Looking for a Super Bowl Stock Boost

We happen to be big New Orleans Saints fans. So after we recovered our voices following the Super Bowl, we started thinking about how many folks we’d seen around the country, and particularly in Louisiana and Mississippi, wearing Saints paraphernalia. So where were these folks buying their souvenir T-shirts and jerseys?

We found an article from a Mississippi newspaper noting that the local Hibbett Sports stores had been mobbed by Saints fans. So that gave us an idea for a stock possibility. We thought the Saints might add a “halo” effect to Hibbett (HIBB) stock.

Hibbett Sports, which specializes in branded merchandise focused on team sports, operates sporting goods stores in small to mid-sized markets predominantly in the Southeast, Southwest, mid-Atlantic and lower Midwest. The company appears to have created a niche market for itself by strategically aligning its merchandise to regional/local sporting and community interests. This may actually gives the company a competitive edge in these markets over larger rivals, such as Dick’s Sporting Goods (DKS) and Big 5 Sporting Goods.

Looking deeper, the company is in the midst of a brisk store expansion program and plans to augment its network by 42 new stores as well as expand 18 to 20 high performing stores during fiscal 2010. Furthermore, Hibbett s management has already identified 350 potential locations for future stores and recently ramped up its distribution center to support over 1,200 stores from 1,000 stores earlier. This provides a strong upside potential to the company.

Hibbett has a healthy debt-free balance sheet with cash and cash equivalents of $24.8 million at the end of fiscal 2010 third quarter coupled with full availability under its $80 million unsecured credit facilities. This offers Hibbett the financial flexibility to drive future top-line expansion. What’s more, the company has a good track record of returning cash to shareholders in the form of regular share buybacks.

UPDATE

As we predicted last month, when we first brought this chain to your attention, Hibbett Sports Inc’s (HIBB) benefited by enthusiasm for the New Orleans Saints. NIBB has reported that fiscal fourth-quarter earnings rose 54% amid rising sales and margins. Results beat analysts’ estimates

Many retailers have been hurt by a cutback in consumer spending, but Hibbett’s sales have remained fairly consistent. On Tuesday, larger competitor Dick’s Sporting Goods Inc. (DKS) swung to a fourth-quarter profit and said its sales jumped by double digits.

Hibbett Chairman Mickey Newsome attributed about a third of a 9.6% rise in same-store sales for the quarter to demand for licensed goods for the University of Alabama and the New Orleans Saints. They won the NCAA football and NFL championships, respectively, this past season. The company had forecast same-store sales between plus or minus 2%.

For the quarter ended Jan. 30, southern U.S.-focused Hibbett reported a profit of $11.8 million, or 40 cents a share, up from $7.6 million, or 26 cents a share, a year earlier. Revenue jumped 13% to $166.8 million.

Analysts polled by Thomson Reuters had most recently forecast earnings of 31 cents on $155 million in revenue.

Gross margin rose to 34% from 32.9%.

Go, Saints!

March 12, 2010 • 9:16 AM

Whale Watching Can Be Dangerous to Your Financial Health

I was once seriously injured while watching whales in the Atlantic Ocean, off the coast of the Eastern seaboard in the U.S. I wasn’t actually hurt by a whale, but as a result of the eager people who had spotted a whale and all crowded onto one side of the boat I was aboard. I was standing behind the crowd, unable to grab the rail, and so when the unbalanced boat pitched dangerously on the crest of a large wave, I went flying into the air and landed on a metal bench. Ouch!

That was a valuable lesson in being wary of the crowd while whale watching, and it’s one that I’ve learned to use in investing. The whale might know where it’s going, but being part of the crowd that follows the whale might not be in your best interest.

In Wall Street terms, whale watching refers to following and potentially copying the moves of the biggest and most influential investors. The idea is to try to benefit from the wisdom of the smartest large-scale investors. The whales of the financial seas include investors like Warren Buffett, who has guided Berkshire Hathaway to gains that have far outdistanced the returns of the major stock indexes.

For every US$1,000 invested in Berkshire Hathaway in 1964, an investor would now have a holding of US$8 million in value, if the investor had held the stock for the full 45-year period. The annualized return at the market price for an investment in Berkshire Hathaway is more than 20%. By comparison, the return for the S&P 500 Index during that same period was 9.3%.

So how do individual investors know where and how to find these whales? Fortunately, major investors in the U.S. regularly have to rise to the surface to reveal their top holdings. Institutional investment managers who exercise investment discretion over $100 million or more in Section 13(f) securities must report their holdings on Form 13F with the U.S. Securities and Exchange Commission. Form 13F requires disclosure of the names of institutional investment managers, the names of the securities they manage and the class of securities, the CUSIP number, the number of shares owned, and the total market value of each security.

When you hear about what where the “smart money” is going in the market, it often refers to the most influential institutional investors who have to reveal their holdings on a quarterly basis. Unfortunately, however, the “smart money” didn’t look so smart during the downturn that began in 2007. Even Warren Buffett’s Berkshire Hathaway made several admitted blunders. A leading hedge-fund leader known as the “Hedge Fund King” was buying stocks like General Motors that were not exactly rising to the top.

Many institutional investors were not setting a successful course in those rough seas. The Pension Benefit Guaranty Corporation in the U.S., which protects the pensions of nearly 44 million American workers and retirees, decided shortly before the stock market crash to switch from a conservative allocation relying heavily on bonds to more speculative investments such as stocks in emerging foreign markets, real estate, and private equity funds. The result was not happy. Other stalwarts of investing like Bill Miller of Legg Mason, considered a legend of investing in the U.S., floundered badly as well. Miller, who guided his fund to a better performance than the S&P 500 for a record 15 years ending in 2005, posted the worst performance of his 27- year career in 2008 as his $3.28 billion Value Trust trailed 99 percent of competing mutual funds.

As a result, anyone who tried to emulate the whales could have wound up on the bottom of the ocean. However, giant whales might have different horizons than small individual investors. Many of the “whales” that appeared to be floundering are now looking much healthier, including Bill Miller.

If you’d like to know what many “whales” are buying now, it happens to be the very same kinds of stocks that appeared to sink them during the downturn: financial stocks. Some of the largest and most successful hedge fund managers have been purchasing massive share quantities in the likes of Bank of America (BAC: NYSE), Wells Fargo (WFC: NYSE), and Citigroup (C:NYSE).

A recent “hedge fund trend monitor report” from Goldman Sachs reports that, of the 10 stocks most commonly held by hedge funds, three are banks – Bank of America, JPMorgan Chase and Wells Fargo.

Just remember, however, what’s good for whales might not always be good for smaller investors who are looking at shorter horizons and choppier seas.

March 11, 2010 • 6:27 PM

Some Investing Lessons from the Recession: What We Won’t Give Up

The recession that began in the U.S. at the end of 2007 and that spread around the world has brought some important lessons about investing. And it has also brought some important lessons about human behavior, as investing cannot be separated from human needs, desires and decision-making.

During this time of economic uncertainty and fear, consumers have demonstrated with their purchases what they consider to be necessities and what they consider to be luxuries. If investors could have predicted with certainty what consumers would give up and what they would keep buying, they could have done quite well despite the downturn. But there have been many surprises, as well as many opportunities.

At the beginning of the downturn, some investment advisors assumed that companies such as Tiffany and Bulgari that cater to wealthy consumers would weather the economic storm. They assumed that wealthy consumers would keep buying the expensive goods they were accustomed to buying. Others said that investors would be better off staying with stocks of companies that offered cheaper goods, such as Wal-Mart.

As it turned out, both views had merit as well as serious drawbacks. Almost all stocks in the U.S. and European markets took a dip during the downturn, from the high end to the low end. Companies like Tiffany were hit very hard by the downturn, while companies that promised bargain prices for consumers dipped much less in stock price. Many wealthy consumers lost as much as 40 to 50 percent of their net worth, and they simply cut back their buying on nearly everything. But that’s not the whole story. Just as important is what happened after March 9 of the last year, which marked the market low in the U.S. That’s when the bargain hunters began looking at beaten down luxury stocks and realizing that they were looking at fire-sale prices.

Let’s take a look at two companies that represent different ends of the economic spectrum: McDonald’s and Starbucks. For many customers, the idea of spending as much as US$4 on a “frothy blended cappuccino” would be considered a luxury. And as many expected, the price of Starbucks stock plunged from about US$28 in November 2007, at the beginning of the recession, to a low price of $9 in March 2009, when the market hit bottom. During that same time, the stock of McDonald’s, where you could spend a quarter of that price for a cup of coffee, dropped from US$60 to $52.

So would you have been better off just buying McDonald’s? It depends on when you bought it. If you had bought McDonald’s stock at the beginning of 2007 and held on to it, you would now have a very nice gain of 100%. But what happened to Starbucks after its low in March 2009? It began a dramatic recovery, even though the job market had not yet recovered. Consumers just couldn’t do without those frothy cappuccinos. So if you had bought Starbucks stock in March 2009, you would have an ever nicer gain of nearly 144%.

You’ll see a similar story if you compare a bargain shoppers’ stock like Wal-Mart with the glittering brand of Tiffany. The price of Wal-Mart stock has been essentially flat since 2005. So you would not have taken a big loss during the downturn. Tiffany, on the other hand, a respected global luxury brand, had climbed 80% from 2005 to November 2007, at the beginning of recession. But then it began a terrifying plunge. You would have lost all your gains and lost another 40% if you had held on to your Tiffany stock from 2005 to March 2009.  Some investors sold their stock at that lowest point, making a huge loss. But what if you bought it in March 2009? You’d be celebrating because you’d be up 80%. And what if you had held onto the stock you bought back in 2005? You would actually have a gain of 40%.

So what are the lessons here? They are the oldest and best lessons in investing. Try to buy low and sell high. Don’t panic. Look seriously at the best brands in the world and wait patiently. The pendulum always swings.

March 4, 2010 • 8:23 AM

Stock-Shopping for Olympic Gold

The Olympics are about emotions, proclaims David Lauren, executive of Polo Ralph Lauren (RL), the company that outfitted the American athletes for their march into Vancouver’s BC Place Stadium last week for the spectacular opening ceremonies of the 2010 Winter Olympics. That certainly seemed true, as the crowds cheered and flags waved for athletes of countries large and small, including many countries that had never won an Olympic medal and the tropical and desert nations that had never seen a snowflake falling from the sky.

But if the Olympics are a boost to the sporting spirit, the cities, countries and companies that sponsor them are hoping that they may also be a boost to their bottom line. “There’s no better exposure for a brand than the Olympics,” Lauren told an interviewer in Vancouver. And so it’s not surprising that Polo Ralph Lauren, which also provided the official outfits for U.S. athletes in Beijing’s summer Olympics, had already begun selling jackets, hats and sweaters in its U.S. Olympics Collection three weeks before the opening ceremonies. The company has engaged in a major marketing campaign that coincides nicely with victories by American stars of the slopes and the half-pipe. David Lauren says the product is flying off the shelves.

The Olympics, then, can be an investing opportunity: for the host city or country, for the sponsoring companies, and for the individual investors who are looking for winners in stocks as well as athletic competitors. For example, as we predicted right here on Woman with Portfolio, the Beijing summer Olympics proved to be a boost for the swimwear company Speedo, a subsidiary of the publicly traded company Warnaco (WRC), based in the U.S. Everyone wanted those sleek, high-tech LZR racer suits made by Speedo that apparently helped Michael Phelps and other swimmers break world records and win gold medals. Warnaco stock jumped even before Michael Phelps dove into the water for his first race.

The city of Vancouver obviously considered the 2010 Olympics a potential boost for its own bottom line, despite escalating costs. As of February 1, the total cost of the games, including infrastructure improvements for the region were estimated to be as much as US$6 billion with US$600 million of the spending directly related to hosting the games. But for those looking for the cost/benefit ratio, the long-term rewards appeared promising. The projected benefits and revenue to the city and province were said by some estimates to be as much as $10 billion, although a study by accounting firm Price-Waterhouse indicated the direct revenues would be in the range of $1 billion.

What investors, from cities and countries to individuals, are actually looking for is something that is not so easy to pin down in numbers. And that is the “halo” effect of being part of an event that has global impact. For Nike (NKE), for example, having millions of viewers eyeballing that Nike Swoosh on Apolo Ohno’s streamlined torso as he zips around the short track—priceless. If you take a look at Nike’s chart since the opening ceremonies, it looks like a nice upward slope.

For those who prefer numbers, however, there is an index for measuring Olympic performance of companies rather than athletes. The Dow Jones Summer/Winter Games Index (which you can follow with the symbol DJOLX) measures the performance of publicly traded companies that are official partners, sponsors and suppliers of the current Olympic Games. Its 36 members, with a combined market cap of US$967 billion, include some of the world’s leading firms. The top components in the Olympic index are General Electric Co. (GE), McDonald’s Corp. (MCD), Royal Bank of Canada (RBC), Coca-Cola Co. (KO), 3M Co. (MMM), Suncor Energy Inc. SU), VISA Inc.(V), Panasonic Corp. (PC), Dow Chemical Co (DOW). and General Mills Inc. (GIS).

As of February 10, the index is up 36.46% since December 22, 2008, when the index components were changed to reflect the Vancouver games. Compare that to the Dow Jones Industrial Average in the U.S., which rose 17.82%.  Obviously, there is some sort of advantage to being an Olympic sponsor, although it is not clear whether this is a chicken-or-the-egg story. If a company can afford to be a sponsor, then it must already have a decent cash flow and a strong commitment to promoting its brand. Unfortunately, there is no ETF corresponding to the Games Index, so you’d have to buy stocks individually to take advantage of the games effect.

An intriguing paper from the U.S. National Bureau of Economic Research suggests that hosting mega-events like the Olympics may yield long-ranging benefits – mainly that of boosting national exports—that were not counted in the initial calculation of the cost/benefit ratio. A paper by Andrew K. Rose and Mark M. Spiegel found that the positive effect on exports was “statistically robust, permanent, and large; trade is around 30% higher for countries that have hosted the Olympics.” The researchers conclude that the Olympic effect on trade is attributable to the “signal a country sends when bidding to host the games,” rather than the act of actually holding a mega-event. The researchers’ most startling finding is that unsuccessful bids to host the Olympics have a similar positive impact on exports.

This conclusion that making the effort to compete is as important as actually winning may be a very heartening message to all those aspiring athletes who participate in competition against all odds, without the hope of winning a gold medal.

February 18, 2010 • 9:34 AM

Trend-Watching in the Snow

We’ll be watching the opening ceremonies of the Olympics tonight with one purpose: to judge the coolness of the outfits worn by the American athletes. Let us know what you think. Why: So we can decide if Polo Ralph Lauren (RL), which designed the outfits and will be marketing spinoffs, will get a stock boost, or halo effect, from the Olympics. We’ll be posting more as the games go on.

February 12, 2010 • 11:44 AM

The Secret to Safe and Easy Portfolios

We’re going to reveal one of the best-kept but most important secrets of investing. This is one that most brokers and fund managers would prefer that you not know.  It’s simple, it’s easy, it’s safe, and it’s cheap. It’s used by some of the richest people in the country.

Here it is: Index Funds.

The best way to diversify, minimize risks, and limit your expenses is to buy index funds or ETFs (exchange-traded funds) that allow you to equal the performance of the market. And that’s something that hardly any active mutual fund managers have been able to do over a long period of time. (By active, we mean funds that are not simply tracking an index.)

To learn what we mean by indexes, go to our previous workout called How Are We Doing, which explains the different benchmarks used to track the performance of the market, such as the S&P 500. You’ll be using these indexes to build your quick and easy portfolios.

The Lazy Woman’s Portfolio

This basic portfolio of three funds has been called by various names: the Margaritaville portfolio, the Coffee House portfolio, and the Couch Potato portfolio. These names indicating the small amount of time and concern expended in this investment. We prefer to call it the Lazy Woman’s Portfolio, which is no insult to those who prefer to take this shortcut to investing. It’s more likely that those who prefer this simplified approach are simply too busy to take more time with their investments. Or they might prefer to be having a massage. Whatever.

Most variations of this portfolio have three funds: a total market index fund, a total international index fund, and a total bond index fund or a treasury-bond index fund.

We’ve used funds from Vanguard, which is widely regarded as the powerhouse of index funds. It has a sterling track record, and its expenses are minimal.

You’ll need a minimum investment of $9,000 to create this portfolio. (Vanguard requires a minimum investment of $3000 in order to buy a fund.) If you don’t have $9,000, start with one fund and then add the others as the money becomes available.

33% Vanguard Total Market Index Fund (VTSMX): $3,000
33% Vanguard Total International Index Fund (VGTSX): $3000
33% Vanguard Total Bond Fund or Vanguard Inflation-Protected Securities (VIPSX): $3000

This ultra-basic portfolio gives you exposure to the total array of stocks in the U.S. market, as well as exposure to the other important world markets. You can choose either the index of relatively safer inflation-protected securities (the Treasure bonds called TIPS) or a more volatile index of the total bond market. During a bull market, you’ll be resenting those dull, boring bonds. But during a downturn, you’ll be glad you have them. 

The Slightly Less Lazy Woman’s Portfolio

For a slightly more diverse approach, based on portfolios followed by a number of institutional investors, including Ivy League universities, we have a six-fund portfolio that gives you exposure to the key indexes in the world and U.S. markets. It includes exposure to U.S. Treasury as well as corporate bonds.

15% Vanguard 500 Index (VFINX): $3,000
15% Vanguard Extended Market Index (VEXMX): $3,000
15% Vanguard Emerging Markets Index (VEIEX): $3,000)
15% Vanguard Complete World Market Index (VGTSX): $3,000
20% Vanguard Complete Bond Market Index (VBMFX): $4,000
15% Vanguard Inflation-Protected Securities (VIPSX): $3,000
Bonus: Add the Permanent Portfolio Fund (PRPFX): $1,000

This portfolio would cost you a minimum of $16,000. And if you’re a more aggressive investor, willing to take more of a risk for a higher return, you can get exposure to the volatile real estate market by adding $3,000 to the Vanguard REIT Index (VGSIX).  We recommend an addition to this portfolio outside the Vanguard family. This is the Permanent Fund (PRPFX), which has a conservative mix of treasuries, gold, and Swiss francs. It’s a no-load fund (no front-end cost) with a minimum purchase of $1,000.

The Other Great Secret

Once you’ve established your basic portfolio of index funds, you can use the other great secret of investing to build on it: dollar-cost averaging. Vanguard and other mutual-fund companies will allow you to add monthly additions to your funds with as small an amount as $50. You can arrange for your monthly contribution to be automatically drawn from your bank account, so you won’t notice the pain. And the great advantage of buying in regular small amounts, through thick and thin, is that you’re buying when the price is down as well as up. You won’t be driven by emotion, and your portfolio will continue to grow. Those of you who have gardens know about the value of patience. It may take years for your planned garden to fill out and become lush and green. But it’s worth waiting for.

The Bargain-Basement Version of the Ultra Deluxe Lazy Woman’s Portfolio

We love to buy designer-quality clothes at bargain-basement prices, without having to fight the crowds at Century 21 (that’s the fabulous bargain-crazed store in lower Manhattan where we’ve purchased some world-class designer items at fire-sale prices). And so we also love the fact that we can put together a very inexpensive version of the index portfolios used by some of the country’s wealthiest families and institutions. And the way we do it is by using ETFs, the relatively new exchange-traded funds that track indexes, sectors, etc. You can buy an ETF for as little as the cost of a single share, though obviously, that would be a little silly, given your transaction fee. (We recommend a minimum of $500 per ETF to start with, though just get started with whatever you can afford.) You can purchase ETFs the same way you do stocks. We’ve looked at the model portfolios used by the leading money managers and financial advisors in the country and put together what we think is the best of the best and then tweaked it very slightly to make it even better.  We’ve included a closed-end fund for an exposure to gold and silver, but it’s purchased in the same way as an ETF. And we’ve just added an optional ETN (exchange-traded note that trades like a stock) that allows exposure to commodities. We think that because of growing demand from developing countries for basic commodities, from agriculture to metals, the demand for commodities is going to remain high indefinitely.

20% ishares Russell 1000 (IWB) or ishares S&P 500 (SPY) or ishares KLD Social Index (KLD)
15% Vanguard Extended Market ETF (VXF)
20% ishares MSCI EAFE, Diversified Foreign Stocks (EFA)
10% ishares Emerging Markets (EEM)
5% Vanguard REIT (VNQ)
10% iShares Lehman TIPS Bond (TIP)
15% ishares Corporate Bond (LQD) or iShares Lehman Aggregate Bond (AGG)
3% Lehman Short-Term Treasury Bonds (SHY)
2% Canadian Central Fund, gold and silver (CEF)

Please note that we have added KLD, a “green” alternative ETF to the major indexes tracking the Russell 1000 or the S&P 500. We find that the KLD Social Index performs as well as the S&P, and you get the added advantage of sleeping better at night. (See the workout on green investing for further information.)

For added zing, add the Elements Exchange-Traded Note based on the Rogers Commodity Index (RJI), established by commodities guru Jim Rogers.

Important Note: These percentages are based on an investor forty years old or younger. If you are older than forty, and particularly if you are even thinking about retiring within a few years, you should up your percentage of bonds!!!!!!

February 1, 2010 • 12:16 AM

A Measure of Fear in the Market

Want to know if Mr. Market is running scared? Well, obviously, one way is to look at the major indexes, like the Dow and Nasdaq. Another way is to look at volatility, which is measured by the CBOE Volatility Index (VIX). It essentially measures investor nervousness. You can even invest in the VIX through an ETN (exchange-traded note) with the ticker symbol VXX. It’s up more than 7% today (Jan. 22nd). That means folks are beginning to get nervous.

The most important thing to note is that the VIX works in the opposite way to the broader market. When the VIX rises, it indicates that the market is usually going down. When the VIX falls, it indicates that the market is going to rise.
You can trade VIX options in any account that allows you to trade options. To play the VIX on the long side – i.e. protect against a market correction, you can buy shares in VXX, the iPath S&P 500 VIX Short-Term Futures ETN. The note is an unsecured debt security, designed to track the S&P 500 VIX Short-Term Futures Index TR. This offers exposure to a daily long position on VIX futures contracts and reflects the implied volatility of the S&P 500 Index at various points along the volatility forward curve.

Last March, when the market reached its nadir, VXX was trading at more than $100 a share, while it is now around $30 a share.

January 22, 2010 • 2:10 PM

Looking for Protection against Cyber-Invaders, Spammers and Virus Spreaders

We’re always looking for ripple effects in the market from negative news, and Google’s announcement of the attack on its corporate infrastructure originating in China has not only given a boost to its Chinese rival Baidu, but it has given a boost to an already growing industry: internet security. It looks as though Google offered the anti-virus industry a free advertisement when it disclosed the attack.

“We would advise people to deploy reputable anti-virus and anti-spyware programs on their computers,” Google wrote in its official blog, googleblog.blogspot.com. Google revealed that its investigation showed that not just Google but at least 20 other large companies from a wide range of businesses, including the Internet, finance, technology, media and chemical, had been similarly targeted.

Unfortunately, if Google can be hacked, it can happen to anybody,” according to Laura DiDio, an analyst with technology research firm ITIC.

On Tuesday, Facebook offered its 350 million users a free six-month trial of McAfee’s Internet Security Suite, which protects computer users from viruses and other Internet threats.

We know that hackers of all stripes have succeeded in attacking businesses, but companies usually don’t disclose the breaches because they are afraid of damaging their reputations and encouraging criminals.

The attacks on Google are the latest in a string of high-profile cyber attacks, including last April’s “Conficker” worm attack, that Wall Street analysts said have helped security companies outperform the broader technology market. In fact, some analysts say that the online security business could grow five-fold in the next few years.

Market researcher IDC estimates that sales of security software rose 4 percent last year to $15.4 billion, even as overall technology spending declined. IDC projects that it will rise another 6 percent this year.

So which firms should we be looking at to benefit most from the growth in security demands?  “Symantec (SYMC) and McAfee (MFE) are the Batman and Superman in terms of protecting enterprises and consumers,” said one analyst. But there are some smaller firms that are worth looking at as well.

We’ve been looking at Commtouch (CTCH), whose Recurrent Pattern Detection™ and GlobalView™ technologies identify and block messaging and Web security threats, including increasingly malicious malware and phishing outbreaks.

Commtouch recently released its Internet Threats Trend Report for Q$ 2009, based on the analysis of over two billion email messages and Internet transactions seen daily in the company’s cloud-based global detection centers.
According to the report, spammers and other cyber-lowlifes continue to be cutting-edge marketers, this time taking advantage of the reputations of global brands, such as UPS, DHL and Facebook to prompt opening of emails.

• Spam levels averaged 77% of all email traffic throughout the quarter, peaking at 98% in November and bottoming out at 68% at the end of December.

• An average of 312,000 zombies were newly activated daily for the purpose of malicious activity.

• “Business” continued to be the Web site category most infected with malware for the third quarter in a row.

• Pharmacy spam remained in the top spot with 81% of all spam messages.

• Brazil continues to produce the most zombies, responsible for 20.4% of global zombie activity.

Blended threats, including fake Swine Flu alerts and Halloween tricks, continued to circulate, while spammers introduced a few new ploys including MP3 spam and personal enhancement spam targeting women.

January 14, 2010 • 12:52 PM

Trends for the Year of the Tiger

The year of the tiger, according to the Chinese zodiac, may prove a tumultuous one, which may be good for breakthroughs but bad for peace of mind. Accordingly, we should be ready to pounce on opportunities and make a hasty retreat should we hear something stirring in the bushes.

In order to minimize the element of surprise, we’ve been tracking the most likely trends for the coming year that may affect stocks and sectors in the market. The stocks and exchange-traded funds that we mention are not necessarily recommendations, but rather examples that you can use in your own research. I’ll be adding to these trends as we go along.

The Data Wave

The most obvious trend, particularly to those of us who are heavily laden with electronic devices and who like to download music and movies, is the current and coming “data wave.” With so much content available now, taking up so much bandwidth, companies are looking for ways to increase capacities for dealing with more and more content, whether in transmission or storage.

One example of a stock in this area is former Tech favorite Akamai Technologies, Inc., which fell along with the dotcom bust, but which has made a strong comeback. Akamai provides services for accelerating and improving the delivery of content and applications over the Internet, from live and on-demand streaming videos to conventional content on Websites, to tools that help people transact business. The Company’s solutions are designed to help businesses, government agencies and other enterprises. It offers services and solutions for digital media and software distribution and storage, content and application delivery, application performance services and other specialized Internet-based offerings.

Transitional Energy:

We’ve seen bubbles grow and burst in alternative energies, as investors are jumping the gun on stocks, technologies and companies that have yet to actually make money and/or that face heavy competition. The first industry to burst was ethanol, and the second was solar. Some ethanol stocks became virtually worthless, which was a wakeup call to be careful. What’s more, ethanol is no boon to the environment.

It’s going to take a long time to get weaned from oil. So in the meantime, one way of getting exposure of the transition from oil to greener fuels is the PowerShares WilderHill Progressive Energy ETF (PUW) that seeks investment results corresponding to the price and yield of the WilderHill Progressive Energy Index. The Index is comprised of the United States-listed companies that are involved in transitional energy bridge companies, with an emphasis on improving the use of fossil fuels. The Fund invests 80% of its total assets in common stocks of companies engaged in the progressive energy business. That includes such widely different companies as Corning (glass and fiber optic for solar), Tenneco (emissions control), Sasol (coal gasification), Cameco (nuclear), United Technologies, Range Resources (natural gas) and National Grid (energy efficiency).

January 7, 2010 • 1:35 PM

Will Santa Bring Us a Rally?

We’re watching to see if Santa delivers his usual boost to the market. The so-called Santa Claus Rally is a gift that tends to last from Dec. 24 through the second trading day of January. (So, this time around, it would end on Jan. 4.)

This trading period can be very useful to anyone, even those who aren’t going to trade during this time frame. Why?  Because the time frame can be used as an indicator. 

The Santa season in the market is almost always a bullish one (e.g., the S&P 500 has moved higher 12 out of the last 15 years), so the fate of the rally will give us a sense of how bullish or bearish the large investors really are by simply sitting and watching what happens. 

If the time period is weak, then it might be a very good indication that the market is likely to be weak in the near to intermediate term. 

December 22, 2009 • 7:47 AM