced on the 1MC that we would be standing down because of the failed outcome. That was one of the first publicized uses of special forces to effect U.S. policy objectives. Today, 30 years hence, both Iran and heroic special forces operators remain in our daily headlines and in my memory.

Name: Kevin Hott

Title/Company: Financial Advisor — Merrill Lynch

Branch: U.S. Navy

Rank held at beginning of service and at end: E1-E4/Seaman Recruit to Petty Officer Third Class

Service Dates: 1997-2001

Work you did: Gas Turbine Systems Electrician

Brief story that stands out from your service time: The first morning after arriving at Recruit Training Center Great Lakes I found myself being awoken abruptly by the Drill Instructor. He was screaming in my face, nose-to-nose, after I overslept by a “few minutes.” I learned quickly when you’re the only one not in formation you get the wrong kind of attention. While we were deployed in the Mediterranean, I remember the roller coaster of emotions we experienced when we all learned of the USS Cole bombing. Oh, and how can I forget the swim call we had in the middle of the Mediterranean? When you have folks jumping off the side of a destroyer into 13,000 feet of water it’s not a pleasant experience when you’re in the water and realize the ship isn’t completely stopped. Name: David Latch

Title/Company: President — Frederick Advisors

Branch: U.S. Army

Rank held at beginning of service and at end: E-3, O-4

Service Dates: 1977-1999

Work you did: Aircraft Maintenance, then Medical Logistics

Brief story that stands out from your service time: I was nearing the end of my first enlistment and was unsure about re-enlisting. My NCIOC, whom I really didn’t think much of, told me to write down the pros and cons of both staying in and getting out. Once I did that, I became a “lifer.”

Name: James Schwartz

Title/Company: Senior Advisor — Strategic Wealth Advisors

Branch: U.S. Air Force

Rank held at beginning of service and at end: 2nd Lt to Captain

Service Dates: 1985-1997

Work you did: A-10 and F-16 Fighter Pilot

Brief story that stands out from your service time: The first year in the USAF was spent in pilot training near Del Rio, Texas. While learning to fly the T-37, student pilots must become proficient in acrobatics, including loops, barrel rolls and split-S's. The split-S is a maneuver where the pilot rolls the jet upside down then pulls back on the stick forcing the jet to fly straight down then continue to a level flight path heading the opposite direction (think of the second half of a loop). As I went through my split-S maneuver and the nose of the aircraft was going straight down toward the earth, my instructor, sitting to my right, said, “Jim, you better pull a little harder.”

And so I did—probably a little too quickly and a little too hard. The G's (acceleration one feels on their body at the bottom of a roller coaster) increased from zero to 3, then 4, and finally 5. At 5 G's a 150-pound person weighs 750 pounds! Well, my instructor wasn’t prepared for such a quick transition to 5 G's and he passed out! I finished my split-S back to level flight but it took my instructor some time to regain consciousness and figure out where he was (later he divulged to me that when he came to he thought we had crashed). At this point the flight was over (due to the loss of consciousness episode) and I flew him back to the base where after two days he was back in the saddle. As I look back at that incident, as a new student pilot, I have to say I was a little scared when I realized my instructor (the person I counted on to be there when I screwed up) had lost consciousness and it was up to me to bring him home. Robert Peterson with co-worker Barb Emenhiser Name: Robert S. Peterson

Title/Company: Vice President, Investments — Raymond James & Associates

Branch: U.S. Army

Rank held at beginning of service and at end: Pvt. to Sergeant

Service Dates: 1970-1973

Work you did: Military Intelligence, Linguist

Brief story that stands out from your service time: I was trained as an interrogator and a linguist in Laotian. I spent most of my time teaching English to foreign nationals.

Bill Gross (left) standing tall in the bridge. Name: Bill Gross

Title/Company: PIMCO - founder and co-chief investment officer

Branch: U.S. Navy

Rank held at beginning of service and at end: LT JG – Lieutenant, Junior Grade

Service Dates: 1967 - 1970

Work you did: N/A

Brief story that stands out from your service time: I arrived at the Pensacola Naval Air Station ready to fulfill my enlistment and ready to become a fighter pilot. And like all raw recruits, we were put in the capable hands of a drill sergeant. Remember, the drill sergeant’s duty is to humiliate and harass us to the breaking point and beyond. And me, the cocky college boy, was so shaken by the experience that it was one of the military moments I remember most vividly. I spent half the night cleaning my rifle, and failing the inspections nonetheless. It took me so long to make up my bunk to my sergeant’s specifications that I slept on the floor. I did push-ups and chin-ups and marched and ran obstacle courses but my sergeant was never satisfied. “You’ll never fly a jet Mr. Gross!,” he screamed. “BLIMPS are more your style!” I ended up flying neither.

Meredith Schneider in Bosnia

Meredith Schneider

Title/Company: Principal — Schneider Wealth Management

Branch/Rank: US Army - 2nd Lt through Captain

Service Dates: June ’92 - Aug. ’96

Work you did: Platoon Leader, Maintenance Officer, S-1, Civil Affairs Officer

Brief story that stands out from your service time: I am honored to have had the opportunity to meet so many people from all over the country who served with great dedication. I will never forget the "Any Solider" letters we received while in Bosnia. Some days they were the only link to life outside of our tents since we had no phone, television, newspaper, Internet, and often no mail from loved ones. I remember a letter in particular from a young boy in Rhode Island who wrote in reply to a letter I wrote back to him. He wrote, "Receiving your letter was the happiest day of my life." Little did he know how happy I was to receive his letter of support.

Harold Evensky

One of the few people in the advisor community who is identified by one name, like a Brazilian soccer player, Evensky is the chairman and cofounder of the wealth management firm of Evensky & Katz in Coral Gables, Fla. He is the author of numerous books, is now an adjunct professor at Texas Tech University and among his honors has been membership of the IA25. But Harold is also a veteran, serving in the Medical Corps of the U.S. Army as a Captain from 1968-1971.

Joni Youngwirth

Folks from Commonwealth Financial Network know Youngwirth quite well, as do other advisors who have benefited from her practice management knowledge delivered in speeches at national conferences, or who have read some of her prescriptions in the pages of Investment Advisor, for instance.

They may know of her practical, disciplined bent when it comes to practice management, but what they may not know is that this partner to advisors previously served with the U.S. Air Force, rising to the rank of first lieutenant.

Youngwirth is Commonwealth Financial Network's managing principal, practice management, and a regular contributor to Investment Advisor.

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Check out previous Advisors Who Serve(d) installments from 2011 and 2012 for Memorial Day and Fourth of July.

We know there are more of you out there who served, so please consider adding your name and story to the growing list of Advisors Who Serve(d) by filling out this simple questionnaire at ThinkAdvisor.

Have the Worries Returned to Broad and Wall?

After finishing in the green nine of the last 10 days, it wasn't exactly surprising to see the bears attempt to get back in the game on Wednesday and for the stock market to pull back a bit.

After all, the S&P had stepped lively to a gain of six percent in just two weeks and 11.5 percent since late-June, which is the very definition of an overbought condition.

In short, it was only a matter of time before something came along to give the bears a raison d'être and cause the buyers to stand aside.

Is Anyone Left to Buy?

One of the problems with just about everyone in the game having access to news, data, and charting tools at the drop of a hat (well, okay, the data actually hits screens much faster than the time it takes for a hat to fall to the floor - think about that for a while!) is that everybody under the sun knows that the trend is up and has been for two weeks. Everybody knows that the stochastics are screaming about an overbought condition. Everybody knows there is a gap on the chart of the S&P 500 at 1733.45 and that it will likely be filled sooner rather than later. And everybody knows that the move has become extended.

When a trend moves in a straight-up fashion, the issue becomes who is left to buy? Okay, perhaps that's more of an old school view. Nowadays, the better question might be who in their right mind would chase stocks higher at this juncture?

Today's market participants tend to be more trading oriented than the soccer mom's trading internet stocks in the late 1990's. Today, everyone wants to be the "fast money." As such, today's traders are well aware when markets become overbought and have been trained to wait for a pullback before committing fresh capital to the long side.

A Self-Fulfilling Move

After a straight-up move such as has been seen over the past two weeks, the idea of a pullback becomes a bit of a self-fulfilling prophecy. Everybody knows that only the "dumb money" buys high. No, today's sophisticated traders only buy t! he dips!

So, Wednesday's little dip was not at all surprising. In fact, the only real surprise is that stocks didn't finish down more. With the buyers waiting for a dip, the sellers would appear to have the upper hand in this type of situation. Thus, today's action could be quite telling. But more on that in a minute.

The Worries

Whenever the bulls are on a roll, something usually comes out of the woodwork to trigger the start of a pullback, a correction, or at the very least, a "sloppy period." And Wednesday was no exception.

Here's the run down on the issues traders were suddenly fretting about.

Money Market Rates in China: Money market rates in China jumped by the highest amount since July after regulators suggested that cash conditions could be tightened to address the risks of inflation stemming from the ongoing run-up in house prices.

Chinese Bank Write-offs: A Bloomberg report noted that China's large banks had tripled the amount of bad loan write-offs compared to the levels seen in the first half of the year.

European Banks (Yes, Again): The ECB put the focus back on Europe's shaky banking system by outlining some details of the stress tests the central bank wants to apply to all eurozone banks. The European bank index dove nearly 2 percent on the report.

Earnings Disappointments: While the earnings season has been largely positive, there was some spin in the press yesterday about high-profile earnings misses. Caterpillar (NYSE: CAT) let the charge here by missing the EPS estimate by 13 percent, missing on revenues, and guiding lower. In addition, semis were under attack all day thanks to Altera's (NASDAQ: ALTR) report, which resulted in a decline of 13.5 percent. Even a former consumer discretionary leader, Panera Bread (NASDAQ: PNRA) got into the act by falling 5.7 percent on the session after cutting both its Q4 and full-year outlooks.

Overbought Conditions: This was touched on above. But to drive the point home, Bespoke Investment Group r! eported t! hat all ten S&P 500 sectors closed Tuesday in extreme overbought territory (defined as at least two standard deviations above 50-day moving averages). Bespoke noted that going back to 1990, there have only been two days when there has been a similar reading. Thus, the "overbought condition" seemed to be one of the go-to excuses for the session.

Something Serious or Just Excuses Du Jour?

So there you have it; the reasons that the Citadels of the world were likely running "ignition algos" to the downside yesterday. However, the question of the day is if any of the issues detailed above are worthy of traders' full attention for more than a day or two.

Since using a crystal ball is not a strong option for most investors, it is probably best to simply watch the action closely for the rest of the week. If stocks are hit hard, then one could argue that the recent joyride to the upside has ended. However, if the pullback is weak and the buyers appear anxious to get back to work, there could easily be some additional upside ahead.

free copy of Dave's Special Report on changes in the current market

1/26/2015

How to Win With the Twitter IPO

BALTIMORE (Stockpickr) -- Want to win with the Twitter IPO? Then stay the hell away from it.

>>5 Stocks Ready to Break Out

Twitter got investors excited last week when it announced -- via Twitter, naturally -- that it had filed an S-1 with the SEC, the first step to an initial public offering. Look, I get the excitement. Twitter has been a revolution in how we communicate, with more than 200 million users blasting out rapid-fire comments 140 characters at a time.

Twitter has helped spread news in warzones, and it's helped spread celebrity gossip on kids' cell phones. It's also become a bit of a phenomenon in the investment world; brevity counts for traders, so the 140-character limit works perfectly for broadcasting trading ideas. Some funds are even using Twitter data to drive trading algorithms right now.

But none of that changes the fact that you shouldn't buy Twitter on day one. It makes sense to avoid this stock, just not for the reasons you think. Let me explain.

Not a Bad Model

First of all, Twitter doesn't have a bad model. Really.

There's one very simple sniff test that I use when I look at social media stocks: Does the company earn its revenue by helping its end users find what they're looking for?

>>5 Stocks Under $10 Set to Soar
LinkedIn (LNKD) is a perfect example of that: The professional network gets 75% of is revenue paid for by users who are posting open jobs or looking for jobs. In other words, it makes money by helping users do what they came to the site to do. And LinkedIn has been the poster child for successful post-IPO performance; shares are up 167% since their first trade in 2011.

Contrast that with Facebook (FB).

Facebook earns most of its revenue by distracting users from stalking their friends and getting them to click ads instead. As I see it, that makes the site inherently less valuable. (For its part, FB has been changing that in recent quarters -- but we're not talking about Facebook today).

Twitter's core ad revenue is more in line with the point of the microblogging service; discovery is an integral part of Twitter (far more than at FB), and advertisers are paying for the privilege. Even better, around half of Twitter's ad revenue is coming from mobile ads right now, a metric that Facebook previously caught heat for missing.

>>4 Tech Stocks Triggering Breakout Trades

In other words, Twitter's business isn't the problem here. Its stock is.

No Bargain Here

First of all, I don't know many of Twitter's specifics -- few do. Because the firm is still below the $1 billion revenue watermark, it was able to file a confidential S-1 with the SEC. I'm not going to try to guess any of the numbers either.

The fact is that it doesn't really matter.

As I write, the broad market is sitting atop all-time highs, fallout from the Fed's unexpected call not to taper the stimulus money they've been pumping into the economy for the last five years. There's no question that we're in a bull market right now. And while bull markets are great for venture capitalists trying to exit an investment via the public markets, they're less great for bargain-seeking investors.

The last two times Twitter shares were auctioned in the secondary market, the auctions were oversubscribed. There wasn't enough supply to fill demand -- and remember, we're talking about "sophisticated" institutional and accredited investors, not individuals.

>>5 Stocks Insiders Love Right Now

But Twitter is a very public product. And as a result, there's going to be strong demand from retail investors too. The same thing happened with Facebook when it went public in the summer of 2012. Individual investors were telling news reporters that they were ready for their chance to buy Facebook "on the ground floor."

Let's get one thing straight: As an IPO investor, you're never buying on the ground floor. You're buying on the top floor, and hoping that the company keeps building floors above you.

That's a critical difference.

By any conventional valuation metric, Twitter's shares are going to be expensive. Recent private bids from hedge funds put the firm's valuation at a reported $14 billion. That's a big price tag for a firm that grossed $350 million in 2012, even if it's growing at a breakneck pace.

By itself, that's not a deal breaker -- there's nothing stopping an expensive stock from becoming more expensive if the technicals are strong. But as an IPO name, Twitter hasn't established any technicals yet.

That's what poses the biggest risk to investors who try to buy on day one.

>>5 Big Traes to Take as the Fed Hits the Gas

A high-profile company can easily score the excitement to get oversubscribed at a hefty IPO price, only to face a vacuum of buyers when dropped into the liquidity of a major stock exchange. Just look at what happened to Facebook -- it took more than a year for first-day buyers to get back to breakeven, and that's with the help of a historic equity rally pushing at its back.

Even LinkedIn buyers could have fared better by waiting six months; holding out for that time period would have nearly doubled LNKD's upside through today.

For the record, I'm not against IPOs. The portfolio I manage at my day job has a position in Tesla Motors (TSLA), another high-profile stock that went public around the same time as those big social networking names. But we intentionally waited months after the IPO before pulling the trigger and ultimately were able to dramatically reduce our risk and get a much clearer picture of the fundamental and technical arguments before putting on the trade. You could say we've done pretty well since then.

Facebook, LinkedIn and Tesla aren't the exception; they're the rule.

Historically, waiting for a fresh IPO stock to establish a trading history doesn't come with a big opportunity cost -- but it does dramatically decrease the risk of buying a stock with an IPO-sized valuation. (More on that here.)

I have no doubt that Twitter is going to fetch a hefty price when it goes public sometime in 2014. And it's going to attract a whole lot of investors who want to own Twitter the Web site, not Twitter the company. Make sure you're not one of them.

We'll get a much clearer look at Twitter's business in the months ahead. If you're still hellbent on owning it, do yourself a favor and wait. In my experience, staying away is the only way to win with the Twitter IPO.

-- Written by Jonas Elmerraji in Baltimore.

1/24/2015

United Capital Announces c5 Wealth Management Acquisition

Fast-growing private wealth counseling firm United Capital Financial Advisers of Newport Beach, Calif., announced Wednesday that it has acquired the majority of assets from c5 Wealth Management, a registered investment advisor based outside of Washington in Great Falls, Va.

The deal follows on the heels of United Capital’s July 1 announcement that it had acquired the majority of assets from Georgia-based PPA Advisors. Combined, the two acquisitions will give United Capital a broader footprint in the East Coast.

Founders Paul Bennett, PhD, MSF, CFP, and Stanley Corey, CFP, ChFC, CPWA, join as managing directors of c5 Wealth Management, now a division of United Capital Financial Advisers. With approximately $300 million in assets under advisement, the firm brings a diverse client base of wealthy families and individuals, trusts, corporate retirement and pension plans and foundations.

Bennett and Corey said they joined United Capital because they were looking to alleviate administrative burdens that took time away from their clients and the firm’s growth.

“By reducing our back-end office needs, we will have more time to connect with clients,” Bennett said in a statement. ‘Our clients span multiple generations, and with United Capital’s resources and support, we know we are going to thrive for years to come and meet the expectations for our diverse client set.”

In 2009, Boomer Market Advisor named c5 as its advisor of the year. Bennett has more than 24 years of experience and Corey has more than 33 years in the industry, and the partners founded c5 in 2006 by merging their independent RIAs.

In addition to administrative assistance, c5 will use United Capital’s advice process, Honest Conversations, to create consistency in their wealth planning process. The two new managing directors, along with their staff of five, have plans to expand their advisory team in the northern Virginia market.

Matt Brinker, senior vice president of partner development and acquisitions at United Capital, said the firm is looking forward to partnering with c5 and help them enhance their work with multigenerational clients and focus on growing not only client assets, but the firm itself.

“We will be able to support the team on both the administrative and planning side, as well as help them work toward future growth and increased profits,” Brinker said in a statement.

As of March 31, United Capital and its affiliates had approximately $17 billion in assets under advisement.

---

Read M&A Roundup: United Capital Acquires Atlanta-Based PPA Advisors at AdvisorOne.

1/22/2015

Why iRobot Shares Short-Circuited

Although we don't believe in timing the market or panicking over market movements, we do like to keep an eye on big changes -- just in case they're material to our investing thesis.

What: Shares of iRobot (NASDAQ: IRBT ) were falling apart today, down as much as 15% following disappointing guidance in its earnings report.

So what: The maker of the Roomba and other automated machines said that adjusted earnings per share came in at $0.21, beating estimates of $0.19, while it also topped revenue projections of $128.9 million as sales grew 17% to $130.4 million. Management credited growth in the Home Robot segment for the strong quarter and noted expansion in Brazil and a new partnership with Cisco Systems called Enterprise Telepresence. Still, analysts seemed to be disappointed by current quarter EPS guidance of $0.20-$0.25, below estimates at $0.27.

Now what: Wall Street often punishes companies for delivering poor guidance after beating estimates, and this is no exception. iRobot did raise the lower end of its full-year EPS range to $0.88 from $0.80, because of a one-time tax benefit, with the high end at $1.00, but that's only enough to make the analyst consensus of $0.94 the midpoint. I'd tend to ignore today's drop in the stock as this was a strong quarter, and the pullback seems to be mostly valuation-based as the P/E is still lofty at 37. Long-term investors should be satisfied with a report like this.

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1/21/2015

Is Samsung's Success All Marketing, or Something Else?

In the mobile world, there are really only two companies that make every other smartphone maker envious -- Apple (NASDAQ: AAPL ) and Samsung. Samsung is the world's largest tech company by revenue, and holds 41% of the Android market share. And, according to researcher Juniper Analytics, the company shipped twice as many smartphones as Apple, and grew nine times faster in Q1 2013.

While Apple's success story has been chronicled in many news articles, books, and a forthcoming biopic, Samsung's advancement is a little more elusive and probably less dramatic -- but the impact on the smartphone market has been just as important.

Good artists copy, great artists steal
Pablo Picaso's oft-quoted phrase was one Steve Jobs used himself. Jobs once added to the phrase in an interview saying, "We have always been shameless about stealing great ideas." In an ironic twist, that's the same approach Samsung took shortly after the iPhone launched.

Apple's smartphone popularity had already been solidified at that time, and Samsung did its best to capitalize on it. In a 2010 Samsung document -- which surfaced during a trial last year between the company and Apple -- Samsung appeared to copy iPhone designs and functionality. Last year, AllThingsD wrote about the document saying: "In each case, it comes up with a recommendation on what Samsung should do going forward, and in most cases, its answer is simple: Make it work more like the iPhone."

You can contrast Samsung's response to the iPhone with other tech companies at the time.

Microsoft (NASDAQ: MSFT ) CEO Steve Ballmer said in 2007: "There's no chance that the iPhone is going to get any significant market share. No chance." The company failed to recognize what consumers wanted, and Microsoft has been paying for it ever since. Windows Phone made up just 3.2% of all global smartphone shipments in Q1 2013.

Reports that leaked years after the iPhone initially launched showed that BlackBerry (NASDAQ: BBRY ) -- formerly Research In Motion -- was in disbelief over the iPhone. RIM's CEO at the time, Jim Balsillie, said this just after the iPhone launched: "It's kind of one more entrant into an already very busy space with lots of choice for consumers ... But in terms of a sort of a sea-change for BlackBerry, I would think that's overstating it."

These two companies are the easiest examples to pull from, because they not only didn't notice what consumers wanted -- or stubbornly chose to ignore it -- but they also went in a decidedly non-Android direction.

Meanwhile, Samsung sought to directly compete with Apple using Android. Part of copying Apple's design and usability lead to years of lawsuits and back-and-forth accusations between Apple and Samsung that most of us are all too familiar with. But, despite rulings on either side, Samsung's similarities with the iPhone at the beginning have paid off for the company.

But Samsung's initial follow-the-leader approach is only one small part of its meteoric rise. You have to dig inside the company's deep pockets -- and its devices -- to really get at the heart of its success.

Components and commercials collide
Samsung manufactures its processors, handset displays, and internal flash memory -- giving it control over major areas of its smartphone production. This gives the company a significant advantage over its competitors by not having to pay other companies to build main components for its devices, or wait for them to catch up to Samsung's production needs. Which is great for the company, considering it cranked out 215 million smartphones last year.

Samsung's component advantage has helped the company flood the market with variations of its devices. While other companies may find it difficult to create multiple versions of smartphones and phablets at different sizes, Samsung can utilize its production to bring a slew of devices to market at many different price points.

The other side to Samsung's manufacturing success is making components for other companies -- including Apple. Over the past few years, Samsung has made applications processors, flash memory, DRM memory, and displays for the company. For obvious reasons, Apple has attempted to move away from Samsung for some of its components, but even now, the difficult relationship remains between the two.

Aside from component manufacturing, Samsung also has marketing prowess that's helped propel the company to the top of the mobile market. The company spent $402 million marketing its smartphones in the U.S. last year -- beating Apple's $333 million for iPhone marketing. Consequently, it was hard getting through 2012 without seeing at least a handful of Samsung commercials.

The company's advertising has helped solidify its brand into the minds of mobile consumers, and has helped push the company into the top smartphone spot. In the first quarter of 2013, Samsung captured 32.7% of the global smartphone market share, with Apple following with 17.3%. One of Samsung's ads -- famously mocking a line of Apple fanboys -- was the most-viewed tech ad in 2012, and has been viewed more than 17 million times on YouTube.

No simple answer
Samsung's smartphone success comes from much more than its marketing budget -- though that's a big part of it. The company has the capability to create lots of products, adapt Android's operating system to its liking, throw gobs of money marketing its devices, and make money creating components for its competitors at the same time.

Add to all that the foresight Samsung had to mimic Apple's products at the opportune time, and you have the beginnings of Samsung's success. For now, it seems the company will continue to enjoy its status in the mobile world -- at least until someone else comes along and parrots what Samsung's doing.

Though the company is on top of the mobile world, there's a list of tough tech competitors waiting to take on Samsung. They know fighting for the top spot is the only way to survive. Find out "Who Will Win the War Between the 5 Biggest Tech Stocks?" in The Motley Fool's latest free report, which details the knock-down, drag-out battle being waged by the five kings of tech. Click here to keep reading.

The Dow Builds Up Gains Despite Manufacturing's Fall

Stocks have pushed higher to start the week, though Wall Street has hardly been flooded with good news. U.S. manufacturing slid sharply in May, according to the Institute for Supply Management's Purchasing Managers' Index released today, although the Dow Jones Industrial Average (DJINDICES: ^DJI ) has managed to defy the downbeat report to pull in gains of about 65 points as of 2:25 p.m. EDT. Stocks have wavered throughout the day, with the index's members mixed between risers and fallers. How far has manufacturing fallen, and is it taking a toll on the Dow's stocks? Let's catch up on what you need to know today.

Manufacturing takes a tumble
America's PMI slipped into contraction territory last month, falling to a reading of 49 from April's measurement of 50.7. A reading of more than 50 indicates expansion in manufacturing, while a number of less than 50 signifies contraction. Economists surveyed by Bloomberg had expected a reading of 51 today. Sequestration's cuts have played a part in manufacturing's contraction, but international sluggishness is likely more to blame here.

China's continued slowdown -- the IMF recently cut its expectations for the country's economic growth by a quarter-percent for the year -- and Europe's ongoing recession have weighed on manufacturers looking to build up sales. The U.S. housing recovery has been a nice story for the industry, but unless other leading economies pick up growth, manufacturing will continue to slump.

The downbeat PMI has taken a toll on two of the Dow's manufacturers today. Alcoa (NYSE: AA ) shares have fallen 0.4% after the PMI suggested further bad news for the metals business. While new orders for metals producers picked up last month, prices continue to fall, a trend that has slammed Alcoa and its fellow aluminum firms. China's aluminum makers are partly responsible for this, having kept up production despite the glut of aluminum supply, but until demand picks up -- something that will require economic growth around the world -- expect prices to continue to haunt the aluminum industry.

United Technologies (NYSE: UTX ) shares are also following manufacturing downward, losing 0.2% of their value. As a conglomerate, UTC is more insulated from such poor reports than more focused companies like Alcoa. Still, UTC could be in for some trouble if manufacturing is contracting, though less because of global concerns and more because of budget cuts. The company operates a sizable defense business through its Sikorsky subsidiary, and with the Pentagon looking to slash its budget by hundreds of millions of dollars over the coming decade, UTC will almost certainly take some hits from sequestration. Sikorsky's well-known Blackhawk helicopter will prevent UTC's subsidiary from being seriously crippled by cuts, but don't expect the company to emerge unscathed.

On the other side of the Dow, Merck (NYSE: MRK ) shares are up 4.1% to lead the index higher today. Merck investors received welcome news today when Merck's melanoma drug lambrolizumab was found to decrease tumors in 38% of its trial population in a significant way. New melanoma drugs are replacing older melanoma treatments, and some analysts believe this could be a multibillion-dollar market in the future. For Merck, which has seen its sales hit hard by the patent cliff, it's an opportunity that it can't afford to miss.

Finally, Intel (NASDAQ: INTC ) shares are up 3% today, following up on last week's gains after the company announced a deal to supply chips for Samsung Galaxy phones. Competitor ARM fired a shot at its rival today by claiming that ARM's mobile processers are "a generation ahead" of Intel's, but whether or not that's true, Intel's good fortune with Samsung has dealt rivals in the mobile industry a blow. Intel has struggled to break into mobile-chip making, but if the company can capitalize on this opportunity, it'll have an outlet to pivot away from the declining PC business it once dominated.

Are you interested in Intel? In this premium research report, a Motley Fool analyst runs through all of the key topics investors should understand about the chip giant. Click here now to learn more.

1/19/2015

Netflix Discovers $8.99 a Month Might Be Too Much to Ask

netflix.com Netflix (NFLX) is still growing, but it's not growing fast enough. The world's leading premium video service took a hit after posting disappointing quarterly results on Wednesday night. The stock-rattling shocker is that Netflix ended the third quarter with 53.06 million streaming subscribers worldwide. That's 3 million more than it had at the end of June, but Netflix itself was forecasting 53.74 million accounts. Netflix is typically conservative with its guidance, making the shortfall as troubling as it is surprising. It has a scapegoat. It's pointing to its springtime rate increase as the primary cause for its blown forecast. "Slightly higher prices result in slightly less growth, other things being equal, and this is manifested more clearly in higher adoption markets such as the U.S.," Netflix notes in its letter to shareholders. When it issued its forecast in late July it was still basking in the magnetism of the second season of "Orange Is the New Black" that resulted in a healthy trickle of signups. Once that buzz subsided, new members became harder to come by. Bucking the Trend Netflix's move to increase the monthly rate in May didn't take the market by surprise. A few months earlier it had announced in an earnings call that it was entertaining a hike. It was pondering $8.99 or $9.99 as the new monthly rate, up from the original $7.99. It chose the lower of the two increases. Existing subscribers were fine with the move. Netflix promised to grandfather them in at $7.99 a month for two years. The market understood, and that was something that couldn't be said a few years ago when there was widespread outrage about Netflix splitting its DVD and streaming services. Customers on DVD-based plans would have to pay as much as 60 percent more if they wanted to continue to stream content, too. May's increase was the first time that Netflix had increased the rate of its stand-alone DVD service. It seemed as if it would be able to pull it off without a hitch, but now, potential new customers appear to be balking. HBO on the Go With Redbox Instant shutting down and Streampix redefining its value proposition, the competition seemed to be caving in to Netflix. However, just hours before Netflix's report, Time Warner's (TWX) HBO suggested that it will roll out a stand-alone streaming service in this country. HBO didn't offer pricing or a timetable for its availability, but it's an interesting move for a company that Netflix CEO Reed Hasting has often considered its biggest rival. This may make it seem like an unfortunate time for Netflix to be increasing prices, but since HBO charges roughly twice as much as Netflix for its cable-based offering, it's unlikely to be much of an issue here. Netflix is looking to land more than 4 million net new streaming additions during the current quarter. It's targeting to surpass 57 million streaming members by year's end, and that forecast is taking into consideration the slowdown since the price hike. Netflix will be fine, even if the stock action paints a bleaker portrait. More from Rick Aristotle Munarriz
•Will a Refreshed 'Words With Friends' App Score for Zynga? •Domino's Tasty Earnings Top Pizza Hut's Performance •Last Quarter's 5 Coolest IPOs: Not Just High-Tech Players

1/17/2015

Restoration Hardware: No, Its Shares Haven’t Bounced Back

Shares of Restoration Hardware (RH) have slipped today following its earnings release, which saw the retailer beat earnings forecasts but miss on revenue.

Brandon Schulman for The Wall St

Jefferies’ John Marrin doesn’t understand the fuss:

The later distribution of the Spring catalog had a larger-than-anticipated detriment to sales around the July 4th promotional event, but a very strong gross-margin performance more than made up the difference as EPS came in well ahead. Guidance for the back half looks very good, particularly for 3Q as management cited a business acceleration late in 2Q and into Aug/Sept. The shares were down in the after hours but we believe they will bounce back
tomorrow.

As of yet, they haven’t. Shares of Restoration Hardware have dropped 3.6% to $79.15 at 12:46 p.m.

1/15/2015

Who's Getting Rich from the Alibaba Deal

The Alibaba IPO is expected to be one of the largest IPOs of all time, and some forecasts indicate that the Chinese e-commerce firm could raise as much as $20 billion in its initial public offering.

Some reports indicate that the Alibaba IPO date could be scheduled for the first week in August, but no official date has been set.

One thing is for certain, however: When Alibaba hits the market sometime in late 2014, there will be a lot of people who pocket a lot of profit.

Those following the deal have learned about the huge windfall Yahoo Inc. (Nasdaq: YHOO) is expecting through the Alibaba IPO. Yahoo owns a 24% stake in Alibaba and is expected to sell up to 50% of that stake through the initial public offering. Considering some estimates place Alibaba's value over $150 billion, Yahoo could walk away with an extra $18 billion in cash.

But Yahoo isn't the only one who will be hitting it big thanks to the Alibaba IPO. Here's who else is in line for a major payday.

$400 Million Payday for Alibaba IPO Underwriters

When companies hold initial public offerings, they hire big banks to perform the underwriting services on the deal. The underwriters help the company determine the IPO price, file the necessary paperwork, choose the right exchange, and issue shares, among other tasks.

These underwriters collect a fee for their services, which is proportional to the size of the IPO.

According to the Financial Times, the underwriters of the Alibaba IPO will be entitled to $400 million in fees, if the IPO raises the $20 billion many expect.

That $400 million will be split among the underwriting companies: Credit Suisse Group (NYSE ADR: CS), Morgan Stanley (NYSE: MS), JPMorgan Chase & Co. (NYSE:
JPM), Deutsche Bank AG (NYSE: DB), Goldman Sachs Group Inc. (NYSE: GS), and Citigroup Inc. (NYSE: C), leaving each bank with more than $66 million in fees.

But the money doesn't necessarily stop there for the underwriters...

When underwriters think an IPO might be oversubscribed (higher demand for shares than there is supply), they are allowed to purchase up to an additional 15% of the stock at the initial offer price. From there, they can sell the shares at a higher price following the IPO in what is known as a "Greenshoe" clause.

The underwriters who would like to purchase additional stock before the IPO takes place will be able to, so they'll see a nice payday after the Alibaba stock price climbs following the IPO.

For those six banks, the $66 million they receive in fees may be just the tip of the iceberg.

But the underwriters aren't the only ones who will make money off the Alibaba IPO...

Alibaba Prepares Employees for Payout

According to Reuters, Alibaba officials have been preparing employees for the influx of cash they will receive when the company hits the market.

Alibaba employees currently hold 26.7% of the company's shares, a value that could be worth as much as $41 billion. A recent Reuters survey of 25 analysts concluded that Alibaba could be valued at $152 billion at the time of its IPO.

Following the IPO, shareholding employees will be free to sell their Alibaba stock whenever they choose.

Alibaba has been preparing employees for years for the eventual IPO windfall and advising them not to spend excessive amounts of money on material goods. However, that hasn't stopped some employees from inquiring if luxury cars, like BMWs, can be ordered in Alibaba's signature orange hue.

While the size of the Alibaba IPO could be unprecedented, this won't be the first time Alibaba employees will have had the opportunity to sell shares. The company has previously allowed workers to sell parts of their stakes through structured "liquidity programs."

But the biggest profits don't have to go solely to Alibaba employees and big banks. In fact, your gains could exceed those of the IPO's original investors...

That's because we've uncovered a way for you to make a fortune on the Alibaba deal right now... long before the shares go public. It could be your one and only chance to make the kind of gains normally reserved for the high-net-worth investors and bankers. You can learn more about this Alibaba profit play here.

Do you plan on investing in Alibaba stock after it hits the market? Join the conversation on Twitter @moneymorning using #Alibaba.

1/14/2015

The heaviest-drinking countries in the world

Worldwide, people 15 and older consumed 6.2 liters of alcohol per person in 2010, according to a recent World Health Organization (WHO) report. Alcohol, in turn, contributed to some 3.3 million deaths as of 2012.

In some countries, consumption, and the resultant health problems attached to drinking, were worse. In 10 countries residents consumed more than 13 or more liters per person as of 2010. In Belarus, the heaviest drinking nation, residents consumed 17.5 liters on average. Based on figures from the WHO, these are the countries with the highest per capita consumption.

Nearly all of the countries with the highest levels of alcohol consumption are located in Eastern Europe. They include Russia and other former Soviet Union nations such as Belarus, Lithuania, Moldova, and Ukraine. The only top-consuming nation not located in Eastern Europe is Andorra, a principality located between France and Spain in the Pyrenees.

According to Tom Donaldson, president of the National Organization on Fetal Alcohol Syndrome (NOFAS), historical and societal factors explain why certain countries have higher rates of consumption.

Residents in many of these areas may also lack the information necessary to make informed health decisions, Donaldson added. "In some of those areas, there are no public health awareness efforts whatsoever about the effects of alcohol consumption." Eight of the nations with the highest consumption did not have public policy initiatives to address the effects of alcohol consumption on the general public.

Residents in these countries were also often among the most likely to suffer from alcohol use disorders. Five of the heaviest drinking countries also had among the 10 highest prevalences of alcohol use disorders. These include alcoholism and other forms of health-damaging use of alcohol. Such disorders lead to physical problems such as liver cirrhosis and mental illnesses such as depression. The three nations with the highest rates of alcohol use disorders, Hungary, Ru! ssia, and Belarus, were all among the 10 heaviest drinking nations.

Of the 3.3 million alcohol related deaths worldwide, a third were caused by cardiovascular diseases and diabetes. Unintentional injuries accounted for 17.1% of alcohol-related deaths. Various types of cancer, gastrointestinal diseases, and intentional self-harm were also common causes of deaths related to alcohol. In five of these nations, 30% of deaths in 2012 were alcohol related, compared to 5.9% of deaths worldwide.

A number of serious diseases are largely caused by alcohol. Half of all deaths due to liver cirrhosis are attributable to alcohol. Similarly, more than one quarter of all cases of pancreatitis and various types of mouth cancer are attributable to alcohol use.

Life expectancies in the nations with heavy alcohol use are also shorter. The average life expectancy at birth in high income nations was 79.3 years as of 2012, far higher than in almost all of the heaviest drinking nations. In Romania, the average life expectancy was just 68.7 years. In Russia and Ukraine the average life expectancy was below 72 years as well.

While men in these countries drink much more than women, women in these countries are also heavy drinkers compared to women in other countries. The heaviest drinking countries overall include six nations where women consumed the most alcohol.

Moreover, "Alcohol use among women has been increasing steadily in line with economic development and changing gender roles," according to the WHO. This presents major health concerns for women who tend to be more vulnerable — physically and socially — to alcohol use.

Women in these countries may also not be aware of the dangers of drinking during pregnancy and the health risks of alcohol on infants in utero. "There are no public health efforts to educate women on fetal alcohol syndrome," Kathleen Mitchell, vice president and spokesperson for NOFAS said. "What it takes is a compilation of public health measures and awareness for pe! ople to c! hange their behavior or take notice."

Based on figures from WHO's recent "Global Report on Alcohol and Health 2014" 24/7 Wall St. reviewed the countries with the highest rates of alcohol consumption. Per capita consumption figures are based on a combination of average recorded consumption between 2008 and 2010, as well as unrecorded consumption estimates as of 2010. Figures on alcohol use disorders, which includes drinking behavior that can lead to health problems and alcoholism; heavy episodic drinking, or binge drinking; and data on the relative contribution of alcohol to mortality as of 2012 are also from the report. 24/7 Wall St. also obtained the most recently published data on GDP, unemployment, and inflation from the International Monetary Fund. Figures on life expectancies and poverty levels are from the World Bank and current as of 2012.

These are the heaviest drinking countries in the world.

1. Belarus

> Alcohol per capita (APC) consumption: 17.5 liters
> Pct. binge drinking: 26.5% (14th highest)
> Pct. of deaths, alcohol-related: 34.7% (the highest)
> Life expectancy at birth: 72.1 years

Belarus had the world's highest level of alcohol consumption, with 17.5 liters of alcohol consumed per capita. The country's high level of consumption has had serious health consequences on its residents. Belarus trailed just two other countries, Russia and Hungary, with 17.5% of the population suffering from an alcohol use disorder. In all, alcohol was a factor in nearly 35% of all deaths in the country, the most out of any nation in the world. Belarus has publicly and aggressively cracked down on production of bootleg alcohol. Alcohol produced illegally accounted for 3.2 liters of per capita consumption on average, among the highest levels in the world. Despite a low unemployment rate, Belarus' economy is heavily state-controlled and often considered inefficient. The country has suffered from extraordinarily high inflation for years as well.

2. Republ! ic of Mol! dova

> Alcohol per capita (APC) consumption: 16.8 liters
> Pct. binge drinking: 32.2% (8th highest)
> Pct. of deaths, alcohol-related: 33.1% (3rd highest)
> Life expectancy at birth: 81.4 years

The Republic of Moldova's economy is relatively underdeveloped, with GDP at just $3,562 per capita in 2013. A sluggish economy and high poverty rates — 16.6% in 2012, the highest rate in Europe — may make it more difficult for residents to acquire alcohol through legitimate channels. Moldova was among the only countries where illicit alcohol consumption exceeded government sanctioned alcohol consumption, with the population consuming 10.5 liters per capita on average of illegal alcohol. Roughly one third of all deaths in Moldova could be linked to alcohol, more than in all but two other countries. Moldova's consumption of alcohol trailed only Belarus in the WHO's most recent study. Consumption rates, however, are projected to reach 17.4% by 2015, ahead of the prediction for Belarus. While increases in consumption rates are expected to continue well past 2015, the country adopted the National Programme of Alcohol Control in 2012 to reduce harmful alcohol use.

MORE: America's most unusual public companies

3. Lithuania

> Alcohol per capita (APC) consumption: 15.4 liters
> Pct. binge drinking: 36.7% (2nd highest)
> Pct. of deaths, alcohol-related: 30.9% (4th highest)
> Life expectancy at birth: 73.9 years

Lithuania was second only to Austria in terms of the percentage of drinkers who engaged in binge-drinking. In fact, nearly one-quarter of the women in the country engaged in binge drinking, more than women in any other country. More than 30% of deaths in Lithuania were related to alcohol consumption in 2012, a higher percentage than all but three other countries reviewed. Nearly 10% of the country's population suffered from an alcohol use disorder, among the highest out of all nations reviewed. Although Lithuania does monitor alcohol ! consumpti! on and measures its social and health consequences, drinking is still a national problem. In March, Lithuania's Prime Minister Algirdas Butkevičius announced that his office is working with the country's liquor industry to draft a new excise tax on alcohol as a way, in part, to fight alcoholism and help decrease the amount of alcohol sold illegally.

4. Russian Federation

> Alcohol per capita (APC) consumption: 15.1 liters
> Pct. binge drinking: 19.3% (32nd highest)
> Pct. of deaths, alcohol-related: 30.5% (5th highest)
> Life expectancy at birth: 70.5 years

Russians drank 15.1 liters of alcohol per capita in 2010, among the highest averages in the world. And annual consumption is expected to remain high in the future, staying roughly around 15 liters per capita through 2025. With 18.2% of residents suffering from alcohol use disorders, more than any country except Hungary, alcohol abuse had adverse health effects for the Russian population. As of 2012, 30.5% of all deaths in Russia were related to alcohol consumption, among the highest rates in the world. A recent study in the acclaimed British medical journal, The Lancet, noted that "Russian adults have extraordinarily high rates of premature death" and that high levels of vodka consumption contributed to higher risks of early death in the country.

MORE: The happiest countries in the world

5. Romania

> Alcohol per capita (APC) consumption: 14.4 liters
> Pct. binge drinking: 7.9% (75th highest)
> Pct. of deaths, alcohol-related: 8.9% (11th highest)
> Life expectancy at birth: 68.7 years

Drinking rates among younger Romanians were particularly high. More than 37% of teenagers between 15 and 19 years old had engaged in binge drinking in the last 30 days, more than in all but a handful of countries. As is usually the case, alcohol consumption was more of an issue among males — more than 55% of Romanian men ages 15 to 19 said they had engaged in binge drinking in the pre! vious 30 ! days, considerably higher than most other countries. Binge drinking may be associated with alcohol related fatalities in the county. Nearly 9% of all deaths in 2012 were alcohol related, more than in all but a handful of nations.

24/7 WALL ST.: See the rest of the Top 10 heaviest-drinking countries

24/7 Wall St. is a USA TODAY content partner offering financial news and commentary. Its content is produced independently of USA TODAY.

1/13/2015

Cincinnati Financial Corp. Dividend Stock Analysis

Linked here is a detailed quantitative analysis of Cincinnati Financial Corp. (CINF). Below are some highlights from the above linked analysis: Company Description: Cincinnati Financial Corp. is an insurance holding company that primarily markets property and casualty coverage. It also conducts life insurance and asset management operations.

Fair Value: In calculating fair value, I consider the NPV MMA Differential Fair Value along with these four calculations of fair value, see page 2 of the linked PDF for a detailed description: 1. Avg. High Yield Price 2. 20-Year DCF Price 3. Avg. P/E Price 4. Graham Number CINF is trading at a discount to only 3.) above. The stock is trading at a 36.8% premium to its calculated fair value of $34.96. CINF did not earn any Stars in this section. Dividend Analytical Data: In this section there are three possible Stars and three key metrics, see page 2 of the linked PDF for a detailed description: 1. Free Cash Flow Payout 2. Debt To Total Capital 3. Key Metrics 4. Dividend Growth Rate 5. Years of Div. Growth 6. Rolling 4-yr Div. > 15% CINF earned two Stars in this section for 1.) and 2.) above. A Star was earned since the Free Cash Flow payout ratio was less than 60% and there were no negative Free Cash Flows over the last 10 years. The stock earned a Star as a result of its most recent Debt to Total Capital being less than 45%. The company has paid a cash dividend to shareholders every year since 1954 and has increased its dividend payments for 54 consecutive years. Dividend Income vs. MMA: Why would you assume the equity risk and invest in a dividend stock if you could earn a better return in a much less risky money market account (MMA) or Treasury bond? This section compares the earning ability of this stock with a high yield MMA. Two items are considered in this section, see page 2 of the linked PDF for a detailed description: 1. NPV MMA Diff. 2. Years to > MMA The NPV MMA Diff. of the $62 is below the $500 target I look for in a stock that has increased dividends as long as CINF has. If CINF grows its dividend at 1.2% per year, it will take 5 years to equal a MMA yielding an estimated 20-year average rate of 3.68%. Memberships and Peers: CINF is a member of the S&P 500, a Dividend Aristocrat, a member of the Broad Dividend Achievers™ Index and a Dividend Champion. The company's peer group includes: Axis Capital Holdings Ltd. (AXS) with a 2.3% yield, The Allstate Corporation (ALL) with a 2.0% yield, and The Travelers Companies Inc. (TRV) with a 2.4% yield. Conclusion: CINF did not earn any Stars in the Fair Value section, earned two Stars in the Dividend Analytical Data section and did not earn any Stars in the Dividend Income vs. MMA section for a total of two Stars. This quantitatively ranks CINF as a 2-Star Weak stock. Using my D4L-PreScreen.xls model, I determined the share price would need to decrease to $35.00 before CINF's NPV MMA Differential increased to the $500 minimum that I look for in a stock with 54 years of consecutive dividend increases. At that price the stock would yield 4.8%. Resetting the D4L-PreScreen.xls model and solving for the dividend growth rate needed to generate the target $500 NPV MMA Differential, the calculated rate is 1.2%. This dividend growth rate is equal to the 1.2% used in this analysis, thus providing no margin of safety. CINF has a risk rating of 1.5 which classifies it as a Low risk stock. CINF was founded by independent insurance agents in order to better service their needs by providing them preferential treatment when picking an underwriter. The company primarily sells commercial property-casualty insurance with a smaller personal lines exposure marketed through a select group of independent insurance agencies. CINF is more heavily exposed to equity risk than its peers; however management is taking steps to re-balance its investments. The company should benefit from an improving pricing environment and steps management has taken to expand its operations. Weather losses from the Two winter storms in the first week of January 2014 willlikely adversely affect CINF's by an estimated $65 million to $85 million. Low interest rates could adversely affect investment income, which is an important component of the company's revenues and net income. The company's financial results have always been volatile due to weather events. However, its strategic initiatives will continue to generate returns over time. The company enjoys a low debt to total capital of 13% and currently has a FCF Payout of 35%, down from 44% in my last analysis. However, the stock is trading at a significant premium to my calculated fair value of $34.96. However, based on dividend fundamentals, I am will continue to look for opportunities to buy. Disclaimer: Material presented here is for informational purposes only. The above quantitative stock analysis, including the Star rating, is mechanically calculated and is based on historical information. The analysis assumes the stock will perform in the future as it has in the past. This is generally never true. Before buying or selling any stock you should do your own research and reach your own conclusion. See my Disclaimer for more information. Full Disclosure: At the time of this writing, I was long in CINF (3.5% of my Dividend Growth Portfolio). See a list of all my dividend growth holdings here. Related Articles: - Archer Daniels Midland Company (ADM) Dividend Stock Analysis - McDonald's Corporation (MCD) Dividend Stock Analysis - Lockheed Martin Corp. (LMT) Dividend Stock Analysis - ConocoPhillips Co. (COP) Dividend Stock Analysis - More Stock Analysis

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Show Us Your Car: Say 'Oui!' to this Citroen 2CV

CATHEDRAL CITY, Calif. -- If there is a more humble or hardy car on this planet, it will have to compete with the Citroen 2CV.

It's another one of those cars that so ugly and crude that it becomes instantly lovable. Of course, it was given a lovable name by the French -- "deux chevaux" or two horses.

The car sure pulled the heartstrings of John Wiser of Winter Park, Fla., who brought his 1984 2CV to the Desert Classic Concours d'Elegance here last weekend.

Wiser, who wranglers cars for movie productions, had one that's pristine. It's also different, since it was part of a special edition made to commemorate France's participation in the 1983 America's Cup. The boat lost, not even making it to the finals, but the fancy paint job still makes for a mighty attractive car.

Wiser says the 2CV was "a car that was made for farmers." Though it only had two cylinders, it had enough pep to transit muddy fields or to drive 70 miles per hour on the highway.

"It doesn't do a thing bad," he says. Plus, it was a student car that shows up a lot of old foreign movies.

The 2CV had a long life. The original designs got their debut in the 1930s and it was built all the way through the 1970s.

1/12/2015

ISM Manufacturing Growth Slows to Almost None

2014 is not looking good for fresh economic reports. The Institute for Supply Management (ISM) said Monday that its report on business in the manufacturing sector showed much weaker growth than expected. Bloomberg and Dow Jones were both calling for a reading of 56.0%, but the monthly barometer came out at only 51.3% for January.

Monday’s message from the ISM is that economic activity in the manufacturing sector still managed to expand for the eighth consecutive month. This now marks overall economic growth for the 56 consecutive months. That being said, this was far worse than expected, and it is down from 56.5% in December.

The New Orders Index fell a sharp 13.2 points to 51.2%, while the Production Index fell 6.9 points to 54.8%. Inventories of raw materials decreased by three percentage points to 44%, its lowest reading since December 2012.

What stands out is that the ISM said a number of comments from the panel cited adverse weather conditions as a factor negatively affecting their businesses in January. Other comments reflected optimism and increasing volumes in the early stages of 2014.

Of the 18 manufacturing industries, only these 11 of them reported growth in January:

Plastics & Rubber Products Primary Metals Textile Mills Wood Products Printing & Related Support Activities Fabricated Metal Products Electrical Equipment, Appliances & Components Transportation Equipment Machinery Furniture & Related Products Food, Beverage & Tobacco Products

These seven industries reporting contraction in January:

Nonmetallic Mineral Products Petroleum & Coal Products Apparel, Leather & Allied Products Miscellaneous Manufacturing Chemical Products Paper Products Computer & Electronic Products

We have also provided the ISM’s table to show the trends and the formal number of each. As a reminder, a figure above 50 signals growth and one of less than 50 signals contraction.

ISM JAN 2014 Source: ISM

House Passes $1.1 Trillion Government Budget

Jan. 15 (Bloomberg) -- The House passed a $1.1 trillion bipartisan spending bill that would finance the federal government through Sept. 30 and avoid a repeat of October’s partial shutdown.

Lawmakers voted 359-67 to send the measure to the Senate, which is set to pass it later this week. Because current funding had been scheduled to lapse tonight, both chambers passed a separate measure pushing the deadline to Jan. 18.

The White House-backed spending bill includes $1.01 trillion for U.S. government operations and additional funds for war financing. To reach an agreement, Republicans ceded on their demands to block funding for President Barack Obama’s health- care law, while Democrats voted to spend far less than they proposed earlier this year.

“In this agreement, no one gets everything they want,” Representative Nita Lowey of New York, the top Democrat on the House Appropriations Committee, said in an interview today. “It’s a good bill, a solid bill.”

Lawmakers agreed on the $1.01 trillion base spending level in December as part of a two-year budget plan.

Today’s bill would continue Congress’s trend toward reducing discretionary funds. Spending in fiscal year 2010, including wars and disaster aid, totaled $1.275 trillion, according to the House Appropriations Committee. That compares with today’s $1.1 trillion measure for fiscal 2014, which began Oct. 1 and runs through Sept. 30.

16 Days

After a 16-day shutdown in October and years of automatic spending cuts and stopgap bills that took the government from crisis to crisis, lawmakers said they were glad they were finally able to vote on a comprehensive plan.

“We ought to recognize that while we’ve had some partisan differences, the legislation was crafted in a bipartisan way,” said Oklahoma Republican Tom Cole, chairman of the subcommittee that oversees legislative operations. “It’s something that we frankly ought to take some pride in.”

Appropriators in the House and Senate worked throughout the holidays to craft the bill, and they announced the agreement Jan. 13.

Several lawmakers complained they and their staff members didn’t have time to read the whole measure. Massachusetts Democrat Jim McGovern said on the House floor he expected that lawmakers may soon learn it contains provisions they wouldn’t have wanted.

Shutdown Alternative

Still, he said lawmakers had to back the bill because “the alternative is shutting the government down.”

Taxpayers for Common Sense, a Washington-based advocacy group that opposes government waste, said a person would have to read the bill at more than a page a minute, without sleep, to understand the entire measure in time for the vote.

“While we’re happy Congress is finally getting its work done -– albeit more than three months late -- this is not how legislation that is funding all of government should be done,” Steve Ellis, vice president for Taxpayers for Common Sense, said in an e-mail.

House Appropriations Chairman Hal Rogers, a Kentucky Republican, told the Rules Committee yesterday he hoped the rush was a one-year-only event.

“I only wish we could consider each and every bill in this package separately, but unfortunately, the timing gives us one shot and one shot only to get it done,” Rogers said.

Regular Cycle

Lawmakers have said a more regular appropriations cycle will reduce the threat of shutdowns and provide certainty to businesses and investors.

U.S. dollar volatility in the last 90 days fell to 4.52 percent from its one-year high of 7.34 percent last September as a shutdown and debt crisis loomed, according to the Bloomberg U.S. Dollar Index. The index, an indicator of market uncertainty, represents 10 major currencies weighted by liquidity and trade flows.

Lowey and Rogers said they intend to pass 12 individual spending bills for fiscal year 2015 before it begins Oct. 1. The last time Congress passed all of its spending bills on time was during the mid-1990s.

This week’s agreement will allow Congress to “get the train back on track,” Rogers said.

The $1.1 trillion measure is H.R. 3547. The three-day stopgap is H.J.Res. 106.

1/10/2015

SEC Investor Advisory Committee Approves Fiduciary, User Fee Plans

The Securities and Exchange Commission’s Investor Advisory Committee approved Friday two of its subcommittee’s recommendations: one on how the SEC should move forward on crafting a fiduciary rule for brokers, and a second proposal requesting that the SEC ask Congress to allow the agency to impose user fees on advisors to fund their exams.

The recommendations were put forth by the Investor as Purchaser subcommittee, which is chaired by Barbara Roper, director of investor protection at the Consumer Federation of America.

The subcommittee recommendation on how brokers should be put under a fiduciary mandate sailed through the full committee Friday in little time and with much praise. Committee member Steve Wallman, founder and CEO of FOLIOfn and a former SEC commissioner, said that as the only “broker-dealer in the room,” he thought the subcommittee’s plan was “an excellent approach,” and that it “would be a terrific step forward” in informing the SEC fiduciary rule as well as the one being crafted by the Department of Labor.

While committee members supported assessing user fees to help boost advisor exams, they voiced concern with how the user fees would ultimately be assessed and whether the cost would trickle down to investors.

The subcommittee believes that the SEC should request legislation that would allow it “to impose user fees on SEC-registered investment advisors to enhance advisor exams, including more frequent onsite exams,” said Craig Goettsch, director of Investor Education and Consumer Outreach at the Iowa Insurance Division.

The subcommittee noted the support among industry groups for the user-fees bill that was introduced during the current Congress by Rep. Maxine Waters, D-Calif., ranking member of the House Financial Services Committee.

H.R. 1627, the Investment Adviser Examination Improvement Act of 2013, "enjoys support from many investment advisor industry associations," the subcommittee said. No companion legislation has been introduced in the Senate.

Roper told ThinkAdvisor that while the subcommittee recommendation "doesn't specify a legislative vehicle, the Waters bill would be consistent with our recommendation."

As SEC Chairwoman Mary Jo White noted in a recent speech, five years after the financial meltdown, approximately 40% of SEC-registered investment advisors (who collectively manage $50 trillion) still have not received their first SEC examination.

“We’re going to tread water if we’re looking for an appropriation” from Congress to help boost advisor exams, Goettsch said. “I’m guessing the [user-fees] cost will be passed on to clients eventually, but we’re talking about firms with more than $100 million” in AUM. The lack of advisor exams “is a ticking time bomb if we don’t address it.”

Indeed, Roper added that the legislation “allows fees to be assessed so that it adjusts the burden of the fees to the size of the firm.” While the investor subcommittee “supports any number of different ways to solve this [advisor exam] problem, this user fees [legislation] seems like the most doable of the options. There’s no reason it should be a partisan issue.”

Andrea Seidt, president of the North American Securities Administrators’ Association, noted in a statement after the Investor Advisory Committee meeting that “by authorizing the SEC to use revenue derived from the self-funding of examinations to augment [the Office of Compliance Inspections and Examinations'] exam program, the legislation recommended by the IAC would permit the SEC to establish and maintain a robust advisor examination program that periodically adjusts to correspond to changes in its examination responsibilities.”

While the SEC has requested that Congress provide the agency more funding so that it can add 250 more examiners, which Seidt says is “the easiest and least expensive way” to address the problem, a user-fees bill “would appear to create a viable, long-term solution to a problem that has plagued the SEC for decades.”

While the SEC is not bound by any recommendations of the Investor Advisory Committee, Section 911 of the Dodd-Frank Act requires the SEC to “promptly issue a public statement assessing the finding or recommendation of the committee,” and to disclose any action the commission intends to take regarding that recommendation.

White said in brief comments before the meeting that she looked “forward to hearing about the [committee’s] additional recommendations, both of which I consider very important.”

White noted that since the committee’s last meeting and recommendation, the committee has gotten a letter from SEC staff regarding its proposal to require “glidepath” illustrations in target-date funds. In recent months, White said, the Division of Investment Management has said it would be useful to request additional comments on the advisory committee’s proposal. “I’m hopeful that target date funds will be included in the commission’s rulemaking in the coming year,” she said.

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Check out SEC Investor Committee Issues Fiduciary Plan on ThinkAdvisor.