Biological Testing Bargain

Luminex sells systems that drug researchers need to come up with new discoveries. Business is good.

In this kind of market, a best stock that is only down 30% from its 52-week high is something of a star performer, since the major averages are all down 40% to 50% from their highs.

Believe it or not, biotechnology stocks are leading the market, even though they are traditionally one of the most speculative and volatile groups. Since the market meltdown began in earnest in late September last year, the Dow, Nasdaq and S&P 500 are each about 30% lower. The AMEX Biotech Index is only down 12%, thanks in large part to a 30% rally since Nov. 20.

One of the best performers in biotechnology over the past few months has been Austin, Texas-based Luminex (nasdaq: LMNX - news - people ). Shares of the company, which specializes in biological testing technologies, are up 40% since Oct. 27, compared to a 20% gain in the Biotech Index. Of course, this gain comes after considerable pain; shares lost half of their value in the month prior to turning higher.

"Though it is currently fading back towards the lower end of its trading range between $18 and $22, as long as it holds above $17.50, Luminex's stock is still tracing out exactly the sort of chart pattern we would like to see at this stage of the overall market cycle," says Nate Pile, editor of the Nate's Notes investment newsletter and a bull on Luminex.

Luminex's xMAP system delivers bioassay results to users in pharmaceutical drug discovery, clinical diagnostics and biomedical research, including genomics and proteomics research.

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"For 2008, Luminex reported revenues of just over $104 million

and net income of just under $3.1 million, or $0.08 per share, as compared to revenues of $75 million and a net loss of $2.7 million, or $0.08 per share, in the prior year," says Pile. "Management also offered guidance that it currently expects revenue to come in between $130 and $140 million for 2009."

Those revenue gains would amount to increases of around 25% to 34% vs. revenue reported in 2008. For the fourth quarter of 2008, revenue came in at $28.2 million, up 31% from the fourth quarter of 2007; and full-year revenue of $104.4 million was up 39% compared to 2007.

Luminex earned $0.05 per share the fourth quarter of 2008, or $2 million, vs. a net loss of ($0.08) per share, or $2.8 million, for the fourth quarter of 2007, excluding non-recurring items of $13.9 million from the fourth quarter 2007.

"With almost $125 million in the bank and very little debt, LMNX is considered a strong buy under $20 and a buy under $24," says Pile.

Returns of Over 52% From Best Stock Investment Within 10 Days

This has been a bad week for the Dow, to say the least. On Friday, it saw its biggest weekly drop since October.

There have been a lot of long faces on Wall Street lately - but there's no reason you have to be one of them. In fact, it would prove to be quite a bit more profitable (not to mention less stressful) for you if you just steered clear of stocks all together.

If removing yourself from Wall Street's nastiness sounds like too big of a leap for you, we urge you to keep reading. We promise there is big money to be made...and you won't have to touch stocks with a ten-foot pole.

Imagine using a "Shadow Market" technique to double your investment in less than two weeks.

Without ever buying a single best stock, bond, commodity or managed fund.

Doesn't seem possible?

I've seen it done. I'll show you.

And in the next 24 hours, you could have a chance to profit just as big ― or bigger.

You see, Phase 3 of a brand new "Shadow Market" trading technique has just gone public for the first time.

And it has the potential to be the biggest recession-proof money making opportunity Agora Financial has ever offered you.

686 privately invited Phase-1 and -2 testers have already made 100% returns in as little as 48 hours. Now, the opportunity is finally open to you.

And, by side-stepping the mainstream markets to harness hidden "Shadow Market" gains, Phase-3 is on track to make you even more.

With hold times of as little as a few days.

Other Phase-3 testers are already starting to take record gains from this "Shadow Market."

And they'll be happy to continue taking those gains whether or not you decide to join in.

Today, I'm offering you a chance to be one of the lucky ones raking in quick "Shadow Market" gains.

A chance to sit back and watch your account fill up with cash.

Understand...the "Shadow Market" seems very easy to play.

And it is.

Yet it is not easily tamed.

Warning: the "Shadow Market" can drain every penny in your account

I'm not going to lie. The "Shadow Market" is brutal.

Conservative investors...weak-stomached investors...stop reading now.

If you're hoping to make a mint using your last $500 let me assure you...

This opportunity is not for you.

The "Shadow Market" moves at a break-neck pace.

Unlike every other market in the world, the "Shadow Market" never closes.

It's open 24 hours a day, five days a week.

And even the tiniest movements in this market can make or break you in a matter of hours if not minutes.

That means never leaving your computer screen ― keeping one eye fixed on your indicators at all time.

Playing it successfully requires every minute of your time.

Sleep? Playing the "Shadow Market" won't give you time for sleep.

Investments are made, money changes hands, "regular people" are made and then broken... 24 hours a day.

And that's yet another reason why it still lurks in the shadows ― who wants to be up all night, trading?

The "Shadow Market" can triple your losses in a matter of minutes

The money needed for a typical investment can be substantial.

When you play the "Shadow Market" you are highly encouraged to leverage your investments 100:1.

Sure, that gives you the opportunity to get in with very little out of pocket.

But, toying with that kind of leverage, even a tiny move against you means your losses can be crushing.

In a matter of minutes, you're on the hook for way more than your initial investment.

But what if you found out some way to tame this market, to keep its power in check... it IS possible, you see...

While every other market is in a historic slump. . .This "Shadow Market" trading technique is banking returns of 100%, 42% and 70%

Phase 1 experiments began back in July 2008.

686 of Agora Financial's most elite readers volunteered to put this great new money-making strategy to the test. They had heard about the power of the "Shadow Market" and volunteered to test-run a new research service that aimed to profit from it.

These test subjects received their first recommendation on July 30, 2008.

Using just a fraction of the power locked in this unorthodox trading technique, 686 Phase 1 testers set their sights on average gains of 10% every month.

If they were successful, they would have doubled their money in just over eight months.

But the numbers just didn't add up. So our intrepid 686 "Shadow Market" volunteers were hungry for more ― much more.

So we turned up the juice and launched into Phase 2 just three months later.

The first buy recommendation went out to the same 686 test subjects on October 27, 2008.

What happened over the next 10 days was astonishing. As you can see in the chart below, just $1000 in the first three plays would have landed you a profit of $1566.33...a mere 10 days later.

That's more than $156 a day in pure "Shadow Market" profits.

If you'd invested $5,000 in each play, starting on October 27, and followed our first three recommendations to a "T", you would have been sitting on $12,831.50 in pure profits just 10 days later.

And $10,000 would have turned into $25,663...that's a daily average of over $2,500!

How would you like to double your money in little more than 10 days. . . by using my secret technique in a little-known "Shadow Market"?

Not a bad start for a test run, wouldn't you agree?

Especially a test run that started on October 27, 2008. Barely a month after the hot stocks market took one of the worst tumbles in history.

But as you can see, we're not talking penny profits here.

Phase 3 could easily mean solid, consistent, five-figure profits in as little as two weeks. Regardless of what the other markets do!

Sure, not every play is going to double that fast. In fact, Bill picked a couple of losers along the way too. But I'll bet a few back-to-back plays averaging 52.2% would look pretty nice right about now.

Am I right?

I mean, we're all scared to death in this economy. And rightly so...

Many investors have completely pulled their money out of stocks, commodities and funds.

The conservative investors tuck their cash under a mattress for a rainy day (what they have left of it anyway).

Meanwhile, the lucky Phase-2 "Shadow Market" volunteers had the chance to double their money in a matter of days.

Grabbing gains like:

23.39% gains in just two days...

33.24% gains in one week and...

100% gains in just 24 hours...

And projections for Phase-3 are far greater than anything we've seen yet.

Learn how to tame the "Shadow Market" and grab insane profits ― in any market

You see, more than $4 trillion changes hands in the "Shadow Market" every day. That's more than triple the amount of all top stocks and futures combined.

Making the "Shadow Market" the single-largest market in the world.

And yet it remains virtually unknown and untouched by comparison.

But why is it so cut off from the mainstream?

Because although the "Shadow Market" is massive and is equally dangerous and terrifying.

That's why it remains hidden in the shadows.

Sure, the profit potential is virtually limitless.

But so are the losses.

So it can be scary.

Those who slip into the "Shadow Market" without the right know-how, crawl home broke and battered ― with barely a shirt on their back.

In a market that moves this quickly, thousands of dollars can be lost in a matter of days, if not hours and minutes.

And that's why you must tame it before you can take steady profits...

So give me just a minute and I'll show you how you could not only tame the "Shadow Market," but use its fullest power for some unbelievable profits.

686 Agora Financial's Phase 1 and 2 volunteers have tamed the "Shadow Market"

With the help of a self-made "Shadow Market" tamer, they've been using a cutting-edge investing strategy that landed them average returns of 52.2% in the first 10 days.

And in just another minute, I'm going to offer you the opportunity to join the just-opened Phase 3 so you could take similar "Shadow Market" profits.

Profits that could make Phase 2 look like pocket change.

Offering double and triple-digit returns:

Without buying a single stock, bond or commodity

Without throwing money away in a fund

Without waiting weeks, months or years

During a time when hot stocks 2009 are down almost 50%, Phase 1 and 2 testers have had the chance to more than double their money.

And as Phase 3 opens to the public, you'll have the chance to profit right along with them.

Using a proven strategy for taming the "Shadow Market" that's fast, safe and won't take more than 10 minutes out of any given day.

My "Shadow Market" Taming System REVEALED!

You might have guessed that the "Shadow Market" is my name for the Forex market.

It's virtually untouched and uncharted financial territory to even the most seasoned traders.

But, we've found a way to make safe, fast, double and triple-digit gains.

The tamed FX market represents the largest most powerful money-making machine on the planet.

And I'm going to show you just how easy it is to make its power work for you.

Best of all, no matter what happens to stocks, commodities, real estate and funds of every shape and size ― as long as the world keeps spinning we'll be there to profit from every move.

Phase 3 uses the power of options to tame and benefit from the wild "Shadow Market"

If you've ever played the stock market 2009, chances are you've heard of options.

But even if you've never bought a stock, you can put this strategy to work for you with just a few simple, easy-to-follow steps.

I'll show you exactly how it works in just a minute.

But the gains I've already told you about are proof that using options allows you to make staggering profits from the single-biggest market on the planet.

But what really sets this taming strategy apart from the "Shadow Market" is that these profits come with:

Virtually limitless profit potential

Extremely fixed and limited risk

A standard stock-trading account (no special accounts or
brokers necessary)

Plus, using options means you don't need to watch the "Shadow Market" around the clock.

Not only do these "Shadow Market" options protect your risk, they allow you to make killer profits without giving up your sleep!

Make staggering Forex gains, no matter what's going on in the other world markets

The tamed Forex system works.

And happy Phase 1 and 2 testers are proof positive:

"I made 27% on my first trade....what a psychological boost in this current bear market."

� Michael S.

"Thanks for another great option call! 30% in 48 hours―nice!

Thanks again."

� Jack M.

Nice call! 22% in 24 hours. Thank you!

� Andrew T.

That's because, up or down... big or small... there is money to be made in any fluctuation in the FX market.

And thanks to hundreds of social, political and economic variables, a currency's value can go up and down several times in a single day.

For the diehards, that means taking huge risks, watching the charts all night and eating every meal in front of the computer screen.

That's why I want you to have your chance to jump on Phase 3 of my Forex trading system...

Playing the Shadow Market market means there is money to be made 24 hours a day, five days a week.

But don't worry.

When the Shadow Market's tamed, using options plays, you don't have to keep those kinds of hours to take quick profits.

Our cutting-edge "Shadow Market" trading strategy
actually tames the FX market for you

Our "Shadow Market" tamer watches the charts, gauges his technical indicators and does all the work for you.

Using simple options plays, we can actually slow down the "Shadow Market," minimize your risk and super-charge your profit potential.

What kind of profit potential am I talking about?

How about doubling your money in just 48 hours.

How easy is it? It couldn't be easier

In fact, it's no different than buying or selling a stock.

All it takes is a single click of your mouse or a single five minute phone call and you're in.

A twelve-year old could do it.

Because, once you're on board, you'll get an email with all the details you'd need to buy into each play―what to click or what to tell your broker, word-for-word.

Two Easy Steps to Tamed Shadow Market Riches:

Decide if you want to act on the urgent play emailed to you

Then we'll email you again when it's time to get out and bank
your profits

Boom, boom, you take your gains.

Even if you've never bought a stock... know nothing about options... have never even heard of the FX market...

You'll find everything you need to know, spelled out, in the pages of The Easy Way to Trade Currency Options.

This report strips away the "investor-ese" and shows you exactly how FX options work, how to set up an account (if you don't already have one) and start grabbing incredible gains.

Just another minute of your time, and I'll show you how to get your hands on this report, absolutely FREE...

So you too will have a chance to see 23.39%. . . 33.24%. . .100% returns, or better!

It's practically fool-proof.

But before I explain how you can put this strategy to work for you...

Let me tell you about the "Shadow Market" genius behind these profit plays.

He's the man watching the computer screen 24 hours a day so that you don't have to.

And his name is Bill Jenkins.

The son of a carpenter and a homemaker, he's the fifth of seven brothers, a minister, a father of eight and a husband of 26 years.

And although you wouldn't know it after speaking to him, he doesn't have a degree in business, finance or economics.

He didn't spend years on the trading floor, wiping the boiler room sweat from his brow.

But he just might be the hardest working man we've ever brought onto our team.

Bill went to college and then seminary school in Western Pennsylvania. From there he went straight into the ministry...

"Minister's salaries being what they are, and having a growing family, I was quickly forced to find a way to supplement my income. 

Somebody told me I could make money in the best stock investment..."

The stock market had its ups and downs for Bill. But the real money came rolling in once he learned how to tame the FX market.

Interestingly enough, he got his start with his brother.

"My oldest brother, Jim, and I made a little money trading stocks, but we made the most on a pair of currency options on Eurodollars. 

It was 1993, and we bought 2 Euro calls for $200.00. 

We cashed them out at $1,200.00." 

That was a quick gain of 500%. And, naturally, Bill was HOOKED.

Over the next 15 years Bill tried his hand at stocks, commodities and real estate with mixed results.

He was raising a family, running a church and he launched and ran his own construction business.

At the same time, he devoured everything he could. Books, newsletters, arcane charts ― he analyzed every building block of trading.

But, more than anything else, Bill realized that you learn more by doing than by reading and studying.

So he put all of his other investments aside and dove headlong into the madness of the FX market.

His success came slow at first.

But the more he played, the more he learned.

And the more he learned, the more cash he started raking in.

Bill knows how to trade currencies and currency options like no man I've ever met.

And that's why he insisted on opening the Phase 3 round of his Forex system to you, if you want to join.

So you'll have a chance to profit right along with him...

Minimize your risk, super-charge your profits and cash in on the power of the FX market

Like I said earlier, the FX market is easy to play ― but it's wild and it's dangerous.

It took Bill's cutting-edge strategy to tame it.


If you're looking for a tame, safe, easy way to play the FX market...

If you enjoy making steady double and triple-digit gains with barely any effort at all...

If you're looking for a profit-driven strategy that keeps your risk known and at a minimum...

And if you enjoy getting eight hours sleep each night...

Then our brand new Master FX Options Trader research service is your key to cash-grabbing success in 2009.

You read that right.

The fastest, easiest, most direct way to grow your money. . .

It doesn't matter if you've never played options before.

In fact, you don't need any investment knowledge whatsoever.

Because, when you sign up for Master FX Options Trader today, we'll send you a copy of The Easy Way to Trade Currency Options absolutely FREE.

We'll show you everything you need to know to get started.

Even if you've never bought a single stock, when you've got an FX master like Bill Jenkins in your corner calling all the shots, it couldn't be easier!

Like I said before, our Phase 2 beta test delivered average returns of over 52% in the first 10 days!

Best of all, it takes less than 10 minutes to get in on each of Bill's recommendations.

A few clicks of your mouse or a few minutes on the phone, and you're in.

How does it work?

Every week Bill will send you an email to let you know what's happening in the world currencies market. And how it can impact each of the major currencies.

He's got a pretty complicated analysis. He uses candlesticks, trendlines, moving averages, Bollinger bands, stochastics and a series of proprietary grids.

Here's just one simple example of the kind of thing Bill looks for:

You see that spike? Bill saw it coming a mile away.

He keeps one eye on his indicators and the other on the international news.

Using his knowledge and understanding of the FX market, he combines those charted trends with any major announcement...

Then bang!

When the timing is right, he'll tell you word-for-word, in plain English, which options play to get what price...and why.

If you like the play, you can actually call your broker and read him Bill's email word-for-word.

Just to show you how easy it really is, here's a copy of the alert that Bill sent out on October 27, telling his readers about the British pound calls that would land them 100% returns just two days later...

As you can see, Bill lays everything out very clearly.

If you decide to take advantage of his recommendation, you can actually call your broker and just read him Bill's email ― it couldn't be easier.

Best of all, unlike playing the "wild" FX market, Bill's "taming" strategy means your out-of-pocket is rarely more than a couple hundred dollars per position.

Your risk on tamed Forex options plays are fixed. You always know exactly how much is at stake ― it's strictly known and completely manageable.

You are 100% in control.

So while a typical FX trade could easily drain your account a hundred times over with a single position...

With tamed currency options:

There's no fine print...

No hidden danger of losing more than you put in...

And your profit potential is virtually limitless!

Of course, not every play is going to be a winner.

Like I said before, even someone batting 1.000 is going to swing and miss from time to time.

That's why only serious readers should take advantage of Bill's Phase 3 Forex system.

Even though Bill's track record has been overwhelmingly profitable so far, you must be able to admit the possibility of a losing play...

But unlike any other investment, Bill's "taming" strategy works in any market environment.

It doesn't matter what happens to top stocks and bonds...

It doesn't matter how many hedge funds go bust or how many CEOs go bankrupt...

It doesn't matter what happens to gold or silver, oil or coal, gas or corn...

As long as the world keeps spinning, currencies will continue to change hands and Bill Jenkins' Master FX Options Trader will help you profit, every step of the way.

A chance to grab returns of 100% or better in just 48 hours! Sign on today for 50% off and start seeing profits as early as next week. . .

Maybe you've seen the late-night Forex infomercials. They tout $10,000 FX services claiming to make you money "while you sleep."

They're pretty hard to miss. And they're equally hard to believe.

And for the most part, they go out into the Wild Forex market, exposing you to unlimited risk. In fact, I've never even seen one that uses options to tame the FX markets like Bill does...

For $10,000 they'll send you a CD, a flimsy report and a fast, one-way ride to financial ruin.

But the brand new Master FX Options Trader won't run you anywhere near that.

Plus, with the Master FX Options Trader you get:

Specific options plays: Bill keeps one eye focused on his charts at any given minute, so you don't have to. And when the time is right, he'll immediately fire off an email with all the details you need to get in on his next play. Up to 52 plays a year!

Breaking news: At least once a week, you'll get the latest on what's going on around the world. You'll get an update on any open positions, details on what's happening in the currency markets and how they can impact your FX options plays.

Expert experience: 15 years worth of Bill's investing experience, uncanny instinct and targeted investment recommendations. Laid out in easy-to-follow language that even an amateur could follow with ease.

FREE Gift #1: Our brand new currency options report, The Easy Way to Trade Currency Options, is yours FREE. It'll tell you everything you need to know about the FX market. How it works, why it can be dangerous, how we've used options to tame it and the easy steps you can follow, in just minutes, to set up your own options trading account (if you don't already have one).

FREE Gift #2: Elite level access to the Master FX Options Trader web site. In it you'll find detailed archives, current alerts, our profit portfolio, free reports and more.

And of course, beyond all of the above...

You get the opportunity to join Phase 3 of Bill's Forex research service to rake in double and triple-digit gains while the majority of investors lose sleep.

So how much will the Master FX Options Trader service run you?

Like I said, a service of this caliber could easily go for $10,000 or more per year.

Especially when you consider that a $5,000 investment in the right recommendations during Phase 2 would have paid for your subscription and then some... in less than two weeks.

But, I want you to have every opportunity to hit the ground running with Phase 3. So we've decided to keep it at a very reasonable $2,000.

However, since I want to make sure there's nothing stopping you from signing up today, I cut the price in half.

That means a full year of Master FX Options Trader will run you just $995!

But I can't guarantee this price forever. My publisher may jack it back up to $2,000 at any time.

Now, I have to warn you:There are no sure things in this world. . .

Is Bill going to make the right call 100% of the time?

Of course not.

23.39%...33.24%...and 100% returns, in the first 10 days were a heck of a good start!

And although Phase 2 came out ahead of the game, his fourth and fifth plays were losers.

So you see, there are very few sure things in this world. And even someone who bats 1.000 is sure to take a swing and a miss from time to time.

But the gains he's achieved have more than made up for the occasional losses.

So, if there's anything keeping you from signing up for Master FX Options Trader, let me offer you this safety net.

If you choose to enroll as a Phase 3 tester today, you can put Bill's insights to the test RISK-FREE for the next 60 days.

That means, a chance to get in on as many as four options plays.

But, even if you don't make any investments of your own ― even if you just paper trade for the next month ― if he doesn't show you an opportunity to make at least double your money on at least one play, as reflected in his track record, just give us a call and we'll refund every penny of your subscription price.

No questions asked.

There's no such thing as a "slow down" in the Forex market

Bill's taming strategy and the launch of Phase 3 can be the safety net you're looking for during the worst economic slump in more than two generations.

His next triple-digit profit opportunity could come at any moment. And I would love for you to profit right along with his lucky Phase 1 and 2 readers.

So why wait another minute? Visit this link, sign up today and save 50% on a full year of Master FX Options Trader now!

Bank Stocks Obliterated

Yesterday's big news was that the Dow Jones closed at its lowest levels since 2002. That's undoubtedly painful and frustrating news. Even if you're a long-term investor, who knows full well that buying hot stocks at these levels will set you up for long-term success, lopping off seven years of returns still hurts.

Then I took a look at bank stocks this morning, and everything suddenly became relative: Some of our largest banks, you see, now trade at their lowest levels since the early 1980s.

For the year to date -- all of about seven weeks -- here's how the biggest banks have performed:


Year-to-Date Performance

Bank of America (NYSE: BAC)


Citigroup (NYSE: C)


Wells Fargo (NYSE: WFC)


JPMorgan Chase (NYSE: JPM)


US Bancorp (NYSE: USB)


*Using intraday prices as of Feb. 20.

As I write, Bank of America is at its lowest level since around 1984. Citigroup is at its lowest level since the banking crisis of 1991. The only relative bright spots of the banking world are Goldman Sachs (NYSE: GS) and Morgan Stanley (NYSE: MS), the latter of which is actually up year to date.

But does it really matter?
Yes. For almost any other investment, at any other time, pointing out short-term share fluctuations would be immaterial for long-term investors focused on the quality of the business. In banks' case, share prices will in fact dictate their future, simply because the common denominator these days is a bank's capacity to raise capital.

Without a significant common-stock base, some banks -- particularly Bank of America and Citigroup -- will be forced to turn to the government to shore up their books. With paper-thin capital cushions beyond what Uncle Sam has already pumped in, the theory du jour is that some form of nationalization -- either fully, or partially like Fannie and Freddie -- is the only way to prevent all-out failures.

Are the fears justified? No one really knows, but it certainly seems feasible. Earlier this month, Bank of America CEO Ken Lewis told CNBC that the prospect of nationalization was "just absurd" and fueled by "a bunch of malicious rumors."

That may be true, but Ken Lewis also forecast back in September that the Merrill Lynch acquisition was "a great opportunity for our shareholders." It's safe to say that his ability to predict the outcome of important events has been thoroughly discredited.

Where to now?
Anyone who tells you they know exactly what'll happen with banks isn't being honest with themselves. Time will tell, yet I wouldn't hold on to a ray of hope. The low single-digit share prices where these top stocks now trade represent more of a call option on hope than actual shareholder value.

Can You Stomach Another 40% Drop?

After seeing the hot stock market lose half its value and head down toward six-year lows, you may feel like you've suffered more than you'd ever expected with your stock portfolio. Yet as another dour earnings season comes to a close, many see the potential for a much larger drop right around the corner.

The valuation conundrum
As dramatic as the drop in stocks has been since last summer, some market observers who focus on relative valuation wonder how the market has held up even as well as it has. If you focus on recent earnings numbers, the collapse in corporate profits among S&P 500 stocks paints an even bleaker picture of where the stock market ought to be trading.

According to The Wall Street Journal, trailing 12-month earnings for the S&P as a whole are likely to drop below $30, thanks to the recession. At least one pundit has applied an average earnings multiple of 15 to that number and come up with a projected value for the S&P 500 index below 450 -- more than 40% below its close at around 780 on Thursday.

Fair value, or foul?
The obvious counterargument to that dire prediction is that the recession has temporarily depressed earnings. After all, earnings for the S&P 500 a year ago were closer to $80, which works out to a P/E below 10 at current levels. If earnings eventually recover to their 2007 levels, then hot stocks 2009 look exceedingly cheap at this point.

But there's no guarantee that earnings will recover anytime soon. Leaving the length of the recession aside, many of the businesses that drove growth over the past several years won't get back to their previous levels of profitability. Even among financial firms that seem likely to survive the crisis, such as Goldman Sachs (NYSE: GS) and JPMorgan Chase (NYSE: JPM), the business model and market conditions that allowed Wall Street to maintain strong profit growth for years no longer exist.

Put another way, even if earnings for the S&P 500 recover fairly strongly -- say 50% from their recession lows -- that still only gets them up to $45. And with the specter of inflation, huge budget deficits, and potentially higher interest rates on the horizon, a P/E ratio of 17 based on that $45 figure sounds fairly pricey.

Protecting against market risk
So with that gloomy prediction, what can you do to cover yourself no matter which way the market moves? One possibility is finding stocks that don't move in lockstep with the market -- and one way to find such stocks is by looking at their betas. Here are some examples of low-beta stocks, which you can see have held up pretty well in the recent bear market:


Beta (Past 3 Years)

1-Year Return

5-Year Average Return

Altria (NYSE: MO)




Aqua America (NYSE: WTR)




Genentech (NYSE: DNA)




Strayer Education (Nasdaq: STRA)




Fairfax Financial (NYSE: FFH)



15. 7%

Source: Yahoo! Finance.

The concept of beta is often misunderstood. Many rely on beta as a pure measure of volatility, counting on high-beta stocks to be more volatile than stocks with low beta values. But that's only true to the extent that a stock's returns are correlated with the overall market. A best stock that moves independently, however, might well show a low beta, but its overall price movements might be fairly volatile.

So while low-beta stocks may provide some protection against a crash, they're no guarantee of positive performance. And of course, if the market rebounds, you'd do better in high-beta stocks that take greater advantage of bull markets.

Be ready
No matter what you do to protect your money, you need to be prepared mentally for what you'll do if top stocks 2009 crash again. As unfair as it might seem to have to consider further losses after what you've already been through, counting on this being the worst of it is just too dangerous. As cheap as many stocks are right now, they could get cheaper -- and if you're on the edge of panicking already, you need to steel yourself for whatever comes next.

Economist Gary Shilling was Right - What's Next?

In 2007 and 2008, top stock market commentators laughed at Gary "Gloom and Doom" Shilling. But all of the financial prognosticators, commentators and pundits filling our airwaves and email inboxes with predictions and prescriptions, none has been more prescient about the current financial crisis than Forbes' own resident economist.

As many of you know, Gary's Financial Strategy column has appeared regularly in the pages of Forbes Magazine since 1983. Back in September 2004, Shilling first wrote a column in Forbes entitled "Wall Street in Dreamland" that accurately predicted that the financial markets and the U.S. economy, which parted company in the late 1990s, would eventually rejoin causing a lot of people to lose a lot of money. He warned his readers: "Don't be one of them. Don't buy a bigger house than you need, and don't buy top stocks on margin. Buy Treasurys."  

What many don't realize is that Gary had been warning his Insight newsletter subscribers as early as July 2004 about our subprime-fueled housing bubble and warning that when it burst, our entire economy would face dire consequences.

"When house prices return to earth―and price declines of 20% in the U.S. and 30% elsewhere are warranted―the effects on the global economy will be serious.... Subprime loans are probably the greatest financial problem facing the nation in the years ahead."
- Insight, July 2004.

Gary's predictions have been eerily accurate. But Gary is not merely a doom and gloom economist.  He also gives his newsletter clients specific advice on how to position their portfolios.

In January 2007, for example, he laid out a 13-step roadmap for his subscribers. Among his predictions and recommendations:

1) Prediction: The housing bubble will burst.

Recommendation: AVOID homebuilders, building materials producers, mortgage and subprime lenders and related entities like Fannie Mae and Freddie Mac.

Result: Housing prices are down 25% nationwide from July 2006. Homebuilders are down 75% from their high. Fannie Mae and Freddie Mac are insolvent and getting a $200 billion federal bailout.

2) Prediction: "U.S. stock prices will fall, perhaps below the 2002 lows, in the midst of a major recession."

Recommendation: SELL Stocks.

Result: The current financial crisis wiped out over $7 trillion of stock market gains. The Dow Jones Industrial Average is at the same level it was in 1997. 

3) Prediction: China will suffer a hard landing due to domestic cooling measures and U.S. recession.

Recommendation: AVOID Chinese stocks. China's Asian trading partners and their currencies and stocks will be damaged by a weak Chinese economy.

Result: China's Shanghai Composite Index is down 55% in the last 12 months.

4) Prediction: "Weakness in U.S. and China will spread globally, dragging down economies and stocks universally."

Recommendation: SELL Emerging Markets. Emerging markets have been driven by American and other offshore inflows. Capital will flee emerging markets and these export-driven economies will collapse.

Result: Morgan Stanley Capital International's Emerging Markets index is off more than 50% since the beginning of 2008.

5) Prediction: "Treasury bonds will rally."   

Recommendation:  BUY Treasurys. They are the world's highest-quality instrument, have huge market liquidity and can't be called, which limits appreciation as interest rates fall. They can be sold anytime with ease and don't need to be held to maturity.

Result: Yields on 10-year Treasurys fell from 5.1% in June 2007 to 2.8% recently.

6) Prediction: "The subprime slime fallout will spread."

Recommendation: SELL junk bonds. Losses from subprime slime will cause a credit crunch that will hit private equity firms hard and limit their ability to do deals. Overleveraged companies and debt-ladened mergers will suffer.
Result: Junk bond spreads over Treasurys have skyrocketed. Single b-rated junk bonds for example now yield 18%, up from 8% in mid 2007, as their prices have plummeted. Spreads over Treasurys are now 1591 basis points, versus about 321 basis points in mid 2007. 

What is iconoclastic Forbes Economist Gary Shilling saying now?

Among other things, Gary is warning readers against giddy enthusiasm over the government's trillion-plus bail-out plans and he warns that there will be more bailouts ahead.

Gary is under-whelmed by the current plan and foresees at least another year of recession and dismal equity markets. He contends that the lynchpin of the global economy is consumer spending, here and in places like China and India.  Given the current financial and housing-related job losses and the worldwide economic fall-out, Gary says consumer spending is likely to be crippled for many months ahead.

However, Gary is not recommending that investors just curl up and hide. He is actively recommending a specific Bear market asset allocation plan that involves, among other things, buying Treasurys- even at these reduced yields! Gary also has specific recommendations for oil and other commodities.

If you would like more details on Forbes Economist Gary Shilling's predictions and a step-by-step program for profiting during the current market turmoil,  please click here.

Each 20 plus page monthly issue of A. Gary Shilling's Insight includes:

In-depth analyses of current global economic, political and financial trends and how they affect the investment world.

Easy-to-understand charts, tables and other metrics dissecting economic indicators critical to making sound investment decisions.

Specific investment theme action directives like "Dividend-Paying Best Stocks" and "Dollar Plays" and "Health care Productivity Enhancers."

Gary's famous back page commentary on matters great and small, complex and mundane, serious and frivolous.

Archived monthly issues of Insight going back four years.

In addition, we will also send you Gary's Free Special Report, Bear Market Tool Kit that will provide you with the specific steps that you should take to protect your portfolio. The financial crisis has already taken too great a toll. Act now to position your assets for growth. 

Clinton: Chinese 'human rights can't interfere' with other crises


"Human rights cannot interfere with the global economic crisis, the global climate change crisis and the security crises," Clinton said in talks with China's foreign minister.

Clinton made China the last and most crucial stopover in her Asia trip, signaling the new administration's first attempts to lay a foundation toward a China policy. It is Clinton's first trip to China as secretary of state. Video Watch Clinton talk to CNN about Asian tour »

She met with Chinese President Hu Jintao on Saturday and discussed the framework for further high-level and mid-level discussions.

"It is essential that the United States and China have a positive, cooperative relationship," Clinton told a group of reporters.

Earlier Saturday, Clinton met with Chinese Premier Wen Jibao in Beijing, where they discussed what they regard as the new defining Sino-U.S. strategic goals: the world economic crisis, regional security and the environment. Video Watch report on the talks »

The United States and China are the world's largest emitters of greenhouse gases.

Human rights, a traditional topic in discussions between the two countries, was broached during Saturday's meeting between Clinton and Chinese Foreign Minister Yang Jiechi, who agreed to engage on a continuous discussion on the issue.

Clinton said both nations will continue to hold frank discussions on crucial human rights issues, such as Tibet and freedom of expression in China. In the past, Clinton has been an outspoken, staunch critic of China's human rights stance.

In a welcoming response, Yang said China was willing to discuss the often-contentious subject of human rights.

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  • Special:  China

"Although differences exist, China is willing to conduct the dialogues with the U.S. to push forward the human rights situation on the premise of mutual respect and noninterference in each other's internal affairs," Yang was quoted in the Chinese Xinhua news agency.

On the economic front, both leaders emphasized the importance of working in cooperation as their economies are intertwined.

China, the world's top holder of U.S. debt, wants to ensure liquidity and security in its dealings with the U.S. treasury bonds.

"We did use foreign exchange reserves to buy U.S. treasury bonds. Our principle of using reserves is to ensure security and liquidity," Chinese Foreign Minister Yang Jiechi told reporters.

China-U.S. trade volume rose by 10.5 percent in 2008 to $333.7 billion, Xinhua reported.

According to the Council on Foreign Relations, China is North Korea's largest trade partner. It has taken a leadership position in the six-party talks, a multinational diplomatic effort to denuclearize North Korea.

In Seoul, Clinton did not refrain form harsh words, restating the U.S. position toward North Korea.

"North Korea is not going to get a different relationship with the U.S. while insulting and refusing dialogue with the Republic of Korea," she said.

Mid-level military discussions will resume this month, Clinton announced Saturday. Last October, the Bush administration notified Congress of its plan to sell $6.5 billion in arms to Taiwan which caused China to suspend military talks with the US.

Pakistan seeks lasting Swat truce

Syed Mohammad Javed, commissioner of Malakand, which includes Swat, revealed the deal. But the Taleban say they are still deciding whether to accept it.

A spokesman said they would wait to see whether a deal to implement Sharia law in Swat was honoured by the government.

Swat, once one of Pakistan's most popular holiday destinations, has long been blighted by militant violence.

Last week a deal was struck which arranged a 10-day ceasefire and saw an agreement by the Pakistani government for Sharia law to be implemented in the Swat area.

The Taleban spokesman, Muslim Khan, told the BBC on Saturday that the rebels were reviewing government progress on the implementation of Sharia law in the district.

"Six of the 10 days of this announcement still remains, when the sixth day comes to an end we will see what will be done by the government of launching Sharia law, then we will decide," he said.

Reports said the prospective deal was arranged when local Taleban met a senior elder appointed by the government to negotiate, Sufi Mohammad, to discuss ceasefire terms.

Sufi Mohammad, a pro-Taleban cleric, is the father-in-law of Maulana Fazlullah, who has been waging a violent campaign to impose Sharia in the region.


Following the deal struck last Sunday to agree to introduce Sharia law, the government's announcement suggests negotiations between Maulana Fazlullah and Sufi Mohammad could now be leading to a more permanent deal.

Tribal areas map

"They [the Taleban] have made commitment that they will observe a permanent ceasefire and we'll do the same," Mr Javed, the commissioner of Malakand, told reporters on Saturday.

He said that the army would scale back its operations in the valley and asked residents who left Swat because of the fighting to return home.

Schools for boys would reopen, although school for girls would remain closed, Mr Javed added.

The BBC's Pakistan analyst Owen Bennett-Jones says the schools announcement, and the decision to pull government troops out of Swat amounted to a capitulation by the Pakistani state.

The territory, a former princely state only absorbed into Pakistan in 1969, was effectively being given up to militant control, our correspondent adds.

Thousands of people have fled and hundreds of schools have been destroyed in Swat since a Taleban insurgency began in 2007.

The people of Swat have long been caught in the crossfire between the army and the Taleban.

More than 1,000 civilians have died in shelling by the army or from beheadings sanctioned by the Taleban. Thousands more have been displaced.

The Taleban now control the entire countryside of Swat, limiting army control to parts of the valley's capital, Mingora

Obama hails 'fastest' US tax cut

In his weekly radio and internet address, President Obama said the typical American family would gain by at least $65 (£46) a month.

He also pledged to cut America's trillion-dollar deficit.

The tax cuts announced on Saturday are part of a $787bn stimulus plan that Mr Obama signed into law this week.

The plan, aimed at reviving the US economy amid a global economic crisis, is split into 36% for tax cuts and 64% percent allocated for spending on social programmes.

Mr Obama said the US treasury had already begun directing employers to reduce the amount of taxes claimed from pay cheques.

The savings will reach 95% of American families, he said.

"Never before in our history has a tax cut taken effect faster or gone to so many hardworking Americans," the president said.

Challenges ahead

Mr Obama said work must now start on trying to stabilise the banking system, stem the fall in house prices and get budget deficits under control.

We can't borrow and spend our way back to prosperity
Republican Dave Camp

Obama diary: The first 100 days
US Senate approves stimulus plan

He announced that he would call a fiscal summit on Monday to discuss an inherited deficit of $1.3tn.

An unnamed US official was later quoted as saying Mr Obama intended to cut the deficit in half by the end of his first term.

This would be done by scaling back on the war in Iraq, increasing taxes on those earning more than $250,000 a year and making government more efficient, the official said.

Mr Obama said he would address the nation about his priorities on Tuesday before issuing a budget on Thursday.

"I'll release a budget that's sober in its assessments, honest in its accounting, and lays out in detail my strategy for investing in what we need, cutting what we don't, and restoring fiscal discipline," he said.

However, he also warned of the challenges ahead.

"As important as it was that I was able to sign this plan into law, it is only a first step on the road to economic recovery.

"None of this will be easy. The road ahead will be long and full of hazards," he added.

"But I am confident that we, as a people, have the strength and wisdom to carry out this strategy and overcome this crisis."

The stimulus plan, which was approved by Congress just over a week ago, aims to save or create 3.5 million jobs, boost consumer spending and rebuild infrastructure.

Over the past week, Mr Obama has also announced measures to assist families facing foreclosures, and those struggling to meet mortgage payments.

But Republicans, only three of whom voted for the stimulus package in Congress despite calls by Mr Obama for bipartisan support, have said the new tax cuts are insufficient.

They have also complained that the president's spending plans will leave the US economy saddled with debt for years to come.

"We can't borrow and spend our way back to prosperity," Republican Dave Camp said in his party's weekly address.

"If he [Mr Obama] is serious about dealing with the tough issues and getting spending under control, his budget will show it."

BBC: Iran held 'backroom' talks with Western diplomats

"The Iranians wanted to be able to strike a deal whereby they stopped killing our forces in Iraq in return for them being allowed to carry on with their nuclear program -- 'We stop killing you in Iraq, stop undermining the political process there, you allow us to carry on with our nuclear program without let or hindrance," said John Sawers, now the British ambassador to the United Nations, in the documentary, "Iran and the West: Nuclear Confrontation."

The United States and other Western nations believe Iran is pursuing a nuclear weapons program, but Iran says it is developing nuclear capability to produce energy. Iran also has been accused of sponsoring terrorists and supplying weapons to Iraqi insurgents. The latter prompted a warning from the United States that such behavior by Tehran "would be regarded by us as enemy action," Philip Zelikow, a State Department counselor, told the BBC.

Then, Iran began shopping its offer around Europe, Sawers said.

Sawers, Britain's political director at the time, reveals the behind-the-scene talks from 2005 -- when roadside bombing against British and American soldiers in Iraq peaked -- were held with British, French and German diplomats at hotels in London, Paris and Berlin.

"And then we'd compare notes among the three of us," Sawers told the BBC.

The British government dismissed the offer and Iran's nuclear enrichment program restarted once again, the BBC reports

Iran has denied offering any such deal and reiterated its position Saturday.

"Iran's high officials have repeatedly stated that Iran has not had any part in attacks against American and British forces, and there is no evidence to support these baseless accusations," Iranian Foreign Ministry spokesman Hassan Qashqavi said, according to the semi-official Mehr News Agency.

Interviews with top brass from former President Bush's administration and British envoys indicate that Iran and the West had neared agreements several times in the past few years, but never reached success.

Nick Burns, who was in charge of the Bush administration's State Department policy with Iran, said taking a tough approach with Iran didn't seem effective.

"We had advocated regime change," Burns told the BBC. "We had a very threatening posture towards Iran for a number of years. It didn't produce any movement whatsoever."

The documentary aired a day after the Washington-based Institute for Science and International Security released a report stating that Iranian scientists have reached "nuclear weapons breakout capability." The report analyzed the finding of the U.N.'s nuclear watchdog agency, the International Atomic Energy Agency (IAEA).

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However, an IAEA official who asked not to be named cautioned against drawing such dramatic conclusions from the data, saying Iran's stock of low-enriched uranium would have to be turned into highly enriched uranium (HEU) in order to be weapons-grade material. That hasn't been done, the official said.

Meanwhile, Iran's relationship with the West continues to be strained, though both sides have indicated interest in holding direct talks.

President Obama, in his first prime-time news conference held earlier this month, said the United States is looking for opportunities for "face-to-face" talks with Iran after an absence of diplomatic ties for nearly three decades.

"There's been a lot of mistrust built up over the years, so it's not going to happen overnight," he said

Should We Bail Out Main Street or Wall Street?

The short answer to the headline's question is neither -- in theory. In practice, the U.S. government is now attempting to do both. There may be a rationale for that (to a limited extent), but there are significant problems with the way they're going about things.

The new, new plan
The Obama administration announced a plan to stem home foreclosures, with $75 billion in subsidies to help lenders reduce mortgage payments for 3 to 4 million borrowers. In addition, the plan calls for 4 to 5 million borrowers to refinance their mortgages through government mortgage giants Fannie Mae (NYSE: FNM) and Freddie Mac (NYSE: FRE). $200 billion in supplemental capital has been allocated to the two firms, doubling the government's commitment.

These measures characterize a "bottom-up" approach to the current crisis, targeting falling home prices and rising foreclosures directly. The bulk of the government's efforts (under both the Bush and Obama administrations) to date has been directed toward the blighted financial sector, with a very mixed record.

Dealing with "Wall Street"
The only private organizations that should be bailed out are terminal institutions that pose a genuine systemic risk. Fannie and Freddie fit the profile, and AIG (NYSE: AIG) probably did, too. The criterion of systemic risk alone sets a high bar, as there are only approximately 20 banks in the U.S. with total assets in excess of $100 billion, including Wells Fargo (NYSE: WFC), US Bancorp (NYSE: USB), Goldman Sachs (NYSE: GS), and Morgan Stanley (NYSE: MS).

Those organizations that are not both terminal and posing systemic risk should be allowed, nay encouraged, to fail. (Note that I do not, however, consider coercing healthy financial institutions into accepting a government investment either a bailout or a good use of taxpayer funds.)

The trouble with "Main Street"
Dealing with home foreclosures looks rather more tricky. My instincts suggest that one shouldn't interfere with home foreclosures in order for the housing market to find its proper level. The trouble is the scale of the problem � the resulting massive wave of foreclosures could cause housing prices to understate fair value when they bottom. This could hurt the values of loans and mortgage securities and leave some banks technically insolvent when they are, in fact, viable. Cue a slump in confidence regarding banks, reduced lending, and…  well, you know the drill.

Do the pieces fit?
Of course, temporary aberrations in the price of those securities would be like water off a duck's balance sheet for an institution with a long-term perspective and deep pockets -- which brings us back to another one of the government's initiatives: a "bad bank" plan that would have the government take soured assets off bank balance sheets. Perhaps there is some coherence to the government's approach, after all, although as I pointed out last week, that "bad bank" has some holes in it, too.

2 Stocks For Cashing In On The Next Healthcare Boom

Before you arrive at the end of this sentence, another baby boomer will turn 50. By the time the last boomer turns 65, the number of Americans 65 or older will have doubled since 2000. Baby boomers control half of all discretionary purchases and 80% of the personal wealth in the United States. They're also the demographic most likely to visit a shopping mall. Along with all that, the 50-plus population presents a huge opportunity for companies serving the healthcare industry.

American industry is waking up to this market. The Department of Labor estimates that seven of the 20 fastest-growing occupations are related to healthcare. Healthcare will generate 3 million jobs between 2006 and 2016, more than any other industry. This is truly a seismic shift in the composition of the U.S. economy, which historically has been driven by the production of other goods and services. Healthcare now employs more people than manufacturing.

For investors, it can be very lucrative to invest in an industry with strong growth trends behind it. Energy and commodities produced enormous gains for investors over the past five years as demand for energy swelled around the world. Compared to those, healthcare has enormous advantages, because it isn't cyclical. Most industries go through blips where demand falls, growth slows, and stock prices plummet. The good thing about healthcare is that demand should grow steadily for the next decade or two.

But just because an industry is growing doesn't mean all companies can make bagfuls of money. Government regulation and competition can lower returns -- just take a look at airlines or automakers, both in industries with good secular growth but where companies have a hard time earning a decent return on their capital. So it's not just enough to invest in the right industry -- you have to pick the winners -- companies with competitive advantages that can earn a solid return on their shareholders' investments.

One competitive advantage in healthcare is scale, and our two recommendations have this in spades. When you're the biggest kid in the lunch line, you are going to get your choice of lunch, and a big portion at that. It's the same in business -- size gives you the ability to set terms for the rest of the industry. And while you'd usually expect to pay a sizable price for such dominance, this is one of the few occasions when the market gives us a chance to own these great healthcare businesses at a bargain price.

No one likes the big managed healthcare providers these days. Rising medical costs, lawsuits, shaky Medicare and Medicaid reimbursement, and the uncertainty of healthcare reform have all weighed on the industry. But the valuation of UnitedHealth Group [NYSE: UNH] reflects these prospects and then some. The future of health insurance is anything but declining, and with 73 million members, UnitedHealth is one of the dominant companies in the industry.

The health insurance game boils down to size. Large insurers can negotiate lower rates on behalf of their customers, be they governments, companies, or individuals, and this leads to a virtuous circle. Doctors and hospitals rely on a network of tens of millions of patients, which affords UnitedHealth tremendous pricing power, allowing it to pass savings on to its paying members. In turn, the variety of healthcare providers and lower negotiated rates attract more people to the network. And the circle is complete.

UnitedHealth's database is also a huge asset -- it includes comprehensive clinical data covering 85 million people and pharmaceutical histories for 250 million -- that enables the company to smartly underwrite risks. Plus, according to government data, UnitedHealth is getting the biggest slice of the new Medicare drug plans and Medicare Advantage plans. Its share was also boosted by a marketing arrangement with AARP and the PacifiCare acquisition. This is one of the key growth drivers for the company.

The Risks

The rising costs of healthcare are a top concern. Reimbursement rates from the government on Medicare and Medicaid are constantly at risk of being cut. Large companies are increasingly moving toward service contracts in which they take on the risk of healthcare costs and have companies like UnitedHealth manage their programs, which lowers revenue but reduces risk.

Lawsuits are also part of the health insurance business. The latest: The New York State Attorney General's Office announced its intent to sue UnitedHealth, which could lead to a cash payout but shouldn't affect the stock's valuation.

The Foolish Bottom Line

Occasionally an entire industry falls out of favor with Wall Street for reasons that are unclear -- and temporary. It is in times like these that investors can hardly go wrong in picking up the strongest companies in the sector, including UnitedHealth. Over the next five to 10 years, UnitedHealth should thrive.

A major provider of healthcare services and benefits, WellPoint boasts one of the largest medical memberships in the United States, with 35 million customers, compared with 73 million for UnitedHealth [NYSE: UNH], 16.8 million for Aetna [NYSE: AET], and 10.2 million for CIGNA [NYSE: CI]. Its membership is roughly a 50-50 mix of fully insured and self-funded members. For the fully insured, the company receives a premium and takes on the risk, making it responsible for covering the cost of medical services. For the self-funded, it charges a fee for services such as administrative work and fee negotiations, but the employer or plan sponsor reimburses all or most of the healthcare costs.

As does UnitedHealth, WellPoint has a size advantage over the competition. Being big means it can spread nonmedical costs over a larger membership base, which improves profit margins. Larger networks are more valuable to healthcare providers -- imagine having access to WellPoint's 35 million members -- and therefore such networks can negotiate lower prices. This is a win-win for members, who have access to cheaper health insurance and a wider selection of healthcare providers.

The national network has a local effect, since people tend to use healthcare services close to home. WellPoint is the exclusive licensee for Blue Cross and Blue Shield brands in 14 states, giving it the No. 1 or No. 2 market share in these areas. On top of its scale and price advantages, WellPoint's membership base has yielded reams of historical data that should help the company understand underwriting risks and plan its business on economical terms.

Like all insurance companies, WellPoint earns considerable interest on its premium float, unearned premiums paid plus unpaid losses. In 2007, interest on WellPoint's cash plus its float exceeded $1 billion and free cash flow was $4 billion. WellPoint has been using this strong free cash flow production to buy back shares -- a worthy use of capital at today's low stock price.

WellPoint isn't a fast growing company -- mid-single-digit growth should come from 1% to 1.5% enrollment growth and 4% to 5% price increases. And the medical-cost ratio could inch up as cost increases slightly outpace price increases -- though management is confident that it can match the two.

The Risks

Systemic health-care reform presents a small risk, but I expect the largest insurers, like WellPoint, to do well while smaller rivals suffer more and experience further consolidation.

If the medical-cost ratio rises higher than expected it could lower the value of WellPoint. Also, as is the case for all insurance companies, WellPoint has an investment portfolio, including in mortgage-backed securities. Almost all these securities are guaranteed by government-sponsored entities, but that doesn't preclude risk.

The Foolish Bottom Line

WellPoint is an extremely fit company selling at a significant discount to its true value, based on little more than uncertainty. In turn, Wall Street has priced the shares as though the business is in terminal decline. Underwriting results will inevitably wax and wane, but WellPoint's long-term prospects are anything but declining. It operates in an industry with long-term growth built in as baby boomers age, and WellPoint should produce healthy returns far in excess of the market.

I hope you've enjoyed this special report.

My name is Philip Durell. I'm the founder and senior advisor of Motley Fool Inside Value.

It's my passion to help individual investors find great top stocks 2009. I believe value investing is the key to building life-changing wealth.

That's why value stocks belong in every portfolio. And it's why every investor needs to learn to think like a value investor.

As Warren Buffett's longtime business partner Charlie Munger says, "All intelligent investing is value investing."

Today you've been handed my top 2 value stock ideas for profiting from the healthcare boom.

But remember...

There are no guarantees when investing in common hot stocks 2009

But rest assured. When you invest your hard-earned money in any of these hot stocks, you do so with the confidence that your decision is backed by the most thorough and purely independent research available.

The same holds true for any stock recommended in Motley Fool Inside Value. My proven formula for identifying hugely profitable companies with high intrinsic values and low stock prices has led me to recommend:

MasterCard -- a 160% gain

Omnicare -- a 75% gain

Covidien -- up 58%

Returns as of 10/3/2008

This is just a small sample of the stocks that are widely overlooked by Wall Street but can yield massive returns. In Motley Fool Inside Value, you'll see a proven formula for identifying hugely profitable companies with high intrinsic values and best stock prices. Plus, how you can avoid the trap of buying stocks that look cheap.

Value investing comes as close to "hands-free," no-worries investing as you'll ever get. And it's no coincidence that this same strategy has helped our tight-knit group to rack up a stunning track record. There's never been a time when our group failed to beat the S&P 500. In fact, I'd like you to experience this remarkable service for yourself.

Let's quickly look at what you can expect to gain...

You get the Inside Value private newsletter, available only to members of my Motley Fool Inside Value service, every single month -- chock-full of the best moneymaking best stock advice the industry has to offer.

You get a personal password to the private Inside Value website, where you'll find full archives of everything I recommend, plus a running portfolio that's kept up to date with my newest recommendations. And where you'll also find new special reports the moment I make them available.

Most important, you'll discover a portfolio of stocks that just let you live better. Because you don't have to worry about them. Allowing you to sleep at night.

Think about it this way. Remember back in 1987 when the market crashed?

If you owned a company like Berkshire Hathaway back then, would you panic and dump your stock to rescue your gains? What about six years ago when Internet stocks collapsed? I certainly don't remember anybody running from these kinds of value investments then.

That's because these are the kinds of stocks SAFE ENOUGH TO HANG ONTO... but STRONG ENOUGH THAT THEY MOVE. And go up, adding value to your portfolio outside of the usual ebb and flow on Wall Street. This is the only way I know of to get big gains without big risks.

It's as simple as that. And you risk nothing by giving Inside Value a try.

Why You Should Sell Top Stocks

I can be just as dumb as anybody else. -- Peter Lynch, September 2008

Peter Lynch earned near-30% annual returns running Fidelity Magellan from 1977 to 1990. He's sold millions of books, raised millions for charity, and holds the rare distinction of having a Motley Fool Global HQ conference room named after him.

But in September 2008, Peter Lynch also had the ignominious honor of holding both AIG (NYSE: AIG) and Fannie Mae (NYSE: FNM) in his personal portfolio -- as they dropped 82% and 76%, respectively, during that month alone.


For those of us who have spent our investing careers trying to match the great Peter Lynch … well, if you lost 80% in September, then congratulations -- you did it! If you did better than negative 80%, then you beat the great Peter Lynch.

Invest like Peter Lynch
We kid, of course, and we're in no way demeaning Lynch or his illustrious career. Rather, we're just pointing out how hard it's been to avoid a flameout lately. When the blue-chip S&P 500 has dropped some 40% over the course of a year, you know it's bad.

And when companies like Boeing (NYSE: BA) and Adobe Systems (Nasdaq: ADBE) drop more than 50% in the course of a year -- even though they're historically strong operators that appear to have little to do with the crisis on Wall Street -- you know it's rough out there for pretty much everyone.

In other words, even if you don't own AIG or Fannie, you probably own a best stock like AIG or Fannie. We sure do. Brian, for example, has ridden Whole Foods Market (Nasdaq: WFMI) from $40 to $12, while Tim has watched pump-maker Colfax sink from $20 on down to $10. Ahem.

We are not alone
And while there are many stocks that will recover from this market downturn, it's likely we're all continuing to hold hot stocks that won't. New research, from Professors Nicholas Barberis and Wei Xiong of Yale and Princeton Universities, gives a name for this tendency. We're exhibiting "realization utility."

Realization utility encourages investors to hang on to stocks that have sunk -- even when those stocks have dim futures. Here's how they explain it:

The authors consider an additional experimental condition in which the experimenter liquidates subjects' holdings and then tells them that they are free to reinvest the proceeds in any way they like. If subjects were holding on to their losing stocks because they thought that these stocks would rebound, we would expect them to re-establish their positions in these losing stocks. In fact, subjects do not re-establish these positions.

That's right. If we force-sold all of your top stocks and gave you the cash to reinvest, would you buy the stocks we had just sold? Odds are, you wouldn't.

So, why would you hold on to stocks that you don't think will recover? We'll let the good professors give it to you straight:

Subjects were refusing to sell their losers simply because it would have been painful to do so … subjects were relieved when the experimenter intervened and did it for them.

Wait a second
But aren't we the guys who pounded the table two years ago about how individual investors like us sell winners too early, missing out on life-changing multibagger gains to lock in a modest return? "Quick trigger fingers aren't rewarded," we wrote at the time.

And that's still true. But down markets like this one present an enormous long-term opportunity for investors … only so long as you're willing to do some selling.

See, when stocks are expensive, we may invest in mediocre stocks because they look cheap, while passing on superior operators because they're too expensive. Today, however, those superior operators are all down double digits at least.

Google (Nasdaq: GOOG), for example, dropped more than 50% in 2008. Dream stock Microsoft (Nasdaq: MSFT) -- given its growth, FCF-generating abilities, competitive advantages, and bulletproof balance sheet -- has a P/E in the single digits!

In other words, now is the time to upgrade your portfolio.

Why you should sell
You should always sell when you have a better place to put your money -- and today, a host of superior companies are on sale. The takeaway, then, is to recognize when realization utility may take root, take a sober view of your holdings, and take advantage of this down market to upgrade your portfolio. Ten years from now, you'll be very glad you did.

We're both looking to take advantage of current prices in foreign markets -- which have been hammered even worse than our own S&P 500. If you're short on ideas, you can try out our Motley Fool Global Gains service free for 30 days. You don't have to subscribe to anything, and you can take a whole month to check out our entire portfolio of premium stock market (including a list of our five favorite stocks for new money) and download every back issue. To learn more about this offer to try Global Gains, simply click here.

Brian Richards owns shares of Microsoft and Whole Foods Market (still). Global Gains co-advisor Tim Hanson owns Colfax. Microsoft is a Motley Fool Inside Value recommendation. Google is a Rule Breakers selection. Whole Foods is a Stock Advisor pick. The Motley Fool has a disclosure policy.

Yes, Stocks Market Is Still Getting Worse

I knew this would happen.

Yes, things were starting to look a little better in late December as bargain-hunters stepped into the stock market, but I knew it wouldn't last. The S&P 500 started slipping back down shortly after the first of the year, and as I write this on Friday morning, it's back in territory it hasn't seen since the scariest moments of the November plunge.

Just as I guessed.

Pretty smart of me, eh? But I think I'll hold off on trying to get myself booked on CNBC as yet another one of those "told ya so" pseudo-experts for a bit. It didn't take much in the way of profound insight to see that another round of selling was likely to set in. If nothing else, the wave of optimism surrounding President Obama was sure to hit the cold reality of dismal earnings and economic numbers before winter turned to spring, and that seemed likely to drive markets right back down.

And so it has. Ouch.

Will it get even worse?
There are an awful lot of uncertainties, even in the near term. How much longer will Bank of America, Citibank, Chrysler, and General Motors twist in the wind before some sort of receivership or bankruptcy proceeding becomes inevitable? How would such actions play out? Will the new stimulus actually stimulate, or will the effects be too little too late?

And this housing plan -- not to mention people's expectations around it -- aren't helping. Subsidizing houses people could never afford in the first place? Trying to push home prices back up to bubble territory so that the paper wealth that people thought they had in 2006 magically reappears and can be realized? Imagine if, back in 2002 or thereabouts, some congressperson had proposed a bill designed to pump the prices of tech top stocks back up to 1999 levels. "The Internet Entrepreneurial Recovery Act" or some such.

Think that congressperson might have gotten a new title in the next election? One starting with the word "Former"?

But I digress. It clearly doesn't look likely to get better any time soon. Even if the market bounces from here and gets a rally going, it may well go right back down again in a month or two. If it doesn't bounce, where does the S&P 500 hit bottom -- 600 … 500?

And more to the point, is there an investment strategy -- other than buying gold, ammo, and canned goods -- that makes sense right now?

One thing to do now
I think there is. I still like the idea of looking for worthwhile value hot stocks and accumulating them through these market drops. If the value case is sufficiently strong, you can effectively take the market's short-term gyrations out of the equation and buy as you go.

Along those lines, I head over to Motley Fool CAPS to play with the best stock screener every now and then, and I look for interesting value ideas. I ran some screens this morning for the first time in a few weeks. Here are some of the names that popped up:


CAPS Rating
(Out of 5)


Long-Term Debt/Equity

Return on Equity

Cal-Maine Foods (Nasdaq: CALM)





Garmin (Nasdaq: GRMN)





General Dynamics (NYSE: GD)





Logitech (Nasdaq: LOGI)





Olin (NYSE: OLN)





QLogic (Nasdaq: QLGC)





WABCO Holdings (NYSE: WBC)





Source: Motley Fool CAPS.

These aren't formal recommendations, of course -- just some of the names that looked intriguing at first glance. If you really like the ammo-and-canned-goods theme, Olin might be one way to play it, since Olin owns the Winchester ammunition company. Some CAPS players, however, seem to think that division is a spinoff candidate.

But it's egg giant Cal-Maine that I'll be taking a closer look at soon. Egg prices seem to have stabilized after a wild ride last year, and demand for eggs seems unlikely to fall during a recession. It might even go up if people are doing more cooking at home, as some are predicting. Such a trend would bode well for the company's 6%-plus dividend yield.

As always, though, you and I both should do further research before buying any of these companies. If you don't have the time or inclination to do that research yourself, but you'd like some carefully vetted value ideas to buy today, I invite you to give our Inside Value newsletter service a try. You can see the team's best ideas for new money in just a few seconds with a 30-day free trial.

Stanford bank in Antigua seized

The move comes after governments elsewhere, including in Peru, Venezuela, and Ecuador, suspended operations at banks owned by the group.

Sir Allen Stanford stands accused by US financial authorities of involvement in an $8bn (£5.6bn) investment fraud. He was served civil papers on Thursday.

The billionaire had been the single biggest private investor in Antigua.

The Securities and Exchange Commission (SEC) has accused Sir Allen of an alleged fraud "of shocking magnitude".

However, he is not in custody and has not been charged with any criminal violations.

Authorities in the US claim that Sir Allen attracted clients by promising unrealistic returns on investments.

Customer accounts held by Stanford Financial Group were frozen until legal claims could be resolved, Reuters news agency reported the company's receiver as saying on Friday.

"For the foreseeable future, customers cannot use their accounts to make payments because transfers out of these accounts are frozen until the receiver is able to verify there are no legal or equitable claims against those accounts," said Ralph Janvey, a Dallas lawyer responsible for recovering Stanford assets.

Earlier in the day, the England and Wales Cricket Board (ECB) ended all contractual links with the billionaire.

The ECB had signed a multi-million dollar deal with the Texan to stage a series of Twenty20 cricket games and tournaments both in the Caribbean and in England.

The England team will not take part in any future Stanford Super Series matches, and the Stanford-sponsored Quadrangular Twenty20 games planned for England in 2009 will not now take place.

'Unusual withdrawal'

The Eastern Caribbean Central Bank says it took control of the Bank of Antigua to prevent a run on the bank after the SEC filed civil fraud charges against Sir Allen in the US. The bank was not named in the SEC's complaint.

The central bank said it had taken the step after "an unusual and substantial withdrawal of funds".

The move by Antigua regulators is aimed at maintaining stability and reassuring customers, correspondents say.

Antigua's Financial Services Regulatory Commission has named a British firm, Vantis Business Recovery Services, as a receiver of Stanford International Bank and Stanford Trust Company, the Associated Press reports.

Mexico police chief stands down

Roberto Orduna stepped down hours after a policeman and a prison guard were killed in the city, which has been wracked by drug-related violence.

Criminal gangs had threatened to kill at least one police officer every two days until Mr Orduna quit.

Murders are frequent in Ciudad Juarez, which sits on the US border and is a key staging post on the drug route.

Mayor Jose Reyes had insisted earlier the city would not back down to criminal gangs.

But speaking after the two murders, he said Mr Orduna's departure was the only way the authorities could protect policemen.

We can't allow men who work defending our citizens to continue to lose their lives
Roberto Orduna
"These events took place despite the measures that we took to protect the municipal policemen. That is the reason why the decision was taken," Mr Reyes said.

Mr Orduna said he did not want to endanger any more lives after a spate of shootings this week.

"We can't allow men who work defending our citizens to continue to lose their lives," he said. "That is why I am presenting my permanent resignation."

Mr Orduna had only been in the post since May; he took over after his predecessor was forced to flee across the border to Texas following death threats.

His replacement would be found in the next few weeks, the city's authorities said.

Death threats

The resignation was the latest evidence that drug gangs exercise formidable control over parts of northern Mexico, says the BBC's Stephen Gibbs in Mexico City.

Recent widespread anti-army protests in the region appear to have been largely orchestrated by the cartels.

Nearly a third of the 6,000 people killed in drug-related violence last year died in Ciudad Juarez.

Police were placed on high alert after notices were posted in the city on Wednesday warning Mr Orduna one of his officers would be killed every two days until he resigned.

Two days later, police officer Cesar Ivan Portillo was found dead, and a note taped to his body - and that of the murdered prison guard - said the deaths were a fulfilment of the threat.

The government of Felipe Calderon has vowed to take on the drugs gangs, and some 40,000 troops have been deployed across Mexico since 2006 to battle cartels which make billions of dollars a year exporting cocaine and other drugs to the US.

While this campaign has resulted in record drug seizures, it has also provoked a dramatic escalation in violence, as the gangs fight both one another and the federal forces

Clinton urges stronger China ties

Co-operation between the US and China on global issues such as the economy and climate change was "imperative", said Mrs Clinton in Beijing.

She said that these would take precedence over points of friction between the two governments, such as human rights and Tibet.

Her Asian tour has included stops in Japan, Indonesia and South Korea.

"We want to deepen and broaden our relationship," she said at a news conference with Chinese Foreign Minister Yang Jiechi.

The US believes it cannot solve any of these problems unless China is involved
The BBC's James Reynolds

Reynolds' blog: Save-the-world club
"We believe we have established a solid foundation, but there is much work to be done.

"It is in our view imperative that the United States and China co-operate on a range of issues from the economy to global climate change to development and so much else."

Mr Yang said the two nations were facing "a series of major and pressing" challenges.

"The larger situation requires our two countries to strengthen dialogue... and work together to elevate our relationship to a new level," he added.

The two held talks lasting almost two hours.

Afterwards, Mr Yang said the discussions had been constructive and produced positive results, with both countries agreeing to take steps to tackle the financial crisis and reject protectionism.

Mrs Clinton said they had focused on the global financial crisis, climate change and security issues including North Korea.

Asked whether she had raised the issue of human rights, Mrs Clinton said she had held candid discussions on the subject with Mr Yang, the BBC's James Reynolds in China says.

Mr Yang said the two sides saw the subject differently, our correspondent says, but he stressed that China did respect human rights.

Mrs Clinton also had talks with President Hu Jintao and Prime Minister Wen Jiabao on Saturday.

Before arriving in Beijing, Mrs Clinton said the debate with China over human rights, Taiwan and Tibet should not interfere with attempts to reach consensus on broader issues.

"Our pressing on those issues (human rights, Taiwan and Tibet) can't interfere with the global economic crisis, the global climate change crisis and the security crises," she said.

"We have to have a dialogue that leads to an understanding and co-operation on each of those."

Pyongyang's ally

On the economy, Mrs Clinton sought to reassure China that its massive holdings of US treasury notes would remain a good investment.

"I appreciate greatly the Chinese government's continuing confidence in United States treasuries. I think this is well-grounded confidence," she said.

Hillary Clinton (left) with China's Foreign Minister Yang Jiechi in Beijing, China, 21 February
Mrs Clinton and Yang Jiechi held two hours of talks

Mrs Clinton also stressed the importance of dealing with climate change with China, which has overtaken the US as the world's leading emitter of greenhouse gases.

The subject of North Korea, and attempts to get six-party talks on Pyongyang's nuclear programme back on track, are also high on the agenda for Mrs Clinton in Beijing.

China is seen as Pyongyang's closest ally and the country most likely to influence the hard-line communist country's rulers.

Speaking earlier in the South Korean capital Seoul, Mrs Clinton urged North Korea to hold talks with the South and end its nuclear