There is also much debate of what to use for earnings. The leading contenders are reported earnings and operating earnings. Some, like Robert Shiller, building off the work of Benjamin Graham, suggest taking a 10-year average, often called "P/E10." I use the most recent trailing four quarters of operating earnings because they eliminate non-recurring items and I believe that current earnings are usually the best basis for predicting future earnings. (We can save the debate on P/E 10 for the comments section or

Gold

I've previously written about the framework for a sustainable fiat money in the form of the Modern Monetary Theory. In this article, I will describe the critical deficiencies of a metal-based currency that could, with no exaggeration whatsoever, bring about a permanent decline of our living standards and the end of the economy as we know it.

Private Sector Cannot Save Without Government Dis-saving

First, let's start with a simple thought experiment, where I illustrate one of the most important findings of MMT. Imagine that you live on an island with four other people, and there is a total of $10 in circulation on the entire island.

The five of you form a very "fiscally responsible" government that will not print any new money, and will not run a deficit. So, the total money supply of the island will forever stay at $10, which means each of you will have,

Analysts (most notably, CNBC analysts) are beginning to call for $5 gasoline to hit pumps by this summer. I don’t know if they will – but it’s certainly within the realm of possibility.

And though we’re still patting ourselves on the back here in the United States for increasing oil domestic oil output, the problem has little to do with oil supply, and everything to do with refinery capacity.

For significant periods of time, refineries have swung in between profitability and non-profitability. Though the politicians at the helm mean to “punish” oil companies with higher taxes, these taxes frequently hit the bottom line of refiners harder than anyone.

Refining is a costly business – not just because it’s heavily taxed at about 10% before a single barrel of gasoline is even sold, but because of the massive shipping, storage and actual product and refinery costs.

And though refining can experience

Regular readers of my articles know that one of my favorite long term sectors in the market is the energy complex. The combination of high oil prices, new drilling technologies and increasing M&A activity provide strong tailwinds for the entire sector. I am particularly fond of smaller energy firms with consistently growing earnings and solid fundamentals that should make investors money just by continuing to execute against strategic plans, with a bonus of being strong acquisition targets. One such stock is Newpark Resources (NR).

Newpark Resources, Inc., together with its subsidiaries, provides fluids management, waste disposal, and well site preparation products and services primarily to the oil and gas exploration and production industry in the United States and internationally. The company operates in three segments: Fluids Systems and Engineering, Mats and Integrated Services, and Environmental Services. (Yahoo Finance).

8 Reasons to pick up Newpark at $8 a share:

• Newpark is

It is human nature to want to jump on the what's hot bandwagon and ignore what is considered boring. Long considered the domain for 'widows and orphans', utilities have developed a somewhat stodgy reputation. Why are utilities considered good for widows and orphans? Here a few reasons:

1. They are generally less volatile than the market (low beta).

2. They sell what people need no matter what the economy is doing, thus;

3. Their dividends tend to be more stable and secure.

Utilities have their own special set of challenges. Their debt and shares outstanding tend to grow over time - not the preferred direction for either. Also, there are industry-specific issues that utilities face, such as radioactive waste for nuclear power plants and air pollution for old coal-fired generators. However, despite their risks, utility dividend stocks have been, and will continue to be, a cornerstone for conservative income investors.

Stocks discussed on the Lightning Round session of Jim Cramer's Mad Money TV Program, Wednesday February 22.

Bullish Calls:

Toll Brothers (TOL): "If you are going to buy a homebuilder, buy the highest quality...a lot of guys are going to downgrade the homebuilders...they think they have run too much...they have caught a couple of downgrades, and they have further downside, but TOL is the head of its class."

Akorn (AKRX), Regeneron (REGN): "Interesting ophthalmology play...my favorite ophthalmology play is Regeneron, which was knocked down because one practice was not using its drug right. I'm going to say buy Regeneron and take advantage of that decline."

United Health (UNH): "It's been on fire...unbelievable...it has pulled away from the pack. I think it can work its way higher. Catch it on a down day, not an up day."

TAL International (TAL): "This is a terrific situation...with a good yield and good momentum

Some basic information about the companies is presented in the table that follows:

X is the larger of the two firms by market capitalization, and has a higher debt to equity ratio. The two companies have been underperformers over the last 5 years, with X losing 68% of its value and STLD shareholders down 24% over the same period. STLD does offer a respectable dividend yield of 2.6%.

Next, I observed the historical growth rates of revenue,

This week, much like any other over the past six months, has been heavily focused on Greece. Tuesday (the first trading day of the week) opened strong with the Dow touching 13,000 for the first time in almost four years. But the day ended on a sour note, forcing equities to surrender nearly all of their gains, as many are still concerned over the long-term outlook for the indebted European nation. Yesterday saw Fitch downgrade Greece stating that a default was “highly likely”, which has only added fuel to the fire. While the euro zone will undoubtedly remain in the foreground for the week, investors will try to focus their attention on a number of U.S. data releases [see also Why No Investor Should Own GLD].

Today will see the weekly U.S. unemployment claims hit the market, which tends to have a measurable impact on volatility and market direction. Unemployment

Back in the early 1900's, 40% of the American workforce made their living from farming. Today, less than 2% of the U.S. Populace works on a farm. What this means to me is that a major polarity shift in business could soon move that number higher as Americans look to protect themselves against long term inflation.

Could we be in the early stages of a multi-year boom for farming in this county? My research tells me that we are only in the early innings of the great boom for the American (and overseas) farmer because of what the price of oil and gold are telling me about inflation pressures and the Dollar. Farming is one of the best hedges against runaway inflation and it seems to me that even though farm prices are up around 12% per year over the longer term, the capacity for farmland to protect investor capital

A cheap stock is the basis for every future return. Beside cheap fundamentals and pricing ratios of a company, the expected growth is an additional important item for investors. After the moderate increase of major stock market indices since the beginning of the year (Dow Jones +5.9% and S&P 500 +8.0%), there are still cheap stocks with attractive dividends.

I screened the market by the cheapest large capitalized dividend stocks; stocks with a market capitalization of more than $10 billion, positive dividends and an expected earnings growth of at least 25 percent for the next year. The valuation of the companies is cheap in terms of growth because they have a price to earnings ratio of less than 20 and a price to sales ratio of less than 2. Only ten stocks fulfilled these criteria. Here are the detailed results:

1. Telefonica (TEF) has a market capitalization of $25.96 billion.

Now that Apple (AAPL) has experienced a huge run-up over the last couple of months, and a huge intra-day reversal on Feb. 15, it could be an ideal time for an iron condor trade. Why? Because there are many reasons to believe that Apple, like every stock, needs time to digest its 25% move to the upside and has settled into a trading range between 450 and 530. If you share that belief, it will be difficult to earn short-term profits via a traditional directional trade. And it's that exact environment where an iron condor trade shines.

Most simply (and you can skip this part if you already trade iron condors), an iron condor combines a bull put spread and a bear call spread. Both spreads provide a net credit that defines your maximum gain. Your maximum loss is equal to the spread between the two put strikes (or two

Looking for an easy way to trace the progress of the housing bubble? Look no further than the 26 years of financial data provided on the website of luxury home-builder Toll Brothers (TOL). See how revenue grew from $125 million in 1986 (802 homes completed) by relatively steady progress to $2.3 billion in 2002 (4430 homes).

Then something odd happens: 2003 suddenly balloons to $2.7 billion, and from there it's a heady ride to a peak of $6.1 billion in 2006 (8601 homes). Revenues and completions have been on a downward slide every year since then, culminating in 2011's $1.5 billion (2611 homes). But Toll Brothers has survived to tell the tale, and 2011 saw a return to profitability for the first time in four years. (Toll Brothers Financial Summary 1986 - 2011 (pdf))

Toll Brothers doesn't build basic, first home buyer dwellings. Instead the company operates in the luxury

Over the past month, we have witnessed an attempt by GeoInvesting, through a series of blog posts (which occurred 3 days prior, 2 days prior, and 1 day prior to L&L Energy (LLEN) options expiration in January, and two days prior to options expiration in February - see here) to place uncertainty in the minds of investors of LLEN regarding LLEN's well documented ownership via SEC filings of Ping Yi. GeoInvesting and their affiliates and friends (a colleague of GeoInvesting did call T Squared to let them know they sell research to investors prior to releasing such reports to public consumption) have disclosed they have a short position in the stock and will benefit if the stock drops as a result of their actions.

The crux of their argument has relied primarily on:

1. Conversations with an anonymous and unverified individual named Mr Wu that were not independently validated and questionable

DaVita, which is Italian for "giving life" is precisely what DaVita, Inc. (DVA), the company, does for its patients. This company has produced a superb record of consistent earnings growth that held through the recessions of 2001 and 2008 as if they never happened.

Demographics indicate a huge opportunity for this quality healthcare company that provides life-saving products and services to its patients. Consequently, we believe that the growth potential of this company is well defined, and significantly above average. Therefore, investors seeking above-average growth of principal should examine this company more carefully.

Growth stocks are defined as companies with high rates of change of earnings growth of 15% to 20%, or more. Growth stocks offer the potential for share prices to rise in lockstep with their profit growth in the long run. Therefore, the PEG ratio formula (price equals growth rate) tends to be the most appropriate formula used

While consumers and governments across the world are strapped for cash, corporations have plenty. Rather than signal long-term trust and pay more generous long-term oriented dividends, many of them have adopted share repurchases to buy back their own stock.

Investors welcome these announcements as they boost earnings per share and provide a lot of support for the share price during the repurchase periods.

FMC (FMC) announced an additional $250 million repurchase program, representing 3.7% of outstanding shares. During the last couple of years, it already repurchased some 6% of its outstanding shares at very favorable levels. In comparison, the diversified chemical company pays about $40 million in dividends per year.

Nordstrom (JWN) announced an additional $800 million share repurchase program, which represents 7.5% of outstanding shares. The fashion retailer still had $270 million left under its current repurchase program. The addition to the program is roughly four times its annual

Do you remember HAL 9000 from "2001 A Space Odyssey"? It was a mega computer on a spaceship that was prepared to do anything to conclude its mission. Arthur C. Clarke, the author of the book, was 10 years too early, however. Since 2010, his vision has taken shape under another name: HFT.

On Feb. 13, the New York Stock Exchange experienced its lowest volume for non-holiday trade in over a decade. If we consider that High-Frequency Trading platforms (HFT) now account for 60%-75% of daily volume, we can easily conclude that HFT is the only game in town. The volume of transactions today is 40%-50% lower than it was three years ago.

Investopedia describes HFT as:

A program-trading platform that uses powerful computers to transact a large number of orders at very fast speeds. High-frequency trading uses complex algorithms to analyze multiple markets and execute orders based on market

The big news this week is that Greece received another bailout and that private debt placements will be forced to take a 54% haircut (above the 50% haircut from a deal back in October). So that should signal better days are ahead and that this whole mess is behind us, right? There is an article in the Wall Street Journal that outlines the deal. So even when this deal is expected to save Greece an additional 107 billion euros, on top of the savings from the other bailouts, debt as a percentage of gross domestic product is only expected to improve to 120.5% by 2020 (from more than 164% now). So the answer to the question that this is behind us is clearly an emphatic no.

I equated the recent announcement for Greece to a poker game. Greece right now is definitely the short stack at the table, and just

Everyone who thinks that the Chinese economy is in a big bubble that is about to burst, better think again, especially after the country's central bank cut reserve ratios for the second time last Saturday. China's big red bubble is ahead of us!

China's central bank action replicate those of Japan's central bank in the aftermath of the Plaza Accord in 1985, which added fuel to the country's ongoing asset bubble at that time, helping it blow for another five years. This policy shift presents a good opportunity for investors to make hefty returns, provided that they invest in the right assets.

Here are four trades investors may want to consider:

First, buy state-owned enterprises like China Petroleum & Chemical Corp. (SNP), China Mobile (CHL), and CNOOC Ltd (CEO) that trade on U.S. Exchanges.

Second, buy private Chinese enterprises like Baidu, Inc. (BIDU) Sina Corp (SINA) Youku (YOKU) Sohu.com Inc.

How would you like to invest in a oil and gas company that has a 10% chance of increasing their reserves by approximately 50 fold in 4 months with very low downside risk if the well doesn't pan out? Currently FX Energy (FXEN) is trading approximately at its net asset value using its P50 (proved + probable) reserves. Their large, exciting drilling inventory is free. In particular, their biggest prospect, Kutno, is being drilled right now and results are due in May or June.

As of YE2011, FX Energy has the following characteristics that offer downside protection:

• 94.5 Bcfe of P50 reserves with a PV10% value of $289 million
• Net cash of $11 million
• 53.5 million fully diluted shares outstanding

How can such an exciting opportunity exist? The North Sea has been (and is) explored by dozens of companies. The geology of the North Sea extends across Europe and into

Fisher Investments is a Woodside, CA-based investment advisory firm founded by billionaire Kenneth Fisher. Fisher Investments manages $ 33 billion worth of equity assets primarily adhering to a value-oriented approach, managing U.S., international and global portfolios. The firm employs an active approach, applying proprietary capital markets technology developed through finance theory, history, and momentum. Fisher Investments uses a combination of top-down macroeconomic research and bottom-up, fundamental stock selection process. For the domestic portfolio, the firm typically applies bottom-up, fundamental and quantitative analyses.

A four-factor valuation model that uses P/E, P/B, PSR and dividend yield is used to determine whether a stock is undervalued. Debt and liquidity screens are also employed. For the global and international investments, Fisher Investments generally utilizes a top-down process that places emphasis on the determinants of portfolio returns. The firm looks into portfolio drivers based on economic and political factors, as well as sentiment to identify

Gabriel Resources Ltd. (GBRRF.PK), Allied Nevada Gold Corp. (ANV) and NovaGold Resources Inc. (NG) are three gold miners with big upside potential and a catalyst to unlock value. All three companies have a catalyst that will unlock value, and at the same time all three are potential takeover targets.

Gabriel Resources Ltd.

Catalyst: Gabriel Resources is probably a year from receiving the constructing permits and starting work on developing one of the largest undeveloped gold and silver deposits in Europe. To date, the company is still considered risky and that is why it is under the radar of the public. Significant value will be created by this gold producer through its reserves and low cash-costs per ounce expected production.

Shareholders: Paulson & Co 16%. Electrum Strategic Holdings LLC 16% (There is rumour that it's a Rothschild's company). BSG Capital 16%. Baupost Group 13%. Newmont 13%. Few value investors plus one

Warren Buffett is considered one of the best long-term investors out there. His company, Berkshire Hathaway (BRK.A), is a holding company that maintains several large positions in well-known American companies. Additionally, most of his publicly-traded investments have above-average dividends and a history of growing them over time.

Here is a recent performance chart of Berkshire Hathaway's B-class shares.

Click on any image below to enlarge:
Many investors like to keep track of What Warren Buffett buys, believing there is much to learn by following the moves made by such an acclaimed investor. Every quarter, Warren Buffett and other large investors such as hedge funds must file reports indicating thier holdings, allowing investors to identify any changes made, and the largest holdings of the company or fund.

Below are Warren Buffett's five largest equity investments according Berkshire Hathaway's last 13F quarterly filing: Coca-Cola (KO), International Business Machines (IBM), Wells Fargo (WFC),

There are two corporate giants operating in the world today: General Electric Co. (GE) and Siemens AG (SI). Both are global conglomerates with businesses in a wide range of industrial, technological and financial industries. Since they both operate in very similar industries, and compete in the same markets, it can be difficult at times to decide which stock is a better investment. To compare the two companies I will use a variety of profitability and valuation techniques.

About the Companies

General Electric Co. is a diversified technology and financial services corporation based in the United States. Some of General Electric's key business segments consist of aviation, power generation, household appliances, GE Capital and a 49% stake in NBC Universal. Siemens AG is a German based integrated technology company predominately engaged in electronics and electrical engineering. Siemens' key business segments consist of industry, energy, healthcare, equity investments, and Siemens Financial Services.

I say to hell with diversification. The only reason to diversify a portfolio is because the stock picker doesn't know the companies well enough (because he's lazy and spends his time scouting Maseratis or just lacks the discipline) and so he thinks that by choosing "the best" group of stocks, he stands a better chance of beating the market. Why would anyone want to do business with someone like that? Well, over three-quarters of Americans trust him with their entire savings and retirement accounts.

In the end, it's all just a gamble. No one has the opportunity to foresee the future of a stock with 100% certainty. There is always some value of risk involved. In reality, there is not a huge difference in the stock market and a casino, as I've come to realize. In a casino, however, the house always has the advantage, meaning that the odds are

This chart shows the Japanese Yen/US Dollar exchange rate since the beginning of last year. What stands out this past month is the sharp depreciation of the yen, which has dropped 5.1% against the dollar in the past three weeks. It's the result of the Bank of Japan undertaking serious intervention steps to weaken the yen, which reached an all-time high of 75.8 against the dollar last October.

Typically, forex intervention is not very effective at changing a currency's value, since most intervention is "sterilized" by monetary authorities. For example, one arm of the government sells its currency for dollars in order to weaken it, thus increasing the supply of its currency, but then another arm sells bonds in order to mop up the extra supply of the currency. With no net change in the supply of its currency, the intervention leads to only a temporary change in the currency's

Contrary to the thoughts of Valuentum, Dell's (DELL) fourth quarter earnings report is indicative of a longer term trend that has been forming for a handful of quarters now. This trend will cause Dell to struggle as PC sales continue to depreciate. It is not a surprise that PC shipments are declining because Europe's economy is slowing down and tablets are moving in on the PC market. Also, Hewlett Packard (HPQ) is indicating the PC market is stalling. And, since a quarter of Dell's revenue comes from desktop PC's, if the market continues to contract, Dell's share price will struggle.

It is important to begin with some of Dell's basic financial trends. In fact, I will begin with two positives. The first is a breakthrough in revenue. Prior to the firm's fourth quarter, revenue was unable to increase over $15.6 billion anytime in the past year and half. Secondly, servers

The Federal Reserve Bank of Atlanta's Survey of Business Inflation Expectations released yesterday showed a continuation of rather modest expectations for unit cost pressures over the coming 12 months. In February, our panel of firms reported a 1.9 percent average expected rise in unit costs over the coming year, still within the very narrow 1.8 percent to 2 percent range the group has been reporting over the past five months.

That's the good news. Now for some (potentially) bad news. In a special question this month, we asked the panel to weigh in on their expectations for annual unit cost increases over the longer term—specifically, the next 5 to 10 years. The group's expectation was a percentage point higher, at 2.9 percent.

The reason for the higher expectation for unit costs over the longer term can be seen in the following chart, which compares how the group assigns probabilities to