TFN eNews 08/26/2009: Debt is the new black — and SGEN is gainer #48
Published via e-mail broadcast on August 26, 2009
In today’s TFN eNews:
* Cash for Clunkers lessons
* Three free swine flu picks are doing well
* Last one turn out the lights
Dear TFN Reader,
If you subscribed to any financial newsletter over the past twenty years, you’ll have noticed it yourself: Allowing yourself to be drawn into the vortex of dyspeptic thought and perma-bearish outlook means missing out on stock-market profits.
Followers of the recently anointed economic sage Nouriel Roubini are now making the same experience that the readers of the Caseys, Wigginses, Davidsons, Norths of the world have made since the 1980’s: You don’t move very far if all you do is watch trains pull out of the station, predicting correctly that one of them, one of these days, may crash some time and somewhere… while exhorting the virtues of pogo sticks as a means of locomotion.
Sure, stocks crashed and burned last year and then again after Inauguration Day. They may yet crash again, judging by the direction the U.S. economy and government debt are headed.
But that didn’t mean you couldn’t make decent money on stocks:
The short-term rally since spring has been called “the biggest rally since the 1930’s”. The S&P500 climbed 52% in six months. The MSCI World Index experienced a 58% gain, the largest since it began in 1970.
The bears’ favorite pogo stick, gold, is up just around 7% for the year.
If you decided to hang your head and stay out of the market, you missed out on serious gains.
And you’ve missed out on laconic messages from TFN’s Laura Cadden, like the one she sent around lunchtime today:
“Seattle Genetics, Inc. (NASDAQ:SGEN) hit wealth-preservation stop-loss for 22.3% gains in 59 days.”
With SGEN, Laura bagged double-digit gainer #48 for Hot Stock Confidential members today.
*** I know, I know… I keep bragging about how much money our premium service subscribers over at Hot Stock Confidential are making. (48 double-digit gainers so far this year, have I mentioned that?)
But how about you, our loyal TFN eNews reader?
Six days ago, on Aug. 20, I sent out our TFN Special Report: The Top Swine Flu Vaccine Stocks under $20. You know the kind of reports I write: Full of useless asides and rambling observations about the vices of the current Administration. In fact, I almost forgot to give you the three free swine flu stock picks I had planned on. That would’ve been a pity because today
Sinovac Biotech Ltd. (AMEX:SVA) is up 30.00%…
Vical Incorporated (NASDAQ:VICL) is up 16.05%…
Even staid-and-steady Indian generics brahmin Dr. Reddy’s Laboratories (NYSE:RDY) is up 3.64%…
No moonshoots, for sure, but 30% in six days beats getting getting your chest waxed. (Or so I’ve heard.)
(The pig flu picks I reserved for our HSC members were a bit smaller… and just a tad more risky. That risk’s been paying off for one stock that shot up over 20% today, for total gains of over 40% in less than a week. But I’m digging in and holding for more..)
*** Cash for Clunkers is over. I hear it was a screaming success.
Then again, I’ve never heard of a program handing our free money not being a screaming success.
As a citizen, working slob, and taxpayer, I’m sure glad I was able to contribute to the three billion dollars spent so that a few people could purchase a new car. As a globalist, I was tickled that 8 out of 10 best-selling stimulus cars were foreign-made. I was thus able to subsidize the repatriated profits of Toyota (best sellers #1, #4, #6), Honda (bestsellers #2, #9, #10), Hyunday (#5) and Nissan (#7)… making sure the governments of Japan and South Korea were beefing up their tax revenues.
But the down payment I so generously provided may still leave many of those buyers with new debt.
Last year, that kind of household debt was considered bad. But we’re living in an era of Hope and Change.
Maybe debt is the new black!
If you missed your opportunity to buy your neighbor a new car, don’t despair. A new $300-million government give-away program is in the works: This time around, you’ll be told to buy him a new fridge! Maybe they’ll do big-screen TVs next? (I’m there’s something about the right to free TV sets in the Constitution or the Bill of Rights. I may just not be looking hard enough!)
The most interesting part of the Clunker giveaway, however, is the precedent it has set for Obamacare.
Think about it: The Clunker subsidy created a surge of demand that depleted the government’s allocated budget in less than a week.
It had to be tripled just to make it through weeks 2 and 3… and then was terminated early. Car dealers are complaining about slow reimbursement. And the government computers processing the payment requests crashed because of the “unexpected” volume.
It sure was hard to see that coming.
Obamacare intends to give “free” healthcare to 43 million uninsured… and $4,500 per person may not quite cover the bill for each one.
Based on the subsidy-generated demand burst the CfC program showed, maybe someone should run those healthcare numbers again…
*** What happens if a government adopts a political ideology that punishes ambition and penalizes success?
Those with ambition and success start packing their bags… and take their money with them. Recent history is full of such examples. But people simply dislike learning from history… which is why ever so often, they have to be taught the hard way.
Look at Britain. According to Bloomberg.com, the number of Americans living in the UK fell 3.8% in the past twelve months. Unimpressed by the paradisical benefits of “free” healthcare, Yanks are heading home in droves as Britain plans a to implement a 50% tax rate for those who earn more than $248,000 a year.
But the Brits don’t like to see them leave unshorn. Foreigners who’ve lived in Britain for more than seven years must pay an annual ransom of 30,000 pounds for the privilege of no longer living in the country. Or give up the special status that shields overseas income from British taxes.
Death, where is your sting?
Based on the beginning exodus, the Confederation of British Industry estimates that the U. K. financial industry will lose about 45,000 jobs in the first nine months of 2009, or 4.3% of the total. I’m sure London’s mayor is atingle at the prospects of falling tax revenues and diminishing jobs.
Of course, the Obama Administration has similar schemes in mind. They’ve got to pay for constituents’ bribal fridges, cars, and health insurance. They, too, may find that squeezing a balloon has predictable results:
I hear Hong Kong is nice this time of year. And if things continue like they have, Moscow may look like a bastion of individual property rights and entrepreneurial incentive two years from now…
Quote of the Day:
“Every president eventually is criticized by the media — even one as ‘transcendent’ as Obama. The President’s supporters should engage his critics with facts, not charges of racism.”
– John Stossel, ABCNews.com
*** Another one bites the dust: 48 double-digit gainers for HSC Members this year.
Average Gains on all HSC Closed Positions (including 11 losers): 18.35%
Average Holding Period: 53 Days
Cumulative Gains: 1,098.4%
Recommended Reading:
General Maritime: Ready to catch up with the market?
The Top Swine Flu Vaccine Stocks under $20
The 3 Best Chinese Stocks Under $5!
4 Top Energy Stocks You Need to Own
The TFN Complete Guide to Biotech Penny Stocks
Today’s Top 3 Financial News Stories:
WSJ.com – As Budget Deficit Grows, So Do Doubts on Dollar “Investors and economists have long harbored concerns about the dollar’s decline, especially in the beginning of this decade as the federal government and consumers ran up their debtloads to finance everything from foreign wars to flat-screen TVs. Last fall’s financial crash suggested that such fears may be overblown: As markets plunged in the wake of the collapse of Lehman Brothers Holdings Inc., investors scrambled to stash their cash in U.S. Treasury bills, perceiving them to be the safest investments. That boosted the value of the U.S. dollar against many of its major counterparts.”
NPR.org — ‘Cash For Clunkers’ Drives Sales Of Foreign Models “According to the Department of Transportation, as of Friday, 59 percent of vehicles bought with Clunkers cash were foreign. The top two sellers were the Toyota Corolla and Honda Civic, both made by Japanese auto manufacturers. The only Detroit vehicles in the top 10 were the Ford Focus and Escape.”
Bloomberg.com – Applying Roubini Wisdom to Stocks Means Missing Out “Anyone attempting to apply Roubini’s wisdom to stocks may be forgiven for missing the biggest rally since the 1930s as the Standard & Poor’s 500 Index climbed 52 percent in six months. While Roubini said in March the advance was a ‘dead-cat bounce,’ that it may ‘fizzle’ in May and warned in July that the economy’s ‘not out of the woods,’ the MSCI World Index was posting a 58 percent gain, the largest since it began in 1970.”
Cordially yours,
J. Christoph Amberger
Executive Publisher, TodaysFinancialNews.com
Next Article: 22% gains on Seattle Genetics, Inc. (SGEN)
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