May Fund Flows: ‘Prelude to the Storm,’ Says Morningstar

Morningstar said Tuesday that May was another strong month of mutual fund inflows: Investors added $38.6 billion into long-term funds, excluding figures for money-market and fund of funds, as well as ETFs.

Taxable-bond funds stayed ahead of the pack with $21 billion in flows.

Investors, who embraced core, intermediate-term bond funds in 2012, are increasingly turning to less interest-rate-sensitive bond sectors and are shunning government bond sectors, according to Michael Rawson, CFA.

In May, interest rates spiked, with the 10-year Treasury rate increasing by nearly half a percent to 2.16%. At the same time, the Barclays Aggregate Bond Index fell 1.78%.

Investors took profits in U.S. equity funds in May “but continued their love affair with emerging-markets stocks,” says Rawson.

Municipal-bond funds experienced net outflows for the third month in a row. Meanwhile, money-market funds (also tracked by Morningstar) grew by $27 billion—their first monthly inflow of 2013.

Darkening Skies

In May, the improving economy and jobs report led to the conclusion that the Fed may ease up on quantitative-easing measures. Flows into the intermediate-term bond category weakened but were positive for the month—and did not turn negative until early June.

In May, it was nontraditional-bond and bank-loan funds that took in the largest share of flows, according to Morningstar.

The PIMCO Total Return Bond had strong outflows. But PIMCO Unconstrained, the largest fund in the nontraditional category, gained more than $1 billion in flows, as did JP Morgan Strategic Income Opportunities.

The bank-loan category also attracted strong inflows, led by Oppenheimer Senior Floating Rate with a $700 million haul. (The fund rose 0.24% in May and 3.54% during the first five months of 2013.

Equity Tremors

The rise in rates did not sit well with equity investors in May.

“While the S&P 500 was up 2.34% for the month, yield-oriented sectors such as REITs and utilities each lost more than 6%, according to Morningstar sector indexes,” Rawson said.

U.S. equity fund investors took out a net $700 million in May, including withdrawals of $1.9 billion from large-growth funds.

On the other hand, international-equity funds gained $8.5 billion, with diversified emerging-markets funds leading the way.

A new fund, ING Emerging Markets Index, “burst onto the scene” with $470 million of inflows in May, says Morningstar. Meanwhile the Vanguard Emerging Markets Stock Index brought in $363 million.

International funds that each brought in more than $1 billion included the Silver-rated GMO International Intrinsic Value and Gold-rated Oakmark International.

(Oakmark International has gained 45% in the past 12 months compared with 28% for the MSCI EAFE Index.)

Fund Family Winners

Vanguard led the pack again, with more than $11 billion in flows.

In May, the fund giant officially launched two international bond funds: the Vanguard Total International Bond Index Fund and Vanguard Emerging Markets Government Bond Index Fund, which didn’t officially start trading until June 4. PIMCO stayed in second place, though its $2.5 billion of flows was its weakest showing for the year to date, Morningstar reports.

Franklin Templeton was close behind PIMCO, adding more than $2 billion; its Templeton Global Bond Fund led the way. Fidelity came in fourth, thanks to strong flows into the Fidelity Series Investment Grade Bond and Strategic Advisers Core Income.

“For the second month in a row, flows to MFS were lifted by a strong interest in Bronze-rated MFS Massachusetts Investors Trust,” said Rawson.

Hartford, Janus and Columbia, however, each had strong outflows.

The Silver-rated Hartford Capital Appreciation saw redemptions of $1.4 billion, while Neutral-rated Janus Fund saw outflows of $481 million.

***

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Bull of the Day: Ruckus Wireless (RKUS) - Bull of the Day

Ruckus Wireless (RKUS) didn't make enough noise when it came public, and the noise it has created at earnings hasn't exactly been music to investors ears. Still, it is a Zacks Rank #2 (Buy). It is the Bull of the Day.Making a ConnectionRecently, analysts are both Deutsche Bank and William Blair noted that the WLAN space was seeing some positive purchasing trends. The idea of constrained IT budgets did not come up nor did customers waiting for the latest and greatest technology.With the way things are going, investors who are looking at the long term might even see a budget flush at the end of this year. The budget flush happens when a business manager spends all available budget all at once to make sure that next year they get an equal amount of budget or more depending on success.Company DescriptionRuckus Wireless provides Wi-Fi solutions. The company offers SmartCell Gateway, a platform to support and manage its Smart Wi-Fi access points as well as for the integration of Wi-Fi and other services into service provider network infrastructure. The company was incorporated in 2002 and is headquartered in Sunnyvale, California.Earnings HistoryLooking to the earnings history, we have a limited data set with only two reports. Worse than having limited data is when they are both misses!The most recent quarter was expected to show a gain of $0.03, but was instead a break even quarter. That miss of $0.03 helped push the stock lower by 22% in the session following the earnings release.IPO Had Access DeniedNot too long ago, RKUS came public and had a major flop of an IPO. The stock was offered at $15 and raised $126 million for the company, but closed down 18% to $12.25 on its first day of trading. Since then, the stock seemed to have a stronger signal for investors.The stock ran to highs of $26 and change before losing the signal again with investors. Now back in the low teens, many are banking on a strong second half for the telco and telco equipment providers to boost shares back to all-time h! ighs.Earnings Estimates AdjustedAfter its recent IPO analysts have had a chance to fine tune their estimates. The 2013 Zacks Consensus has been trimmed from $0.16 to a nickel. At the same time the 2014 Zacks Consensus Estimate has dropped from $0.30 in January of this year to the current level of $0.16. Analysts often have trouble with a new company that does not have a full year of data available to discern trends. This is likely the case for RKUS, but the new, lower bar means the company has a much better chance of beating the number. ValuationThe valuation picture for RKUS is a stiff one. This is often the case for a stock that is fresh off an IPO with only two quarters behind it. With minimal earnings at present the 45x trailing PE doesn't seem to really be a fair comparison to the 12x industry average. Similarly, a 304x forward PE seems to be more of a data error than a basis for an investment decision. At the same time, a 250% growth in earnings from 2013 to 2014 works to level the absurd PE ratios. The Chart The chart on this stock is one that doesn't scream a Zacks Rank #2 (Buy). Instead it looks like one of those stocks that got ahead of itself and has later corrected. Taking advantage of the correction is one thing that I suggest investors look into as the stock bottomed in June and is on the rise. I am very positive on the whole telco equipment space after companies like GOOG and MSFT recently missed earnings. The likelihood of a flood of wearable devices coming in 4Q is pretty high, and all of them will need wireless connections... and playing a basket of wireless equipment stocks makes a lot of sense right here. Brian Bolan is a Stock Strategist for Zacks.com. He is the Editor in charge of the Zacks Home Run Investor service, a Buy and Hold service where he recommends the stocks in the portfolio.Brian is also the editor of Breakout Growth Trader a trading service that ! focuses o! n small cap stocks and also carries a risk limiting strategy. Subscribers get daily emails along with buy, and sell alerts.Follow Brian Bolan on twitter at @BBolan1Like Brian Bolan on Facebook

Europe Stocks Drop as Investors Watch BOE After Fed Talk

(Corrects description of jobless threshold in first and fifth paragraphs, and size of rally in third paragraph of story published yesterday.)

European stocks fell as the Bank of England said it won't raise interest rates or reduce bond purchases until the U.K.'s jobless rate falls to 7 percent, sparking concern it expects the economic recovery to be slow.

Natixis SA dropped the most in six months after posting a 29 percent decline in second-quarter net income. Rexel SA lost 4.2 percent after its largest shareholder sold a 10 percent stake. Randgold Resources Ltd. led mining stocks lower after reporting a slump in sales and earnings. ING Groep NV surged to a two-year high after quarterly pretax profit rose.

The Stoxx Europe 600 Index declined 0.2 percent to 302.81 at the close of trading, as Bank of England Governor Mark Carney said the U.K. economy hasn't reached "escape velocity." The benchmark gauge has rallied 9.9 percent since June 24 as the Federal Reserve, the European Central Bank and the Bank of England pledged to continue stimulus.

"It looks like rates are not going to rise in the next three years, though they could, as Carney has stressed they are not pre-committed," Marc Ostwald, a strategist at Monument Securities in London, wrote in an e-mail. "This is a rather valueless bit of forward guidance as is the case with the ECB. Where is the evidence that there is a stable relationship between U.K. unemployment and U.K. inflation trends?"

Threshold Set

The Bank of England said it will seek not to raise its benchmark interest rate or reduce bond purchases until the U.K.'s unemployment rate falls to 7 percent, linking stimulus measures to a threshold for the first time. The unemployment rate was at 7.8 percent in the quarter through May and the BOE expects it will stay above 7 percent at least until the third quarter of 2016.

The BOE's Monetary Policy Committee last week voted to maintain the bank rate at 0.5 percent, the level it has been held at since March 2009, and the stock of asset purchases at 375 billion pounds ($580 billion).

In the U.S., Fed Bank of Chicago President Charles Evans, a proponent of monetary stimulus, said late yesterday he would not rule out a decision to reduce bond purchases from September.

Fed Bank of Dallas President Richard Fisher, one of the most vocal critics of quantitative easing, said Aug. 5 that policy makers were "closer to execution mode" in considering the right time to begin reducing purchases.

DAX Declines

National benchmark indexes retreated in 11 of the 18 western-European markets. The U.K.'s FTSE 100 slipped 1.4 percent, while Germany's DAX Index lost 0.5 percent. France's CAC 40 rose 0.2 percent.

Natixis declined 3.8 percent to 3.79 euros, its biggest decrease since Feb. 4. Quarterly net income on a pro-forma basis dropped to 248 million euros ($330 million). The bank took a 20 million-euro charge on its debt, after booking a 91 million-euro gain in the year-earlier period.

Rexel (RXL) slid 4.2 percent to 18.15 euros. Ray Investment SARL sold 28.8 million shares at 18.25 euros each in the electrical-equipment distributor, according to a personal familiar with the sale. Ray Investment now holds 60.8 million shares, or more than 21 percent, in the company.

A gauge of mining companies declined for a second day as Australia's highest court upheld the country's tax on iron-ore and coal profits, dismissing a challenge from Fortescue Metals Group Ltd. and state governments.

Randgold, Rio

Randgold Resources retreated 1.4 percent to 4,366 pence. The gold producer said second-quarter profit slumped 61 percent from a year earlier to $46.3 million, while sales declined 27 percent to $252.8 million.

Rio Tinto Group fell 1.5 percent 2,953.5 pence. The commodity producer lost three bidders for its iron-ore unit in Canada after offers came below the company's expectations, Reuters reported, citing people familiar with the matter.

Andritz AG tumbled 7.9 percent to 39.10 euros, for its largest decline in three months. The Austrian maker of hydro-power turbines posted second-quarter profit that missed estimates and said full-year earnings will drop.

ING (INGA), which received a 10 billion-euro government bailout in 2008, gained 5.1 percent to 8.26 euros. Underlying pretax profit for the banking unit rose 14 percent to 1.15 billion euros in the second quarter as the interest margin improved and cost cuts paid off, the biggest Dutch financial-services company said.

Securitas AB climbed 8.4 percent to 70.50 kronor, its largest increase since October 2008. The seven-day rally also marked its longest winning streak since March 2011. The security provider posted net income of 461 million kronor ($70 million) in the second quarter, exceeding the average analyst estimate of 437 million kronor.

This Week in Sirius XM Radio

Things never get dull for the country's lone satellite-radio provider. Shares of Sirius XM Radio (NASDAQ: SIRI  ) moved sharply lower on the week, shedding 5.5% to hit $3.27. The media darling's drop was far worse than the more modest declines for the Dow and Nasdaq.

Sirius XM slipped after Apple (NASDAQ: AAPL  ) unveiled a streaming service and deeper iOS integration in cars. Higher mortgage rates may also be problematic for Sirius XM. Meanwhile, Pandora (NYSE: P  ) made a surprising move that could lower its streaming royalties. But at the same time, the number of shares of Sirius XM sold short did decline slightly in the latest bimonthly report.

There was more going on this week beyond the share-price gyrations, though. Let's take a closer look.

Apple turns up the Radio
There has been iRadio chatter for months, and reports that Apple had struck deals with the final two major labels last week made it a lock for the tech giant to announce its new platform during this week's WWDC.

iTunes Radio will be built into iTunes as a free ad-supported music-discovery service. Users who want an ad-free experience can pay $25 a year for the existing iTunes Match service that will now include ad-free iTunes Radio.

The product itself sounds like a bigger threat to Pandora than to Sirius XM. The model is certainly similar, and the premium offering is even priced less than Pandora's $36 a year.

However, Apple also revealed that it's working with at least five automakers to integrate iOS in their dashboard technology by as early as next year. If iPhone owners can stream iTunes Radio seamlessly from their Bluetooth-enabled car audio systems, does Sirius XM become a luxury instead of a near necessity?

Gaining interest
It may not seem like a big deal now, but mortgage rates hit a 14-month high this week. According to the Mortgage Bankers Association, the average rate on a 30-year mortgage has spiked from 3.59% early last month to 4.15% now. The move has resulted in a 36% plunge in refinancing applications.

How does this play into satellite radio? Well, let's think about car sales. Showrooms are always hungry to make deals, so you can bet that automakers will be aggressive in keeping financing rates low. However, a lot of people who were taking advantage of low refinancing rates and rising home prices to take out money in a refi to buy a new car or other big-ticket item will now be less likely to do so.

Sirius XM relies on new-car sales to grow its subscriber base, so this bears watching.

Pandora goes terrestrial
Pandora turned heads on Tuesday when it announced the purchase of a small radio station in South Dakota.

Legal counsel for the music-discovery website believes that snapping up the FM station will help it qualify for the lower royalties that 16 of the 20 largest Internet radio companies pay. Songwriter royalty collector BMI immediately moved to sue Pandora to block the move, but it will be interesting to see if this move brings to light the great inequity that has different companies paying different rates per song streamed online.

Short people
Bears continued their slow retreat out of Sirius XM. There were 368.8 million shares of Sirius XM held short at the end of May, well off the February peak of 414 million.

The trend has gone in Sirius XM's favor, with shorting activity declining for five of the six bi-monthly reporting periods since late February's peak, but it will be interesting to see whether the weak trading in June and Apple's new iTunes Radio announcement woo back the naysayers.

A Sirius future
It was an interesting week for Sirius XM. The new week isn't likely to be dull.

Even though Sirius XM has been one of the market's biggest winners since bottoming out three years ago, there is still some healthy upside to be had if things go right for it -- and plenty of room for it to fall if things don't. Read all about Sirius in The Motley Fool's premium report. To get started, just click here now.

Don't Get Too Worked Up Over Genesee & Wyoming's Earnings

Although business headlines still tout earnings numbers, many investors have moved past net earnings as a measure of a company's economic output. That's because earnings are very often less trustworthy than cash flow, since earnings are more open to manipulation based on dubious judgment calls.

Earnings' unreliability is one of the reasons Foolish investors often flip straight past the income statement to check the cash flow statement. In general, by taking a close look at the cash moving in and out of the business, you can better understand whether the last batch of earnings brought money into the company, or merely disguised a cash gusher with a pretty headline.

Calling all cash flows
When you are trying to buy the market's best stocks, it's worth checking up on your companies' free cash flow once a quarter or so, to see whether it bears any relationship to the net income in the headlines. That's what we do with this series. Today, we're checking in on Genesee & Wyoming (NYSE: GWR  ) , whose recent revenue and earnings are plotted below.

Source: S&P Capital IQ. Data is current as of last fully reported fiscal quarter. Dollar values in millions. FCF = free cash flow. FY = fiscal year. TTM = trailing 12 months.

Over the past 12 months, Genesee & Wyoming burned $12.9 million cash while it booked net income of $112.8 million. That means it burned through all its revenue and more. That doesn't sound so great. FCF is less than net income. Ideally, we'd like to see the opposite.

All cash is not equal
Unfortunately, the cash flow statement isn't immune from nonsense, either. That's why it pays to take a close look at the components of cash flow from operations, to make sure that the cash flows are of high quality. What does that mean? To me, it means they need to be real and replicable in the upcoming quarters, rather than being offset by continual cash outflows that don't appear on the income statement (such as major capital expenditures).

For instance, cash flow based on cash net income and adjustments for non-cash income-statement expenses (like depreciation) is generally favorable. An increase in cash flow based on stiffing your suppliers (by increasing accounts payable for the short term) or shortchanging Uncle Sam on taxes will come back to bite investors later. The same goes for decreasing accounts receivable; this is good to see, but it's ordinary in recessionary times, and you can only increase collections so much. Finally, adding stock-based compensation expense back to cash flows is questionable when a company hands out a lot of equity to employees and uses cash in later periods to buy back those shares.

So how does the cash flow at Genesee & Wyoming look? Take a peek at the chart below, which flags questionable cash flow sources with a red bar.

Source: S&P Capital IQ. Data is current as of last fully reported fiscal quarter. Dollar values in millions. TTM = trailing 12 months.

When I say "questionable cash flow sources," I mean items such as changes in taxes payable, tax benefits from stock options, and asset sales, among others. That's not to say that companies booking these as sources of cash flow are weak, or are engaging in any sort of wrongdoing, or that everything that comes up questionable in my graph is automatically bad news. But whenever a company is getting more than, say, 10% of its cash from operations from these dubious sources, investors ought to make sure to refer to the filings and dig in.

With 15.1% of operating cash flow coming from questionable sources, Genesee & Wyoming investors should take a closer look at the underlying numbers. Within the questionable cash flow figure plotted in the TTM period above, other operating activities (which can include deferred income taxes, pension charges, and other one-off items) provided the biggest boost, at 23.7% of cash flow from operations. Overall, the biggest drag on FCF came from capital expenditures.

A Foolish final thought
Most investors don't keep tabs on their companies' cash flow. I think that's a mistake. If you take the time to read past the headlines and crack a filing now and then, you're in a much better position to spot potential trouble early. Better yet, you'll improve your odds of finding the underappreciated home-run stocks that provide the market's best returns.

If you're interested in transportation companies like Genesee & Wyoming, then you should check out our special report that features 3 companies who depend on, and invest in, that industry. Learn the basic financial habits of millionaires next door and get these 3 focused stock ideas in our free report, "3 Stocks That Will Help You Retire Rich." Click here for instant access to this free report.

We can help you keep tabs on your companies with My Watchlist, our free, personalized stock tracking service.

Add Genesee & Wyoming to My Watchlist.

Japan Stocks Rise as Leasing Shares Climb on Abe’s Plan

Japan's Topix Index (TPX) closed at its highest since August 2008, led by leasing companies on a report Prime Minister Shinzo Abe will encourage the practice as part of his growth strategy.

Orix Corp. (8591), which provides leasing and loans, jumped 9.2 percent. Mizuno Corp. soared 18 percent after the sportswear company more than doubled its net-income forecast. A gauge tracking agricultural stocks climbed to the highest since 2008 on a separate report that Abe plans to double the industry's income in a decade. Sony Corp. (6758) dropped 1.7 percent after Japan's biggest exporter of consumer electronics surged 19 percent over the past five trading days.

The Topix added 0.6 percent to close at 1,253.24 in Tokyo, the highest since Aug. 29, 2008, after falling as much as 0.7 percent. The gauge capped a 3.5 percent gain this week. The Nikkei 225 Stock Average rose 0.7 percent to 15,138.12 today. Gains were limited amid signs the market may be overheating.

"Leasing companies continue to draw attention as they surge on a report about the government's growth strategy," said Takashi Aoki, a Tokyo-based fund manager at Mizuho Asset Management Co., which oversees about 3.4 trillion yen ($33 billion). "The market is trading in a tight range as profit-taking takes place while investors buy on dips."

The Topix has risen 46 percent this year, outperforming all major equity indexes amid unprecedented easing from the Bank of Japan. The gauge traded at 1.3 times book value, compared with about 2.4 for the Standard & Poor's 500 Index and 1.7 for the Stoxx Europe 600 Index.

Abe Strategy

Abe will encourage leasing to revive capital spending to a level last seen before the collapse of Lehman Brothers Holdings Inc., the Nikkei newspaper said without citing anyone. The prime minister will outline a growth plan in a speech today after the market close.

Orix jumped 9.2 percent to 1,638 yen. Mitsubishi UFJ Lease & Finance Co. surged 17 percent to 597 yen.

Abe's growth strategies will also include boosting the agricultural industry and tripling infrastructure exports to about 30 trillion yen by 2020, public broadcaster NHK reported.

The Topix Fishery, Agriculture & Forestry Index rose 3.5 percent, the biggest gain since Feb. 26. Nippon Suisan Kaisha Ltd., a maker of seafood products, added 6.3 percent to 219 yen. Sakata Seed Corp. gained 6.1 percent to 1,530 yen.

Investors are more confident in a Japanese leader than at any time since at least September 2010. Abe's policies are perceived more optimistically than those of his counterparts in the U.S., Europe and China, according to a worldwide poll of investors, analysts and traders who are Bloomberg subscribers.

Overheating Signs

Shares opened lower today after the 14-day relative strength index, a measure of trading momentum, held above 70 for both the Topix and the Nikkei 225 for the past six days. That's a level some traders say signals a sell-off.

Sony slid 1.7 percent to 2,046 yen after its 14-day RSI climbed to 81 yesterday.

Futures on the S&P 500 added 0.2 percent today. The equity gauge fell 0.5 percent in New York yesterday, halting four days of record gains. A report showed jobless claims jumped by 32,000 to 360,000 last week, the most since the end of March. Housing starts slumped 16.5 percent in April, the most since February 2011.

Of the 803 companies on the Topix that have reported full-year earnings since April 1, and for which Bloomberg has estimates, 482 beat analysts' projections.

Mizuno soared 18 percent to 505 yen, the biggest gain since 1999, after saying net income will more than double to 4.2 billion yen in the current fiscal year.

The Nikkei Stock Average Volatility Index fell 0.5 percent to 26.53, indicating traders expect a swing of about 7.6 percent on the benchmark gauge during the next 30 days.

Why Citigroup Is Tanking -- Again -- Today

Just when it looked like the banking sector was leveling off from the power dive it went into last Wednesday, down it goes again, taking Citigroup (NYSE: C  ) along with it. The superbank is already down 0.50% on the day. This is a hangover from last week, and it's lasting longer than we'd like.

Market roundup
First, here's where Citi's peers and the rest of the market stand on this first day of the trading week:

Bank of America (NYSE: BAC  ) is down 0.17%. JPMorgan Chase is down 0.40%. Wells Fargo is down 0.44%

The markets are more of a mixed bag, but net out in the negative, with the Dow Jones Industrial Average down 0.46% on the day, the S&P 500 down 0.18%, and the Nasdaq Composite up 0.13%.

Foolish bottom line
Last week, things were going along swimmingly until Wednesday morning, when B of A reported earnings. Based on how the market reacted, you'd have thought it was the worst quarter ever, but that was far from the case: Results were solid, if not stellar, and far better that B of A investors probably had the right to expect.

But it tipped the banking sector -- along with the markets -- into a dive. The S&P 500 lost 2.1% for the week. Goldman Sachs (NYSE: GS  ) alone lost 7% off its share price and had reported strong first-quarter earnings just days earlier. Citi investors had also gotten a glowing first-quarter report on Monday, but once the B of A effect took hold, that was that.

On Friday, it did briefly seem like investor optimism was about to take hold again, with many stocks getting back a little of what they'd lost in the previous two days, but investors seem to be in a pessimistic mood again today. All told, in the last five days, Citi investors have lost 2.48% of their related wealth.

This is one of those many times when the market is behaving irrationally. Citi had a good first quarter, and the superbank's investors need to stay calm and carry on. The market will have its ups and down, but so long as you have faith in the fundamentals of the companies you're invested in, your money is in the right place. That's what Foolish investing is all about.

Looking for in-depth analysis on Citi?
If so, look no further than our new premium report on the superbank. In it, Matt Koppenheffer -- The Motley Fool's senior banking analyst -- will fill you in on both reasons to buy and reasons to sell Citigroup. He'll also clue you in on what areas investors need to watch going forward. For instant access to Matt's personal take on Citi, simply click here now.

Why Cameco Is Ready to Rebound

Based on the aggregated intelligence of 180,000-plus investors participating in Motley Fool CAPS, the Fool's free investing community, uranium producer Cameco (NYSE: CCJ  ) has earned a respected four-star ranking.

With that in mind, let's take a closer look at Cameco and see what CAPS investors are saying about the stock right now.

Cameco facts

Headquarters (founded)	Saskatoon, Canada (1987)
Market Cap	$7.8 billion
Industry	Coal and consumable fuels
Trailing-12-Month Revenue	$2.4 billion
Management	CEO Timothy Gitzel (since 2011) CFO Grant Isaac (since 2011)
Return on Equity (average, past 3 years)	8.3%
Cash/Debt	$814.7 million / $1.6 billion
Dividend Yield	2%
Competitors	AREVA BHP Billiton Rio Tinto

Sources: S&P Capital IQ and Motley Fool CAPS.

On CAPS, 98% of the 1,834 members who have rated Cameco believe the stock will outperform the S&P 500 going forward.

Just yesterday, one of those Fools, All-Star Chemdawg, succinctly summed up the Cameco bull case for our community:

[R]eactors coming back online slowly but the uranium is so cheap it is not economical to mine. [T]hat won't stay that way long. Cigar Lake is due to start actually producing this year. [S]ometimes being the best has its advantages ... you stay alive when the weaker ones go 10 toes up. [O]utperform.

If you want market-thumping returns, you need to put together the best portfolio you can. Of course, despite a strong four-star rating, Cameco may not be your top choice.

If that's the case, we've compiled a special free report for investors called "The Tiny Gold Stock Digging Up Massive Profits," which uncovers a smaller miner with big potential. The report is 100% free, but it won't be around forever, so click here to access it now.

Want to see how well (or not so well) the stocks in this series are performing? Follow the TrackPoisedTo CAPS account.

China drives global diamond jewelery sales to $79 billion

  World's hottest diamond markets HONG KONG (CNNMoney) A diamond is forever ... especially in China.

Global diamond jewelry sales hit a record $79 billion last year, led by strong interest from the Chinese for the rare gem, according to a report from De Beers.

Polished diamond sales in China rocketed by 14% last year alone, double the pace of growth seen in the U.S.

Overall, sales of diamond jewelry to the Chinese have been the fastest growing in the world, averaging about 21% a year over the last decade. China now accounts for 13% of global demand, up from just 3% in 2003.

The U.S. is still the world's largest diamond market but companies such as De Beers are increasingly looking to China for growth.

As disposable incomes rise, Chinese consumers are driving global markets for luxury products, including expensive watches, handbags, cars and diamonds. China now accounts for nearly one-third of global luxury purchases, according to the report.

China is still seeing much higher than average growth in diamond sales, even though some luxury segments have been hurt by a government anti-corruption campaign, and a slowing economy.

Mid-Afternoon Market Update: FMC Slips On Weak Outlook; Integrys Energy Shares Surge

Related AKS Mid-Day Market Update: FMC Slips On Weak Outlook; Integrys Energy Shares Surge AK Steel Unveils Q2 Outlook - Analyst Blog

Closing in on the final hour of trading on Monday, the Dow traded down 0.16 percent to 16,920.20 while the NASDAQ declined 0.02 percent to 4,367.02. The S&P also fell, dropping 0.12 percent to 1,960.59.

Leading and Lagging Sectors

Monday morning, the basic materials sector proved to be a source of strength for the market. Leading the sector was strength from AK Steel Holding (NYSE: AKS) and Thompson Creek Metals Company (NYSE: TC).

Telecommunications services shares fell around 0.65 percent in trading on Monday. Top losers in the sector included NQ Mobile (NYSE: NQ), down 4 percent, and ORBCOMM (NASDAQ: ORBC), off 5 percent.

Top Headline

Oracle (NYSE: ORCL) announced its plans to buy Micros Systems (NASDAQ: MCRS) in a $5.3 billion deal.

The offer price of $68 per share represents a 3.4% premium over Micros' closing price on Friday.

Equities Trading UP

Integrys Energy Group (NYSE: TEG) shares shot up 12.12 percent to $68.34 after Wisconsin Energy (NYSE: WEC) announced its plans to acquire Integrys Energy Group in a deal valued at $9.1 billion.

Shares of Central Garden & Pet Company (NASDAQ: CENT) got a boost, shooting up 7.78 percent to $9.70 after Harbinger Group offered to buy Central Garden & Pet Co for $10 per share.

MICROS Systems (NASDAQ: MCRS) shares were also up, gaining 3.34 percent to $67.97 after Oracle (NYSE: ORCL) announced its plans to buy MICROS for $68 per share.

Equities Trading DOWN

Shares of Meritor (NYSE: MTOR) were 12.95 percent to $12.70 after the company reached a $500 million settlement with Eaton (NYSE: ETN) related to an anti-trust suit filed in 2006. The company’s board also authorized a repurchase of up to $210 million.

Ixia (NASDAQ: XXIA) shares lost 2.36 percent to $11.59 after the company reported its Q4 earnings of $0.15 per share on revenue of $120.60 million. Ixia now expected Q1 sales of $109.0 million to $113.0 million.

FMC (NYSE: FMC) was down, falling 4.64 percent to $71.28 after the company lowered its FY14 earnings forecast and issued a weak Q2 outlook.

Commodities

In commodity news, oil traded down 0.58 percent to $106.21, while gold traded up 0.11 percent to $1,318.10

Silver traded down 0.23 percent Monday to $20.90, while copper rose 0.80 percent to $3.15.

Eurozone

European shares were lower today.

The eurozone’s STOXX 600 declined 0.51 percent, the Spanish IBEX Index dropped 0.33 percent, while Italy’s FTSE MIB Index fell 1.33 percent.

Meanwhile, the German DAX declined 0.66 percent and the French CAC 40 dropped 0.57 percent while UK shares slipped 0.36 percent.

Economics

The Chicago Fed National Activity Index rose to 0.21 in May, versus economists’ expectations for a reading of 0.20.

The flash reading of Markit PMI manufacturing index rose to a reading of 57.5 in June versus a reading of 56.4 in May. However, economists were expecting a reading of 56.0.

Sales of existing homes rose 4.9% to an annual rate of 4.89 million in May. However, economists were estimating a sales rate of 4.74 million.

Posted-In: Earnings News Eurozone Futures Commodities Economics Markets

© 2014 Benzinga.com. Benzinga does not provide investment advice. All rights reserved.

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Tech Banquet Gone Before Investors Get a Bite

NEW YORK (TheStreet) -- Technology is always eating its young. This week's leaked information on an Apple (AAPL)-Beats Electronics deal points to what would be only the latest in a string of exciting new companies gobbled up before then went public.  

Small investors don't get a taste of many such deals, either on the front end or the back end. They won't learn about it until the bubble pops and supposedly safe investments crash.

Systems like Crowdfunder, which offer small investors the chance to get in on the ground floor of start-ups, claim they can plug the gap. But Stanford research indicates nearly 90% of venture capital investments fail. 

Want to fight those odds? If you don't, you may not get a sniff of today's hot deals. Back in the 1990s, venture capitalists quickly took investments public in order to cash in on their successes and recycle the money. But that carried significant downside. After the dot-com bubble popped, small investors had to eat some failures, like Pets.com, Webvan, and CMGI. Some, like Priceline (PCLN) and Amazon  (AMZN), returned to glory, but that came years later, and these were the exceptions rather than the rule. I personally remember getting stuck with one such "investment," when a site I was writing for, which had been acquired by Andover.Net, was in turn acquired by a company called VA Linux in early 2000. I was offered stock options, which I should have flipped, but instead I held the shares and rode them to disaster. Lesson learned. But will I ever get a chance to apply it? These days venture capital has merged into private equity, which does its own forms of financial engineering. Private equity companies don't need to recycle their cash like VCs do. They are large enough to take over, not just large private companies, but public ones as well. As a result many start-ups now routinely get multiple rounds of capital, each at a higher valuation. As these companies mature, private equity will take a bigger position, so the VCs can recycle their cash, but the company may still not come public. Whether or not it they become profitable, today's tech start-ups can also be recycled into larger tech companies as never before. During 2013, for instance, Apple made 13 acquisitions, including four in the mapping area, two in semiconductors, and a company called WiFiSlam involved in something called "indoor location." 

Stock quotes in this article: PCLN, AMZN, AAPL, GOOG, FB, YHOO 

Google (GOOG) made 18 acquisitions during the same year, including seven in the area of robotics alone. Facebook (FB) bought nine companies. Amazon mainly stayed out of it, buying only three firms. 

Yahoo! (YHOO) topped them all, taking over 26 companies in 2013. Tumblr was the biggest deal at $1.1 billion, but CEO Marissa Mayer also splashed out $50 million for Qwiki video production, $40 million for Xobni, a customer relationship management company, and $30 million for Summly, a news aggregator, and its 17-year old founder, Nick D'Alosio. 

Some of these were doubtless "acqui-hires," bought in order to gain the teams running them rather than the products they were producing. Acqui-hire companies are often closed once they're acquired.

Some of the biggest techs, notably Google, now have their own venture capital units which let them create their own start-ups, like Uber, practically from scratch, and bring them to multi-billion dollar valuations without selling out. In 2014, the hits just keep on coming. Big tech is taking out small, successful tech and you're not getting a taste of any of it. Oculus Rift was bought by Facebook. Google, which had backed Nest, bought it. At this writing, Apple is still considering a $3.2 billion deal to buy Beats, which makes headphones and runs a streaming music service, Beats Music. Beats' last funding round, $60 million in March, was headed by Ukranian-born industrialist Len Blavatnik. The latest rumor is the deal will be announced at next month's WorldWide Developer Conference. Time thinks Amazon could swoop in but given the few acquisitions the company has made so far, that seems unlikely. Thus, if there is a tech bubble, small investors are not profiting from it. Many of the IPOs filed in the last month had nothing to do with technology. They include several energy-related companies, a bank and a company that buys and operates farms in the Pacific Northwest.  So when this latest tech bubble pops, how will you know? Maybe when your Google shares collapse, weighed down by buying out the private equity boys who sold them their garbage. Or maybe it will just be the sound of a slow leak, as your safe investments are burdened by acquisition dilution.  >>Read More:

WWE Gets Smacked Down

5 Things Apple Doesn't Want You to Know

Pinterest, Uber Eye Fresh Funding on Sky-High Valuations At the time of publication the author owned shares of GOOG, AAPL and AMZN. This article represents the opinion of a contributor and not necessarily that of TheStreet or its editorial staff.

Stock quotes in this article: PCLN, AMZN, AAPL, GOOG, FB, YHOO 

Michaels confirms breach of as many as 2.6M cards

NEW YORK (AP) — Michaels Stores said Thursday that about 2.6 million cards, or about 7% of all debit and credit cards used at its namesake stores, may have been affected in a security breach.

The nation's largest arts and crafts chain said its subsidiary Aaron Brothers was also attacked, with about 400,000 cards potentially affected.

Irving, Texas-based Michaels said that it has contained the incident, which began last year. It has received "limited" reports of fraud from banks and the payment card brands that are potentially connected to the breach.

The compromised data includes customer information such as payment card numbers and expiration dates. But there's no evidence that other personal information such as names, addresses or PIN numbers were at risk, Michaels said.

MORE: Agency says Target hackers may take years to find

Michaels' report comes as many shoppers worry about the safety of their personal data following a massive pre-Christmas security breach at Target that affected 40 million debit and credit cards.

The details come nearly three months after Michaels disclosed that it may have been a victim of a data breach and that it was working with law enforcement authorities, banks and payment processors.

The company said Thursday that both chains were attacked by criminals using highly sophisticated malware that had not been encountered previously by the two security firms that were conducting the investigation.

"Our customers are always number one priority and we are truly sorry for any inconvenience or concern Michaels may have caused," said Chuck Rubin, CEO of Michaels, in a statement.

The breach at Michaels stores occurred between May 8, 2013 and Jan. 27. The company confirmed that between June 26, 2013 and Feb. 27, 54 Aaron Brothers stores were affected by this malware.

Michaels said that it was offering free identity protection, credit monitoring and fraud assistance services to affected Michaels and Aaron Brothers customers in! the U.S. for 12 months.

Follow Anne D'Innocenzio on Twitter @adinnocenzio

.

Tension grows between ranchers, mustang backers

RENO, Nev. (AP) — Tensions bubbled over on the range in a turf battle that has been simmering for decades over one of the icons of the American West and scant forage on arid, high desert lands from Nevada to Wyoming.

With the presence of wild horses continuing to pit animal advocates against ranchers, the Bureau of Land Management, which is caught in the middle, on Saturday began seizing hundreds of cattle from a longtime rancher that it says are trespassing on public land in southern Nevada.

The action came a day after the agency agreed to remove horses from the range in southwest Utah after Iron County commissioners threatened to take matters in their own hands.

Wild-horse protection advocates say the government is rounding up too many mustangs while allowing livestock to feed at taxpayer expense on the same rangeland scientists say is being overgrazed.

Ranchers say the government refuses to gather enough horses in the herds that double in size every five years while moving to confiscate cattle on lands where their ancestors have operated for more than a century.

The BLM says it's doing all it can, given budget constraints, overflowing holding pens and a distaste for the politically unpopular options of either ending the costly roundups or slaughtering excess horses.

The agency started taking cattle Saturday from Cliven Bundy, who it says has been trespassing on U.S. land without required grazing permits for over 25 years. Bundy doesn't recognize federal authority on land he insists belongs to Nevada.

"These people are thieves," Bundy told The Associated Press on Saturday. "I haven't even started fighting yet. You think I'm going to lay down and just give up. I'm going to fight for the Constitution and state sovereignty."

Asked what actions he planned to take, Bundy replied, "Why don't you wait and see. As I told the BLM and county sheriff, 'I'll do whatever it takes.'"

BLM spokeswoman Kirsten Cannon, in a media conference call Saturday afternoon,! said her agency was implementing two federal court orders to remove Bundy's cattle after making repeated efforts to resolve the matter outside court.

Plans call for the removal of some 900 trespassing cattle from 1,200 square miles of land in southern Nevada managed by her agency and the National Park Service over the next three to four weeks, she said.

A federal judge in Las Vegas first ordered Bundy to remove his trespassing cattle in 1998. Similar orders were issued last July and again in October.

"(Bundy's trespassing) is unfair to the thousands of other ranchers who graze livestock in compliance with federal laws and regulations in the West," Cannon said, adding the agencies are working with local and state officials to ensure the removal occurs in a safe manner.

She declined to comment on the number of personnel involved, and was unable to provide a cost estimate for the operation.

Bundy, who said he owns about 500 cows, estimates at least 100 federal agents and other personnel, many of them armed, gathered around the ranch his family has operated since the 1870s southwest of Mesquite a few miles from the Utah line.

"I've tried to stop them for 20 years. I've tried to be legal in the courts. I've tried to do it politically and through the media. Now, it's about down to having to do it as 'We the people,'" he said.

It's a battle that has raged since the 1980s when the Sagebrush Rebellion challenged federal ownership of Nevada rangeland ranchers said was rightfully theirs.

During the past 10 years, horse advocates have been more the aggressors, asking courts to block roundups they say violate the Wild Free-Roaming Horses and Burro Act of 1971. But in recent months, ranchers have again gone back on the attack.

The Nevada Farm Bureau Federation and Nevada Association of Counties sued the government in U.S. District Court in Reno in December seeking to force the BLM to step up roundups and, if necessary, sell excess mustangs for slaughter — somet! hing they! say is allowed under the law but that the federal agency has resisted.

Earlier this week, a federal magistrate judge in Reno granted horse advocates' request to become a party in that case based on their argument no one else involved — including the BLM — has the horses' best interest in mind.

In Utah, Iron County commissioners had threatened to gather up hundreds of mustangs themselves, saying the horses threaten livestock and wildlife on rangelands already damaged by drought.

"We will take whatever action we have to take to reduce those numbers immediately," Commissioner David Miller told the Salt Lake Tribune.

But BLM State Director Juan Palma, in an email sent Friday to Miller, said he is committed to working with the county in developing a plan to reduce the number of horses, The Spectrum of St. George, Utah, reported.

"Both the BLM and Iron County have a shared interest in the well-being of the range and all who rely in its health. ... Additionally, (we have) our shared interest in the well-being of sustainable populations of our wild horses," Palma wrote.

Whitney Tilson's Kase Fund 2013 Annual Letter

Kase Fund Annual Letter-2013

Also check out: Whitney Tilson Undervalued Stocks Whitney Tilson Top Growth Companies Whitney Tilson High Yield stocks, and Stocks that Whitney Tilson keeps buying
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Gold’s Next Big Move: Boom or Bust?

Gold has had very long periods of boom and bust. Was last year’s 28% tumble the end of boom and beginning of bust? 

On the bearish front, Morgan Stanley (MS) reduced its 2014 gold forecast by 12% to $1,160 an ounce, and Goldman Sachs expects gold to fall to $1,050 over the next year. 

In contrast, gold perma-bulls see higher bullion prices this year, just as they wrongly predicted last year. Who’s right? 

Market prices always tell us who’s right and who’s wrong. And so far, gold is ahead around 4%, and gold mining stocks are up almost 15% year-to-date.  

However, ETFs tied to large-cap gold mining stocks (GDX) lost 79% from 2011 to 2013, while small-cap miners (GDXJ) crashed 111%.

The Direxion Shares Daily Gold Miners Bear 3x Shares (DUST), which aims for triple daily opposite performance to mining stocks, skyrocketed 179% last year and was a star performer.

After such a significant decline for both GDX and GDXJ, a significant bounce was almost inevitable.

Strategic Bets

Understanding market psychology and being able to profit from it is important, especially in a disorderly and mood-driven market like precious metals.

Before the surge in gold miner ETFs began in late December, overly bearish sentiment signaled a clear profit opportunity in this beaten down sector. Were you ready?

“This year [2013] will be the third consecutive year of losses for gold mining stocks. But once year-end tax loss selling is over, we’re anticipating a bounce in beaten down gold miners in January.

“It remains to be seen whether this bounce will become a bigger trend change for GDX from down to up, but it’s nevertheless a short-term profit opportunity. We’re buying the Market Vectors Gold Miners ETF (GDX) at $21 and our tandem options trade is to buy the GDX JAN 2013 20 call options (GDX140124C00020000) at around $140,” said ETFguide’s Weekly ETF Picks from Dec. 26.

Since our 12/26 gold miners buy alert, we booked a blended two-week gain of 27% on our tandem GDX options trade, and we’re still long GDX shares.

As readers familiar with ETFguide’s research know, last year we were consistently bearish on gold and other precious metals along with mining stocks. In fact, our largest ETF gainer last year was our 2/14/13 time-stamped alert to buy GDX JUN 2013, 40 put options at $190 per contract.

As we expected, GDX crashed. In our 5/15/13 alert, we exited the trade with a 525% gain, selling our remaining position at $1,200 per contract.

This time around, the smart gold trade has been to do the exact opposite of the crowd. When they’re selling, you should be buying.  

Although gold bullishness has certainly picked up, it isn’t at extreme levels. And that’s good. It means the 2014 rally in gold and gold equities may have some legs, even if it has no brains.

*** 

Ron DeLegge is Editor of the ETF Profit Strategy Newsletter which uses technical and fundamental analysis along with market history and common sense to keep advisors on the right side of the market.  In 2013, 70% of ETFguide’s weekly ETF picks were winners.

 

 

 

George Goodman, TV's "Adam Smith," dies at 83

NEW YORK (AP) — George Goodman, a journalist, business author and award-winning television host who under the pseudonym "Adam Smith" made economics accessible to millions of people, died Friday at age 83.

Goodman's son, Mark Goodman, said his father died at the University of Miami Hospital after a long battle with the bone marrow disorder myelofibrosis.

Starting in the 1950s, the elder Goodman had a long, diverse and accomplished career, whether as a founder of New York Magazine, as a best-selling business author or as the personable host of "Adam Smith's Money World."

Known as "Jerry" to his friends, he prided himself on making arcane debates among economists and business leaders understandable, often using an anecdotal or irreverent approach to explain a complicated issue. He has been credited with coining the mocking catchphrase, "Assume a can opener," as a parody of academic jargon.

"I have always believed that if you dramatize a story, you can make it comprehensible while at the same time maintaining a relatively high level of sophistication," he once said.

"Adam Smith's Money World" was a multiple Emmy winner that aired on PBS stations from 1984-1996, with guests including Warren Buffett and then-Federal Reserve Board chairman Paul Volcker. He was also an executive editor at Esquire, a member of The New York Times editorial board and a commentator for NBC television. In recent years, he sponsored a lecture series through the Harvard Club of New York Foundation.

Before his success in the business world, Goodman had written novels and worked in Hollywood as a screenwriter. He helped adapt his own book, "The Wheeler Dealers," into a 1963 movie of the same name starring Lee Remick and James Garner.

Smith was editing the monthly journal The Institutional Investor when his first nonfiction book, "The Money Game," was published in 1968. Among the year's top sellers, and read for decades after, "The Money Game" offered a colorful take on the financial markets tha! t added a human element to the laws of finance and seemed as influenced by Damon Runyon as by any economic theorist. One popular character was an oversized investment guru known as "Scarsdale Fats."

"As far as I know it was a couple of the Boston institutions that hung the nickname on him, which shows that Boston institutions are not as stuffy as they used to be" Smith wrote. "One of his enthusiasts described him as 'glob shaped.' Minnesota Fats is an ectomorph and Sydney Greenstreet would blow away in the Scarsdale Fats ratio! All Scarsdale will say is that he is comfortably over 200 pounds."

"The Money Game" was also Goodman's first book as "Adam Smith." He wanted to keep Wall Street from learning his identity — the game was up soon after publication — and accepted a suggestion from founding New York magazine editor Clay Felker that he name himself after the 18th century economist.

His other books included "Supermoney," a 1972 publication that introduced many readers to a then-little known Buffett; "Powers of Mind" and "Paper Money," which came out in 1981.

"Where some authors exploit the paranoia over paper money, warning of horrible crashes and galloping inflation to come, Adam Smith strives for sanity," Leonard Silk wrote of "Paper Money" in a review for The New York Times. "And where some writers urge people to look out for Number One and to be prepared to head for the hills with their gold coins, silver futures, cans of beans and weapons to keep out the neighbors, Adam Smith counsels the revival of a sense of community."

George Jerome Waldo Goodman grew up outside St. Louis and was graduated from Harvard University in 1952. He was a Rhodes Scholar at Oxford and a member of the U.S. Army Special Forces, the forerunner of the Green Berets. He was still in the Army when his first novel, the comic tale "The Bubble Makers," came out in 1955.

He is survived by two children and three grandchildren. His wife, actress Sally Brophy, died in 2007.

EUM – Bet Against Emerging Markets in 2014

Popular Posts: The Taper Is Coming: Top 3 Ways to Play Fed Tapering Recent Posts: EUM – Bet Against Emerging Markets in 2014 The Taper Is Coming: Top 3 Ways to Play Fed Tapering Good News Spooks Wall Street View All Posts

Editor's note: This column is part of our Best Stocks for 2014 contest. Anthony Mirhaydari’s pick for the contest is the ProShares Short MSCI Emerging Markets ETF (EUM).

For a long time, things were going very right for emerging markets. Emerging markets were riding a wave of industrialization and urbanization fueled by mercantilist currency policies, an army of cheap laborers and eager multinationals looking to boost profits by slashing expenses.

But the jewels of the last bull market (as well as the 2009-11 rebound) are losing some sparkle.

Since the global economy hit an air pocket in 2011 — on a combination of the U.S. credit downgrade market scare and a surge of inflationary pressure that forced central banks to tighten (The Federal Reserve ended QE2 while the People’s Bank of China tightened policy) — the fairytale for emerging markets has been slowly ending.

The iShares MSCI Emerging Markets ETF (EEM) has gone nowhere, down 13% from its peak as it slides sideways.

Why You Should Buy the ProShares Short MSCI Emerging Markets ETF (EUM)

In anticipation of a bumpy 2014 for emerging markets, I recommend investors look to profit from the risks via the ProShares Short MSCI Emerging Markets ETF (EUM), and have picked it for the Best Stocks of 2014 contest.

There are many problems with the emerging markets story. Just look at China. The job market is tightening as the demographic dividend ends, a consequence of the one-child policy, which China recently updated. A massive credit bubble and infrastructure overbuilding threaten to not only roil the banking system and rattle the housing market, but also are complicating efforts by Beijing to structurally reorient the economy away from export-dependence toward domestic consumption.

And after colonizing China’s coastal regions before moving into the inner provinces, profit-maximizing multinationals are moving on to greener pastures, such as Thailand and Vietnam.

But above all, it’s the currency situation — and the infidelity of all the hot money inflows that fueled the infrastructure boom — that has me worried about emerging markets.

We got a taste of what’s to come in May and June: Emerging markets were slammed as the Federal Reserve started talking up a potential tapering of its QE3 stimulus. That bolstered the U.S. dollar and caused a rout in emerging markets currencies such as India’s rupee, which lost nearly 20% against the greenback between May and August. Indian stocks lost 15%.

I think the new Fed taper will act as the spark that catalyzes this dynamic once more. Another dramatic plunge in the Japanese yen — should the Bank of Japan desperately launch another currency devaluation/stimulus salvo in February or March, as analysts now anticipate — could also contribute.

Stocks in emerging markets have been lagging U.S. averages all year, and the iShares MSCI Emerging Markets ETF is once again threatening to fall through its 200-day moving average as shown in the chart above. A violation would put the 2012/2013 lows back in play for EEM — a 10% decline from here. If those levels are violated, there is no significant support above the 2009 bear market lows.

Worryingly, the current situation looks and feels similar to the run up to the 1997 Asian financial crisis. Then, as now, the reversal of hot-money foreign direct investment inflows is a real threat. A rapid increase in debt has fueled asset bubbles, notably in Chinese real estate. A breakdown in the yen is underway once more. And the Fed is poised to tighten monetary policy.

All of that potential tumult makes the EUM fund look attractive for 2014, and should put it among the leaders of the Best Stocks of 2014 contest.

Anthony Mirhaydari is the editor of Edge. As of this writing, he had recommended EUM to his clients.

Sending out an SOS: RadioShack Plunges 20% as Losses Grow

When I was a kid, I bought my first–and only–Ham radio telegraph key at RadioShack (RSH), which was a haven for those of us geeky enough to like playing with electronics. I also adored its packaged electronic kits, with those little metal springs to hold the wires. But that’s not today’s RadioShack, not really.

Getty Images

The problem is, that RadioShack doesn’t know what it is anymore, as clearly demonstrated by second-quarter loss of $1.11, well below forecasts for a 37 cents loss. The Wall Street Journal has the details:

Earlier this year [CEO Joe] Magnacca, a former Walgreen Co. executive who was hired in February, outlined a strategy to refurbish stores by overhauling layouts and removing items from the shelves, part of a broader effort to improve perception among younger customers while keeping traditional “do-it-yourself” patrons satisfied. The company plans to open or remodel more than 100 of its roughly 4,300 stores with some form of that new design by the end of the year.

In the meantime, RadioShack’s quarterly loss widened to $112.4 million from $47.1 million a year earlier as overall sales fell 10% to $805.4 million.

Sales at stores open at least a year dropped 8.4% as the company cleared stockpiles of less-profitable products by marking down devices or, in most cases, unloading them on wholesalers. The effort squeezed the company’s gross margin down to 30.1% from 36% a year earlier.

RadioShack also announced that it had hired two executives with J.C. Penney (JCP) pasts to help improve merchandising and global sourcing. Yes, JC Penney. That will make investors feel good.

Still, JCPenney RadioShack was able to sign an $835 million financing deal at “very market-based competitive rates,” its CFO said.

BB&T Capital Markets’ Anthony Chukumba and Eric Cohen survey the damage:

RadioShack continued to stumble in Q3'13, and we saw scant evidence in the company's results a turnaround is on the horizon. While we are encouraged to see RadioShack secure the necessary financing to make it through the upcoming holiday selling season, we still have serious concerns about the company's long-term viability—particularly as Best Buy (BBY) continues to right its ship and Amazon (AMZN) becomes a larger player in consumer electronics retailing.

Radioshack’s shares have dropped 21% today, and Chukumba and Cohen continue to rate the stock a hold. Because at $$2.79, what else are you going to do?

Pay Attention To Your Fund’s Expense Ratio

All mutual funds and exchange-traded funds (ETFs) charge their shareholders an expense ratio to cover the fund's total annual operating expenses. Expressed as a percentage of a fund's average net assets, the expense ratio can include various operational costs such as administrative, compliance, distribution, management, marketing, shareholder services, record-keeping fees and other costs. The expense ratio, which is calculated annually and disclosed in the fund's prospectus and shareholder reports, directly reduces the fund's returns to its shareholders, and, therefore, the value of your investment.

According to a report published by the Investment Company Institute (ICI) entitled Trends in the Expenses and Fees of Mutual Funds, 2012, expense ratios incurred by investors in long-term mutual funds have, on average, declined over the past 20 years. Equity fund expense ratios, for example, fell from an average of 1.07% in 1993 to 0.77% in 2012. Hybrid funds went from 0.96% to 0.79%, bond funds dropped from 0.83% to 0.61%, and money market funds fell from 52% to 17% over the same 20-year period.

The trend in lower expense ratios can be attributed to a variety of factors, such as money market funds waiving expenses to ensure that net returns remain positive during periods of low interest rates, and target date mutual funds being able to lower expenses due to economies of scale (target date mutual fund assets have tripled since 2008). In addition, expense ratios often vary inversely with fund assets, meaning that as a fund's assets increase, its fixed costs likely represent a smaller percentage of its net assets; therefore, its expense ratio can correspondingly decrease. Despite trends indicating an overall decrease in fees across many fund categories, investors should still pay attention to expense ratios: even small differences in fees can have a significant impact on your investment over time.

Expense Ratios Differ

In general, the expense ratios for mutual funds tend to be higher than for ETFs. While ETF expense ratios top out around 2.5%, mutual fund costs can be as high as 20% (most, however, are much lower). The costs of operating funds vary greatly depending on the investment category, investment strategy and the size of the fund, and those with higher internal costs generally pass on these costs to shareholders through the expense ratio. If a fund's assets are small, for example, its expense ratio might be relatively high, because the fund has a restricted asset base from which to meet its expenses.

When looking at funds and costs, it is important to compare funds that own similar types of investments. For example, international funds are typically very expensive to operate because they invest in many countries and may have staff all over the world (which equates to higher research expenses and payroll). Large cap funds, on the other hand, tend to be less expensive to operate. While it is reasonable to compare expense ratios across multiple international funds, it would not make sense to compare the costs of an international fund against a large cap fund.

When researching investments, there are several ways you can determine the expense ratio of a fund:

The fund's prospectus - If you are already a shareholder, the prospectus will be mailed or sent electronically to you each year. The expense ratio is typically found under the "Shareholder Fees" heading. You can also view the prospectus on the fund company's website. Financial news websites - Websites such as Google Finance and Yahoo! Finance have expense ratio information for mutual funds and ETFs. Type in a fund's ticker symbol to view this information. Fund screeners - A number of ETF and mutual fund screeners are available online. You can search by category or group (i.e., equity, bond, money market, international) and compare expense ratios across similar investments. FINRA's Mutual Fund Expense Analyzer, for example allows you to compare up to three mutual funds (or ETFs) or the share classes of the same mutual fund. The tool estimates the value of the funds and impact of fees and expenses on your investment. News journals - Print newspapers, such as Investor's Business Daily (IBD) and the Wall Street Journal print information regarding funds, including expense ratios. Rates Affect investments

To see how expense ratios can affect your investments over time, let's compare the returns of several hypothetical investments that differ only in expense ratio. The following table depicts the returns on a $10,000 initial investment, assuming an average annualized gain of 10%, with different expense ratios (0.5%, 1%, 1.5%, 2% and 2.5%):



As the table illustrates, even a small difference in expense ratio can cost you a lot of money in the long run. If you had invested $10,000 in the fund with a 2.5% expense ratio, the value of your fund would be $46,022 after 20 years. Had you instead invested your $10,000 in the fund with a lower, 0.5% expense ratio, your investment would be worth $61,159 after two decades, a 0.33% improvement over the more expensive fund. Keep in mind, this hypothetical example examines funds whose only differences are the expense ratios: all other variables, including initial investment and annualized gains, remain constant (for the example, we must assume identical taxation as well). While two funds are not likely to have the exact same performance over a 20-year period, the table illustrates the effects that small changes in expense ratio can have on your long-term returns.

The Bottom Line

While important, a fund's expense ratio is not the only important consideration when analyzing and comparing fund investments. Investors must consider a variety of factors, including each fund's:

Sales charges Taxes Age and size Risks and volatility Recent changes in operations (for example, has the fund's investment adviser changed?) Impact on your portfolio diversification It should be noted that a fund's expense ratio represents your cost of owning the fund – not purchasing or redeeming the fund (sales loads). Any initial or deferred sales charges, transaction fees or brokerage charges are not included in the expense ratio. All of these factors should be taken into consideration prior to making any investment decisions. With research, you can find funds that meet your goals and objectives while leaving more money in your portfolio.

FedEx Beats Estimates as Net Income Rises 7%

MEMPHIS (TheStreet) -- FedEx (FDX) beat Wall Street estimates as net income rose 7%, driven by growth in each of the company's transportation segment.

In pre-market trading about an hour before the opening bell, FedEx shares had gained $3.32 or 3% to $114.

The overnight package shipper reported earnings of $489 million, or $1.53 a share, for the fiscal first quarter ended Aug. 31. Analysts surveyed by Thomson Reuters had estimated $1.50. Revenue rose 2% to $11 billion, in line with estimates.

In the same quarter a year earlier, FedEx earned $459 million, or $1.45 a share. "Growth in overall demand for our broad global portfolio of solutions drove our improved first quarter results," said CEO Fred Smith, in a prepared statement. "FedEx Express remains focused on reducing costs while facing challenging global economic conditions. Meanwhile, FedEx Ground continues to generate strong profitability on growing customer demand for its services." Looking ahead, FedEx reaffirmed its forecast of full-year earnings per share growth of 7% to 13%, assuming the market outlook for fuel prices, U.S. GDP growth of 2.1% and world GDP growth of 2.6%. "We remain confident in our full year earnings outlook despite tepid global economic growth," said Chief Financial Officer Alan Graf. The company will increase shipping rates by an average of 3.9% for U.S. services, effective Jan. 6, 2014. During the quarter operating income rose 7% to $742 million while operating margin was 7.2%, up from 6.9% a year earlier. Trends were positive despite "significant headwinds from the net year-over-year impact from the timing lag that exists between when fuel prices change and (when) indexed fuel surcharges automatically adjust, as well as one fewer operating day," the company said. At FedEx Express, operating income rose 14% to $236 million, while revenue declined marginally $6.61 billion due to lower fuel surcharges and one fewer operating day. At FedEx Ground, operating income rose 5% to $468 million while revenue rose 11% to $2.73 billion due to increased rates and higher residential surcharge revenue, partially offset by lower fuel surcharges. At FedEx Freight, operating income rose 1% to $91 million, while revenue rose 2% to $1.42 billion. Follow @tedreednc -- Written by Ted Reed in Charlotte, N.C. >To contact the writer of this article, click here: Ted Reed

Anticipation Builds For QUAN’s Debut iPad Case (OTCMKTS:QUAN, OTCMKTS:CLNO)

Quantum International Corp. (QUAN)

Today, QUAN surged (+2.86%) up +0.005 at $.180 with 160,170 shares in play thus far (ref. google finance Delayed: 11:43AM EDT June 24, 2013).

As Apple is expected to release the iPad 5 this summer, Quantum International Corp. is readying to enter the exploding $2.3 billion iPad accessories market as work continues on the company's first prototype case.

With iPads becoming more and more prevalent in the professional environment as well as for education and entertainment, Quantum's engineering partners are hard at work developing an amazing and innovative case that will provide users with many exciting options. The case will be the debut offering in Quantum's lifestyle enhancement product line.

Take a look at Quantum International Corp. (QUAN) 5 day chart:

Market Crash: 7 steps to keep in mind

The 'August' fall in the stock market still has many of us at the edge of our seats. With their wealth and dreams on the line, who wouldn�t be! And after the last US market crash during late 2007, all people want to do is keep their wealth safe. While this fall doesn�t seem as bad as the recession right now, many of us are already in a state of flux, unsure of what we should do.

Over the past few weeks, several people have been asking the same question

� �What should I do now?� Does one take their money out and start preparing for a market meltdown or should they stay put and continue investing? It has been observed that an overwhelming majority of people wanted to just stop investing and keep their money safe.

While 'protecting' your investment is the most natural thing to do, following up on your dreams and goals is also an important aspect of life itself. Realizing those dreams is what we live and earn for. And putting a halt to them is not the answer. Here are seven things you shouldn�t do when you find yourself in this situation:

Don�t proceed without planning: Things may seem bad at the moment, but pulling out of your investment without a second thought is as dangerous as self medication. If you do find yourself in such a situation, plan on how you would like to retreat your investments. Abruptly stopping all payments on the same, will not only cause disharmony in your money matters but also put an end to all your dreams.

Don�t panic: Panic is the most natural state of mind, when things go haywire. If you do find yourself in this situation, have a calm discussion about how you should proceed. Panicking will only cause more grievances and force you to make bad decisions.  An apt move to make at this point would be to speak openly to a certified financial planner who will be able to guide you in the best possible manner.

Don�t end your financial plan: Investing during times of financial crunch, especially for retirement, may sound unreasonable to many, but remember that this investment is being done for your future. If you are currently investing in a plan, try to continue the same instead of putting it to a complete halt. You can always rework your monthly investment to suit your financial needs.

Don�t get carried away with the market: The volatility of the market may scare you and your financial plans, but it is best not to be carried away by this fear.

Don�t get emotionally carried away if you see the market falling and avoid taking impulsive decisions. Keeping your money safe is the key.

Don�t be influenced by short term losses: The term loss itself will set of various alarms in your head. If you find your investments and stock options under this position, try not to get ahead of yourself. If you have used a particular tool for a long term plan, then these losses would not affect very heavily on your plans or your investments.
 
Do not ignore the importance of family in financial decisions: The breadwinner of the family is usually the one to make decisions. However, it is important that you keep your family in the loop of the current situations, as it is also their financial future that depends on this. You may not be able to change the outcome of the markets, but you can keep your family�s future safe.

Don�t give up: One cannot stress on this enough. You cannot give up on the idea of having a financially secure future, just because the present situation seems murky. Remember to always have a contingency plan that will help you during such situations. This would ensure that your present and your future safety are withheld. This situation will pass, and all you need to remember is that there are people who can guide you and support you in times of financial turmoil.

While it�s easier said than done you can protect your own future through these simple methods. All you need to do is just keep the faith. 

Is Your Connected Car Obsolete Before You Buy It?

The Connected Car Conference -- or C3, if you wish to get your geek on -- was a big hit at CE Week in New York City. Thanks largely to navigation and entertainment apps on Apple and Google smartphones, it's easy to marvel at how far we've come in bringing our outside world inside our vehicle. But C3 also concentrated on the future, and what automakers and their partners are doing to increase your car's usefulness and safety.

Our roving reporter Rex Moore talked with General Motors' (NYSE: GM  ) chief technology officer Tim Nixon at the conference. His Chevrolet MyLink system offers Pandora and Sirius XM for entertainment, a BringGo navigation system that runs from your smartphone so your maps are never out-of-date, and Apple's Siri Eyes Free, which allows you to interact with Siri without having to view the screen. In fact, the screen won't even light up while your car is in motion.

Still, advances in consumer electronics far outpace the product cycle of a car, which could be obsolete by the time it hits the showroom floor. In the video below, Tim talks about how his company addresses these concerns.

It's incredible to think just how much of our digital and technological lives are almost entirely shaped and molded by just a handful of companies. Find out "Who Will Win the War Between the 5 Biggest Tech Stocks?" in The Motley Fool's latest free report, which details the knock-down, drag-out battle being waged by the five kings of tech. Click here to keep reading.

Why GM Hasn't Repaid Taxpayers

GM headquarters in Detroit. Photo credit: General Motors Co.

It's a question that readers ask me all the time: When will General Motors (NYSE: GM  ) repay taxpayers?

The answer is that it depends on how you look at it.

Legally speaking, GM has already repaid the $49.5 billion loan it got from the U.S. government to fund its bankruptcy restructuring in 2009. GM gave the U.S. Treasury a mix of cash and stock, as agreed. There's nothing more that GM is required to do under the terms of those loans. It's a done deal.

But here's why some folks continue to complain: The amount that has been returned to the U.S. Treasury so far is much less than that $49.5 billion.

The government has been recovering more every month, as it sells off its holdings of GM stock. But as I'll explain, the government probably doesn't have enough stock left to fully pay off the debt.

The government has been selling off its stock ...
Here's the background: At this time last year, the U.S. Treasury Department held just over 500 million shares of GM's common stock. But last December, GM and the Treasury struck a deal: GM agreed to buy 200 million of those shares outright, for a price that was a bit above what the stock was trading for on the market at that time.

In turn, the Treasury agreed to start selling off the remaining 300 million shares on the open market -- gradually, so as not to disrupt the markets. It said that it would complete its sales by next spring.

The first of those sales happened early this year. Since then, the government has been releasing monthly updates on its progress. Last week, it said that it had sold nearly $2 billion worth of stock in June.

Here's how GM's "repayment" so far breaks down.

... but it's likely to come up short in the end
As I said, Treasury's loans to GM totaled $49.5 billion. Of that, the Treasury has since recovered around $33.4 billion.

A little over $6 billion of that came from the Treasury's stock sales since January, along with dividends and interest received since GM emerged from bankruptcy. The remainder breaks down like this:

$6.7 billion in cash, the last of which was paid in April 2010. That was when then-CEO Ed Whitacre declared that GM's debt had been "paid in full," which was not his best move. $13 billion via GM's IPO, back in 2010. The government sold about 45% of its stock holdings at that time. $2.1 billion recovered when GM bought back some preferred stock from the Treasury in late 2010. $5.5 billion when GM bought back those 200 million shares from the Treasury last December, as I mentioned.

The upshot? The Treasury is still a little over $16 billion short – but it has about 160 million shares of GM stock left to sell.

That's not likely to be enough to make things whole.

So where will that leave taxpayers – and GM?
At current prices, those shares are worth a little less than $6 billion. Unless GM's stock goes way up, and soon, Treasury is going to be left with a shortfall after it sells the last of its stock. That shortfall is likely to be in the neighborhood of $10 billion.

Now, it's possible to argue that the U.S. government has received more than $10 billion in value from its decision to save General Motors. That decision kept the U.S. automotive supply chain alive in a time of deep crisis, which probably indirectly saved Ford as (NYSE: F  ) well -- along with thousands and thousands of American jobs. The recession would have been a lot worse had the U.S. auto industry collapsed.

But it's also possible to argue that GM, which is now a solidly profitable global company with more than $20 billion in cash on hand, might be obligated to make up some or all of that $10 billion shortfall -- morally, if not legally.

What do you think? Scroll down to leave a comment and let me know.

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Renren Launches New Share Buyback Program

Renren (NYSE: RENN  ) hopes to boost the value of its American Depositary Shares by repurchasing big chunks of them. The company's board has authorized a buyback program for up to $100 million worth of ADSes. The program is effective as of today, and will be in force for one year.

This replaces an existing $150 million initiative that had nearly been exhausted. That effort was launched in September 2011.

The buybacks for the current program will be effected through various means, including open market purchases, block trades, privately negotiated buys, and other "legally permissible ways".

In the press release announcing the move, Renren quoted its CEO Joseph Chen as saying that, in spite of the expense, the firm will "continue to focus on our long-term strategy of building a sustainable business around mobile-centric social networking." 

Currently, Renren has more than 377 million shares outstanding. Its most recent closing stock price was $2.99 per share.