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	<title>White Cap Report &#187; 2008</title>
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		<title>32 Billion Reasons The Average Investor Will Fail</title>
		<link>http://www.whitecapreport.com/archives/32-billion-reasons-the-average-investor-will-fail/</link>
		<comments>http://www.whitecapreport.com/archives/32-billion-reasons-the-average-investor-will-fail/#comments</comments>
		<pubDate>Tue, 23 Dec 2008 19:55:31 +0000</pubDate>
		<dc:creator>Louis Basenese</dc:creator>
				<category><![CDATA[White Cap Report]]></category>
		<category><![CDATA[Louis Basenese]]></category>

		<guid isPermaLink="false">http://whitecapreport.com/?p=451</guid>
		<description><![CDATA[32 Billion Reasons The Average Investor Will Fail by Louis Basenese, Chief Investment Strategist I&#8217;ll be the first to concede the going&#8217;s tough. That almost every &#8220;time-tested&#8221; strategy that worked well in bull markets is sputtering and collapsing. But is it so bad we&#8217;ve given up on turning a profit? And just resigned ourselves to [...]]]></description>
			<content:encoded><![CDATA[<h1>32 Billion Reasons<br />
The Average Investor Will Fail</h1>
<p>by <a title="Louis Basenese" href="http://whitecapreport.com/about-the-white-cap-report-team/#LouisBasenese">Louis Basenese</a>, Chief Investment Strategist</p>
<p>I&#8217;ll be the first to concede the going&#8217;s tough. That almost every &#8220;time-tested&#8221; strategy that worked well in bull markets is sputtering and collapsing.</p>
<p>But is it so bad we&#8217;ve given up on turning a profit? And just resigned ourselves to preserving our principal, right?</p>
<p>WRONG.</p>
<p>This week the Treasury sold $32 billion in 4-week bills at a yield of ZERO percent.</p>
<p>That&#8217;s not a typo. Investors actually clamored for the opportunity to lend the government their money in return for absolutely no return. In fact, investors bid $126 billion at the auction, more than four times the amount available.</p>
<p>As Michael Franzese, the head of government bond trading at Standard Chartered explains, &#8220;I have never seen this before&#8230; It&#8217;s all about capital preservation for the turn of the year, not capital appreciation.&#8221;</p>
<p>Forget unbelievable. It&#8217;s idiotic. What investors are essentially saying is that absolutely no better opportunity exists in the market right now &#8211; that survival is their paramount goal of investing, not profiting. But ignore what the lemmings are doing. Their folly is creating endless (and historic) opportunities for us to increase our wealth. Of course, simply telling you that will not suffice&#8230;</p>
<h2>6 Market Investment Opportunities Right Now</h2>
<p>Let me share with you a short-list of market investment opportunities I&#8217;m researching and taking advantage of on a daily basis. If nothing else, it should make you think twice before you follow the $32 billion worth of stupid money&#8230;</p>
<ul>
<li><strong>International Stocks: Forget decoupling</strong>. It was a farce. The United States caught a cold&#8230; and international markets caught pneumonia. The offshoot? International markets are the cheapest on the planet &#8211; despite much stronger growth prospects than in the United States. For instance, the average Russian stock trades for just three times earnings! South Africa and Brazil are the next cheapest at six and seven times, respectively. An easy way to capture upside here is to rebalance your portfolio by adding money to your diversified international funds or investments. One of my favorite options here is the <strong>Templeton Emerging Markets Fund</strong> (<a title="Templeton Emerging Markets Fund" href="http://finance.google.com/finance?q=NYSE%3A+EMF" target="_blank">NYSE: EMF</a>), run by the best international manager around, Mark Mobius.</li>
</ul>
<ul>
<li><strong>&#8220;Free&#8221; Stocks</strong>: Hundreds of stocks trade below their cash balances, making them essentially free. Some will of course, burn through that cash faster than my wife on a shopping spree. So we can&#8217;t buy blindly. But that&#8217;s not the case for all of these stocks. One compelling opportunity I recently presented to my subscribers is <strong>Immersion Corp</strong>. (<a title="Immersion Corp." href="http://finance.google.com/finance?q=NASDAQ%3AIMMR" target="_blank">Nasdaq: IMMR</a>) &#8211; a leader in haptic technology. Forget cash on hand, its patent portfolio is worth more than the current stock price.</li>
</ul>
<ul>
<li><strong>Income:</strong> Dividend yields rest at 15-year highs. Of course, not all dividend-paying stocks are created equal. Many will slash or suspend payments just to survive the downturn. But others won&#8217;t. The master limited partnership (MLP) space is rife with opportunity. Investors seem to forget these companies aren&#8217;t impacted by the price of oil and gas. They just get paid to transport it. The price of oil might be off 70%, but demand is not. My favorite play here is <strong>Kinder Morgan Energy</strong> (<a title="Kinder Morgan Energy" href="http://finance.google.com/finance?q=NYSE%3AKMP" target="_blank">NYSE: KMP</a>). It just increased its dividend and currently offers investors an attractive 8.7% yield.</li>
</ul>
<ul>
<li><strong>Munis:</strong> We all know there are NO guarantees in investing. But I can guarantee taxes are going up. How else will the government fund the billions upon billions in new spending? Especially, at a time when tax receipts will plummet. Thanks to a drop in corporate profits and the loss of 1.2 million taxpayers to unemployment. No surprise, the herd is piling out of munis ($7.4 billion so far this quarter) at exactly the wrong time. Their folly is creating attractive tax-free income yields and upside for us. For instance, the <strong>Vanguard Intermediate Tax Exempt Fund</strong> (<a title="Vanguard Intermediate Tax Exempt Fund" href="http://finance.google.com/finance?q=VWITX" target="_blank">VWITX</a>) currently sports a 4.25% yield. That&#8217;s tax free and equivalent to earning 6.5% (based on a 35% tax bracket).</li>
</ul>
<ul>
<li><strong>Real Estate</strong>: Pricing remains completely irrational for <a title="Real Estate Investment Trusts" href="http://www.investmentu.com/IUEL/2008/August/real-estate-investment-trusts.html" target="_blank">real estate investment trusts</a> (REITs). Some closed-end funds are off as much as 90%. Dirt is cheap &#8211; but it isn&#8217;t that cheap. This is a once-in-a-lifetime rebound opportunity. If nothing else, capitalize on the unstoppable trend of homeowners converting into renters by considering an apartment like <strong>Equity Residential Properties</strong> (<a title="Equity Residential Properties" href="http://finance.google.com/finance?q=NYSE%3AEQR" target="_blank">NYSE: EQR</a>).</li>
</ul>
<ul>
<li><strong>Short selling</strong>: An economic recovery won&#8217;t save every company. Plenty will remain in the tank, or worse, end up on the courthouse steps. Yet, most investors overlook the simple strategy to profit from these collapses &#8211; selling short. But they shouldn&#8217;t. In these markets it&#8217;s one of the few strategies consistently booking winners. That&#8217;s why I&#8217;ve been using it for my subscribers. Just last week, we booked a 50% winner in <strong>The New York Times Company</strong> (<a title="The New York Times Company" href="http://finance.google.com/finance?q=NYSE%3ANYT" target="_blank">NYSE: NYT</a>), for example.</li>
</ul>
<p>Remember this is just my short-list. The key takeaway is simple &#8211; investment opportunities abound.</p>
<p>Granted, we might have to work harder than normal to unearth them. But we certainly don&#8217;t have to resign ourselves to handing over our hard earned capital to the government for nothing in return. After all, that privilege is reserved for our tax dollars.</p>
<p>Good investing,</p>
<p>Lou Basenese</p>
<p><span class="Normal"><strong>Related Articles:</strong></span></p>
<ul>
<li><span class="Normal"><a title="Stock Market Predictions" href="http://whitecapreport.com/archives/stock-market-predictions-crazy-about-the-dollar/"><span style="color: #496a6c;">Stock Market Predictions</span></a>: “Crazy” About the Dollar</span></li>
<li><span class="Normal"><a title="Small Caps" href="http://whitecapreport.com/archives/small-caps/"><span style="color: #496a6c;">Small Caps</span></a>: It’s Time to Think Small</span></li>
<li><span class="Normal"><a title="Closed-End Income Funds" href="http://whitecapreport.com/archives/closed-end-income-funds/"><span style="color: #496a6c;">Closed-End Income Funds</span></a>: Why It’s Time to Buy Them</span></li>
<li><span class="Normal"><a title="Wind Power" href="http://whitecapreport.com/archives/wind-power-why-this-renewable-energy-could-solve-the-us-oil-addiction/"><span style="color: #496a6c;">Wind Power</span></a>: Why This Renewable Energy Could Solve The U.S. Oil Addiction</span></li>
</ul>
<p style="text-align: center;"><a href="http://whitecapreport.com/louis-basenese-articles/">White Cap Report Archives</a></p>
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		<title>Wind Power: Why This Renewable Energy Could Solve The U.S. Oil Addiction</title>
		<link>http://www.whitecapreport.com/archives/wind-power-why-this-renewable-energy-could-solve-the-us-oil-addiction/</link>
		<comments>http://www.whitecapreport.com/archives/wind-power-why-this-renewable-energy-could-solve-the-us-oil-addiction/#comments</comments>
		<pubDate>Tue, 25 Nov 2008 19:41:46 +0000</pubDate>
		<dc:creator>Louis Basenese</dc:creator>
				<category><![CDATA[White Cap Report]]></category>
		<category><![CDATA[Louis Basenese]]></category>

		<guid isPermaLink="false">http://whitecapreport.com/?p=297</guid>
		<description><![CDATA[Wind Power: Why This Renewable Energy Could Solve The U.S. Oil Addiction by Louis Basenese, Chief Investment Strategist It&#8217;s become cliché to say that the United States is addicted to oil. I&#8217;ll make no effort to refute the claim because it&#8217;s true. It&#8217;s an expensive habit, too. The upshot, however, has been the explosion of [...]]]></description>
			<content:encoded><![CDATA[<h2><span class="Normal">Wind Power: Why This Renewable Energy Could Solve The U.S. Oil Addiction</span></h2>
<p><span class="Normal">by <a title="Louis Basenese" href="http://whitecapreport.com/about-the-white-cap-report-team/#LouisBasenese">Louis Basenese</a>, Chief Investment Strategist</span></p>
<p><span class="Normal">It&#8217;s become cliché to say that the United States is addicted to oil. I&#8217;ll make no effort to refute the claim because it&#8217;s true. It&#8217;s an expensive habit, too.</span></p>
<p><span class="Normal">The upshot, however, has been the explosion of interest in renewable energy sources. Last year, investors poured a record $71 billion into the alternative energy space. And billions more funnel in every day.</span></p>
<p>But with so many possibilities &#8211; hydropower, wind power, solar power, geothermal, biofuel, clean coal technology &#8211; investors are forced to pick which alternative energy source will distinguish itself as the most viable replacement for oil. It&#8217;s a crapshoot.</p>
<p><span class="Normal">That is, until you realize the shooter (in this case Wall Street) is rolling a pair of &#8220;loaded&#8221; dice. In recent months, heavy hitters like The Blackstone Group, General Electric and T. Boone Pickens have stealthily invested billions into a single renewable energy source. JP Morgan Chase revealed that it&#8217;s holding a $1 billion stake in the very same investment.</span></p>
<p><span class="Normal">Even better, in the next five years, the governments in the United States, China and Europe will plow at least $150 billion into the same alternative, according to CLSA Research.</span></p>
<p><span class="Normal">And, unlike oil, there&#8217;s no possibility of it running out. So let&#8217;s take a closer look at this odds-on favorite to win the alternative energy derby.</span></p>
<h2><span class="Normal">And the Winner Is &#8211; Wind Power</span></h2>
<p><span class="Normal">Wind. It&#8217;s clean (wind power generates absolutely no greenhouse gases). It&#8217;s renewable. And it involves no production decline curve. Hence, 30 years from now we won&#8217;t be worrying about &#8220;Peak Wind&#8221; theories coming to fruition.</span></p>
<p><span class="Normal">It also can&#8217;t be hoarded by power hungry cartels. In fact, enough of it exists to satisfy global demand seven times over, according to a Stanford University study. North Dakota alone has enough of it to meet 25% of U.S. demand.</span></p>
<p><span class="Normal">But perhaps most importantly, it&#8217;s finally coming of age. Just consider:</span></p>
<ul>
<li><span class="Normal">From 2000 to 2007, the size of the wind power industry increased fivefold. </span></li>
<li><span class="Normal">Last year, records were shattered with $36 billion in total global wind investments with the United States leading the way with $9 billion. </span></li>
<li><span class="Normal">In the next 10 years, the wind industry is expected to quadruple in size.</span></li>
</ul>
<p><span class="Normal">Hands down, wind is the fastest growing source of power. But can such growth continue?</span></p>
<p><span class="Normal">Sure, the Department of Energy and countless other studies and industry experts say it will. But are they being realistic? Absolutely. And here&#8217;s why…</span></p>
<h2><span class="Normal">Wind Power Makes Economic Sense &amp; Simply Works</span></h2>
<p><span class="Normal">First and foremost, wind power makes economic sense. If the price of oil drops to $50 a barrel (it won&#8217;t), the economics still work; even without government subsidies.</span></p>
<p><span class="Normal">You see, wind can be used to generate electricity for 6 to 8.5 cents per kilowatt-hour.</span></p>
<p><span class="Normal">For comparison&#8217;s sake, the cost of nuclear power runs about 15 cents per kilowatt-hour. Coal now costs north of 10 cents (without factoring in carbon capture and storage). And gas-fired power costs approximately 12 cents.</span></p>
<p><span class="Normal">Keep in mind, too, that just a few years ago, wind costs rested north of 15 to 20 cents. But today, costs are low enough in some markets to compete with conventional power generation methods. And future advancements will make wind power even cheaper.</span></p>
<p><span class="Normal">Look no further than Denmark. It already generates 20% of its electricity from wind. And Spain, Portugal and Germany boast similarly impressive penetration rates of roughly 12%, 10% and 7%, respectively.</span></p>
<p><span class="Normal">The timing couldn&#8217;t be more perfect, either. While wind energy costs are dropping, costs for competing technologies &#8211; coal, nuclear and gas &#8211; are headed in the opposite direction.</span></p>
<p><span class="Normal">Wind is the cost effective way our nation can start solving its oil addiction. And unlike many of the other far-fetched solutions to our energy needs …</span></p>
<p><span class="Normal">Wind is realistically attainable.</span></p>
<p><span class="Normal">Good investing,</span></p>
<p><span class="Normal">Louis Basenese</span></p>
<p><span class="Normal"><span class="Normal"><strong>Related Articles:</strong></span></span></p>
<p><span class="Normal"> </span></p>
<ul>
<li><span class="Normal"><a title="Stock Market Predictions" href="http://whitecapreport.com/archives/stock-market-predictions-crazy-about-the-dollar/ ">Stock Market Predictions</a>: “Crazy” About the Dollar</span></li>
<li><span class="Normal"><a title="Small Caps" href="http://whitecapreport.com/archives/small-caps/ ">Small Caps</a>: It&#8217;s Time to Think Small</span></li>
<li><span class="Normal"><a title="Long-Term Investment Goals" href="http://whitecapreport.com/archives/long-term-investment-goals/ ">Long-Term Investment Goals</a>: Answers to The Top 3 Investing Questions Right Now</span></li>
<li><span class="Normal"><a title="Closed-End Income Funds" href="http://whitecapreport.com/archives/closed-end-income-funds/">Closed-End Income Funds</a>: Why It&#8217;s Time to Buy Them</span></li>
</ul>
<p align="center"><span class="Normal"><a title="White Cap Report" href="http://whitecapreport.com/louis-basenese-articles/">White Cap Report Archives</a></span></p>
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<h2 style="text-align: center;"><a href="https://www.web-purchases.com/WCX/WWCXL102/onepageorderform.html" target="_blank">Become a White Cap Report Member Now</a></h2>
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		<title>Closed-End Income Funds: Why It&#039;s Time to Buy Them</title>
		<link>http://www.whitecapreport.com/archives/closed-end-income-funds/</link>
		<comments>http://www.whitecapreport.com/archives/closed-end-income-funds/#comments</comments>
		<pubDate>Tue, 25 Nov 2008 19:41:23 +0000</pubDate>
		<dc:creator>Louis Basenese</dc:creator>
				<category><![CDATA[White Cap Report]]></category>
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		<guid isPermaLink="false">http://whitecapreport.com/?p=295</guid>
		<description><![CDATA[Closed-End Income Funds: Why It&#8217;s Time to Buy Them by Louis Basenese, Chief Investment Strategist Pick a stock. Any stock. And invariably, one investor will argue it&#8217;s cheap. Another will say it&#8217;s expensive. Even in this panic-driven sell off. The problem, of course, is that no foolproof, infallible metric exists to determine who is right. [...]]]></description>
			<content:encoded><![CDATA[<h2><span class="Normal">Closed-End Income Funds: Why It&#8217;s Time to Buy Them</span></h2>
<p><span class="Normal">by <a title="Louis Basenese" href="http://whitecapreport.com/about-the-white-cap-report-team/#LouisBasenese">Louis Basenese</a>, Chief Investment Strategist</span></p>
<p><span class="Normal">Pick a stock. Any stock. And invariably, one investor will argue it&#8217;s cheap. Another will say it&#8217;s expensive. Even in this panic-driven sell off. The problem, of course, is that no foolproof, infallible metric exists to determine who is right. Until it&#8217;s too late.</span></p>
<p><span class="Normal">But the same is not true of <em>closed-end income funds</em>.</span></p>
<p><span class="Normal">A first grader with a good grasp of addition and subtraction can tell whether one is cheap. Or expensive. Right now, they&#8217;re ridiculously cheap.</span></p>
<p><span class="Normal">Since closed-end income funds issue a fixed number of shares, supply and demand determines market prices. That means it&#8217;s possible for such funds to trade at a price that&#8217;s greater than (a premium) or less than (a discount) the actual value of the securities in the portfolio (net asset value).</span></p>
<h2><span class="Normal">Average Closed-End Income Fund Discount</span></h2>
<p><span class="Normal">Currently, the average closed-end income fund is selling at a 13.7% discount. Almost double the average of three weeks ago, according to research firm Lipper. That means if the fund&#8217;s manager sold all of the fund&#8217;s holdings, investors would earn an instant 13.7% profit.</span></p>
<p><span class="Normal">What&#8217;s more, almost 200 closed-end funds trade at more than a 20% discount. And more than 20 trade at discounts of 30% to 40%. Not to mention, many sport double-digit yields.</span></p>
<p><span class="Normal">Have you ever complained about buying something at 40% off? Me either. And that&#8217;s the attitude we need to embrace when it comes to closed-end funds. We&#8217;re witnessing a once in a lifetime buying opportunity. But, don&#8217;t just take my word for it…</span></p>
<ul>
<li><span class="Normal">&#8220;I&#8217;ve been in the industry for 25 years and I&#8217;ve never seen [discounts]… this wide,&#8221; declares Cecilia Gondor, Executive Vice President at Thomas J. Herzfeld Advisors Inc.</span></li>
<li><span class="Normal">&#8220;Discounts have gotten to levels perhaps never seen before, certainly not for years,&#8221; according to Jonathan Issac, Vice President at Eaton Vance Corp.</span></li>
<li><span class="Normal">&#8220;I&#8217;ve been through [market crises] six times in my 40-year career, and this is as nasty as I&#8217;ve seen it,&#8221; explains the President of Thomas Herzfeld Advisors.</span></li>
</ul>
<p><span class="Normal">A skeptical bent, especially in this market, doesn&#8217;t hurt…</span></p>
<h2><span class="Normal">Are Closed-End Income Fund Bargains Too Good to Be True?</span></h2>
<p><span class="Normal">Yet, when it comes to closed-end income funds, the bargains aren&#8217;t too good to be true. They&#8217;re a result of fearful investors. Not a breakdown in the underlying fundamentals.</span></p>
<p><span class="Normal">You see, when investors are scared, they sell indiscriminately. Companies with stellar earning growth and fundamentals get tossed just as quickly as companies with terrible fundamentals.</span></p>
<p><span class="Normal">If you have any doubt, consider that as of the close on October 6, 80% of the stocks in the Russell 3000 were down for the year. Obviously, not every one of those 2,400 stocks sports terrible fundamentals.</span></p>
<p><span class="Normal">My point. Good stocks are getting thrown out with the bad. So, too, are many solid closed-end income funds. It&#8217;s especially true among the 400 or so income-based closed-end funds. Because investors are extremely leery of anything credit related, they&#8217;re selling income funds more aggressively.</span></p>
<p><span class="Normal">For investors that value solid income (in some cases paid monthly), with the potential for double-digit appreciation, too, I&#8217;m convinced no better opportunity exists. Here&#8217;s why…</span></p>
<p><span class="Normal">The widespread panic in the markets is doing more than sending discounts to the moon. It&#8217;s also depressing asset prices, leading to declines in the NAV. But remember, unlike stocks, fixed-income investments have a predetermined value at maturity.</span></p>
<p><span class="Normal">So despite the wild swings, and even dips in NAV, valuations will recover as maturity draws near. Even better, so will the historic discounts.</span></p>
<h2><span class="Normal">The Premium/Discount History of Closed-End Income Funds</span></h2>
<p><span class="Normal">If you have any doubt, pull up the premium/discount history for any closed-end income fund with at least a five-year track record. You&#8217;ll notice, time and time again, that the fire sale prices don&#8217;t last.</span></p>
<p><span class="Normal">By no means am I suggesting all the funds are immune to losses. No investments are. Not even money market funds.</span></p>
<p><span class="Normal">Some closed-end income funds will inevitably pay the price for using too much leverage. Or overdosing on toxic fixed-income investments. But countless others will not.</span></p>
<p><span class="Normal">Unfortunately, simple math won&#8217;t help us distinguish between the good and the bad. But it&#8217;s not an impossible task. I&#8217;m convinced you can single out some inevitable winners and enjoy steady double-digit yields and capital appreciation…</span></p>
<p><span class="Normal">All you have to do is avoid the funds with the highest yields. Or the biggest discounts to NAV. Such extreme levels indicate higher risk. Whether it&#8217;s justified or not, it&#8217;s best to steer clear of these outliers.</span></p>
<p><span class="Normal">And instead, focus on funds with slightly above average yields (9% to 12%) and discounts to NAV of 15% to 25%. At the same time, I&#8217;d focus on funds with…</span></p>
<ul>
<li><span class="Normal">Less than 10% exposure to the &#8220;toxic&#8221; financial sector.</span></li>
<li><span class="Normal">A reasonable amount of leverage (up to 25%). Or none at all. This will minimize the impact of any poor investment choices.</span></li>
<li><span class="Normal">No investments in mortgage-backed securities. Or only agency mortgage-backed securities (the ones backed up by the full faith and credit of the government).</span></li>
<li><span class="Normal">A dividend that hasn&#8217;t been cut since the beginning of the credit crunch (August 2007). A dividend cut often confirms deterioration in the underlying assets.</span></li>
<li><span class="Normal">Minimal or no exposure to auction-rate securities. Funds relying on this type of financing remain hamstringed, as the auction-rate market is still not functioning properly.</span></li>
</ul>
<p><span class="Normal">These two websites &#8211; <a href="http://www.cefa.com/" target="_blank">www.cefa.com</a> and <a href="http://www.etfconnect.com/" target="_blank">www.etfconnect.com</a> &#8211; should help you find all the necessary information. (If you want to skip the hassle, here are the eight closed-end funds we highly recommend right now.)</span></p>
<p><span class="Normal">In the end, we&#8217;ll look back at this period in amazement over the extraordinary buys available in closed-end income funds. The last thing I want is for your amazement to be soured with regret over not taking advantage of them.</span></p>
<p><span class="Normal">Good investing,</span></p>
<p><span class="Normal">Lou Basenese</span></p>
<p><span class="Normal"><br />
<strong>Related Articles:</strong></span></p>
<ul>
<li><span class="Normal"><a title="Stock Market Predictions" href="http://whitecapreport.com/archives/stock-market-predictions-crazy-about-the-dollar/">Stock Market Predictions</a>: “Crazy” About the Dollar</span></li>
<li><span class="Normal"><a title="Small Caps" href="http://whitecapreport.com/archives/small-caps/ ">Small Caps</a>: It&#8217;s Time to Think Small</span></li>
<li><span class="Normal"><a title="Long-Term Investment Goals" href="http://whitecapreport.com/archives/long-term-investment-goals/ ">Long-Term Investment Goals</a>: Answers to The Top 3 Investing Questions Right Now</span></li>
<li><span class="Normal"><a title="Wind Power" href="http://whitecapreport.com/archives/wind-power-why-this-renewable-energy-could-solve-the-us-oil-addiction/ ">Wind Power</a>: Why This Renewable Energy Could Solve The U.S. Oil Addiction</span></li>
</ul>
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		<title>Long-Term Investment Goals: Answers to The Top 3 Investing Questions Right Now</title>
		<link>http://www.whitecapreport.com/archives/long-term-investment-goals/</link>
		<comments>http://www.whitecapreport.com/archives/long-term-investment-goals/#comments</comments>
		<pubDate>Tue, 25 Nov 2008 19:41:05 +0000</pubDate>
		<dc:creator>Louis Basenese</dc:creator>
				<category><![CDATA[White Cap Report]]></category>
		<category><![CDATA[Louis Basenese]]></category>

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		<description><![CDATA[Long-Term Investment Goals: Answers to The Top 3 Investing Questions Right Now by Louis Basenese, Chief Investment Strategist With Investment U having over 360,000 members and The Oxford Club with over 70,000,  two publications I write for, I always get a steady stream of questions. But in recent weeks, as the market has accelerated its descent, [...]]]></description>
			<content:encoded><![CDATA[<h2><span class="Normal">Long-Term Investment Goals: Answers to The Top 3 Investing Questions Right Now</span></h2>
<p><span class="Normal">by <a title="Louis Basenese" href="http://whitecapreport.com/about-the-white-cap-report-team/#LouisBasenese">Louis Basenese</a>, Chief Investment Strategist</span></p>
<p><span class="Normal">With <em><a href="www.investmentu.com">Investment U</a></em> having over 360,000 members and <a href="http://whitecapreport.com/the-oxford-club/"><em>The Oxford Club</em> </a>with over 70,000,  two publications I write for, I always get a steady stream of questions. But in recent weeks, as the market has accelerated its descent, they&#8217;ve become increasingly alarmist.</span></p>
<p><span class="Normal">As I&#8217;ve learned, when we give into panic, we act hastily. And often undermine our <em>long-term investment goals</em>.</span></p>
<p><span class="Normal">So today, let&#8217;s put to rest some of your pressing concerns. And make sure that doesn&#8217;t happen.</span></p>
<h2><span class="Normal">Long Term Investment Goals: Is My Cash Safe?</span></h2>
<p><span class="Normal">When my grandfather died, my grandmother found $17,000 lying around the house. He was Italian. So yes, some was stashed under mattresses. Some was in coffee cans behind the refrigerator in the basement. And more still was found in his sock drawer.</span></p>
<p><span class="Normal">Forget the terrible investment implication of earning no interest on this money. My father almost burnt the house down when he was 12. And my great uncle was convicted of arson. So an &#8220;accidental&#8221; fire, not inflation, was a bigger threat to his savings.</span></p>
<p><span class="Normal">My point: There&#8217;s a lot of fear in the market. Banks continue to go under. Many people are trying to predict the next collapse, and move their assets in advance. (I can empathize because I bank with Washington Mutual, now JP Morgan.) But whatever you do, be smarter than us Italians. The mattress is not a safe or smart place for cash.</span></p>
<p><span class="Normal">In all seriousness, if we take a few simple steps, we can keep all our cash in the bank, and make sure every penny is insured.</span></p>
<p><span class="Normal">The rescue package increased the FDIC limits up $250,000 per qualified account. This increase alone brings almost 75% of deposits in the United States under coverage. The expanded coverage remains in effect until December 31, 2009.</span></p>
<p><span class="Normal">If you have more than $250,000 in cash, you don&#8217;t have to move it to another bank to get an additional $250,000 in coverage. Simply set up another account under a different ownership category (single, joint, IRA, revocable trust, corporation, etc.). For most banks, this can even be done online.</span></p>
<p><span class="Normal">For those interested in insuring large deposits, up to $50 million, you might want to consider EverBank&#8217;s Insured Advantage Certificates of Deposit (CDARS)*.</span></p>
<h2><span class="Normal"><span class="Normal">Long Term Investment Goals:</span> Should I Worry About Mutual Fund Companies Going Bankrupt?</span></h2>
<p><span class="Normal">No. We&#8217;re protected here, too. The Investment Act of 1940 requires each fund to be set up as an individual corporate entity, with a board of directors. That entity then hires the mutual fund company to manage its assets. So if the mutual fund company goes belly-up, its creditors can&#8217;t touch the fund&#8217;s assets. And the board of directors simply hires a new manager, after getting shareholder approval.</span></p>
<p><span class="Normal">The only way your mutual fund can go bankrupt is if the actual value of all the stocks or bonds in the portfolio drop to zero.</span></p>
<h2><span class="Normal"><span class="Normal">Long Term Investment Goals:</span> What if My Broker Goes Out of Business?</span></h2>
<p><span class="Normal">Again, we&#8217;re covered. Brokerage firms are restricted from co-mingling funds by SEC Rule 15c3-3 &#8211; the Customer Protection Rule. Or as they used to tell us at summer camp &#8211; boys are blue, girls are red. And we don&#8217;t want any purple running around here.</span></p>
<p><span class="Normal">As the Financial Industry Regulatory Authority (FINRA) explains, &#8220;In virtually all cases, when a brokerage firm ceases to operate, customer assets are safe and typically are transferred in an orderly fashion to another registered brokerage firm.&#8221;</span></p>
<p><span class="Normal">But we all know that Wall Street doesn&#8217;t always abide by the rules. That&#8217;s where SIPC insurance comes in. Created in 1970 as a non-profit, non-government membership corporation, funded by member broker-dealers, the SIPC&#8217;s primary role is to return funds and securities to investors if the broker-dealer holding these assets becomes insolvent.</span></p>
<p><span class="Normal">SIPC coverage is limited to $500,000 per customer, including up to $100,000 for cash. But again, we can easily increase coverage by establishing multiple accounts under different ownership structures.</span></p>
<p><span class="Normal">Good investing,</span></p>
<p><span class="Normal">Louis Basenese</span></p>
<p><span class="Normal"><strong>Related Articles:</strong></span></p>
<ul>
<li><span class="Normal"><a title="Stock Market Predictions" href="http://whitecapreport.com/archives/stock-market-predictions-crazy-about-the-dollar/">Stock Market Predictions</a>: “Crazy” About the Dollar</span></li>
<li><span class="Normal"><a title="Small Caps" href="http://whitecapreport.com/archives/small-caps/ ">Small Caps</a>: It&#8217;s Time to Think Small</span></li>
<li><span class="Normal"><a title="Closed-End Income Funds" href="http://whitecapreport.com/archives/closed-end-income-funds/ ">Closed-End Income Funds</a>: Why It&#8217;s Time to Buy Them</span></li>
<li><span class="Normal"><a title="Wind Power" href="http://whitecapreport.com/archives/wind-power-why-this-renewable-energy-could-solve-the-us-oil-addiction/ ">Wind Power</a>: Why This Renewable Energy Could Solve The U.S. Oil Addiction</span></li>
</ul>
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		<title>Small Caps: It&#039;s Time to Think Small</title>
		<link>http://www.whitecapreport.com/archives/small-caps/</link>
		<comments>http://www.whitecapreport.com/archives/small-caps/#comments</comments>
		<pubDate>Tue, 25 Nov 2008 19:40:53 +0000</pubDate>
		<dc:creator>Louis Basenese</dc:creator>
				<category><![CDATA[White Cap Report]]></category>
		<category><![CDATA[Louis Basenese]]></category>

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		<description><![CDATA[Small Caps: It&#8217;s Time to Think Small by Louis Basenese, Chief Investment Strategist Over one million jobs vanished this year. Retail sales cratered for the eleventh consecutive month. Auto sales, and for that matter automakers, are headed for the junkyard. And there&#8217;s no sign of consumer confidence anywhere. It&#8217;s not official yet. Apparently the committee [...]]]></description>
			<content:encoded><![CDATA[<h2>Small Caps: It&#8217;s Time to Think Small</h2>
<p>by <a title="Louis Basenese" href="http://whitecapreport.com/about-the-white-cap-report-team/#LouisBasenese">Louis Basenese</a>, Chief Investment Strategist</p>
<p>Over one million jobs vanished this year. Retail sales cratered for the eleventh consecutive month. Auto sales, and for that matter automakers, are headed for the junkyard. And there&#8217;s no sign of consumer confidence anywhere.</p>
<p>It&#8217;s not official yet. Apparently the committee of &#8220;esteemed&#8221; economists at the National Bureau of Economic Research (NBER) doesn&#8217;t get paid for timeliness. But the statistics don&#8217;t lie&#8230; we&#8217;re in a recession.</p>
<p>And that&#8217;s got me giddier than an Obama supporter scoring an inauguration ticket. That&#8217;s right. I&#8217;m actually glad the economic data stinks. Because when a recession is here, a small-cap rally isn&#8217;t far behind.</p>
<p>Accordingly, I&#8217;m loading up on small caps in my own portfolio. I suggest you do the same, instead of joining the lemmings piling into Treasuries.</p>
<p>If you&#8217;re reluctant and afraid small caps are too risky, chew on this:</p>
<p>In the year following the six major bear markets of the last century, small cap stocks soared an average of 82%, according to Ibbotson Associates.</p>
<p>If the prospect of an 82% gain doesn&#8217;t excite you in these trying markets, check your pulse. If it does, read on&#8230;</p>
<h2>Any Old Small Cap Just Won&#8217;t Do</h2>
<p>There&#8217;s no denying the strong historical trend, but it doesn&#8217;t mean ALL small caps will soar. Nothing in investing is ever that easy. In order to really benefit from the imminent rally, we need to isolate the most compelling and innovative small-cap stocks.</p>
<p>To that end, let me share a disciplined approach that&#8217;s always served me well. When it comes to small caps, I focus exclusively on companies with these three characteristics:</p>
<ul>
<li><strong>A pioneer on the verge of creating new trends.</strong> Companies can create products to compete in existing markets&#8230; Or they can create products that are so revolutionary and timely that they launch their own markets and trends. The latter obviously positions the company, and in turn investors, to reap the most profits. If you need help qualifying this factor think <strong>Intuitive Surgical </strong>(Nasdaq: ISRG), <strong>Google </strong>(Nasdaq: GOOG), even <strong>VMware </strong>(NYSE: VMW).</li>
<li><strong>Within three years of an initial public offering (or major index listing).</strong> Smaller and/or newer companies have more room to grow. Plus, Wall Street tends to overlook many of these firms. By focusing on these young and virgin opportunities, we can actually profit ahead of the Wall Street institutions and the trillions in capital they control.</li>
<li><strong>Increasing earnings by at least 30%.</strong> A market panic can only hold back fast growing stocks for so long. Eventually, share prices will follow earnings. By focusing on companies with the strongest growth profiles, we set ourselves up for the most dramatic gains. And yes, even in this market such companies do exist.</li>
</ul>
<p>Other characteristics worth screening for include: recurring revenue streams, potential applications for products in parallel markets, new products in the pipeline, little or no analyst coverage and management ownership of 10% or more.</p>
<p>Granted, the process of actually finding such companies is tedious and time consuming. But as Abraham Lincoln quipped, &#8220;Things [profits] may come to those who wait, but only the things [profits] left by those who hustle.&#8221;</p>
<p>In other words, all the hard work we put into indentifying these small-cap stocks will be rewarded. But if we don&#8217;t grab the profits while we can, another investor will.</p>
<h2>Short on Time? Buy These 2 Small Caps&#8230; And Call Me in a Year</h2>
<p>I recognize not all of us can scour the markets each day in search of the most compelling opportunities. So let me make it easy for you. Here are two small-cap companies I&#8217;m convinced will be 50% higher (or more) a year from now.</p>
<p><strong>Genoptix, Inc.</strong> (<a title="Genoptix, Inc." href="http://finance.google.com/finance?q=GXDX" target="_blank">Nasdaq: GXDX</a>) The economic cycle doesn&#8217;t impact business for this provider of bone marrow and blood-based cancer tests one bit. Sadly, when it comes to diagnosing cancer, people can&#8217;t wait for better times. But the company&#8217;s focus on community-based oncologists also provides ample growth opportunities. Earnings increased 198% in the last nine months to $26 million. And yet, the company still only controls 4% of the market.</p>
<ul>
<li><strong>American Public Education, Inc.</strong> (<a title="American Public Education, Inc." href="http://finance.google.com/finance?q=NASDAQ%3AAPEI" target="_blank">Nasdaq: APEI</a>) This West Virginia-based company provides online, post-secondary education to a very specific market &#8211; military personnel. Its niche focus is delivering impressive growth, with revenues and earnings up 56% and 72%, respectively, in the most recent quarter.</li>
</ul>
<p>Whether you opt for these recommendations or seek out your own, it doesn&#8217;t matter. A recession is here, so a small-cap rally isn&#8217;t far behind. Before it&#8217;s too late, I recommend you position yourself accordingly.</p>
<p>Good investing,</p>
<p>Lou Basenese</p>
<p><strong> Related Articles:</strong></p>
<ul>
<li><a title="Stock Market Predictions" href="http://whitecapreport.com/archives/stock-market-predictions-crazy-about-the-dollar/ ">Stock Market Predictions</a>: “Crazy” About the Dollar</li>
<li><a title="Long Term Investment Goals" href="http://whitecapreport.com/archives/long-term-investment-goals/ ">Long-Term Investment Goals</a>: Answers to The Top 3 Investing Questions Right Now</li>
<li><a title="Closed-End Income Funds" href="http://whitecapreport.com/archives/closed-end-income-funds/ ">Closed-End Income Funds</a>: Why It&#8217;s Time to Buy Them</li>
<li><a title="Wind Power" href="http://whitecapreport.com/archives/wind-power-why-this-renewable-energy-could-solve-the-us-oil-addiction/ ">Wind Power</a>: Why This Renewable Energy Could Solve The U.S. Oil Addiction</li>
</ul>
<p align="center"><a title="White Cap Report" href="http://whitecapreport.com/louis-basenese-articles/">White Cap Report Archives</a></p>
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		<title>Stock Market Predictions: &quot;Crazy&quot; About the Dollar</title>
		<link>http://www.whitecapreport.com/archives/stock-market-predictions-crazy-about-the-dollar/</link>
		<comments>http://www.whitecapreport.com/archives/stock-market-predictions-crazy-about-the-dollar/#comments</comments>
		<pubDate>Fri, 21 Nov 2008 20:44:57 +0000</pubDate>
		<dc:creator>Louis Basenese</dc:creator>
				<category><![CDATA[White Cap Report]]></category>
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		<description><![CDATA[Stock Market Predictions: &#8220;Crazy&#8221; About the Dollar by Louis Basenese, Chief Investment Strategist I&#8217;m no stranger to controversial stock market predictions. In fact, a few weeks ago I angered an entire room of investors at the Agora Financial Symposium with my latest trio of &#8220;crazy&#8221; recommendations… &#8220;Take profits on your gold, while the getting&#8217;s good.&#8221; [...]]]></description>
			<content:encoded><![CDATA[<h2><span class="Normal">Stock Market Predictions: &#8220;Crazy&#8221; About the Dollar</span></h2>
<p><span class="Normal">by <a title="Louis Basenese" href="http://whitecapreport.com/about-the-white-cap-report-team/#LouisBasenese">Louis Basenese</a>, Chief Investment Strategist</span></p>
<p><span class="Normal">I&#8217;m no stranger to controversial <em>stock market predictions</em>. In fact, a few weeks ago I angered an entire room of investors at the Agora Financial Symposium with my latest trio of &#8220;crazy&#8221; recommendations…</span><span class="boxad"><br />
</span></p>
<ul>
<li><span class="Normal">&#8220;Take profits on your gold, while the getting&#8217;s good.&#8221; </span><span class="Normal">Since uttering those words, the yellow metal&#8217;s dropped $108, or roughly 12%.</span></li>
<li><span class="Normal">&#8220;Get short oil. It&#8217;s going to $100 before it touches $150.&#8221;<br />
</span><span class="Normal">And oil obliged by dropping to $113, a move that silenced everyone who was calling for $200 oil just weeks ago.</span></li>
<li><span class="Normal">&#8220;And do the unthinkable. Get long the U.S. dollar versus the euro.&#8221;<br />
</span><span class="Normal">Last Friday, the euro endured its worst single-day slide in eight years, breaking through a key technical support level at $1.50.</span></li>
</ul>
<h2><span class="Normal">Bullish Dollar Predictions</span></h2>
<p><span class="Normal">Now, before you cry &#8220;foul,&#8221; I&#8217;ll confess… I did issue similar bullish dollar predictions here on two occasions (The End of the Weak Dollar and Weak Dollar Rising). And I know they weren&#8217;t well received because my inbox immediately filled up with &#8220;positive&#8221; reinforcement. Such as…</span></p>
<ul>
<li><span class="Normal">&#8220;I would stick your dollar where the sun don&#8217;t shine.&#8221;</span></li>
<li><span class="Normal">&#8220;I&#8217;m still questioning your intelligence.&#8221;</span></li>
<li><span class="Normal">&#8220;I really am amazed that people who are so well educated could be so ignorant… to send out a newsletter saying how the weak dollar is looking up is very irresponsible.&#8221;</span></li>
</ul>
<p><span class="Normal">And yes, I kept every one of them in hopes of eventually being vindicated. But that&#8217;s not why I&#8217;m writing today. Gloating doesn&#8217;t put money into my portfolio. Only successful investments do.</span></p>
<p><span class="Normal">Instead, I&#8217;m writing to make one last appeal for you to consider initiating a long dollar/short euro position, before it&#8217;s too late…</span></p>
<h2><span class="Normal">4 Great Investors Badmouthing the Dollar…</span></h2>
<p><span class="Normal">Recall in March everyone, including four of the greatest investors of all time (with much more experienced than me) &#8211; Warren Buffett, Jim Rogers, Bill Gross and George Soros &#8211; were publicly badmouthing the dollar. By June, Soros changed his mind, mostly. He went from being a dollar bear to neutral. <span class="Normal">A sentiment change is afoot…</span></span></p>
<p><span class="Normal">And after last Friday&#8217;s move, the dollar bull officially charged off the endangered species list. Here are a just a few sightings, culled from recent articles in the financial press…</span></p>
<ul>
<li><span class="Normal">&#8220;The U.S. [dollar] multi-year down trend is over.&#8221; &#8211; <em>Marc Chandler, global head of currency strategy at Brown Brothers Harriman.</em> </span></li>
<li><span class="Normal">&#8220;Since reaching an all-time low against the major currencies in mid-March, the U.S. dollar has climbed 6%… The currency has seen several larger, temporary gains during its 38% slide since 2002, but this one could have legs.&#8221;  &#8211; <em>Sal Guatieri, economist at BMO Capital Markets.</em></span></li>
<li><span class="Normal">&#8220;The dollar&#8217;s surge against the euro has prompted Bank of America Corp. to tell its customers to exit trades betting on more gains.&#8221; <em>Bloomberg.com</em>, August 14, 2008<em>.</em></span></li>
</ul>
<p><span class="Normal">Trust me when I say there are countless others.</span> <span class="Normal">Instead of listing them all, I think it&#8217;s more important to understand the three factors prompting the sudden and massive conversions.</span></p>
<ul>
<li><span class="Normal">First, investors finally woke up to the decoupling farce. Just like the United States, the rest of the world (at least this time around) is staring down the double-whammy of slowing growth and rising inflation. That includes Europe and (gasp) China. In fact, going into today, the U.S. markets were performing better than all of the highly touted BRIC-countries, year-to-date. In a truly decoupled world, that wouldn&#8217;t be happening. </span></li>
<li><span class="Normal">Second, the latest reading of the <em>Economist&#8217;s</em> Big Mac Index confirmed the euro is grossly overvalued, by as much as 50% versus the U.S. dollar. The most it has ever been. </span></li>
<li><span class="Normal">For the skeptics in the bunch, here&#8217;s one more point to chew on…</span> <span class="Normal">It&#8217;s a fact the dollar moves in five to seven year cycles. It&#8217;s a fact the dollar&#8217;s already endured a six-year drubbing. So odds are the latest rally marks a legitimate reversal. And that means the euro is in store for an epic tumble.</span></li>
</ul>
<p><span class="Normal">So instead of merely daydreaming about the return of an affordable European vacation, I encourage you to do something that will actually help you afford it!</span></p>
<h2><span class="Normal">Stock Market Predictions &#8211; Get Long The U.S. Dollar</span></h2>
<p><span class="Normal">Here&#8217;s a stock market prediction &#8211; get long the U.S. dollar versus the euro. (See the <em>Investment U</em> Crib Sheet for two ideas.)</span></p>
<p><span class="Normal">And I know. I&#8217;ve insisted on the same move twice before. But as one of you put it, my prognosis was just &#8220;a bit premature. [The dollar] will get much worse before it gets better.&#8221;</span></p>
<p><span class="Normal">It did. The euro hit an all-time high of $1.6038 on July 15. But now it&#8217;s at a five-and-a-half-month low… with a long way to go.</span></p>
<p><span class="Normal">Remember, if you&#8217;re early, there&#8217;s still time to get it right. But if you&#8217;re late, there&#8217;s only time for regrets. Here&#8217;s to investing with no regrets.</span></p>
<p><span class="Normal">Good investing,</span></p>
<p><span class="Normal">Louis Basenese</span></p>
<p><span class="Normal"><strong>Related Articles:</strong></span></p>
<ul>
<li><span class="Normal"><a href="http://whitecapreport.com/archives/small-caps/ ">Small Caps</a>: It&#8217;s Time to Think Small</span></li>
<li><span class="Normal"><a href="http://whitecapreport.com/archives/long-term-investment-goals/">Long-Term Investment Goals</a>: Answers to The Top 3 Investing Questions Right Now</span></li>
<li><span class="Normal"><a title="Closed-End Income Funds" href="http://whitecapreport.com/archives/closed-end-income-funds/ ">Closed-End Income Funds</a>: Why It&#8217;s Time to Buy Them</span></li>
<li><span class="Normal"><a title="wind power" href="http://whitecapreport.com/archives/wind-power-why-this-renewable-energy-could-solve-the-us-oil-addiction/ ">Wind Power</a>: Why This Renewable Energy Could Solve The U.S. Oil Addiction</span></li>
</ul>
<p align="center"><span class="Normal"><a title="White Cap Report" href="http://whitecapreport.com/louis-basenese-articles/">White Cap Report Archives</a></span></p>
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