Bad April Fools’ Joke for Investors Playing Out

Wow! Things must be good again. The stock market just had its best first quarter run in a decade, up 6.4% for the calendar quarter ended yesterday. The U.S. Labor Department said that 216,000 jobs were created in March and the unemployment rate has fallen to 8.8%.

Good times are rolling again. Luxury retail brand Prada says that its net income rose to $355 million in 2010, up 150% from the year before. Most of the luxury-brand stocks are rising again, and this morning we have the NASDAQ saying it wants to buy the NYSE for $11.3 billion. Deal-making is back, big-time.

My gut tells me that this will all turn out to be a bad April Fools’ joke for investors.

Sure, I may be the only economist and stock analyst out there today who is warning investors. But I was also the only one telling my readers to buy gold at $300.00 an ounce in 2000, telling them to get out of U.S. real estate in 2005, and predicting a severe recession in 2007 when the stock market was at a record high. It’s okay; I’m used to going it alone. (Maybe that’s why this investment e-letter continues to gain 30,000 new readers a month.)

Okay. Enough talk. Let’s look at what is unfolding here:

Phase I of the bear market: Bring stocks down to the point where investors bail out of stocks, and create deep negativity and fear surrounding stocks and the economy. This occurred during most of 2008 and early 2009, culminating with the Dow Jones Industrial Average collapsing to 6,440 on March 9, 2009. Only a few months earlier, in October 2007, the Dow Jones was trading at a record high of 14,164.

Phase II of the bear market: Bring the suckers back in. Slowly spread the feeling that “the economy is getting better again” and “the worst is behind us.” Bring stock prices higher, make investors feel they are missing the boat on the economic turnaround. This morning, the Dow Jones sits 91% higher than it did in March of 2009. Greatest turn-around story of our generation! Unfortunately, Phase II of the bear market is close to turning into Phase III.

Phase III of the bear market: Just when the great majority of investors and citizens feel that the economy has fully recovered, pull the carpet from under their feet again. Start bringing stocks back down, some weeks slowly, other weeks violently. Phase III of the bear market is not far off. Ideally, it will hit when the current bear market rally has risen 100% from when Phase I ended, which would be 12,880 on the Dow Jones or five percent to 10% either way of that number.

Please read my “Personal Notes” and “Where the Market Stands; Where it’s Headed” commentaries for today below, as they relate to the above.

Michael’s Personal Notes:

It’s absolutely ridiculous to see so many investors and analysts glued to the newswire this morning waiting to hear the U.S. job numbers report for March. By this point, I’ve trained my readers to be skeptical about the “official” unemployment rate posted by our government.

Keep the following in mind:

1)      The job numbers are always revised the following month. For example, this morning the U.S. Labor Department released the March unemployment rate and the “revised” job numbers report for February.

2)      There has been stark criticism of how the government determines the unemployment rate. In compiling the “official” unemployment rate, the following are excluded: people who have given up looking for work; prisoners (1.5% of the working population); retirees who have involuntarily accepted early retirement; part-time workers who want full-time jobs; and professional students who stay in school because they cannot find work.

3)      Eight million Americans lost their jobs during the 2008-2009 recessions. If the U.S. created 200,000 jobs every month for 40 months straight (which it will not), it would take over three years just to be back where we were before the recession started.

Bottom line: I never trust the job numbers report. As crazy as it sounds, when the U.S. Labor Department said this morning that the official unemployment rate is now 8.8%, I added 75% to that number to get a real unemployment rate of 15.4%. The “underemployment” rate (includes part-time workers who want full-time work and those people who given up looking for work) stands at 15.7%.

Where the Market Stands; Where it’s Headed:

It was an outstanding first quarter for the stock market, with the Dow Jones Industrial Average gaining 6.4% for the quarter ended March 31, 2011. This bear market rally has more steam to blow off. And I’m looking for one more shot above the Dow Jones’ post-crash high of 12,391.29 set this past February.

Yes, I continue to see stock prices rising in the immediate term. But short-term, the market’s internals are looking worse. The bear market rally that started in March of 2009 is getting “long in the tooth,” as they say, and getting close to finishing its run. Part III of this bear market rally, coming to us soon, promises to be a doozy.

What He Said:

“I’m getting very worried about the state of the U.S. housing market and its ramifications on the economy. The U.S. could be headed for its first outright annual decline in home prices on record, adjusted for inflation. And I really believe this could be a catastrophe for the U.S. economy.” Michael Lombardi in PROFIT CONFIDENTIAL, August 2, 2006. Michael started talking about and predicting the financial catastrophe we started experiencing in 2008 long before anyone else

Michael bought his first stock when he was 17 years old. He quickly saw $2,000 of savings from summer jobs turn into $1,000. Determined not to lose money again on a stock, Michael started researching the market intensely, reading every book he could find on the topic and taking every course he could afford. It didn’t take long for Michael to start making money with stocks, and that led Michael to launch a newsletter on the stock market. Today, Michael only employs the top market analysts and editors. Some of our recommendations have posted gains in excess of 500%! Michael has authored and published over one thousand articles on investment and money management. Along the way to building Lombardi Publishing Corporation, now with over one million customers in 141 countries, Michael became an active investor in real estate, art, precious metals and various businesses. Readers of the daily Profit Confidential e-letter are offered the benefit of the expertise Michael has gained in these sectors. Michael believes in successful stock picking as an important wealth accumulation tool. Married with two children, Michael received his Chartered Financial Planner designation from the Financial Planners Standards Council of Canada and his MBA from the Graduate Business School, Heriot-Watt University, Edinburgh, Scotland. Follow Michael and the latest from Profit Confidential on Twitter

No comments yet.

View the original article here

Bad April Fools’ Joke for Investors Playing Out

Wow! Things must be good again. The stock market just had its best first quarter run in a decade, up 6.4% for the calendar quarter ended yesterday. The U.S. Labor Department said that 216,000 jobs were created in March and the unemployment rate has fallen to 8.8%.

Good times are rolling again. Luxury retail brand Prada says that its net income rose to $355 million in 2010, up 150% from the year before. Most of the luxury-brand stocks are rising again, and this morning we have the NASDAQ saying it wants to buy the NYSE for $11.3 billion. Deal-making is back, big-time.

My gut tells me that this will all turn out to be a bad April Fools’ joke for investors.

Sure, I may be the only economist and stock analyst out there today who is warning investors. But I was also the only one telling my readers to buy gold at $300.00 an ounce in 2000, telling them to get out of U.S. real estate in 2005, and predicting a severe recession in 2007 when the stock market was at a record high. It’s okay; I’m used to going it alone. (Maybe that’s why this investment e-letter continues to gain 30,000 new readers a month.)

Okay. Enough talk. Let’s look at what is unfolding here:

Phase I of the bear market: Bring stocks down to the point where investors bail out of stocks, and create deep negativity and fear surrounding stocks and the economy. This occurred during most of 2008 and early 2009, culminating with the Dow Jones Industrial Average collapsing to 6,440 on March 9, 2009. Only a few months earlier, in October 2007, the Dow Jones was trading at a record high of 14,164.

Phase II of the bear market: Bring the suckers back in. Slowly spread the feeling that “the economy is getting better again” and “the worst is behind us.” Bring stock prices higher, make investors feel they are missing the boat on the economic turnaround. This morning, the Dow Jones sits 91% higher than it did in March of 2009. Greatest turn-around story of our generation! Unfortunately, Phase II of the bear market is close to turning into Phase III.

Phase III of the bear market: Just when the great majority of investors and citizens feel that the economy has fully recovered, pull the carpet from under their feet again. Start bringing stocks back down, some weeks slowly, other weeks violently. Phase III of the bear market is not far off. Ideally, it will hit when the current bear market rally has risen 100% from when Phase I ended, which would be 12,880 on the Dow Jones or five percent to 10% either way of that number.

Please read my “Personal Notes” and “Where the Market Stands; Where it’s Headed” commentaries for today below, as they relate to the above.

Michael’s Personal Notes:

It’s absolutely ridiculous to see so many investors and analysts glued to the newswire this morning waiting to hear the U.S. job numbers report for March. By this point, I’ve trained my readers to be skeptical about the “official” unemployment rate posted by our government.

Keep the following in mind:

1)      The job numbers are always revised the following month. For example, this morning the U.S. Labor Department released the March unemployment rate and the “revised” job numbers report for February.

2)      There has been stark criticism of how the government determines the unemployment rate. In compiling the “official” unemployment rate, the following are excluded: people who have given up looking for work; prisoners (1.5% of the working population); retirees who have involuntarily accepted early retirement; part-time workers who want full-time jobs; and professional students who stay in school because they cannot find work.

3)      Eight million Americans lost their jobs during the 2008-2009 recessions. If the U.S. created 200,000 jobs every month for 40 months straight (which it will not), it would take over three years just to be back where we were before the recession started.

Bottom line: I never trust the job numbers report. As crazy as it sounds, when the U.S. Labor Department said this morning that the official unemployment rate is now 8.8%, I added 75% to that number to get a real unemployment rate of 15.4%. The “underemployment” rate (includes part-time workers who want full-time work and those people who given up looking for work) stands at 15.7%.

Where the Market Stands; Where it’s Headed:

It was an outstanding first quarter for the stock market, with the Dow Jones Industrial Average gaining 6.4% for the quarter ended March 31, 2011. This bear market rally has more steam to blow off. And I’m looking for one more shot above the Dow Jones’ post-crash high of 12,391.29 set this past February.

Yes, I continue to see stock prices rising in the immediate term. But short-term, the market’s internals are looking worse. The bear market rally that started in March of 2009 is getting “long in the tooth,” as they say, and getting close to finishing its run. Part III of this bear market rally, coming to us soon, promises to be a doozy.

What He Said:

“I’m getting very worried about the state of the U.S. housing market and its ramifications on the economy. The U.S. could be headed for its first outright annual decline in home prices on record, adjusted for inflation. And I really believe this could be a catastrophe for the U.S. economy.” Michael Lombardi in PROFIT CONFIDENTIAL, August 2, 2006. Michael started talking about and predicting the financial catastrophe we started experiencing in 2008 long before anyone else

Michael bought his first stock when he was 17 years old. He quickly saw $2,000 of savings from summer jobs turn into $1,000. Determined not to lose money again on a stock, Michael started researching the market intensely, reading every book he could find on the topic and taking every course he could afford. It didn’t take long for Michael to start making money with stocks, and that led Michael to launch a newsletter on the stock market. Today, Michael only employs the top market analysts and editors. Some of our recommendations have posted gains in excess of 500%! Michael has authored and published over one thousand articles on investment and money management. Along the way to building Lombardi Publishing Corporation, now with over one million customers in 141 countries, Michael became an active investor in real estate, art, precious metals and various businesses. Readers of the daily Profit Confidential e-letter are offered the benefit of the expertise Michael has gained in these sectors. Michael believes in successful stock picking as an important wealth accumulation tool. Married with two children, Michael received his Chartered Financial Planner designation from the Financial Planners Standards Council of Canada and his MBA from the Graduate Business School, Heriot-Watt University, Edinburgh, Scotland. Follow Michael and the latest from Profit Confidential on Twitter

No comments yet.

View the original article here

A kid-friendly tax shelter to consider before April 18 …

In my last few columns I’ve been talking about a number of ways you can both save for retirement and reduce your tax burden.

But today I want to talk about one more type of tax shelter that’s great for a child in your life — whether it’s a son, a granddaughter, or even a niece. In fact, I’ve been using this very same type of account for my daughter Vela since she was born in 2007.

It’s Called a Coverdell ESA,
And Here’s How It Works …

Yes, the name sounds pretty intimidating … but what is now called a Coverdell Education Savings Account used to be known simply as an Education IRA. I guess lawmakers later decided that calling it a retirement account was silly since these things have to be used by age 30. Either that or they were looking for something to name after yet another Senator (in this case, Paul Coverdell of Georgia)!

Of course no matter what you want to call it, the Coverdell account does function very much like Roth IRAs designed for young students.

Like Roth IRAs, they allow you to sock away money — $2,000 a year, in this case — by tax day. And like Roth IRAs, as long as the funds are used for the benefit of schooling costs, any returns earned in the account will be distributed free of additional taxation going forward.

While that’s not an eye-popping number, it’s still a nice start and will add up over time. Plus, it’s perfect for using any tax refund money you receive.

Meanwhile, don’t underestimate the benefit of that tax shelter! Heck, let’s say you happened to put $2,000 into your child’s Coverdell account and invested it so wisely that within ten years it had miraculously turned into $200,000. That full amount would be available to pay for your kid’s education, and not one penny of taxes would need to be paid as you pulled it out!

Another cool feature of Coverdell accounts is that — unlike ever-popular 529 Plans — they can be used for expenses related to all types of schooling: High-priced pre-K classes, private secondary education, and many associated costs such as computers and books. It’s worth noting that this feature was set to expire in 2010 — but as part of the recent tax package, it has now been extended.

The contribution limit was also set to drop down to just $500 a year in 2011, but the tax package also extended the $2,000-a-year limit through 2012.

What about income restrictions, you ask?

A Coverdell can be a great way to save some money for future education expenses.

Well, like the Roth IRA there are some caps to be aware of: Technically, you cannot fund a Coverdell if you have MAGI above $110,000 filing singly or $190,000 married filing jointly. Phase-outs kick in at lower levels, too.

But here’s where it gets interesting — even a child with no earned income can contribute to a Coverdell!

So if you’re above the income threshold, you can just gift the $2,000 to the child under the Uniform Transfer to Minors Act and they can put it in the Coverdell themselves.

Yes, it’s a stupid formality, but if it works in your favor, go with it!

And again, please note that you can establish a Coverdell for ANY child in your life — not just a direct relative but even a friend’s child or grandchild. Corporations and trusts are also free to establish Coverdells.

The only thing to know is that the Coverdell’s beneficiary can only have $2,000 contributed to his or her account in any given year. So you should always ask whether an account already exists and how much has been deposited before establishing one on your own. Contributions must also be made before the beneficiary turns 18.

As I noted earlier, a Coverdell beneficiary has to use the funds before turning age 30, or else taxes and penalties will likely be owed. However, the account can always be switched to another beneficiary before then — even if the new recipient is between ages 18 and 30!

Bottom line: You don’t get the potential for tax deductions that you do with 529 plans, but as you can see, Coverdells are a unique way to sock away a little extra money for someone special. And they can be fully funded in addition to 529 plans. So if you’re an aggressive saver and planner, they are definitely worth investigating no matter what.

If you’re interested in establishing a Coverdell, just check with your regular brokerage house or other financial institution. Most offer them, and it’s just a matter of completing some simple paperwork. But remember, you only have a couple weeks left to open one for the 2010 tax year!

Best wishes,

Nilus

P.S. While I’m using a Coverdell to help plan for my daughter’s future education expenses, I’m helping my dad plan for his retirement with a regular IRA. To learn more about what we’re doing there, just click here.

Nilus Mattive has been obsessed with dividend-paying stocks since the sixth grade. And after graduating from college, he began working for Jono Steinberg's Individual Investor Group, where he wrote a regular investment column. Later, Nilus spent five years at Standard & Poor's editing the company's flagship investment newsletter, The Outlook. During that time, Nilus also penned his first finance book, The Standard & Poor's Guide for the New Investor. These days, Nilus loves telling investors about dividend-paying stocks in his monthly newsletter, Income Superstars.

View the original article here

Ground operation in Libya could start in April – Russian intelligence

Ground operation in Libya could start in April.

The international coalition force is planning a ground operation in Libya that could start in late April, a high-ranking Russian intelligence service source said on Friday.

“Information coming via different channels shows that NATO countries, with the active participation of Britain and the United States, are developing a plan for a ground operation on Libyan territory,” he said.

“From all indications, a ground operation will be launched if the alliance fails to force the Gaddafi regime to capitulate with air strikes and missile attacks.”

If the events in Libya follow this scenario, the ground operation could start “in late April-early May,” he added.

The UN Security Council imposed a no-fly zone over Libya on March 17, allowing “all necessary measures” to protect civilians from Muammar Gaddafi’s attacks on rebel-held towns.

The operation to enforce the no-fly zone, codenamed Odyssey Dawn, is being conducted jointly by 13 states, including the United States, Britain and France.

Western warplanes have flown more than 300 sorties over the North African country and fired 162 Tomahawk missiles in the UN mission.

Source

Related posts:

Did you like this information? Then please consider making a donation or subscribing to our Newsletter.

View the original article here