2014 Top Stocks Market, Best Stocks Investment In 2014, Top Stocks For 2014: 10/27/13

Alternative ETFs and Risk-Adjusted Performance

NEW YORK (ETF Expert) -- In this commentary, I am choosing to look at some alternative asset exchange-traded funds. They are often misunderstood, rarely discussed in detail and they may go the furthest toward reducing overall portfolio risk.

If the "fit hits the shan" the way it did in the financial collapse of 2008, then most asset classes (e.g., most stock types, most bond types, most REITs, most currencies, most commodities, etc.) could depreciate significantly. Alternative assets may or may not do much better, but when it comes to a world where the Fed is likely to remain exceptionally accommodative, "alt assets" are worthy of discussion.

Here are three exchange-traded investments for tapping into a world of alternative possibilities:

1. ETRACS Wells Fargo Business Development Company Index Note (BDCS). Business Development Companies (BDCs) are similar to venture capitalists and private equity firms. In particular, there are roughly 30 or more publicly traded corporations that engage in lending at high yield rates to smaller up-n-comers; BDCs often garner equity stakes as well. The Securities and Exchange Commission requires these BDCs to invest 70% of assets in U.S. companies, while distributing a minimum of 90% of taxable income in the form of dividends. Those distributions often lead to annual yields in the 7%-9% range for shareholders. Not surprisingly, there are exchange-traded vehicles for BDCs. The unleveraged ETN from UBS E-TRACS, ticker symbol BDCS, is a means for accessing the alternative asset class. Capital appreciation may be a little light in 2013, though the 7% annualized yield is a nice offset; rising interest rates in the May-June period did not hurt BDCS more than the market at large. Moreover, the 50-day moving average has remained above the 200-day moving average since early in 2012. Courtesy of StockCharts.com 2. ProShares Large Cap Core Plus (CSM). Before fees and expenses, CSM pursues the results of Credit Suisse's 130/30 Large Cap Index. The 130/30 paradigm has become increasingly popular in the alternative arena, where an index has total long exposure of 130% and total short exposure of 30%. In this vehicle, the 500 largest stocks comprise the universe where a rules-based ranking system determines which companies will make up the "long" and which will make up the "short."

However, there is very little discernible performance difference or price direction when compared to the S&P 500 SPDR Trust (SPY). Both have three-year total returns of roughly 58%; both move in the same direction 99 times out of 100. The advocates of 130/30 strategies swear by the approach's ability to deliver excess returns for less risk, but the evidence is pretty slim... at least in the passive world of ETF indexing.

3. Credit Suisse Merger Arbitrage Index ETN (CSMA). In merger arbitrage, one is pursuing the spread between the stock price of a target company after the public announcement of its proposed acquisition and the price offered by the acquirer to pay for the targeted company's shares. If a deal goes through as anticipated, gains are probable. If a deal fails to materialize, losses may occur.

Compared to the previous "alt" assets, CSMA provides the least annualized volatility and the lowest correlation with the S&P 500 with a coefficient of 0.39. In the same vein, however, the investment may not provide much of anything of value. Over the previous three years, the profits are frighteningly slim.

For the most part, alternative ETFs may not be alternative enough. And when they are, they may not provide enough value to warrant their inclusion. That means the majority of ETF enthusiasts should stick with mainstream offerings tied to stocks, bonds, REITs and commodities. Moreover, since few of the primary asset classes will hold up in a systemic shock, you'll need to actively manage the downside risk with an approach to lowering your overall exposure. Follow @etfexpert This article was written by an independent contributor, separate from TheStreet's regular news coverage.

Disclosure Statement: ETF Expert is a website that makes the world of ETFs easier to understand. Gary Gordon, Pacific Park Financial and/or its clients may hold positions in ETFs, mutual funds and investment assets mentioned. The commentary does not constitute individualized investment advice. The opinions offered are not personalized recommendations to buy, sell or hold securities. At times, issuers of exchange-traded products compensate Pacific Park Financial or its subsidiaries for advertising at the ETF Expert website. ETF Expert content is created independently of any advertising relationships. You may review additional ETF Expert at the site. Gary Gordon reads: Real Clear Markets Jeff Miller indexuniverse Charles Kirk On Twitter, Gary Gordon follows: Jonathan Hoenig Doug Kass Hard Assets Investor

How to Profit from a Potential Housing Market Downdraft

The housing market has had a nice run up over the past several years, but the party is beginning to fade.

Home prices continue to edge higher with a 12.8% jump in August, according to the S&P/Case-Shiller 20-City Home Price Index. While this seems positive, you also have to wonder if the housing market is headed for a bubble down the road as mortgage rates rise—and they will.

The chart of the S&P/Case-Shiller 20-City Home Price Index below shows the currency recovery in home prices. The index is still far below the peak in 2006 and 2007, prior to the subprime blow-up. These were unrealistic levels. We saw downward moves in 2009 and 2012, but it has been clear sailing. Yet the problem is that much of the buying in the housing market was driven by institutional buying. Once this begins to fade as home prices rise, we could see a relapse in the housing market.

Is Walgreen Still a Winner?

With shares of Walgreen Co. (NYSE:WAG) trading at around $49.51, is WAG 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

Walgreen was rated on OUTPERFORM here on March 12. It has had a good run since that time, but have circumstances changed? There will be a lot of information below, but perhaps the most important fact is that 75 percent of the U.S. population lives within 3 miles of a Walgreens. One of the biggest selling points that most people already know about is the rise in generics, which means improved margins. Getting back on board with Express Scripts Holding Company (NASDAQ:ESRX) was also a big move. In addition to that, Walgreen inked a 10-year deal with AmerisourceBergen Corporation (NYSE:ABC). This will increase Walgreen's potential in brand and generic drugs on a global scale. Let's take a look at some other positives for Walgreen, as well as some negatives.

NEW! Discover a new stock idea each week for less than the cost of 1 trade. CLICK HERE for your Weekly Stock Cheat Sheets NOW!

Positives:

Margin expansion Traction in Balance Rewards loyalty program Future share repurchase program likely 2.20 percent yield (higher than peers) Analysts like the stock: 15 Buy, 6 Hold, 2 Sell Large insider purchase on April 18 at $48.62 (insider purchases are rare these days)

Negatives:

Wal-Mart Stores Inc. (NYSE:WMT) is a growing threat CVS Caremark Corporation (NYSE:CVS) is an ever-present nuisance for Walgreen Still fighting to win back previous customers EPS decline in 2012 Revenue decline in 2012

Now let's take a look at some comparative numbers. The chart below compares fundamentals for Walgreen, CVS, and Rite Aid Corporation (NYSE:RAD). Walgreen has a market cap of $46.59 billion, CVS has a market cap of $71.48 billion, and Rite-Aid has a market cap of $2.38 billion.

	WAG	CVS	RAD
Trailing P/E	21.86	19.19	21.96
Forward P/E	13.33	13.16	16.47
Profit Margin	2.91%	3.15%	0.47%
ROE	12.19%	10.25%	N/A
Operating Cash Flow	$4.41 Billion	$6.67 Billion	$819.59 Million
Dividend Yield	2.20%	1.60%	N/A
Short Position	1.40%	0.90%	5.00%

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

E = Equity to Debt Ratio Is Strong

The debt-to-equity ratio for Walgreen is stronger than the industry average of 0.40.

	Debt-To-Equity	Cash	Long-Term Debt
WAG	0.34	$2.44 Billion	$6.36 Billion
CVS	0.26	$1.38 Billion	$9.83 Billion
RAD	N/A	$129.45 Million	$6.05 Billion

T = Technicals Are Strong

Walgreen has performed well over a three-year time frame. Rite Aid has been the top performer in this group, but that's not likely to last. Over the long haul, Walgreen and CVS are highly likely to outperform Rite Aid.

NEW! Discover a new stock idea each week for less than the cost of 1 trade. CLICK HERE for your Weekly Stock Cheat Sheets NOW!

	1 Month	Year-To-Date	1 Year	3 Year
WAG	3.82%	34.63%	42.90%	48.28%
CVS	6.28%	21.40%	31.68%	63.00%
RAD	40.00%	95.59%	79.73%	79.73%

At $49.51, Walgreen is trading above all its averages.

50-Day SMA	45.15
100-Day SMA	41.83
200-Day SMA	38.34

E = Earnings Have Been Steady

Earnings suffered a setback in 2012, but looking at the past five years, there is consistency. Revenue had been improving on an annual basis until a slight setback in 2012.

	2008	2009	2010	2011	2012
Revenue ($)in billions	59.03	63.64	67.42	72.18	71.63
Diluted EPS ($)	2.17	2.02	2.12	2.94	2.42

When we look at the previous quarter on a year-over-year basis, we see flat revenue and a slight increase in earnings. However, on a sequential basis, there were impressive improvements in both revenue and earnings.

	2/2012	5/2012	8/2012	11/2012	2/2013
Revenue ($)in billions	18.65	17.75	17.07	17.32	18.65
Diluted EPS ($)	0.78	0.62	0.39	0.43	0.79

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

T = Trends Support the Industry

For many people, medicine is a necessity, not a luxury. People are also living longer, and with baby boomers retiring in droves, the industry is likely to have a bright future. Technological advances will also lead to new diagnostic products, which might be sold at drug stores. Of course, there's also the increased popularity of generics, which means higher margins for drug stores. The only big negative is if the stock market crashes. If that happens, then there will be pain, but Walgreen and CVS should hold up better than most companies throughout the broader market. It could also be looked at as an opportunity to buy more stock. Furthermore, there will be dividend payments along the way. All of this doesn't pertain to Rite Aid, which is a much riskier investment.

NEW! Discover a new stock idea each week for less than the cost of 1 trade. CLICK HERE for your Weekly Stock Cheat Sheets NOW!

Conclusion

Walgreen's long-term planning is excellent. The big concern is the stock market being overheated, not the company itself. However, the market could be propped up for another two years. Nobody knows how that will play out. The good news is that Walgreen will be around for a long time, and that being the case, any downward moves in the stock price should present an opportunity. Buying in increments is always recommended in order to reduce downside risk.

Investment Strategies For Volatile Markets

Most investors are aware that the market undergoes times of strong trends and times of lateral ranging. Many investors employ a different trading system for each environment. But what happens in a period of extreme volatility? Any system a trader might use is susceptible to the increased market swings, which could wipe out previous gains and more. By using either a non-directional or a probability-based trading method, investors may be able to more fully protect their assets.

When Volatility Increases
It is important to understand the difference between volatility and risk. Volatility in the financial markets is seen as extreme and rapid price swings. Risk is the possibility of losing some or all of an investment. So as volatility increases, so does profit potential and the risk of loss, as the market swings from peaks to troughs. There is a marked increase in the frequency of trades during these periods and a corresponding decrease in the amount of time that positions are held. During times of increased volatility, a hyper-sensitivity to news is often reflected in market prices.

Directional Investing
Most private investors practice directional investing, which simply requires the markets to move consistently in the desired direction, which can be either up or down. Market timers, long or short equity investors and trend investors all rely on directional investing strategies. Times of increased volatility can result in a directionless or sideways market, repeatedly triggering stop losses. Gains earned over years can be eroded in a few days.

Non-Directional Investing
Non-directional investors attempt to take advantage of market inefficiencies and relative pricing discrepancies. Following are some strategies they deploy:

Equity Market Neutral - Here is where stock pickers can shine, because the ability to pick the right stock is just about all that matters with this strategy. The goal is to leverage differences in stock prices by being both long and short among stocks in the same sector, industry, nation, market cap, etc. By focusing on the sector and not the market as a whole, emphasis is placed on movement within a category. Consequently, a loss on a short position can be quickly offset by a gain on a long one. The trick is to identify the standout and the underperforming stocks. The principle behind this strategy is that your gains will be more closely linked to the difference between the best and worst performers than the overall market performance and therefore will be less susceptible to market volatility. Merger Arbitrage - Many private investors have noticed that the stocks of two companies involved in a potential merger or acquisition often react differently to the news of the impending action and try to take advantage of the shareholders' reaction. Often the acquirer's stock is discounted while the stock of the company to be acquired rises in anticipation of the buyout. A merger arbitrage strategy attempts to take advantage of the fact that the stocks combined generally trade at a discount to the post-merger price due to the risk that any merger could fall apart. Hoping that the merger will close, the investor should simultaneously buy the target company stock and short the acquiring company's stock. Relative Value Arbitrage - The relative value approach seeks out a correlation between securities and is typically used during a sideways market. What kinds of pairs are ideal? They are heavyweight stocks within the same industry that share a significant amount of trading history. Once you've identified the similarities, it's time to wait for their paths to diverge. A 5% or larger divergence lasting two days or more signals that you can open a position in both securities with the expectation they will eventually converge. You can long the undervalued security and short the overvalued one, and then close both positions once they converge. Event Driven - This scenario is triggered by corporate upheaval, whether it be a merger, assets sale, restructuring or even bankruptcy. Any of these events can temporarily inflate or deflate a company's stock price while the market attempts to judge and value these newest developments. This strategy does require analytical skills to identify the core issue and what will resolve it, as well as the ability to determine individual performance relative to the market in general. Trading on Volatility Investors who seek profits from market volatility can trade ETFs or ETNs on a volatility index such as iPath S&P 500 VIX Short-Term Futures ETN (ARCA:VXX). The VXX tracks the movement of the CBOE volatiliy index (VIX). During the budget impasse and debt ceiling problem in 2013, VXX rose nearly 21%. After the problem was solved, it fell nearly 30%. If investors had bought VXX before it rose significantly and sold at the peak, they would have realized large profits.
Probability-Based Investing
Although investors' consensus opinion will usually result in a relatively efficient stock price that reflects all known information, there are obviously times when one or more key pieces of data about a company are not widely disseminated, resulting in an inefficient stock price that is not reflected in its beta. The investor is therefore taking an additional risk of which he or she is most likely unaware. Probability-based investing is one strategy that can be used to help determine whether this factor applies to a given stock or security. Investors who employ this strategy will compare the company's future growth as anticipated by the market with the company's actual financial data, including current cash flow and historical growth. This comparison allows calculating the probability that the stock price is truly reflecting all pertinent data. Companies that stand up to the criteria of this analysis are therefore considered more likely to achieve the future growth level that the market perceives them to possess.

The Bottom Line
Volatile times provide an opportunity to reconsider one's investment strategy. Although the approaches described here are not for all investors, they can be leveraged by the experienced trader and alternatively, each option is available through a professional money manager.

Is Barrick Gold Undervalued?

GOLD With shares of Barrick Gold (NYSE:ABX) trading around $15, is ABX 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

Barrick Gold is engaged in the production and sale of gold, as well as exploration and mine development. The company also produces copper and holds other interests, which include a nickel development project. Barrick Gold’s business is organized into seven primary operating segments: four regional gold businesses, a global copper business unit, an oil and gas business, and a capital projects group. Its gold, copper, nickel, and oil and gas businesses and interests are dispersed around the world.

Gold prices continue to decline, as demand for this precious metal is not what it once was. The future doesn’t look so bright from the perspective of commodity-focused companies, as prices around the world continue to drop. Look for changes in gold, oil, and gas prices to have significant effects on the future profits of companies like Barrick Gold.

T = Technicals on the Stock Chart are Weak

Barrick Gold stock has seen a disastrous decline over the last couple of years. The stock is now trading at lows not seen in over a decade. Analyzing the price trend and its strength can be done using key simple moving averages.

What are the key moving averages? They are the 50-day (pink), 100-day (blue), and 200-day (yellow) simple moving averages. As seen in the daily price chart below, Barrick Gold is trading below its declining key averages, which signal neutral to bearish price action in the near-term.

ABX

(Source: Thinkorswim)

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

	Implied Volatility (IV)	30-Day IV Percentile	90-Day IV Percentile
Barrick Gold Options	62.35%	63%	61%

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

	Put IV Skew	Call IV Skew
August Options	Steep	Average
September Options	Steep	Average

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

On the next page, let’s take a look at the earnings and revenue growth rates, and what that means for Barrick’s stock.

E = Earnings Are Decreasing Quarter-Over-Quarter

Rising stock prices are often strongly correlated with rising earnings and revenue growth rates. The last four quarterly earnings announcement reactions can also help gauge investor sentiment on Barrick Gold’s stock. What do the last four quarterly earnings and revenue growth (Y-O-Y) figures for Barrick Gold 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)	-18.27%	-418.65%	-54.41%	-35.34%
Revenue Growth (Y-O-Y)	-5.68%	11.35%	-13.47%	-4.04%
Earnings Reaction	4.26%	1.04%	-7.43%	-6.59%

Barrick Gold has seen decreasing earnings and revenue figures over the last four quarters. From these numbers, the markets have had mixed feelings about Barrick Gold’s recent earnings announcements.

P = Poor Relative Performance Versus Peers and Sector

How has Barrick Gold stock done relative to its peers, Goldcorp (NYSE:GG), Newmont Mining (NYSE:NEM), Freeport McMoRan (NYSE:FCX), and the overall sector?

	Barrick Gold	Goldcorp	Newmont Mining	Freeport McMoRan	Sector
Year-to-Date Return	-56.78%	-29.81%	-41.11%	-17.92%	-47.55%

In a weak sector, Barrick Gold has been a poor relative performer, year-to-date.

Conclusion

Barrick Gold is a gold mining firm that also has interests in copper, nickel, oil, and gas projects around the world. The company’s stock hasn’t done very well in the last two years, and is now trading at lows not seen in over a decade. Over the last four quarters, earnings and revenue figures have declined, which has produced mixed feelings among investors in the company. Relative to its weak peers and sector, Barrick Gold has been a poor year-to-date performer. STAY AWAY from Barrick Gold for now.

China Stocks Sink to 7-Week Low as PBOC Fails to Cut Money Rates

Chinese stocks slumped, dragging the benchmark gauge to the lowest level in seven weeks, as small companies plunged and the central bank's first cash injection in two weeks failed to reduce money-market rates.

Tsinghua Tongfang Co., a maker of personal computers, tumbled 6.2 percent to lead losses among technology companies. Zhejiang Beingmate Technology Industry & Trade Co. (002570) fell 8.9 percent after third-quarter net income plunged. The ChiNext index of Shenzhen-listed companies sank 5.1 percent, the most since June 24. The fixing on the seven-day money-market rate rose seven basis points to 5 percent. A gauge of financial shares pared its gain to 1 percent after rallying 3.6 percent.

The Shanghai Composite Index (SHCOMP) fell 1.7 percent to 2,097.38 at 1:21 p.m. local time, reversing an advance of 1.4 percent. The People's Bank of China added 13 billion yuan ($2.1 billion) using seven-day reverse-repurchase agreements today, according to a trader at a primary dealer required to bid at the auctions.

"We were rising in the morning because of the reverse repo, but after pricing that in, we have to note the market is still in a weak mode," said Zhang Haidong, analyst at Tebon Securities Co. in Shanghai. "Liquidity is still tight."

The Shanghai measure has lost 3.4 percent this month, poised for the first decline since June, and trades at 8.4 times projected profits for the next 12 months. That's lower than the seven-year average of 15.4.

The CSI 300 Index dropped 1.2 percent to 2,338.45. The Hang Seng China Enterprises Index (HSCEI) of mainland companies traded in Hong Kong climbed 0.6 percent. The Bloomberg China-US Equity Index fell 1.2 percent in New York yesterday.

Company Earnings

Trading volumes in the Shanghai index were 1 percent above the 30-day average for this time of day, after falling to the lowest level in two months yesterday, according to data compiled by Bloomberg. Earnings at the 146 companies in the Shanghai gauge tracked by Bloomberg that reported results so far this quarter have trailed analyst estimates by 5.7 percent.

Tsinghua Tongfang dropped to 8.12 yuan. A gauge of technology companies fell 4.4 percent on the CSI 300, the most among 10 industry groups. Zhejiang Beingmate slumped 8.9 percent to 33.05 yuan after third-quarter net income plunged 59 percent from a year ago. The ChiNext pared this year's gains to 71 percent.

"Small-cap companies had risen a lot previously and earnings so far aren't good, so it's damping market sentiment," says Wei Wei, an analyst at West China Securities. "There's still concern about the economy. The only thing supporting the market today is banking stocks."

Lenders Gain

Ping An Bank Co. climbed 4.8 percent to 13.75 yuan. Industrial Bank Co. advanced 3.4 percent to 11.93 yuan.

China may start a trial of preferred share offerings in industries including banking and electricity generation, the China Securities Journal reported, citing unidentified investment bankers.

"This could alleviate some of the funding pressure faced by medium-size banks,"said Gerry Alfonso, a trader at Shenyin & Wanguo in an e-mail.

PetroChina Co. and China Petroleum & Chemical Corp. are due to release third-quarter results later today.

The Shanghai index has slumped 7.1 percent this year on concerns a slowing economy will hurt profit growth and the government will introduce measures to curb property-price gains.

The iShares China Large-Cap ETF, the largest Chinese exchange-traded fund in the U.S., climbed 0.3 percent to $36.55 in New York. NQ Mobile Inc. extended its three-day plunge to 62 percent after Muddy Waters LLC accused it of fabricating revenue, while Sohu.com Inc. tumbled on plans to boost marketing expenses.

Is Inflation Of 2% Enough For You?

In one of those “what could possibly go wrong with that plan” moments – which are becoming all too frequent these days – the New York Times this weekend reported that there is “growing concern inside and outside the Fed that inflation is not rising fast enough.”

At some level, this is not exactly new thinking. For decades, economists have argued that “price stability” really means inflation of something just slightly over 0%, because it is assumed to be quite hard to get out of a deflationary spiral. In my view, that’s silly, because simply adding a zero to the currency in everyone’s pocket is a guaranteed way to get out of deflation. It may be that since nudging inflation higher is harder than kicking it higher, the costs of mild deflation are higher than the costs of mild inflation, but I think the jury is out on that question since it isn’t something we have ever experienced. But in any event, this is the reason that inflation in the neighborhood of 2%, rather than 0%, has been the Fed’s implicit or explicit target for a long time.

To the extent that discussion stays academic, it’s not worrisome. Navel-gazing is an occupational hazard of being a professional economist, after all. But now, there are louder and more frequent voices arguing that 2% is too low a target. To see how urgent a problem this is, I submit the following chart, which shows median CPI, along with a horizontal line at 2.25% (roughly equivalent to a 2% target on PCE). Wow, I can see the reason for panic. We are nearly 0.2% below that! And we got within 0.6% of deflation in 2010, in the aftermath of the worst credit crisis in almost 100 years.

(click to enlarge)I am all for the idea that mild inflation serves to lubricate the gears of commerce, but we should remember that when the CFO of Costco (COST) says he likes rising inflation because i! n that circumstance “the retailer is generally able to expand its profit margins,” that’s good for the equity market perhaps but not as good for the consumer!

It always amazes me how sketchy is the understanding of inflation in a capital markets context by members of the Fed. In the aforementioned article, Chicago Fed President Evans is quoted, saying, “If inflation is lower than expected, then debt financing is more burdensome than borrowers expected. Problems of debt overhang become that much worse for the economy.” This is absolutely true, but almost completely irrelevant in the current context. Inflation has been lower than a priori expectations since about 1980, which is why a long-nominal-bond position has routinely outperformed inflation. But currently, as the chart below illustrates, 10-year inflation breakevens are at 2.19%. Fully 72% of all 10-year periods since 1914 have seen compounded inflation above that level.

(click to enlarge)

Ten-year inflation swaps, a better measure of inflation expectations, are at 2.52%, which still doesn’t sound like a horrible bet for borrowers. If inflation comes in above 2.52%, the borrower of 10-year fixed-rate money wins; if it comes in below 2.52%, the borrower loses. This is one reason that it is so rare to see corporations issue inflation-indexed debt… they like that bet.

Finally, the article explains that higher inflation allows workers to get higher wages, and gives the example of teachers in Anchorage, Alaska, who just agreed to a contract giving them 1% pay increases for each of the next three years. Since inflation is likely to be above that, the article says, they will be probably receiving a pay cut in real terms. This is absolutely true. (It is also the exact opposite position of the debtor, in that the teachers will do better in real terms if deflation actually happened. Sometimes I ju! st wish t! he authors of these articles would be consistent.) But this circumstance certainly isn’t helped by inflation; since wage increases tend to trail inflation, real wages tend to lag in inflationary upticks.

None of this represents deep insight from this author. It merely represents that I have at least a rudimentary understanding of how inflation works, and a respect for the damage inflation can cause to economies, workers, and savers. The fact that this is increasingly rare these days is probably cyclical, and unfortunately is probably a minimum condition for setting up this next inflation debacle. In that context, and with more Federal Reserve economists openly musing about needing to target higher inflation, does 2.19% breakeven sound like a bad deal?

Source: Is Inflation Of 2% Enough For You?

Scoreboard of Gurus â€“ Highest Gain Investors and Six Stocks

The last six months have been an exciting time for the highest-gaining Gurus Jean-Marie Eveillard, Michael Price, Robert Karr and David Nierenberg. According to the GuruFocus Score Board of Gurus, their performance is as follows:

Jean-Marie Eveillard, First Eagle Investment Management LLC

In a portfolio weighted with basic materials at 18.3%, technology at 15.7% and financial services at 14.2%, First Eagle bought 92 stocks and made the highest average gain of 178.62% over the last six months. Eveillard is also top gainer over 12 months, averaging 86.7% on 215 stocks. Eveillard's mutual fund had a peak-to-peak annual return from 1999 to 2012 of 12.73%.

Averaging 125% on shares bought, a high gaining stock in this portfolio is Comcast Corp. (CMCSK), up 32% over 12 months.

His holding history:

Averaging 47% on shares bought, another consistent gainer in this portfolio is Cisco Systems Inc. (CSCO), up 61% over 12 months:

Michael Price, MFP Investors LLC

In a portfolio weighted with financial services at 34%, health care at 15.4% and consumer cyclical at 10.1%, Michael Price bought 18 stocks and made the second highest average gain of 95.5% over the last six months. He is also second top gainer over 12 months, averaging 83.95% on 55 stocks.

Averaging 228% on shares bought, a high gainer in this portfolio is Ruth's Hospitality Group Inc. (RUTH), up 81% over 12 months:

Robert Karr, Joho Capital

In a portfolio weighted with technology at 64.3% and consumer defensive at 28.6%, Robert Karr bought six stocks and made an average gain of 54.5% over the last six months. He is also the top third gainer over 12 months, averaging 42.27% on 22 stocks.

Averaging 94% on shares bought, Karr's Estee Lauder Cos. Inc. (EL) is a high gainer, up 26% over 12 months:

Averaging 80% on shares bought, another high gaining stock in this portfolio is Google Inc. (GOOG), up 40% over 12 months:

David Nierenberg, D3 Family of ! Funds

In a portfolio weighted with technology at 54.2%, financial services at 19% and consumer defensive at 15.3%, David Nierenberg comes in at fourth position. He bought one stock and made an average gain of 42% over the last six months. He is also a top gainer over 12 months, averaging 19.83% on six stocks.

Averaging 50% on shares bought, a high gain stock in this portfolio is Rosetta Stone Inc. (RST):

Check out the GuruFocus Score Board of Gurus to track performance numbers for all the investor Gurus and their companies.

If you are not a Premium Member, we invite you for a 7-day Free Trial.

GuruFocus Real Time Picks reports the stock purchases and sales that Gurus have made within the prior 2 weeks. The report time lag can be as short as 2 days after the date of the transaction. This feature is for Premium Members only.

Check out the GuruFocus special feature 52-week low screener to find the stocks hitting new lows but are still held by top investor Gurus and Insiders.

Can the New News Corp. Overcome the Old Skeptics?

The new News Corp. (NASDAQ: NWSA ) has a lot to prove as a stand-alone company.

This News Corp. is the product of a split between the former media conglomerate also known as News Corp., which then consisted of one company containing ample entertainment, broadcasting, and print-media assets. When the old News Corp. CEO Rupert Murdoch chose to divide it into two separate companies, with trading commencing on July 1, the new News Corp. inherited the print-journalism assets, including The Wall Street Journal and the perennially money-bleeding New York Post, as well as book publisher HarperCollins and Dow Jones (for which I worked, as a media columnist at MarketWatch, from 2007 till early this year).

The other component, 21st Century Fox (NASDAQ: FOXA ) , encompasses such broadcasting brands as the Fox News Channel and the Fox filmed-entertainment unit.

OK. Got that straight? Old News Corp., boasting those more promising properties, good. New News Corp., consisting of worrisome print components, not so good.

It is no secret that U.S. newspaper companies have had a tough time adjusting to the digital revolution, as the dailies' advertising dollars have slowed down and managements have groped with the challenge of monetizing the Internet.

Like many media observers, I'm fascinated to see whether this operation can overcome the stigma of being closely identified with the bad, "old" media of print journalism and publishing.

21st Century Fox shareholders sure aren't complaining, though. Murdoch's decision to put the less desirable print properties into a separate company is in step with the broader media ecosystem. Just last month, Gannett acquired Belo to add broadcasting strength and reduce its dependence on the newspaper business. For its part, Tribune also recently gobbled up TV operations, enabling it to reinvent itself as a strong local TV entity, as it ponders a potential sale of its daily newspapers.

Murdoch, the CEO of the "old" News Corp. and the head of 21st Century Fox, has pledged that the new entity will succeed. Murdoch has a stake in it, as he will be the chairman of both companies.

When he announced the plans for the split, Murdoch said the move would "unlock the true value of both companies and their distinct assets, enabling investors to benefit from the strategic opportunities resulting from more focused management of each division."

Skeptics, however, assert that when Murdoch created these two entities, the more attractive movie and television-related assets were assigned to 21st Century Fox. Meanwhile, the comparatively less appealing and slower-growth properties were lumped together at the new News Corp., under the direction of Robert Thomson, who was promoted from his position as editor of The Wall Street Journal.

Not only were the print assets financially worrisome before the split, but they were also capable of causing Murdoch and the company tremendous embarrassment worldwide. Two summers ago, News Corp. print journalists in London were found to have hacked the phones and violated the privacy of private citizens. In fact, many believe that the fallout from this scandal paved the way for the News Corp. split, as a way to keep the attractive broadcast assets apart from the troublesome print ones.

So far, at least, in the early returns, we see that since the July 1 trading of the stocks commenced, News Corp. shares rose 2.9% while 21st Century Fox shares jumped 5.5% by July 24 and the Standard & Poor's 500 increased 5%.

For his part, Thomson stressed that the new media conglomerate would "cultivate a start-up sensibility even though we already work for the world's most established and prestigious diversified media and information services company."

Thomson's strategy is to get the most out of his prized asset, The Wall Street Journal. News Corp. is intent on creating value around its news assets and editorial content, the backbone of the company. To do that, News Corp. must find ways to make more money from the Journal by leveraging its prestige in the marketplace.

The Journal already possesses a clientele of well-heeled readers, which is why it was able a few years ago to take the bold step of diversifying its news offerings from beyond business and finance to become more of a general-news paper, in the style of The New York Times.

Having accomplished that objective, Thomson and his team must now come up with ways to leverage the prestige of the Journal on mobile devices and tablets, and in other digital ways.

The Journal is coming to the new company from a position of strength. As of May 1, it was bucking the trend of declining circulation numbers in the U.S. newspaper world, remaining the nation's biggest newspaper. Going by the average weekday circulation figures, as of March 31, it boasted 2.4 million in total print and digital subscribers. This represented a 12% jump from the previous year, based on a report by the Alliance for Audited Media. These data encompassed 898,102 online customers.

Wall Street will be following the new company to measure how well it can survive on its own, without the cushion of the strengths of 21st Century Fox, such as its cable capabilities and a movie studio that has lifted all boats in the past with blockbusters like Avatar and Titanic.

Dow Jones CEO Lex Fenwick was not long ago a senior executive at Bloomberg, and he well understands the inner workings of his ex-employer, one of Dow Jones' most heated foes. Dow Jones' new DJX project, which has acquired the nickname "The Bloomberg Killer," is intended to go forcefully against Bloomberg and Thomson Reuters. It will offer a wire service that supplies subscribers with a two-minute jump on news exclusives of the Journal and additional Dow Jones journalists.

Journalism points aside, there is another tantalizing question that Wall Street is pondering: What role will Rupert Murdoch play in the new News Corp.? Naysayers fret that Murdoch will be so busy at 21st Century Fox that he won't be able to give that much of his attention to News Corp.

Public comments I've seen are more inclined to champion 21st Century Fox than anything else, as a testament to Murdoch's vision. "By divesting its less attractive legacy business, Fox has become a pure-play entertainment company with fantastic assets in its cable channels," Gabelli & Co. analyst Brett Harriss told Reuters a few weeks ago.

That's great news -- if you hold shares in 21st Century Fox.

If you happen, however, to be a holder of News Corp., the best you can do is wait and see.

Top Performing Stocks To Watch For 2014

Canadian stocks rose, following the third weekly drop for the benchmark index, as a nine-month high in the price of crude boosted oil and gas producers and existing home sales rose in May.

Calfrac Well Services Ltd. and Bankers Petroleum Ltd. (BNK) added at least 4.4 percent to pace gains among energy shares. Talisman Energy (TLM) Inc. increased 1.7 percent after Lundin Petroleum AB began drilling in a field co-owned by the two companies in the North Sea. B2Gold Corp. jumped the most in six weeks, ahead of its inclusion in an index of gold mining stocks. Rogers Communications Inc. rallied 1.3 percent after an analyst with Canaccord Genuity Inc. raised his rating for the stock.

The Standard & Poor��/TSX Composite Index (SPTSX) rose 101.54 points, or 0.8 percent, to 12,288.90 at 4 p.m. in Toronto. The gauge slipped 1.5 percent last week and has lost 1.2 percent this year, making it the third-worst performing index among developed markets in the world, ahead of Austria and Hong Kong.

Top Performing Stocks To Watch For 2014: Cumberland Pharmaceuticals Inc (CPIX)

Cumberland Pharmaceuticals Inc. (Cumberland), incorporated on January 6, 1999, is specialty pharmaceutical company focused on the acquisition, development and commercialization of branded prescription products. Cumberland is focused on acquiring rights to, developing and commercializing prescription products for the hospital care and gastroenterology markets. Its product portfolio includes Acetadote (acetylcysteine), Caldolor (ibuprofen), Kristalose (lactulose) and Hepatoren (ifetroban). As of December 31, 2011, Hepatoren was in Phase II clinical development. The Company markets and sells its products through its hospital and gastroenterology sales forces in the United States. Its pre-clinical product candidates are being developed through its 85% owned subsidiary Cumberland Emerging Technologies, Inc. In November 2011, the Company completed the acquisition of the remaining rights associated with the Kristalose brand, including the United Sates Food and Drug Administration (FDA) registration and trademark. During the year ended December 31, 2011, it acquired rights to a late-stage product candidate that it develops under the brand name Hepatoren.

Acetadote

Acetadote is an intravenous formulation of N-acetylcysteine, or NAC, indicated for the treatment of acetaminophen poisoning. Acetadote is used in hospital emergency departments. In January 2011, the Company received the United Sates Food and Drug Administration (FDA) approval and commenced the United Sates launch activities for this Acetadote formulation.

The Company competes with Geneva Pharmaceuticals, Inc., Ben Venue Laboratories, Inc., Roxane Laboratories, Inc. and Hospira Inc.

Caldolor

Caldolor, Cumberland�� intravenous formulation of ibuprofen, is the injectable product approved in the United States for the treatment of both pain and fever. The product is indicated for use in adults for the management of mild to moderate pain, for the management of moderate to severe pain as ! an adjunct to opioid analgesics, and for the reduction of fever. As of December 31, 2011, it was enrolling patients in four clinical studies designed to support marketing of Caldolor. Two of these clinical trials are designed to support pediatric use, including a pediatric fever study to evaluate safety, efficacy and pharmacokinetics of Caldolor in hospitalized children ,as well as a pediatric pain study. Two registry studies with Caldolor are also underway and are designed to gather additional safety and efficacy data on use of the product in adults. As of December 31, 2011, Caldolor was available in 800 milligram vials.

The Company competes with EKR Therapeutics, Inc.

Kristalose

Kristalose is a prescription laxative administered orally for the treatment of constipation. Kristalose is a dry powder crystalline formulation of lactulose. Kristalose is manufactured under a contract with Inalco S.p.A. and Inalco Biochemicals, Inc. (collectively Inalco). Constipation treatments are sold in both the over-the-counter (OTC) and prescription segments.

The Company competes with Sucampo Pharmaceuticals Inc., Takeda Pharmaceutical Company Limited and Braintree Laboratories, Inc.

Top Performing Stocks To Watch For 2014: Rh Petrogas Limited (T13.SI)

RH Petrogas Limited engages in the exploration, development, and production of oil and gas properties. It develops and produces hydrocarbon in Fuyu 1 Block in the Songliao Basin, Jilin Province, the People�s Republic of China; and explores and produces petroleum in West Belida Block, Jambi, South Sumatra, Indonesia covering an area of approximately 1,402 square kilometers. RH Petrogas Limited also has a total of 60% of the Basin PSC and 33.2% of the Island PSC, which are contiguous blocks located in the Birds Head area of West Papua, Indonesia covering an area of approximately 2,000 square kilometers onshore and offshore. The company was formerly known as Tri-M Technologies (S) Limited and changed its name to RH PetroGas Limited in November 2009. RH Petrogas Limited is headquartered in Singapore.

5 Best Heal Care Stocks To Invest In 2014: Worthington Energy Inc (WGAS.PK)

Worthington Energy, Inc. (Worthington), formerly Paxton Energy, Inc., incorporated July 30, 2004, is an oil and gas exploration and production company with assets in Texas and in the Gulf of Mexico. Worthington�� assets in Texas consist of a minority working interest in limited production and drilling prospects in the Cooke Ranch area of La Salle County, Texas, and Jefferson County, Texas, all operated by Bayshore Exploration L.L.C. (Bayshore). The Company�� assets in the Gulf of Mexico consist of a leasehold working interests in certain oil and gas leases located offshore from Louisiana, upon which no drilling or production has commenced as of December 31, 2011, and a 10.35% interest in the recently drilled I-1 well and a 2% royalty interest in 14,400 acres in the Mustang Island Tract 818. On March 27, 2012, it acquired certain assets from Black Cat Exploration & Production, LLC.

In Texas, the Company has working interests ranging from 4% to 31.75% (ne t revenue interests ranging from 3% to 23.8125%) in the various wells. In the Gulf of Mexico it has a 70% leasehold working interest, with a net revenue interest of 51.975%, of certain oil and gas leases in the Vermillion 179 tract and 10.35% interest in the recently drilled I-1 well and a 2% royalty interest in 14,400 acres in the Mustang Island Tract 818. As of December 31, 2011, it had one producing well that generated average total monthly net revenue.

The Mustang Island 818-L Field, located in the Kleberg County waters of the Gulf of Mexico, is a field re-habilitation project targeting bypassed or only partially produced gas-condensate. Total production from the wells within the seismic coverage was 125.6 billion cubic feet. In January 2011, the Hercules Offshore 205 jack-up rig was contracted to re-enter the I-Well on the Mustang License Area. The oil and gas leases are located in the VM 179, which is in the shallow waters of the Gulf of Mexico offshore fr om Louisiana. VM 179 is at 85 inches water depth approxima! te! ly 46 miles offshore Louisiana in the Gulf of Mexico.

Top Performing Stocks To Watch For 2014: Materion Corporation (MTRN)

Materion Corporation, a materials solutions company, engages in the production and supply of high-performance engineered materials in the United States and internationally. The company offers high performance materials solutions for large area coatings, alternative energy, and thin film applications; and specialty inorganic chemicals for semiconductors, LED lighting, and energy storage applications. It also provides precision thin film coatings and optical filters for manufacturers in the defense, commercial, space, science, astronomy, and thermal imaging industries; beryllium-based metals and metal matrix composites for commercial, research, and engineering applications; and copper, copper beryllium, and spinodal alloy products for end-use products in the aerospace, automotive, computers, telecommunications, manufacturing equipment, mobile equipment, medical products, oil and gas, alternative energy, and plastic tooling markets. In addition, the company offers high perfor mance engineered ceramics; beryllium X-ray window and ultra high vacuum products; electron beam welding, vacuum furnace brazing, and waterjet cutting services, as well as engineering support services; and beryllium products, such as speaker domes and microphone transducers. Further, Materion Corporation provides precision-coated materials; thin film deposition materials, electronic packaging products, and specialty materials for the semiconductor, photonics, data storage, wireless, military, and medical markets; and precision parts cleaning, precious metals refining, and recycling services. Additionally, it engages in beryllium mining and milling business; and offers engineered beryllium materials and specialty strip metal products. The company was formerly known as Brush Engineered Materials Inc. and changed its name to Materion Corporation on March 8, 2011. Materion Corporation was founded in 1931 and is headquartered in Mayfield Heights, Ohio.

Advisors' Opinion:

[By Ben Levisohn]
Materion (MTRN) has fallen 8% to $29.75 after the gold refiner said earnings should come in at around 20 cents a share, well below analyst forecasts. Outerwall (OUTR), meanwhile, has jumped 12% to $64.08 after an activist investor took a big stake in the company.
[By Seth Jayson]
Margins matter. The more Materion (NYSE: MTRN ) keeps of each buck it earns in revenue, the more money it has to invest in growth, fund new strategic plans, or (gasp!) distribute to shareholders. Healthy margins often separate pretenders from the best stocks in the market. That's why we check up on margins at least once a quarter in this series. I'm looking for the absolute numbers, so I can compare them to current and potential competitors, and any trend that may tell me how strong Materion's competitive position could be.

Top Performing Stocks To Watch For 2014: BioSpecifics Technologies Corp(BSTC)

Biospecifics Technologies Corp., a biopharmaceutical company, involves in the development of an injectable collagenase for various indications. It has a development and license agreement with Auxilium Pharmaceuticals, Inc. for injectable collagenase for clinical indications in Dupuytren?s contracture, Peyronie?s disease, and frozen shoulder. Biospecifics Technologies Corp. also focuses on the development of collagenase for various other clinical indications, including human and canine lipoma and cellulite. The company develops and commercializes XIAFLEX, which is used for the treatment of adult Dupuytren?s contracture. Biospecifics Technologies Corp. was founded in 1957 and is headquartered in Lynbrook, New York.

Top Performing Stocks To Watch For 2014: United Financial Bancorp Inc.(UBNK)

United Financial Bancorp, Inc. operates as a holding company for United Bank that provides various banking products and services in Massachusetts. It provides a range of deposit products, including demand accounts, NOW accounts, money market accounts, savings accounts, retirement accounts, and certificates of deposits. The company?s loan portfolio consists of one- to four-family residential mortgage loans, commercial real estate loans, construction loans, home equity loans and home equity lines of credit, commercial and industrial loans, and automobile loans, as well as consumer loans comprising secured and unsecured personal loans, motorcycle and motor home loans, manufactured housing, boat loans, and pool and spa loans. In addition, it offers non-deposit investment products and financial planning services comprising mutual funds; debt, equity, and government securities; insurance products; fixed and variable annuities; financial planning for individual and commercial cu stomers; and estate planning services. Further, the company engages in buying, selling, and holding investment securities; and holding real estate assets. It operates 22 full-service banking offices and 2 financial services facilities. The company was founded in 1882 and is headquartered in West Springfield, Massachusetts.