In the woods, you have to dry off fast or risk any number of calamities. Living in temperate rainforest, an emergency fire was a challenge. But thanks to duct tape’s inherent desire to burn, I was re-warmed in no time.

But my mundane story has got nothing on the bush pilot that returned to his Piper Cub (the plane, not one of Palin’s kids) to find a pissed off grizzly had utterly destroyed the craft’s ability to fly as the hungry beast searched for the scraps of meat hidden inside.

Just like any savvy outdoorsmen, the pilot’s first thought after seeing the calamity was duct tape.

He used his radio to call for two new tires, two rolls of cellophane and three cases of duct tape.

After some masterful repairs and one nerve-wracking takeoff, the bold pilot was on his way home. True story…

What does this have to do with investing? Think about it.

When the bears come and eat your lifeline, nobody is going to come rescue your plane, especially when it’s a 1958 jalopy. You have to get innovative and do it yourself.

Financially speaking, it is time to get out the duct tape.

Let’s face it. If you subscribe to this newsletter, you go against the crowd. Or at the very least, it’s a notion you are contemplating.

While the Wall Street herd is overpaying for assets that are riskier now –with unemployment over 10% and the dollar losing its worth – than they were twelve months ago, you are looking for the nearest exit.

An investment in Ford, General Electric or even a chunk of gold is not going to cut it. That’s mainstream stuff and the current is going in the wrong direction.

Every day, right around lunchtime, I log onto my screener and search out the day’s biggest movers. Without fail, the majority of the top ten (usually at least eight or nine) winners are from the small- or micro-cap sector.

Stocks with share price of fifty cents, five cents or ninety-five cents – penny stocks – are up by 15%, 60% or even doubling in value, while most of their bigger, “stronger” brethren are moving in lockstep with the overall markets, locked in as dangerous dependent variables to much stronger forces like the value of the dollar or Washington’s latest vote on how to rule the minions.

While penny stocks are not for everybody (thankfully), I am willing to bet they deserve a role in your portfolio. After all, you have already shown tendencies of being an active, intelligent investor just by subscribing to this newsletter.

Here is what is great about penny stock investing these days.

For the nation’s up-and-coming companies, the ones with revolutionary products or breakthrough technology, it does not matter that unemployment is at 10.2%. It does not matter if the dollar is weak against the euro and the yuan. And it most certainly does not matter what Obama, Pelosi and the gang are doing in Washington.

What matters is many of these companies are the duct tape that can rebuild almost any portfolio or, even better, build a brand new one.

It doesn’t matter what the bears did to your plane. All you have to do is call in a few penny-stock winners and you will be soaring once again.

Over at TodaysFinancialNews.com, we have been noticing the disconnect between penny stocks and the overall market ever since things began to collapse last fall. But we had no way of letting our readers in on the situation.

Our sites are so popular that if we even hint at our bullishness for a thinly traded penny stock, share price would soar and very few of our readers would be able to get in on the action.

But we just figured out a way to eliminate that pesky little problem. Chances are, you have already heard about Penny Stock Confidential, our newest, most innovative membership opportunity.

If not, here’s a sneak peak.

If you are as wary of Wall Street as I am, you will do anything to get your portfolio the protection it deserves.

Gold won’t work. The dollar certainly won’t get the job done. And CDs are the equivalent of burning your cash.

Penny stocks, on the other hand, especially the tiny over-the-counter trades, get rid of greedy Wall Street analysts. They get rid of political pay caps and sneaky executives. And best of all, they get rid of all that distracting noise that has filled the investing world of late.

If you want to invest in something tangible, something that you know represents an actual asset, the penny stock market is the place to be.

It is the duct tape that will save your day.

*** And so it begins. Whatever was left of the Fed’s autonomy has been eradicated overnight.

Yesterday, I wrote about Chris Dodd’s latest proposed law that greatly changes the way the nation’s banking system is regulated.

The legislation slams the Fed’s authoritative power. Obviously, it is not something Ben Bernanke wants to deal with. His team is quite comfortable in their current positions, ruling the world’s money and its banks.

In Washington, there is only one way to get what you want. Go political. If Bernanke wants to keep his job, he and his team are going to have to play dirty.

Going political is not new territory for Bernanke.

After all, the politician of politicians, Barney Frank, recently applauded Bernanke’s political prowess. But now the Fed chief gets a chance to do it overtly.

Instead of thinking independently about the nation’s economic path and whether interest rates are optimally tuned, Bernanke will be thinking about guys like Frank and Dodd, two men that would be my absolute last choice to be in control of the country’s economic future.

Washington has always been political. But this is a whole new level. Pretty soon, you won’t need guys like me to help shed light on favorable investments. Barney Frank will make your selections for you.

He’ll  say it helps spread the wealth.

But our other big national deficit is creating a different problem, as well as the potential for one low-risk, high-return investment opportunity. Here’s the bottom line…

Because the United States has run such a large and persistent trade deficit for so many years, other countries – like China – have been able to run up large current account surpluses. These surpluses, in turn, have enabled them to accumulate substantial foreign exchange reserves.

For years, this money was invested in the world’s safest securities: U.S. Treasuries. But the returns from these securities haven’t been so hot lately. Especially when you’re a foreign investor watching the greenback wilt like last week’s roses.

Many world governments are now putting their money to work elsewhere. (Can you blame them?) Sovereign Wealth Funds are their vehicle.

Sovereign Wealth Funds are the financial assets of a country – usually part of the national savings – that are owned and organized into a state-controlled fund. These funds are increasingly moving money into global equity markets. And the sums involved are fairly staggering.

Current assets controlled by Sovereign Wealth Funds are estimated to be $3 trillion. They are expected to reach at least three times this amount over the next five years.

This is a bit scary to some investors, because these funds are entirely secretive. There is no world body to which they have to disclose what they are buying or when.

But here’s a common sense insight. They aren’t buying small or mid-cap companies. There isn’t enough liquidity in these to allow them to enter or exit their positions efficiently.

No, these funds must invest in the world’s biggest companies. As an individual investor, you might benefit from picking up giant companies like General Electric or British Petroleum or HSBC.

Or you can do it the easy way, by plunking for a few shares of the Dow Jones Global Titans Fund (AMEX: DGT).

This exchange-traded fund (ETF) holds 30 of the world’s largest publicly traded companies. It also pays a 2.5% dividend, 25% more than the average money market is paying right now.

Its major holdings include the companies I mentioned above, plus other market bellwethers like AT&T, Johnson & Johnson, Nestle, Microsoft and Proctor & Gamble.

The Global Titans Fund has several advantages. It is well diversified, liquid, and gives you instant foreign currency diversification. (60% of the holdings are in the United States, the rest are in international markets.)

It also uses a passive indexing approach, so it is both cost-effective and highly tax-efficient. Annual expenses are only one half of one percent.

This fund was originally brought to my attention by Eric Roseman, the Sovereign Society’s savvy Investment Director. (To read Eric’s views and learn more about international money flows, global investing and financial privacy, I suggest you check out the Sovereign Society’s Off Shore A-Letter. It’s quite good – and it’s free.)

In sum, the Dow Jones Global Titans Fund is holding exactly the mega-cap global companies that Sovereign Wealth Funds are likely to plow money into for many years to come.

My suggestion? Pick up a few shares now. And let the world’s most powerful creditors push your shares higher in the weeks and months ahead.

Good investing,

Alex

Source: How to Turn Sovereign Wealth Into Personal Wealth

If you need proof, just look at the Top Five suitors for General Electric Co.’s (GE) century-old home-appliances division. There isn’t a U.S. company on the list.

GE Chief Executive Officer Jeffrey R. Immelt – who last week told analysts the company was “seriously considering a spin-off” for the unit – said yesterday (Wednesday) that there were five possible buyers, including:

• LG Electronics Inc., a South Korean electronics and telecommunications giant that’s positioning itself as a global heavyweight.
• Haier Group Co., a China-based appliance-maker that’s one of that country’s real corporate success stories.
• Controladora Mabe S.A. de C.V., a successful Mexico-based appliance firm that is partly owned by GE, and that already makes appliances for other brand-name firms – including GE.
• Electrolux AB (OTC ADR: ELUXY), a Stockholm-based company that parlayed its success in high-end vacuum cleaners into a broader success in home appliances.
• Arcelik Anonim Sirketi, an Istanbul, Turkey-based appliance-maker that does business throughout the world – including in the United States.

It’s only been a week since reports surfaced that GE was looking to sell or spin-off its home-appliance business unit, the latest in an ongoing series of divestitures aimed at unshackling the Corporate America heavyweight from the ebb-and-flow of consumer-focused markets. In that time, however, the unconfirmed rumors have solidified to the point that Immelt yesterday identified specific possible suitors.

“The players become very obvious,” Immelt said during a breakfast meeting with businessmen in Seoul yesterday. “It’s Haier in China, LG in Korea, and so on. Of course, LG is one of the leading candidates.”

Immelt said the sale of the unit will be “a long process.”

GE’s appliances division is the No. 1 provider of refrigerators, ovens and dishwashers for newly-constructed houses in the U.S. market. The unit may draw bids of $3 billion to $8 billion, according to analysts at Citigroup Inc. (C) and Goldman Sachs Group Inc. (GS).

For Haier, the acquisition of the GE unit would give the China-based company a household brand name it could use to accelerate its U.S. expansion. Once named Qingdao Refrigerator Plant, the company is now “China’s ambassador to appliance stores worldwide,” according to Hoover’s, the well-known business-information provider.

From the brink of bankruptcy, Haier rebounded and remade itself into China’s largest appliance company and a world-renowned brand that sells refrigerators, freezers, mobile phones, computers, air conditioners and more in more than 160 countries worldwide. Since “pulling itself up by its bootstraps,” Haier has used joint ventures and other shrewd maneuvers to branch out both geographically and commercially, Hoover’s reports.

For the Seoul-based LG Electronics, the purchase of GE’s appliance business would allow the Korean firm to challenge U.S. heavyweight Whirlpool Corp.’s (WHR) global lead in the production of appliances, Bloomberg News reported.

According to published reports by Bloomberg and others, LG hasn’t decided whether to bid for the GE unit, the company said yesterday in response to a query by Korea’s stock exchange.
LG is “carefully monitoring” the sale of GE’s appliances division, Chief Executive Officer Nam Yong said. Zhao Rui, a spokeswoman at Haier, declined to comment, Bloomberg said.
James Kim, an analyst at Lehman Brothers Holdings Inc. (LEH), wrote in an investment note that speculation that LG will bid for GE “has been overdone, without any concrete developments … according to our channel checks, GE and LG Electronics have not talked about this potential acquisition.”

However, Castor Pang, an analyst at Sun Hung Kai Securities in Hong Kong, told Bloomberg that “both LG and Haier need [the] GE [business unit in order] to break into the U.S. market because [GE] has a very strong brand. Buying GE would be a big advertisement for them. After all, the U.S. market is still a very big market.”

GE’s appliances business had a U.S. market share of 27% in 2006, the most recent figures available, JPMorgan Chase & Co. (JPM) analysts estimate. The unit had revenue of $7.2 billion in 2007, according to Credit Suisse Group (ADR: CS) estimates.

Source: GE Home Appliance Unit Sale Underscores Again That Corporations and Investors Alike Must Go Global to Succeed

• Global chemical producer Dow Chemical Co. (DOW) announced yesterday (Wednesday) that it would raise prices on all 3,200 of its products – some by as much as 20% – beginning at the start of the third quarter. Bloomberg News said it’s the single-biggest price increase in the Michigan-based company’s 111-year history. But Dow Chief Executive Officer Andrew Liveris said the price hike was made necessary by “unparalleled” increases in the costs of energy, transportation and raw materials, which together boosted Dow’s expenses 42% in the first quarter, Reuters reported.

• A day after South Africa posted its slowest quarterly growth in six years (2.1%), the country’s April inflation rate rose to 10.4%, the highest in more than five years. Analysts say this increases the chances that the country’s central bank will raise interest rates at least more than twice this year, Bloomberg reported.

• Conglomerate General Electric Co. (GE) said it plans to cut its water consumption by 20% by 2012. To do so, the company will use its own treatment and filtration products, Bloomberg reported. “Water is the next big environmental issue we need to get our heads around,” Lorraine Bolsinger, leader of GE’s environmental initiatives, told Bloomberg.

• Discount retailer Dollar Tree Inc. (DLTR) said its first-quarter net income rose 14% to $43.6 million, or 48 cents a share. Sales were up 7.8% to $1.05 billion as rising food and gas prices forced shoppers to look for better deals.

• U.S. Federal Reserve Governor Frederic Mishkin submitted his written resignation, effective Aug. 31, to President Bush yesterday (Wednesday). The Fed’s Aug. 5 meeting will be Mishkin’s last, MarketWatch reported. He is leaving to return to Columbia University’s Graduate School of Business.

• A proposal backed by descendents of legendary oil great John D. Rockefeller to split chief executive officer and chairman duties at Exxon Mobil Corp. (XOM) has been defeated by shareholders. Rex W. Tillerson currently serves as both chairman of the board and CEO. The proposal also included provisions to make the oil major more environmentally friendly, CNNMoney.com reported.

• Yesterday (Wednesday), United Parcel Service Inc. (UPS) announced a partnership deal with German-based Deutsche Post AG’s U.S. subsidiary DHL Express Inc. UPS will deliver some freight for DHL in the United States, Canada and Mexico. The deal is expected to generate an additional $1 billion in annual revenue for UPS, Forbes reported.

• Dell Inc. (DELL) and Dell Financial Services LP were found guilty of fraud in advertising in a New York Supreme Court yesterday (Wednesday). “Dell has engaged in repeated misleading, deceptive and unlawful business conduct, including false and deceptive advertising of financing promotions and the terms of warranties, fraudulent, misleading and deceptive practices in credit financing and failure to provide warranty service and rebates,” Justice Joseph C. Teresi said in his decision, Forbes reported.

Source: Global Investing Roundups: Thursday, May 29th, 2008

Pickens’ Mesa Power LLP yesterday (Thursday) unveiled the first phase of an eventual $10 billion alternative energy project that has the potential to become the world’s largest wind farm.

“You find an oilfield, it peaks and starts declining, and you’ve got to find another one to replace it,” Pickens, who once operated one of the largest independent oil-and-gas production companies in the country, said of the deal. “It can drive you crazy. With wind, there’s no decline curve.”

Mesa Power will purchase 667 wind turbines from General Electric Co. (GE). Each turbine can produce 1.5 megawatts of electricity. The first phase of the project will produce 1,000 megawatts, enough energy to power 300,000 homes. GE will begin delivering the turbines in 2010, and current plans call for the project to start producing power in 2011.

“T. Boone Pickens’ commitment underscores the ability of wind technology to help meet the country’s need for diverse sources of energy,” said Jeffrey R. Immelt, GE’s chairman and CEO. “As America’s demand for energy escalates, it is clear that wind can and will play a bigger part in meeting that need. We’re excited to partner with an energy visionary like T. Boone Pickens to bring our wind technology to the marketplace.”

Ultimately, Mesa Power plans to have enough turbines to produce 4,000 megawatts of energy, the overall project is expected to cost $10 billion and be completed in 2014.

Mesa Power has leased sparsely populated land in the Texas panhandle, where the wind often blows during daylight hours when energy needs are highest. Texas’ Competitive Renewable Energy Zones (CREZ) transmission lines will deliver what Pickens hopes will be “cost effective and reliable electricity generated by renewable energy power projects.”

“We have had a great response to this project,” Pickens said. “We are making Pampa the wind capital of the world. It’s clear that landowners and local officials understand the economic benefits that this renewable energy can bring not only to landowners who are involved with the project, but also in revitalizing an area that has struggled in recent years.”

“Alternative” Energy No Longer Just an Alternative

At a time when oil is costing upwards of $125 a barrel, alternative energy sources are no longer just for the environmentally conscious, but for the cost conscious, as well.

“The development of alternative energy projects, especially renewable resources such as wind power, is critical for the future of the country in the face of declining world oil resources,” Pickens said.

For years, emerging economies such as China have chosen “cheap” over “clean” when it comes to energy sources. But with the cost of traditional fuel sources such as oil and coal skyrocketing, environmentally friendly choices are becoming more appealing.

When it comes to China investments, “the smart money is in the clean money,” says Money Morning Investment Director Keith Fitz-Gerald.

And when it comes to alternative energy, wind power isn’t the only option. The Solar Energy Industries Association (SEIA) says that solar power will provide 50% of all new electricity in the United States within eight years, creating tens of thousands of new high-tech jobs, while helping to conserve natural gas and saving American taxpayers billions in energy costs.

And while that estimate might be a bit ambitious, it’s certainly true that solar power use is on the rise, both domestically and abroad.

One of the solar power stars is First Solar Inc. (FSLR), which designs and manufactures solar modules using a proprietary thin-film semiconductor technology. With that know-how, the company’s average cost for making a solar module is among the lowest in the world.

Another up-and-comer is LDK Solar Company Ltd. (LDK), which expects to complete a brand-new silicon plant with a 1,000-ton production capacity this summer. And another plant with a production capacity of 15,000 tons per year is set to come online sometime next year.

If you prefer the built-in diversification that mutual-fund-type investments offer, consider an exchange-traded fund (ETFs) that focuses on such “clean” technologies as solar and wind power. One of the top ETF names is PowerShares WilderHill Clean Energy (PBW).

If you’re the type of investor who prefers cool breezes to sunny skies, you could invest in the makers of wind turbines.

Two of the largest include GE and Siemens AG (ADR: SI). GE just received the $2 billion order from Pickens and expects another $6 billion in orders from the planned 4,000 MW Pampa project alone. And Siemens will supply the turbines for a 500 MW wind farm planned in the United Kingdom.

Source: Former Oilman T. Boone Pickens Makes a $2 Billion Bet on Alternative Wind Energy

“The role of finance in the economy is going to come down significantly in the coming years,” Carlos Asilis, chief investment officer at New Jersey money manager Glovista Investments, tells the Wall Street Journal. “From a societal standpoint, we got carried away with finance.”

Wags might wonder if the Journal is deliberately playing down finance in keeping with its new emphasis on general news and especially politics now that it’s an arm of the Murdochtopus.   But as the paper rightly notes, “The trend already has hurt companies beyond banks and Wall Street firms. General Electric Co.’s first-quarter profits at its financial-services businesses were 21% lower than a year earlier.

Retailer Target Corp., which got 13% of its before-tax profit last year from credit cards, last month wrote off $55.5 million in credit-card loans, 8.1% of its total portfolio at an annualized rate.”

“I think you’re seeing a clear inflection point,” says Tom Gallagher, an ISI Group analyst. “Whether it’s financials as a share of the stock market or financials as a share of GDP, we’ve peaked.”

Indeed, the financials now account for over 21% of the S&P 500’s market cap.  That’s less than the 34% that technology represented at the height of the tech bubble in 2000, but the Journal is already calling the top.

For finance workers, this shift could resemble the 1980s, when manufacturing lost its pole position in the U.S. labor market and thousands found that skills they had honed over the years were less marketable. The Bureau of Labor Statistics already counts 60,000 fewer people working in finance than a year ago. Merrill Lynch & Co. is cutting 4,000 jobs, and Lehman Brothers Holdings Inc. is cutting 1,425. Many of Bear Stearns Cos.’ 14,000 employees are expected to lose their jobs when J.P. Morgan Chase & Co. swallows the firm.

Left unaddressed in the article is this most uncomfortable of questions: If our manufacturing sector has been hollowed out and shipped off to Asia on the assumption that “we think, they sweat”… and if even our think-work in the tech sector has been abandoned because moving money around was much more interesting and lucrative… what happens now that moving money around has lost its luster?

I’m not sure of the answer, but the fate of empires past has hung on similar questions.

“On Friday, we had the bad surprise from [General Electric Co. (GE)],” Ken Tower, chief market strategist at Covered Bridge Tactical, told MarketWatch. “But this week, we’re seeing investors pleasantly surprised that earnings overall are not as bad, supporting the view of a shallow economic decline instead of a more severe one.”

At midday in New York, the blue-chip Dow Jones Industrial Average Index was up 179.37 points (1.45%), to trade at 12,541.84. The tech-laden Nasdaq Composite Index gained 48.43 points (2.12%), to reach 2,334.47. And the broader Standard & Poor’s 500 Index increased 18.68 points (1.40%), to hit 1,353.11.

All sectors were up, with the basic materials sector (up 3.02%) and the technology sector (up 2.55%) posting the largest gains.

Intel Corp. (INTC) shares got a boost from strong first quarter sales results in Asia and Europe. Sales increased 9.3% to $9.67 billion, beating analyst estimates.

“These big market-share multinationals are still benefiting from economic growth outside the U.S.,” Keith Wirtz, Cincinnati-based chief investment officer at Fifth Third Asset Management, told Bloomberg News. “It tells me conditions are not all that bad on a global basis.”

March industrial production also rose slightly for the month with a 0.3% increase.

“The manufacturing sector may not be expanding but it is not contracting either, which is good news,” Joel Naroff, president and chief economist of Naroff Economic Advisors, said in a note to clients today.

In overseas markets, Japan’s Nikkei 225 Index gained 1.2% with an increase of 155.55 points to close at 13,146.13. Hong Kong’s blue-chip Hang Seng Index was relatively flat with a 22.98-point drop, to close at 23,878.35.

The FTSEurofirst 300 index of top European shares gained 1.6%. Other major European bourses were up, with the Paris-based CAC40, London’s FTSE 100, Madrid’s IBEX 35 and the Frankfurt-based DAX all posting gains.

At midday, the dollar had lost ground against the euro (down 1.072%), the yen (down 0.010%) and the pound sterling (down 0.785%).

And today reality has bitten hard. US stocks fell with a loud thud following missed earnings from industrial behemoth General Electric, whose dismal earnings report casting a gloomy light on upcoming profit reports.

According to Dow Jones MarketWatch, the Dow Jones industrials shed 148.59 points to 12,433.39, with 25 of its 30 components trading in the red.

The GE reported 6% drop in 1Q net profit.

Tumbling stocks isn’t investors only worry. Inflation and the weakening dollar are also threat invetors’ wealth.

“The only way for the United States and other economies to salvage their financial systems is to print credit, or aggressively grow their money-supply,” says Eric Roseman in the Offshore A-Letter.

“Over the next 12 months, I have no doubt that the Fed, ECB and other central banks will print credit like there’s no tomorrow. Money-supply must boom and inflation must prevail over deflation.

“The central bankers talk a tough game on inflation, yet history shows they have a pathetic scorecard. Fiat money has severely crimped our purchasing power since the demise of the gold standard under Nixon in 1971.”