Sunday, May 31, 2015

FINRA ‘Aggressively’ Seeking BD Feedback on CARDS: Ketchum

Richard Ketchum, chairman and CEO of the Financial Industry Regulatory Authority, said Monday that while the self-regulator was moving ahead with its controversial Comprehensive Automated Risk Data System (CARDS) as it’s “the next step—and big leap forward—in the evolution” of FINRA’s risk-based regulatory programs, FINRA has created broker-dealer working groups and is "aggressively" seeking BD feedback to “get this right.”

Noting the more than 800 comment letters that FINRA received on its CARDS plan, Ketchum told the 1,000 attendees at FINRA’s annual conference in Washington that “your input is critical to us getting CARDS right. By giving us your feedback, you have an opportunity to contribute to the best solution possible. Please help us shape this.”

However, Ketchum said that while FINRA is “looking closely” at the cost and operational concerns that broker-dealers have raised, many commenters’ concerns “seem to me to be a tad one-sided.”

CARDS, Ketchum argued, “has the potential to be one of the most important investor protection tools to emerge in recent years,” and “strongly urged” BDs to view CARDS “through the broader lens of investor protection, rather than through the more narrow lens of how it affects your firm.”

That being said, Ketchum said that FINRA recognized “that costs tied to CARDS are a real issue for firms,” stating that’s FINRA has created a CARDS “pilot” and is talking to BDs about the “real, bottom-line impact” it may have on their firms.

CARDS would be a rule-based program that would allow FINRA to collect — on a standardized, automated and regular basis — account information, as well as account activity and security identification information that a firm maintains as part of its books and records.

CARDS, Ketchum said during his remarks, “will allow us to collect and manage data from firms in such a way that we can quickly identify trends and product concentrations that are harmful to investors and take swift, responsive action.”

The automated system would gather data from broker-dealers and clearing firms that the regulator can then use to spot potential problems with sales practices of individual BDs, branches and reps prior to onsite FINRA exams.

Indeed, Hardeep Walia, co-founder and CEO of Motif Investing and a member of both FINRA's Small-Firm Advisory Board and its Technology Advisory Committee, noted on a compliance panel after Ketchum’s speech that “there’s a lot of good that can come out of CARDS,” adding that “the power of CARDS is that it’s the next generation of regulation, which is technology.”

If “we can get it right and get safeguards around it, it will be the next-gen form of regulation” that other regulators can look to, he said.

Michelle Oroschakoff, chief risk officer of LPL Financial, noted on a separate panel on the top 10 regulatory issues that "if done right," CARDS "is going to be terrific" for the markets and for investors, allowing "more targeted [exam] sweeps." However, she said that advisors were already getting questions from their clients about CARDS regarding data privacy issues and that the "investing public is not as supportive of" CARDS as may have been thought. /* .premium-promo { border: 1px solid #ddd; padding: 10px; margin: 0 10px 10px 0; width: 200px; float: left; } .premium-promo li, .premium-promo ul { list-style-type: none; margin: 0; padding: 0; } .premium-promo li { margin: 0 0 10px; padding: 0 0 10px; border-bottom: 1px dotted #ddd; } .premium-promo h3 { text-transform: uppercase; font-size: 11px; } .premium-promo h4 { font-size: 16px; } .premium-promo a { text-decoration: none !important; } .premium-promo .btn { background: #0069a1; border-radius: 4px; display: inline-block; padding: 5px 10px; clear: both; color: #fff; font-weight: bold; } .premium-promo .btn:hover { background: #034c92; } */ BDs’ feedback has already changed the original CARDS plan, which was issued as a concept release.

After pushback, FINRA said in early March that it would modify its original approach by not collecting sensitive personally identifying information (PII) from the data it receives from CARDS, a point that Ketchum noted during his Monday remarks.

“We clarified that PII is not part of the proposal, so CARDS data will not include account names, addresses, tax IDs or Social Security numbers,” Ketchum said. “Thus, customer accounts will not be linked across firms. We know that CARDS will be effective without collecting this information.”

Ketchum said that the self-regulator has also heard BDs' concerns about the security “of such a large database.” However, Ketchum said that FINRA believes the security risk “is very low — and dispute[s] that CARDS could create systemic risk.”

Given that FINRA will not be collecting personally identifiable information, he said, “the chance that anyone could exploit what is, in effect, anonymous data for nefarious purposes is very small.”

But Paul Tolley, chief compliance officer of Commonwealth Financial Network, noted on a panel discussion about the top 10 regulatory issues that he's "not a fan" of CARDS, particularly due to its "privacy" concerns. "The sheer volume" of data in "such a huge database," if breached, could be a problem, he said. "There are some pretty sophisticated systems that have been breached," noting that such a breach of CARDS could spark market manipulation.

CARDS will also be launched “in stages,” Ketchum said, and the CARDS plan has been changed to allow firms to choose how they send data to FINRA. “You can send it to us through a clearing firm, you can send it to us through a service bureau or you can send it to us directly," he said. "It’s up to you.”

Firms raised concerns about having to send the data through clearing firms, with many BDs worrying about “the cost implications of working with a clearing firm, especially since nearly 2,000 firms don’t currently have clearing firm relationships,” Ketchum said.

While FINRA will provide firms with a “standardized file specification” for transmitting data, FINRA plans to permit “variability in the format of data related to suitability,” Ketchum said, which “stems from comments that introducing firms, in particular, use different terminology with respect to information about their customers.”

To address concerns about “direct business data and how the clearing firms would handle that data,” Ketchum noted that “in its initial phases, CARDS will not require firms to submit information about products not held at the firm,” such as variable annuities, direct participation programs and direct mutual funds. /* .premium-promo { border: 1px solid #ddd; padding: 10px; margin: 0 10px 10px 0; width: 200px; float: left; } .premium-promo li, .premium-promo ul { list-style-type: none; margin: 0; padding: 0; } .premium-promo li { margin: 0 0 10px; padding: 0 0 10px; border-bottom: 1px dotted #ddd; } .premium-promo h3 { text-transform: uppercase; font-size: 11px; } .premium-promo h4 { font-size: 16px; } .premium-promo a { text-decoration: none !important; } .premium-promo .btn { background: #0069a1; border-radius: 4px; display: inline-block; padding: 5px 10px; clear: both; color: #fff; font-weight: bold; } .premium-promo .btn:hover { background: #034c92; } */ In a later phase, however, Ketchum said that FINRA “may collect this kind of product information through CARDS, but that collection would be pursuant to additional rulemaking — which would provide us with ample opportunity to continue our dialogue and arrive at workable solutions.”

Ketchum also addressed the question of why FINRA doesn’t first tackle implementing the consolidated audit trail (CAT) before CARDS.

The short answer, Ketchum said: “Unlike CARDS, CAT will not contain the kind of critical information about customer risk appetites, investment objectives, cash movements, margin requirements and position data that we need for our sales practice reviews,” he said. “Moreover, CAT needs to function on a near real-time basis. CARDS does not. To have it do so would be light years more costly than our current proposal.”

Thursday, May 28, 2015

A Map to Turn Fear into Profit

Last Monday, I shared a chart with Money Map Report subscribers and suggested they may want to batten down the hatches because I saw a 30- to 40-point drop happening by the end of the week.

Now I want to share that same chart with you plus a new one - and encourage you to do the same thing.

The shellacking the markets took last Thursday is the most powerful warning sign we've seen yet that things are not what they seem in the financial markets. For lack of a better term, it's a bearish omen, despite Monday's recovery.

Today I want to talk about what that means for your money and what you can do about it in the name of protecting your money and, more importantly, the pursuit of profits.

Contrary to what you might believe, not all bears are bad news.

Let's start with the chart....

The Real Reason Black Monday Still Resonates So Clearly

I find the old adage that a picture is worth a thousand words is really true, especially when you look carefully at market charts over widely disparate time frames. That's because you can easily see similarities that are otherwise not apparent.

This helps you prepare ahead of time for contingencies that others will not see until it's too late.

For example, many people have convinced themselves that things are different today in our post-financial crisis world. They cite everything from the "brave new world" we live in to the "rapidly changing technology" and even the Fed's "innovative financial policies" as rationale. Things, they say, are different this time.

So why is it that today's bull market is eerily similar to another famous bull market? And why are traders worried that we'll have a repeat of Black Monday in 1987 a month from now?

Short version... because the charts point to very similar dynamics over almost identical time frames.

Even if investors don't recall the data, they recall the angst from Black Monday 27 years ago.

Psychologists say this is because of the way the amygdala works. That's the part of the brain that activates in response to emotionally charged circumstances, especially those that provoke fear.

I think it's simply the collective knowledge of one generation being passed involuntarily to the next as part of a critical survival instinct, which is why even those who were not investing then feel the fear now.

To draw a parallel, saber-toothed tigers haven't existed for more than 12,000 years. Yet, the thought of them prowling around still causes an involuntary reaction, not to mention a totally irrational "grab-your-spear-and-run-for-the-cave" reaction in most people.

The bull market that started in March 2009 is now up 169% through Friday. That's nearly step for step with the rally that began in 1982 and immediately before the biggest single-day drop in market history on Oct. 19, 1987 - a day we now refer to as "Black Monday."

S&P 500 Bull Market

Many technicians, myself included, are concerned that we could have a repeat 30 days from now.

A Tempered View of a Correction

Marc Faber, who publishes the Gloom, Boom and Doom Report, took it up a notch after last Thursday's trading, saying that he thinks stocks will "drop by 20% to 30% in the near future." With guys like that out there, who needs saber-toothed tigers?!

Anyway, don't let that put you off track. While another Black Monday is theoretically possible, the far more probable scenario is a market correction of 5% to 10%. And that's not a bad thing.

It's long overdue and would be a welcome sign that things are, in fact, working normally. People forget that nothing goes up forever. Markets have to buy and sell for there to be price discovery. Up and down is part of the process. That's why Monday's rally is only part of the story.

If you look at a chart of the S&P 500, a correction like what I am suggesting points to a drop from roughly 1850, where we are now, to approximately 1757, should we get it.

S&P 500

It's worth noting that in order to arrive there, the markets would have to take out key support at 1820ish before coming into contact with the 200-day moving average that, not coincidentally, is farther below.

Will we get there?

I have no idea. Nobody does. But I do know that many of the computers that account for 70% or more of the overall trading volume on today's exchanges are programmed to sell when the markets break below key support levels. Until that happens, the volatility we are experiencing right now is just statistical noise.

If this gives you pause, take a deep breath.

We have talked many times about how and why market volatility creates tremendous opportunity. I know it's not comfortable, but that's your amygdala talking again.

Logically speaking, a sizeable correction is long overdue and should be celebrated because the business cases behind many of the best companies remain intact and completely unaffected by how the stock markets move. It's your chance to buy a $50 steak at Peter Luger's in NYC at a substantial discount.

I can think of any number of reasons why.

For instance, productivity is hitting all-time highs because of technology and innovation. Businesses are cash flush with trillions of cash being put to work. Interest rates remain low - albeit totally for artificial reasons thanks to the Fed, but low nonetheless.

And globalization continues, with the benefits flowing right to the bottom line on some 60+% of the S&P 500, while also charging into economies growing at 6% to 8% a year. Those same economies are where some 75% of the world's population lives today.

Your Specific Profit Plan

Here's what I want you to do today:

Double-check your trailing stops. If the markets do continue to fall, chances are you're going to have the opportunity to capture plenty of profits just like Money Map Report subscribers have in the past. You are using them... right? (If not, click here to find out about getting a copy of the Money Map Method, where I share how to maximize profits and minimize losses using them.) If the markets continue to rise, you're going to go along for the ride and you just raise your stops to ensure you capture even larger profits, which is, after all, kinda the point. Add an inverse fund to your portfolio right now. My favorites include the Rydex Series Trust Inverse S&P 500 Strategy Fund Class Investor (MUTF: RYURX) fund or the ProShares Short S&P 500 (NYSE ARCA: SH). Both appreciate as the S&P 500 falls. Studies show that 3% to 5% of overall investable assets can provide some substantial reinforcement for your portfolio, not to mention some healthy profits, too. Get your buy list ready. If you wanted to buy Tesla Motors Inc. (Nasdaq: TSLA) at $150 or Amazon.com Inc. (Nasdaq: AMZN) at $250, you just may get your chance. Other companies may be similarly discounted - and I'll be back in subsequent columns with some names and ideas I hope you find helpful.

No investor has to suffer the ravages of a bear market if they're properly prepared.

Best regards for great investing,

Keith

Wednesday, May 27, 2015

This Tech Sector About to See Explosive Growth?

Related HPQ Morgan Stanley Keeps Overweight Rating, $34 Target on HP Amid Earnings Top Trending Tickers On StockTwits For February 21

The 3D-printing sector may be currently in an impasse but trust me folks, when I say the sector will be significant going forward and a buying opportunity as the price of the 3D-printing machines fall. My stock analysis is that 3D printers will become a common sight on the desk of many homes.

Recall what happened when the laser printer first debuted in May 1984 with Hewlett-Packard Company’s (NYSE: HPQ) desktop laser printer. The initial cost was staggeringly high at more than $3,000, but now a laser printer sells for less than $100.00. The same thing will happen for the 3D printer as prices start to decline, based on my stock analysis.

Also Read: NYSE holidays 2014

As my stock analysis indicates, 3D-printing technology will be a big winner going forward in nearly every area, from manufacturing to medical devices and technology.

The size of the 3D-printing and associated services market could jump to more than $6.0 billion by 2018, according to Citibank analyst Kenneth Wong. (Source: “3D Printing Market to Triple by 2018,” Business Wire, August 27, 2013.) As Wong notes, the catalyst for the growth will begin with the expiration of key patents in 2014 that will drive prices lower.

Even athletic shoemaker New Balance is using the 3D-printing technology to produce customized shoes for elite athletes. (Source: “New Balance Pushes the Limits of Innovation with 3D Printing,” New Balance web site, March 7, 2013.) I expect the 3D service will eventually be available for everyday purchases once 3D-printing machines become more readily available.

At this point into the race, my stock analysis suggests that the leaders in this sector are Stratasys Ltd. (NASDAQ: SSYS), with a market cap of about $6.24 billion, and 3D Systems Corporation (NYSE: DDD), with a market cap of about $7.99 billion.

On the small-cap side, an interesting stock to watch and keep an eye on is Friedberg, Germany-based voxeljet AG (NASDAQ: VJET), which has a $349-million market cap, as my stock analysis indicates.

Voxeljet made its initial public offering (IPO) debut on October 18, 2013 at $20.00 and surged to $70.00 on November 18, but it has not been an easy ride since, with the stock price falling to its current level around $34.00.

The company makes high-speed, large-format 3D printers and on-demand parts services geared for industrial and commercial customers. The move to the retail market is not there yet, but my stock analysis suggests that it will only be a matter of time before this occurs.

The valuation is extreme at this time, trading at 388X its estimated 2014 earnings per share (EPS), but the stock must be analyzed as far as its potential and not its valuation, according to my stock analysis.

Based on my stock analysis, Voxeljet has what it takes to deliver.

Annual revenues increased from $4.76 million in 2010 to $8.71 million in 2012. For 2014, the revenue growth is estimated at 57.2% to $24.4 million, according to Thomson Financial.

Voxeljet has been in the red, but it is predicted to make $0.01 per diluted share in 2013 and $0.09 per diluted share in 2014, according to the Thomson Financial estimates.

For Voxeljet, it’s all about the future, when 3D printers become a mainstay in the homes of everyday users, based on my stock analysis.

This article This Tech Sector About to See Explosive Growth? was originally published at Daily Gains Letter

The following article is from one of our external contributors. It does not represent the opinion of Benzinga and has not been edited.

Posted-In: Markets Tech Trading Ideas

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Monday, May 25, 2015

4 Big Stocks on Traders' Radars

BALTIMORE (Stockpickr) -- Put down the 10-K filings and the stock screeners. It's time to take a break from the traditional methods of generating investment ideas. Instead, let the crowd do it for you.

>>5 Hated Earnings Stocks You Should Love

From hedge funds to individual investors, scores of market participants are turning to social media to figure out which stocks are worth watching. It's a concept that's known as "crowdsourcing," and it uses the masses to identify emerging trends in the market.

Crowdsourcing has long been a popular tool for the advertising industry, but it also makes a lot of sense as an investment tool. After all, the market is completely driven by the supply and demand, so it can be valuable to see what names are trending among the crowd.

While some fund managers are already trying to leverage social media resources like Twitter to find algorithmic trading opportunities, for most investors, crowdsourcing works best as a starting point for investors who want a starting point in their analysis. Today, we'll leverage the power of the crowd to take a look at some of the most active stocks on the market today.

>>Where's the S&P Headed From Here? Higher!

These "most active" names are the most heavily-traded names on the market -- and often, uber-active names have some sort of a technical or fundamental catalyst driving investors' attention on shares. That's especially true now that earnings season is officially underway. And when there's a big catalyst, there's often a trading opportunity.

Without further ado, here's a look at today's stocks.

Ford


Nearest Resistance: $15

Nearest Support: $13

Catalyst: January Sales Miss

>>5 Rocket Stocks to Buy in February

Shares of Detroit automaker Ford (F) are off more than 3% on high volume this afternoon, the reaction from a January sales miss that registered 7% lower vs. last year's particularly strong reading. Ford attributed the miss to inclement weather in the brand's biggest sales regions.

One silver lining came from Lincoln, the premium brand that's been struggling to find its way in recent years. Lincoln saw its strongest sales in four years.

Still, Ford looks bearish overall today. More significantly, today's 3% selloff is pushing shares through an important support level at $15. With buyers unable to keep up with supply of shares at that level, look out below for more downside in Ford in February.

AT&T


Nearest Resistance: $33.50

Nearest Support: $32.25

Catalyst: Price Cuts

>>5 Big Trades to Profit During the Fed's QE Pay Cut

Telecom giant AT&T (T) is another name that's down more than 3% this afternoon, in this case because of an escalating war between the firm and its ultra-competitive rivals. AT&T announced that it was cutting the monthly fee for family data plans on Saturday, a move that could spur rival carriers into reacting with cuts in kind. While the move was designed to retain customers amid commoditized service offerings, it's also going to negatively impact AT&T's margins in 2014.

The technical story in AT&T isn't far off from Ford's setup. Shares of T are testing a key support level at $32.35 in today's session, a support level that, if broken, spells a lot more downside ahead. AT&T's chart has been broken for a while now, but it's getting worse. Don't buy the dip in this communications giant.

Radio Shack


Nearest Resistance: $2.70

Nearest Support: $2.40

Catalyst: Super Bowl Ad

Electronics retailer Radio Shack (RSH) is moving higher on abnormal volume after -- of all things -- a funny Super Bowl ad. I wish I were making that up. Indeed, RSH is more than 4% higher on today's session thanks to the ad, which lampooned the store for its '80s vibes -- and reintroduced the new Radio Shack store concept.

Part of the move higher this afternoon comes from a stock that started off with pretty attractive technicals to begin with. RSH has been looking "bottomy" lately, with an inverse head and shoulders setup forming in shares since December. The buy signal comes on a push through the $2.70 level.

Verizon

Nearest Resistance: $47

Nearest Support: $45.50

Catalyst: AT&T Price Cuts

>>5 Stocks With Big Insider Buying

Last up is Verizon (VZ), a name that's off 2.7% this afternoon because of AT&T's decision to cut prices. Investors are selling shares on fears that AT&T just ignited a race to the bottom on data charges, a change that would be great for consumers -- and horrific for VZ's bottom line. Whatever the outcome, Verizon's technical story looks sketchy right now.

Shares are pushing through support at $47 this afternoon. If the breakdown holds into today's close, the next-closest support level is down at $45.50. It makes sense to stay away from VZ unless it can catch some semblance of support again.

To see these stocks in action, check out the at Most-Active Stocks portfolio on Stockpickr.



-- Written by Jonas Elmerraji in Baltimore.


RELATED LINKS:



>>3 Stocks Spiking on Unusual Volume



>>5 Short-Squeeze Stocks That Could Pop in February



>>2 Stocks Under $10 Moving Higher

Follow Stockpickr on Twitter and become a fan on Facebook.

At the time of publication, author had no positions in stocks mentioned.

Jonas Elmerraji, CMT, is a senior market analyst at Agora Financial in Baltimore and a contributor to

TheStreet. Before that, he managed a portfolio of stocks for an investment advisory returned 15% in 2008. He has been featured in Forbes , Investor's Business Daily, and on CNBC.com. Jonas holds a degree in financial economics from UMBC and the Chartered Market Technician designation.

Follow Jonas on Twitter @JonasElmerraji


Sunday, May 24, 2015

Cisco Systems, Inc. (NASDAQ:CSCO): What Cisco May Add To Next-Gen UCS?

The year 2014 could be significant for Cisco Systems, Inc. (NASDAQ:CSCO), particularly for its unified computing system (UCS) business.

Cisco Unified Computing System (UCS) is a x86 architecture data-center server platform. It unifies computing, networking, management, virtualization, and storage access into a single integrated architecture.

The unique architecture enables end-to-end server visibility, management, and control in both bare metal and virtual environments and facilitates the move to cloud computing and IT-as-a-Service with Fabric-Based Infrastructure.

It seems that the Cisco's UCS plan for next year will include an expansion of the Whiptail Flash storage acquisition to integrate Hard Disk Drives (HDD) for application data capacity (implying a mix use of Flash and Disk). Cisco expects Data Center/UCS business to grow 20-25 percent over the next 3-5 years.

[Related -Cisco Systems, Inc. (CSCO) Dividend Stock Analysis]

Sterne Agee analyst Alex Kurtz views that the potential HDD addition is a likely sign of Cisco's move deeper into Tier 0/1workloads and positive for its Total Addressable Market (TAM), which over time could create tension with existing partners like EMC Corporation (NYSE:EMC) and NetApp Inc. (NASDAQ:NTAP).

[Related -Cisco CSCO Shares Shatters Support Into Open Air Pocket]

With the $415 million acquisition of Flash storage vendor Whiptail in October, Cisco has indicated its intent to capture storage dollars among Tier 0/1 workloads. At its recent analyst day, Cisco was increasingly focusing on the Business Intelligence/Analytics market with UCS, indicating the potential addition of Hard Disk Drive capacity as part of the UCS evolution.

Cisco positioning would likely remain focused on high Input/Output (IO) driven applications with this new UCS platform and would not represent a push into the broader storage market. Yet, the presence of HDDs would suggest the intent to capture larger pools of application data.

Kurtz said the high-end IO intensive Storage market is potentially 10-15 percent of the overall $26 billion Networked Storage market. He views this as an incremental opportunity for Cisco's Data Center practice (5 percent of revenue but a key longer-term growth driver).

Cisco needs a more integrated selling approach than the company has had to execute against historically (sell to both Business Intelligence/Analytic admins as well as the Compute/Storage team - often separate groups that have siloed relationships with EMC, NetApp, Oracle and SAP).

Cisco's potential moves would mean a complex set of scenarios for EMC and NetApp, dependent on the extent of HDD capacity in the UCS chassis. It would be closely watched how Cisco's potential platform would work extensively outside bare metal environments.

Kurtz said there would be some friction EMC over the next several years against XtremIO in the All Flash Array market. NetApp's FlashRay has yet to reach general availability in 2014, but he suspects some potential overlap here, as well.

Moreover, the introduction of HDD capacity into UCS could also complicate a longstanding market thesis of Cisco acquiring NetApp.

Meanwhile, how this (UCS+HDD) integrates, if at all, into virtualized environments compared to bare metal remains a key outstanding question. California-based Cisco makes Internet Protocol (IP) networking and other products to the communications and IT industry worldwide. Shares of Cisco have gained about 8 percent in the last one year.

Wednesday, May 20, 2015

IIHS names 22 cars as Top Safety Pick Plus

Just when it looked like every new car on the road would earn the Insurance Institute for Highway Safety's Top Safety Pick Plus designation, the rules get changed and the winners are winnowed down considerably.

Only 22 models now earn the IIHS' top award, coveted enough that it shows up endlessly in car advertising. To have won it, cars not only had to ace front, side, head restraint and roof crash tests, but the "small overlap crash test," which simulates crashing into a pole on the driver's side of the car.

That last test has been bedeviling automakers since it was introduced. Cars that had been on recommended lists for years suddenly found themselves failing. Automakers scrambled and make sure they could pass. Hence, Consumer Reports magazine today restores Toyota Corolla to its recommended list now that it passes the IIHS tests.

"We've made it more difficult for manufacturers this year," says IIHS President Adrian Lund in a statement. "Following a gradual

phase-in, the small overlap crash is now part of our basic battery of tests, and good or acceptable performance should

be part of every vehicle's safety credentials."

Those passing all the test include:

Honda Civic hybridMazda3 built after October 2013Toyota Prius built after November 2013Ford FusionChrysler 200Honda Accord 2-doorHonda Accord 4-doorMazda6Subaru LegacySubaru OutbackInfiniti Q50Lincoln MKZVolvo S60Volvo S80Mazda CX-5 built after October 2013Mitsubishi OutlanderSubaru ForesterToyota HighlanderAcura MDXMercedes-Benz M-Class built after August 2013Volvo XC60Honda Odyssey

Tuesday, May 19, 2015

Do Financial Advisors Follow Their Own Advice?

By Hal M. Bundrick

NEW YORK (MainStreet) � Ever wonder if financial advisors follow their own advice? They urge you to plan for the future, invest wisely and save for retirement. But turn the tables and you'll find over two thirds (67%) of these money pros don't have a succession plan in place for their very own business, according to research by Fidelity Institutional Wealth Services.

With the average age of financial advisors being 52, that's a problem.

"While there is no substitute for comprehensive succession planning, we recognize that for many [investment] firm leaders, this longer-term planning is a process that requires time," said David Canter, executive vice president and head of practice management and consulting at Fidelity Institutional Wealth Services. "Yet there's a need for advisors to put back-up measures in place immediately. We encourage advisors to establish business continuity plans � even before their succession plans � so they know their clients and their business are taken care of in case of an emergency." Depending on an advisor to manage your financial assets, and then finding out that there was no succession plan in place can leave clients in the lurch. Consumers and small business owners can take a tip from this advisor neglect and form a succession plan for their own family or business. Fidelity offers these tips: Limited Power of Attorney � This document outlines a temporary plan if something happens to you or your business, ensuring that it can continue to operate and generate revenue. Buy-Sell Agreement � Every small business should have a plan in place specifying who will take the reins if the owner is permanently disabled or passes away. A buy-sell agreement helps to define a businesses' valuation, payment of the purchase price and closing terms. Operating/Shareholders Agreement Review � Family businesses especially need agreements that include provisions addressing both the temporary and permanent unavailability of one or more partners or principals. "We have found that prudent business continuity planning creates a logical bridge to begin the dialogue on succession planning," said Brian Hamburger, president of MarketCounsel, a consulting firm for investment advisors. "Looking at the issue from a practical scenario, the unavailability or sudden loss of key personnel makes the issue real." Hamburger says effective succession planning is becoming even more critical to ensuring current business owners hand over control to others in a way that is least disruptive to their firm's operations, clients and long-term value. That's a good lesson for advisors, as well as all business owners. Fidelity offers six steps to help lead to a successful business transition: 1) value your firm 2) establish goals and determine timelines 3) assess potential buyers 4) evaluate different deal structure options 5) address governance issues 6) document your businesses' succession plan --Written by Hal M. Bundrick for MainStreet

Monday, May 18, 2015

Move Here for Lower Health Care Insurance Premiums

By Hal M. Bundrick

NEW YORK (MainStreet)�When it comes to the cost of healthcare, we'll take good news wherever we can find it. And while this update is not worthy of a "breaking news" graphic, Aon Hewitt says health care insurance premium rate increases are at their lowest in more than a decade.

So yes, premium rates are still going up, just not quite as quickly.

The average health care premium rate increase for large employers in 2013 was 3.3%, down from 4.9% in 2012 and 8.5% in 2011. In 2014, however, average health care premium increases are projected to bounce back to the 6% to 7% range. "There are many factors that contributed to the lower rate of premium increases we saw over the past two years that we don't expect to continue in the long-term," says Tim Nimmer, chief health care actuary at Aon Hewitt. "These include the lagged effect from the economic recession on health care spending and continued adjustments as employers and insurers phase out the conservatism that was reflected in earlier premiums due to uncertainty around economic conditions and health care reform. Additionally, employers and insurers will now be subject to new transitional reinsurance fees and health insurance industry fees. While we are seeing pockets of promising innovation in the health care industry, we expect to see 2014 premium increases shift back towards the 6% to 7% range overall." And now the bad news   But of course, there is bad news. The money out of your pocket -- for copayments, coinsurance and deductibles -- increased 12.8% ($2,239) in 2013, compared to a 6.2% bump in 2012.   The analysis reports the average health care cost per employee was $10,471 in 2013. That is expected to rise to $11,176 per employee next year. To put the rising costs in perspective, over the last decade your share of health care expenses -- including employee contributions and out-of-pocket costs -- will have increased almost 150%. Where you live matters In 2013, major U.S. markets that experienced rate increases higher than the national average included Los Angeles (6.9%), Orange County (6.9%), Washington DC (5.3%) and San Francisco/Oakland/San Jose (4.8%). Meanwhile, New York City (1.6%), Milwaukee (2.1%) and Atlanta (2.4%) experienced lower-than-average rate increases in 2013. Can you learn to like cold weather? Minneapolis actually saw a decrease in health care insurance premiums, at -0.1%. --Written by Hal M. Bundrick for MainStreet

Sunday, May 17, 2015

Tough Times For Intel Earnings Never Looked Better

Intel Corp. (NASDAQ: INTC) reported its third quarter earnings on Tuesday after the market close, and the set-up for earnings was that the sales would be dragged lower by a lack of PC sales. In short, processors for computers are not where the current trends are. So why is that even with caution that the stock is being so well received.

Earnings came in at $0.58 per share on revenue of $13.48 billion for the quarter. Where things are doing well is that Thomson Reuters was calling for a mere $0.53 EPS on sales of $13.46 billion in revenue. Intel did manage to keep sales flat from a year ago, and they were actually up 5% sequentially. That translates to earnings of about $3 billion, and gross margin was still shockingly high at 62.4%.

Intel called it a quarter of modest growth in a tough environment, The company also guided the following quarter to have margins at 61% and sales of $13.7 billion, plus or minus Intel’s usual couple of percentage points fudge room in either direction and a $500 plus and minus range on sales. We would point out that Intel’s sales for the fourth quarter of 2012 were $13.477 billion, so Intel could actually post year-over-year growth if things in Washington D.C. do not become too out of hand in the coming days or weeks. When things were dire in the past at Intel the guidance was for much more significant caution around future sales.

The PC client sales came in at $8.4 billion (up 3.5 percent sequentially and down 3.5 percent year-over-year) and the data center group sales came in at $2.9 billion (up 6.2 percent sequentially and up 12.2 percent year-over-year). Where Intel is starting to make strides is that over 40 22nm products have been introduced for the ultra-mobile device, networking, storage, and server market segments. This is what has to drive Intel shares much higher, maybe even to $28 to $30 or much higher.

Intel shares closed down 6-cents at $23.39 against a 52-week range of $19.23 to $25.98, and shares were indicated higher by about 1.5% at $23.75 shortly after the earnings report in the after-hours trading session on Tuesday.

If you just listened to Apple lovers and smartphone and tablet users you might think Intel has a questionable future. If you consider that Intel’s rough patches have been there before, things sure seem great in reality versus such a tough perception.

Wednesday, May 13, 2015

Adviser capping firm's annual fees, saying larger clients paying too much

A small Nebraska financial advisory firm is unveiling a novel approach to attracting its target clients by capping its annual adviser fee at $11,000.

Phil Wood's Wealth Partners Inc. has launched a new division that charges clients 1.25% on assets up to that annual total. As a result, management of investments totaling more than about $880,000 will be on the house. The firm, which manages about $170 million in assets, eventually will move all its clients to its One Price Portfolio division, Mr. Wood said.

“Clients with larger accounts have been paying an unfair share,” he said. “The time involved to manage a large portfolio isn't that much greater than a small one.”

Technology developments, specifically the portfolio management software the firm uses from its broker-dealer, SII Investments Inc., make the investment management tasks similar among all his clients, Mr. Wood said. Clients will still pay additional charges for financial plans and other services.

See Also: How to raise fees without ticking off clients

The advisory fee for one client with $1.5 million in assets, for example, would fall from about $15,000 a year to $11,000 under this new pricing plan. The firm's target clients have portfolios between $1 million and $5 million.

Annual percentage-based fees typically decline as the client's asset total grows — a pricing plan long considered a way to compensate advisers for growing account values but also a nod toward the conclusion that it doesn't necessarily cost more to manage portfolios of a greater size.

John Anderson, head of practice management for SEI Advisor Network, praised the firm's new fee transparency. He said that even if clients aren't asking an adviser about the amount they charge, they are thinking about whether it really costs $10,000 more to manage a $2 million portfolio, versus one of $1 million.

“Advisers often set minimum fees but rarely have been capping their fees,” Mr. Anderson said. “It's a phenomenal idea.”

Such a cap might not work for larger accounts, such as $10 million and over, because those would likely require more complicated investments, such as in alternatives, and more due diligence, Mr. Anderson said. Of course, advisers also have greater liability as the amount of assets they manage climbs, he said.

Mr. Wood said that industrywide, he doesn't believe that clients are aware of what they pay each year just to compensate their adviser, and he's hoping to change that, too.

A calculator at OnePricePortfolio.com allows users to add their portfolio balance sum, and using industry averages, it estimates the financial adviser fee the user is paying. It lists those in compa! rison with what the person would pay using their capped-fee structure.

“If people knew what they were paying to their current adviser, they would be interested in changing,” said Mr. Wood, who hopes One Price Portfolio will lead to many client referrals from existing and new clients.

He expects to serve clients mostly online or over the phone, enabling the firm to expand its national reach versus its current clients, who are mostly from or live in Nebraska.

Tuesday, May 12, 2015

The Interesting Value ETF You Don't Know

NEW YORK (TheStreet) -- This past spring First Trust restructured its Strategic Value Index Fund and renamed it the First Trust Capital Strength ETF (FTCS).

The new fund falls into the "smart beta" category I have written about recently. Such funds use custom screens to select components from broad-based indices in an effort to outperform their benchmarks. [Read: Investment Ideas From Day 1 of the NY Value Investing Congress]

FTCS starts by identifying the 500 largest U.S. stocks that have at least $5 million in daily trading volume. The ETF screens those 500 stocks to find the ones with at least $1 billion in cash or short-term investments, a ratio of market cap to long-term debt of less than 30% and a return on equity greater than 15%. From there, it scores the stocks for volatility, and the fund purchases equal amounts of the 50 stocks that have the lowest volatility.

FTCS also has rules to avoid being overly concentrated in any single sector, capping exposure at 30%. The index is reconstituted quarterly. The current sector makeup favors industrials, at 20%, followed by consumer services at 19%, health care at 17%, consumer goods at 17% and tech at 10%. The fund has no exposure to utilities or telecom. Omitting those two sectors is logical because they tend to be very debt-heavy. FTCS is oriented toward large-cap stocks, so most of the names in the fund should be familiar to you, such as MasterCard (MA), Qualcomm (QCOM) and Nike (NKE). Interestingly, defense contractors make up 8% of the fund, which could smooth out the ride for FTCS if the situation in Syria escalates into a situation that is bad for the markets in general but good for defense stocks. First Trust has said that it converted its more traditional large-cap value fund into the Capital Strength fund after realizing that many investors are concerned about how fast the market has gone up in recent years and worried that the fundamentals do not necessarily support the big rally. [Read: 5 Breakout Trades to Take Ahead of the Fed] First Trust says that companies with the attributes identified by FTCS will better weather a large downturn or a period of increased volatility because those companies have more options with their cash and less financial risk because of their low debt.

Although First Trust hasn't said as much, it's also possible that it made the conversion after deciding that the original fund's lack of assets -- $37 million -- indicated the market didn't need another basic large-cap value fund.

Although the capital strength process yields a value tilt, it is not a carbon copy of other large-cap value funds offered by competitors.

The iShares S&P 500 Value ETF (IVE), the Power Shares Dynamic Large Cap Value Portfolio (PWV) and the Vanguard Mega Cap Value ETF (MGV) all have weightings greater than 20% in the financial sector compared to just 8% for FTCS. The other funds have much less exposure to the industrial sector than FTCS. [Read: Ex-JPMorgan Traders Could Face 20 Years in Prison]

Since FTCS started trading in its current incarnation these differences have not mattered because all four of these funds have traded in lockstep. Historically the industrial sector tends to decline more than the broad market during the bear phase of the cycle and then bounces back more than the broad market in new bull markets. Although First Trust seeks to offer a fund that is more resilient to bear market declines, the fund may not in fact do that if it still has its heaviest weighting in the industrial sector when the next large decline comes. At the time of publication, Nusbaum had no positions in securities mentioned. Follow @randomroger This article is commentary by an independent contributor, separate from TheStreet's regular news coverage.

This contributor reads: Credit Writedowns Pragmatic Capitalist Mike Shedlock Barry Ritholtz John Hussman On Twitter, this contributor follows: TheStalwart ETF Database zerohedge financial acrobat

Sunday, May 10, 2015

Green Technology Solutions, Inc. & Partners Prepare for Bolivian Expansion (OTCBB:GTSO)

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Green Technology Solutions, Inc. (GTSO)

Today, GTSO has shed (-10.51%) -0.0041 at $.0349 with 1,304,937 shares in play thus far (ref. google finance Delayed: 2:03PM EDT August 13, 2013).

Green Technology Solutions, Inc. and its partner, Chilerecicla, are preparing to expand recycling operations into Bolivia.

One of South America's top recyclers of e-waste, Chilerecicla operates the first e-waste recycling plant in Southern Chile and maintains crucial relationships with overseas smelters, with the right to sell them as many recovered metals and minerals as GTSO and Chilerecicla can provide. With a feasibility study on the region now complete, the joint venture has targeted Bolivia as an ideal territory for growth.

Green Technology Solutions, Inc. (GTSO) 5 day chart:

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