Stock-Market Tango of Price, Earnings Has Two Left Feet – Bloomberg 04-10-14

Salient to Investors:

Robbert Van Batenburg at Newedge Group said:

  • The number of S&P 500 companies that have lowered their quarterly forecasts is at an all-time high, bringing the projected growth rate dangerously close to zero.
  • The brutal US winter is not the only reason for a projected lackluster earnings season because EPS estimates declines have been indiscriminate and across sectors. For example Cliffs Natural Resources, a miner, and Carnival, a cruise operator, have shown the biggest declines in earnings estimates and it does not snow in mines or on tropical cruises.

Read the full article at http://www.bloomberg.com/news/2014-04-10/stock-market-tango-of-price-earnings-has-two-left-feet.html

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Nasdaq Falls Most Since 2011 as Tech Selloff Resumes – Bloomberg 04-10-14

Salient to Investors:

The Nasdaq Composite is at 35 times reported earnings  versus 17 for the S&P 500. Analysts forecast S&P 500 earnings climbed 1 percent in Q1.

Chad Morganlander at Stifel Nicolaus said the rotation out of high-flying momentum stocks of 2013 into more value-driven opportunities will continue in the coming weeks as investors look for consistency in earnings, fueled by concerns about high valuations and flat revenue growth, a perfect cocktail for a sector rotation out of growth and into value.

Tom Caldwell at Caldwell Securities a month of the market getting tired and letting off steam is not a dramatic trend reversal, and the market is waiting for good news, a new revelation.

Sam Chi Yung at Delta Asia Securities said China’s allowed quota of cross-border trading will have a significant impact on the Hong Kong market because it accounts for about a quarter or fifth of the daily turnover.

Read the full article at http://www.bloomberg.com/news/2014-04-09/asian-futures-rise-on-fed-as-yen-slips-crude-snaps-climb.html

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Trailer Parks Lure Wall Street Investors Looking for Double-Wide Returns – Bloomberg 04-10-14

Salient to Investors:

Investors are getting rich renting the concrete pads and surrounding dirt on which residents park their homes. JLT & Associates say rents nationwide average $390 per pad per month.

Many US counties have banned or discouraged construction of new trailer parks because the inhabitants are poor, pay little in taxes and drain resources. Demand is higher than ever because so many people never got back on their feet after the recession and more of the US middle class is sliding into poverty. 

Warren Buffett purchased Clayton Homes, the largest manufacturer of mobile homes, over a decade ago. Private-equity firms are starting to invest.

6 percent of Americans lived in mobile homes in 2012. Once a tenant trucks a home to a site, he is unlikely to leave because it costs at least $5,000 to move a home.

The way to instant profits is to find a distressed park, where rent checks are late, water meters don’t exist and trailers date from the 1980s or 1990s, and buy it cheaply and turn it around.

Read the full article at http://www.bloomberg.com/news/2014-04-10/trailer-parks-lure-investors-pursuing-double-wide-returns.html

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Why Do Investors Make Bad Choices? – Bloomberg 04-09-14

Salient to Investors:

Cass Sunstein at Harvard said:

  • Economists know that if you invest in stocks, it makes sense to invest in a passively managed diversified portfolio of largely low-cost index funds, weighted toward equities, and add money as you get it – diversifying it as well – and keep the cash you need.
  • The first behavioral mistake is “availability bias”, or if something has happened in the recent past, people tend to exaggerate the probability that it will happen in the future. The stock market collapsed in 2008, and does not collapse very often, so in 2011 you should not have feared another meltdown.
  • The second behavioral mistake is “loss aversion”, or hating losses from the status quo far more than equivalent gains. Suddenly losing $10,000 is more stressful than the joy of suddenly gaining $10,000.
  • The third behavioral mistake is “probability neglect”, or focusing on worst-case scenarios, especially when emotions are running high, and not on the likelihood that such scenarios will actually come about.
  • Investors are prone to the “disposition effect,” or selling stocks too quickly when they appreciate in price and holding on too long when they have depreciated in price.
  • Many individual investors are overconfident, men worse than women.

Read the full article at http://www.bloombergview.com/articles/2014-04-09/why-do-investors-make-bad-choices

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Stay-at-Home Moms Rise in Reversal of Modern Family Trend – Bloomberg 04-08-14

Salient to Investors:

The Pew Research Center said the share of mothers with children under age 18 who do not work away from home rose to 29 percent in 2012, versus the modern-era low of 23 percent in 1999, which ended the decline in most years from 1970 to 1999. D’Vera Cohn at Pew said the majority of mothers would like to be in the workplace.

Just 22 percent of stay-at-home moms with working husbands had family incomes of $100,000 or more in 2012.

A third of stay-at-home mothers are at the poverty level versus 12 percent of working mothers, while 6 percent say they are at home because they cannot find work.

Asian and Hispanic children were the most likely to be raised by stay-at-home mothers in 2012 – 37 percent and 36 percent resp., versus 26 percent of white children and 23 percent of black children.

A quarter of stay-at-home moms have college degrees versus 7 percent in 1970.

28 percent of children in 2012 were being raised by a stay-at-home mother versus 24 percent in 2000 and 48 percent in 1970.

American Time Use Survey said stay-at-home mothers spend an average of 18 hours per week caring for children, 7 more than working mothers. 

Read the full article at http://www.bloomberg.com/news/2014-04-08/stay-at-home-moms-rise-in-reversal-of-modern-family-trend.html

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Oklahoma Swamped by Surge in Earthquakes Near Fracking – Bloomberg 04-08-14

Salient to Investors:

Austin Holland at the Oklahoma Geological Survey said the state experienced its 109th earthquake of a magnitude 3 or higher on April 6, matching the total for all of 2013.

Reports have become more frequent from Texas to Ohio of earthquakes linked to wells that drillers use to pump wastewater underground.

The US Geological Survey said pumping fracking wastewater underground has been linked to a 6-fold jump in quakes in the central US from 2000 to 2011.

University of Oklahoma, Columbia University and the US Geological Survey link Oklahoma’s biggest recorded earthquake of 5.7 magnitude on Nov. 6, 2011 to wastewater wells.

Read the full article at http://www.bloomberg.com/news/2014-04-07/oklahoma-swamped-by-surge-in-earthquakes-near-fracking.html

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Emerging-Market ETFs Halt Outflow as Investors Flee Tech – Bloomberg 04-08-14

Salient to Investors:

US-based emerging-market ETF equities and bonds are heading for their biggest monthly inflow since September, while global tech funds lost the most funds among 12 industries.

Richard Titherington at JPMorgan Asset Mgmt said investors recognize emerging-market equities are cheap, rotating into sectors that have underperformed.

Jennifer Vail at US Bancorp said investors are finally feeling comfortable dipping back into emerging market stocks.

MSCI Index of emerging-market stocks is at 10.6 times estimated earnings versus 15.2 times for equities from advanced economies and near the biggest discount since 2006.

The Dow Jones Internet gauge is at 89 times trailing earnings versus 17 for the S&P 500.

Read the full article at http://www.bloomberg.com/news/2014-04-08/emerging-market-etfs-halt-outflow-as-investors-flee-tech.html

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