J.C. Penney Surprise: 10% Comparable Store Sales Growth in November

J. C. Penney Company, Inc. (NYSE: JCP) is acting like a company which might not be doomed after all. The troubled department store retail giant offered preliminary guidance on its month ending November 30, 2013 and the numbers were pretty stellar considering that the Black Friday numbers were weak at many stores.

The company’s comparable store sales grew by a sharp 10.1% in November of 2013 versus November of 2012. Its e-commerce sales online were called strong and running well ahead of last year. This is also said to be consistent with the prior month’s trend, although the comparable store sales gain in October was a mere 0.9%.

CEO Mike Ullman said that the company is encouraged by the early performance of its giftable items, especially among its private brands such as Modern Bride, St. John’s Bay and a.n.a. Here is where things may get tricky. J.C. Penney said that customers “took advantage of exciting promotions for gift buying for their loved ones as well as for themselves.” Another mention was made that the environment will remain as competitive as ever.

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We would caution that J.C. Penney shares are now back above $10.00 per share, closing up 1% at $10.11 on the day. The stock is also up another 4% or so at $10.57 in the after-hours session. Its 52-week trading range is $6.24 to $23.10 and its market cap is almost $3.1 billion.

Seven Stores Remaining Closed on Thanksgiving

With more stores than ever before choosing to open for at least part of Thanksgiving day, there has been a lot of public response to those merchants who will be doing business on the most American of holidays. While many people like the idea of shopping on Thanksgiving, merchants who are opening are getting some backlash, as they probably expected.

As a supplement to our rundown of eight major retailers that will be opening on Thanksgiving, we thought we'd take a look at eight other retailers that will remain closed.

The largest chain by far that will not be open on Thanksgiving day is Costco Wholesale Corp. (NASDAQ: COST). The store has regularly been cited as an example of a company that isn't ruining the holiday for its workers. That may well be true, but the store is also looking out for its own bottom line. Costco's profits come largely from membership fees. Keeping the stores open just adds to costs without raising membership numbers much.

For example, in the quarter ending last November 25th, Costco's membership fees totaled $511 million and the company's quarterly profit came in at $639 million. Nearly 80% of profit came from membership fees. Besides, Costco doesn't do doorbuster sales or similar promotions.

And while we don't know exactly how membership fees affect BJ's Wholesale Club, it's not a bad bet that the fees play a significant role in the stores' profit as well. BJ's has been privately held since 2011 when private equity firms Leonard Green & Partners and CVC Capital Partners acquired the company for around $2.8 billion. BJ's operates 201 stores, mostly in the northeastern U.S.

Another major company that won't be opening its 261 stores on Thanksgiving is Nordstrom's Inc. (NYSE: JWN). Nordstrom's big annual sales event comes in July and it is a bigger profit-maker for the store than is Black Friday. Staying open would likely add little to the company's coffers and the backlash from consumers is probably just not worth the aggravation to Nordstrom's. The store's upscale image would also likely take a hit from being one of the mob open on the holiday.

Ross Stores Inc. (NASDAQ: ROST) has said that its more than 1,100 stores will remain closed on Thanksgiving, as has The TJX Companies Inc. (NYSE: TJX), owner of the TJ Maxx, Marshall's, and other retail brands. Another off-price retailer, Burlington Stores Inc. (NYSE: BURL), owner of the Burlington Coat Factory stores, will also remain closed on the holiday.

For the off-price stores remaining closed could at least partly due to a determination that they have little, if anything, to gain in the way of sales by being open. By keeping their promotional offers on hold until the early hours of Black Friday, they could stand out a bit more from the crowd that will be open on Thanksgiving. These stores could see a bump in sales from people who refuse to shop on the holiday, and will vote with their feet and their wallets on Friday.

One more large privately held chain won't be open on the holiday. P.C. Richard & Son, an electronics retailer in the New York, New Jersey, Connecticut, and Pennsylvania area, will not open its 68 stores on Thanksgiving.

Japan Stocks Sink to Monthly Worst in Developed Markets

Japan's stocks trailed every other developed market last month, with the steepest rally in 40 years petering out on concern a higher sales tax will curb growth while U.S. stimulus bolsters the yen.

The Topix index rose less than 0.1 percent in October, the smallest gain among 24 developed markets tracked by Bloomberg. The gauge, which remains the best performer this year with a 39 percent surge, has fallen for four of the past six months. Prime Minister Shinzo Abe said on Oct. 1 he will proceed with a plan to raise the sales levy in April to 8 percent from 5 percent. Strategists pared forecasts for yen declines as a weaker economic outlook spurred speculation that the Federal Reserve will delay reducing its monthly bond purchases.

"The biggest drag is that the Fed's tapering has been put off, eroding a bearish view on the yen," said Kenichi Kubo, a senior fund manager at Tokio Marine Asset Management Co., which oversees about 5 trillion yen ($51 billion). "There's also a sense that an increase in the sales tax will weigh on growth. And it seems we won't get much out of Abe's third arrow."

Investors are waiting to see whether Abe can succeed with growth-oriented initiatives to make Japan's economic recovery sustainable, in the so-called third arrow of his strategy following fiscal stimulus and monetary easing. Exporters led by Toyota Motor Corp. are reliant on a weaker yen to help them meet the outsized profit gains expected by analysts. Topix (TPX) member companies will boost earnings by 26 percent in the next 12 months, compared with the 11 percent growth estimated for the Standard & Poor's 500 Index, data compiled by Bloomberg show.

Third Arrow

Abe may have to put off plans for key deregulation of the labor market in special economic zones, including lifting restrictions on working hours for white-collar workers, the Nikkei newspaper reported on Oct. 18.

The yen gained 5.2 percent against the greenback through yesterday from a 4 1/2-year low reached May 22. The currency will trade at 100 per dollar by year-end, from 98.36 yesterday, according to the median of analyst forecasts compiled by Bloomberg. At the end of September, strategists were predicting a slump to 102 by Dec. 31.

The Topix dropped 1 percent as of 2:16 p.m. in Tokyo as the yen climbed 0.4 percent to 97.95 per dollar.

The Fed will wait until March to taper its monthly bond buying, a Bloomberg survey Oct. 17-18 showed.

Other Asian benchmark indexes trailed developed-market peers in October. Singapore's Straits Times Index rose 1.4 percent last month, the second-worst performer among the 24 markets. Hong Kong's Hang Seng Index added 1.5 percent last month, the third-worst performer. The index slumped 1.4 percent on Oct. 23 as China's money-market rates jumped.

Greece's ASE Index led gains with a 17 percent surge, followed by Italy's FTSE MIB Index, which climbed 11 percent.

Stimulus Package

The Topix capped four consecutive quarterly gains through September, climbing 62 percent for the biggest rally since 1973.

The advance should resume toward the end of the year as Abe announces details of a 5 trillion yen spending plan to cushion the first sales-tax increase since 1997 while corporate earnings continue to improve, said Masaaki Yamaguchi, equity market strategist at Nomura Holdings Inc.

"The stimulus package will offset a drop in spending following the sales tax increase," Yamaguchi said. "As the government announces details about the package, investors will buy its beneficiaries."

Nomura expects the Topix to climb to 1,500 by the end of December, the highest forecast among 18 estimates in a Bloomberg survey last month.

Company Earnings

Yesterday was the peak of the earnings season with some 270 companies on the Topix reporting. Of the 147 companies on the Topix that have posted quarterly results since Oct. 1 and for which estimates were available, 83 exceeded expectations, according to data compiled by Bloomberg.

Canon Inc., the world's largest camera maker, cut its annual profit forecast and predicted its first drop in sales of models with an interchangeable lens as consumers switch to smartphones to take photos. Net income will probably total 240 billion yen for the year ending December, the Tokyo-based company said Oct. 24, down from its earlier forecast of 260 billion yen.

Nippon Steel & Sumitomo Metal Corp., the world's largest steelmaker by market value, forecast full-year profit that lagged analyst estimates. Net income may be 200 billion yen in the 12 months ending March 31, the Tokyo-based company said Oct. 30. That's below the average estimate of 232 billion yen from 18 analysts compiled by Bloomberg.

Relative Value

The Topix traded at 1.24 times book value yesterday, compared with 2.55 for the S&P 500. The U.S. benchmark measure capped a 4.5 percent advance last month, its second monthly gain, and closed at a record high on Oct. 29.

Keeping U.S. stimulus for longer would have mixed outcomes for Japanese equities by boosting demand for riskier assets while also causing the dollar to fall against the yen, damping the earnings outlook for exporters.

The Fed on Oct. 30 maintained the pace of its bond purchases and said it's seeking more evidence that the economy will continue to improve. The Topix dropped 0.9 percent yesterday as the yen advanced after the Bank of Japan maintained unprecedented monetary easing.

Many companies won't raise their forecasts substantially unless they see another slump in the Japanese currency, said Hitoshi Asaoka, a Tokyo-based senior strategist at Mizuho Trust & Banking Co.

"Earnings are recovering at a very slow pace," Asaoka said. "I think the currency is the biggest reason Japanese stocks are lagging U.S. counterparts."

Focus on debt funds as you near retirement: Wiseinvest

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Rustagi recommends, "The focus for an individual close to retirement has to be primarily on investing predominantly in debt instruments. If he is looking at earning healthy return and a more tax efficient return, he can look at mutual funds. There are debt oriented hybrid funds. These are typically monthly income plans. He can opt for growth option under these plans. These funds typically invest around 80-85% money in debt and the balance is invested in equity. These are more tax efficient compared to traditional options like bonds and fixed deposits."

Here is the edited transcript of the interview on CNBC-TV18.

Q: An investor can invest Rs 2000 per month. He has a time horizon of three years. He wants to invest for his retirement. How should he allocate his money?

A: He has mentioned that he is 57 years old and will retire in the next three years. It is quite evident that he should not take too much of risk at this stage because once he retires, he has to ascertain what his needs are and may be then realign his portfolio.

Currently, his focus has to be primarily on an option which is investing predominantly in debt instruments. If he is looking at earning healthy return and a more tax efficient return, he can look at mutual funds. There are debt oriented hybrid funds. These are typically monthly income plans. He can opt for growth option under these plans. These funds typically invest around 80-85% money in debt and the balance is invested in equity. These are more tax efficient compared to traditional options like bonds and fixed deposits.

He can consider investing through SIP in Reliance MIP . He also invests around Rs 50,000 per month in gold. Looking at the return that gold has given over the past few years, my recommendation is that he should reduce his exposure to gold because it is very high compared to his overall portfolio. Some part of it can also go into debt oriented hybrid fund that will also help in terms of diversification and given better returns over the next couple of years.

There are two more funds that I recommend in the same space, Canara Robecco MIP and HDFC MIP long-term.
 
Q: An investor can invest Rs 5000 per month. His time horizon is 10-12 years. He wants to invest for his child's education. What is your advice?

A: Since he has a time horizon of 10-12 years, he can afford to invest predominantly in equity funds. Both funds that he is currently invested in are of good quality. These are HDFC top 200 and DSP Blackrock equity fund .

What he can do is he can invest around 60% of the money of Rs 5000 in these existing funds because there is no point in adding too many funds. So I would recommend that he can add Rs 2000, put additional money in HDFC top 200 and Rs 1000 in DSP equity and may be add one balance fund to create the right balance in the portfolio. He can look at HDFC balanced fund .

If I assume returns of around 12% over the next 10 years, he can hope to build a corpus of around Rs 11 lakh. He is looking to build a corpus of Rs 25 lakh for which he will have to invest Rs 11,000 per month. If he can't invest Rs 11,000 then I would say that he can begin with whatever he has right now and try and increase it over a period of time.

Another area where he needs to focus is also his insurance portfolio. He has two insurance policies - money back policy and endowment policy. These are basically not the right products to give you the adequate risk cover.

My recommendation is that he should look at a term plan and try and separate his risk cover from investments. For long-term investment, he can continue with the existing mutual funds because these two products that he has will give him guaranteed return but he will have to struggle to beat inflation.

Since his time horizon is 10 years, the bigger risk is inflation. He needs to invest to beat inflation. Debt funds have a role to play while investing for short to medium term because there the focus has to be on capital protection. While he needs to look at diversification in the portfolio, it need not be done for each of the goals because the time horizon is 10 years and because he is investing regularly. So the volatility risk automatically is taken care of.

Pandora’s Perfect Storm

With shares of Pandora Media (NYSE:P) trading at around $15.22, is P an OUTPERFORM, WAIT AND SEE or STAY AWAY? Let's analyze the stock with the relevant sections of our CHEAT SHEET investing framework:

C = Catalyst for the Stock's Movement

Pandora Media has made two highly strategic moves recently. It has allowed listeners to link to Pandora through their Facebook (NASDAQ:FB) accounts, and it has implemented a 40-hour limit of free listening per month. The former should increase exposure, and the latter should aid monetization. However, these moves still might not be enough to save Pandora.

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The stock has appreciated more than 65 percent year-to-date, but there are several red flags that investors seem to be ignoring. These red flags include a lack of profitability, fierce competition, and a subpar company culture.

Lack of Profitability

Pandora went public in 2011, but it launched in 2000. If a company is unable to deliver consistent profits after more than a decade, then there should be cause for concern. Of course, Pandora's popularity increased after it went public, which led to more users and paid subscribers, but providing excuses for a company isn't a wise investing strategy.

Management has been somewhat effective with increasing paid subscribers, and mobile ad revenue doubled last quarter. These are clear positives, but while revenue growth is always exciting, it doesn't mean much if costs – content acquisition costs being the biggest factor in this case – prevent consistent profits.

Fierce Competition

As of right now, Spotify is the biggest competitor. Pandora is bigger, but Spotify is growing faster. This has a lot to do with the "cool factor" among the 18-35 demographic.

According to Alexa.com, Pandora is ranked #282 in the world and #54 in the United States. In other words, only 281 websites in the world receive more traffic than Pandora. Spotfiy is ranked #1085 in the world and #519 in the United States.

Over the past three months for Pandora, pageviews-per-user has increased 4.7 percent, time-on-site has increased 4.0 percent, and the bounce rate (only one pageview per visit) has declined 2.0 percent. These are all impressive numbers. Over the past three months for Spotify, pageviews-per-user has increased 1.1 percent, time-on-site has increased 8.0 percent, and the bounce rate has declined 2.0 percent. These are also impressive numbers.

In this instance, the numbers don't reveal the whole truth. If you're only looking at traffic numbers over the past three months, then it would seem as though it's close to even. And if you're including overall ranking, then Pandora looks like the dominating force. However, Spotify was launched in 2008. Therefore, despite eight fewer years of operation, it's already a significant threat to Pandora.

As if Pandora didn't already have enough to worry about on the competitive front, Google Inc. (NASDAQ:GOOG) and Apple Inc. (NASDAQ:AAPL) are also looking to jump into the game. This is similar to playing a game of one-on-one basketball against a neighborhood foe and winning by a point or two, and then the game changes when Michael Jordan and Kobe Bryant show up. Ambitions might be high, but reality is going to play a serious role.

Google Play Music All Access is up and running, and it's supposedly coming to iOS within a matter of weeks. For $9.99 per month, subscribers have unlimited listening access to millions of songs, radio customization capability, a skipping feature, and more. For those who start the trial prior to June 30, the cost will only be $7.99 per month. Google also offers more content than Pandora and Spotify.

Pandora One offers no external ads and unlimited listening hours on all devices for only $3.99 per month (or $36 per year), and Spotify Unlimited offers unlimited music on desktops and laptops for $4.99 per month. Spotify also offers Spotify Premium, where listeners can enjoy ad-free music on any device for $9.99 per month. The latter option doesn't seem so appealing with Google entering the fray.

And let's not forget about Apple's iRadio. Apple has reached an agreement with Warner Music Group, and it's attempting to iron out a deal with Sony Music. There are many rumors that Apple is offering a much sweeter deal to Warner Music Group than Pandora. Apparently, this will come in the form of 10 percent of ad revenue opposed to the 4 percent of ad revenue Warner Music Group currently receives from Pandora.

Company Culture

According to Glassdoor.com, Pandora's employees rate their employer a 3.4 of 5. This is decent, but if you read the actual employee reviews on Glassdoor, you will notice a few recurring themes, which include "no long-term game plan," "needless spending," "insecurity," and "paranoia." For comparative purposes, Spotify employees have rated their employer a 4.7 out of 5.

The chart below compares basic fundamentals for Pandora, Google, and Apple.

	P	GOOG	AAPL
Trailing P/E	N/A	25.96	10.76
Forward P/E	56.37	16.24	10.31
Profit Margin	-9.86%	20.92%	23.46%
ROE	-53.68%	16.36%	33.34%
Operating Cash Flow	-2.28M	16.56B	55.26B
Dividend Yield	N/A	N/A	2.70%
Short Position	31.60%	1.80%	2.80%

Let's take a look at some more important numbers prior to forming an opinion on this stock.

T = Technicals Are Mixed

Pandora has performed exceptionally well over the past year and year-to-date, but yesterday’s drop was a memorable one.

	1 Month	Year-To-Date	1 Year	3 Year
P	3.82%	65.80%	52.81%	0.00%
GOOG	2.59%	22.65%	51.95%	71.60%
AAPL	1.54%	-13.64%	-17.35%	76.21%

At $15.22, Pandora is still trading above its averages, but this might not last much longer.

50-Day SMA	15.06
200-Day SMA	12.14

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E = Equity to Debt Ratio Is Strong

The debt-to-equity ratio for Pandora is much stronger than the industry average of 4.20.

	Debt-To-Equity	Cash	Long-Term Debt
P	0.00	75.42M	0.00
GOOG	0.10	50.10B	7.38B
AAPL	0.00	39.14B	0.00

E = Earnings Are Weak

While revenue has been impressive, any company that consistently loses money is a risky investment.

Fiscal Year	2009	2010	2011	2012	2013
Revenue ($) in millions	19	55	138	274	427
Diluted EPS ($)	NA	NA	-1.03	-0.19	-0.23

Looking at the last quarter on a year-over-year basis, revenue improved but the loss widened.

Quarter	Apr. 30, 2012	Jul. 31, 2012	Oct. 31, 2012	Jan. 31, 2013	Apr. 30, 2013
Revenue ($) in millions	80.78	101.27	120	125.09	125.51
Diluted EPS ($)	-0.12	-0.03	0.01	-0.09	-0.16

Now let's take a look at the next page for the Conclusion. Is this stock an OUTPERFORM, a WAIT AND SEE, or a STAY AWAY?

Conclusion

Pandora has paved the way for the industry. Therefore, in a perfect world, it should be rewarded. Unfortunately, this is far from a perfect world. Pandora is a company that cannot turn consistent profits, and with competition increasing, it's highly unlikely that this will change. A few profitable quarters are possible, but it would be difficult to see Pandora fighting off all threats over the long haul. Even if competition isn't factored into the equation, margins are poor, cash flow is weak, and nobody knows how the stock would perform in a bear market.

Black Friday in July

Is Target's (NYSE: TGT  )  recent Bonus Black Friday akin to Christmas come early for investors? Or is it a sign of desperation from the retailer? Meanwhile, Best Buy's (NYSE: BBY  ) been on a strong run recently and is looking to continue that trend with its new store-within-a-store concept -- will this new strategy set it on a course toward profits? And finally, CEO Mike Ullman is looking to cement his place as the once and future CEO of J.C. Penney (NYSE: JCP  ) with a strong back-to-school season -- but will a slow spring and summer stop him from turning his company around? Watch this video by Motley Fool blog editor Mark Reeth and find out!

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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.

Microsoft Expands Iowa Data Center for $678 Million

Microsoft (NASDAQ: MSFT  ) is expanding its West Des Moines Data Center in Iowa for the third time, according to a press release from the Greater Des Moines Partnership released today. The new addition will have a minimum investment of $677.6 million, and comes four years after Microsoft opened its first Des Moines data center in 2009.

Microsoft General Manager of Data Center Services Christian Belady said in a statement today:

Microsoft has enjoyed a strong working relationship with the state of Iowa and West Des Moines and we are excited about our latest expansion project. The expansion of the West Des Moines data center is a win-win, bringing both new jobs to Iowa while supporting the growing demand for Microsoft's cloud services. The new facility is designed to provide fast and reliable services to customers in the region and features our latest efficient data center thinking.

Code-named "Project Mountain" by the Iowa Economic Development Authority, the final agreement includes eligibility for up to $20 million in tax credits. "Local incentives" from West Des Moines were also approved, but financial details were not disclosed in the release.

The center will focus primarily on Microsoft's cloud services. Construction is expected to begin later this year, with the expansion completed by 2016.

It's been a frustrating path for Microsoft investors, who've watched the company fail to capitalize on the incredible growth in mobile over the past decade. However, with the release of its own tablet, along with the widely anticipated Windows 8 operating system, the company is looking to make a splash in this booming market. In a new premium report on Microsoft, a Motley Fool analyst explains that while the opportunity is huge, so are the challenges. The report includes regular updates as key events occur, so make sure to claim a copy of this report now by clicking here.

Starbucks to D.C.: ‘Come together’ on shutdown

Starbucks CEO Howard Schultz wants lawmakers to come together to resolve their political gridlock. And he's giving away free coffee to customers who set an example how to do it.

From Wednesday to Friday, the coffee chain is offering a free tall brewed coffee to any customer in the U.S. who buys another person a beverage at Starbucks.

The offer is a way to help fellow citizens "support and connect with one another, even as we wait for our elected officials to do the same for our country," Schultz said in a memo to staff on Tuesday.

Schultz wrote that he wants to do something about Americans' uncertainty over the federal government shutdown, the pending debt and default crisis and waning consumer confidence.

"In times like these, a small act of generosity and civility can make a big difference," says an ad being published in The New York Times, Washington Post and USA TODAY on Wednesday. "Let's see what can happen. #payitforward."

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It's not the first time Schultz has waded into the national political debate. In 2011, he asked other chief executives to join him in halting campaign contributions until politicians stopped their partisan bickering. The CEOs of more than 100 companies, from AOL to Zipcar, took the pledge.

Marshal Cohen, chief retail analyst at The NPD Group, said the latest campaign won't likely have much political effect because it lacks the kind of punishment that makes lawmakers think twice, like an impeachment drive.

But it makes for great marketing, especially since many people, especially younger ones, care about brands that have a strong social conscience, Cohen said.

"Will it work on the political level? No. Won't make a dent. Will it work on the commercial end? Absolutely," he said.

16 Oil and Gas Stocks to Sell Now

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This week, the overall grades of 16 oil and gas stocks are lower, according to the Portfolio Grader database. Each of these rates a “D” (“sell”) or “F” overall (“strong sell”).

PDC Energy’s () rating falls to a D (“sell”) this week, down from C (“hold”) the week prior. PDC is an oil and gas company with drilling and production operations in the Rocky Mountains, the Appalachian Basin and Michigan. In Portfolio Grader’s specific subcategories of Earnings Revisions and Cash Flow, PETD also gets F’s. As of Dec. 20, 2013, 12.8% of outstanding PDC Energy shares were held short. .

EOG Resources, Inc. () is having a tough week. The company’s rating falls from a C to a D. EOG Resources is in the business of the exploration, development, production, and marketing of natural gas and crude oil. The stock gets F’s in Earnings Growth, Earnings Momentum and Margin Growth. The stock currently has a trailing PE Ratio of 40.00. .

Suncor Energy () ratings are on the decline this week as the company earns an F (“strong sell”). Last week, it received a D (“sell”). Suncor Energy is an integrated energy company in Canada. The stock gets F’s in Earnings Momentum and Earnings Surprise. The stock price has dropped 5.4% over the past month, worse than the 1.7% decrease the S&P 500 has seen over the same period of time. .

Enbridge Energy Partners, L.P. Class A () gets weaker ratings this week as last week’s D drops to an F. Enbridge Energy Partners transports crude oil and natural gas liquids to refineries in the midwestern United States and eastern Canada. The stock receives F’s in Earnings Growth, Earnings Revisions and Earnings Surprise. Cash Flow and Sales Growth also get F’s. The trailing PE Ratio for the stock is 48.30. .

PVR Partners, L.P.’s () rating weakens this week, dropping to a D versus last week’s C. Penn Virginia Resource Partners owns and operates a network of natural gas pipelines and processing plants that provide gathering, transportation, compression, processing, dehydration and related services to natural gas producers. The stock’s trailing PE Ratio is 80.80. .

This week, Green Plains Renewable Energy, Inc. () drops from a C to a D rating. Green Plains Renewable Energy constructs and operates dry mill, fuel-grade ethanol production facilities. The stock gets F’s in Earnings Growth, Earnings Revisions and Margin Growth. As of Dec. 20, 2013, 18.1% of outstanding Green Plains Renewable Energy, Inc. shares were held short. .

Chevron Corporation () earns a D this week, moving down from last week’s grade of C. Chevron gives management and technological support to international subsidiaries that operate petroleum, chemicals, mining, power generation, and energy services. The stock also rates an F in Sales Growth. .

This is a rough week for ONEOK Partners, L.P. (). The company’s rating falls to D from the previous week’s C. ONEOK Partners is engaged in the gathering, processing, storage, and transportation of natural gas in the United States. The stock also gets an F in Sales Growth. .

Slipping from a D to an F rating, Continental Resources, Inc. () takes a hit this week. Continental Resources explores for, develops, and produces oil and natural gas properties in the United States. The stock gets F’s in Earnings Growth, Earnings Momentum, Cash Flow and Sales Growth. .

Teekay Corporation () experiences a ratings drop this week, going from last week’s C to a D. Teekay is a provider of international crude oil and petroleum product transportation services. The stock gets F’s in Earnings Momentum, Earnings Revisions and Earnings Surprise. Equity and Cash Flow also get F’s. .

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The rating of Frontline () declines this week from a D to an F. Frontline owns a fleet of very large crude carriers and Suezmax tankers that transport crude oil and oil products between ports. The stock receives F’s in Earnings Revisions, Equity, Cash Flow and Sales Growth. As of Dec. 20, 2013, 12.7% of outstanding Frontline shares were held short. .

This week, Endeavour International Corporation’s () rating worsens to an F from the company’s D rating a week ago. Endeavour International is an international oil and gas exploration and production company that acquires, explores, and develops energy reserves. The stock gets F’s in Equity and Cash Flow. As of Dec. 20, 2013, 20.7% of outstanding Endeavour International Corporation shares were held short. .

North European Oil Royalty Trust () earns an F this week, falling from last week’s grade of D. North European Oil Royalty Trust is involved in gas and oil production, and it holds overriding royalty rights in certain concessions or leases in the Federal Republic of Germany. The stock also gets an F in Sales Growth. .

SandRidge Energy, Inc. () gets weaker ratings this week as last week’s D drops to an F. SandRidge Energy explores and produces natural gas and crude oil. The stock receives F’s in Earnings Growth, Earnings Momentum and Equity. Cash Flow and Margin Growth also get F’s. As of Dec. 20, 2013, 12.6% of outstanding SandRidge Energy, Inc. shares were held short. .

Gevo () experiences a ratings drop this week, going from last week’s D to an F. Gevo operates as a technology development company for biobutanol. The stock gets F’s in Equity, Cash Flow and Sales Growth. As of Dec. 20, 2013, 12.2% of outstanding Gevo shares were held short. .

Slipping from a C to a D rating, Teekay Offshore Partners L.P. () takes a hit this week. Teekay Offshore Partners LP provides marine transportation and storage services to the offshore oil industry. The stock also gets an F in Sales Growth. .

Louis Navellier’s proprietary Portfolio Grader stock ranking system assesses roughly 5,000 companies every week based on a number of fundamental and quantitative measures. Stocks are given a letter grade based on their results — with A being “strong buy,” and F being “strong sell.” Explore the tool here.

Carnival Corporation Posts Lower Q4 Earnings, but Still Beats Estimates (CCL)

Carnival Corp (CCL) announced its Q4 and full-year earnings before the bell on Thursday, with quarterly earnings coming in much lower than the same period last year.

CCL Earnings in Brief

-Carnival Corp reported quarterly revenue of $3.658 billion, up slightly from last year’s Q4 figure of $3.579 billion.
-The company’s net income came in at $66 million, down substantially from $93 million.
-On a non-GAAP basis, net income came in at $35 million, or 4 cents per share, down from $111 million, or 14 cents per share.
-Carnival was able to beat analysts’ estimates of 0 cents EPS on revenues of $3.58 billion.
-For the full year, CCL reported revenue of $11.648 billion, which is down slightly from $11.658 billion last year. Non-GAAP EPS came in at $1.58, down from $1.94 in 2012.
-Looking forward to Q1 2014, CCL sees non-GAAP diluted losses in the range of 7 cents to 11 cents.

CEO Commentary

Arnold Donald, the CEO of CCL, had the following comments on the company’s earnings: ”Accelerated progress in Carnival Cruise Lines’ brand recovery had a positive impact on fourth quarter results. A steady stream of innovative product initiatives, the launch of a nationwide marketing campaign and travel agent outreach program, as well as an industry-leading vacation guarantee fueled the brand’s improvement.”

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No Dividend Change

CCL didn’t announce any changes to its quarterly dividend in its quarterly earnings report. The company reinstated its dividend in April 2013, and currently pays 25 cents quarterly. CCL made its last dividend payment December 13. Investors should look for CCL to declare its next dividend in the coming month.

Stock Performance

CCL stock was up $1.50, or 4%, in early morning trading. YTD, the company’s stock is down 1.04%.

America's Bestselling Retirement "Plan" Is Jeopardizing – of All Things – Your Retirement

I recently received a call from "Russ," a client of mine. He was wondering why the investments he holds at my money management firm have gone up so much more than the money he's entrusted to a major fund broker.

I'd be wondering, too.

That's because, in a year filled with hundreds of 52-week highs and a broad market that climbed roughly 25%, they've managed to "grow" Russ' money all of... 2%?

It didn't take long to find out why.

It's estimated that by 2020, nearly $3.85 trillion will be invested in the same "one-click" mutual fund industry's bestsellers that Russ did: "Target Retirement Funds."

I'm so glad he called.

These "funds of funds" are dangerous. They're far too simplistic, automatically adjusting your investments based largely on one factor: your age. And that just doesn't work anymore.

In fact, these "solutions" are more dangerous than they've ever been...

The Market Doesn't Know - or Care About - Your Birthday

"Target" funds allocate client money to other funds within their respective investment "families," and they do so almost exclusively based on the client's age.

Basically, the older the client, the greater the percentage of the target funds allocated to bond funds rather than equity funds.

That sure sounds good. I mean, who doesn't want an easy retirement solution?

But if successful investing were as simple as knowing your age, then everyone would get it right.

Yet all of the big brokers push these "Target Retirement Funds" now.

Vanguard, Fidelity, T. Rowe Price, Schwab...

And they push them to everyone.

Income investors, retirees, would-be retirees... They even now sell funds that you can tailor to the age when your children will head to college... as if the market cared about our children's ages, too, let alone ours.

Russ found this out just in time...

So Much for "Safety"

My client is 86 years old, and when he told me about his target fund and its underperformance versus my income allocations, I immediately suspected that most of his money was allocated to long-term Treasury and corporate bonds.

Indeed.

Stocks, private-equity funds, business development corporations (BDCs), and other nontraditional income-generating assets have done very well this year.

But bonds, and particularly long-term Treasury bonds, have had a very rough go of it.

For example, the iShares 20+ Year Treasury Bond ETF (TLT), an exchange-traded fund (ETF) that tracks the performance of an index of public obligations of the United States Treasury with a remaining maturity of 20 or more years, is down nearly 17% over the past 12 months.

So much for those "safe" long-term Treasury bonds...

The chart here of TLT shows the bearish trend in this once-hot market segment.

Here's the Problem One reason why Russ' target fund has disappointed this year is because these funds follow an easy-to-understand formula called the "rule of 100."

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This rule states that if you want to find out how much of your investment capital you should put into equities, and how much you should put into bonds, then subtract your age from 100, and the resulting sum is how much of your portfolio you should have allocated to equities. The rest is what you should have in bonds. So, if you are 86 years old, then just 14% of your money should be in equities, and the rest in bonds.

Yet given how poorly many bond segments have performed in 2013, this rule has been a miserable failure for income investors.

And this "rule" will continue holding you back from achieving your goals.

You can thank a long-term trend of rising interest rates for that...

The Inevitable Shift Has Begun

The inevitable shift toward rising interest rates, i.e., falling bond prices, means many older investors will be grossly over-allocated to one of the worst-performing market segments at the time when they need income most. With bank savings, CDs, and other "safe" investments yielding next to nothing, income investors simply cannot afford to uncritically follow the formulaic underpinnings at the crux of these target funds.

Today, investors need to be more involved, more aggressive, and just plain smarter when it comes to making investment allocations in their income portfolios.

The plain truth is that the new bond landscape demands that your strategy change along with it. In the current environment, you simply cannot buy and hold long-term bond funds, or formulaic target funds, and hope to achieve the kind of yield and share price appreciation required to generate the total return results that many income investors enjoyed during the bond bull prior to 2013.

It's just not enough today to wait around passively for your income holdings to eke out a 2% gain, the way Russ' did. That barely keeps up with inflation, and it definitely doesn't give you the kind of income most of us need to live the way we want to live.

How I Fixed the Problem

In the end, I advised Russ to exit his Total Retirement Fund, and stop relying on outdated allocation strategies, like the "Rule of 100."

He's much better off in "total return" holdings, like Apollo Investment Corp. (Nasdaq: AINV) which we covered right here, and Kinder Morgan Energy Partners LP (NYSE: KMP), another long-term winner.

After just a few weeks, the move has already paid off for Russ...

More from Robert Hsu:
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Third Avenue Management Comments on Vodafone

Fund Management initiated a position in Vodafone (VOD) Common during the quarter. Vodafone is a leading provider of telecommunications services based in the United Kingdom. This investment is discussed in more detail in this quarter's Third Avenue International Value Fund shareholder letter. The Vodafone common investment made by the Fund was prompted by the company's sale of its 45% stake in Verizon Wireless at a tremendous price (9.4 times EBITDA). Shares of Vodafone Common were purchased at less than five times pro-forma EBITDA and at a mid-single digit dividend yield in the Fund. Although conditions in the European telecommunications industry are difficult, Vodafone's business is very cash generative and the proceeds from the Verizon Wireless transaction will enable the company to reinvest more in its networks than many of its competitors while maintaining a very strong financial position and a healthy dividend. Vodafone also has substantial exposure to emerging markets, such as India and Africa, that are experiencing tremendous growth in demand for smart phones and data.

From Third Avenue Management's fourth quarter 2013 shareholder letter.

Also check out: Third Avenue Management Undervalued Stocks Third Avenue Management Top Growth Companies Third Avenue Management High Yield stocks, and Stocks that Third Avenue Management keeps buying

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Can Goldman Sachs Continue to Outperform?

With shares of Goldman Sachs (NYSE:GS) trading around $170, is GS an OUTPERFORM, WAIT AND SEE, or STAY AWAY? Let's analyze the stock with the relevant sections of our CHEAT SHEET investing framework:

T = Trends for a Stock’s Movement

Goldman Sachs is engaged in investment banking, securities, and investment management. It provides a range of financial services to a substantial and diversified client base that includes corporations, financial institutions, governments, and high net worth individuals. The company operates in four segments: investment banking, institutional client services, investing and lending, and investment management. Through its segments, Goldman Sachs provides valuable investment services to consumers and companies worldwide.

Goldman Sachs lowered shares of RWE AG (NASDAQ:RWEOY) from a buy rating to a neutral rating in a report released. The company has also modified their ratings on a number of other stocks in the few days. The firm upgraded shares of IAMGOLD Corp. from a sell rating to a neutral rating. Also, Goldman Sachs initiated coverage on shares of MarkWest Energy Partners. They issued a buy rating on that stock. Finally, Goldman Sachs initiated coverage on shares of DCP Midstream Partners, LP. They issued a buy rating on that stock.

T = Technicals on the Stock Chart Are Strong

Goldman Sachs stock has made significant progress in the last several quarters. The stock is currently trading near highs for the year and look poised to continue. Analyzing the price trend and its strength can be done using key simple moving averages. What are the key moving averages? The 50-day (pink), 100-day (blue), and 200-day (yellow) simple moving averages. As seen in the daily price chart below, Goldman Sachs is trading above its rising key averages, which signal neutral to bullish price action in the near-term.

(Source: Thinkorswim)

Taking a look at the implied volatility (red) and implied volatility skew levels of Goldman Sachs options may help determine if investors are bullish, neutral, or bearish.

	Top Small Cap Companies To Own For 2014 Implied Volatility (IV)	30-Day IV Percentile	90-Day IV Percentile
Goldman Sachs options	24.84%	93%	90%

What does this mean? This means that investors or traders are buying a very significant amount of call and put options contracts, as compared to the last 30 and 90 trading days.

	Put IV Skew	Call IV Skew
January Options	Flat	Average
February Options	Flat	Average

As of today, there is an average demand from call buyers or sellers and low demand by put buyers or high demand by put sellers, all neutral to bullish over the next two months. To summarize, investors are buying a very significant amount of call and put option contracts and are leaning neutral to bullish over the next two months.

On the next page, let’s take a look at the earnings and revenue growth rates and the conclusion.

E = Earnings Are Increasing Quarter-Over-Quarter

Rising stock prices are often strongly correlated with rising earnings and revenue growth rates. Also, the last four quarterly earnings announcement reactions help gauge investor sentiment on Goldman Sachs’s stock. What do the last four quarterly earnings and revenue growth (Y-O-Y) figures for Goldman Sachs look like and more importantly, how did the markets like these numbers?

	2013 Q2	2013 Q1	2012 Q4	2012 Q3
Earnings Growth (Y-O-Y)	1.05%	107.87%	9.44%	203.29%
Revenue Growth (Y-O-Y)	-19.51%	0.21%	1.42%	52.69%
Earnings Reaction	-2.42%	-1.69%	-1.61%	4.05%

Goldman Sachs has seen increasing earnings and revenue figures over the last four quarters. From these numbers, the markets have been happy about Goldman Sachs’s recent earnings announcements.

P = Excellent Relative Performance Versus Peers and Sector

How has Goldman Sachs stock done relative to its peers, JPMorgan Chase (NYSE:JPM), Citigroup (NYSE:C), Morgan Stanley (NYSE:MS), and sector?

	Goldman Sachs	JPMorgan Chase	Citigroup	Morgan Stanley	Sector
Year-to-Date Return	42.59%	31.96%	35.82%	71.36%	37.79%

Goldman Sachs has been a relative performance leader, year-to-date.

Conclusion

Goldman Sachs is a bellwether in the financial sector that strives to provide valuable financial products and services to consumers and businesses around the world. The company lowered shares of RWE AG from a buy rating to a neutral rating in a report released. The stock has been moving higher in recent years and is currently trading near highs for the year. Over the last four quarters, earnings and revenues have been on the rise, which has left investors happy about Goldman Sachs's earnings announcements. Relative to its peers and sector, Goldman Sachs has been a relative performance leader year-to-date. Look for Goldman Sachs to OUTPERFORM.

Simplicity: The One-Fund Approach

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Investing these days is like sitting down at a restaurant with a 500-page menu. With so many choices, even the most experienced of investors might feel overwhelmed, however, sometimes simple is better, writes Rob Carrick of The Globe and Mail.

Even savvy investors can be overwhelmed by the number of investment choices available in Canada: 355 exchange-traded funds, 17,517 mutual funds and 1,977 individual stocks, and other securities listed on the Toronto Stock Exchange. You can add another 4,699 stocks, ETFs, and other odds and ends if you add the various listings on the New York Stock Exchange, and still another 2,746 choices on the Nasdaq. More choices are arriving all the time.

The irony here is that a single well-chosen fund may suffice. Consider the one-fund approach if you're a beginner and you don't know where to start and don't have much money, or a busy individual looking for a reliable auto-pilot approach, or an actively engaged investor who wants a simple solution for at least some of your money.

To be worthy of consideration as an investor's single holding, a fund must have low fees, a mix of bonds and stocks, exposure to companies from Canada, the United States, and around the world, and a track record of competitive returns. I recently came up with nine such funds.

Among them are three of the four funds in the Streetwise lineup from the online bank ING Direct, which is owned by Bank of Nova Scotia. A fourth Streetwise fund was left out because it has exposure to stocks only, and no bonds.

Streetwise funds are so simple in construction they may offend experienced investors used to more diversity and complexity. Each is a blend of index funds, tracking bonds, Canadian stocks, US stocks, and international stocks (everywhere but North America). Yes, sensible portfolios can be this simple.

The management expense ratio for Streetwise funds is 1.07%, which is high for a plain vanilla index fund product but acceptable for two reasons. One, the fund has no minimum investment and thus is accessible to all. Two, the holdings of each of the funds are rebalanced automatically.

Each of the three Streetwise funds offers a different mix of stocks and bonds. Rebalancing, often neglected by investors, ensures the funds keep to that blend over time. Without rebalancing, you could gradually find yourself with more stocks or bonds in your portfolio than you want or need.

Consider Streetwise as a good option for beginners with little money to invest. Investors with $5,000 to $25,000 and a desire for simplicity should investigate a handful of other low-cost funds that can be a portfolio unto themselves.

Two possibilities are Mawer Balanced, for registered accounts, and Mawer Tax Effective Balanced, for non-registered accounts. The MER for both is just below 1%, and returns have been very strong and consistent over the years.

Both products are essentially a fund of funds, which is to say their portfolios are built mainly on other funds in the Mawer lineup. Don't worry about extra fees from the underlying funds—you pay only the headline MERs, which in this case are among the lowest in the balanced fund world.

Mawer funds are sold by most online brokers, with RBC Direct Investing a notable exception. You can usually buy the funds with no commissions and a minimum upfront investment of $5,000.

A minimum $5,000 will also get you into Leith Wheeler Balanced if you buy from online brokers. This fund has among the highest fees of any of the names considered here, at 1.17%, but its returns have been competitive and it offers a lower level of volatility than many of its peers in the global equity balanced category.

One more balanced fund to consider is CI Signature High Income (BPIHINCF:CN), which has a low MER by fund industry standards, but is nevertheless the most expensive fund on this list. It's a fairly aggressive fund, but diversified globally and a consistently strong performer in the past.

Balanced funds like this have been monster sellers for the mutual fund industry, but ETF companies haven't had much success with them. The typical ETF is an index-tracking fund that trades like a stock; a very small number of ETFs bundle a group of underlying funds into a fund-of-funds portfolio. Two of these ETF products stand out.

One is the iShares Balanced Income CorePortfolio Fund (CBD:CN), and the other is the iShares Balanced Growth CorePortfolio Fund (CBN:CN). Fees are on the high side for these funds, at 0.89% for CBN:CN and 0.72% for CBD:CN, but you benefit from having iShares maintain a portfolio containing 15-plus underlying ETFs covering sectors, such as the Canadian and foreign stocks, emerging markets, global real estate, gold and preferred shares.

Are these ETFs perhaps diversified to the point of silliness, with some holdings accounting for just 0.5% of the portfolio? Possibly, but the concept seems to be working. CBD:CN has been a steady performer for five years, and CBN:CN has been coming on strong in the past three years.

If you're going to make frequent additions to your holdings in one of these ETFs, consider using an online brokerage, such as Questrade or Virtual Brokers, that waives ETF purchase commissions (National Bank Direct Brokerage has waived ETF commissions until October 31). Qtrade Investor and Scotia iTrade have a limited selection of commission-free ETFs.

Back in the mutual fund world, you'll find a surfeit of both balanced funds and a similar one-fund product called a wrap, or, in marketing lingo, a portfolio solution. Most wraps are overpriced and undistinguished: Avoid them, they put marketing ahead of sound financial management.

Sadly, this advice applies to wraps in the same family as the highly regarded TD e-series of index mutual funds. Individual e-series funds are available only online through TD Asset Management or the discount broker TD Direct Investing, and they're ideal for beginners and people who want to gradually build portfolios with minimal wastage on fees and commissions.

There are five e-series wraps offering various levels of risk and the convenience of rebalancing. The fees seem high, though. An example is TD Managed Index Balanced Growth - e, with an MER of 1.29%.

If you manually assembled the same portfolio as TD Managed Index Balanced Growth using individual e-series index funds, your fees would be more than halved.

Single-fund convenience is great, but sometimes—as in this case—it pays to do the portfolio-building yourself.

For more personal finance coverage, follow Rob Carrick on Twitter (@rcarrick) and Facebook (robcarrickfinance).

Read more of Portfolio Strategy here…

Delta Air Lines: Please Sir, Can I Have Some More?

Delta Air Lines (DAL) has gained 133% so far this year, but that hasn’t stopped the folks at Barclays from putting it “at the top of [its] airlines list for 2014.”

Bloomberg News

Sure that gain is huge, both on its own terms and relative to its competitors. Delta has outgained nearly all its peers, as Southwest Airlines (LUV) has gained 82% in 2013, Alaska Air (ALK) has risen 68% and United Continental (UAL) is up 61%. Spirit Airlines (SAVE), with a 144% rise, was one of the few airlines to trump Delta.

So why is Barclays still bullish? David Fintzen and team explain why they left Delta’s investor meeting yesterday feeling optimistic:

The focus was rightfully on the 'sustainability' question that we think remains central to the long-term upside in DAL shares. Specifically, a long-term operating margin target of 10-12% was encouraging, but also strikes us as realistic given the initiatives (re-fleeting, etc) underway. Secondly, we were encouraged by comments that margin improvement can still come from the 'core' of the network, not just the outliers. It's hard for us to quantify, but setting a high threshold (i.e. not simply accepting an 8% margin) in a route/city/hub strikes us as a seemingly simple mindset change that matters (and needs to become engrained in the industry). On the cost side, similarly, multiple comments around 'restoring balance to the supply chain' strike us as similarly hard to quantify, but indicative of an expectation to push margins higher.

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Delta has gained 1.9% to $28.19 today at 1:48 p.m., while United Continental has risen 3.4% to $37.83, Spirit Airlines has advanced 2.2% to $43.32, and Southwest, which was upgraded by Merrill Lynch today, has jumped 3.6% to $18.62. Alaska Air has dropped 1.3% to $72.49.

Record number of U.S. firms offering same-sex benefits

Goldman Sachs showed its support of the Supreme Court's same-sex marriage ruling this summer by flying a rainbow flag outside of its offices.

NEW YORK (CNNMoney) It's been a record year for gay rights.

Not only did the Supreme Court overturn the Defense of Marriage Act, the law preventing same-sex couples from receiving federal spousal benefits, but hundreds of American corporations have been rallying for the cause, publicly supporting same-sex marriage and ramping up benefits and protections for lesbian, gay, bisexual and transgender employees.

Heading into 2014, a record 304 U.S. companies boast perfect "corporate equality" scores of 100 from the Human Rights Campaign, according to the LGBT advocacy group's new report examining more than 900 businesses on 40 different policies and practices. That's up from 252 perfect scores last year and 189 two years ago.

A perfect "corporate equality" score means a company has a non-discrimination policy in place protecting LGBT employees, provides same-sex partner health benefits, offers transgender-inclusive medical insurance, publicly supports LGBT equality and has organization-wide LGBT initiatives.

Industries boasting the highest percentage of companies with perfect scores include law, banking and financial services, and retail and consumer products. Companies new to the 100% club include Nissan (NSANF), General Electric (GE, Fortune 500) and Procter & Gamble (PG, Fortune 500). Other companies among the most improved this year (though they haven't achieved perfect scores yet) include Wal-Mart (WMT, Fortune 500), which saw its score jump from a 60 to 80 after it introduced same-sex benefits for employees, and Cracker Barrel (CBRL), which rose 10 points to a score of 45 after it launched a LGBT employee network and implemented a non-discrimination policy for LGBT employees.

A record 90% of all companies in the HRC report and 67% of Fortune 500 companies offer health benefits for same-sex couples. Meanwhile, 46% of all companies and 28% of Fortune 500 companies offer transgender-inclusive health care, with an all-time high of 340 companies now covering transitional medical procedures for transgender employees -- up from only 49 companies in 2009.

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Corporate America has long been an active player in the battle for LGBT rights. As the Supreme Court prepared to debate the constitutionality of DOMA,! hundreds of companies -- including Facebook (FB, Fortune 500), Google (GOOG, Fortune 500) and Starbucks (SBUX, Fortune 500) -- filed briefs urging the Supreme Court to overturn the law. When the law was struck down, companies issued statements of support, and Goldman Sachs even hung a rainbow flag outside its headquarters.

Most recently, more than 100 businesses joined a coalition calling on Congress to pass the Employment Non-Discrimination Act (ENDA), which would prohibit companies nationwide from discriminating against employees on the basis of sexual orientation and gender identity. Apple (AAPL, Fortune 500) CEO, Tim Cook, even wrote an op-ed in the Wall Street Journal saying the law should be passed.

Many companies are already ahead of the proposed law. A record 91% of Fortune 500 companies prohibit discrimination on the basis of sexual orientation and 61% on the basis of gender identity.

"This will go down in history as the year that corporate support for equality left the boardroom and reached each and every corner of this country," said HRC President Chad Griffin. "Not only do fair-minded companies guarantee fair treatment to millions of LGBT employees in all 50 states, but now those same companies are fighting for full legal equality in state legislatures, in the halls of Congress and before the U.S. Supreme Court."

Despite the momentum, however, some companies are still lagging behind -- particularly in the oil and gas, mining and manufacturing industries, according to the HRC.

ExxonMobil (XOM, Fortune 500) continues to receive the lowest score of any company, for example -- with a score of negative 25. HRC deducted extra points because the company has resisted efforts by shareholders to amend its non-discrimination policy. An ExxonMobil spokesman called the report "inaccurate" and said the company has a policy prohibiting all forms of discrimination, even though it doesn't explicitly say that lesbian, gay, bisexual and transgender employ! ees are p! rotected.

Currency ETFs and Inflation

The annual rate of inflation currently stands at 1.0%; but, as any Wall Street currency trader will tell you, it's not what's happening right now that counts. And most economists see it rising over the next year or two, suggests Brian O'Connell in Wealth Daily.

Increasingly, savvy investors are turning to a surprising—yet historically effective—inflation-fighting tool: currency exchange traded funds.

This is especially true of non-US currency ETFs. With the dollar losing value against other global currencies—as the US government takes on more foreign debt—a hedge in a fund that tracks foreign currencies can keep you one step ahead of inflation—and one step closer to your investment goals.

Currency ETFs allow investors to speculate in the currency market, without the risk of investing directly in currencies, and without entering the forex market.

Like all ETFs, currency funds enable investors to invest in a single currency or basket of currencies, while still taking full advantage of fluctuations in the currency market.

The majority of US investors have their entire portfolios stocked with US companies, and thus are tied directly to the fortunes of the US dollar.

Given the precarious state of the US economy these days, currency ETFs provide US investors some much-needed exposure to non-US currencies.

Currencies are notoriously fast-moving investments. If you're not prepared to do your homework, or if you're blindsided by geopolitical events (like the crash of the Japanese economy following the earthquake and tsunami of March 2011), you might think twice before committing any cash to the currency market.

You can buy a currency ETF that focuses on a single country currency, or you can mix and match currencies within a single ETF, hoping the better performing currencies override the poorer performing ones.

There are seemingly as many currency ETFs as Baskin-Robbins has flavors of ice cream. So, to keep things simple, consider a conventional play: the PowerShares DB US Dollar Index Bullish (UUP), which tracks the performance of the US dollar against key global currencies, like the yen and the pound.

If the dollar rises, the fund goes up; when the dollar declines, the fund's value declines.

To make a contrarian play, the PowerShares DB US Dollar Index Bearish (UDN) works the opposite way: When the dollar declines, the fund fares better.

To leverage the increasingly powerful Chinese economy (the largest buyer of US debt going into 2014), kick some tires with the Wisdom Tree Chinese Yuan Fund (CYB).

Subscribe to Wealth Daily here…

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Tech Teardown: Dec. 6, 2013

In this episode of Tech Teardown, Erin Kennedy discusses the latest developments in the tech sector with Evan Niu, CFA, our tech and telecom bureau chief.

The long-awaited deal between Apple and China Mobile is finally here. Or wait -- maybe it isn't? Apple's new iBeacon technology doesn't seem especially significant, but investors might be overlooking something here. With the acquisition of Topsy, Apple moves deeper into the business of data. Twitter's new feature could help it draw more dollars from advertisers. With yet another possible rival on mobile devices, is the streaming market getting too crowded for Pandora? Following approval from several regulatory agencies, the Microsoft-Nokia deal looks increasingly more certain.

Invest in tech like a pro
Watch our jaw-dropping investor alert video today to find out why The Motley Fool's chief technology officer is putting $117,238 of his own money on the table, and why he's so confident this will be a huge winner in 2013 and beyond. Just click here to watch!

Bitcoin is soaring, but financial advisers are steering clear for now

Bloomberg News

Bitcoin is soaring to record heights, hitting the $1,000 mark Friday for the first time, but financial advisers aren't biting — yet, anyway.

The virtual currency passed the quadruple digit price shortly before 10 a.m. on the Mt. Gox exchange and has since soared higher than $1,020. That marks a gain of about 5,000% from the $20 level at which Bitcoin was trading at the start of this year.

Despite the hype, many advisers are steering clear of the online currency, which is unregulated by central banks and traded freely on the Internet. Because the digital currency is so new and its rise has been so fast, advisers are doing their homework before investing clients' money.

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“I'm probably even less interested in it now,” said Phil Christenson, an adviser and portfolio manager at Phillip James Financial. Snapshot of the Mt. Gox Bitcoin tracker, chronicling the currency's rise. Source: Mt. Gox

“Because it hit that $1,000 mark, [investors] think it's going to go to $2,000, going to go to $5,000,” he said. “This is probably the time to ignore it.”

Bitcoin was originally dismissed as a serious investment when it first began to surge early this year. It was known for being extremely volatile, and not many businesses accepted the digital coins as actual currency.

Since then, the currency has seen a boom that rivals the Beanie Baby bubble of the 1990s. As its value has grown, well-known Internet names, including OKCupid, Reddit and WordPress now accept the currency on their sites.

Even some physical stores, including a pizza shop in Vermont and a plastic surgery clinic in Miami, let customers swap Bitcoins instead of cash.

And Virgin Galactic is taking Bitcoin as payment for its upcoming space trips, according to Forbes.

After Thanksgiving, Bitcoin is scheduled to gain additional attention through a Bitcoin Black Friday event, in which hundreds of outlets are offering their goods for the virtual currency.

Jennifer Failla, principal and founder of Failla Financial Management LLC, said that she hasn't placed any of her client's money in Bitcoin yet.

However, more of her clients are approaching her about the currency, and her firm is performing due diligence on Bitcoin, researching issues such as encryption and open source code.

“I know far more about Bitcoin now than I did four months ago,” Ms. Failla said.

“If a client comes to us, we'll sit down and take the proper steps to research it,” she said. “I wouldn't say we're at that point where I'm ready to pull the trigger and buy.”

Although Ms. Failla said that it still might be too early to gauge Bitcoin's success as an investment, it is something that she may consider once her due diligence is complete.

Her firm isn't a traditional stocks and bonds practice and has had clients do things like physically bury gold and silver, she said.

“What we're tr! ying to mitigate is the hype around the viability,” Ms. Failla said. “As think-outside-the-box wealth managers, it's definitely something we're going to continue to keep an eye on.”

Bitcoin's meteoric gains this year have been contradicted by gold, another asset class that verges on being traded as currency.

This week, gold has traded just above a 34-month low, according to Bloomberg.

The asset has declined more than 25% since the start of the year and is set to mark its first yearly drop since 2000.

Despite Bitcoin's huge gains this year, Mr. Christenson said that investors and advisers shouldn't be tempted to put their money in an investment that is due for a downward shock.

“If you look at a chart, it's just gone straight up,” he said.

“If Bitcoin was a stock, I'd seriously be considering selling some of it. I wouldn't be buying it,” Mr. Christenson said.

If investors are interested in Bitcoin, he recommends setting aside a small portion of a portfolio to use for fun.

But don't bet the farm on it, Mr. Christenson said.

“These things come and go and some people make money on them, but you will lose money on it if you try to jump in now,” he said. Like what you've read?

Small Cap Obesity Stock EnteroMedics Inc (ETRM) Soars: Now What? ARNA, OREX & VVUS

On Tuesday, small cap EnteroMedics Inc (NASDAQ: ETRM) soared 63.5% after reporting new clinical trial data for its Maestro system that is designed to control obesity, meaning it might be time to take a closer look at the stock along with the performance of other small cap obesity drug or treatment players like Arena Pharmaceuticals, Inc (NASDAQ: ARNA), Orexigen Therapeutics, Inc (NASDAQ: OREX) and VIVUS, Inc (NASDAQ: VVUS).

What is EnteroMedics Inc?

Samll cap EnteroMedics Inc has developed the VBLOC® vagal blocking therapy as a weight loss treatment for obesity and related co-morbidities. More specifically, the VBLOC Therapy is intended to address the lifelong challenge of obesity through the use of a pacemaker-like device called the Maestro® Rechargeable System that is designed to control both hunger and fullness by blocking the primary nerve which regulates the digestive system.

What You Need to Know or Be Warned About EnteroMedics Inc

Yesterday, EnteroMedics Inc reported that patients on its Maestro RC system lost 25% of their excess weight, or 10% of their total body weight, after 18 months while patients who received a sham implant lost 12% of their excess weight, or 4% of their total weight. The system is already approved in Europe and Australia, but its not yet approved in the US. 

However, investors should be aware that EnteroMedics Inc said back in September that the FDA was asking additional questions about the Maestro Rechargeable System and that regulators wanted more information about device testing and clinical data, including training programs for users and a study of the device after it is approved. The company was expecting a FDA panel to review the Maestro system late in the fourth quarter or early in the first quarter, then make a decision in the first half of 2014.

Moreover, EnteroMedics sank from the $3 level all the way down to below the $1 level after reporting disappointing clinical trial results when it said that patients who were implanted with the Maestro device lost more weight than patients who received a placebo device, but the weight loss totals were not as good as had been hoped for.

Otherwise and as far as financials go, it should be noted that EnteroMedics Inc has reported revenues of $311k (2012) and nothing for the three years before that along with net losses of $23.46M (2012), $26.00M (2011), $17.35M (2010) and $31.93M (2009) for the past four years. There have also been no revenues this year and net losses of $6.30M (2013-09-30), $6.32M (2013-06-30) and $6.58M (2013-03-31) plus the company had around $21.14M in cash to cover $8.43M worth of current liabilities and $3.83M in long term debt at the end of the last quarter. So the company is not endanger of running out of money soon.

Share Performance: EnteroMedics Inc vs. ARNA, ETRM & OREX

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On Tuesday, small cap EnteroMedics Inc soared 63.5% to $2.24 (ETRM has a 52 week trading range of $0.81 to $3.23 a share) for a market cap of $135.96 million plus the stock is down 20% since the start of the year and down 77.4% over the past five years. Here is a look at the long term performance of EnteroMedics Inc verses that of Arena Pharmaceuticals, Orexigen Therapeutics and VIVUS, Inc:

As you can see from the above chart, the performance of EnteroMedics Inc has helped the portfolios of investors to loose more weight but the performance of the other small cap obesity drug or treatment stocks has not exactly been great either.

The Bottom Line. The latest news puts investors in small cap obesity treatment stock EnteroMedics Inc near where they started the year at but still far off from where they stood five years ago and below the performance of Arena Pharmaceuticals, Orexigen Therapeutics and VIVUS, Inc. So the real test will come if there is FDA approval for the Maestro system. 

Logan put on leave of absence for 60 Minutes fi…

CBS News correspondent Lara Logan, under fire for using a discredited source for a 60 Minutes story on the Benghazi attack, has agreed to take a leave of absence, according to an internal memo obtained by USA TODAY.

The segment's producer, Max McClellan, also was placed on leave.

"There is a lot to learn from this mistake for the entire organization," Jeff Fager, chairman of CBS News and executive producer of 60 Minutes, said in an email to CBS employees Tuesday. "As executive producer, I am responsible for what gets on the air. I pride myself in catching almost everything, but this deception got through and it shouldn't have."

Fager didn't address how long Logan or McClellan would be away from their jobs.

"The 60 Minutes journalistic review is concluded, and we are implementing ongoing changes based on its results," said CBS News spokeswoman Sonya McNair.

In October, Logan reported a harrowing eyewitness account of the deadly attack on the U.S. mission in Benghazi. Dylan Davies, a security guard for working for a British contractor hired by the State Department to handle security, told Logan that he violated his employer's orders to stay away from the compound and fought off a militant at the facility. He also claimed to have seen the body of U.S. Ambassador Christopher Stevens at a local hospital. Stevens was one four Americans who died in the attack.

Davies' claims were widely discredited after it was revealed that he had told his employer and the FBI that he had in fact been nowhere near the scene.

The review, conducted by Al Ortiz, CBS News' executive director of standards and practices, concluded that the error could have been prevented if Logan and McClellan had used "wider reporting resources of CBS News" to confirm his account.

"It's possible that reporters and producers with better access to inside FBI sources could have found out that Davies had given varying and conflicting accounts of his story," Ortiz wrote in another internal memo obtained b! y USA Today.

Earlier this month, Logan apologized publicly on CBS This Morning. "Today the truth is we made a mistake and that's very disappointing for any journalist," she said. "It's very disappointing for me."

Logan was scheduled to host the Committee to Protect Journalists' press freedom awards dinner in New York Tuesday evening. She will not attend the event.

Grab your gains and hold on tight – at least till New Year's

Eleven months of stock market momentum can be a powerful thing, which is why some advisers believe it is more prudent to ride the wave — at least through the final month of the year.

With the S&P 500 up more than 29% from the start of the year, on the heels of a 15% gain last year, it is a safe bet that there are plenty of taxable gains sitting inside client portfolios. But even if you feel the market is getting rich, it might be worth waiting until after Jan. 1 to cash out.

“I certainly see the merit behind waiting until at least January to sell and take some profits,” said Todd Rosenbluth, director of mutual fund research at S&P Capital IQ.

“It's unlikely that 2014 will be as good as 2013 has been, and waiting until January to sell gives you a whole year to find ways to offset the gains.”

(Extreme bull: S&P 500 to top 2,000 by spring)

While some would argue that gains are gains, and taxes are difficult to avoid, the strategy of delaying any sales until the conclusion of a strong year for the markets can be so pervasive that it virtually guarantees a positive December.

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That, in turn, becomes another reason to sit tight for the rest of the month.

Including this year, there have been 15 years since 1995 that the S&P has been positive through November. And of those years, only twice did the index register a decline in December.

In 1996, the S&P was up 25.4% during the first 11 months, then declined by 1.9% in December.

The other example is 2007, when the index gained 6.2% through November, and fell by 0.7% in December.

“We believe the December effect, whereby investors choose to defer paying taxes on equity market gains until the following year, will provide additional support to the equity markets as we close out the year,” said Charles Gradante, co-founder of hedge fund advisory firm Hennessee Group.

(As investors buy, managers sock away cash)

Of course, holding stocks for tax purposes doesn't fly with everyone.

“One of the biggest mistakes investors make is judging the merit of an investment based on the tax consequences, rather than treating it as an investment,” said Paul Schatz, president of Heritage Capital.

“Riding something up and down because you don't want to pay taxes on it is ridiculous,” he added. “People do that either out of complacency or they're hoping and prayi! ng a stock will come back, but to me, if it's time to sell, I'm getting out.”

Mr. Schatz admits he does a lot of tax-loss harvesting this time of year, which typically involves registering a loss for tax purposes and then immediately buying a comparable investment to maintain the portfolio allocation.

But if historical performance can be used as any kind of guide, most investors will stick with their winners through at least the end of the year, giving that extra boost to December market performance.

The last time the S&P came into December with such strong performance was 2009, when it had gained more than 24% through November.

That December the index gained just under 2%.

But, as Mr. Rosenbluth pointed out, 2009 was a strong year for stocks on the heels of a 38% drop in 2008, which could have led to more tax-management selling at the end of 2009.

“Coming off back-to-back strong years at this point means investors who were patient are sitting on gains from multiple years,” he said. “There's just less to offset from a tax standpoint.”

Petrobras Raises Brazilian Gasoline, Diesel Prices: Better Late than Never

Petroleo Brasileiro SA (NYSE: PBR), commonly called Petrobras, announced on Friday that it is raising the prices it charges for gasoline and diesel fuel by 4% and 8%, respectively. This is the fifth rise in diesel prices and the third in gasoline prices in the past year and a half. The price hike became effective at midnight and Brazilian drivers will see the higher prices at the pump beginning on Saturday.

The price increase announced yesterday is expected to raise pump prices by about 3%. A gallon of gasoline in Brazil sold for around $4.60 before the hike was announced.

Brazil's problem is that inflation is eating away at its economy and the country's central bank has been raising interest rates in an effort to cool things off. The government, which owns the majority stake in Petrobras, has also been trying to keep the lid on pump prices, forcing Petrobras to sell gasoline for less than it costs to produce.

But keeping the price of gasoline low has the unintended effect of driving up demand. That was predictable. A second unintended effect is that the low price of gasoline has forced the country's ethanol producers to keep their prices low and the country's ethanol industry is also being forced to sell ethanol at prices too low to make a profit.

More than half of Brazil's automobile fleet is comprised of flex-fuel vehicles that are able to use either gasoline or pure ethanol. But because ethanol contains only about 70% of the energy of gasoline, the price of ethanol must be at least 30% below the price of gasoline or consumers won't buy it. The low price of gasoline is also driving ethanol producers out of business and the country finds itself in the awkward position of having to import ethanol, often from the U.S.

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The government, which was badly stung in August when it raised bus fares by $0.10 and thousands of people took to the streets, has been reluctant to allow Petrobras to adjust prices on any sort of regular schedule that would reflect global prices. Instead, the company has to plead with the government for a price hike and usually the raise is too small and too late.

Petrobras now says that it has adopted and gotten approval for a new plan that would allow the company to adjust prices at regular intervals. What the company will not do is disclose details of the plan, so the adjustments may continue to be arbitrary regarding timing.

Shares of Petrobras closed up about 1% on Friday at $15.94 in a 52-week range of $12.03 to $20.63. After Friday's price hike, shares are likely to trade higher on Monday as well.