De Blasio Takes Oath of Office to Become 109th Mayor of New York

NEW YORK (TheStreet) -- Saying he was going to ask more of the wealthy, Mayor Bill de Blasio was sworn in as New York's 109th mayor.

De Blasio succeeds Mike Bloomberg, who served three four-year terms, covering the period of New York's recovery from the 9/11 attacks on the World Trade Center.

The new mayor is the first Democrat to lead the city in 20 years. David Dinkins, the last Democrat to be mayor, was on the platform for the ceremonial swearing-in at City Hall at midday. De Blasio was officially sworn-in by State Attorney General Eric Schneiderman just after midnight in front of his Brooklyn home.

In the City Hall ceremony, President Bill Clinton administered the oath of office as de Blasio's family, Bloomberg, Gov. Andrew Cuomo and former Secretary of State Hillary Clinton looked on. Then the new mayor laid out his plans for the city, including his desire to bridge the gap between the wealthy and the poor, in his inaugural address.

"When I said we would take dead aim at the Tale of Two Cities, I meant it," de Blasio said. "And we will do it. I will honor the faith and trust you have placed in me. And we will give life to the hope of so many in our city. We will succeed as One City."

De Blasio said the wealthy need to be prepared to pay more in taxes. "We will ask the very wealthy to pay a little more in taxes so that we can offer full-day universal pre-K, and after-school programs for every middle school student," he said. "We do not ask more of the wealthy to punish success. We do it to create more success stories."

The mayor emphasized that the tax increase for the wealthy would be "little," coming to about $3 a day for someone earning between $500,000 and $1 million a year.

He said he would push to require large developers to build affordable housing. "We'll fight to stem the tide of hospital closures," the mayor said. "And we'll expand community health centers into neighborhoods in need, so that New Yorkers see our city not as the exclusive domain of the One Percent, but a place where everyday people can afford to live, work, and raise a family. We won't wait. We'll do it now."

De Blasio noted that the city has confronted many challenges. "New York has faced fiscal collapse, a crime epidemic, terrorist attacks and natural disasters," he said. "But now, in our time, we face a different crisis -- an inequality crisis. It's not often the stuff of banner headlines in our daily newspapers. It's a quiet crisis, but one no less pernicious than those that have come before.

"Its urgency is read on the faces of our neighbors and their children, as families struggle to make it against increasingly long odds. To tackle a challenge this daunting, we need a dramatic new approach -- rebuilding our communities from the bottom-up, from the neighborhoods up. And just like before, the world will watch as we succeed. All along the way, we will remember what makes New York, New York.

"A city that fights injustice and inequality -- not just because it honors our values, but because it strengthens our people. A city of five boroughs -- all created equal. Black, white, Latino, Asian, gay, straight, old, young, rich, middle class, and poor. A city that remembers our responsibility to each other -- our common cause -- is to leave no New Yorker behind." He concluded by saying: "Working together, we will make this One City. And that mission - our march toward a fairer, more just, more progressive place, our march to keep the promise of New York alive for the next generation. It begins today."  Follow @cabara

Nationstar Falls as Lesser-known Cousin Rises After Deal

NEW YORK (TheStreet) -- Nationstar Mortgage Holdings (NSM) shares, which rose Wednesday following a transaction with a related company, New Residential Investment Corp (NRZ), erased its gains Thursday after an analyst downgrade. New Residential, meanwhile -- a lesser-known name with no employees that analysts mostly ignored -- clung to its gains.

While Nationstar shares traded higher on Wednesday, rising 4.7% to $42.73 in the first few hours following the deal's announcement, they fell 3.83% Thursday to close at $39.70. Shares of New Residential, meanwhile, have risen 5.2% in the two trading days since the deal was announced. New Residential shares closed at $6.45 Thursday.

In the deal announced Wednesday, New Residential and related parties acquired from Nationstar a part of servicing fee income on up to $130 billion worth of unpaid mortgage debt. Servicing essentially refers to collecting the debt. In return for acquiring the rights to the fees, known as mortgage servicing rights (MSRs), New Residential would have to finance up to $6.3 billion of advances against potential non-payment of the mortgage debt. Fortress Investment Group (FIG) owns 75% of Nationstar and an affiliate of Fortress is an external manager of New Residential. New Residential has no employees, serving largely as a corporate shell that pays out a large dividend from the fee income it essentially buys from Nationstar. By holding capital against potential non-payment of mortgages, it frees up Nationstar for other activities such as acquisitions or paying down debt.

Wednesday's deal "enables Nationstar to pay down debt and potentially purchase more mortgage servicing rights," according to a report from Compass Point Research analyst Kevin Barker. However, Barker argued the deal "highlights how capital intensive this business has become," adding "we would expect the bidding for future MSR deals to be more competitive. Therefore, we view the potential return on capital from new deals as limited." While at least three analysts published reports on Thursday saying the deal was positive for Nationstar, a downgrade from appeared to drive the stock. The downgrade was published ahead of Thursday's open and the stock remained in negative territory all day. By contrast, no analysts published reports on New Residential. While 10 analysts cover Nationstar, just five follow New Residential. Sterne Agee analyst Henry Coffey, who predicted Wednesday's deal in a note on Tuesday, stated in a follow-up note on Thursday that the deal "creates positive investment/reinvestment opportunities for NRZ and capital relief (w/minimal EPS impact) for NSM." He has a "buy" rating on New Residential and a "neutral" rating on Nationstar. -- Written by Dan Freed in New York. Follow @dan_freed

Stock quotes in this article: NSM, NRZ 

All aboard? Starbucks tests train store

Starbucks wants to put its caffeine jolt into your train ride.

In Zurich on Wednesday the coffee giant unveiled the first Starbucks store on a train, including a fully-branded Starbucks motif on the inside and out. And, of course, baristas serving the java.

The move comes at a time that Starbucks continues ramping-up its efforts to expand outside the conventional storefront. It's sold in grocery stores. It's sold on college campuses. It's served on some airplanes. And now, even a Swiss train.

Starbucks train partner is Swiss Federal Railways (abbrevated as SBB in German), the national railway company of Switzerland. The first official voyage for the Starbucks train will take place on the train line running from Geneva Airport to St. Gallen in Switzerland on November 21 at 06:36 AM.

It was a serious challenge to design the Starbucks store on a train, says Liz Muller, director of concept design for Starbucks.. "We had to take into account the constant movement of the train, space limitation and stringent safety regulations."

It's one of the smallest espresso bars and stores that Starbucks has ever designed, she says.

The exterior of the sleek red and white car is branded with Starbucks siren logo on both sides including 'Starbucks' text. White icons representing menu items including beverages and muffins and an image of Starbucks espresso machines are on the train windows.

Inside, the colors are the familiar Starbucks browns and whites -- but no orange or green. The car's two levels provide seating for 50.

On the entry level, the baristas will serve passengers from behind a curved wooden bar that also features a small pastry case. There is a standing bar provided for customers. The upstairs boasts a lounge area with moveable club chairs and shared wooden tables.

For a Swiss-inspired twist, special dials resembling watch faces are built into all of the upstairs tables. Each has a number on it which is used so that customers can order from their se! ats and have drinks delivered.

But don't look for the Starbucks train to pull into New York's Penn Station or Washington D.C.'s Union Station in the near future.

"Not any time soon," says Starbucks spokeswoman Haley Drage . "This is something we are testing, and then can see how we can bring more broadly."

Raymond James reports record net income, profit for fiscal year

Raymond James' CEO Paul Reilly Bloomberg News

On the back of its acquisition of Morgan Keegan, Raymond James Financial Inc. on Wednesday reported record net revenues for its fiscal year ended in Sept. 30 of $4.5 billion, up 18% from the prior year. The firm, home to 5,700 registered reps and advisers in the United States, also reported record annual net income of $367 million, an increase of 24% from the prior year.

After a slow start to the recruiting year, independent broker-dealer Raymond James Financial Services Inc. posted better net new adviser numbers in the second half of the fiscal year, finishing with 3,275 reps and advisers by the end of September. That's a net gain of 55 reps and advisers in the course of the year, a gain of almost 2%.

Raymond James & Associates, the employee broker-dealer that absorbed Morgan Keegan brokers earlier this year, suffered a net loss of 43 reps and advisers after combining the two securities businesses. Its headcount as of Sept. 30 was 2,443 reps and advisers.

“All four operating segments generated net revenues and earnings this year, which is a testament to the firm's conservative business model and our associates' unwavering focus on serving clients and advisers,” said CEO Paul Reilly, in a statement.

Private client group revenues for the year increased 18% to $2.9 billion. Pre-tax income in the private client group was up 7% to $230.3 million. The private client group is the largest of Raymond James' businesses, account for roughly two-thirds the firm's revenues. The other segments are: capital markets, asset management, and a bank.

Overall for the company, earnings reached $2.58 per diluted share, up 17% from $2.20 per diluted share in the prior fiscal year. Excluding $80 million in pre-tax charges for acquisition-related expenses and other items, net income would have been $2.95 per diluted share. The firm also reported record assets under administration of $425 billion, up 10% for the year, and record assets under management of $56 billion, up 31% for the year.

The results included a full year of Morgan Keegan business operations, which Raymond James acquired for $930 million in April 2012 from Regions Financial Bank.

Shares of Raymond James Financial closed Wednesday at $43.46, down 0.73%.

Arch Coal Falls 5% as Morgan Stanley Downgrades on Cheaper Coal

Shares of Arch Coal (ACI) have plunged today after Morgan Stanley downgraded the company after predicting that even-cheaper natural gas would knock down coal prices–and Arch’s profits.

Bloomberg News

Morgan Stanley’s Stephen Byrd and team explain:

NAPP coal demand is at the highest risk from negative gas basis in Marcellus and Utica. Although coal demand has rebounded from 2012, we see 2013 as a near term peak as regional gas prices in the production-heavy mid-Atlantic erodes NAPP demand. Although NAPP falls lower on a generic cost curve than CAPP, it is burned primarily in regions exposed to cheap gas from Marcellus and Utica production. We expect weak gas basis relative to Henry Hub to spread though PA, NJ, WV and even Ohio and Downstate NY in 2014, reducing capacity factors at coal plants in these regions. We see ~8mm tons decrease in PJM NAPP coal burn in 2014 relative to 2013.

That’s bad for Arch Coal, Byrd says. He writes:

We are downgrading Arch to Underweight from Equal-weight, driven by our more negative view of the domestic thermal coal market. Arch is a thermal-heavy name with significant balance sheet leverage, making the company vulnerable to prolonged depressed market conditions.

Also taking a hit: Exelon (EXC), which Byrd downgraded to Underweight from Overweight.

It’s not all bad news, however. Two utilities should benefit from this trend, Calpine (CPN) and Dominion Resources (D), although the advantage may already be priced into Dominion’s shares, Byrd says.

Sahes of Arch Coal have dropped 5.3% to $3.90 at 3:03 p.m. today, while Excelon has dropped 3.2% to $28.59. Calpine has gained 0.7% to $19.37 and Dominion is up 1.1% at $62.49. Consol Energy (CNX), which is also exposed to East Coast coal is down 2.1% at $37.55.

Clients ready to listen to advisers on alternative investments

Advisers who may still fear a client's look of horror for recommending alternative investments should take note of these survey results — investors are ready to listen.

About 72% of investors would consider alternative investments if their adviser recommended them — up from 35% a year ago and a giant leap from 19% in 2011, a Natixis Global Asset Management SA survey found. About 43% said they already are willing to invest in alternatives.

Education will be key, as 85% of investors said they would invest in alternatives if they understood them better, according to the survey, which sampled investors with at least $200,000 in assets. The survey, released Tuesday, included 750 U.S. investors as part of a global survey of 5,650 investors from 14 countries.

“Advisers sometimes think they can't bring alternatives to the discussion,” said Matthew Coldren, executive vice president of Natixis. “But there's increasingly an openness from investors to learning more about alternative strategies.”

Most investors, about 61%, said they don't believe that traditional stock-and-bond portfolios are the best way to manage investments and go after returns, according to the survey.

In fact, about 28% of investors said they plan to increase their investments in real estate over the next 12 months, 28% in gold and other precious metals, 22% in alternative mutual funds and 20% in private equity, the survey found. About 25% plan to increase their U.S. stock allocation.

The largest planned shift in allocations, however, was from about 36% of investors who plan to increase the amount of their portfolios that are in cash over the next year.

Almost all investors, 86%, pay attention to the overall risk in their portfolios, and 82% try to measure their investments' risk, the survey found.

“It's encouraging to see a strong focus on risk,” said John Hailer, chief executive of Natixis in the Americas and Asia. “We know from recent history that when investors are focused on growing assets without understanding the risks involved, it's a recipe for disaster.”

The survey also found that about half of these investors don't have a financial plan to help them achieve their goals — a figure that has been steady during the past four years of the Natixis survey, Mr. Coldren said. And about 45% of investors said they don't have clear financial goals.

What Do Ballistic Missiles, Barbara Bush and Alternative Investments Have in Common?

Talk about a witness to history.

While speaking about graduating Phi Beta Kappa from Wellesley College, Dorothy Weaver (left) mentions (with no hint of airs) the role she played in bringing former first lady Barbara Bush and Russia’s first lady Raisa Gorbachev to the campus for a 1990’s commencement speech.

The invitation drew controversy that was closely watched around the country because many of the female graduates didn’t feel Bush’s individual achievements measured up. Bush, however, waded into the mini-maelstrom, charmingly disarmed the graduates and saved the day.

So how did Weaver, chair of her alma mater's financial committee at the time (a post she held for 17 years) land the A-list speaker?

“Barbara introduced me to my husband,” she responds just as oft-handedly.

While her connections are impressive, her career achievements are more so. The CEO, chairman and co-founder of Collins Capital, an alternative investment firm based in Coral Gables, Fla., is also a former chairman of the Federal Reserve Bank in Miami.

“I sometimes disagree with my brother-in-law, Richard Fisher,” she says, referring to the current (and outspoken) president and CEO of the Federal Reserve Bank of Dallas. It’s gotta be a Texas thing—Weaver is a native—because she doesn’t hold back.

“We’ve been in hedge funds since before they were called hedge funds,” she begins. “What did we call them then? Good managers.”

Advisors, Weaver says, are clear about where they don’t want to be. Identifying where they therefore want to be is the problem.

“Advisors say they want equity-like returns. Oh really, they want returns like equities have recently delivered, meaning zero? They also say they want ‘bond-like risk.’ Like the risks that bonds offered in the spring? It’s code. What they’re really asking for is high single-digit or low double-digit returns with low risk.”

In other words, she adds, they’re may be “danger in safety.” Although equities and bonds are critical in a portfolio, a “third stool is needed—alternative investments.”

“A return enhancer with low risk and reduced volatility? Alternatives fill that role. But it has to be a multimanager, multidiscipline strategy with a differentiated approach. Investors and advisors now have the opportunity to include a hedge fund strategy within the portfolio.”

Weaver explains that she’s been implementing such strategies since 1995, and that the “H” doesn’t stand for “Hail Mary, heroic or the hare from Aesop’s Fable, it stands for hedge, and we’re the slow and steady tortoise in that world.”

She claims that when the market was down 40% during the crisis, Collins alternative strategy was up 9%. She didn’t aim for the gain, rather her focus was on preservation of capital at the time, but the gain nonetheless happened.

“Advisors know the pieces they need in the portfolio, they just might have an issue with execution,” she says. “They want hedge fund expertise with mutual fund ease. That’s where we come in. Right now, advisors are on the cusp of really understanding the difference between alternative strategies and vehicles. Hedge funds can get them there.”

Something else that makes the firm unique is the rocket scientist (literally) they have working on the alternative strategy. In what is rapidly becoming commonplace in Weaver’s explanations, she notes that his former role was manning the defenses in the United Kingdom against a Cold War ballistic missile attack.

“If he made a mistake, millions of people’s lives would be at risk,” she says. “He has that same level of attention and responsibility today, knowing if he messes up, people’s lives—or at least the quality of their lives—is at risk.”

Mattel's Future: Happily Ever After?

According to its most recent earnings release, Mattel (NASDAQ: MAT  ) seems to have become a victim of its own success. The company reported a 12% drop in revenue from its Barbie brand, while other girls' toys ate up market share. The American Girl and Monster High lines did particularly well, but the cost was high. As the newer lines continue to succeed, the questions around Barbie's future grow.

Making the most of the trend
Monster High is leading the way at Mattel, and analysts now believe that the business may be worth up to $500 million annually. That success has helped steer Mattel toward new opportunities, including a variation on Monster High -- which is a line of monsters in high school -- called Ever After High. The new line is going to hit stores in the second half of the year, and focuses on classic fairytale characters while they're in high school.

When I say "classic fairytale characters," I, of course, mean slightly rebranded Disney (NYSE: DIS  ) princesses. The list includes Snow White, Sleeping Beauty, and Cinderella-style characters, along with some princes, and Alice-in-Wonderland themed dolls.

The move makes an incredible amount of sense for Mattel, as Disney has had runaway success with its rebranding of the princesses as a separate line. According to analyst studies, the Princess line is generating $3 billion in annual global sales. That's six times what Monster High is pulling in, and highlights the value available in the marketplace. Since Mattel is only spending $10 million to $20 million to develop the spin-off lines , the payback is almost immediate.

The long game
The stock suffered a 7% drop yesterday in light of the shortfall from Mattel. Overall, the company managed a 1% increase in global sales, but it had a 25% drop in earnings per share . The long game for Mattel looks increasingly like an ever evolving line of girls' toys. While the company has had success with boys' lines, its real core lies in girls.

On the competitive side, Hasbro (NASDAQ: HAS  ) seems to have boys' toys locked down. The company is generating more than twice as much from its boys' toys as it does from girls' toys. That success is resting on the strength of Marvel-branded toys, G.I Joe, and NERF. Mattel is a much larger company, and Hasbro has to be content to simply succeed where it can.

For Mattel, the most interesting thing to come over the next year may be the conflict that arises between Mattel and Disney, if its Ever After brand takes off. Right now, Mattel produces a number of toys with the Disney branding, and it relies on a good relationship with the media company. Disney may start to see some encroachment on its territory, which could lead to a confrontation. But first, Ever After has to succeed.

The retail space is in the midst of the biggest paradigm shift since mail order took off at the turn of last century. Only those most forward-looking and capable companies will survive, and they'll handsomely reward those investors who understand the landscape. You can read about the 3 Companies Ready to Rule Retail in The Motley Fool's special report. Uncovering these top picks is free today; just click here to read more.

The Dow Upgrades Itself, and the Smartphone Era Begins

On this day in economic and business history ...

Technology and pharmaceuticals gained a permanent foothold in the Dow Jones Industrial Average (DJINDICES: ^DJI  ) on June 29, 1979. The index added IBM (NYSE: IBM  ) and Merck (NYSE: MRK  ) that day, replacing floundering automaker Chrysler and food-products company Esmark for only its second component swap in the previous 20 years -- still the slowest rate of changes in Dow history.

The addition of IBM was actually the start of its second Dow membership period, as it had been a component from 1932 to 1939. However, IBM's 1979 addition marked the first time that a specialized digital technology company held a place on the Dow -- IBM was not a computer maker (no one was) in the '30s, and neither longtime components AT&T nor General Electric had dedicated mainframe computer divisions, although both tried to enter the market. Merck's addition marked the first time any drugmaker had ever been a part of America's most-watched market index. It has since been joined by two other drugmakers, and one health insurer.

IBM's exclusion had been previously justified on account of the outsized effect its triple-digit share prices might have on the price-weighted index, but the computer maker enacted a 4-for-1 split earlier in 1979. The Dow missed out on some rather staggering gains during the years it excluded IBM, as the company's 22,000% gain over those four decades would have doubled the Dow's real value by 1979. The tech beachhead IBM opened on the Dow has since been stormed by four other technology stocks.

Building a leader
Home Depot (NYSE: HD  ) was founded on June 29, 1978. A year later, the ambitious young retailer opened its first two superstores. Within six years, Home Depot was a public company, and its trajectory continued to rise to the present day. To read more about Home Depot's history, click the link earlier in this paragraph.

The new computing craze
Apple's (NASDAQ: AAPL  ) flagship device finally reached consumers' hands on June 29, 2007, six months after Steve Jobs introduced it to the world. Crowds pressed up against the doors of Apple retail stores across the United States, rabidly awaiting the opportunity to own one of the first iPhones. The $599 smartphone sold briskly on its first day, and within two days, more than 270,000 people went home with new iPhones.

Despite the early hype, there were plenty of critics. Microsoft CEO Steve Ballmer burst out laughing when asked about the device's market potential, calling it "the most expensive phone in the world." Bloomberg writer Matthew Lynn also knocked the "luxury bauble," and other tech writers heaped scorn on the iPhone's unusual configuration in a phone era dominated by glorified PDAs with articulated keyboards. No one can criticize Apple now. Even if you don't like the iPhone, you can't argue with an industry-leading 320 million-plus unit sales across all models, accomplished in just the first six years since its introduction.

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 among the five kings of tech. Click here to keep reading.

1 Retail Stock in Trouble

The following video is from Tuesday's Investor Beat, in which host Chris Hill and analysts Jason Moser and Charly Travers dissect the hardest-hitting investing stories of the day.

First-quarter earnings for lululemon athletica  (NASDAQ: LULU  )  came in better than expected. With same-store sales rising 7% for the quarter, the popular maker of yoga wear appeared to have put its recent troubles in the rearview mirror. But shares plunged today on the news that CEO Christine Day is resigning. In her five years at the top, Lululemon has grown steadily and shares of the stock have risen more than 400%. In the lead story from today's Investor Beat, Motley Fool analysts Charly Travers and Jason Moser discuss whether the next CEO will fare as well or if increased competition means the troubles are only beginning for Lululemon.

Lululemon has the potential to grow its sales by 10 times if it can penetrate its other markets like it has in Canada, but the competitive landscape is starting to increase. Can Lululemon fight off larger retailers and ultimately deliver huge profits for savvy investors? The Motley Fool answers these questions and more in its most in-depth Lululemon research available. Thousands have already claimed their own premium ticker coverage; gain instant access to your own by clicking here now.

The relevant video segment can be found between 0:18 and 2:29.

U.K. Stocks Decline as FTSE 100 Index Trims Monthly Gain

U.K. stocks declined, with the FTSE 100 (UKX) Index posting two consecutive weekly losses for the first time since November, even as the equity benchmark completed the longest streak of monthly gains since its inception.

Imagination Technologies Group Plc (IMG) dropped 4.5 percent as Bank of America Corp.'s Merrill Lynch unit recommended that investors sell the shares. London-listed mining companies pared their first monthly advance since January as Rio Tinto Group and Glencore Xstrata Plc both fell at least 2.5 percent.

The FTSE 100 lost 73.9 points, or 1.1 percent, to 6,583.09 at the close in London. The gauge dropped 1.1 percent this week. It has still climbed 2.4 percent in May, for a 12th month of gains and the longest winning streak since the gauge was formed in 1984. The broader FTSE All-Share Index declined 1 percent today, even as it rose for a 12th month for the first time since the benchmark measure began in 1962. Ireland's ISEQ Index slipped 0.5 percent.

"The market is perhaps going to be more volatile from here," Xavier Lagrandie, who helps manage about $40 billion at Lombard Odier Investment Managers, said in a telephone interview from Geneva. "Still, this is a short-term pull-back, and I'd see a correction of 5 to even 10 percent as an opportunity to put more money to work again."

Treasury Yields

The yield on benchmark 10-year U.S. Treasuries (USGG10YR) has increased 48 basis points in May, its biggest monthly advance since December 2010, amid speculation that the Federal Reserve will taper its debt-buying program as economic data improves.

"It's understandable that at some point interest rates go up a bit, but rates are still extremely low," Lagrandie said. "We've seen an economic recovery in the U.S., which supports global growth, though Europe continues to lag behind."

U.S. consumer sentiment climbed in May to the highest level since July 2007. The Thomson Reuters/University of Michigan index of consumer confidence rose to 84.5 from 76.4 in April, according to a final reading today. Economists had predicted a gain to 83.7.

Business activity in the U.S. increased this month to the highest level in 14 months. The MNI Chicago Report's business barometer rose to 58.7 in May, from 49 in April. Economists surveyed by Bloomberg had forecast an increase to 50. A reading above 50 signals expansion.

Economic Growth

The U.K. economy will grow faster than previously forecast over the next three years, the British Chambers of Commerce said today. Gross domestic product will rise 0.9 percent this year, 1.9 percent next year and 2.4 percent in 2015, compared with previous forecasts of 0.6 percent, 1.7 percent and 2.2 percent, the London-based lobby group said.

A U.K. consumer-sentiment index published by GfK NOP Ltd. climbed 5 points to minus 22 this month. That matched the reading in November, which was the strongest in 18 months.

The number of shares changing hands in FTSE 100-listed companies was 49 percent greater than the average of the past 30 days, data compiled by Bloomberg showed.

Imagination Technologies dropped 4.5 percent to 351.4 pence. Merrill Lynch lowered its rating on the designer of chips for mobile devices to underperform, the equivalent of a sell recommendation, from neutral. The brokerage said that lower prices for smartphones and tablet computers sold in emerging markets will reduce the royalties that the company collects from every sale.

A gauge of London-listed mining companies slipped 2.1 percent, paring its advance in May to 1.7 percent. Rio Tinto, the world's second-largest raw-materials producer, slipped 2.6 percent to 2,857 pence, while Glencore decreased 3.1 percent to 323.1 pence. Vedanta Resources Plc (VED) slid 3.4 percent to 1,262 pence.

Lonmin Plc (LMI) jumped 2.8 percent to 295 pence, extending its biggest weekly rally in almost four months. Morgan Stanley upgraded the shares to overweight from equal weight, meaning that investors should buy more of the shares. The brokerage described their valuation as attractive.

What Internet of Things (IoT) Investors Need to Watch in 2015

Source: Piktochart.

There is plenty of media coverage of the Internet of Things, or IoT. I've contributed my fair share. But while many of those stories focus on connected thermostats, fitness bands, and smart watches, there are much larger trends influencing IoT. 

Admittedly, these trends aren't anything new. Big Data, security, and even predictive maintenance have all been around for a while. But in 2015, we can expect each of them to become a much bigger part of IoT than ever before. 

1. Big data gets even bigger
Cisco Systems expects 25 billion "things" to become connected to the Internet this year, and managing all the data those things create will become increasingly important.

David Cearley, a vice president at Gartner, said recently in the research company's report on strategic technology trends for 2015 that, "Organizations need to manage how best to filter the huge amounts of data coming from the IoT, social media and wearable devices, and then deliver exactly the right information to the right person, at the right time. Analytics will become deeply, but invisibly embedded everywhere."

In short: Companies can't just make Internet of Things devices, they must also manage the data they collect.

We've already seen evidence of this. Last year, big IoT players Intel (NASDAQ: INTC  ) , General Electric (NYSE: GE  ) , and Sierra Wireless (NASDAQ: SWIR  ) all introduced or expanded their own Internet of Things platforms for managing embedded connections. General Electric opened the Predix platform to a small number of companies, and is making the software available to companies of all sizes in 2015. The company expects to generate $5 billion in revenue from Predix over the next two years.

GE is already using its Predix IoT platform. Source: GE.

It's not just the large conglomerates that are trying to manage IoT connections. A small yet dominant force in IoT, Sierra Wireless, last year introduced its Legato platform for managing its own embedded devices. The company said the software "allows OEMs, service providers, and their customers to configure and manipulate the data they collect from their connected assets, integrating it easily into their own back-end systems for business intelligence, even in real time when required."

So while last year brought new platforms for managing massive amounts of data from the Internet of Things, in 2015 we should see more adoption of those platforms. As Cearley noted in his report, "Every app now needs to be an analytic app."

2. IoT vulnerability becomes clear
In light of the massive data breaches experienced in 2014 (including the Heartbleed bug, cyberattacks on Home Depot and Staples, the iCloud hack, and the Sony fiasco) it's not hard to imagine Internet of Things vulnerability. In fact, it's likely one of the most insecure areas of tech right now.

Source: Source: Piktochart.

While 2014 was the "year we got hacked, " as Forbes called it, 2015 will be the year the public realizes the Internet of Things is wide open for hackers. In a list of projections for 2015, Malwarebytes Labs, which makes anti-malware products, said that "Both mainstream media and the general public will hear about the first major hacker attack against an internet connected device (that was previously not connected)."

Why does this matter? Because it could be detrimental for companies developing consumer devices that experience the breach. The IoT will manage massive amounts of data, connect important industrial equipment, and bring parts of our homes online. The company that suffers a major public breach can likely expect its product sales (and stock price) to take a hit. 

3. Predictive maintenance will drive IoT growth
It's easy to think of Big Data as a massive amount of information that needs to be sifted through (and it is), but that information just doesn't sit around waiting to be analyzed. The Internet of Things allows that data to be collected and processed in real time so that maintenance decisions can be made automatically.

International Data Corp. said that in 2015 predictive maintenance will become one of the most important IoT solutions categories. In fact, it's already being put to good use. In the agricultural sector, a company called TempuTech uses sensors and GE technology to monitor grain conveyer belts, which have a tendency to overheat and can cause fires. The sensors monitor belts and grain elevators for problems, and send real-time notifications to farmers before a problem starts.

Source: Intel.. 

That is just one small system in one sector. Last year, Intel tested its own predictive maintenance technology at one of its back-end manufacturing plants in Malaysia -- and saved $9 million as a result. The company said the savings came through "cost avoidance and improved decision making," which allowed equipment to run more efficiently and with less downtime. The good news for manufacturing companies is that Intel is bringing the same technology to market this year.

IDC also believes this year will be key for the entire information and telecommunications technology industry (what it calls ICT). "To say that 2015 will be a pivotal year in the ICT industry is a gross understatement," Frank Gens, IDC's senior vice president and chief analyst, said in a report.

As these Internet of Things trends continue into 2015, investors can expect them to be catalysts to this year's technology innovations. 

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Ford - The Time Tested Business House

For quite a long time Ford Motor Co. (F) has been sailing through the rough waters which is evident from the fact that two of its main competitors essentially went out of business and then saved by government bailout.

Let us run through a precise health checkup of Ford business. Let us look at Ford's margins as a way of assessing the health of the current business and any risks or upside to those margins and what it could mean for shareholders.

Margin Talks

First, let us take into consideration Ford's gross margins. Success for any company can be recognized at the first instance from its gross margins as this tells you how much it costs for a company to make whatever it's selling. This is a reflection of the business' capability to show pricing power with its suppliers and demand from its customers in the face of intense competition.

It is evident that Ford's gross margin has been into the rough waters for the past ten years. Ford was a blockbuster brand in the early part of the 2000s but its growth got jilted by rising gas prices trimming the demand for its highest selling models in early 2006 and Ford had to take the hit. Margins are razor thin in the auto industry in the first place but given Ford's macro conditions, an already poor environment for margin got highly aggravated. However the agility of Ford's management team saw to it that Ford quickly responded back to the depleting business and margins scaled back up gradually to close to 20% before beginning a second round of down slide in the past three years. Margins are set to come approximately in line with 2013 this year so the trend continues.

Falling margins are never a favorable symptom for any business progress since everything a company pays for – from A to Z - comes out of gross margins. When gross margins fall the number of dollars available to pay employees, invest in the business, buy things, etc. is diminished to the equal proportion of the margin fall. But most of all, the worst hit area due to falling margins is profit, the bottom-line of any business and that is why it is so important to keep a close watch and control on margin movements of a business.

Dissecting the Margins

Now let's explore further into the margins and get into operating margins, though here the story is not repetitive but it is in sync with the gross margin movement.

Operating margins gives the best insight of how a business' Health. It is simply the measure of a company's profits before taxes, interest and other expenses that are not directly related to making and selling things. In this way we get a clearer understanding of how well the business is performing without the clamoring of GAAP accounting policies.

Ford's operating margins have actually dropped below zero thrice in the past ten years, a figure which triggered the panic button amongst investors to such an extent that Ford shares have traded at two bucks near the lowest lows of its downturn. Investors often carry the notion that margin can be no less than zero which means the company earns back what it spends but this is not entirely true especially in a business like the auto sector where the margins are so less, that a couple of adversities can push the margins to sub-zero levels. Hence the moment margins get southbound, they can go way south in a hurry triggering panic in the market.

So what does this mean for the shares and shareholders? The picture isn't exactly rosy and rather quite gloomy. However, the stocks look attractive from the valuation point of view. The shares are not just cheap but there is also the cyclicality of Ford's business. Every auto maker goes through cycles of undulations owing to the nature of the business domain and currently Ford is near the bottom of its downside. Revenue and margins have been flagging recently but with an array of new models about to hit the roads in the next couple of years I think Ford's drive looks to be brighter in the uphill direction.

Ford management has also evolved with time and has developed the smartness of controlling operating expenses more efficiently than their predecessors. Analysts have noted that the spread between operating profit and gross margins has flattened out over time. The following chart shows the difference between gross margins and operating margins; in other words, it shows the percentage of revenue Ford spends on operating expenses each year, or the difference between the first two graphs.

Cutting the Cost according to the Cloth

Ford has managed to effectively trim its operating expenses to half as a percentage of revenue since 2009 and while the number has crept up since 2011 it is still at the lower si

5 Stocks With Big Insider Buying

DELAFIELD, Wis. (Stockpickr) -- Corporate insiders sell their own companies' stock for a number of reasons. 


They might need the cash for a big personal purchase such as a new house or yacht, or they might need the cash to fund a charity. Sometimes they sell as part of a planned selling program that they have put in place for diversification purposes, which allows them to sell stock in stages instead of selling all at one price.

Read More: 5 Hated Earnings Stocks You Should Love




Other times they sell because they think their stock is overvalued and the risk/reward is no longer attractive. Some even dump their own stock because they have inside knowledge that a competitor is eating their lunch and stealing market share. 


But insiders usually buy their own shares for one reason: They think the stock is a bargain and has tremendous upside.



The key word in that last statement is "think." Just because a corporate insider thinks his or her stock is going to trade higher, that doesn't mean it will play out that way. Insiders can have all the conviction in the world that their stock is a buy, but if the market doesn't agree with them, the stock could end up going nowhere. Also, I say "usually" because sometimes insiders are loaned money by the company to buy their own stock. Those loans are often sweetheart deals and shouldn't be viewed as organic insider buying.



At the end of the day, it's institutional money managers running big mutual funds and hedge funds that drive stock prices, not insiders. That said, many of these savvy stock operators will follow insider buying activity when they agree with the insider that the stock is undervalued and has upside potential. This is why it's so important to always be monitoring insider activity but twice as important to make sure the trend of the stock coincides with the insider buying.



Recently, a number of companies' corporate insiders have bought large amounts of stock. These insiders are finding some value in the market, which warrants a closer look at these stocks. Here's a look five stocks whose insiders have been doing some big buying per SEC filings.

Read More: Warren Buffett's Top 10 Dividend Stocks

Southern Copper

One basic materials player that insiders are snapping up a large amount of stock in here is Southern Copper (SCCO), which is engaged in the mining, exploring, smelting, and refining copper and other minerals in Peru, Mexico, Argentina, Chile, and Ecuador.  Insiders are buying this stock into notable strength, since shares are up 13% so far in 2014.

Southern Copper has a market cap of $27 billion and an enterprise value of $29 billion. This stock trades at a cheap valuation, with a trailing price-to-earnings of 18.8 and a forward price-to-earnings of 15.5. Its estimated growth rate for this year is -8.9%, and for next year it's pegged at 20%. This is not a cash-rich company, since the total cash position on its balance sheet is $1.63 billion and its total debt is $4.21 billion. This stock currently sports a dividend yield of 1.4%.

The chairman of the board just bought 150,000 shares, or about $4.76 million worth of stock, at $31.53 to $31.89 per share.

From a technical perspective, SCCO is currently trending above its 200-day moving average and just below its 50-day moving average, which is neutral trendwise. This stock has been trending sideways and consolidating for the last two months and change, with shares moving between $30.83 on the downside and $33.77 on the upside. Shares of SCCO are now starting to spike higher and flirt with its 50-day moving average and it's beginning to move within range of triggering a near-term breakout trade.

If you're bullish on SCCO, then I would look for long-biased trades as long as this stock is trending above some key near-term support levels at $31.23 to $30.83 and then once it breaks out above some near-term overhead resistance levels at $33.05 to $33.67 and then above its 52-week high at $33.90 a share with high volume. Look for a sustained move or close above those levels with volume that hits near or above its three-month average action of 1.77 million shares. If that breakout hits soon, then SCCO will set up to re-test or possibly take out its next major overhead resistance level at $40.73 a share.

Read More: 5 Rocket Stocks Worth Buying in September

Titan Machinery

An agricultural machinery player that insiders are jumping into here is Titan Machinery (TITN), which owns and operates a network of full service agricultural and construction equipment stores in the U.S. and Europe. Insiders are buying this stock into major weakness, since shares are down large by 24% so far in 2014.

Titan Machinery has a market cap of $281 million and an enterprise value of $1.2 billion. This stock trades at a reasonable valuation, with a trailing price-to-earnings of 58 and a forward price-to-earnings of 19. Its estimated growth rate for this year is -47.4%, and for next year it's pegged at 65.9%. This is not a cash-rich company, since the total cash position on its balance sheet is $89.71 million and its total debt is just $1.08 billion.

The CEO just bought 90,250 shares, or about $1.17 million worth of stock, at $13.01 per share.

From a technical perspective, TITN is currently trending below both its 50-day and 200-day moving averages, which is bearish. This stock has been downtrending badly for the last three months and change, with shares moving lower from its high of $18.25 to its recent low of $12.12 a share. During that downtrend, shares of TITN have been consistently making lower highs and lower lows, which is bearish technical price action. That said, shares of TITN have now started to spike higher off that $12.12 low and it's starting to move within range of triggering a near-term breakout trade.

If you're in the bull camp on TITN, then I would look for long-biased trades as long as this stock is trending above its recent low of $12.12 and then once it breaks out above some near-term overhead resistance levels at $14.07 to $14.73 a share with high volume. Look for a sustained move or close above those levels with volume that hits near or above its three-month average action of 206,059 shares. If that breakout kicks off soon, then TITN will set up to re-test or possibly take out its next major overhead resistance levels at its 200-day moving average of $15.91 to $16.50, or even $17 a share.

Read More: 4 Stocks Breaking Out on Big Volume

Heartware International

One medical device player that insiders are active in here is Heartware International (HTWR), which is engaged in developing and manufacturing miniaturized implantable heart pumps or ventricular assist devices for the treatment of advanced heart failure in the U.S. and internationally. Insiders are buying into notable weakness, since shares are off by 12% so far in 2014.

Heartware International has a market cap of $1.39 billion and an enterprise value of $1.3 billion. This stock trades at a reasonable valuation, with a price-to-sales of 5.62 and a price-to-book of 6.74. Its estimated growth rate for this year is 40.1%, and for next year it's pegged at 20.8%. This is a cash-rich company, since the total cash position on its balance sheet is $182.70 million and its total debt is $110.85 million.

A beneficial owner just bought 90,000 shares, or $6.93 million worth of stock, at $76.90 to $77.39 per share.

From a technical perspective, HTWR is currently trending below both its 50-day and 200-day moving averages, which is bearish. This stock has just started to spike higher off its recent low of $76.19 a share with decent upside volume flows. That spike is now starting to push shares of HTWR within range of triggering a near-term breakout trade above some key overhead resistance levels.

If you're bullish on HTWR, then I would look for long-biased trades as long as this stock is trending above some near-term support at $80 or at $76.19 a share and then once it breaks out above some key near-term overhead resistance levels at its 50-day moving average at $83.06 to $83.92 a share with high volume. Look for a sustained move or close above those levels with volume that hits near or above its three-month average volume of 150,241 shares. If that breakout gets started soon, then HTWR will set up to re-fill some of its previous gap-down-day zone from July that started at $93.73 a share.

Read More: 10 Stocks Billionaire John Paulson Loves in 2014

Halozyme Therapeutics

One biopharmaceutical player that insiders are in love with here is Halozyme Therapeutics (HALO), which researches, develops, and commercializes human enzymes. Insiders are buying this stock into major weakness, since shares have plunged lower by 36% so far in 2014.

Halozyme Therapeutics has a market cap of $1.1 billion and an enterprise value of $1 billion. This stock trades at a premium valuation, with a price-to-sales of 19 and a price-to-book of 20. Its estimated growth rate for this year is 16.2%, and for next year it's pegged at 53.2%. This is a cash-rich company, since the total cash position on its balance sheet is $147.65 million and its total debt is $49.82 million.

The CEO just bought 50,000 shares, or about $446,000 worth of stock, at $8.92 per share. The CFO also just bought 25,000 shares, or about $222,000 worth of stock, at $8.90 per share.

From a technical perspective, HALO is currently trending above its 50-day moving average and below its 200-day moving average, which is neutral trendwise. This stock has found buying interest over the last two months and change each time its pulled back to just under $9 a share. Shares of HALO are now starting to spike higher off those support levels and it's starting to move within range of triggering a big breakout trade above some key overhead resistance levels.

If you're bullish on HALO, then I would look for long-biased trades as long as this stock is trending above some key support levels at $8.75 to $8.58 a share and then once it breaks out above some near-term overhead resistance levels at $9.90 to $10.11 a share and then above $10.31 to $10.70 a share with high volume. Look for a sustained move or close above those levels with volume that registers near or above its three-month average action of 1.29 million shares. If that breakout develops soon, then HALO will set up to re-test or possibly take out its next major overhead resistance levels at $13 to $14 a share.

Read More: How to Trade the Market's Most-Active Stocks

Brixmor Property Group

One final stock with some decent insider buying is Brixmor Property Group (BRX), which operates various grocery-anchored community and neighborhood shopping centers in the U.S. Insiders are buying this stock into notable strength, since shares have gone up by around 14% so far in 2014.

Brixmor Property Group has a market cap of $5.6 billion and an enterprise value of $11.6 billion. This stock trades at a premium valuation, with a forward price-to-earnings of 46. Its estimated growth rate for this year is 191.7%, and for next year it's pegged at 42.9%. This is not a cash-rich company, since the total cash position on its balance sheet is $61.83 million and its total debt is $6.07 billion. This stock currently sports a dividend yield of 2.4%.

A director just bought 20,950 shares, or about $493,000 worth of stock, at $23.55 per share. The CEO also just bought 15,000 shares, or about $349,000 worth of stock, at $23.33 per share.
From a technical perspective, BRX is currently trending above its 200-day moving average and just below its 50-day moving average, which is neutral trendwise. This stock has been uptrending over the last six months, with shares moving higher from its low of $20.25 to its recent high of $24.10 a share. During that uptrend, shares of BRX have been making mostly higher lows and higher highs, which is bullish technical price action. That move has now pushed shares of BRX within range of triggering a near-term breakout trade.

If you're bullish on BRX, then look for long-biased trades as long as this stock is trending above some key near-term support levels at $22.45 to its 200-day at $21.65 and then once it breaks out above its 50-day moving average of $23.41 to its all-time high at $24.10 a share with high volume. Look for a sustained move or close above the levels with volume that registers near or above its three-month average action of 1 million shares. If that breakout gets underway soon, then BRX will set up to enter new all-time-high territory, which is bullish technical price action. Some possible upside targets off that breakout are $30 to $35 a share.

To see more stocks with notable insider buying, check out the Stocks With Big Insider Buying portfolio on Stockpickr.

-- Written by Roberto Pedone in Delafield, Wis.

RELATED LINKS:

>>It's Not Too Late to Buy Apple -- but Hurry Up

>>Hedge Funds Love These 5 Tech Stocks -- but Should You?

>>5 Big Financial Stocks to Boost Your Gains in September

Follow Stockpickr on Twitter and become a fan on Facebook.

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

Roberto Pedone, based out of Delafield, Wis., is an independent trader who focuses on technical analysis for small- and large-cap stocks, options, futures, commodities and currencies. Roberto studied international business at the Milwaukee School of Engineering, and he spent a year overseas studying business in Lubeck, Germany. His work has appeared on financial outlets including

CNBC.com and Forbes.com. You can follow Pedone on Twitter at www.twitter.com/zerosum24 or @zerosum24.

Wait, Dov Charney Was Still CEO of American Apparel?

Normally I wouldn’t write about a stock that trades under a buck, but since we’re talking about American Apparel (APP), I guess I can make an exception. Today, news broke that controversial Dov Charney is out as CEO from the company he founded.

Bloomberg News

My first response: Charney was still CEO? Based solely on stock price alone–American Apparel’s shares have dropped 28% a year for the past five years–Charney would have been long gone. Then toss in the controversial nature of his tenure at the company–including this infamous Jane Magazine article, which detailed his outside-the, um, box behavior–and it’s amazing the guy’s still around.

As for the stock, it’s gained 6.4% to 68 cents on news of Charney’s departure. I’m sure that’s great comfort to investors who were in for the long haul.

Seriously, how do you destroy that much value and still get to run a company?

Amazon's Retail Strategy Needs a Soundtrack

NEW YORK (TheStreet) -- While I've never had a problem with Amazon.com (AMZN) ripping off other people's ideas, it's starting to get a bit old. And there's more than a halfway chance the approach could produce diminishing returns if it hasn't started to already.

Granted Jeff Bezos can claim the wholesale redefinition and disruption of retail, expanding Sunday delivery via the USPS and forthcoming package drops by drone as his own, but he's lifted pretty much everything else.

Amazon Fresh -- that's a Webvan knockoff.

Paying people to quit -- that's an aqui-idea (my word, trademark pending) courtesy of Zappos.com. Outside of the Kindle e-reader, Amazon's actual and rumored pieces of hardware have been little more than knockoffs. You can argue Kindle Fire came on the heels of the e-reader, but it was just a response to Apple's (AAPL) iPad. As much as I love Amazon's Fire TV, it's still an answer to Apple TV, the Roku player and similar devices. If Amazon does a smartphone, same deal. It's not much different in consumer-centric software and services. Online video -- Amazon's taking on Netflix's (NFLX). And -- soon -- Amazon will take pretty much the free world's lead and do some sort of streaming music service. The argument that these initiatives -- across hardware and software/services -- build Amazon's ecosystem, make Amazon Prime more attractive (in some instances) and ultimately drive e-commerce sales is a good one. I've made it so many times there's no need to provide a link. However, if you're a fan of Amazon -- as a consumer service, company and stock (I'm still long-term bullish) -- you've got to be longing for something more. Something that changes the game and, in turn, has an even bigger impact on Amazon's core revenue stream. There's an opportunity for Amazon to do this with its forthcoming streaming music service. We know it's coming. Amazon has sent out an Apple-like take-it-or-leave-it contract to independent record labels. And, in light of the potential Apple-Beats Electronics deal, it might make sense for Amazon to expedite whatever plans it has. I just want the result to be more exciting than what we saw with, say, Fire TV, where a couple extra features begin and end the hype. How can Amazon move the needle? Here's how ...

Stock quotes in this article: AMZN, AAPL, P 

While it remains to be seen how effective it will be, the recent partnership that lets Amazon customers put items in their cart via Twitter (TWTR) provides hope that there's a modicum of thought at Amazon beyond kicking retail's losers while they're down and following pop technology trends. If there's any place where Amazon can continue to tunnel this trajectory to more innovative ground it's by using streaming radio for some other ends than to play music, pay royalties and add (perceived) value to Amazon Prime.

I provided some color earlier this year on how this might look in Amazon Music Could Be Songza: Songza aims to provide the perfect advertisement and, quite possibly, the ideal e-commerce opportunity for what you're doing, thinking, feeling. The idea is that music acts as the soundtrack for people's lives -- from big think, all-encompassing and day-to-day activity standpoints. That's at least how it was explained to me last year when I did some digging and talked to people about Songza's plans. It's not there yet, but that's the thought process behind the ongoing evolution. And what better way to get there than having Amazon put the full power of its beast behind you. Plus, if the aforementioned model isn't right up Amazon's alley, I'm not sure what is.

The looks less and less like that'll actually happen, the more and more I think about it and wonder why.

If you're Amazon and you're going to get into some flavor of music-driven streaming media, it seems to me you risk underwhelming both Wall Street and consumers with some tired iteration of Google (GOOG) Play on the on-demand side or Pandora  (P) or Apple's iTunes Radio on the radio side. How much value is that really going to add to Prime? I can't imagine droves of people dumping whatever they're using now to use whatever Amazon puts out. However some will use Amazon's offering along with what they're already using -- especially if they're already Prime members -- and even more bodies will at least check it out if there's a distinctive wrinkle. This is probably the most boring video I'll ever embed in an article, but it's apropos to the conversation. In it the president of the Songwriter's Guild testifies before Congress in favor of better compensation for songwriters. I'm on board with him, but it's the music sells everything message he delivers at the beginning of this clip you need to pay attention to with respect to Amazon. It's only a few seconds long: Whether it's via Songza, doing something Songza-like (another knockoff!) or something all together different, it would be nice to see Amazon find some sort of e-commerce tie-in for its forthcoming streaming radio service. Something nobody has done yet. Something that creatively and respectfully marries the association between music as everything from a soundtrack to the background in our lives with our penchant to buy stuff online. Our tendency to make impulse purchases while surfing Amazon and listening to music. Some type of thoughtful integration of the Amazon e-commerce platform with its streaming radio interface. If anybody can pull this off, it might be Amazon. And it would make a much larger and more meaningful splash than the introduction of another Pandora killer that has zero chance of killing Pandora. Plus it might provide a different path for every type of Amazon customer (prospective, light, emerging, heavy Prime user, etc.) to buy stuff from the top dominator that doubles as an imitator in retail/technology. Follow @mynameisrocco --Written by Rocco Pendola in Santa Monica, Calif. >>Read More: Amazon and Netflix Are Going After Your Kids WWE Announces New Television Deal with NBC Universal Big Media Will Win With or Without Net Neutrality

Stock quotes in this article: AMZN, AAPL, P  Rocco Pendola is a full-time columnist for TheStreet. He lives in Santa Monica. Disclosure: TheStreet's editorial policy prohibits staff editors, reporters and analysts from holding positions in any individual stocks.

Family Finances Advice From Around the Web

We often talk about money in our house because, after all, I write about it for a living and my husband is an economics professor. So my kids get an earful about spending less and saving more. I was happy to discover that my kids aren't the only ones getting money lessons at home. when I spoke to my fourth grader's Girl Scout (Brownie) troop this week about making smart money decisions, I was impressed with how many of them already knew a lot about the topic because their parents had made the effort to teach them.

SEE ALSO: How Parents Can Be Financial Role Models

Talking to children about money matters isn't easy for many parents, though. Kiplinger's Personal Finance Editor Janet Bodnar does a great job of advising parents how to tackle this difficult task in her Money Smart Kids column. I encourage you to read it, and I've rounded up tips from personal finance bloggers about kids and money -- as well as advice on managing your family's finances.

How to Talk With Your Kids About Money Issues [Christian Personal Finance]
"When you're a kid, money is something that just appears in your dad's wallet and checks are used to buy things that you don't have money for!"

Kids and Allowance: Don't Let Your Kids 'Rob' You "What approach should you use? There is no one right answer. It's just what works for you and your child(ren)."

Why I'm Making My Daughter Pay for Her Dental Braces "I refuse to reward irresponsible behavior -- especially after repeated warnings -- and if I picked up the tab for Nina's braces the second time around, that is exactly what I'd be doing."

Can You Grow Your Family on a Shrinking Income? [Get Rich Slowly]
"While we didn't anticipate everything and we underestimated some expenses, I know that our planning paid off. During our planning period, we were able to save up a decent savings cushion and prepare as much as possible."

How to Make the Shift From Two Incomes to One [Money Saving Mom]
"Think realistically about what sacrifices and lifestyle changes will need to be made in order to make living on one income a possibility."

How Steve Chou's Wife Replaced Her $100k Income With an Online Store [Good Financial Cents]
"What makes their story special is that his wife was able to develop a web based business from home that has replaced her former salary and currently brings in a six-figure income."

U.S. Dollar Unchanged As Trading Winds Down

The U.S. Dollar is trading unchanged late Monday, off the session highs. March U.S. Dollar Futures are trading at 92.15, up 0.03 as the session winds down.

In other Forex markets, the AUD/USD is trading at 0.8166, down 0.0023; he Dollar-Swiss (USD/CHF) is trading at 1.0139.

Posted-In: Futures Forex Markets

© 2015 Benzinga.com. Benzinga does not provide investment advice. All rights reserved.

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3 Signs Your Mutual Fund Is Hosing You

Mutual funds are a beautiful device. With a single purchase, investors can be part owner of a collection of hundreds of investments, allowing them to have diversified portfolios, even with a modest investment of less than $1,000.

Asset management isn't a not-for-profit business, however. The industry thrives on fees, which transfer wealth from mutual fund investors to mutual fund managers.

Here are three signs your mutual fund is hosing you, transferring wealth from your pocket to theirs.

Take a load off your back
Nothing irks me more than loaded mutual funds. A load is a fee you pay when you buy or when you sell a mutual fund.

The most egregious cases involve fund companies that charge up-front loads of 5% or more. If you invest $10,000 into a fund with a 5% load, $9,500 will go to your investments. The $500 load -- 5% of your investment -- will go to the broker and the fund company.

Some so-called "experts" recommend that individual investors buy loaded mutual funds. The idea is that the load is a behavior device -- if you pay a load to buy a fund, you'll be less likely to sell your funds and pay another load in the future.

Such advice is rooted in the same logic that you should poke out an eyeball to understand why you'd never want to go blind. You could never convince someone to spare an eyeball to understand the cost of blindness, but whole convention rooms full of investors have been convinced that paying a load is in their best interest. It isn't.

12b-1 fees
To call a spade a spade, a 12b-1 fee is a fee investors pay a mutual fund for marketing. The proceeds of the fee are often divided between the fund company and brokers, who effectively earn a "kickback" for selling mutual funds to their clients.

The cost of 12b-1 fees is significant. At 0.25% per year, the cut-off at which a fund can call itself a "no-load fund," 12b-1 can add up to tens of thousands of dollars in lost growth over the long haul. For advisors, it represents a highly profitable fee stream on which brokers get rich on the backs of savers.

Read the fund company's prospectus carefully. If you're paying a 12b-1 fee, you're probably getting hosed.

Turn and churn
Mutual funds used to be largely passive entities. Managers would identify their best ideas, make investments, and wait. Waiting, after all, is 99% of the investment process.

Today, however, funds are turning over their investments at a faster clip -- some 85% of their portfolio holdings each year, on average. The end result is that turnover creates significant tax consequences. This year, a number of fund companies distributed big capital gains distributions to their clients.

If your mutual fund has a high turnover ratio, you're probably getting hosed. Not by the fund company, but certainly by Uncle Sam. And your mutual fund manager is entirely to blame.

How one Seattle couple secured a $60K Social Security bonus -- and you can too
A Seattle couple recently discovered some little-known Social Security secrets that can boost many retirees' income by as much as $60,000. They were shocked by how easy it was to actually take advantage of these loopholes. And although it may seem too good to be true, it's 100% real. In fact, one MarketWatch reporter argues that if more Americans used them, the government would have to shell out an extra $10 billion... every year! So once you learn how to take advantage of these loopholes, you could retire confidently with the peace of mind we're all after, even if you're woefully unprepared. Simply click here to receive your free copy of our new report that details how you can take advantage of these strategies.

 

A Whole Lot of Long-Term Investing

Many investors may be doubting that there are even any long-term investing possibilities available in this macro market today, but MoneyShow's Jim Jubak, also of Jubak's Picks, offers a whole bunch of opportunities.

Are there any long-term investors left in the current market?

And, more importantly, should there be?

I think the answer to both questions is "Yes." Long-term investing has a place, even in this macro-driven, let's-all-follow-the-central-banks market. There are big, readily identifiable long-term trends to back with your money.

But…and I think this is crucial…long-term investing, not only, isn't easy right now, when all the profits seem to be going to the momentum players, but also, making money from this strategy requires some rethinking of how to play the long-term game.

I put together some thoughts on this topic for a workshop I gave on November 15 at the American Association of Individual Investors conference in Orlando. This post is a version of that presentation.

It's pretty easy to spell out why this market is so difficult for long-term investors. We seem to be in a period of repeated booms and busts, beginning in 1999 with the Dot com/technology boom and bear, and concluding (maybe, but I don't think so) with the Lehman/global financial boom and bust. The current market is one dominated by macro forces, and particularly by cheap money from global central banks. To take just one example, the Federal Reserve's balance sheet had ballooned to $3.84 trillion as of mid-October. That's up from just $488 billion in January 2011. As all that money sloshes around the world in search of opportunities and hot markets, it produces extraordinary short-term volatility. My favorite example of that is August 2011 when, from July 6 to August 10, the Standard & Poor's 500 (SPX) dropped 16.3%, only to climb 7.4% from August 10 to August 15, before falling 7.1% from August 15 to August 19, before climbing 7.9% from August 19 to August 30. Quite a ride for a year when the total net S&P 500 return for the year came to only 2.1%.

I could advise, as some dedicated long-term investors do, patience—if I thought this kind of market was only going to last for a few more months.

But it's not. This market is likely to be with us for quite a while.

Why? Let me give you some of my reasons:

We're witnessing the end of the 30-year bull market in bonds, as interest rates drop from the double-digit 1980s. That drop in interest rates has to stop—unless we go to some form of electronic money that lets us set negative interest rates…at 0%. From here on out, stocks don't have the fuel of falling rates that makes them look ever better versus bonds, and that helps increase company profits by lowering corporate interest payments.

We can't expect the world's central banks to withdraw the cash they've pumped into the global economy any time soon. As I wrote in my November 4 post, the Federal Reserve has no end game. It will take the Fed more than a decade to reduce the Fed balance sheet to "normal." Same goes for the Bank of Japan. And, if the global and/or regional economy breaks the wrong way, for the People's Bank of China, and the European Central Bank.

And finally, I think a number of the trends that pushed up global growth rates are now breaking in the other direction. An aging world grows more slowly. We're seeing the end of cheap rural labor in China. We're seeing the beginning of an age of competition for global capital.

NEXT PAGE: Global Growth Rate Trends

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In more homes, the roof overhead is a rented one

In the aftermath of a historic housing bust, rented single-family homes are on the rise in communities from coast to coast.

At least a fifth of all occupied single-family homes were rentals last year in 32 of the nation's top metropolitan regions, according to a USA TODAY analysis of U.S. Census Bureau data. That's up from seven metros in 2006.

Rates: National average on 30-year mortgage falls to 4.5%

The growth reflects changes brought by the housing boom and bust and the enduring financial hardships imposed by the recession. Millions of homeowners lost homes to foreclosure and were forced to become renters, while others delayed homeownership.

Nationwide, 18% of occupied single-family homes last year were rentals, up from nearly 15% in 2006, show data based on the American Community Survey, an annual Census Bureau survey.

Prices: Home price gains slowing as market recovers

The metros with the most growth in single-family rentals are those where foreclosures were most rampant.

Among them were Las Vegas, where almost 29% were rentals, up more than 10 percentage points from 2006.

Florida's Cape Coral area was more than 25%, another 10-point gain.

Stockton, Calif., was about 24% in 2006 — now it's above 32%, the highest share among the 100 metro regions in USA TODAY's study.

Metros outside the top foreclosure hot spots have also seen larger growth in single-family rentals than the national average, including Memphis, Dallas, Denver and Seattle, the data show.

Sales: Is the housing market making a major shift?

In those metros, more homeowners may be turning homes into rentals to meet strong demand, says Svenja Gudell, Zillow economist.

Single-family rents in Denver were up 5.6% in August year-over-year, vs. a 1.9% national rise, Zillow data show.

"There are a lot of folks who've decided to rent homes out, vs. sell," says Kim Klapac, Colorado Springs Realtor.

City officials say they prefer rented-out homes to v! acant ones, which lead to blight. In many cases, today's single-family home renter lost a home to foreclosure.

"There's a lot of good-quality renters out there," says Micah Runner, interim economic development director in Stockton. "The issue can be when the homes are owned by people outside of the area and it's harder to get them to fix stuff."

More rentals may also lead to more classroom turnover in local schools, because renters tend to move more often than owners, says Southern California research economist John Husing.

Wealth generation will also be affected, says Michael Orr, real estate expert at the W.P. Carey School of Business at Arizona State University.

"A good slice of our owner occupants have become tenants against their will. That's not a good thing," Orr says.

Phoenix was one of the first cities targeted by institutional investors, who are spending billions turning single-family homes into rentals alongside mom-and-pop investors.

Since Phoenix home prices bottomed in 2011, they're up about 40%, according to Standard & Poor's Case-Shiller data. That makes it harder for owner-occupants to now buy in, Orr says.

Horatio Gulash: Analyzing Advertising Expense

Our last episode concluded with Horatio pondering various methods of growing his hot dog business. As you may recall, he still owes Pop a considerable amount of money which he must pay off within the next three years; thus far he has paid back approximately 40% of the debt.

Horatio has owned the hot dog stand and the lease on the parking lot for slightly over two years and still has nearly three years remaining on his lease. At that point he might be forced to move the stand from its prime location.

Horatio feels now is the time to expand but he must make certain that he does not over extended his limited finances. His moves must be frugal, strategic and above all, successful. He recalls the advice of his deceased father who once told him: "Hunters with a single-shot gun should not fire hastily but they can not spend much time aiming, or they will never get off a shot". Horatio feels he has only one bullet in the chamber so he must move abruptly while at the same time being extremely careful with his limited funds.

Horatio feels that Pop is a tremendous asset to his business. The customers who drop by the stand frequently carry on conversations with the elderly man as they dine. His thick German accent and his self-styled patois are entertaining. The old man is really quite amusing, possessing an innate ability to draw patrons to his stand.

While Pop talks Horatio listens and monitors the reactions of his customers. He notices that children as well as adults take to the old man. Pop is famous for carrying a sack of bubble gum which he hands out to children admonishing them: "dun't chew da gum til you eat da frankfurter."

It occurs to Horatio he is not selling hot dogs; rather he is selling a unique frankfurter which is not available from anyone else. The key ingredient of the frank is the special sauce that Pop has perfected. The sauce mixes particularly well with sauerkraut but is just as appearing without the kraut. The smell of kraut permeates the stand and p! rovides it with a certain presence that reinforces the name "Old World Franks." Pop's thick German accent adds to the ambiance and the uniqueness of the stand.

Horatio concludes that he must create an atmosphere to enhance the delicious taste of the frank. He also decides that Pop must be part of that atmosphere if he is to succeed. He needs the image of the old man as well as his financial backing; otherwise his business will never amount to anything more that a temporarily successful, single hot dog stand.

Horatio plans on coaxing Pop out of retirement and offering him an inviting proposition. He offers him a full partnership in the business. In return, Pop must forgive the remaining loan which Horatio owes on the business, provide some modest additional working capital as needed and serve as the advertising face of the business. In essence, Pop is a walking billboard for Old World Franks. He provides an unmistakable image for the business which continually reinforces the brand.

Advertising and Old World Franks

Pop's image will become instrumental in promoting the new stands and growing "Old World Franks." He will visit the new stands regularly, greeting customers, passing out gum to the children, and telling stories about his immigration to the U.S. from Germany and the origin of the special sauce.

Old World Franks stands will become fixtures in every serious home show or special event in St. Louis which offers food, and Pop will always make appearances as long as his health allows. The business will have carts outside the famous zoo during summer weekends, as well as outside the Ram football games. Eventually, the franks will make their way into the concession stands in the stadiums of every major St. Louis sporting event.

Pop is dressed in traditional Bavarian attire, complete with suspenders and various decorated hats. When he arrives, the stand plays recordings of polka music as he welcomes the crowd, offering them small samples of his special fran! kfurters ! dipped in the delicious sauce. He asks the crowd, "Vould ya like a taste of de old vorld frankfurter? Its de secret sauce on de Bavarian frankfurter dat makes da difference. Come taste de German Frankfurter."

Later on when the business comes more successful and can afford more expensive advertising, Pop will be promoted as Papa Joseph Greiser, "Der Veiner Meister" on television. His thick accent and unique appearance will become the focus of the advertising campaign. A caricature of his face will appear on the shirts of employees and on the signs of all the Old World Franks restaurants. Der Viener Meister will become a highly recognizable character in the St. Louis area and gradually throughout the rest of the country as well.

Papa Joseph has but one rule in his restaurants, no employee will ever utter the word hot dog since he sells only "Bavarian frankfurters."

Advertising: The Key Ratio for Old World Franks

Despite his limited business experience Horatio was quite astute at recognizing the need for brand-building at Old World Franks. His decision to sacrifice 50% of his profits to utilize Pop's image and access his capital turned out to be a stroke of genius in the long term.

As it turns out the parking lot owner did not extend Horatio's lease after five years. It seems that he began to feel that Old World Franks was becoming too much of threat to the profits of his own restaurant and he attempted to run Horatio out of business. Similar to Sam Walton, Horatio never forgot that lesson. He never again undertook a short-term lease and he always insisted on having an option to extend the lease when he negotiated a property. Additionally, he made it a point to put an Old World Franks restaurant in close proximity to all of his former landlord's burger restaurants. Call it a bit of vindictiveness if you like.

Horatio decides that he will invest 10 percent of revenues into advertising expense. The advertising will help secure new customers for his existing! stores a! nd new stores in addition to maintaining his long time clientele by reminding them how much they enjoy his unique frankfurter.

To assess the effectiveness of his advertising, Horatio charts same store sales at all his stands and restaurants and monitors the total amount of hot dogs sold. In that way he able to test the pricing power and the growth in sales of hot dogs. He is pleased to find out that he can raise prices to offset his rising costs while still increasing the total volume of hot dogs he sells at his stands and restaurants.

His gross profit (Revenues minus Cost of Goods Sold) is rising, as is his gross margin (Gross Profit divided by Revenues). Those figures indicate that his business is developing not only a successful brand but a competitive advantage in the form of the delightful taste of his frankfurter. He has verified that the original location of his stand close to Busch Stadium was only part of the competitive advantage of his business. Old World Franks apparently contains some advantages that are quite sustainable, thus reinvesting capital for growth is an intelligent decision.

Horatio also tracks his advertising costs as a percentage of sales; much to his delight he finds that his advertising cost as a percentage of sales is decreasing. He derives that figure by dividing his advertising costs into his revenues. His advertising has been quite successful; each dollar he invests is resulting in an increasing greater amount of total revenues. The diminishing ratio speaks volumes for the effectiveness of his ad campaign.

Using Advertising Ratios in Analyzing Stocks: PETS

Just as in the case of Horatio's fictitious business, investors need to monitor advertising effectiveness to successfully analyze equities. Careful analysis of key advertising ratios can provide investors with information that may indicate that competition is impinging on a company's profits. Most companies provide clues in their 10K filings.

Let's take a quick look at! PetMed E! xpress (PETS) as an example. From the Fiscal 2012 10K:

Fiscal Year Ended March 31,
		2012			2011			2010
Sales			100.0	%			100.0	%			100.0	%
Cost of sales			66.3				63.8				61.4
Gross profit			33.7				36.2				38.6
Operating expenses:
General and administrative			9.4				9.6				9.4
Advertising			12.8				11.8				11.6
Depreciation			0.6				0.6				0.6
Total operating expenses			22.8				22.0				2! 1.6
Income from operations			10.9				14.2				17.0
Total other income			0.2				0.2				0.1
Income before provision for income taxes			11.1				14.4				17.1
Provision for income taxes			4.1				5.4				6.2
Net income			7.0	%			9.0	%			10.9	%

The above key ratio summary contains some troubling trends. First of all, gross margin and net margin are dropping; secondly, advertising as a percentage of sales is increasing. For the purpose of today's discussion we will focus on advertising.

The table suggests that either the advertising campaign for PETS is becoming less effective or that competition is intruding upon the competitive advantage of the business. Since gross margins are dropping si! gnificant! ly it seems that increased competition may be the source of the overall margin decline.

If we scroll down the 10-K we find some more troubling news:

Sales may be adversely affected in fiscal 2013 due to increased competition and consumers giving more consideration to price and trading down to less expensive brands, including generics. In response to these trends, the company will maintain a more aggressive advertising and pricing strategy combined with expanding our product offerings to pet supplies and generics.

This more aggressive pricing strategy has resulted in a decrease to gross profit margins, and no guarantees can be made that the Company's efforts will be successful, or that sales will grow in the future. The majority of our product sales are affected by the seasons, due to the seasonality of mainly heartworm, and flea and tick medications. For the quarters ended June 30, September 30, December 31, and March 31 of fiscal 2012, the company's sales were approximately 31%, 24%, 21%, and 24%, respectively.

In effect, the company is telling us in fiscal 2013, advertising costs will continue to increase and gross margins will continue to drop. That may translate into another significant increase in advertising expense as a percentage of sales.

Further down in the 10-K we find more interesting information:

Advertising expenses increased by approximately $3.0 million, or 11.0%, to approximately $30.4 million for the year ended March 31, 2012, from approximately $27.4 million for the year ended March 31, 2011. The increase in advertising expenses for fiscal 2012 can be mainly attributed to a more aggressive advertising strategy during the year. The advertising costs of acquiring a new customer, defined as total advertising costs divided by new customers acquired, was $42 for both the fiscal years ended March 31, 2012 and 2011.

Advertising cost of acquiring a new customer can be impacted by the advertising environment, the effectiveness of ou! r adverti! sing creative, increased advertising spending, and price competition. Historically, the advertising environment fluctuates due to supply and demand. A more favorable advertising environment may positively impact future new order sales, whereas a less favorable advertising environment may negatively impact future new order sales.

Note that advertising cost for acquiring a new customer was $42 for both fiscal years 2011 and 2012. What was the cost in prior years? The fiscal 2010 10K reveals the answer:

The advertising costs of acquiring a new customer, defined as total advertising costs divided by new customers acquired, was $34 for the year ended March 31, 2010, compared to $36 for the year ended March 31, 2009.

In other words, the effectiveness of the company in generating new customers through advertising has diminished significantly in the last two years. Since advertising is the key expense in generating new sales for PETS, the increase in acquisition costs does not bode well for future operating margins — particularly when those increased advertising costs are coupled with declining gross margins.

Fortunately for Horatio, his business is experiencing exactly the opposite scenario as PETS. His ad costs as a percentage of sales are declining, while his gross margin is increasing.

In the next episode Horatio expands the business outside the St. Louis area.

Disclosure: No position in PETS

Why Allot Communications Shares Popped

Although we don't believe in timing the market or panicking over market movements, we do like to keep an eye on big changes -- just in case they're material to our investing thesis.

What: Shares of Allot Communications (NASDAQ: ALLT  ) have popped today by as much as 10% after the company scored a big contract.

So what: Allot said it landed a $6.5 million order from a "Tier-1" mobile operator in Europe, the Middle East, and Africa for Intelligent Steering and Value-Added Service licenses. The company added that the contract is a licensing expansion of an existing deployment. The customer will add functionalities to the current Allot Service Gateways deployment.

Now what: CEO Rami Hadar said the deal shows how Allot can help operators better handle network traffic. For context, Allot posted total revenue of $104.8 million last year, so this order is a solid score for the company. Allot separately confirmed that its next earnings release date will be May 7 before market open.

Interested in more info on Allot Communications? Add it to your watchlist by clicking here.

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.