A New Index of Healthcare Cost Containment Companies (TEVA, rated BUY)

November 20, 2008

A New Index of Healthcare Cost Containment Companies

The ETF Innovators [ETFI] Global Healthcare Cost Containment Index profiled in the accompanying table includes companies with market caps over $250M which are involved in the following two segments of the healthcare sector with the common theme of reducing healthcare costs and insurance premiums for consumers, employers, and third-party payers such as the government (through Medicare recipients) and insurance companies.

Generic Healthcare Products: This category includes generic prescription and over-the-counter drug products, led by Teva Pharma (TEVA) and Perrigo (PRGO), respectively. The category also includes diagnostic products such as blood sugar monitors and related supplies, including companies such as Home Diagnostics (HDIX), although its market cap is currently too small to qualify for active inclusion – however it may be an interesting play as an under-the-radar micro-cap value stock.

Pharmacy Benefit Management [PBMs]: This category includes the sale of prescription drugs and diagnostic products by either mail order or network retail pharmacies, specialty pharmacy services and drug product sales, drug plan design & management, drug formulary management, but excludes all activities related to the operation of chain drugstores such as CVS Caremark (CVS) and health insurance plans such as UnitedHealth Group (UNH) in favor of companies such as Express Scripts (ESRX) and MedcoHealth Solutions (MHS).

Health benefit providers are ailing over the past year , with many companies losing over half of their value such as UNH, Aetna (AET), and Humana (HUM) – although the outlook is better for companies which are focused on PBM activities without significant exposure to insurance or retail operations. As I wrote previously , the CEO of MedcoHealth Solutions, Dave Snow, expressed a bullish outlook for next year on their conference call in early November on the prospects for legislation next year to clear the way for high margin generic equivalents to biotech drugs and the possibility for increased healthcare coverage under President-Elect Obama, with the latter expected to increase overall prescription drug sales as more people are covered by drug plans.

A New Index of Healthcare Cost Containment Companies (TEVA, rated BUY)

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UltraShort Russell1000 Value ProShares (SJF) is a BUY

November 20, 2008

These days it is hard for anyone to be credible when they say they know what is going to happen next. I am no different. I have a view and for now it is working but that doesn’t mean it will tomorrow. I am happy to tell everyone what I think and they are free to agree or disagree. My premise is a simple one but it isn’t a happy one. So you may sleep better if you just hit the delete key now. In my view, the problem we all face is a big one. The US like the rest of the world is over leveraged. As anyone who has ever lost their butts trading stocks on margin knows when times are great leverage is a great thing. It juices our returns and helps us make more money, however, when times are bad exactly the opposite is true. Simply put the markets are suffering from a lack of confidence. It started with the mortgage crisis and now it has spread to the world. Everyone is pulling back, banks are pulling in their capital, consumers are cutting back on spending, and countries are repatriating their wealth. This is causing a massive collapse of the global economy and where it stops nobody knows. If anyone does know it certainly isn’t the talking heads on CNBC! As go bubbles so go busts they never level out where they should. They over shoot to the upside and they over shoot to the downside. Usually, when there is a sell off the relative values of stocks gets cheaper. Today’s problem is that the lower the market goes lower the more everyone pulls back so stocks aren’t getting any cheaper. we are in a spiral and I think you are making a big mistake if you think we have put in a bottom because the bottom is eroding away. The US is taking extraordinary steps to stop the carnage but how do you restore confidence? It is easier said than done. We can’t bailout everyone that is for sure. Already, the US will need to borrow approximately $2 trillion dollars next year. We already know that there is a lack of capital. Will the US be able to borrow the needed funds? The answer to the question is yes. The better question, however, might be: At what cost? If the US borrows $2 trillion next year rates will go up. Since the US is the safest borrower in the world everyone else’s rates will go up even more. Obviously, as rates go up profitability goes down which makes spreads over treasuries even wider. And so it goes. Next consider the dollar. The US dollar is the strongest currency in the world. Or is it? There are numerous very astute people who believe the current demand for the US dollar isn’t a flight to safety but rather a squeeze. Sure there is some demand driven by the safety the dollar offers but it is more likely being caused by dollar denominated debt that is maturing and not being rolled over. The FED has massively increased swap lines to ease the squeeze. Think of the demand of dollars as the tide coming in. A strong GDP is what drives a currency. Over the past 30 years the US has gone from a 70% manufacturing economy to a 70% services economy. Most of those services are financial services. I am not saying anything you don’t already know by saying financial services is not exactly a strong sector any more. Therefore the US dollar should weaken. If you combine rising interest rates, a weak GDP, falling confidence, and a falling dollar you start to paint a pretty ugly picture. Not just for the US but for the world economy. The US isn’t the worst by far but it is the most leveraged and as any day trader will tell you having to meet a margin call isn’t ever fun. This is all a rather long-winded way to get to my investment thesis. If it takes capital to make it…..sell it. (Cars, telecom, and other capital driven businesses) If it takes capital for the customer to buy it…sell it. (Again Cars, houses, airplanes, etc) If it is discretionary…sell it (fashionable clothing, luxury goods, consumer durables, etc) In addition, own assets that will benefit from global inflation. To me that means gold. Gold does well whenever there is distrust in financial institutions, inflationary times, etc.). Gold will do better than other metals, which tend to do well in inflationary periods that are driven by over heating economies. To be sure this isn’t that so I want to stay away from commodities that have a heavy industrial component. This inflationary period will be caused by a dollar that begins to fall sharply as the tide goes out, fueled by a weak economy, high interest rates and on and on. Like I said It isn’t a rosy picture so you may just want to hit the delete key. If you would like to get more of my thoughts subscribe to my blog at http://caps.fool.com/Blogs/ViewBlog.aspx?t=010042160227607416…

UltraShort Russell1000 Value ProShares (SJF) is a BUY

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Dissecting Defensive Dividend Stocks & ETFs (PFE, rated BUY)

November 19, 2008

Dissecting Defensive Dividend Stocks & ETFs

The accompanying table includes 47 U.S.-listed companies with market caps over $10B and dividend yields over 5%, excluding all companies from the following sectors or industry groups: finance, insurance, consumer cyclical products, retailers, and basic materials. Also, the following dividend ETFs are included in the table as a comparison:

1.) iShares Dow Jones Select Dividend (DVY)
2.) WisdomTree Dividend Top 100 (DTN)
3.) SPDR S&P Dividend ETF (SDY)
4.) PowerShares High Yield Dividend Achievers (PEY)
5.) Vanguard Dividend Appreciation (VIG)
6.) PowerShares International Dividend Achievers (PID)
7.) PowerShares Dividend Achievers (PFM)

Some of favorite stocks on the list which I have wrote about previously include Altria Group (MO) and Pfizer (PFE) with dividend yields near 8% each. Also, AT&T (T) and Verizon (VZ) are attractive from the telecom services space with yields of about 6% each, with many foreign telcos yielding even more such as Swisscom (SCMWY), Telstra (TLSYY), France Telecom (FTE), Deutsche Telekom (DT).

Several values also appear in the beaten up energy sector, such as Sasol (SSL), British Petroleum (BP), PetroChina (PTR), and Repsol YPF (REP). Gas pipeline operator Kinder Morgan Energy Partners (KMP) was the best performing stock and only company to post a gain over the past year, followed by two utilities – Progress Energy (PGN) and Duke Energy (DUK).

Dissecting Defensive Dividend Stocks & ETFs (PFE, rated BUY)

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UltraShort Russell2000 ProShares (TWM) is a BUY

November 19, 2008

FUND SUMMARY The investment seeks daily investment results, before fees and expenses, which correspond to twice the inverse of the daily performance of the Russell 2000 index. The fund normally invests 80% of assets in financial instruments with economic characteristics that should be inverse to those of the index. It may employ leveraged investment techniques in seeking its investment objective. The fund is nondiversified. FUND OPERATIONS TWM Category Avg. Total Expense Ratio 0.95% N/A Annual Holdings Turnover N/A N/A Total Net Assets 501.59M 174.21M

UltraShort Russell2000 ProShares (TWM) is a BUY

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S&P 500 a short term buy (SPY, rated BUY)

November 18, 2008

The current price pattern in the S&P 500, and spike in treasury bond prices set up a bullish short term ( 1-3 day) scenario if the S&P futures have a big gap down on Monday November 17th below 845 then rally through 845. See performance results of this pattern below. This pattern has 18 wins out of 18 trades since 1982
The intermediate term (1-7 day) S&P 500 model is already long at higher prices so this short term setup is a nice confirmation.

For the SPY
If Open <85.16 then Buy @ 85.16
Exit on 1st profitable open or 2% stop loss.

full performance stats here http://ripetrade.blogspot.com/2008/11/s-500-short-term-buy_16…

S&P 500 a short term buy (SPY, rated BUY)

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New Global Telecom Index Connects Investors to Dividends (T, rated BUY)

November 18, 2008

New Global Telecom Index Connects Investors to Dividends

As investors search for defensive stock investments and high dividend yields during the current bear market turmoil, they need look no further than telecom services companies. In contrast to many of the existing telecom ETFs (the four listed below are all down by about 40% on average in the last year) which have large positions in Verizon (VZ) and AT&T (T), the ETF Innovators [ETFI] Global Telco Dividend Income Index is structured as an equally-weighted, all-world index among the top 35 rated companies, which are rebalanced each quarter. The accompanying table includes statistics for the index, along with the Top 10 rated companies.

1.) Telecom HOLDRs (TTH) has over 80% invested in T + VZ with $143M in net assets

2.) iShares Dow Jones U.S. Telecom (IYZ) has over 37% invested in T + VZ with $377M in net assets

3.) Vanguard Telecom Services (VOX) has over 39% invested in T + VZ with $94M in net assets

4.) iShares S&P Global Telecom (IXP) has over 23% invested in T + VZ with $181M in net assets, in addition to about 20% invested in Vodafone (VOD) + Telefonica (TEF)

A total of 71 companies are eligible for the ETFI Global Telco Services Dividend Income Index, which includes companies with market caps over $1B (USD) and dividend yields of at least 2.4% that derive the majority of their revenues from telecom services. As shown in the accompanying table, the performance of the top 35 rated companies included a total return over the past year of -4.7%, compared to losses of 36%-52% for the five telecom benchmark funds already on the market, with the Emerging Markets Telecom Fund (ETF) getting hit the hardest with a loss of 52% in the past year.

New Global Telecom Index Connects Investors to Dividends (T, rated BUY)

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SmartHeat Inc - (OTCBB: SMHT) Announces Record 3rd Quarter Financial Results - Earnings Per Share (EPS) of $0.18, Increased 1700%, Energy Saving Equipment Sales Continue to Benefit from Rapid Growth Momentum (SMHT, rated BUY)

November 18, 2008

- Net Income increased 1865% to $4.3 million for the quarter ended September 30, 2008 compared to $0.22 million for the same period in 2007.

- Net Income for the first nine months in 2008 reached $5.53 million, an increase of 1335% over the $0.39 million reported for the comparable 2007 period.

- Earnings per Share were $0.18 and $0.26, respectively, for the three and nine months ended September 30, 2008, increases of approximately 1700% and 1200% as compared to $0.01 and $0.02 for the same periods in 2007.

- Revenues for the three and nine months ended September 30, 2008 were $20.7 million and $29.3 million, respective increases of 587% and 436% period to period.

SmartHeat Inc. (Website: www.smartheatinc.com ) (OTC Bulletin Board: SMHT), a market leader in China’s "green" technology, environmentally friendly energy savings industry, today announced record financial results for the quarter ended September 30, 2008.

SmartHeat generated revenue of $20.7 million in the quarter compared to $3.01 million in the same period in 2007, an increase of approximately 587%. This increase was primarily due to increased customer recognition and acceptance of SmartHeat brand quality products, deeper market penetration and strong customer demand as China mandates that businesses and municipalities adopt energy saving programs. SmartHeat expects this momentum to continue in 2008 and 2009.

Net income for the quarter was $4.3 million compared to $0.22 million for the corresponding 2007 period. The year to year increase in SmartHeat’s earnings was attributable in large part to larger economies of scale, combined with the growth in revenues and significantly improved operating efficiency.

James Jun Wang, SmartHeat’s CEO, commented: "We are pleased with our 3rd quarter financial results which demonstrate continued rapid growth in our business and the industry in general that we anticipated in early 2008. Our strong financial performance reflects execution of our growth strategies in a favorable market environment as China embraces more energy efficient products and mandates the use of environmentally friendly energy saving equipment. As a market leader, SmartHeat stands to benefit greatly from China’s "green" movement towards a clean environment. Our products reduce heat consumption and lower heating bills by as much as 50%. We are committed to delivering quality products to customers while creating greater value for our shareholders."

SmartHeat Inc - (OTCBB: SMHT) Announces Record 3rd Quarter Financial Results - Earnings Per Share (EPS) of $0.18, Increased 1700%, Energy Saving Equipment Sales Continue to Benefit from Rapid Growth Momentum (SMHT, rated BUY)

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SmartHeat Inc - (OTCBB: SMHT) Announces Record 3rd Quarter Financial Results (SMHT, rated BUY)

November 18, 2008

- Net Income increased 1865% to $4.3 million for the quarter ended September 30, 2008 compared to $0.22 million for the same period in 2007.

- Net Income for the first nine months in 2008 reached $5.53 million, an increase of 1335% over the $0.39 million reported for the comparable 2007 period.

- Revenues for the three and nine months ended September 30, 2008 were $20.7 million and $29.3 million, respective increases of 587% and 436% period to period.

SmartHeat Inc. (Website: www.smartheatinc.com) (OTC Bulletin Board: SMHT), a market leader in China’s "green" technology, environmentally friendly energy savings industry, today announced record financial results for the quarter ended September 30, 2008.

SmartHeat Inc - (OTCBB: SMHT) Announces Record 3rd Quarter Financial Results (SMHT, rated BUY)

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An Index of Top Rated Global Transport Companies (IYT, rated SELL)

November 17, 2008

An Index of Top Rated Global Transport Companies

The accompanying table includes the top 50 rated companies and statistics for the ETF Innovators (ETFI) Global Transportation PerformIdex, which is structured as an equally-weighted index with quarterly updates from a database of 225 companies included in the five indexes below to provide broader investment exposure compared to existing ETFs such as iShares Dow Transports (IYT) and PowerShares Global Progressive Transport (PTRP).

1.) ETFI Global Air Transport

2.) ETFI Global Personal Transport

3.) ETFI Global Maritime Transport

4.) ETFI Global Railroad Industry

5.) ETFI Global Trucking & Logistics

The index is structured to include 15 companies each from railroads + trucking & logistics, 10 companies from air transport, and five companies each from maritime + personal transport. The trucking & logistics group has posted strong results over the past year in spite of the weak global economy and has been aided by declining fuel prices, including gains of about 50% for Marten Transport (MRTN) and nearly 10% each for Werner Enterprises (WERN) and C.H. Robinson Worldwide (CHRW).

The Personal Transport Index includes auto makers such as Honda (HMC), motorcycle makers such as Harley Davidson (HOG), recreational vehicles such as Polaris (PII) – although the top five rated companies are auto makers at this time, led by Volkswagen (VLKAY).

Within the Maritime Transport Index, the only bright spot has been Nordic American Tanker (NAT), which is the only company whose stock price has increased in the last year as the entire group has been decimated – with the new Claymore/Delta Global Shipping ETF down 55% since its inception in early September.

The Railroad Index has also posted strong results in the past year and it remains to be seen whether the major rail transport companies can maintain pricing power in the face of a global economic slowdown and less "stuff" to move around. Some of the top rated railroad companies in the index include Warren Buffett favorite Burlington Northern (BNI) along with the other major U.S. rail transport companies Union Pacific (UNP), CSX Corp (CSX), and Norfolk Southern (NSC).

The Air Transport Index includes mostly passenger airlines, in addition to helicopter transport and air freight companies such as Atlas Air Worldwide (AAWW). The top 10 rated companies include top performers such as Hawaiian Airlines (HA) and Allegiant Travel (ALGT), low fare airline JetBlue Airways (JBLU), and the biggest companies in the industry such as Singapore Airlines (SINGF) and Southwest Airlines (LUV).

An Index of Top Rated Global Transport Companies (IYT, rated SELL)

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