Retailers Reflect a Changing Economy

By Jon Herring

What is good for individuals and for the economy in general is not necessarily good for retailers. For example, it is a good thing when people stop using their home equity as an ATM machine. And it's a good thing when they increase savings and pay down debt. But these improvements in consumer balance sheets can be a drain on the balance sheets of retailers.

Like it or not, consumer spending accounts for more than two-thirds of U.S. economic activity. And that makes retail earnings an important barometer for the economy. So what are retail earnings telling us... and how can you profit?

The biggest lesson we can take from retail earnings is that our economy is not only slowing (that is obvious), it is also changing. We are moving from an economy based on "what I want" to an economy based on "what I need."

That is why retailers that sell necessities (like Wal-Mart) will continue to show strength, whereas retailers that focus on luxuries and rely on discretionary spending (think Coach, Tiffany, and Saks) will show weakness.

Two companies that exemplify the shift in consumer buying trends are deep-discount retailers Family Dollar (FDO) and Dollar Tree (DLTR). Market research firm Nielsen recently reported that high-income shoppers (from households making more than $100,000 a year) increased their spending at dollar stores by 18 percent in the second half of 2008 as compared to 2007. Not surprisingly, both of these companies are near their all-time highs, while the rest of the market founders.

And speaking of relative strength, one of my favorite retailers in this market is AutoZone (AZO). When the economy tumbles and money is tight, people are more inclined to fix their old car, rather than buy a new one. Need evidence? AZO is also within spitting distance of its all-time high. Few companies have shown this level of resilience, and in a down market that is what you should be looking for.

Personally, I am choosing real estate, not to buy and hold, but rather to flip and collect profits immediately, no placing bets on stocks. Home Seller Assist provides complete A-Z training and 100% funding to buy using no credit or cash plus we have live training each Wed evening!

Larry Potter
Home of 20-day loan closings

7,000 Points to Go, and That's the Good News

By Steve McDonald

For months, my colleagues and I at ETR's sister newsletter, Investor's Daily Edge, have been pounding the table about how this market is a stock picker's dream. We have said things like, "Millionaires are made at this point in the market cycle," "Stocks are really cheap," and "Build a bulletproof portfolio now." But most people can only hear the doom and gloom news, and it always ends up costing them money.

The market is almost 7,000 points below its previous high, even after a huge move in the last month. This is a buy signal... not a reason to stay out. But most will stay on the sidelines and wait for stocks to become overpriced before they buy again.

In my last ETR article, I said that you can lower your risk in this market by giving it time. Now, here's another suggestion...

Average in, rather than dumping in all your money at once. Buy about one-quarter to one-third of what your usual position size is, and buy on the dips - and there will be dips in the next three to five years.

If you want to add a nice kicker to this plan, buy companies with good dividends. That could add 5 to 7 percent to your annual return. That's how cheap stocks are right now. Companies that usually have dividends of 1 to 3 percent are paying 5 to 7 percent.

This is a 100-year buying opportunity. The only requirement is that you must be willing to stay the course and treat selling dips as buying opportunities. You have your pick of the best companies in the world right now at bargain basement prices.

[Ed. Note: Get the scoop on more emerging investment opportunities from Steve McDonald in Investor's Daily Edge, ETR's sister publication. Sign up for free right here.

Larry Potter
http://www.yoursocialprofits.com

Financial Wizards

Since last fall, our financial wizards have promised $12.8 trillion in bailout funds to primarily well connected cronies. The US national debt since the birth of this great nation now stands at a comparable $11 trillion. None of these debts will ever be paid off and it’s hard to fathom how anyone believes to the contrary.

The printing press is also being used to artificially maintain low interest rates via market interventions. Derivatives have long been focused there but now the Fed has resorted to direct action. The Fed is in the market buying our own Treasury Bonds. $300 billion is the first estimate, but you know how government estimates tend to work out.

Folks, this extreme action is akin to entering the bidding for your own house sale. An advanced central planning degree is required for this desperate maneuver.

Larry Potter
Stocks2Watch

http://www.youtube.com/watch?v=lkJCsIMAiNY

Selling Put Options

Selling puts is a strategy that can generate an annualized yield in the neighborhood of 30 percent to 50 percent. When executed properly, this strategy can be highly profitable and carry very low risk. That is especially true in the kind of market we have today, where fear is high and option prices are elevated.

This is a great way to buy stocks at a discount. Let's say you would love to buy IBM at $81 a share, but it's selling at $89 a share. In this case, you could sell the $81 put option. If the price falls below $81 before the option expiration date, you get your shares at the price you like. If the price stays above $81, you keep the premium and you can repeat the process.

You can also sell puts with the goal of generating income. In this case, you'd want the puts to expire worthless so you can capture the option premium. To accomplish this goal, you sell puts that are "out of the money" on stocks you believe to have very little downside risk... and which you would be willing to purchase at a much lower price.

Here is an example...

Let's assume that stock XYZ is selling for $13. We'll also assume the stock has already fallen by a significant amount (not too hard to find in today's market) and you believe the rock bottom liquidation value of the company is $8.

With the stock trading at $13, the July $10 put option is well out of the money and selling for $1.50. You decide to sell those puts. When the trade closes, $150 will automatically show up in your account for every put contract you sold.

The only way you could lose money on this trade is if XYZ trades below $8.50 ($10 minus $1.50) on or before the option expiration date in July. That would be a 35 percent drop from the depressed level the stock is trading at when you sell the puts.

And in the unlikely event that you are obligated to purchase those shares below $8.50, you should still come out okay. After all, the liquidation value of the company is $8 a share, which makes the downside risk very small.

This strategy should be employed on stocks where you believe the downside risk is minimal. And you should only employ it on stocks that you would be glad to own at a price below where you sell the put.

You should also have a reasonable understanding of the true valuation of the company. For this reason, I would exclude most financial and insurance companies, as few people (including insiders) have any idea how much these companies are worth or what is on the books.

By selling put options, you could buy super-high-quality stocks as much as 50 percent cheaper than today's historically low prices. Plus, you'll get cold, hard cash deposited in your account instantly... adding to your annual income!

Larry Potter

http://www.youtube.com/watch?v=lkJCsIMAiNY

www.ATicketToWealth.com

Make Margin Trends Your Friends

By Andrew M. Gordon

When investigating companies to invest in, I look at several margins - gross, operating, pre-tax, and net profit margin. But I focus on operating margin. Operating margin is the difference between how much you make and how much you spend to operate the business. If the "making" is at least 15 percent higher than the "spending," I'm interested.

But there's something else I need to know...

Was the operating margin lower or higher last year? And the year before? And the year before that? I like to see margins on an upward trend. It could mean several things, like...

Strong and/or rising pricing power
A shortage of products (Think Harley-Davidson, which deliberately makes fewer bikes than they could sell.)
Technological leadership
A transition from lower-end to higher-end products
Rising productivity
The ability to effectively manage costs

It takes more homework to figure out what is driving higher margins, but all of the above possibilities are good. So with an operating margin on an upward trend, even without doing the homework, you already know the company is running its business from a position of strength.
Profit margins go to the core of what makes a business successful. If you want a reality check, consider retailers.

Many retailers sold more product than ever during the 2008 holiday season. But because they had to slash prices to get customers to buy, their margins were squeezed to the max. So while sales were up, profits were down. That's what happens when margins go in the wrong direction.
If you want to do the research yourself, the numbers are provided online by Reuters Finance. Just look up a specific company and click on "Ratios."

[Ed. Note: This June, investment expert Andrew Gordon is just one of 9 investment experts who will show you exactly how you can make a fortune in today's market. Find out how to get their top recommendations for making 2009 the best year ever for your portfolio right here.]

Larry Potter
http://www.youtube.com/watch?v=lkJCsIMAiNY
www.ATicketToWealth.com

People who are Happy for No Reason surround themselves with support.

We catch the emotions of those around us just like we catch their colds. It's called emotional contagion. So it's important to make wise choices about the company you keep. Establish appropriate boundaries with emotional bullies and "happiness vampires" who suck the life out of you.

Develop your happiness "dream team" - a mastermind or support group you meet with regularly to keep you steadily on the happiness path."Happily ever after" isn't just for fairy tales or the lucky few. Imagine experiencing inner peace and well-being as the backdrop for everything else in your life.

When you're Happy for No Reason, it's not that your life always looks perfect - it's that however it looks, you're still happy! [Ed. Note: Marci Shimoff is the author of the New York Times bestseller Happy for No Reason: 7 Steps to Being Happy from the Inside Out, a revolutionary approach to experiencing deep and lasting happiness. As the woman's face of the Chicken Soup for the Soul series and a featured teacher in The Secret, Marci is an authority on success, happiness, and the law of attraction.

To order Happy for No Reason, newly released in paperback, and receive free bonus gifts, go to www.happyfornoreason.com/home.asp. One of the best ways to feel happy is to enjoy the work you do. What better way to create enjoyment in your work than to start your own business, based on something you love to do? Get all the details for getting a moneymaking Internet business up and running right here]

Larry Potter
http://www.youtube.com/watch?v=lkJCsIMAiNY
www.ATicketToWealth.com

China Flexes its Muscles

Finance officials from Beijing in Moscow on Thursday held a videoconference to discuss the creation of a “supra-national reserve currency,” the latest evidence of the support China is getting from developing countries as it seeks to replace the U.S. dollar as the world's main reserve currency.

This controversial proposal – and the support that it's getting – also underscores China's continued emergence as a growing global force in both the financial and political arenas.

Larry Potter

http://budurl.com/nn8h

www.ATicketToWealth.com

Mining Sector Doesn't Need Banks

In the magical world of FinanceLand, it seems evil Dr. Doom has landed on the capital (Stall Street), and with a zap from his freezing ray-gun, has permeated the landscape with a thick layer of frost.

The effect: Traditional sources of financing – indeed, virtually every type of credit – have been placed in an Ice Age-like deep freeze. Facing a major crisis of confidence, banks underwent a 180-degree turn: Whereas they were previously almost force-feeding us loans, banks are now terrified to even include them on their menus.

Larry Potter

http://www.youtube.com/watch?v=ObVVfulxlBk

www.ATicketToWealth.com

Dollar Could Be...

...Ready to Move Higher Again ...

Two pieces of recent economic data have me expecting more of the same risk-averse capital to be driving the U.S. dollar back higher soon:

Japan's exports plunged nearly 50 percent in February — an obvious sign global demand has come to a screeching halt. Tack on the slowdown in exports for the U.S., China, and Germany and you've painted a real ugly picture for the export side of the global economy.

U.S. fourth-quarter GDP sunk by 6.3 percent. This was more than had been expected. Perhaps it's a lagging indicator. But such a dramatic slowdown bodes ill for any bounce-back strength out of the U.S. consumer.

Larry Potter
www.ATicketToWealth.com
http://www.youtube.com/watch?v=ObVVfulxlBk

The Next Big Thing in Autos

By Andrew Gordon

Auto companies are in horrible shape. Will GM survive? Has Toyota seen its best days? Is Ford's funk temporary or permanent?

You should stay away from them. But why not invest in the next big technology the auto companies will need? All of them have plans to introduce or step up the production of battery-driven cars beginning around 2011-12.

The batteries being used today won't be the batteries that will be used in a few years. Nickel-cadmium batteries are on the way out. On the way in are lithium-ion batteries, with twice the capacity and half the weight. Plus, they work fine in hot or cold weather.

This market is flying under the radar. From $9 billion today, it could reach $150 billion in the next 10 years.

There are about 30 car manufacturers around the world dying to get their hands on this new technology. And those companies that have already begun production have the best chance of becoming big players in this market.

The U.S. dollar recently set new highs...

...by touching a level not reached since early 2006.

But the move that sent the dollar above overhead resistance hasn't held.

All the efforts to push back to those highs have been met with overpowering selling pressure.

Both the bears and bulls have been participating, no doubt about it. But the bears have been in the driver's seat lately.

HOME SELLER ASSIST - THE TOUR

Larry Potter
www.ATicketToWealth.com

What actions should you take?

A good program will get you excited to get started. All you will be thinking about is "Firing"!

Taking action is critical to your success, but first take the time to make a plan.

This is the second half of getting ready. You have to know WHAT you want to achieve, but you also need to figure out HOW you will use what you've learned to achieve it. Then, take action!
When we took our first real estate investing program years ago, we skipped right through to taking action. We didn't carefully consider our long-range objectives. So we didn't have any real idea of what we should be getting out of the program. We just knew that we wanted to be rich real estate investors. The sooner the better!

Had we taken a few hours to set realistic, specific goals for ourselves, we could have saved tens of thousands of dollars on repairs and fines for the kind of buildings we shouldn't have bought, and three years of headaches with terrible tenants. And we could have achieved our goal of becoming millionaire real estate investors that much faster.

Taking good programs and learning from mentors is an excellent way to acquire the tools you need to take action and realize your dreams. But save yourself money and pain by getting "Ready" before you "Fire." Then - later - the "Aiming" part comes really easy.

Larry Potter
www.ATicketToWealth.com

How to Not Only Survive but Prosper in 2009

Prosperity in the midst of the worsening economic recession might sound like a pipe dream.
But the reality is that those who'll prosper will be those with a definite plan in mind and a lot of courage.

Most Americans are focused on survival right now.
They're circling the wagons in an attempt to protect themselves.

But some lone guns are out in the hostile economic wilderness searching for gold mines of opportunity.

Prosperity Road won't be easy to travel at first. There's bound to be plenty of cactus and wild weather to hamper the journey.

But in the end, those gold mines will be worth the effort.

So how will you find your gold mine?

By mapping out where you want to go and how to get there.

If you want to go from survival mode to Prosperity Road, click here.

One Approach to Investing

A wise teacher once told me, "Common horse sense is not so common." And investors seem to overlook common sense now and again.

Let's say we stop the presses right now. We disconnect the Internet and Satellite TV, and push all of the papers and magazines on our desks into a cardboard box.

We sit at our desks in complete silence.

Without referring to any notes, commentators, or anything else - try to rely on everything you've learned up to this point in your life.

Now ask yourself, "Which sectors have the greatest upside potential over the next 2 to 5 years?"

Home healthcare? The Internet? Defense? E-commerce? Natural resources? Online gaming? Write down your answers and use them to begin your stock-selection process.

That's how I start my process. I start with the sector that has the greatest upside potential - and work back from there.

Ask yourself which sectors "should" do well based on everything you know up to this point. Your answers will amaze you. Sure, you'll be off the mark once in a while. But most of the time you'll be right on the money.

By Charles Newcastle

The Only No-Risk Way to Ride the Next Big Market Pop

By Andrew M. Gordon

Your next big investing dilemma is right around the corner. Should you - can you - take advantage of the next big stock market pop?

History (since WWII) tells us that when the S&P 500 bottoms, it'll go up about 32 percent over the following nine months. That's been the average climb following a bear market.

Here's the problem. It usually happens in bursts. And if you're not in the market for the initial burst, you've probably missed snagging the biggest gains.

The solution? Market Index Target-Term Securities (MITTS). The irresistible feature of these investments is that you can't lose money. They're hybrid securities - part bond and part options. They go for $10 per share (when first issued), and are traded on the New York Stock Exchange and the NASDAQ.

You can buy MITTS that cover the S&P 500. If the S&P goes up, you get 100 percent of the gains. If, for example, the S&P goes up 40 percent during the life of the MITTS, your gain would be 40 percent. (They last 3-7 years, but you can get them maturing as soon as May 2009.)

What if the S&P loses 40 percent? Your loss would be zero. You automatically get back the $10 per share at maturity. And, right now, all the active MITTS are trading at a discount - for as low as $8.84.

It's a zero-risk way of playing the next big market bounce. MITTS are easy to look up, because The Wall Street Journal tracks them. They're also highly liquid. So if you're interested, your broker can buy them for you. No problem.