Etihad Close To Taking Minority Stake In India's Jet Airways

For an airline, United Arab Emirates' Etihad Airways doesn't like to waste time.  They were the first to land in India when the government opened its market for foreigners this year.  And now they're approximately two weeks away from taking a 24% stake in regional Jet Airways, one of India's three domestic carriers, government regulators said Thursday.

The $379 million deal is being called more of a "strategic partnership" by Etihad.  The Australian managed airline from Abu Dhabi has decisively taken a different tack in the airline industry and has going on an acquiring binge, buying up stakes in airlines from air berlin to Virgin Australia.

Etihad's latest airline deal could get green lighted from the Cabinet Committee on Economic Affairs within the next two weeks, but the final outcome of the transaction will be decided by the Securities and Exchange Board of India (Sebi).

The Indian authorities have expressed some concerned that the original agreement, signed in April, will result in Etihad effectively controlling the management of Jet Airways.

The Indian airlines shares have been getting clobbered all year.  Jet's down over 36% since the Etihad deal was announced and down 36.7% year-to-date.  The stock has rebounded over the last month by 15%.

Etihad is privately held.

"India is one of the world's fastest-growing destinations, and a key market in the growth strategy of Etihad Airways," Chief Executive James Hogan said in a statement. "We now have the opportunity to add significant capacity between the two countries."

By the end of the year, Etihad will operate twice-daily flights leaving from its hub in Abu Dhabi-and heading to both Mumbai and New Delhi instead of just daily flights currently. It also plans to upgrade Abu Dhabi to Chennai flights.

Etihad was awarded the best airline in the Middle East by the World Travel Awards last month.

World's Leading Airline Business Class 2012

 

Best Penny Companies To Invest In 2014

It's been more than three years since the spill at the Macondo well in the Gulf of Mexico, and day by day the prospects for oil exploration there seem to get better. A recent report by Wood MacKenzie shows that production in the Gulf went up 6% last year, and another 4% is expected this year. By 2018, the research group�believes�that the Gulf will be back to its pre-Macondo-spill high in�production�of 2 million barrels per day. �

For this to happen, though, exploration and production companies will need to spend a pretty penny. Between now and 2015, E&P companies are expected to spend somewhere around $20 billion. In this video, fool.com contributor Tyler Crowe looks at what this could mean for oil services companies that specialize in offshore regions such as the Gulf.

Best Penny Companies To Invest In 2014: (NVDL)

NovaDel Pharma Inc., a specialty pharmaceutical company, develops oral spray formulations for marketed pharmaceuticals. The company?s proprietary technology enables delivery of drugs into the bloodstream leading to onset of action and patient benefits. Its oral spray candidates target angina, insomnia, erectile dysfunction, migraine headaches, and nausea. NovaDel Pharma?s marketed products include NitroMist for acute relief of an attack of angina pectoris, or acute prophylaxis of angina pectoris, due to coronary artery disease; and ZolpiMist for short-term treatment of insomnia. The company?s product candidates comprise Duromist, which is in preclinical development for erectile dysfunction; Zensana, which is in preclinical development for nausea; NVD-201, an oral spray formulation of sumatriptan in Phase 2/3 clinical trial to treat migraine headache; NVD-301, an oral spray formulation of midazolam in preclinical stage for the treatment of sedation during diagnostic, therap eutic, and endoscopic procedures; and ZolpiMist in Phase 1 clinical trial to treat middle of the night awakening. It has strategic license agreements with Talon Therapeutics, Inc., Kwang Dong Pharmaceuticals, and BioAlliance Pharma SA to develop and market Zensana; Manhattan Pharmaceuticals, Inc. for the company?s oral spray technology to deliver propofol for pre-procedural sedation; and Velcera Pharmaceuticals, Inc. for veterinary applications for marketed veterinary drugs. NovaDel Pharma also has agreements with Mist Acquisition, LLC, for the manufacturing and commercialization of the NitroMist lingual spray version of nitroglycerine; and ECR Pharmaceuticals Company, Inc. to manufacture and commercialize ZolpiMist. The company was formerly known as Flemington Pharmaceutical Corporation and changed its name to NovaDel Pharma Inc. in October 2002. NovaDel Pharma Inc. was founded in 1982 and is headquartered in Bridgewater, New Jersey.

Best Penny Companies To Invest In 2014: ZST Digital Networks Inc.(ZSTN)

ZST Digital Networks, Inc. engages in supplying digital and optical network equipment and providing installation services to cable system operators in China, as well as in providing GPS location and tracking services to local logistics and transportation companies in China. It offers a line of IPTV devices that are used to provide bundled cable television, Internet, and telephone services to residential and commercial customers. The company has assisted in the installation and construction of approximately 400 local cable networks in approximately 90 municipal districts, counties, townships, and enterprises. ZST Digital Networks has also launched a commercial line of vehicle tracking devices utilizing its GPS tracking technologies and support services for transport-related enterprises to track, monitor, and optimize their businesses. The company was founded in 1996 and is based in Zhengzhou City, the People?s Republic of China.

Top 10 Heal Care Companies To Invest In Right Now: America First Tax Exempt Investors L.P.(ATAX)

America First Tax Exempt Investors, L.P. engages in acquiring, holding, selling, and dealing with a portfolio of federally tax-exempt mortgage revenue bonds. As of March 31, 2011, it held 20 tax-exempt mortgage bonds secured by 20 multifamily apartment properties containing a total of 3,606 rental units. America First Capital Associates Limited Partnership Two serves as the general partner of the company. The company was founded in 1998 and is based in Omaha, Nebraska.

Best Penny Companies To Invest In 2014: Capital Product Partners L.P.(CPLP)

Capital Product Partners L.P., a shipping company, provides seaborne transportation of refined oil products and chemicals. It provides marine transportation services under medium- to long-term time charters or bareboat charters. As of July 13, 2011, the company?s fleet consisted of 22 double-hull tankers, including 18 medium range (MR) tankers, 2 small product tankers, 1 Suezmax crude oil tanker, and 1 Capesize bulk carrier. Its tankers are capable of carrying crude and refined oil products, such as gasoline, diesel, fuel oil, and jet fuel, as well as edible oils and chemicals, including ethanol. Capital GP L.L.C. operates as a general partner of the company. Capital Product Partners L.P. was founded in 2007 and is headquartered in Piraeus, Greece.

Best Penny Companies To Invest In 2014: MGP Ingredients Inc.(MGPI)

MGP Ingredients, Inc. produces ingredients and distillery products in the United States. It processes wheat flour and corn into various products through an integrated production process. The company operates in three business segments: Ingredient Solutions, Distillery Products, and Other. The Ingredient Solutions segment products consist of specialty proteins, specialty starches, vital wheat gluten, commodity wheat starch, and mill by-products. The Distillery Products segment offers food grade alcohol; fuel grade alcohol, commonly known as ethanol; and distiller?s feed and carbon dioxide, which are co-products of the company?s distillery operations. The Other segment products comprise resins, and plant-based polymers and composites. MGP Ingredients, Inc. sells its products directly or through distributors to the manufacturers and processors of finished goods. The company was founded in 1941 and is headquartered in Atchison, Kansas.

J.C. Penney, Paychex are stocks to watch

SAN FRANCISCO (MarketWatch) — Among the companies whose shares are expected to see active trade in Monday's session are J.C. Penney Co., Paychex Inc., and Diamond Foods Inc.

Investors are likely to watch J.C. Penney (JCP)  shares to see if they rebound following a 30% drop during the week, the biggest loser in the S&P 500 (SPX) . The department store chain late Thursday secured funds via the sale of 84 million shares which weighed heavily on the stock.

Many of the concerns that dragged the shares down recently have the been remedied, said analysts at Deutsche Bank. Still, top-line and margin results are the key factors determining the company's prospects going forward, they said. The analysts lowered the stock's price target to $12 from $15.

Paychex (PAYX)  is projected to report first-quarter earnings of 43 cents a share, according to a consensus survey by Thomson Reuters. "We expect the core payroll business to show continued weakness in fiscal 1Q at 3.0% growth," Jason Kupferberg, an analyst at Jefferies, said in a note.

Diamond Foods (DMND)   is forecast to post a loss of 3 cents a share in the fourth quarter. The stock was upgraded to buy from hold with a price target of $28 at BB&T Capital Markets on Thursday.

Best Buy Co., Inc. (BBY): CEO Dumping Shares After 224% Gain In 2013

The Street loves a good turnaround story. Not only do investors like to root for the underdog, but turnaround stocks also have the ability to deliver market-crushing returns. And there's been no shortage of them in 2013.

That group includes Herbalife Ltd (HLF), up 116%, Green Mountain Coffee Roasters, Inc. (GMCR), up 94% and Chesapeake Energy Corp (CHK), up 60%.

But even though those are all impressive, market-crushing gains on their own, there is one stock that trumps them all. This well-know, industry leader has delivered an eye-popping 224% return in 2013, making it a top contender for turnaround stock of the year. Take a look at the impressive move below.

I'm talking about Best Buy Co., Inc. (BBY), a familiar name to most and a global leader in consumer electronics. The company's big gain in 2013 comes on the heels of a crushing 3 year slide that saw Best Buy crash from a multi-year high above $48 in early 2010 to just $11 in December of 2012.

That big rebound has been driven by the company's strategic initiative to adjust its business model and adapt to a dynamic market where Best Buy is being challenged with intense competition from online retailers and mobile, ecommerce.

But even though Best Buy's big turnaround effort is producing phenomenal results on the chart, it also triggered a key event that should make investors nervous.

New CEO Hulbert Joly recently made one the biggest insider moves I've seen in a long time, shocking the market by dumping 450,000 shares, exercising and selling 350,467 stock options while also selling 100,686 previously owned shares. 

So what is Mr. Joly looking at that has him locking in big profits?

The official statement from Best Buy says the sale was driven by Joly's recent divorce and a short-term need for cash and liquidity. It's also important to note that Mr. Joly remains heavily invested in Best Buy, as most CEO's engineering a turnaround story are. But Best Buy's recent surge and valuation made this a very go! od time to lock in some profit. Because while shares have been surging on the chart, earnings and estimates have only increased marginally.

With the 2013 estimate up 7% in the last 3 months, Best Buy is expected to earn $2.41 this year. That has shares trading with a forward P/E 16x. That hardly seems unreasonable when companies such as Tesla, Inc. (TSLA) trades with a forward P/E of 862. But when considering that Best Buy's forward P/E was just a pinch below 5x early in the year, which represents more than a 200% increase how the company is being valued by the Street in less than 9 months. And it was a big enough swing to push Mr. Joly into locking in some profit while the taking is good.

Because long term, big-box retailers are going to struggle as the space contracts due to intense competition from online channels.

 

The Takeaway

Best Buy has seen a huge bounce in 2013, with shares up a market-crushing 224% on the year. But even though the company continues to successfully execute a comprehensive turnaround strategy, shares have jumped from a forward P/E of 5X early in the year to 16X, more than a 200% increase in less than 9 months. That means it's a good time for regular investors to think about locking in some profit after an incredible rebound.

Understanding The Impact Of Legalized Recreational Marijuana On State Tax Revenue

Writing in today's sissified, politically correct environment ain't easy. In the old days, you could just tell it like it was, and if people got mad, so be it. But now, make a comment about one certain group of individuals, and it's immediately, "Boo-Hoo, I'm being repressed."  Constantly crying discrimination, these people have become so hyper-sensitive that they will twist the most innocuous comment in order to brand me a bigot.

I'm talking, of course, about pot smokers. Who did you think I was referring to?

See, every time I write about the tax implications of the recent recreational marijuana revolution – with Washington and my home state of Colorado becoming the first states to approve the sale and use of the drug for non-medicinal purposes – my obligatory slew of tired, predictable pothead jokes are met with a backlash that is far more intense than one would expect from what should be a laid-back weed-smoking community.

The argument goes like this: "Why do you have to perpetuate the same tired clichés by painting cannabis users as futon-dwelling watchers of inane television? Do a little bit of research, and you'll find that there are millions of cannabis users who are high functioning members of society:  lawyers, teachers, politicians and yes, even doctors."

Well, Spicolli, I've got three things to say to you.

First, stop calling its cannabis. It's weed. The rest of your day you call it weed, so don't start calling it cannabis when you want to establish some sort of legitimacy. You're not fooling anyone.

Second, maybe upstanding members of society are smoking weed all the time, but society as a whole isn't ready to process that just yet. There are certain people in positions of trust and power that we want, nay, need, to believe simply don't dabble. Not just in weed, but in totally legal and socially acceptable booze. Trust me, as a guy who's endured brain surgery, I welcome the idea of my neurosurgeon blowing off steam by ripping bong hits no more than I welcome the idea of him knocking back a handle of Jack. Doctors should live squeaky clean, or stop being doctors.

Finally, let's get serious. There's no way that many people really smoke weed, do they?

/googles

I stand corrected.

According to this study, it is anticipated that 665,000 Coloradans will use recreational marijuana in 2014 now that it's legal. This number does not include those that continue to buy black market weed because 1) they want the rush that comes from tasting forbidden fruit, or 2) they're morons.

No matter how you split it, that's a lot of pot *ahem* cannabis users. The study then estimates that the average user will smoke 3.53 ounces in 2014. This puts total anticipated consumption at 2.3 million ounces for 2014.

Of course, the projected use of recreational marijuana is important for reasons aside from proving me an idiot. One of the primary arguments for legalizing weed has been to regulate and tax the hell out of it in a time when most states are struggling to stay in the black, and that's exactly what Colorado intends to do. Back in May, Colorado Governor John Hickenlooper signed Proposition AA, which would assess a three-tiered series of hefty taxes on the new industry. This November, voters will head to the booths to either approve or shoot down the proposal.

Under the taxing structure, an excise tax of 15% would first be levied on all wholesale sales of marijuana from the grower to a retail operation.

Next Next, a special 15% sales tax would be levied on all retail sales from stores to the ultimate consumer. This was originally set at 25% before being lowered prior to finalization of the legislation.

Lastly, the state's existing 2.9% sales tax would also apply on the retail sales, as would any local sales taxes.

That amounts to a staggering 32.9% in excise and sales taxing on a single life-cycle of weed as it makes the journey from seed to Von Miller's lungs. Based on an estimated total market for recreational marijuana of $605 million, the various taxes would produce over $130 million in revenue in 2014 alone.

What Interest Rates Mean For The Stock Market

In recent weeks, there has been considerable discussion among "pundits" about the impact of interest rates on the stock market. It has been asserted that the increase in rates since the Spring of this year indicates that stock prices will decline. It is important to review stock market metrics which utilize interest rates as an input in order to better understand just where we are and where we are likely to go from here.

There are a variety of metrics or "rules of thumb" which strategists use to gauge the market and its likely direction. Some of these metrics take no account of prevailing interest rates whatsoever. Thus, the Cyclically Adjusted Price Earnings (CAPE) ration looks at the current price of the market and compares it with the average earnings over the past ten years to derive a ratio which is then compared with similar ratios in the past to determine whether it appears "high" or "low." This metric will give you the same answer when the federal funds rate is 15% that it will give you when the federal funds rate is 0%. Similarly, the Tobin Q looks at a ratio between two numbers calculated by the federal government and uses that ratio to determine whether the market is overpriced. As with the CAPE ratio, the Tobin Q metric does not take account of current interest rates. Analysts who have followed these metrics slavishly have already missed one of the major rallies in stock market history. I have suggested in previous articles here and here that interest rates are a necessary component in any strategic assessment of the market.

Before going further it is important to understand why interest rates are relevant to equity valuations. There are at least three important reasons. First and most fundamentally, equity valuations ultimately depend upon the discounted present value of future cash flow; the discount rate used in this calculation should depend - at least in part - upon current interest rates. A low discount rate will produce a h! igher present value and, thus, low rates tend to produce higher equity valuations. Stated more simply, in a world in which it is hard to get a 3% return on one's money, a piece of paper which has a dividend yield of 3% and an earnings yield of 6% tends to be worth more than that same piece of paper is worth in a world in which it is easy to get a 12% yield on one's money.

Secondly, investors will have a tendency to demand a lower dividend and earnings yield from stocks when those investors do not have attractive alternatives in the form of high yielding bonds. While there are all sorts of caveats, there is definitely a tendency for low interest rates to push or, perhaps, coax investors in the direction of equities with a resulting upward pressure on prices.

Finally, corporations themselves will engage in "financial engineering" if cheap debt is available. This is sometimes described as "balance sheet optimization" and takes the form of borrowing money to buy back stock, engaging in cash for stock acquisitions and participating in leveraged buy outs. In each case, returns on equity can be enhanced by trading low yielding debt for equity with a higher earnings yield. As long as the after tax interest rate on debt used to fund repurchases is lower than the earnings yield (the inverse of the price earnings ratio) of the stock being repurchased, the net effect of borrowing to buy back stock is to increase earnings per share.

If it makes sense that low interest rates are good for stocks, then shouldn't it be the case that an increase in interest rates will result in a decline in stock averages? Not necessarily. In the current market, a strong case can be made that an expectation of higher interest rates is already "baked in" to the pricing of the market.

I am aware of at least two market metrics utilizing interest rates to assess the market. Let's take a look at what they tell us.

The Fed Model. The first metric is the "Fed Model" which uti! lizes the! 10 year Treasury Bond yield and compares it with the earnings yield on stocks. It was popularized in the 1990's (I believe, by Ed Yardeni) and has the virtue of simplicity. The Table below provides a series of 10 year Treasury Bond yields and corresponding price earnings (PE) ratios and projected S&P 500 index prices. I am using S&P data from Barron's (earnings of $87.20, a price of $1709.91 and a PE of 19.50). I have used the low Treasury rate from last summer, the current rate of 2.73%, and some potential future rates.

Yield	1.41%	2.73%	3.00%	3.50%	4.00%	4.50%	5.00%
PE	70.9	36.6	33.3	28.6	25	22.2	20
S&P 500 Index	$6218.64	$3210.19	$2920.74	$2508.50	$2192.75	$1947.16	$1754.20

Under the Fed Model, the S&P 500 Index is actually priced for a 10 year Treasury Bond yield of over 5%, well above the current level of 2.73%. When the low rates were reached last summer, stocks were priced at levels building in enormous expectations of rising rates, which expectations have not yet been realized. At the current rate of 2.73% the yield on ten year Treasuries implies a PE of 36.6 and a pricing of the Index at almost twice its current levels. So - yes - higher rates have reduced the price of the Index as suggested by the Fed Model, but the reduction has been from a level nearly four times the current price down to a level nearly twice the current price! And rates could go up a long way before they would begin to reach levels which would suggest that the market is overpriced.

The Timmer Model. The second metric which uses interest rates is the Timmer Model and is based on insights in an excellent article by Jan Timmer . Focusing on the phenomenon of financial engineering, this model is based up! on the af! ter tax interest rate paid by corporate borrowers. The reasoning is that - as long as this rate is lower than the earnings yield on common stock - corporate management will be able to increase earnings per share by borrowing money and buying back stock. This will tend to lead the earnings yield to equal the after tax borrowing cost. Using this metric, one can estimate the PE that would be associated with a given interest rate and use this PE to calculate a target price for the Index.

It is, of course, impossible to develop a universal corporate borrowing rate. I have conservatively used six per cent as a rate at which many of the large corporations can borrow money for 10 years. Readers should be aware that many, many large corporations can borrow at much, much lower rates. For example, Apple (AAPL) has 10 year bonds priced to yield 3.64%, Verizon (VZ) 3.55%, Bank of America (BAC) 4.06%, and AT&T (T) 4.15%. In this regard, the S&P 500 Index is weighted by market cap and so the impact of large companies with low borrowing costs - such as AAPL, Exxon (XOM), Microsoft (MSFT) and Verizon - is very large. Thus, the 6 per cent borrowing cost I am using for companies in the Index is very, very conservative. At any rate, I have assumed a 35% corporate tax rate and I have calculated the after tax borrowing cost, the PE, and the Index price which would correspond to various corporate interest rates using this Model.

Rate6.00%7.00%8.00%After Tax CostPEIndex Price

3.90%	4.55%	5.20%
25.6	22	19.2
$2245.37	$1929.62	$1684.03

Under this Model and using the 6 per cent rate(which is almost certainly considerably too high) , the market is currently priced nearly 20% below target. The current pricing would be warranted only as the interest rate faced by large corporations began to near 8%. Once again, we have a long way! to go be! fore interest rates will start flashing a "Sell!" signal.

I do not believe any model should be accorded a talismanic reverence and I make no exception for the Fed Model or the Timmer Model. However, I believe it is also a serious mistake to worship at the altar of a model which ignores interest rates. I also believe that, as long as the earnings yield on a stock is substantially below the company's after tax borrowing costs, there will be a strong incentive for financial engineering through share repurchases and, to a lesser extent, cash for stock acquisitions. These forces will lead to financial engineering which will provide buying pressure in the market and will gradually remove shares from the market. While these forces may not actually force the market to the exact levels suggested by the Model, they will exert a powerful force and this force will tend to become more powerful to the extent that the market deviates further from the level suggested by the Model because the incentives favoring financial engineering will be enhanced by such deviation.

I think that the current environment continues to favor companies with strong balance sheets that can take advantage of generous credit markets and, in this connection, I am still bullish on AAPL, MSFT, Cisco (CSCO), Seagate (STX), Western Digital (WDC) and Johnson & Johnson (JNJ). All things being equal, higher interest rates are bad for stocks. But the market has already priced in substantial increases in interest rates so that interest rate increases do not necessarily constitute sell signals.

Source: What Interest Rates Mean For The Stock Market

Disclosure: I am long AAPL, MSFT, CSCO, XOM, BAC, VZ, T. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article. (More...)

Broker Dealers, Equity-Focused Managers To Lag On Taper Delay: Citi

Investors are still wading through the implications of the Federal Reserve's decision not to begin tapering its bond purchases. Citigroup's William Katz has a note out today wading through the consequences for brokers and asset managers.

He expects two main outcomes from the taper delay. Firstly, that broker dealers will likely lag in the short term, given rate leverage embedded in their models and recent outperformance—although he warns that a more prolonged delay would "materially impact" the time before these names will reach normalized earnings.  He also writes that managers focused on stocks will likely lag compared to fixed income managers, while wondering overall if the move calls into question the strength of the economic recovery and the credibility of the Fed.

Read on for company-specific musings from the report:

Moving up Franklin Resources (BEN) among Traditionals; Close out T. Rowe Price (TROW)/Legg Mason (LM) pair trade — We are still selective on Traditional managers but are re-ranking our short-term (ST) preferences as we believe FI-centric managers may outperform as NAV risks diminish while volumes become more sustainable. Invesco (IVZ) remains our top selection but we move up BEN ahead of TROW. BEN should outperform given: a) attractive relative valuation; and, b) easing investor concern over FI NAV risk and global bond volumes. We also close out long TROW/underweight LM pair trade as equities flow recovery could slow. Additionally, we see Wisdom Tree Investments (WETF) negatively impacted as DXJ is ~35% of AUM and depreciating USD may result in uneven ST volumes.

Top 10 Stocks To Buy Right Now

Expect B/Ds to lag in the ST but keeping perspective on LT thesis — The delay in tapering and the pullback in rate expectations weakens the ST case for rate sensitive names but does not take away from upside potential with respect to normalized earnings power. While the 10-year Treasury yield pulled back sharply on 9/18 to 2.70%, it is still up from ~2.50% at 6/30. Nonetheless, we see Buy-rated LPL Financial (LPLA) and Neutral-rated Raymond James Financial (RJF) as likely defensive in the ST given FI centricity within key businesses; lower correlation to long end of the curve; and underperformance relative to TD Ameritrade (AMTD) + Charles Schwab (SCHW). Among LPLA and RJF, we prefer LPLA given stronger ETR potential and less risk around consensus expectations. That said, there is no change to our positive LT thesis on B/Ds reflecting bottoming EPS expectations; improving retail re-engagement; and higher NIM.

For alternative names, Katz notes these remain well positioned, as low rates in the short term could reduce pressure on financing costs (although with the prospect of reduced economic growth). He favors Blackstone Group (BX), Apollo Group (APO), KKR, (KKR), and Och-Ziff Capital Management Group (OZM).

How To Profit From 'Food-Stamp Nation'

"I hesitated to write about this trend. It's disturbing. Many of its facets are also politically charged. But as an investor, I have to avoid politics. There's no money to be made by laying blame or opining about what should be. My only job is to find strong trends that support an investable idea."

So noted Amy Calistri in the introduction to the most recent issue of Stock of the Month.

I'll get to Amy's "investable idea" in a moment.

First, some grim realities...  

Four out of five American adults struggle with joblessness, near-poverty or reliance on welfare at some point in their lives. That's what The Associated Press reported in late July, based on what it said was exclusive survey data.

This report came on the heels of a July 17 Gallup poll showing that a fifth of two-parent households in the United States said there were times during the preceding 12 months when they struggled to afford food. Among single-parent households, the portion of those reporting food-affordability problems soared to nearly a third. 

Against that backdrop, it should come as little surprise that nearly 1 in 6 Americans receives food stamps. 

What may be surprising, however, is that food-stamp use as of June was up 2.3% from a year earlier, to nearly 47.8 million participants.

That's right. Even as the unemployment rate has dropped and as a number of other economic indicators have steadily improved since the recession, the number of food-stamp recipients continues to climb.

One reason for the apparent discrepancy: the swelling of the ranks of the "working poor." 

As Amy pointed out in the current issue of Stock of the Month, the number of jobs in the low-paying food-and-drink service sector grew 21.3% in the past 10 years, while other jobs increased by just 3.2%.

In 2010, 26.9% of fast-food workers participated in the food-stamp program (which, since 2008, is officially known as the Supplemental Nutrition Assistance Program, or SNAP). Since then, Amy wrote, "the minimum wage hasn't changed, (but) the ranks of fast-food employees have grown."

Moreover, according to Amy, 284,000 college graduates -- some with advanced degrees -- worked in minimum-wage jobs last year. That's up 70% from a decade ago.

Wherever there's a societal or business trend in the making -- however troubling -- chances are someone stands to benefit. And toward that end Amy looked to the administration of the food-stamp program itself for her investable idea.

You see, just as the numbers of SNAP users -- and their profiles -- have changed over the years, so has the "stamp."

The nation's largest food assistance program has its roots in the Great Depression in the 1930s, when the government issued blue stamps to subsidize the cost of food that was in surplus. After an 18-year hiatus, the idea was revived in the 1960s, expanding into a permanent program that sold discount food coupons to low-income people. In 1977 the government began distributing food stamps to the poor for free.

These days, food-stamp purchases are made electronically -- on plastic Electronic Benefit Transfer (EBT) cards, which resemble credit cards.

A waiter for the Las Vegas Guardian Express recently called the EBT cards "the American Express card of the 21st century."

Amy recently called them the basis for her September "Stock of the Month." 

Bob: In Stock of the Month, you refer to a "wave of SNAP recipients to come." Who are they?

Amy: Older Americans, those age 60 or older. The average monthly Social Security check for a retired worker is $1,269.38. The average monthly Social Security check for the spouse of a retired worker is $633.27. The median retirement savings of all households nearing retirement is just $12,000. Even for households with a designated retirement account, median savings are just $100,000 for the soon-to-retire. All in all, it's not an encouraging outlook.

Roughly 3.8 million people age 60 or older currently receive SNAP benefits, but many more are eligible.

Overall, nearly three-quarters of people who qualify for SNAP apply for benefits. Yet only one-third of the qualifying elderly apply for SNAP. The reasons for this are varied. Many people who are retired and collect Social Security assume they don't qualify. The older generation also tends to assign more of a stigma to public assistance programs. But as more of their friends and family members participate in the program, baby boomers are starting to view SNAP as one more tool they can use to make ends meet. 

The elderly are also the fastest-growing segment of the population. The number of those 60 years old or older will grow from 59.5 million in 2012 to 74.8 million in 2020. 

Bob: There are only three companies involved in the administration of the EBT cards used for SNAP and other government assistance programs. You focused on the least well-known of the three. Who's your pick, and why?

Amy: Both JPMorgan Chase (NYSE: JPM) and Xerox (NYSE: XRX) administer EBT programs. But I chose Fidelity National Information Services (NYSE: FIS) because this business is right in its wheelhouse and it's in a position to gain market share.

In its Sept. 2 issue, Forbes Magazine published a list of what it considers to be the world's most innovative companies. Alongside tech giants such as Apple (Nasdaq: AAPL) and Google (Nasdaq: GOOG) is Fidelity, the world's largest provider of banking and payments technologies.

FIS currently has the smallest number of SNAP state contracts of the three providers. Most of these are legacy contracts that eFunds secured before it was acquired by Fidelity. But now as part of a larger corporate entity, Fidelity has the clout to be a bigger player, primarily at JPMorgan's expense. For instance, on Sept. 16, FIS will start administering Florida's SNAP program, which previously was a JPMorgan contract.

Bob: To what extent will the upcoming congressional debate over food-stamp allocations likely affect the participation or allocation rate -- and, by extension, the fortunes of the companies involved in the administration of the program?

Amy: Companies that administer SNAP are affected more by the number of participants than the actual benefit amount. There are likely to be some eligibility cutbacks when the Farm Bill comes up for debate, primarily related to work requirements for working-age adults without children. But the potential participation impact from this change will be more than offset in the near future by the growing ranks of minimum wage workers and the elderly.

Actually the biggest legislative change that could reduce SNAP participation is an increase to the minimum wage. While that issue has been raised, it has yet to gain traction in Congress.     

Bob: What else influenced your decision to go with Fidelity as your "stock of the month" for September? 

Amy: I've been encouraged by recent economic data out of Europe. If Europe begins to stabilize, I think that will be a big plus for the global economy. That's another reason why I think Fidelity is an appealing opportunity. Roughly 20% of Fidelity's revenues come from its International Solutions Group, which provides banking and financial software and consulting services. Financial institutions in Germany, Brazil, the United Kingdom and India are Fidelity's primary international customers.

Another trend I've been tracking is the growth of mobile banking. A recent study by Juniper Research projected 550 million people worldwide will use their smartphones for banking by 2016, up from 185 million in 2011. In March, Fidelity completed its acquisition of mFoundry, a company that specialized in mobile payment systems for financial institutions and retailers.

Fidelity has made a number of smart acquisitions of leading-edge payment processing companies. These technologies can now be better leveraged by Fidelity's scale and reach. 

Unlike other advisory services, I only profile one stock a month -- the single best opportunity I can find. To qualify, I have to be convinced that a number of trends and factors are working together to produce returns that outperform the market. I believe that Fidelity has that potential.

P.S. -- Amy Calistri dodged the 2008 financial collapse, and she says the market is again ripe for a pullback. This is the same analyst who's produced annual returns of up to 510%, and has picked winning investments roughly 85% of the time. To learn how she's protecting her portfolio today, click here.

An Introduction To Gamma-Delta Neutral Option Spreads

Have you ever found strategies that make full use of the decay of an option's theta that are attractive, but you can't stand the associated risk? At the same time, conservative strategies such as covered-call writing or synthetic covered-call writing can be too restrictive. The gamma-delta neutral spread may just be the best middle ground to these concerns when searching for a way to exploit time decay while neutralizing the effect of price actions on your position's value. In this article, we'll introduce you to this strategy.

Learning Greek
To understand the application of this strategy as explained here, knowledge of the basic Greek measures associated with options is essential. This inherently means that the reader must also be familiar with options and their characteristics.

Theta
Theta is the decay rate in an option's value that can be attributed to the passage of one day's time. With this spread, we will exploit the decay of theta to our advantage to extract a profit from the position. Of course, many other spreads do this; but as you'll discover, by hedging the net gamma and net delta of our position, we can safely keep our position direction neutral in terms of price.

The Strategy
For our purposes, we will use a ratio call write strategy as our core position. In these examples, we will buy options at a lower strike price than that at which they are sold. For example, if we buy the calls with a $30 strike price, we will sell the calls at a $35 strike price. Of course, we will not just perform a regular ratio call write strategy - we will adjust the ratio at which we buy and sell options to materially eliminate the net gamma of our position.

We know that in a ratio write options strategy, more options are written than are purchased. This means that some options are sold "naked." This is inherently risky. The risk here is that if the stock rallies enough, the position will lose money as a result of the unlimited exposure to the upside with the naked options. By reducing the net gamma to a value close to zero, we eliminate the risk that the delta will shift significantly (assuming only a very short time frame).

Neutralizing the Gamma
To effectively neutralize the gamma, we first need to find the ratio at which we will buy and write. Instead of going through a system of equation models to find the ratio, we can quickly figure out the gamma neutral ratio by doing the following:

Find the gamma of each option.
To find the number you will buy, take the gamma of the option you are selling, round it to three decimal places and multiply it by 100.
To find the number you will sell, take the gamma of the option you are buying, round it to three decimal places and multiply it by 100. For example, if we have our $30 call with a gamma of 0.126 and our $35 call with a gamma of 0.095, we would buy 95 $30 calls and sell 126 $35 calls. Remember this is per share, and each option represents 100 shares.

Buying 95 calls with a gamma of 0.126 is a gamma of 1,197 (9,500*0.126).
Selling 126 calls with a gamma of -0.095 (negative because we're selling them) is a gamma of -1,197 [12,600*(-0.095)]. This adds up to a net gamma of 0. Because the gamma is usually not nicely rounded to three decimal places, your actual net gamma might vary by about 10 points around zero. But because we are dealing with such large numbers, these variations of actual net gamma are not material and will not affect a good spread.

Neutralizing the Delta
Now that we have the gamma neutralized, we will need to make the net delta zero. If our $30 calls have a delta of 0.709 and our $35 calls have a delta of 0.418, we can calculate the following.

95 calls bought with a delta of 0.709 is 6,735.5.
126 calls sold with a delta of -0.418 (negative because we're selling them) is -5,266.8. This results in a net delta of positive 1,468.7. To make this net delta very close to zero, we can short 1,469 shares of the underlying stock. This is because each share of stock has a delta of 1. This adds -1,469 to the delta, making it -0.3, very close to zero. Because you cannot short parts of a share, -0.3 is as close as we can get the net delta to zero. Again, like we stated in the gamma, because we are dealing with large numbers, this will not be materially large enough to affect the outcome of a good spread.

Examining the Theta
Now that we have our position effectively price neutral, let's examine its profitability. The $30 calls have a theta of -0.018 and the $35 calls have a theta of -0.027. This means:


95 calls bought with a theta of -0.018 is -171.
126 calls sold with a theta of 0.027 (positive because we're selling them) is 340.2. This results in a net theta of 169.2. This can be interpreted as your position making $169.20 per day. Because option behavior isn't adjusted daily, you'll have to hold your position roughly a week before you'll be able to notice these changes and profit from them.

Profitability
Without going through all the margin requirements and net debits and credits, the strategy we've detailed would require about $32,000 in capital to set up. If you held this position for five days, you could expect to make $846. This is 2.64% on top of the capital needed to set this up - a pretty good return for five days. In most real-life examples, you'll find a position that's been held for five days would yield about 0.5-0.7%. This may not seem like a lot until you annualize 0.5% in five days - this represents a 36.5% return per year.

Possible Drawbacks
A few risks are associated with this strategy. First, you'll need low commissions to make a profit. This is why it is important to have a very low commission broker. Very large price moves can also throw this out of whack. If held for a week, a required adjustment to the ratio and the delta hedge is not probable; if held for a longer time, the price of the stock will have more time to move in one direction.

Changes in implied volatility, which are not hedged here, can result in dramatic changes in the position's value. Although we have eliminated the relative day-to-day price movements, we are faced with another risk: an increased exposure to changes in implied volatility. Over the short time horizon of a week, changes in volatility should play a small role in your overall position. This doesn't mean you shouldn't keep your eyes on it though!

The Bottom Line
We can see that the risk of ratio writes can be brought down by mathematically hedging certain characteristics of the options we are dealing with, along with adjusting our position in the underlying common stock. By doing this, we can profit from the theta decay in the written options. Although this strategy is attractive to most investors, it can only be functionally executed by market professionals due to the high commission costs associated with it.

Computer glitch causes widespread JetBlue delays

Computer problems grounded JetBlue flights Friday morning.

NEW YORK (CNNMoney) JetBlue Airways was hit by a computer problem which caused widespread delays across its system on Friday.

The problem, which the airline described as a software problem affecting its computer system used to dispatch flights lasted for several hours, delaying at least 40 morning flights.

While the airline reported that the problem had been corrected by 10:30 a.m. ET, it said it expects further delays throughout the rest of the day. It asked that passengers check with the airline on the status of their flights.

Independent flight tracking service FlightStats reported that as of 11:30 a.m. 72% of JetBlue's departures for the day were on-time.

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That's actually better than the 55% on-time performance it reported for JetBlue on Thursday, the day before the computer problem. A strong thunder storm hit the East Coast Thursday. JetBlue's flights are concentrated in the East Coast and the storm could have had a greater impact on flights. The airline had an 85% on-time performance on Wednesday that was more typical of its regular performance.

Is Procter & Gamble Still a Top-Notch Investment?

With shares of Procter & Gamble (NYSE:PG) trading at around $78.03, is PG 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

Procter & Gamble has made many changes recently, but all the fear surrounding the company seems to have been overplayed. This even includes insiders. Sometimes an outsider is more accurate simply because every little detail isn't being overanalyzed. Procter & Gamble has many positives, including:

Strong cost savings Consistent innovation (Tide Pods, Always Radiance, Bounty Trap & Lock, Bounty Unstoppables) Diversified product portfolio Excellent marketing Brand recognition Emerging market growth (40 percent of sales vs. 20 percent of sales in 2003)

Procter & Gamble's restructuring means four sectors opposed to five beginning July 1, 2013. These sectors will include:

Global Baby, Feminine and Family Care Global Beauty Global Health and Grooming Global Fabric and Home Care

As you can see, there is a big emphasis on global.

As far as revenue goes, it has increased on an annual basis. Earnings have been inconsistent, but profits are always healthy. On a year-over-year basis, revenue increased 2 percent last quarter, and earnings increased 6.40 percent. If you exclude Wall Street expectations, Procter & Gamble is doing just fine.

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As far as valuation is concerned, Procter & Gamble is trading at 17 times earnings whereas Johnson & Johnson (NYSE:JNJ) is trading at 23 times earnings and Kimberly-Clark (NYSE:KMB) is trading at 21 times earnings. However, all three of these companies are long-term winners. And Procter & Gamble is trading at 18 times forward earnings whereas Johnson & Johnson is trading at 15 times forward earnings and Kimberly-Clark is trading at 16 times forward earnings. Procter & Gamble and Johnson & Johnson have the most impressive profit margins at 15.61 percent and 15.22 percent, respectively. Kimberly-Clark has a profit margin of 8.58 percent. In regards to yield, the numbers are once again similar. Procter & Gamble currently yields 3.10 percent, Johnson & Johnson yields 3.20 percent, and Kimberly-Clark yields 3.30 percent.

Procter & Gamble is cutting $10 billion in costs by 2016. Many of these cuts will come via the workforce. These cuts (not just in the workforce, but in an overall sense) should help improve margins and improve earnings. However, Procter & Gamble still has growth potential as well, especially in emerging markets.

All that said, there are negatives for Procter & Gamble as well, which include:

A weak consumer High gas costs Rising interest rates Unemployment and underemployment Weakness in Europe Competitive pricing Soft beauty sales (Procter & Gamble is highly focused on improving in this area) Weak guidance

In regards to company culture, it's strong at Procter & Gamble. This is a good sign because happy workers often mean increased productivity. Despite Procter & Gamble planning layoffs of 2 percent to 4 percent of the workforce every year through 2016, employees have still rated their employer a 3.9 of 5, and 88 percent of employees would recommend the company to a friend.

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

T = Technicals Are Mixed

Procter & Gamble hasn’t performed well over the past months, but it has been steady over a three-year time frame.

	1 Month	Year-To-Date	1 Year	3 Year
PG	-0.60%	16.85%	28.94%	40.94%
JNJ	0.02%	23.48%	36.72%	62.01%
KMB	-4.60%	18.19%	24.37%	77.36%

At $78.03, Procter & Gamble is trading below its 50-day SMA, but still above its 200-day SMA.

50-Day SMA	78.36
200-Day SMA	75.22

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E = Equity to Debt Ratio Is Normal

The debt-to-equity ratio for Procter & Gamble is close to the industry average of 0.50.

	Debt-To-Equity	Cash	Long-Term Debt
PG	0.47	5.88B	32.22B
JNJ	0.24	21.67B	15.89B
KMB	1.41	1.11B	7.03B

E = Earnings Have Been Steady

Earnings haven’t consistently grown on an annual basis, but they have been steady within a range.

Fiscal Year	2008	2009	2010	2011	2012
Revenue ($) in millions	83,503	79,029	78,938	82,559	83,680
Diluted EPS ($)	3.64	4.26	4.11	3.93	3.66

Looking at the last quarter on a year-over-year basis, revenue and earnings both improved.

Quarter	Mar. 31, 2012	Jun. 30, 2012	Sep. 30, 2012	Dec. 31, 2012	Mar. 31, 2013
Revenue ($) in millions	20,194	20,212	20,739	22,175	20,598
Diluted EPS ($)	0.82	1.24	0.96	1.39	0.88

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

Procter & Gamble might be dealing with several headwinds at the moment, but this is a company that has survived many storms in the past. With a strong management in place and clear-cut goals that are likely to be effective, Procter & Gamble should remain a long-term winner.

Will Bank of America Surpass The Competition?

With shares of Bank of America (NYSE:BAC) trading around $13, is BAC 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

Bank of America is a financial institution, serving individual consumers, small and middle market businesses, corporations, and governments with a range of banking, investing, asset management, and other financial and risk management products and services. Through its banking and various nonbanking subsidiaries throughout the United States and in international markets, the company provides a range of banking and nonbanking financial services and products through five business segments: Consumer and Business Banking, Consumer Real Estate Services, Global Banking, Global Markets and Global Wealth & Investment Management, and Other.

Bank of America is a giant in the financial industry that is the backbone of most economies worldwide. The industry suffered in recent years but is now recovering and looks poised to provide the products and services consumers and companies need in order to see progress. A recent settlement scuffle with American International Group (NYSE:AIG) regarding a Countrywide matter may cause some distress to investors.

T = Technicals on the Stock Chart are Mixed

Bank of America stock has flown higher the last couple of years after rebounding from a huge sell-off in 2011. The stock is now trading sideways as it digest gains from this powerful run. 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, Bank of America is trading slightly 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 Bank of America options may help determine if investors are bullish, neutral, or bearish.

	Implied Volatility (IV)	30-Day IV Percentile	90-Day IV Percentile
Bank of America Options	32.80%	53%	52%

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

	Put IV Skew	Call IV Skew
July Options	Flat	Average
August 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 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 Mixed 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 Bank of America’s stock. What do the last four quarterly earnings and revenue growth (Y-O-Y) figures for Bank of America look like and more importantly, how did the markets like these numbers?

	2013 Q1	2012 Q4	2012 Q3	2012 Q2
Earnings Growth (Y-O-Y)	233.33%	-77.17%	-100.00%	121.11%
Revenue Growth (Y-O-Y)	4.13%	-25.02%	-28.20%	65.97%
Earnings Reaction	-4.72%	-4.24%	-0.21%	-4.92%

Bank of America has seen mixed earnings and revenue figures over the last four quarters. From these numbers, the markets have not been excited about Bank of America’s recent earnings announcements.

P = Weak Relative Performance Versus Peers and Sector

How has Bank of America stock done relative to its peers, JPMorgan Chase (NYSE:JPM), Wells Fargo (NYSE:WFC), Citigroup (NYSE:C), and sector?

	Bank of America	JPMorgan Chase	Wells Fargo	Citigroup	Sector
Year-to-Date Return	11.20%	20.11%	21.26%	21.56%	18.98%

Bank of America has been a weak relative performer, year-to-date.

Conclusion

Bank of America is a bank and financial services giant that operates in a recovering financial industry, the backbone of the United States economy. The stock has been on a powerful move to higher prices, over the last couple of years, and is now trading sideways as it digests these gains. Over the last four quarters, investors in the company have not been too happy as earnings and revenue figures have been mixed. Relative to its peers and sector, Bank of America has been a weak year-to-date performer. WAIT AND SEE what Bank of America does in coming quarters.

Can These Oil Companies Be Carbon Neutral?

If only we could use oil without the side effects of carbon emissions, that would be quite the thing wouldn't it? Well, there are a couple of oil companies that are at least making an attempt. One company that stands out among those making token efforts is Denbury Resources (NYSE: DNR  ) . The company has been rather innovative by piping CO2 emissions from factories and refineries to inject into wells for enhanced oil recovery. Not only does this technique lower overall carbon emissions, but it also creates a demand for something we once considered a byproduct of using hydrocarbons. 

Can Denbury and others actually be carbon neutral using this technique? Tune into the video below where Fool.com contributors Tyler Crowe and Aimee Duffy tackle this topic. 

The search for oil and gas is getting more and more creative, and to accomplish these increasingly complex methods we need more and more equipment support. There is one behind-the-scenes energy giant that is at the very center of this need, and our analysts have put together a comprehensive report outlying this company's prospoects. Let us help you discover this little known energy giant by checking out "The Only Energy Stock You'll Ever Need." By simply clicking here, we'll give you free access to this valuable report.  

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4 Credit Card Rewards Gimmicks Revealed

By Shirley Pulawski

Credit card rewards programs are everywhere, and some are more rewarding than others. It is important to read the fine print and understand how each rewards program works and how to select a card that suits your lifestyle. Credit card companies rely on consumers who don't pay close attention to details about rewards eligibility to increase their profit margins, so it's important to know about some of the traps to avoid losing out on deals.

Complicated rewards programs Some credit card offers include rewards and bonuses which sound very enticing, but the programs end up being complicated and hard to use for many consumers. Rotating rewards categories are a common example of complicated rewards programs. The credit card company changes the types of purchases which qualify for rewards every quarter, and the consumer must sign up for them each quarter. If the card user doesn't sign up, they earn no rewards on those purchases. It's easy to guess the companies hope people will forget to sign up on time.

Others rope in new customers by offering savings, but complicate the way rewards are redeemed. For example, one gas card offered a 25-cent discount on up to 20 gallons of gas at their proprietary stations if $100 per month was spent on the card. The problem was that the rebate was automatically applied at the pump when it became eligible to use, and the remaining discount didn't carry over to the next visit to the pump. This meant that if a consumer only needed 10 gallons of gas, the discount on the remaining 10 gallons would go to waste. Some consumers reported driving two family vehicles to the station and using the same pump transaction to fill up to the 20-gallon point, but not everyone is willing or able to go to such lengths.

Further complications include making it difficult to determine how much reward points are worth or offering reward points that expire. Sometimes, points are applied at one rate to a specific category of goods or services offered, but for as little as half as much value for other purchases. The fine print can get very difficult to decipher in some cases, but paying close attention can pay off.

Spending thresholds Certain rewards or bonuses don't start until after a specified amount has been spent on some cards, and the amounts can be huge.

Some cards lure new customers with big offers of 15,000 reward points or flight miles, but only after spending $30,000 in a year on the card. Some cards offer reward bonuses if a threshold amount is spent within a period of time after opening the new account. This type of offer can lead to overspending on the card, and later, disappointment results when the rewards trickle in more slowly after using the card for a while.

Reward maximums or caps A card may offer a higher bonus incentive for some purchases, but the additional percentage is capped off after a certain dollar amount has been spent. For example, a base rate of 1 percent might be standard for most purchases, but a 5 percent reward may be offered in one category, such as gas or restaurant spending, up to a predetermined amount. Once that limit is reached, the rewards drop back to the base rate. This means big spenders in certain categories, especially those who use their cards for work or business spending, will lose out once they hit the threshold and their reward points drop.

Redemption minimums A particular amount of reward points needs to be built up before rewards can be redeemed with some cards, and the information may not be clear in the original offer boasting big rewards or other enticements. For some consumers, this becomes a pitfall as the desire to speed up the reward eligibility leads to excess spending, and credit card companies are counting on this.

The most important thing to remember is that all credit card companies are in the business of making money, so it is only natural for them to stack the odds in their favor. It's up to each consumer to study the fine print carefully, and determine whether or not the terms of the rewards offered suit their purchasing style and habits.

MyBankTracker is an independent resource that helps consumers make smarter banking and money decisions.

Master Your Trading Mindtraps

The popularization of speculative trading in the financial markets, partly due to the development of retail trading solutions offered on the internet, has created a new population of traders in the market. Most of these traders are non-professionals that are attracted by the potential to generate revenue quickly.

Falsely Created Expectations
Many novice traders may believe that it is very easy to make money, especially when they are trying a broker service using a free practice account.

However, if these traders manage to generate a sudden substantial return, it can lead them to believe that trading is an easy occupation - one in which revenue can be quickly generated with little work by the trader. For the inexperienced, one good pick can make it seem like market speculation is the key to success and wealth.

Unfortunately, when these inexperienced speculators overtake this virtual investing environment and decide to start trading live accounts and risking real money on the market, the activity becomes much more complex. In many cases, the days of outstanding day-trading performance come to look suddenly and distressingly like old souvenirs - it is an abrupt initiation into the pitiless reality of the financial markets.

Real Life vs. Practice
When new traders take the leap from their virtual trading accounts to trading with real money, they enter into the most difficult step of their initiation to trading: trading psychology.

In other words, while it may be easy to trade when the risk of loss does not exist, when the trader's hard-earned dollars are thrown into the mix, his or her focus and price objective can go out the window. Often, traders using virtual accounts will feel relatively comfortable even when the market moves against the positions they enter. This allows them to keep their focus on their price objective and wait for the market to get moving in the right direction. Because there is little consequence tied to "virtual money", personal emotion does ! not interfere. Unfortunately, when a trader's actions come to affect the gain or loss of his or her own personal assets, that trader is less likely to behave in such a methodical way.

Emotions Can Rule the Trade
Emotions can be seen as the trader's worst enemies; they often lead to misjudgment and loss.

Feelings generate what psychologist Roland Barach calls "mindtraps" in his book, "Mindtraps: Unlocking the Key to Investment Success" (1988). Roland Barach provides a collection of 88 lessons explaining the pitfalls, such as fear and greed, that hold many traders back.

Greed
Greed can lead a trader to hold on to a position too long in hopes of a higher price, even as it falls. This emotion has been the main reason behind many trades that have gone from large gains to large losses. To thwart this emotion, try to take an objective look at the reasoning behind your positions. When one of your positions experiences a large run-up, ask yourself whether the reasons behind your initial investment still remain; if not, it may be time to close or reduce the position.

Fear
Fear can prevent a trader from entering trades and lead to taking them out of positions far too early. If an investor is too concerned with potential loss and the risks that come with an investment, he or she can often be dissuaded from a good opportunity. Also, if a trader is more susceptible to fear, he or she may sell out of an investment far too early based on the fear of losing the gain he/she has made. In many cases, this can prevent a trader from cashing in on a much bigger gain.

Paralyze by Analyze
Paralyze by analyze is an interesting phenomenon in which traders get so caught up in analyzing everything about a potential investment, they never actually pull the trigger on the trade. In this case, what often happens is that the investor will constantly question all of the little details found in the analysis in an attempt to perfectly analyze a situation. This is a truly unachievable task, which can prevent a trader both from making monetary gains and from making experiential gains by getting into the trade.

A wide range of other emotions can rule a trader, but the important thing for any market participant is to recognize these emotions.

Acknowledge Your Emotions
All traders will experience at least one mindtrap, but the very best traders learn to recognize, understand and neutralize them. This process forms the foundation of any trader's training. Therefore, if you want to become a successful trader, you should first spend some time getting to know yourself and the particular mindtraps you tend to fall into. A skillful trader tends to have a strong desire to master his or her emotions and prevent them from affecting his or her performance.

Trading Nirvana
Traders are only human and, as such, perfection may not exist in trading. However, profitable trading can be achieved when a trader learns to manage his or her emotions. This will be easier for some than for others, but it is only through experience in the market that this skill can be developed. Therefore, before you can learn how to win, you have to take some risks (or at least get into the market) and learn to master the emotions that making (and sometimes losing) money stirs up.

10 Best Wealth Manager Logos: Advisors Behind the Winners

With 2,051 votes tallied, readers voting on AdvisorOne have selected the 10 Best Wealth Manager Logos out of 25 finalists. The finalists were selected by the editorial staff of the Investment Advisor Group—the editors and art directors of AdvisorOne and Research and Investment Advisor magazines. The winners comprised firms with staff sizes from 227 down to just one, but all came up big regarding their logos’ appeal to readers — and, therefore, potential clients.

The 10 winners were also featured in the July issues of Research and Investment Advisor. This expanded Web-only version includes photos of the winning advisors and their answers to questions about how they chose their logo and how they market their firm.

The intent of our original slideshow on AdvisorOne, Our 20 Favorite Top Wealth Manager Logos, and the subsequent readers’ poll, was to help educate advisors on one way to stand out to both current clients and prospects, immediately and directly, in collateral marketing material—and we hope this has helped out a bit.

You can also check out detailed information on some of these firms, and other helpful information, at AdvisorOne’s 2012 Top Wealth Managers landing page.