Valeant: A ‘Pharmaceutical Enron’?

by Dawn Pennington on October 21, 2015

Citron Research just lowered its price target on Valeant Pharmaceuticals ($VRX) on concerns about “unsavory business practices” including big price hikes, less money spent on research and development, and a lot of questions about the way the company operates. Activist investor Bill Ackman, who has lost big as VRX shares have tumbled recently, reportedly bought another 2 million shares. The stock ended almost 20% lower today at $118.61. It will be interesting to see where these fraud allegations lead … and whether Ackman is willing to lose billions more if this ship sinks further.


Some weekend reading for you …

by Dawn Pennington on October 16, 2015

The Dow Industrials gained for a third-straight week, their best performance in eight months.

Something else people were talking about this week was the first Democratic presidential debate. There were no real surprises, but two of the candidates found their names in the news today.

Donald Trump suggested the Fed hasn’t raised interest rates because Janet Yellen wants to help fellow presidential candidate Hillary Clinton.

And if you remember Martin Shkreli, who raised the price of an infection-fighting drug to $750 from $13.50 per dose, he allegedly attempted to donate to Bernie Sanders’ presidential campaign … and was rejected.

Speaking of Bernie Sanders, he’s a hot topic over at our Sound Dollar Campaign. This week we examined the real source of Mr. Sanders’ appeal. We suggest you check it out, along with our publisher Brad Hoppmann’s take on Ben Bernanke’s new book.


So how did you fare in Q3?

by Dawn Pennington on October 2, 2015

The third quarter of 2015 turned out to be the worst-performing quarter for the major indices since 2011. All three major U.S. indices dropped into correction territory, and they all remain that way as we enter the fourth quarter.

Among the biggest losers were energy and biotech, while the only sector that held up fairly well was the safe haven of utilities.

Here’s a quick numerical performance recap of some of the biggest domestic averages, as well as some of the biggest global markets, during the dreary Q3:

Q4 is set to bring a fresh wave of Q3 earnings reports starting next Thursday with Alcoa (AA), which recently announced that it is splitting into two companies. (Wonder which will kick off earnings season after the split?)

October also brings yet another Federal Open Market Committee meeting, and another round of “will they or won’t they?” angst.  So buckle up, batten down the hatches and stock up on your favorite libation … and be sure to read your morning and afternoon editions of Uncommon Wisdom Daily. And, as always, we’ll get through it together!


That’s one way to raise rates

by Dawn Pennington on September 15, 2015

The opening line of this Bloomberg article says it all …

“If the Federal Reserve doesn’t raise interest rates this week, Bill Loving may have to do it himself.”

He’s the CEO of West Virginia-based Pendleton Community Bank. And he makes a pretty good case for why interest rates need to rise, even if it’s only in the area his bank serves.



by Dawn Pennington on September 15, 2015

Happy birthday, global financial crisis. You marked this week in 2008 with the housing crash, the credit crunch and by ushering in a new era we all came to know and loathe as the Great Recession.

Business Insider published your baby book, for those who forget what a brat you were.

How about keeping the party to a dull roar this year, eh?

Oh, and get off my lawn.


Tim Cook had a great day. As for the rest of the markets …

by Dawn Pennington on September 9, 2015

U.S. stocks began the trading day with a big gain, with the Dow Industrials gaining nearly 200 points. But midway through Wednesday’s trade, stocks reversed course to close down nearly 240 Dow points.

The afternoon selling came as traders feared a potential interest-rate hike on the heels of the newest JOLTS data.  According to a recent Labor Department report, the number of job openings in the U.S. surged to a record in July. Plus, the report showed the number of positions waiting to be filled jumped by 430,000, the biggest gain since April 2010, to 5.75 million.

Here’s what else happened …

  • Apple (AAPL) announced the iPhone 6s and iPhone 6s Plus Wednesday, products CEO Tim Cook called “the most advanced smartphones in the world.” Apple also announced a new Apple TV product, and upgrades to its iWatch device, including a partnership with fashion house Hermes. The news was better than expected but shares fell 1.9%.
  • Oil futures fell below $45 a barrel, finishing at their lowest level in nearly two weeks after the EIA lowered its crude-oil price forecasts for this year and next.
  • Gold futures fell to their lowest level in a month Wednesday, as a rise in Asian and European equities and strength in the U.S. dollar pulled capital away from the yellow metal.
  • After the Shanghai Composite lost 2,000 points since June, the Chinese government tapped BlackRock’s Larry Fink for guidance. Fink reportedly arrived in China in late August; since then, its market has risen slightly but is flat on the year.
  • Yahoo! (YHOO) reversed some of yesterday’s losses, after dropping 4% Tuesday on concerns that its tax-free Alibaba (BABA) spin-off won’t go through as planned. If the move is taxed, it could reduce the proceeds by up to $16 billion. YHOO shares gained 2% Wednesday; BABA gained nearly 5.2%.
  • Cheniere Energy (LNG) tooka 3.2% hit today after Jim Chanos, of hedge fund Kynikos Associates, announced a short position in the stock. On the opposite side of the trade is Carl Icahn, who recently took an 8% ownership stake.
  • It’s National Career Day at Chipotle (CMG), which is looking to hire 4,000 people today — a move that will boost its workforce by roughly 7%. Shares slid about 13 points today, or 1.8%.
  • Now that McDonald’s (MCD) plans to start offering breakfast items all day, it is looking to go cage-free in the next 10 years. MarketWatch reported today that MCD buys more than 4% of the country’s eggs, of which 10% are currently cage-free. Shares dropped about 1.3% in today’s trade, in line with the broader indices’ pullback.
  • Barnes & Noble (BKS) got battered today, dropping more than 27% after earnings came in light for the fifth-consecutive quarter.


$8 billion or $13 billion: What Trump Could Really be Worth

by Dawn Pennington on September 3, 2015

When Donald Trump sent his detailed accounting of his personal finances to the Federal Elections Committee, we learned that his net worth is close to $8.7 billion.

As most of us know, he inherited much of his fortune. But what’s interesting is that he would have made more money investing in index funds, according to Forbes, than he made by building his own empire.

Trump’s net worth has grown about 300% to an estimated $4 billion since 1987, according to a report by the Associated Press. But the real estate mogul would have made even more money if he had just invested in index funds. The AP says that, if Trump had invested in an index fund in 1988, his net worth would be as much as $13 billion.

The S&P 500 has grown 1,336% since 1988.

Fortune, “Donald Trump Would’ve Been Richer if He’d Invested in Index Funds”

Not for nuthin’, but I’m impressed that he decided to work hard for a living … to build a brand that goes beyond the Kardashian-esque “famous for being famous” lifestyle … to create companies and jobs and TV shows that employ thousands upon thousands of people … instead of coasting on his family’s wealth and partying on a yacht in the Keys. (Although, I wouldn’t be mad at that either …)

The man has lost billions, yes — anywhere from $1 billion to $6 billion in failed businesses, depending on which source you read. But he’s made up for the shortfall with roughly $3.3 billion in royalties thanks to licensing and branding deals.

I’m not parlaying that as a reason to vote for him in 2016. But I think we can learn two very important things from his net worth:

1. Smart, conservative investing pays off over time, and

2. Having fun and taking calculated risks may not pay off as much, but it sure makes you a smarter person with more character in the end.

So, whether you’re a conservative investor or you’re experimenting with different trading strategies, you can reach your investing goals. In the latter case, you will probably earn every gray hair on your head. But you’ll probably have the better stories to tell at cocktail parties!


A week for the record books …

by Dawn Pennington on August 28, 2015

It was a week for the record books for Mr. Market. First, it tumbled 10% between last Wednesday and this Tuesday, wiping out more than $2 trillion in investor wealth.

Then the markets soared so much Wednesday and Thursday that the Dow Industrials set a two-day record, adding nearly 989 points. (Its prior record was 905 points in 2008.)

We saw another record Thursday when oil futures soared more than 10% on a report that Venezuela has asked OPEC to hold an emergency meeting. West Texas Intermediate crude ended the day at $42.56 per barrel. It was the best percentage gain for crude since 2009.

Oil continued its climb Friday, adding 6.2%, but unfortunately the stock surge didn’t stick going into the weekend.

The good news is that stocks managed to gain for the week. But the worst may not be over yet — something each editor in your Uncommon Wisdom Daily newsletters has been warning about since the Dow first tumbled 1,100 points on Monday morning.

Brad Hoppmann in particular has been warning that Sept. 16, 2015, is the day he’s been watching as having the potential to send shockwaves through the U.S. markets. And it could make this week’s action look like a bullish day at the beach.

Keep an eye on your Cash Flow Kings and Global Trend Trader issues for more about this pending market event. In the meantime, if you’re in Erika’s path like Uncommon Wisdom Daily headquarters is, please stay safe because the storm is heading our way this weekend.


A Good Week for Gold (and Little Else)

by Dawn Pennington on August 21, 2015

The U.S. markets saw not just their worst week in 2015 so far — but their worst week since 2011.The Dow has already dropped 1,000 points in August. All 10 S&P 500 subsectors are in the red. And West Texas Intermediate crude slid below $40 in today’s trading (for the first time since 2009).


Overseas, things were pretty much the same, as global stocks plunged on widespread economic growth concerns. On top of that, China got the “no confidence vote” heard ’round the world when the International Monetary Fund said the yuan won’t be included in its basket of world reserve currencies this year. Specifically, it will be “at least a year” before that could become a possibility.


And in Greece, Prime Minister Alexis Tsipras said he was stepping down after just a little more than half a year on the job. Elections are set a few weeks from now; at this point whoever steps up will be responsible for making sure the nation meets the terms of its third bailout. (We have a couple dozen presidential contenders over here … maybe we can make a suggestion or two?)


It was a good week for gold, though, as the December futures contract gained $46 (4.1%) this week.


In Thursday’s trade alone, gold gained 2.2%, although JR Crooks’ subscribers were able to grab two triple-digit-plus gold gains thanks to the yellow metal’s move up.



Not all bankers are ‘banksters’

by Dawn Pennington on August 18, 2015

Privately held Bank of Georgetown in Washington, D.C., just did something unusual. It voluntarily reported quarterly results, and announced plans to keep doing so — in good times or bad.

Earnings were good, in case you were wondering. And no, the company doesn’t appear to want to go public.

I’ll be watching this one. Maybe we all should …