Month: January 2014

By WallStreetDaily.com

“The first will be last.”

So concludes the Parable of the Workers in the Vineyard, written nearly 2,000 years ago in the Gospel of Matthew.

And after a weekend’s worth of number crunching and analysis, I can’t shake the ancient text from my mind.

Why? Because even though the S&P 500 Index logged its best annual gain since 1997 – and each of the 10 sectors within the Index rallied, most by double digits – all is not well.

Put simply, the stage is set for last year’s best-performing sector to be this year’s worst.

Take heed! Otherwise, you could lose much more than a few denarii like back in Jesus’ day.

Trade With Discretion

Last year, the S&P 500 rocketed 29.6% higher. Impressive.

But the real profit bonanza erupted in the consumer discretionary sector.

Companies that provide non-essential goods and services (think department stores, restaurants and entertainment companies) rose 41%, on average.

Standout performances by Netflix (NFLX), up 298%, and Best Buy (BBY), up 242%, certainly helped.

It’s not like a few stocks are unfairly skewing the results, though. To the contrary, the strength in the sector was broad based and perfectly rational.

Consider: In the last year, the economic recovery chugged along. Personal finances kept improving. (The ratio of household debt payments to disposable income fell to a 35-year low.) Consumer confidence rose. And inflation, well, remained non-existent.

In other words, Americans found themselves more optimistic, with more disposable income, and they spent it on affordable goods and services.

Now, consumer discretionary stocks should benefit the most under such conditions. And they did. But that’s all about to change…

The Sky isn’t Falling

No, I’m not suggesting an economic collapse is afoot that’s going to send consumers back into hibernation. Far from it.

Lest you forget, in early December, based on the latest automotive sales data, I went out on a limb to declare that the U.S. economy was strengthening.

A few weeks later, the Commerce Department confirmed it, revealing that U.S. GDP growth in the third quarter climbed to a healthy 4.1% annualized rate, well ahead of expectations.

Fast forward to today, and my bold prediction seems rather pedestrian…

Quoting a recent report from UBS’ Managing Director and Chief Economist, Maury N. Harris, Barron’s says that the economic “momentum is palpable.”

Jim Paulsen, Chief Investment Strategist at Wells Capital Management, concurs. In a recent note to clients, he predicted that U.S. economic growth “will quicken more than most anticipate.”

It goes without saying that a stronger economy promises to lift wages. However, even though it’s completely counterintuitive, more income in the hands of consumers won’t be a boon to consumer discretionary stocks. Here’s why…

Consumer Discretionary Headwind #1:
Bounce Already Baked In

The stock market is a forward-looking beast. And it figured out long ago that resurgent home values, slumping gas prices and an overall improvement in economic conditions would boost consumer spending.

Hence, the chart-topping performance for the economically sensitive stocks.

Put simply, the upside to the highly anticipated acceleration in the U.S. economy is already baked into prices for consumer discretionary stocks.

Sorry. But the time to play the resurgence has passed. If you missed it, don’t chase performance. You’ll get burned.

Consumer Discretionary Headwind #2:
Rising Incomes, Rising Costs

With 13 states set to raise their minimum wage in 2014 – and another 11 considering it – U.S. workers stand to be more flush with cash than in previous years, relatively speaking.

However, rising incomes for workers means rising labor costs for employers. And consumer discretionary companies can’t afford to absorb those increases.

As Bank of America’s (BAC) Equity Strategist, Savita Subramanian, points out, the sector is already the most labor-intensive one in the S&P 500.

Sales per worker at some consumer discretionary companies check in as low as $63,000 – and average about $233,000. For comparison’s sake, average sales per worker in the energy sector reach about $1.8 million.

More damning still, profitability in the consumer discretionary sector rests near historic highs. Current operating margins of 10.6% are just a stone’s throw away from the long-term ceiling at 11.1%, according to Subramanian.

Add it all up, and after years of relentless cost cutting, there’s no more “fat” to trim to increase profits. So as incomes rise, total costs for consumer discretionary companies will, too, as they can’t offset the pay increases with other cuts.

In turn, profits will be squeezed. And that’s bad news for stocks since they ultimately move in lockstep with profits.

Consumer Discretionary Headwind #3:
Stretched Valuations

After the price-to-earnings (P/E) multiple for the S&P 500 expanded from about 14.5 to 17 in 2013, pundits want to scream that we’re in another stock bubble.

In comparison, though, consumer discretionary stocks are almost 25% more costly. In fact, they’re the most expensive stocks in the market, trading hands for close to 22 times earnings.

Trying to buy high and sell higher is a fool’s game. But if you want to bet on consumer discretionary stocks like Wendy’s (WEN), which rallied 89% last year and trades at a P/E ratio of 91, go for it!

Come 2015, though, you’ll no doubt be asking, “Where’s the beef?”

Bottom line: After being the top-performing sector in 2013, consumer discretionary stocks are now the most expensive in the market. With both profit margins and valuations stretched, get ready for a disappointment of Biblical proportions.

Ahead of the tape,

Louis Basenese

The post Moneymaking Secret Found Hiding Inside the Bible appeared first on Wall Street Daily.

Article By WallStreetDaily.com

Original Article: Moneymaking Secret Found Hiding Inside the Bible

By HY Markets Forex Blog

Crude oil trading resulted in futures for this raw material and source of energy experiencing a sharp drop in price on the first session of the year.

On Jan. 2, the February contract for light, sweet crude settled 3 percent lower, at $95.44 per barrel on the New York Mercantile Exchange, according to The Wall Street Journal. At the end of the session, the future had fallen to its lowest price since Dec. 2.

This robust decline represented the largest daily drop that the contract experienced since November 2012, Reuters reported. Brent crude also dropped substantially, finishing the session down $3.02 a barrel at $107.78, which represented the most significant one-day decline since June.

Individuals who take part in online trading of oil might benefit from knowing that the sharp price declines that the commodity experienced on Jan. 2 were attributed to events that were related to the supply-demand fundamentals of the energy source, according to the news source.

Various factors impact supply-demand fundamentals

One major factor that was cited as having an impact on the price of oil was a rising value for the U.S. dollar, The Associated Press reported. On Jan. 2, the euro had fallen to $1.3633, down from $1.3663 late in the previous day in New York.

In addition, the U.S. dollar index, which compares the value of the greenback to various other currencies, rose to its highest value in two weeks during the day, according to Reuters. The sharp appreciation in the greenback was attributed to data indicating improvement in the American economy.

Reports pointing to both stronger manufacturing activity and also a decline in the number of initial applications for jobless benefits helped to provide upward pressure for the dollar, the media outlet reported.

Dollar’s impact on oil

When the greenback appreciates, it makes it more expensive for market participants using other currencies to purchase contracts that are denominated in the dollar. As a result, a rising value or this particular currency can help to suppress demand for commodities including oil.

Another factor that was cited as having an influence on the value of crude oil was an announcement made by Libya’s National Oil Corp. that after the resolution of a recent strike, production is expected to start up again at the El Sharara field within a matter of days, according to Reuters.

The oil output of the North African nation has fallen sharply over the last several months, declining from 1.4 million barrels per day in July to 250,000 BPD currently, the media outlet reported. Many different oil plays in the nation have been operating far below potential since the nation’s civil war in 2011. The country’s production of the commodity could rise by 300,000 BPD as a result of El Sharara becoming functional once again.

“While recent announcements of a similar nature have failed to materialize and the situation in the east of the country remains in a deadlock, the potential of additional sweet crude supplies are serving to weigh further on the Brent market,” analysts at Vienna-based JBC Energy wrote in a report, according to the news source.

These market experts were certainly not the only ones who noted the impact of the news about production in Libya returning, as Bill Baruch, senior market strategist at Chicago-based iitrader.com, provided similar statements to Reuters.

“Really what’s moving the market back down is Libya back online,” Baruch told the news source. “We didn’t expect them to be back until the end of Q1.”

Markets respond to stockpile data

In addition to the rising dollar and production in the North African nation being credited for pushing oil lower, market sources told the media outlet that a report released by industry information provider Genscape, which revealed a substantial increase in oil supplies at a key location, also contributed to the sharp depreciation in the price of the commodity.

The document revealed that Cushing, Okla., which is crucial for the settlement of many oil futures contracts, experienced an increase in supplies of 1 million barrels.

Also, it was reported on Jan. 2 that for four weeks in a row, the inventories of U.S. crude have declined, but the continued decreases have largely been attributed to refineries lowering their supplies to make use of tax benefits, Dominick Chirichella, oil analyst for the Energy Management Institute, told The Wall Street Journal.

“Everybody recognizes that most of the crude oil draws we’ve seen over the last month or so has been really for accounting or tax reasons,” he told the news source.

Individuals who want to make money by taking part in online trading of oil might benefit from observing the sharp decline that the commodity experienced on Jan. 2, and how this substantial depreciation was tied to news events that provided updates on the situation in terms of supply and demand.

The post Crude Oil Trading Results in Sharp Drop in Prices Amid Supply-Demand Concerns appeared first on | HY Markets Official blog.

Article provided by HY Markets Forex Blog

Source: Brian Sylvester of The Gold Report (1/6/14)

http://www.theaureport.com/cs/user/print/na/15779

Paul Harris sees a lot of untapped value in Colombia, a land that hasn’t seen the arrival of modern mining due to a government sluggish to implement speedy approval processes. But Harris, editor of the Colombia Gold Letter, believes there are still some opportunities out there, pummeled by the market but poised to be buoyed by a more accommodating political climate and rising gold prices. He talks about the leading Colombia plays in this interview with The Gold Report.

The Gold Report: Paul, you’re our resident mining expert on the ground in Colombia. Some noteworthy developments have occurred in the junior mining space since we last chatted in May. How is that playing out in Colombia?

Paul Harris: Activity in gold exploration is off. The main reason is the drought of financing for junior companies. A lot of companies have run out of money. Those that have money are in cash-conservation mode. Many have mothballed their plans until they can finance again. There are only a handful of companies that are doing any meaningful gold exploration work at the moment.

I recently did an analysis of the drilling sector in Colombia. Drilling reached its peak in 2012 with more than 650,000 meters (650km) drilled. It’s fallen off this year to about 100km and it’s going to be much less in 2014. There’s about 100km of drilling that’s been planned, but on hold until companies can finance.

TGR: So three or four companies are doing the lion’s share of that drilling?

PH: Yes. The other thing I discovered was that the size of the typical drill program has shrunk. In the past it was 5–20km. Now companies are putting out 2km and smaller programs.

TGR: What’s responsible for cooling off the sector over the last couple of years?

PH: Many explorers in Colombia came into the Middle Cauca Belt looking for gold, copper-gold and gold-copper porphyries, which if successful would more than likely be billion-dollar mine development projects. The paradigm shift in the mining industry has meant that the majors are no longer looking for those projects. They’re looking for small high-grade projects and projects with low capital expenditures (capex). The change in fashion, if you like, has left many junior explorers in Colombia hanging.

There’s also a government factor. There’s a growing concern within the investment community over whether, having found a deposit, a company would be able to develop a mine in Colombia and about how long getting the approvals to do so would take. It’s one thing to find a resource that may be economic to exploit—but getting it permitted? Modern mining is a new concept in Colombia and there are no modern gold mines. There’s a question mark over how the government would do that.

TGR: Earlier this year MinMinas, Colombia’s Ministry of Mining and Energy, reopened the concession application process. Tell us about that and what’s happened since.

PH: The government reopened for concession applications July 2 after a two-year hiatus. It was quite successful with hundreds of applications on the first day.

Five months down the road, a lot of those companies that applied still don’t know whether they’re going to get their concessions or not. The government is dragging its heels on concession application approvals and that is hurting the sector, as companies have to pay their fixed costs while waiting.

TGR: Is there a discernible difference between the success of companies with a Colombian political insider, either in the management team or on the board, versus ones that don’t have that luxury?

PH: No. There isn’t one company that’s raced ahead of the others because it had a former minister or diplomat on its board of directors, and you shouldn’t expect this to be the case in a country where the rule of law is present. There are political issues to deal with in Colombia—I am not pretending that it is the simplest place to work—and while there may be bureaucracy and even corruption in some instances, I cannot see an instance where a political appointment has borne fruit. For the most part, they have been a waste of money and have filled a board seat perhaps better filled by someone that can add to the technical or financial aspects of a project.

TGR: How do investors make money in Colombian mining equities or companies with projects in Colombia?

PH: Well, Brian, I think you, as a journalist writing about exploration stocks, are in the unusual position of making more money than those that invest in exploration stocks at the moment. Seriously though, management, as always, is a key thing. There are companies that have very good management in Colombia. One of the best examples is Continental Gold Ltd. (CNL:TSX; CGOOF:OTCQX), but there are others like B2Gold Corp. (BTG:NYSE; BTO:TSX; B2G:NSX). The company has been very successful raising funds, finding projects, drilling and developing resources.

Continental is continuing with its pre-project developments, such as driving three development tunnels to better access its Buriticá deposit, and it continues to put out good drill results. It’s working on a new resource estimate and a prefeasibility study for mid-2014 and is working with the mining ministry on a program to legalize about 500 informal miners in the Buriticá area. Apparently the government is very pleased with its progress and participation to date.

TGR: Is Continental still the best bet to be the first company to go from discovery to production in Colombia in the modern era?

PH: Yes, without a doubt.

TGR: Will Continental need to return to the market for more cash?

PH: I would imagine so. It’s in a pretty good cash position, but the mine is going to cost more than it has to build.

TGR: Will the company need a partner?

PH: It shouldn’t because it is planning a relatively low capex project, so financing through debt and equity should be within its capacity and ability.

TGR: B2Gold has a management team with a history of mine development. What is its key asset in Colombia?

PH: B2Gold’s key asset is the Gramalote project in Antioquia. It has a resource of 4.1 million ounces (4.1 Moz). It’s in a joint venture with AngloGold Ashanti Ltd. (AU:NYSE; ANG:JSE; AGG:ASX; AGD:LSE), in which B2Gold is the junior partner. AngloGold will be developing that project. It’s also a junior partner with AngloGold in another property, Quebradona, and is actively looking for other gold exploration plays or properties in Colombia.

TGR: B2Gold wouldn’t be there if it didn’t believe that it could bring, in conjunction with a larger company, an asset to production. How do you reconcile that with what’s happening elsewhere?

PH: B2Gold recognizes the gold production potential of Colombia. B2Gold was originally was the senior joint venture partner, but AngloGold wanted to take control of the two projects.

AngloGold’s main project in Colombia is La Colosa, a 24 Moz project that has had a lot of political and community difficulties advancing. La Colosa is looking to be a very big mining operation. I think AngloGold wanted to take control of Gramalote because financing its development is more within its grasp and also because its development would show Colombia how it can successfully manage the development of a modern gold mining project, taking care of the community issues and protecting the environment. Successful development of Gramalote would go a long way to helping convince the people of Colombia and the government that it can successfully develop La Colosa as well.

There are also a couple of exciting companies coming through in copper, interestingly enough. Atico Mining Corp. (ATY:TSX.V; ATCMF:OTCBB) recently completed its option purchase on the El Roble mine and is working on ramping up production of copper concentrate.

There’s the merger underway between Cordoba Minerals Corp. (CDB:TSX.V) and Sabre Metals Inc., which is in a very interesting copper district in Cordoba. The lawyers are doing the paperwork on that and it should be finished in Q1/14. That’s one to watch, assuming the merger is successful.

TGR: How long before Atico produces copper?

PH: It’s producing copper concentrates. It acquired an active mine that was producing something like 20,000 tons a year. There are a lot opportunities to improve efficiency and scale, and find and exploit new resources.

TGR: Is that the path to making money in Colombia? Buy an existing mine that already has gone through the permitting process and build up confidence with the government to develop another project afterward?

PH: There isn’t a great deal of existing or active mines to buy. Atico is quite rare because it’s the only copper production in Colombia.

The most notable company that bought existing operations in the gold sector is Gran Colombia Gold Corp. (GCM:TSX.V). It bought the Frontino Gold Mine assets, which is now known as its Segovia operations, but it’s struggling to deliver. It is a high-cost operation and as fast as the company cuts costs, the gold price has fallen faster. It’s going to be a while yet before that company is in a cash-positive situation. It is now looking to raise about US$15 million (US$15M). The company has rolled back its stock twice in the last three years and has a market cap of about US$16M, so it will be interesting to see how that goes.

Colombia’s very much an exploration play. The challenge is showing and educating governments, communities and politicians about modern mining, its benefits, the processes and the technologies. Everything is very new in Colombia. For example, heap leaching for gold doesn’t exist. Large-scale mining for gold doesn’t exist. There are conceptual hurdles to overcome.

TGR: If only a few companies are moving forward, what stage are the rest of the companies at?

PH: There are some that got in a few rounds of drilling, but not enough to get a resource out or to get to a conceptual stage, like a preliminary economic assessment (PEA). There are companies, such as Solvista Gold Corp. (SVV:TSX; SVVZF:OTCQX), that have done a lot of drilling, but have gone into hibernation to conserve cash. Trident Gold Corp. (TTG:TSX.V) is in the same boat. There are easily 10, 15 or maybe even 20 companies like that.

TGR: Talk about some of the companies that have reached the PEA stage.

PH: The most recent one, Batero Gold Corp. (BAT:TSX.V) in the Middle Cauca, put out its PEA in November. It’s focused its PEA on the higher-grade, near-surface oxides. A lot of the juniors have tried to refocus on the shallow, high-grade material. Batero is next door to Seafield Resources Ltd. (SFF:TSX.V), which put out its PEA in June. Progress has been made and resources have been discovered in Colombia even though the government may be slow and bureaucratic. Now comes the difficult part of trying to get projects developed, permitted and financed.

TGR: Is there any further talk about a merger?

PH: Both companies recognize and acknowledge the value from such a merger in facilities and shared infrastructure but, from what I understand, there is no definite plan. The companies are in slightly different positions—Batero still has a healthy cash position of about $15M, while Seafield has taken on debt, so what would be the structure or the ownership? Seafield is also due to produce its prefeasibility study soon. It will be interesting to see what those numbers are.

The meltdown of Eike Batista’s natural resource empire and subsequent garage sale of assets has been written about a great deal. In Colombia, he has already offloaded his coal assets and is looking to do the same with the gold assets in the Santander district that are held by AUX, Batista’s gold mining unit. AUX bought up several of the exploration projects in the Santander District: Ventana Gold, Calvista Gold and Galway Resources. AUX calls the project El Gigante, “the giant” and it’s on the block and up for sale.

It’s estimated it has something like 20 Moz Au and AUX pulled the plug on the prefeasibility study to save cash.

TGR: When would that reach production?

PH: I can’t say. AUX was planning a very large operation with aggressive production goals that would have a high capex.

TGR: Would a higher gold price be enough to save Colombia as a mining exploration play?

PH: A higher gold price is always helpful and makes uneconomic projects economic. Colombia is being very cautious about how it addresses modern mining and there is an information gap. Rightly or wrongly the financial markets view that caution as risk. Colombia is not like Chile or Peru where there have been so many mine developments. Until that first project is permitted and developed in Colombia, there’s going to be that question mark hanging over the country about whether mine development is possible or not.

TGR: Is there any light at the end of this tunnel, Paul?

PH: Continental Gold is a good company with a good management team, good financing ability and good technical ability. It’s got an excellent project. It’s got a high-grade, low-capex project. It’s trading at $3.37/share. Some would say at that price Continental Gold is a huge bargain, but it could still fall another dollar for all I know. I haven’t got a crystal ball.

In addition to Continental Gold, other ones to watch include Cordoba Minerals and also Colombian Mines Corp. (CMJ:TSX.V), which has a couple of interesting early-stage projects: El Dovio and Mercedes.

TGR: What advice would you give to MinMinas, if you could?

PH: One, reduce the administrative burden of exploration. Does it really need to scrutinize concession applications for five months? The bulk of administrative scrutiny should come at the project development stage. The same thing for water use permits for drilling. These things shouldn’t take six months to obtain.

Two, work hard to develop a good working relationship with the environment ministry so that the environmental permitting aspects can be better. Nobody wants environmental permits to be anything but rigorous because the environment should be protected, but there should be a process that flows.

TGR: Are there some company milestones investors can look forward to in 2014?

PH: There’s going to be several. Continental Gold will put out an updated resource and prefeasibility study midyear. Seafield’s prefeasibility study is due after the holidays. The merger between Cordoba Minerals and Saber could wrap up early in the year.

TGR: Some parting thoughts for investors?

PH: Take a deep breath and put your head down. Go for what your instincts tell you.

TGR: Thanks, Paul.

Paul Harris is a mining information expert with more than 12 years of experience as an analyst, journalist and researcher about the mining industry, of which he has spent nine years in Latin America including four years in Colombia and five years in Chile. Harris has written for leading industry publications and business newspapers around the world and produced reports for leading consultancy firms prior to starting Colombia Gold Letter.

Want to read more Gold Report interviews like this? Sign up for our free e-newsletter, and you’ll learn when new articles have been published. To see a list of recent interviews with industry analysts and commentators, visit our Streetwise Interviews page.

DISCLOSURE:

1) Brian Sylvester conducted this interview for The Gold Report and provides services to The Gold Report as an independent contractor. He or his family own shares of the following companies mentioned in this interview: None.

2) The following companies mentioned in the interview are sponsors of The Gold Report: Continental Gold Ltd. Streetwise Reports does not accept stock in exchange for its services or as sponsorship payment.

3) Paul Harris: I or my family own shares of the following companies mentioned in this interview: Batero Gold Corp., Seafield Resources Ltd. and Continental Gold Ltd. I personally am or my family is paid by the following companies mentioned in this interview: None. My company has a financial relationship with the following companies mentioned in this interview: None. I was not paid by Streetwise Reports for participating in this interview. Comments and opinions expressed are my own comments and opinions. I had the opportunity to review the interview for accuracy as of the date of the interview and am responsible for the content of the interview.

4) Interviews are edited for clarity. Streetwise Reports does not make editorial comments or change experts’ statements without their consent.

5) The interview does not constitute investment advice. Each reader is encouraged to consult with his or her individual financial professional and any action a reader takes as a result of information presented here is his or her own responsibility. By opening this page, each reader accepts and agrees to Streetwise Reports’ terms of use and full legal disclaimer.

6) From time to time, Streetwise Reports LLC and its directors, officers, employees or members of their families, as well as persons interviewed for articles and interviews on the site, may have a long or short position in securities mentioned and may make purchases and/or sales of those securities in the open market or otherwise.

Streetwise – The Gold Report is Copyright © 2013 by Streetwise Reports LLC. All rights are reserved. Streetwise Reports LLC hereby grants an unrestricted license to use or disseminate this copyrighted material (i) only in whole (and always including this disclaimer), but (ii) never in part.

Streetwise Reports LLC does not guarantee the accuracy or thoroughness of the information reported.

Streetwise Reports LLC receives a fee from companies that are listed on the home page in the In This Issue section. Their sponsor pages may be considered advertising for the purposes of 18 U.S.C. 1734.

Participating companies provide the logos used in The Gold Report. These logos are trademarks and are the property of the individual companies.

101 Second St., Suite 110

Petaluma, CA 94952

Tel.: (707) 981-8999

Fax: (707) 981-8998

Email: [email protected]

By MoneyMorning.com.au

People often ask us how we can be so positive about the future when the headlines are full of depressing news.

You only have to look at the front page of the Bloomberg News website on any given day to see what they mean.

More often than not the top story involves the latest mess involving central banks or governments. Most of the time it’s a story about how they’re trying to head off the next disaster.

What a sad state of affairs. And yet if you strip away the gloomy headlines and look at what’s really going on in the world, you’ll find that today is perhaps the most exciting and potentially rewarding period in the history of the Earth.

And we’ve got the picture that proves it…

You’ve probably heard of compounding returns in the context of investing.

If you put money in the bank it will earn interest. When the bank credits that interest to your account it also begins to earn interest. When the bank credits that interest to your account, that interest earns interest too. And so on.

That’s compounding your investment returns. Your initial investment helps you earn a return. That return then ‘works’ with your initial investment to produce an even bigger return.

What you may not realize is that you can apply the same compounding principle to technology.

Progress Hundreds of Thousands of Years in the Making

Compound interest is one of the investing world’s under-appreciated investment tricks. It’s investing for the super-patient. It’s not a get-rich-quick scheme. The fact is that making money from compound interest takes time…a long time.

It can take 20 or 30 years before the earned interest reaches a level that makes the returns truly spectacular.

But if that seems like a long time, it’s nothing compared to the time taken to reap the rewards from technological compounding. We’re not talking about two or three decades. We’re talking hundreds of thousands of years.

Through most of history technology didn’t change. And when it did change the improvement from one technology to the next was hardly noticeable.

That was fine for the people living through those times. They didn’t expect things to change. So they weren’t disappointed when things didn’t change for the better. The way of doing things was the same throughout their entire life. It had been the same throughout their parents’ entire lives too, and their grandparents’.

Any yet, that’s not to say that things weren’t changing. It’s just that the changes were so small that those at the time couldn’t see the change happening.

That’s the way things went for tens and hundreds of thousands of years. That was until big changes started to happen around the time of the Industrial Revolution.

Change and advances in technology became more noticeable. But still, these changes were tiny compared to the advances in technology we’ve seen in recent years. And if the trend continues, the advances will only become more spectacular.

That’s where we’ll show you pictorial proof of how the advance of technology is happening at a rate that surpasses all innovations in the history of mankind.

The Trigger Point for Technological Advance

The chart below shows how technology has taken off over the past century. The chart only goes back to 1400. But in reality you could extend that almost flat line to the left and keep going until it went back to the dawn of humanity.

Source: Miovision
Click to enlarge

As we mentioned above, things really began to change after the Industrial Revolution. That was when technological advances really began to ‘compound’. It was the trigger point, the ‘bend in the knee’ as the world began an exponential rise in technological advancement unseen in history.

The compounding of technology occurred as ‘new’ technology could help develop an even ‘newer’ and more sophisticated technology. From here the advance of technology would continue at an ever increasing rate of knots.

A Limitless Opportunity in Technology

Now, a mathematician or physicist may look at that chart and point out that an exponential gain can’t go on forever. They’ll say that in a world of finite resources there is a limit to how much anyone can produce of anything.

They’ll use the example of the rice and the chessboard. If you start by putting one grain of rice on the first square of a chessboard and then double the amount on each subsequent square (eg. 1, 2, 4, 8, 16, etc…) the total amount of rice on the chessboard would rise to the height of Mt Everest and equal more than 1,000 times the world’s annual rice production! (Do the maths if you don’t believe us.)

That’s exponential growth. You don’t notice the change early on, and it seems incomprehensible that the number could grow so big. But it does. And the same thing is playing out in technology.

Of course, we’re not about to fly in the face of maths. But what if there was a circumstance where the resource was infinite? What if there was no limitation to what technology and humanity could achieve?

This is something technology analyst Sam Volkering and your editor have followed in Revolutionary Tech Investor, the premium technology investing advisory service.

We call it the ‘Sixth Revolution’ where future advancement in technology (where the exponential growth rate really takes off) happens at the molecular level. Part of this shift involves the development of ‘immersive’ technology.

We won’t go into the details here as it’s a subject we’re still exploring for Revolutionary Tech Investor subscribers. But we will say that the potential growth in this sector and in technology are limitless.

Of course finding and recognising this change is one thing. Getting into a position to profit from it financially is another. That’s exactly what we’re doing now as we take investing down to the molecular level and look for the potentially infinite opportunities.

Cheers,
Kris+

Special Report: The Recession Strategy

Join Money Morning on Google+

By MoneyMorning.com.au

By MoneyMorning.com.au

The great inventors/businessmen of the First Industrial Revolution, such as James Watt and Matthew Boulton of steam-engine fame, were not just smart but privileged. Most were either born into the ruling class or lucky enough to be apprenticed to one of the elite. For most of history since then, entrepreneurship has meant either setting up a corner grocery shop or some other sort of modest local business or, more rarely, a total pie-in-the-sky crapshoot around an idea that is more likely to bring ruination than riches.

Today we are spoiled by the easy pickings of the Web. Any kid with an idea and a laptop can create the seeds of a world-changing company – just look at Mark Zuckerburg and Facebook or any one of thousands of other Web startups hoping to follow his path. Sure, they may fail, but the cost is measured in overdue credit-card payments, not lifelong disgrace and a pauper’s prison.

The beauty of the Web is that it democratised the tools both of invention and of production. Anyone with an idea for a service can turn it into a product with some software cost (these days it hardly even requires much programming skill, and what you need you can learn online)–no patent required. Then, with a keystroke, you can ‘ship it’ to a global market of billions of people.

Maybe lots of people will notice and like it, or maybe they won’t. Maybe there will be a business model attached, or maybe there won’t. Maybe riches lie at the end of this rainbow, or maybe they don’t. But the point is that the path from ‘inventor’ to ‘entrepreneur’ is so foreshortened it hardly exists at all anymore.

Indeed, startup factories such as Y Combinator now coin entrepreneurs first and ideas later. Their ‘startup schools’ admit smart young people on the basis of little more than a PowerPoint presentation. Once admitted, the would-be entrepreneurs are given spending money, whiteboards and desk space and told to dream up something worth funding in three weeks.

Most do, which says as much about the Web’s ankle-high barriers to entry as it does about the genius of the participants. Over the past six years, Y Combinator has funded three hundred such companies with such names as Loopt, Wufoo, Xobni, Heroku, Heyzap, and Bump. Incredibly, some of the (such as DropBox and Airbnb) are now worth billions of dollars. Indeed, the company I work for, Conde Nast, even bought one of them, Reddit, which now gets more than two billion pageviews a month. It’s on its third team of twenty something genius managers; for some of them, this is their first job and they’ve never known anything but stratospheric professional success.

But that is the world of bits, those elemental units of the digital world. The Web Age has liberated bits; they are cheaply created and travel cheaply, too. This is fantastic; the weightless economics of bits has reshaped everything from culture to economics. It is perhaps the defining characteristic of the twenty-first century (I’ve written a couple of books on that, too). Bits have changed the world.

We, however, live mostly in the world of atoms, also known as the Real World of Places and Stuff. Huge as information industries have become, they’re still a sideshow in the world economy. To put a ballpark figure on it, the digital economy, broadly defined, represents $20 trillion of revenues, according to Citibank and Oxford Economics. The economy beyond the Web, by the same estimate, is about $130 trillion. In short, the world of atoms is at least five times larger than the world of bits.

We’ve seen what the Web’s model of democratised innovation has done to spur entrepreneurship and economic growth. Just imagine what a similar model could do in the larger economy of Real Stuff. More to the point, there’s no need to imagine – it’s already starting to happen. That’s what this book is about. There are thousands of entrepreneurs emerging from the maker Movement who are industrializing the do-it-yourself (DIY) spirit…

We are all Makers. We are born Makers (just watch a child’s fascination with drawing, blocks, Lego, or crafts), and many of us train that love in our hobbies and passions. It’s not just about workshops, garages, and man caves. If you love to cook, you’re a kitchen Maker and your stove is your workbench (homemade food is best, right?). If you love to plant, you’re a garden Maker. Knitting and sewing, scrapbooking, beading, and cross-stitching; all Making.

These projects represent the ideas, dreams, and passions of millions of people. Most never leave the home, and that’s probably no bad thing. But one of the most profound shifts of the Web Age is that there is a new default of sharing online. If you do something, video it. If you video something, post it. If you post something, promote it to your friends. Projects shared online become inspiration for others and opportunities for collaboration. Individual Makers, globally connected this way, become a movement. Millions of DIYers, once working alone, suddenly start working together.

Thus ideas, shared, turn into bigger ideas. Projects, shared, become group projects and more ambitious than any one person would attempt alone. And those projects can become the seeds of products, movements, even industries. The simple act of ‘making in public’ can become the engine of innovation, even if that was not the intent. It is simply what ideas do: spread when shared.

We’ve seen this play out on the Web many times. The first generation of Silicon Valley giants got their start in a garage, but they took decades to get big. Now companies start in dorm rooms and get big before their founders can graduate. You know why. Computers amplify human potential: they not only give people the power to create but can also spread their ideas quickly, creating communities, markets, even movements.

Now the same is happening with physical stuff. Despite our fascination with screens, we still live in the real world. It’s the food we eat, our homes, the clothes we wear, and the cars we drive. Our cities and gardens; our offices and our backyards. That’s all atoms, not bits.

This construction-’atoms’ versus ‘bits’-originated with the work of a number of thinkers from the MIT Media Lab, starting with its founder, Nicholas Negroponte, and today most prominently exemplified by Neal Gershenfeld and the MIT Center for Bits and Atoms. It is shorthand for the distinction between software and hardware, or information technology and Everything Else. Today the two are increasingly blurring as more everyday objects contain electronics and are connected to other objects, the so-called Internet of Things 

The idea of a ‘factory’ is, in a word, changing. Just as the web democratized innovation in bits, a new class of ‘rapid prototyping’ technologies, from 3-D printers to laser cutters, is democratizing innovation in atoms. You think the last two decades were amazing? Just wait.

Chris Anderson
Contributing Editor, Money Morning

Ed Note: The above article is an edited version of an article originally published in The Daily Reckoning US.

Join Money Morning on Google+

By MoneyMorning.com.au

Article by Investazor.com

We came back from the holidays full of energy for the year ahead. We wish you a wonderful new 2014, full of success and good trades.

As well as us, investors are also coming back from their holidays and this can be seen in the rising volume and the lower volatility from the Forex Market. Around new years eve, it seems that the low volume made possible for the FX instruments, especially EUR/USD to have some interesting moves.

Let us start with the most traded currency pare, which we mentioned earlier EURUSD. It closed on 2013 under 1.3800 and this meant that bears still have some fighting power left. During the first trading days it dropped all the way to 1.3600 and this week dropped even lower, hitting 1.3572.

Today there were some interesting publications in the economic calendar. The German Prelim CPI was in line with the expectations, 0.4% rise, Spanish Services PMI rose the a 6 year peak, 54.2, Italian Services PMI slightly rose to 47.9 from last month’s 47.2 and the Europe Sentix Investor Confidence rose the most in the past 3 years, hitting 11.9.

The United States reported today the ISM Non-Manufacturing at 53.0, lower with 0.3 points from las month, and the Factory Orders up 1.8%, which was in line with the expectations.

From these publications investors bought the Euro today and send it 0.33% higher from the Friday close.

Up next in the FX Calendar there will be some very interesting and important events. Starting tomorrow Germany will publish the Retail Sales, Unemployment Change, Factory orders and the Constitutional Court Ruling and the Industrial Production. But this is only the beginning because the most important events are on Wednesday the US ADP Non-Farm Payrolls and the FOMC Meeting Minutes, on Thursday the ECB will publish its Minimum Bid Rate and will held the monetary policy conference and the USA will release the Unemployment Claims. Investors are really interested in what will the Non-Farm Payrolls and Unemployment Rate from Friday will look like, after Fed has tapered the QE with 10 billion dollars.

From the technical point of view there are some bearish signals to be taken into consideration. The price has broken the up trend’s line and hit a lower low. Any bearish signal encountered under 1.3700 (like candle stick patterns, price patterns or anything based on technical indicators) can be considered strong. Above 1.3700 the bears loose powers and bulls might get back the terrain to 1.3800. A clear drop under 1.3570 low would mean a strengthen of the US Dollar with the next target at 1.3520/00.

Let us go on to our next currency, GBPUSD. In its first day of 2014 the Britain pound has reached a maximum at 1.6600, but didn’t maintain this position, dropping all the way to 1.6336.

Today Great Britain has released its services PMI which dropped to 58.8 from 60.00 last month, but despite this data we can see that the GBP had gained in front of the US dollar, but this has happened because of sell off on the greenback.

For this week we can see that are scheduled on Wednesday to be released the Halifax HPI. Thursday will be more important because of the releases on the US dollar but mainly because the BOE will have its monetary policy meeting and will release the Official Bank Rate and the Asset Purchase Facility.

Looking at the technical analysis we saw that the price broke the trend line, or better said the lower line of the Rising Wedge. This breakout could be a false one if the bears will push the price above 1.6450, and the next targets at 1.6500 and 1.6550. A daily close under 1.6350, on the other hand, could mean that bears are still in command and are willing to push the price all the way to 1.6300 or even lower to meet the Rising Wedge target.

These two are currency pairs that would be very interesting to follow this week especially because there will the policy meetings for both the ECB and Bank Of England, and the volatility will pick up the pace.

The post EURUSD and GBPUSD Overview, Volume is picking up appeared first on investazor.com.

By George Leong for Daily Gains Letter

Now that New Year’s has come and gone, as we look forward into 2014, the big question will be how the stock market performs this year, especially following an impressive advance in 2013 that was beyond my estimates.

The past year was seen as the year of the Fed-induced market rally that resulted in some strong gains across the board from blue chips to technology and growth stocks. It was one of the best years to make money on the stock market in recent history.

At this stage, the economy is looking better and will need to strengthen in order for the stock market to advance higher toward more record gains. A strong January would be positive and would suggest an up year for the stock market.

My early view is that the stock market will head higher in 2014, but not at the same rate as we saw in 2013, which was out of whack.

The key will be how fast the Federal Reserve, under Janet Yellen, decides to taper its bond buying. A slower taper is supportive for the stock market. However, the flow of money will depend on the rate of economic renewal and, more specifically, the jobs market and whether job creation continues to move along at a steady pace. If we see growth and more jobs created, the Fed will continue to cut its bond buying, though it has said that it will keep interest rates near record lows until the unemployment rate falls to 6.5% or lower, which could happen sometime in mid- to late 2014.

I see another up year for the stock market in 2014, but I doubt we will see gains in excess of 30% this year. By my estimates, the S&P 500 could target a rise of 15% to 2,100 or perhaps as high as 2,200 for a 20% rise. The Dow Jones Industrial Average could move upward toward 19,000, for an advance of 15%. Of course, the actual advance will depend on the economy and what the Fed does.

Technology and small-cap stocks will likely lead the markets higher again this year. I like the Internet and mobility areas in the technology sector. Social media will likely take a breather following the staggering gains we witnessed in 2013.

So while the stock market is looking higher this year, I also feel that stocks could be vulnerable to selling and a stock market correction following the record advances in 2013. With the stock market in its fifth year of the current bull market, there’s some vulnerability on the charts.

But while the stock market may seem risky, investors should know that there’s more money to be made in equities than other investments, such as commodities. Take gold, for example. I remain bearish toward the yellow metal unless we see a rise in inflation or market risk, which would cause investors to flee to this safe haven. For the time being, I would look to trade gold on weakness and sell into strength.

Whatever the gains are in 2014, the key will be to buy more selectively this year and be alert to any stock market weakness to buy on dips.

By Moe Zulfiqar for Daily Gains Letter

Trading for 2014 has begun. In 2013, we saw massive moves on the key stock indices—something we have only seen a few times. For example, the S&P 500 moved up by almost 30%, and the NASDAQ Composite increased by more than 35%. Those who were long saw their portfolio grow, and those who went against the key stock indices probably had to question their strategy and re-allocate the capital.

You can see for yourself in the chart below: key stock indices such as the S&P 500 maintained an upward trajectory throughout the year—and without any major hiccups.

Chart courtesy of www.StockCharts.com

The average return on the S&P 500 between 1970 and 2012 was 8.2%; on the Dow Jones Industrial Average, it was 7.9%; and on the NASDAQ Composite, it was just slightly more than 13%. (Source: “Historical Price Data,” StockCharts.com, last accessed January 2, 2013.)

Sadly, these numbers only indicate past performance. With the beginning of the new year, investors have one main question in mind: where are the key stock indices going to go in 2014? Will we see a decline or are we in for another stellar year?

The year 2014, I believe, is going to be an interesting year for stock investors. The rally in the key stock indices that started in 2009 continues to march forward. As this is happening, the fundamentals that act as fuel for the stock market rally are becoming anemic. This should be noted, because without fundamentals becoming stronger, key stock indices can only go so far.

For instance, on the surface, the U.S. gross domestic product (GDP) looks better than before, but the factors driving it higher are nothing to be proud of; instead, they’re troubling, to say the least. In the third quarter, we saw a massive buildup of inventories—this suggests that U.S. consumers are not really buying, yet consumer spending is the backbone of U.S. GDP.

Adding to this, we continue to see troubles in the housing market. The demand from buyers continues to plummet as the interest rates are increasing. This is very evident when looking at the mortgage activity tracked by the Mortgage Bankers Association. The index tracking mortgage activity in the U.S. economy dropped to a 13-year low near the end of December. (Source: “U.S. mortgage applications fall as refinance hits five-year low: MBA,” Reuters, December 24, 2013.)

Is it time to go against the key stock indices?

With all this said, investors have to keep one very important phenomenon in mind: predicting tops and bottoms can kill an investor’s portfolio returns; markets can be irrational for some time. The best strategy is to act with the market, which is currently in an upward trajectory. January is usually a good month for key stock indices. We will see how it pans out once we move further into the year.

By George Leong, B.Comm.

In 2013, the Federal Reserve gave stock market investors some of the easiest gains in history as a result of its quantitative easing. Now, as we move into 2014, while I believe it will likely be another up year for the stock market, I doubt the gains will be as good as last year’s.

Let’s take a look at the situation in 2014.

Fed Chairman Ben Bernanke will be gone in a few weeks and in will come Janet Yellen, another dovish banker who loves to use easy monetary policy to drive the economy. This implies that the tapering process could be slow and could take into 2015 to complete—good news for the stock market.

But the reality is that the unprecedented flow of the Fed’s easy money into the stock market over the last four years is a thing of the past. The flow of money will now depend on the rate of economic renewal and, more specifically, the jobs market and whether the rate of job creation continues to move along at a steady pace.

Since the announcement of the Fed’s $10.0-billion-a-month cut in bond buying (which I believe is a sensible move at this point, given the current economic renewal and jobs market growth), some uncertainty has been removed from the stock market; as a result, the S&P 500 and Dow Jones Industrial Average (DJIA) have reached record highs. (See “Fed’s Move to Taper the Right Choice for the Stock Market in 2014?”)

If the economy continues to strengthen, jobs are created, and the Fed tapers slowly, the stock market could be rewarded for the fifth straight year.

For the broader market, the S&P 500 could rise to 2,100 for a 15% advance, or if we see more bullish sentiment, the index could hit 2,200 for a 20% gain. The small-cap Russell 2000 will likely do well, too (though likely not at the same rate as in 2013), as long as the economy continues to grow. On the blue chip side, the DJIA could drive higher to around 19,000 for an advance of 15%…if all works out.

The top area of growth continues to be technology, especially in the mobile and Internet areas, as the economy continues to improve. Unless the appetite for risk declines, I see potential gains in the NASDAQ in excess of that for the S&P 500 and DJIA.

I also like the financial sector, especially the banks, credit card companies, and providers of prepaid credit cards, as interest rates will remain low for a few more years, making purchasing on credit that much more attractive to consumers.

As far as foreign stock market opportunities go, I like China, an underperformer in 2013 for the second straight year; I sense China will deliver some better returns this year, especially in the technology and industrial areas.

In the commodities area, I continue to believe gold will underperform in 2014. Gold recently declined to below $1,200 an ounce and is hovering at just above that mark, but I’m not that positive. The reality is that many of the underlying fundamentals that have traditionally supported the metal are not evident. Yes, China is continuing to accumulate physical gold, but India, which is the world’s largest buyer, has shown some stalling in its buying of the yellow ore.

So continue to enjoy the stock market for now and use selling as a buying opportunity, as I sense the stock market will continue to deliver above-average returns for investors as we move ahead in 2014.

This article Where the Gains Will Be in 2014 is originally published at Profitconfidential

By Mitchell Clark, B.Comm.

With 2013 producing an outstanding year in equity market returns, investors will be looking for catalysts to sell until reports for fourth-quarter earnings season begin.

Countless blue chips are trading right at their all-time record highs. Meanwhile, Wall Street earnings estimates have been going up for many of these companies for the first quarter and 2014 calendar year.

I think this upcoming earnings season will surprise to the upside; however, this doesn’t mean that stocks will continue appreciating in value all year. If 2013 was a banner breakout year of “buy on rumor,” 2014 may very well turn out to be the year of “sell on news.”

Stocks are fully valued, but a positive disposition remains in investor sentiment with the prospect of continued low interest rates at the short end of the curve. Revenue growth among blue chips is generally expected to be in the low single digits and earnings growth should be in the high single digits.

But most blue chips are in extremely good financial health, and the prospects of higher dividends this year is probable. Therefore, investors in blue chip stocks have every reason to expect high single-digit to low double-digit rates of return from equities. Modest capital gains in the main equity indices are a very real possibility again this year, especially with the certainty of a low federal funds rate.

Near-term, good news may still result in stocks selling off, if only for the simple reason that they’re due to. This market is very much a hold in anticipation of fourth-quarter earnings season results. I don’t see a lot of action to take in a market that’s gone up so tremendously in anticipation of better business conditions in the U.S. economy.

Strategy-wise, I still favor dividend paying stocks and dividend reinvestment for those investors who don’t rely on the quarterly or monthly income.

The NASDAQ Composite’s accelerating outperformance last year was a classic sign that investors are willing to be more speculative over the blue-chip breakout that occurred at the beginning of the year.

But the earnings power is with large-cap stocks, especially those corporations that have effected rising prices for their products and services without affecting demand. Combined with strong cash balances and the very low cost of money, the prospects for rising dividends in 2014 remain excellent.

While the outlook for dividend paying stocks is good, there was a lot of initial public offering (IPO) froth last year and many of these positions could easily be cut by a third if a real correction were to occur.

In terms of portfolio strategy, I see no reason why investors need to increase their investment risk by allocating a greater percentage of holdings to more risky positions. As the last few years illustrated, blue-chip investing can be very lucrative when the cycle is right. (See “’Need to Know’ Info About the Coming Retrenchment.”)

I think the cycle will continue to favor those stocks that are existing winners, of which many are blue chips. While this market is very much due for a meaningful price correction, those companies offering rising dividends should continue to fare well. Last year was about the big index moves; this year should be less about the indices, and more about the performance of individual stocks.

This article Stock Market Focus to Shift in 2014 is originally published at Profitconfidential