Bullishness Jumps to Three-Year High

Individual investors were feeling especially cheery about stocks this holiday week.

The percentage of bullish individuals rose to 55.1%, the highest level in nearly three years, in the week ended Dec. 25, according to the American Association of Individual Investors. That was a jump from the 47.5% of investors who said they were bullish the previous week.

The last time that more investors said they were bullish was during the week ended Jan. 6, 2011, when 55.9% said they were bullish.

The year-end rise in holiday spirits doesn't appear to be a seasonal phenomenon. Historically, the holiday change in investor sentiment is just about evenly split. Bullishness rose during the last full week of the year in 10 of the past 20 years, and fell the other 10, according to historical AAII data.

With last week's reading, an average 39.7% of investors have said they bullish each week this year, according to AAII data. That marks a rise from last year's average of 36.5%, and remains above the average 38.1% of investors who said they were bullish each week in 2011. Individuals were more bullish in 2010, however, when an average 40.5% of investors said they thought stocks would rise in the next six months.

On the surface, the AAII reading may seem like another piece of good news for a stock market that is on track for its 50th record high in the Dow. But for many traders, the AAII is often used as a short-term contrarian indicator, with the thinking that by the time mom and pop jump in the rally, it's mostly played out.

Individuals aren't putting on their rally caps quite yet, either. Over recent years, the steadiest rise has been in the number of investors who say they are neutral on stocks. Even with last week's jump in bullishness, an average 30.7% of investors were neutral on stocks each week this year. That is a rise from last year's 30.1%, and the highest since 1999, when 35% of investors said they didn't expect big moves from stocks.

The Four Biggest Mistakes in Stock, ETF and Futures Trading Strategies

In this series I would like to share with you the four biggest mistakes traders and investors make which costs them time, money and usually self-confidence when trading stocks, ETF's or futures trading strategies.

The Four Biggest Mistakes

1. Lack Of A Trading Plan

2. Using To Much Leverage

3. Failure to Control Risk

4. Lack Of Self-Discipline

Throughout this multi-part series I will cover the major mistakes, why traders make them and how you can avoid them with your stock, ETF, and futures trading strategies.

While most books about trading are based on success, I want to talk about the other 90% of traders and trading results – the dark side of the business. Why? Because if you can avoid the mistakes then success should naturally happen. Trading As Your Business should not be taken lightly and it's generally the little things (negatives) that make the biggest differences.

Part I – Lack Of A Trading Plan

Recently to took a free online course by Steve Blank. The program was called "How to Build a Startup". This course was really well done and if you are an entrepreneur then it's a must do course hands down. I think it took me roughly 10-12 hours (online videos with embedded quizzes). Anyway, Steve teaches you everything you need to know and do before starting any type of business and why so many individuals fail to succeed.

The #1 mistake made by traders is because they have no trading plan to guide them through the financial market place. A surprisingly high level of traders enter the market without a clear strategy on how they will trade in and out of the market. Most traders are so excited to start trading they simply skip the process of creating, building and testing a stock, ETF of futures trading strategy before they actually start trading with real money and why there is a high rate of failure.

If you take great pride in your trading and truly want to succeed over the long run, then I am sure you find yourself as I do, constantly consumed by monitoring your trades and strategies to be sure the process is executed correctly. If this is you, then congratulations, you are rare and likely making some big money.

Why Do Trades Make Mistake #1?

The main reason individuals trade without a plan is because of the allure that making money in the market can be quick and highly profitable. Many people just do not want to "waste" time planning to trade when they can just pull the trigger to buy and sell within minutes of opening a trading account.

This mind set is understandable. We are all guilty of tossing a product manual to the side and just try to build or use a new product without learning how it works, only to realize hours or days later we are reading the manual because we made some mistakes…

Let's face it, with so many marketing ads hitting our inbox each day, and books talking about how traders are turning $10,000 into $1,000,000 in less than a year most novice traders will get fired up and start trading before they are truly ready.

Stock ,ETF and Futures Trading Strategies Brutal Truth You Don't Want

As with any business or professional to be a success a great deal of hard work is typically involved. First of all it is not easy to build a successful trading plan. And then if you can do that, then you need to follow the plan, which is actually even harder. If you want to be a successful trader then you better be prepared to pay the price in terms of time and money.

How to Avoid Mistake #1 – There are only two ways around making this mistake

Avoidance Method 1 - The first is to devote as much time and energy needed to develop a detailed stock, ETF or futures trading strategy that addresses all of the key elements of a successful trading plan and system and still knowing that this will BOT guarantee your success.

The Key Elements That Must Be Mapped Out

- How much money can you afford to lose/trade without affecting your lifestyle?

- What market/s will you trade?

- What trading time frames works best for you?

- Day trade, swing trade, investing, manual order entry, automated trading system?

- What will your criteria's be for entering a trade?

- What will your criteria's be for exiting a trade with partial profits?

- What will your criteria's be for getting stopped out of a trade gone bad?

- What time frame chart will use base the trend of the market on for you trades to follow?

- How will to manage positions by letting your profits run and by cutting losses?

Avoidance Method 2 – The second and fasted growing route traders and investors are going is to buy or subscribe to ETF Trading Strategies, or Futures Trading Strategies and fast track the process to hopefully make money trading with the least amount of effort, the lowest amount of downside risk for their capital and being 100% hands free.

Part I – Conclusion:

I hope this short report helps you see the light at the end of the very long tunnel of creating, building and following a trading plan. Without this first step/blueprint you are doomed from day one.

Keep your eyes open for part II where I will talk about trading with leverage, how to avoid it, and how to use it to generate massive gains if used correctly.

Chris Vermeulen – www.TheGoldAndOilGuy.com

Fed meets with ‘taper’ plan likely on hold

NEW YORK — Back in September, the last time the Federal Reserve met on monetary policy, they voted not to start dialing back their market-friendly bond-buying program. Some said the vote was a "relatively close call."

Since then, the economy has been blindsided by a 16-day government shutdown that delayed the release of key economic data and dented consumer confidence.

There has also been soft incoming readings on employment and housing, two areas the Fed wants to see perk up dramatically before reducing its stimulus.

SURVEY: Shutdown shrinks economists' optimism

The bottom line: Tapering is off the table this month, too. And the Fed will likely let the world know that when its two-day meeting ends Wednesday.

"We doubt the vote (not to taper) will be nearly as close for most Fed members this time around," Michael Hanson, U.S. economist for Bank of America Merrill Lynch noted in a report.

So, will the Fed start cutting back on its $85 billion in monthly purchases of long-term U.S. Treasuries and mortgage-backed bonds at its December meeting? Or wait until 2014, as many economists say is more likely?

"The timing of tapering is still open to debate," says Steven Ricchiuto, U.S. chief economist at Mizuho Securities USA.

In search of clues, investors will scrutinize the Fed's post-meeting statement. But Hanson says the "most interesting aspects" of the Fed's discussion "won't be revealed" until the minutes of the October meeting are released in mid-November.

Stocks waver after record run

Click for more market data.

NEW YORK (CNNMoney) After last week's big rally, investors were taking a more cautious approach Monday as they look for clarity about the economy and corporate earnings.

The S&P 500 pulled back a bit, after opening at a record high. The Dow Jones industrial average was also off a few points, while the Nasdaq held modest gains.

Investors jumped back into the market last week after the U.S. government reopened and lawmakers ended a budget showdown that threatened the nation's credit rating.

But the tone was more muted Monday as investors asses the economic damage caused by the shutdown and weigh the outlook for corporate earnings.

"The market will be looking for an excuse" to pull back by 1% or 2%, said Peter Cardillo, chief economist at Rockwell Global Capital. That excuse, he said, might be the September jobs report, which will be released Tuesday after being delayed by the partial government shutdown.

McDonald's (MCD, Fortune 500) shares fell after the fast food chain reported earnings that met expectations, but global sales growth was tepid . Halliburt (HAL, Fortune 500)on shares fell after the oil field services company's earnings met expectations.

AT&T (T, Fortune 500) shares gained after the company announced over the weekend that it had inked a $4.8 billion lease deal with Crown Castle International Corp (CCI).

  Investors not lovin' Mcdonald's

Who's watching Netflix? Netflix (NFLX) is among the companies slated to release quarterly results after the market closes.

"$NFLX up more than 3% this morning on volume 3X average : is it a clue about the earnings that will be announced this evening?" asked StockTwits user JeanPaul.

At least one trader thinks the provider of online TV and movie rentals could announce plans to ramp up its original content.

"Wouldn't be surprised to see $NFLX raise a little cash to finance more in house productions," said danconway.

Given the high expectations, some traders were bracing for a volatile reaction if the company fails to deliver.

"$NFLX It's like a lot o! f good news is getting priced in. So if earnings doesn't blow the street away, it may not go a ton higher tomorrow," said tangsting.

Keeping tabs on JPMorgan. Shares of JPMorgan Chase (JPM, Fortune 500) rose following news over the weekend that the bank and the Department of Justice have tentatively agreed to a $13 billion civil settlement to resolve several investigations into the bank's mortgage securities business.

Despite the record fine, the settlement would be a positive for the stock since it means JPMorgan can finally move beyond its legal woes, according to analysts at Biard Equity Research.

Tomorrow is iPad day. Apple (AAPL, Fortune 500) shares were up 2% one day before the company is expected to reveal its first revamped iPad in a year. Apple, which reports earnings next week, was also upgraded to "Buy" by analysts at Societe Generale.

"$AAPL Triple whammy of positives. 1) just crossed 513 2) iPad event with possible CHL deal 3) ER next week. Good buy right here IMO," wrote mjhtradepro.

On the economic front, the National Association of Realtors said existing home sales fell 1.9% in September. The group said rising interest rates and the fallout from the government shutdown will weigh on the housing market in the months ahead.

One Small Step From Organovo Holdings is Actually a Very Big One (ONVO)

It's certainly not the way I would have likes for things to shake out with Organovo Holdings Inc. (NYSEMKT:ONVO), but I'm not going to complain - it's pointed in the right direction. More important, for anybody who's been wanting into an ONVO trade but wasn't sure where the right entry spot was, today's move is it, with just one little caveat.

If the ticker 'ONVO' seems vaguely familiar, it may be because yours truly has looked at it three separate times since early June. The first look was a bullish stance (right in front of a runup), the second one was a bearish stance (right in front of a pullback), and the third look from August 2nd was a bullish look at Organovo Holdings again, which hadn't gotten much traction... until today.

Simply put, though it took a while, Organovo Holdings Inc. shares have rocked their way out of a wedge formation after finding repeated support at any and all of its key moving average lines. The breakout is unfurling in the second day of decidedly-higher volume from ONVO too, suggesting this is the real deal.

The only flaw I see with the breakout effort is the fact that the stock left behind a gap with this morning's jump. Generally speaking, the market doesn't like to leave gaps unfilled, meaning there's a good chance ONVO could slide back to Thursday's high of $6.08 to close the gap. Even if it does, however, don't sweat it - the bulls have tipped their hand with today's move, and even if we do get that dip, the odds are good that we'll bounce right back out of it. There's just not much room left to knock around inside this narrow tip of the triangle, and those moving average lines stand ready to act as a floor.

The big question is, of course, what prompted the breakout in the first place? After all, ONVO can only keep rallying if it can keep new investors flowing in. The answer is, nothing specific from the company, but a handful of positive write-ups from opinion-journalism. That's ok though. Opinion-driven buying can be and often is longer-lived than news-based bullishness is. Whatever the case is for Organovo Holdings, the technical breakout looks healthy enough to use as a buy signal.

If you'd like to get more trading ideas and insights like this one, sign up for the free SmallCap Network daily e-newsletter. It's full of stock picks, market calls, and more.

More precise numbers = more trust from clients

Clients may have more confidence in financial advisers who use precise numbers, rather than those who round them up or down, new research from the University of California, Los Angeles, suggests.

People who use more specific numbers — such as citing a 6.4% return instead of a 6% return — are judged to be more reliable sources and are more likely to be tapped by others for advice, according to a recent study by Danny Oppenheimer, associate professor of marketing and psychology at UCLA.

“For advisers, if you give more precise estimates, people will think you are more confident in your decisions and may be more inclined to trust you,” Mr. Oppenheimer said.

Most previous research on what conveys confidence has focused on physical cues, such as the eye contact of the presenter, their posture and whether they make nervous gestures. This research suggests that specificity with numbers as a confidence booster works even when the information is delivered through written forms of communication.

“So much more communication is happening today in ways that people don't have normal cues,” Mr. Oppenheimer said, noting the increased importance of e-mail and social media in business.

In the first part of the study, 187 undergraduates were asked to read 10 questions and estimate the confidence level of the person who had answered each one. The answers all involved numbers but some offered precise measures, such as “2,611 miles,” while others gave imprecise answers like “2,600 miles.”

Participants judged those who answered with more significant digits to be more confident, Mr. Oppenheimer said.

In the second part of the study, 163 people were paid to participate in a Price is Right-style game where they had to guess the price of different items. They were given audience suggestions like “$60” or $63” and had to choose which audience members would advise them in subsequent rounds.

Researchers found that participants preferred advice from those who gave more precise estimates, said the study, which was co-authored by UCLA's Ashley Angulo and Princeton University's Alexandra Jerez-Fernandez.

Applications for the research include “which politician to vote for, which stock broker to take on as financial advisers, and which doctor to trust with diagnosis,” the authors wrote.

However, one key is to be accurate, Mr. Oppenheimer advised.

Some legal psychological research suggests that when someone makes a statement with a lot of confidence but get it wrong, people are more skeptical of the person in the future, he said, noting that such theories have not been investigated in the context of! investments.

“And of course, it's easier to be wrong, the more specific you are,” Mr. Oppenheimer said.

What U.S. Investors Should Do About Syria

NEW YORK (TheStreet) -- The ineptitude of U.S. foreign policy in the Middle East is truly staggering. Following in the footsteps of former President George W. Bush's debacle in Iraq, President Obama seems hell-bent on a regime change in Syria, an eventuality that would make that Middle Eastern nation less stable, less humane, less democratic and more dangerous to U.S. national security. All the while, Obama's policy is damaging the U.S. economy and causing irreparable harm to U.S. influence and prestige in the Middle East region and around the world.

In the face of this situation, to speculate about potential damage to the S&P 500 or the Dow Jones Industrial Average almost seems vulgar. But, unfortunately, taking care of one's wealth will appear uncouth at times.

So let's get to it. The first step is to actually gain a reasonably objective (i.e., non-partisan) understanding of the situation. Then, one can strategize about what one should do as an investor. Remembering the U.S. Experience in Iraq I hate to repeat this hackneyed phrase, but it is so true, in this case: "Those who forget history are condemned to repeat it."

The U.S. intervened militarily in Iraq ostensibly on three grounds: 1) To eliminate a threat to U.S. national security. 2) To promote democracy and stability in the Middle East. 3) To promote human rights in Iraq, particularly of minority groups. [Read: Will Twitter Sell Its Soul Like Facebook Did?] So let us make a summary cost-benefit analysis of the U.S. policy in Iraq. On the cost side of the ledger, hundreds of thousands of Iraqi and American lives were ruined and trillions of dollars of U.S. and Iraqi wealth were lost. But what was the benefit? Regardless of political persuasion, the following are historical facts about whether -- and to what extent -- the U.S. obtained its stated objectives in Iraq: National security. Iraq was never a serious threat to U.S. national security -- even if it had been true that it possessed chemical weapons. So no benefit to U.S. national security could have been attained from a non-threat, even if everything had gone right. Tragically, Iraq actually poses a greater threat to U.S. national security today than it did before the invasion, as a result of the rise of extremism within Iraq as well as the relative strengthening of Iran's (America's declared arch-enemy) influence within Iraq and the region. Middle East stability. Iraq and the Middle East as a whole are demonstrably more unstable today than prior to the U.S. invasion. Democracy and human rights. Iraq is less of a liberal democratic society today than it was prior to the invasion. Elections do not guarantee liberty, justice or democracy in any meaningful sense. Never have; never will. Post-Sadaam Iraq is just one more case study, proving to be a humanitarian and democratic disaster for Iraq's minority groups including Christians, Jews as well as many Muslims. [Read: Does the iPhone 5S Fingerprint Tech Make You Safer?]

Obama Imitating Bush Obama apparently wants to imitate the Bush disaster. The parallels are uncanny.

The reasons stated for a military intervention in Syria are almost exactly the same: U.S. national security; Middle East stability; the promotion of a regime change in the direction of democracy and human rights. And it is already obvious that Obama is achieving the same sort of results that Bush did.

National security. Syria poses no serious national security threat to the U.S. The Assad regime and its weapons may pose a threat to opposition groups within Syria (including jihadists), but not to U.S. national security. Even if Assad were so stupid as to commit a hostile act against the U.S., America could very swiftly take care of this puny threat with full moral justification and backing from the international community.

What about threats posed by Syria to Israel? Syria poses no more danger than virtually any other major Middle Eastern nation does to Israel (they all have conflicts with Israel), nor is it any more of a threat than it was one, five or 10 years ago. Furthermore, the current regime poses considerably less risk to Israel than virtually any Syrian successor regime that can realistically be imagined. Israel and the Assad regime have coexisted for many decades; there is nothing to suggest that the danger to Israel posed by the Assad regime has increased relative to historical norms. Middle East stability. As much as some Americans may not like to admit it, the Assad regime represents the best chance for the most stability that can be hoped for in Syria at the present time, given Syria's state of economic, social, cultural and political development. A post-Assad Syria would look much like the post-Sadaam disaster in Iraq today (sectarian and ethnic civil war) and the post-Mubarak catastrophe brewing in Egypt. The Assad regime represents the best chance of keeping this religiously and politically fractious nation together and avoiding a civil war and potential holocaust. Democracy and human rights. While the Assad regime is hardly model of modern sensibilities with regards to human rights, it represents the best chance that Syria's ancient Christian population, its Jewish population, political secularists and Muslim moderates have to evolve into an ethnically diverse liberal-democratic nation over time, based on the rule of law. It is unrealistic to think that the establishment of liberal democracy can occur in Syria in anything other than a gradual evolutionary fashion that will take at least two or three generations' time. The overthrow of the Assad regime will almost certainly represent a set-back on this path and entail the massacre and mass emigration of Syria's sizable Christian population, just as occurred in Iraq and is currently happening in Egypt. Gruesome attacks on Syria's Christian population by Islamist anti-Assad groups have already begun. [Read: Twitter Files for an IPO ] Obama is trying to draw a distinction between his Syria policy and Bush's Iraq policy by saying that he "won't put boots on the ground in Syria." This argument is so wrong-headed, it beggars belief. First, from the point of view of Syrian internal stability, it really does not matter whether the Assad regime is overthrown with the help of U.S. troops or with the help of cruise missiles. The destabilizing political consequences for the Middle East and the humanitarian cost for Syria's minority populations will be the same -- potentially even worse without the restraining influence of U.S. troops. Second, from the point of view of U.S. national security, not placing boots on the ground to secure Syria's chemical weapons (remember that securing WMD stockpiles was the prime justification for boots on the ground in Iraq) would gravely endanger U.S. national security, as those weapons will likely fall into the hands of U.S. and Israeli enemies in the event of the sort of chaotic civil war that is likely to follow the collapse of the Assad regime. Loss of U.S. Influence The U.S.'s inept handling of the situation in Syria is handing a major diplomatic victory to the Putin regime in Russia -- a regime which poses a far greater threat to U.S. national interests than the Assad regime ever has. It is also strengthening the hand of Iran and China, regimes that also pose a far greater threat to U.S. national interests than the Assad regime in Syria ever has. More general, the belligerent fumbling and bumbling of the Obama administration is causing massive damage to U.S. standing and prestige around the world. It also indirectly harms the political and social standing of U.S. companies such as Exxon (XOM), Chevron (CVX) and Schlumberger (SLB), which have important economic interests in the region. [Read: Fast-Food Workers Are Right: Raise the Minimum Wage]

Conclusion After ruining the lives of hundreds of Americans through death and injury, while squandering trillions of dollars' worth of U.S. wealth, America has evidently not learned its lessons from Iraq. The ongoing US-sponsored disasters in Egypt and Libya have apparently not provided enough warning either.

President Obama seems hell-bent on repeating the fundamental errors Bush made in Iraq and the ones he made in Egypt and Libya, making Syria less stable, less humane, less democratic and more dangerous to U.S. national security.

Obama is accomplishing all of this while handing out major diplomatic victories to regimes that truly threaten U.S. national interests, such as Russia, China and Iran. And to top it all off, the Obama administration is following in the tradition of George W. Bush by damaging the U.S. economy and causing massive harm to U.S. influence and prestige in the Middle East region and around the world.

What should Obama actually do, then? As far as the chemical weapons are concerned, Obama should hand the job over to the U.N. Assad will not dare use chemical weapons with bumbling U.N. inspectors supervising stockpiles and swarming the country with detective hats and magnifying glasses on the lookout for other WMD. As far as the desire for regime change, forget it. The alternatives are worse. The smartest policy for the U.S. would be one of deepening economic and cultural ties with the Assad regime in the hope that the U.S. can gradually influence political and societal change over time via the sort of incremental cultural changes that inevitably come with deeper economic and social ties. What should investors do? Nothing. [Read: Will Twitter Sell Its Soul Like Facebook Did?] Syria is not relevant to the value of the U.S. equity market. The only way Syria would matter at all is if one of three things happened: First, some sort of major terrorist reprisal against the U.S. or U.S. interests from a desperate Assad regime. Second, a devastating attack on Israel or some other major emergency situation that led to U.S. boots on the ground. Third, the spreading of military hostilities with other interested nations such as Iran or Russia. The probabilities of any of these scenarios materializing are minor, in my view. Therefore, from an expected return point of view, there is nothing that U.S. investors can, or should, do about this. For example, if you ascribe a probability of 20% to any one or more of the three risks mentioned actually materializing (which is way too high, in my view), and one hypothesizes a consequent hit to market value of as much as 20% (which is absurdly high), the impact on current expected market value would only be 4%. In practice, such an adjustment in a price target for the S&P 500 makes no sense, as it is indistinguishable from technical "noise."

Therefore, save your time worrying about the impact of Syria on your investments and write your congressman and the Obama's office instead. Tell them you are an independent voter that voted for them in the last election, that you are disappointed in them as a result of current Syria policy, and that you promise to definitely vote for the opposite party in the next election, if they do not reverse policy now.

That might have more beneficial impact on your portfolio than trying to speculate about how the highly volatile, unpredictable and relatively unimportant (from the point of view of market value) the Syrian situation will impact the U.S. stock market.

At the time of publication the author had no position in any of the stocks mentioned.

Follow @jameskostohryz This article was written by an independent contributor, separate from TheStreet's regular news coverage.

James Kostohryz has accumulated over twenty years of experience investing and trading virtually every asset class across the globe. Kostohryz started his investment career as an analyst at one of the US's largest asset management firms covering sectors as diverse as emerging markets, banking, energy, construction, real estate, metals and mining. Later, Kostohryz became Chief Global Strategist and Head of International investments for a major investment bank. Kostohryz currently manages his own investment firm, specializing in proprietary trading and institutional portfolio management advisory. Born in Mexico, Kostohryz grew up between south Texas and Colombia, has lived and worked in nine different countries, and has traveled extensively in more than 50 others. Kostohryz actively pursues various intellectual interests and is currently writing a book on the impact of culture on economic development. He is a former NCAA and world-class decathlete and has stayed active in a variety of sports. Kostohryz graduated with honors from both Stanford University and Harvard Law School. View Kostohryz's LinkedIn profile and connect with him here; follow him on Twitter here and Google+ here. When connecting, be sure to identify yourself as a reader from TheStreet.

First Community Financial Partners, Inc. Reported Earnings of $0.03 Per Share and Net Income of $567,000 For Q2 (OTCMKTS:FCMP, OTCMKTS:EQLB)

First Community Financial Partners, Inc. (FCMP)

Today, FCMP remains (0.00%) +0.000 at $3.00 thus far (ref. google finance Delayed: 9:33AM EDT August 8, 2013).

First Community Financial Partners, Inc. previously reported results for the quarter ended June 30, 2013. For the quarter ended June 30, 2013, First Community's net income applicable to common shareholders was $567,000, or $0.03 per diluted share, compared with net income applicable to common shareholders of $1.1 million, or $0.08 per diluted share, for the quarter ended March 31, 2013.

First Community Financial Partners, Inc. (FCMP) 5 day chart:

EQ Labs, Inc. (EQLB)

Today, EQ Labs, Inc. (OTCMKTS:EQLB) (www.drinkeq.com) remains (0.00%) +0.000 at $.0065 thus far (ref. google finance Delayed:  3:00PM EDT August 8, 2013).

Now at the current price of $.0065, EQLB would be considered to have experienced a (+983.33%) gain if compared to the 52 week low of $.0006.

EQ Labs, Inc. manufactures and markets energy drink products in the United States and Latin America. The company offers EQ Smart Energy Drink, in an effervescent tablet form that provides an instant energy drink once added to a beverage of choice. EQ Labs, Inc. distributes its products through national and regional distributors.

EQ Labs, Inc. (EQLB) 5d chart:

Check out: 3 equity funds for long-term financial targets

Below is the verbatim transcript of Vaid's interview with CNBC-TV18.

Caller Q: I can invest Rs 5,000 a month for four months and thereafter Rs 7,000 a month. I am paying home loan equated monthly installments (EMI) of Rs 21,000 per month with 11 years remaining. How should I utilise the balance fund?

A: First and foremost advice is to articulate your goal because without goal it becomes difficult to know what is your objective of saving or what are you trying to achieve in terms of investment. You should have a goal which is slightly long-term in nature and in your case goal is not mentioned so we are assuming there is a retirement goal over a period of next ten years and once you get the goal and duration right for that planning then you can articulate an asset allocation.

Therefore, any goal which is above six-seven years, which is long-term duration, you can have an asset allocation suggested at 80 percent equity and 20 percent fixed income which further gets divided into largecap and midcap equity out of 80 percent and fixed income in the dynamic bond fund.

The allocation advice for your query will be to look at 80 percent in equity fund, funds like ICICI Prudential Discovery Fund , ICICI Prudential Dynamic Fund , HDFC Equity Fund and DSP Blackrock Equity Fund . On the fixed income side look at Birla Sun Life Dynamic Bond Fund and ICICI Prudential Dynamic Debt Fund . So, these will be good allocation to start with.

However, do remember that goals are very important, especially in a volatile market. If you want to persist, if you do not want to get worried about what is happening to your investment and keep taking your money out every six months then have a goal because that will help you to stay long.

Dow Components to Watch This Coming Week

After last week, when eight of the Dow Jones Industrial Average's (DJINDICES: ^DJI  ) 30 components reported earnings, this week may seem slow, with only four companies releasing their second-quarter financials. Before they do, let's take a few minutes to review what Wall Street is expecting from each of them.

Monday will be a busy day for earnings releases, though not from any of the Dow's components. Things will heat up for the index on Tuesday, with Pfizer (NYSE: PFE  ) and Merck (NYSE: MRK  ) both set to report earnings before the opening bell on Tuesday.

Wall Street expects Pfizer to report earnings per share at $0.55 on revenue of $13.02 billion. The EPS number is based on 15 analysts' estimates, with the high end at $0.61 and the low end at $0.52. One year ago, Pfizer posted EPS of $0.62 while analysts had expected $0.54. Pfizer posted revenue of $15.06 billion in Q2 2012, so with this quarter's estimate, analysts are expecting a sales decline of 13.5%.  

As for Merck, the Street expects revenue of $11.22 billion and an average analyst EPS target of $0.83. The high-end estimate for EPS is $0.89, and the low end is $0.80. Last year, Merck's $1.05 EPS beat estimates of $1.01, while sales came in at $12.31 billion. Wall Street is expecting the company to post an 8.9% sales decline this year over last.  

Both Pfizer and Merck have been hit hard in recent months as the companies deal with the patent cliff and their high-performing drugs lose market share in the face of generic-drug competition. If either company can beat expectations, shares should respond upward nicely, but if they do even worse than expected results, we may just see the bottom fall out.

ExxonMobil (NYSE: XOM  ) reports on Thursday, while fellow energy stock Chevron (NYSE: CVX  ) pulls in on Friday. For Exxon, the Street wants to see EPS of $1.90 on revenue of $105.54 billion. A year ago, Exxon posted EPS of $1.80 and sales of $127.36 billion. Earnings are thus set to rise, and that's what really matters. The EPS estimate of $1.90 is an average of 21 analysts' opinions, with the high end at $2.05 per share and the low end coming in at $1.63. The expected 17.1% year-over-year revenue drop for Q2 isn't a great sign, and it could pose a big problem if Exxon misses expectations.  

As for Chevron, the outlook is for revenue of $56.01 billion, 10.5% below the same quarter in 2012. EPS are also forecast to be down to $2.96, from $3.56 a year ago. Last year analysts expected EPS of $3.24, and if a big surprise was to come again this year, the stock could respond very favorably -- but don't hold your breath.  

While both companies are benefiting from higher oil prices and the large amount of oil and natural gas to be extracted here in the U.S., getting the fuel out of the ground and transporting it is becoming more difficult and costly for the companies involved. Investors should be watching costs, especially to see how fast they riss from a year ago, before making any buy or sell decisions here.

If you're on the lookout for some currently intriguing energy plays, check out The Motley Fool's "3 Stocks for $100 Oil." For free access to this special report, simply click here now.

Why Triumph Group's Earnings May Not Be So Hot

Although business headlines still tout earnings numbers, many investors have moved past net earnings as a measure of a company's economic output. That's because earnings are very often less trustworthy than cash flow, since earnings are more open to manipulation based on dubious judgment calls.

Earnings' unreliability is one of the reasons Foolish investors often flip straight past the income statement to check the cash flow statement. In general, by taking a close look at the cash moving in and out of the business, you can better understand whether the last batch of earnings brought money into the company, or merely disguised a cash gusher with a pretty headline.

Calling all cash flows
When you are trying to buy the market's best stocks, it's worth checking up on your companies' free cash flow once a quarter or so, to see whether it bears any relationship to the net income in the headlines. That's what we do with this series. Today, we're checking in on Triumph Group (NYSE: TGI  ) , whose recent revenue and earnings are plotted below.

Source: S&P Capital IQ. Data is current as of last fully reported fiscal quarter. Dollar values in millions. FCF = free cash flow. FY = fiscal year. TTM = trailing 12 months.

Over the past 12 months, Triumph Group generated $194.0 million cash while it booked net income of $297.3 million. That means it turned 5.2% of its revenue into FCF. That sounds OK. However, FCF is less than net income. Ideally, we'd like to see the opposite.

All cash is not equal
Unfortunately, the cash flow statement isn't immune from nonsense, either. That's why it pays to take a close look at the components of cash flow from operations, to make sure that the cash flows are of high quality. What does that mean? To me, it means they need to be real and replicable in the upcoming quarters, rather than being offset by continual cash outflows that don't appear on the income statement (such as major capital expenditures).

For instance, cash flow based on cash net income and adjustments for non-cash income-statement expenses (like depreciation) is generally favorable. An increase in cash flow based on stiffing your suppliers (by increasing accounts payable for the short term) or shortchanging Uncle Sam on taxes will come back to bite investors later. The same goes for decreasing accounts receivable; this is good to see, but it's ordinary in recessionary times, and you can only increase collections so much. Finally, adding stock-based compensation expense back to cash flows is questionable when a company hands out a lot of equity to employees and uses cash in later periods to buy back those shares.

So how does the cash flow at Triumph Group look? Take a peek at the chart below, which flags questionable cash flow sources with a red bar.

Source: S&P Capital IQ. Data is current as of last fully reported fiscal quarter. Dollar values in millions. TTM = trailing 12 months.

When I say "questionable cash flow sources," I mean items such as changes in taxes payable, tax benefits from stock options, and asset sales, among others. That's not to say that companies booking these as sources of cash flow are weak, or are engaging in any sort of wrongdoing, or that everything that comes up questionable in my graph is automatically bad news. But whenever a company is getting more than, say, 10% of its cash from operations from these dubious sources, investors ought to make sure to refer to the filings and dig in.

With 71.4% of operating cash flow coming from questionable sources, Triumph Group investors should take a closer look at the underlying numbers. Within the questionable cash flow figure plotted in the TTM period above, other operating activities (which can include deferred income taxes, pension charges, and other one-off items) provided the biggest boost, at 68.8% of cash flow from operations. Overall, the biggest drag on FCF came from capital expenditures, which consumed 39.5% of cash from operations.

A Foolish final thought
Most investors don't keep tabs on their companies' cash flow. I think that's a mistake. If you take the time to read past the headlines and crack a filing now and then, you're in a much better position to spot potential trouble early. Better yet, you'll improve your odds of finding the underappreciated home-run stocks that provide the market's best returns.

If you're interested in companies like Triumph Group, you might want to check out the jaw-dropping technology that's about to put 100 million Chinese factory workers out on the street – and the 3 companies that control it. We'll tell you all about them in "The Future is Made in America." Click here for instant access to this free report.

We can help you keep tabs on your companies with My Watchlist, our free, personalized stock tracking service.

Add Triumph Group to My Watchlist.

Friday's Top Upgrades (and Downgrades)

This series, brought to you by Yahoo! Finance, looks at which upgrades and downgrades make sense, and which ones investors should act on. Today, our headlines feature a pair of new buy ratings for resorts operators Vail Resorts (NYSE: MTN  ) and SeaWorld Entertainment (NYSE: SEAS  ) . But the news isn't all good, so before we address those two, let's take a look at why one analyst thinks that...

Micron will get smaller 
Shares of NAND flash and DRAM memory maker Micron (NASDAQ: MU  ) are moving lower today, hurt in part by a downgrade from analysts at MKM Partners -- but not hurt too much.

Although it's technically bad news, MKM didn't do as much damage to Micron's share price as it might have, a fact resulting from two things: First, the downgrade was only to "neutral," and not the dread "sell" rating. Second, despite downgrading the stock to hold, MKM says it still thinks Micron shares are worth $13 apiece -- and with the stock still trading south of $12, that's hardly horrible news. But is MKM right? Is there still some room for upside in these shares?

Sadly, probably no. On one hand, things aren't quite as bleak as they look at Micron. While technically "unprofitable" from a GAAP-earnings perspective, Micron actually is generating a bit of free cash flow from its business. Over the past year, the company produced $235 million worth of real cash profits, and while that still leaves Micron trading for a heady 52 times FCF, at least it's a positive number.

With a long-term growth rate estimated at just over 14%, it's hard to say why anyone would want to buy Micron at these prices -- and that's probably why MKM no longer is telling people to buy. That said, a valuation this high also leaves me scratching my head, and wondering why the analyst stopped short at a neutral rating, and didn't take the next, obvious step of downgrading all the way to "sell."

Vail: Climb this mountain?
Turning now to the good news of the day: Investors in Vail Resorts are running away from today's sideways market with a 1.6% pop, courtesy of -- you guessed it -- MKM Partners again.

MKM initiated coverage of the ski resorts stock with a buy rating and an $82 price target this morning. The question is, why?

At a price tag 90 times its trailing earnings, even Vail's robust 29% projected growth rate looks too gradual an incline to justify the stock's price. And yet, Vail generated just less than $126 million in real free cash flow over the past year. That's a number nearly five times as big as the firm's $25.7 million in reported GAAP income, and big enough to work the price-to-free cash flow ratio on this one down to just 18.2.

On a 29% growth rate, MKM's right -- this makes Vail stock an attractive vacation location for investor cash.

See the world, but not with SeaWorld
If only we could say the same about Busch Gardens operator SeaWorld Entertainment, just initiated at "overweight" by Barclays.

The Brit banker thinks this stock will sell for $40 a share a year from now, but with the stock already costing nearly $36, that hardly seems enough profit potential to justify a full-throated buy recommendation. The more so when you consider that SeaWorld may never hit that $40 price at all.

Remember, this stock already costs a pretty penny at more than 36 times trailing earnings. Its robust free cash flows ($169 million, trailing) mean SeaWorld's P/FCF ratio is quite a bit less -- about 20. But with a projected growth rate of only 8% going forward, and no dividend to recommend it, the stock looks like a less attractive deal than Vail's.

Fool contributor Rich Smith has no position in any stocks mentioned. The Motley Fool recommends Vail Resorts.

link

Procter & Gamble Co Reports Lower Q1 Results; Announces Plan to Exit Duracell Business (PG)

Before Friday’s opening bell, Procter & Gamble Co (PG) released its first quarter results and announced its plan to exit its Duracell battery business.

PG’s Earnings in Brief

PG reported first quarter net income of $2.00 billion, or 68 cents per share, down from $3.04 billion, or $1.03 per share a year ago. Excluding special items, earnings for $1.07 per share – matching analysts’ estimate of $1.07 per share. Net sales were $20.79 billion, down from $20.83 billion in the year prior.  Analysts expected to see revenue of $20.83 billion.

Duracell Personal Power Business

The company announced that it now plans to exit its Duracell personal power business by making it a stand alone company. PG has not yet provided details surrounding this spinoff.

CEO Commentary

CEO Alan G. Lafley commented, “P&G’s first quarter results were in-line with our expectations, despite a very difficult operating environment. This keeps us on-track to deliver our fiscal year commitments. We continue to accelerate and increase productivity savings, sharpen our strategies and strengthen our portfolio by focusing on our biggest opportunities.”

PG’s Dividend

PG will pay its next 64.36 cent dividend on November 17. The stock went ex-dividend on October 22.

PG Dividend Snapshot

As of market close on October 23, 2014

Click here to see the complete history of PG dividends.

Procter & Gamble shares were up $1.47, or 1.77% during premarket trading Friday. The stock is up 2.24% YTD.

84 Reasons We Love Warren Buffett

Saturday, Aug. 30, is Warren Buffett's 84th birthday. Each year, I celebrate the Babe Ruth of Investing's birthday by adding another reason we love our hero.

1. Intricate, occasionally contradictory complexity hides beneath the "Aw, shucks" folksy charm. As a Forbes writer once put it, "Buffett is not a simple person, but he has simple tastes."

2. Many people talk about avoiding the madding crowd, but Buffett actually does it by living 1,250 miles away from Wall Street.

3. He has a fortresslike internal scorecard on all things investing, yet a vulnerable, endearing external scorecard on many aspects of his personal life. See his penchant for seeking mother figures.

4. His perspective: "In the 20th century, the United States endured two world wars and other traumatic and expensive military conflicts; the Depression; a dozen or so recessions and financial panics; oil shocks; a flu epidemic; and the resignation of a disgraced president. Yet the Dow rose from 66 to 11,497."

5. He is that guy in school who tells you he may have failed the test -- only to bust the top of the curve.

6. His time frame for the long run consistently exceeds his life span.

7. He says it better: "Someone's sitting in the shade today because someone planted a tree a long time ago."

8. He's human. He fears nuclear war and his own mortality. He's frequently more adept at business relationships than personal ones. He can hold a grudge. His hero is his daddy.

9. Classic line: "Rule No. 1: Never lose money. Rule No. 2: Never forget rule No. 1."

10. Once branded a stingy miser (rightly or wrongly), Buffett has evolved (assuming it wasn't his intention from the start) into one of the most effective philanthropists I know. After growing his potential givings at a 20% compounded rate per year, he set a plan to give most of it away.

11. Perhaps as importantly, he put ego aside and outsourced his charitable decision-making to the Bill & Melinda Gates Foundation. Circle of competence at its finest.

12. "I never attempt to make money on the stock market. I buy on the assumption that they could close the market the next day and not reopen it for five years." Contrast that with computer algorithm-based trading, day trading, and some of the moves you've made in your own account.

13. Buffett's smarter than you and I, but he's kind enough to let us feel otherwise.

14. David Sokol was once an heir apparent and arguably Buffett's most trusted operations guy. But when Sokolgate emerged, Buffett stayed true to his word: "We can afford to lose money -- even a lot of money. But we can't afford to lose reputation -- even a shred of reputation."

15. "Derivatives are financial weapons of mass destruction." He said it early, and we are reminded of it often.

16. In a glimpse of the nuance that some commentators call hypocrisy, Buffett uses derivatives himself. But he does so in a way that doesn't threaten the entire financial system and explains exactly why in his annual shareholder letters.

17. He doomed himself from ever holding public office: "A public-opinion poll is no substitute for thought."

18. I like juxtaposing these two quotes: 1) "It's better to hang out with people better than you. Pick out associates whose behavior is better than yours and you'll drift in that direction." 2) "Wall Street is the only place that people ride to in a Rolls-Royce to get advice from those who take the subway."

19. "You only have to do a very few things right in your life so long as you don't do too many things wrong."

20. He has the ability to resist the allure of the quick fix or quick buck when longer-term dynamics are at play.

21. Not sure if this quote came before or after the Internet: "Let blockheads read what blockheads wrote."

22. For those hoping to become famous and respected, he's a testament that the challenges and doubts keep coming regardless of the length of the track record. He has publicly prevailed so far.

23. An investing truism: "Price is what you pay. Value is what you get."

24. The business side of that investing truism: "Your premium brand had better be delivering something special, or it's not going to get the business."

25. He uses colorful language and analogies when drab jargon could do the trick.

26. Boring example: moat vs. competitive advantage.

27. Not-so-boring example: sex.

28. "Look at market fluctuations as your friend rather than your enemy; profit from folly rather than participate in it."

29. Classic line: "Only when the tide goes out do you discover who's been swimming naked."

30. He backs up his saying, "Our favorite holding period is forever," by keeping past-their-prime subsidiaries that others would "spin off to unlock value."

31. His Robin (Charlie Munger) can kick your Batman's butt.

32. He makes loophole-free handshake deals.

33. "Risk comes from not knowing what you're doing."

34. Quote No. 1 on keeping it simple, stupid: "The business schools reward difficult complex behavior more than simple behavior, but simple behavior is more effective."

35. Quote No. 2 on keeping it simple, stupid: "There seems to be some perverse human characteristic that likes to make easy things difficult."

36. The Berkshire Hathaway (NYSE: BRK-A  ) (NYSE: BRK-B  )  annual meeting is an unrivaled spectacle in investing, truly living up to its billing as the Woodstock for Capitalists.

37. One of the most concise summations of why America is great: "There are 309 million people out there that are trying to improve their lot in life. And we've got a system that allows them to do it."

38. Speaking of systems, he harnesses the power of some of the most well-conceived ones around.

39. Trash-bin-diving caution No. 1: "It's far better to buy a wonderful company at a fair price than a fair company at a wonderful price."

40. Trash-bin-diving caution No. 2: "Time is the friend of the wonderful company, the enemy of the mediocre."

41. He's an eternal optimist in a sound-bite culture that often rewards pessimists.

42. His shareholder letters reveal an artisanlike craftsmanship only seen when the proprietor cares deeply about his creation.

43. The contrarian credo: "We simply attempt to be fearful when others are greedy and to be greedy only when others are fearful."

44. He recognizes that genius fails: "When a management with a reputation for brilliance tackles a business with a reputation for bad economics, it is the reputation of the business that remains intact."

45. Like so many great thinkers, Buffett is able to ignore noise and whittle a decision down to its core variables. After he explains those variables, the decision sounds elementary.

46. Why banking can be dangerous: "When you combine ignorance and leverage, you get some pretty interesting results."

47. He allows me to see the name Buffett without thinking of Jimmy.

48. Buffett maintains a high thought-to-speech ratio.

49. Buffett's librarian fantasy: "If past history was all there was to the game, the richest people would be librarians."

50. He converts a deadly sin into a virtue: "You do things when the opportunities come along. I've had periods in my life when I've had a bundle of ideas come along, and I've had long dry spells. If I get an idea next week, I'll do something. If not, I won't do a damn thing."

51. Averaging 20% returns for almost half a century results in beating the S&P 500 78-to-1!

52. Even though he has fewer and fewer meaningful investing options because of the size of Berkshire Hathaway, he continues to wow us.

53. On a chili-dog-and-onion-ring-flavored note, Berkshire Hathaway owns Dairy Queen, my favorite fast-food chain.

54. Many of Buffett's managers were wildly successful entrepreneurs before selling out to Berkshire. Convincing successful, headstrong, boss-less superstars to subjugate themselves, and keeping those people motivated and happy, is quite a feat.

55. On a related note, Buffett doesn't micromanage -- good thing, with an empire this large.

56. He gets doubted again and again and again and proves the doubters wrong most of the time. Yet you never hear him say, "I told you so."

57. Well, maybe sometimes he gloats. Harvard Business School rejected him, which led him to study under his mentors Benjamin Graham and David Dodd at Columbia. His "How do you like me now?" statement: "Harvard did me a big favor by turning me down. But I haven't made any contributions to them in thanks for that."

58. He has become America's de facto investing teacher. And he has done so willingly.

59. Perhaps my favorite Buffett line: "We like things that you don't have to carry out to three decimal places. If you have to carry them out to three decimal places, they're not good ideas."

60. Not that he can't be ruthless, but Buffett tends to look for win-win situations where possible. Contrast that with the Wall Street art of "ripping the face off" of clients.

61. He's often described as a "learning machine," extending his natural abilities and allowing him to make behemoth investing decisions over the span of just hours.

62. He added to Ben Graham's teachings with the help of that learning ability and Munger's counsel.

63. Now is a good time to point out that companies' annual reports, which are available to all, are the primary fuel in his learning machine. He reads them voraciously to compare and contrast companies and build his business knowledge base. See the next point.

64. When asked what the most important key to his success was, Buffett answered, "Focus." His biographer Alice Schroeder elaborates: He has "focus like you have never seen on anybody else." For good or ill, Buffett's entire life has been dedicated to investing. It's much harder than he lets on.

65. There are plenty of business fish in the sea: "There are all kinds of businesses that I don't understand, but that doesn't cause me to stay up at night. It just means I go on to the next one, and that's what the individual investor should do."

66. How many people can pull off being a contrarian by buying shares of Coca-Cola?

67. Even in an investing world full of Buffett students and imitators, he manages to surprise.

68. He takes every legal, ethical advantage available in the current system, but he lobbies for a better system. For example, he supports higher taxes for the rich, more severe estate taxes, and a level playing field. As he puts it, "I don't like anything where the bottom 20% keep getting a poorer and poorer deal."

69. He is grateful for the advantages he has had in life -- like many of us, he won the "ovarian lottery."

70. When he talks, E. F. Hutton listens.

71. Like many geniuses, he is frequently the confounding exception to the rule. For example, Berkshire Hathaway has never paid a dividend and only started share repurchases recently. It also doesn't split the chairman and CEO roles. And we shareholders thank him for it.

72. Buffett buys what he knows (and frequently loves), but he doesn't overpay out of affection. He has the discipline to wait decades for the right opportunity.

73. He gives credit to his direct reports.

74. Not only is Buffett a great investor and manager, but he's one hell of a writer. My jealousy grows.

75. He once picked up a date in a hearse he co-owned.

76. Before making his money work for him, he worked for his money early on with a series of jobs, schemes, and ventures. These included a paper route, selling chewing gum door to door, a pinball business, a sales job at J.C. Penney's, caddying, marking up refurbished golf balls, and founding a horse-racing tip sheet.

77. He's a permabull -- on women.

78. It's very possible that the house you live in is worth more than the house Buffett lives in -- the house in Omaha he bought in 1958.

79. Over the years, he has relied on a similar set of answers to oft-asked questions. That his philosophy has stayed stable throughout that time is remarkable.

80. His wealth has bought him the ultimate trophy: He does whatever he wants to do just about every single day.

81. He's the outsized calming influence a lot of us need. From his biography Snowball: "If a tornado were barreling straight toward Kiewit Plaza [where his office is], Buffett would say that things were 'never better' before mentioning the twister."

82. Anyone who can make the hyperopinionated Charlie Munger regularly utter, "I have nothing to add" must be saying something impressive.

83. When his time to step down finally comes, it will take a village (a CEO, a chairman, and multiple portfolio investors) to perform his current responsibilities.

84. That said, he fully expects this list to one day reach well into the triple digits. And I look forward to adding those lines. Happy birthday, Mr. Buffett!

Warren Buffett: This new technology is a "real threat"
At the recent Berkshire Hathaway annual meeting, Warren Buffett admitted this emerging technology is threatening his biggest cash-cow. While Buffett shakes in his billionaire-boots, only a few investors are embracing this new market which experts say will be worth over $2 trillion. Find out how you can cash in on this technology before the crowd catches on, by jumping onto one company that could get you the biggest piece of the action. Click here to access a FREE investor alert on the company we're calling the "brains behind" the technology.

Costa Rica aims to win World Cup ad game

NEW YORK (CNNMoney) Costa Rica's President Luis Guillermo Solís says Uruguay is "cocky" toward his nation and arrogant. This kind of talk would normally spark a diplomatic row, but the two nations face off in the World Cup today.

Many experts, including Goldman Sachs, predict Costa Rica (and the U.S.) won't make it out of the first round, but the Central American nation has it sights on another goal: Winning the World Cup ad game.

"Essential Costa Rica" is a print and TV ad campaign running in major cities in the U.S., U.K. and Germany during the World Cup. The message is simple: Costa Rica is more than a pretty place to vacation, come invest and partner with us.

It's a push to shed the country's image as a Banana Republic. Only 6% of the country's GDP is agriculture today, although the sector remains a large employer. The U.S. is its biggest trading partner, accounting for about half of its exports and foreign direct investment.

The country is growing its technology industry and promoting the fact that 16% of its population has college degrees now.

President Solís is a good example. His grandfather had no schooling. His father made it to about high school, and he has a master's degree. Before he was elected president in April, much of his life was spent as a history professor and scholar. He ran as a "third party" candidate.

CNNMoney interviewed President Solís in New York this week. This is an excerpt of the conversation.

Q: Intel (INTC, Tech30) and Bank of America (BAC) recently announced 3,000 job cuts in Costa Rica. What are you doing about it?

Solís: Within one month of taking office, I am here in the United States speaking with investors, those already working in Costa Rica and those who may want to go. As a result, we've been able to get an announcement from Intel that their Mega Lab will be installed in Costa Rica, which is extraordinarily important for us, thus moving us from manufacturing to research and development of new products. I hope this will bring about significant change in how we're seen in the international community.

We also have a VMWare (VMW) announcement saying they are expanding their activities in Costa Rica. I hope this will clear any doubt that may exist regarding the commitment of the new government to the private sector or the conditions of the country for direct investments.

Q: Several analysts cut your GDP f! orecasts in half. Is that fair?

Solís: This is not what the central bank in Costa Rica is saying. In our estimation and that of the World Bank, we are going to grow at a rate of 3.7% this year. I think it's going to go up, not down. I hope so because this is the best way we can deal with a number of challenges that we have: Fiscal, monetary and other ways.

Q: How do you move the Costa Rican economy beyond tourism and agriculture?

Solís: It has happened in the last 25 years. We were an early exporter of coffee to Europe. Now we have more than 250 multi-national companies, especially in manufacturing and services.

We have 14 different free trade agreements -- 50 countries -- with China, North America, Europe, etc. Coffee exports today are only 3% of our goods. Bananas are 7%. Services represent 33%. We have already moved beyond agriculture.

Q: Your currency the colón has fallen a lot against the dollar in recent months. Will this continue?

Solís: Before the government entered into office, the colón depreciation started to jump in the band system that we have. We're going to keep the bands, but we are going to lower the volatility by flattening the bands. The central bank has enough reserves to prevent this volatility without tampering with the trend -- the slow trend -- towards devaluation, which has been good news for the Costa Rican exporters and the tourism industry. We are almost at the level we were before the crisis.

Q: What would you like to see evolve in your relations with the United States?

Solís: I would like to see the relationship evolve in an official way to move more from security issues related to drugs into talk of the environment, green energy and social development issues. These policies will help prevent violence, including narcotraffic.

Q: A mysterious kidney disease is impacting your agriculture workers. What are you doing about it?

Solís: We are researching the probl! em to beg! in with because we don't know where it comes from. We were also asked about arsenic. We're trying to find out what the problem is because it seems to be associated with certain regions.

TrueCar shares up 16% after lowball IPO price

Feeling a bit like the car dealers in its car-selling network, auto research and sales outfit TrueCar got horse-traded down to only $9 a share in its IPO, from the $12 to $14 range the company had forecast.

Bloomberg calculates that the initial public offering was 7.78 million shares, raising $70 million for the company to use marketing new products.

Investors decided the stock is more valuable than that, though, and the newly public company's first day of NASDAQ trading opened at $9.75. Mid-day trading had pushed it to $10.44.

TrueCar operates TrueCar.com, an online car-shopping and research site. The site shows a range of good, bad and average prices that others are paying for the car you want in your area. It claims to account for 3.2% of new-car sales in the U.S.

Initially the site was able to give shoppers guaranteed prices from its affiliated dealers. But Honda told dealers in 2012 they couldn't do that if resulted in advertising cars for less than the invoice price, and some states called the arrangement illegal under their dealer-franchise laws. So TrueCar overhauled its approach to focus on what others are paying instead of getting a price gurantee.

That's made it less distinctive, because some competing car sites do the same.

Main rivals include Edmunds.com, Kelley Blue Book's kbb.com and Cars.com, which are not public.

TrueCar founder Scott Painter has been involved with a number of other car-shopping and -buying companies, such as CarsDirect and Auto-By-Tel.

TrueCar President John Krafcik, late the CEO of Hyundai Motor America, and industry veteran Larry Dominique, head of TrueCar's ALG unit, are well-regarded, seasoned players in the car business.

Stocks Hitting 52-Week Lows

Related DMD Prosensa Rises on Encouraging Data - Analyst Blog Biotech Stock Roundup: Biogen Up for S&P100, Geron Plunges on Clinical Hold - Analyst Blog Related EXPR Top 4 NYSE Stocks In The Apparel Stores Industry With The Lowest PEG Ratio Bear of the Day: Express (EXPR) - Bear of the Day Express Logs 4Q Profit Miss, Ugly Guidance (Fox Business)

Demand Media (NYSE: DMD) shares reached a new 52-week low of $4.23. Demand Media is expected to announce its Q1 results on May 8, 2014.

Express (NYSE: EXPR) shares fell 2.49% to touch a new 52-week low of $14.28. Express shares have dropped 14.83% over the past 52 weeks, while the S&P 500 index has gained 20.97% in the same period.

Moneygram International (NASDAQ: MGI) shares tumbled 12.29% to touch a new 52-week low of $12.99. JMP Securities downgraded Moneygram from Market Outperform to Market Perform.

Comverse (NASDAQ: CNSI) shares fell 2.50% to reach a new 52-week low of $25.75. Comverse's trailing-twelve-month profit margin is 2.86%.

Posted-In: 52-Week LowsNews Movers & Shakers Intraday Update Markets

© 2014 Benzinga.com. Benzinga does not provide investment advice. All rights reserved.

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Why Comcast's Happiest Quarter in 7 Years Was Probably a Fluke

Alamy The cord cutting trend may have stalled at Comcast (CMCSK), but let's not assume that the country's largest cable provider has completely reversed the pattern of folks kissing their cable providers goodbye. Yes, in the fourth quarter Comcast posted its first sequential net gain of video customers since early 2007. It closed out 2013 with 43,000 more cable TV subscribers than it had in September. After 26 quarters, growth is back on the cable menu at Comcast. Don't expect it to last. It's All Connected Tuesday morning's announcement wasn't much of a revelation. CEO Brian Roberts spilled the beans at a Citigroup conference in Las Vegas three weeks ago. He pointed out how Comcast posted a "modest" gain in video customers during the fourth quarter. However, even Roberts wasn't ready to declare it the end of the cord cutter era. The fourth quarter is a seasonally strong period for Comcast, and it's widely expected that it will post another year of net video customer defections for all of 2014. Yes, Comcast may have grown in the past three months to serve 21.7 million cable TV accounts, but it started out last year with 22 million. There are plenty of reasons to feel that the uptick won't stick. Beyond the seasonality, we can point to the current strength in the housing market, which is unlikely to stick around in 2014 as interest rates move higher. Some see Comcast as a thinking investor's housing play since folks buying new homes often follow the purchase with a call to get cable installed. Therefore, if the real estate market cools, demand for new subscriptions will likely follow. We also can't forget that the services that many credit with triggering the cord-cutting trend are still growing even faster. Netflix (NFLX) added 2.3 million net subscribers domestically during the same quarter. We also saw the introduction late last year of three extremely popular devices -- the Xbox One, PS4, and Chromecast -- that make it easier to watch Web-based video. To Xfinity and Beyond It's not easy being Comcast. Until the fourth quarter's welcome uptick in video customers, it had been relying solely on cable price increases and the bundling of cable TV with broadband and Internet phone service to keep growing. The steady growth of cable bills doesn't necessarily mean Comcast is being greedy. Cable networks and broadcasters continue to demand more money for the rights to carry their channels. Comcast and its smaller rivals simply pass those expenses on to their customers. And from a financial perspective, it's doing the right things. On Tuesday morning, Comcast announced that it was increasing its dividend by 15 percent. It's also beefing up its share buyback efforts. However, the root of the matter is that it's hard to grow a business when the customer is unhappy. "Comcast is always at or near the bottom of most customer service and satisfaction surveys," Consumerist recently pointed out. If subscribers aren't happy and they're tiring of increases, isn't it more likely for what's happened in 26 of the past 27 quarters -- sequential declines in video customers -- to be the norm? A quarter with more installations than cancellations is a refreshing development, but it won't be a surprise if Comcast reveals it has resumed its losing ways in its next report.

Google's plot to take over your digital life

SAN FRANCISCO (CNNMoney) Google is knocking at your front door. It wants to come inside and quietly take control of everything in your home and your digital life.

For years, Google (GOOG, Fortune 500) has been buying and building the tools to do just that. This week's $3.2 billion purchase of Nest, a smart thermostat and smoke detector company, is just the latest step.

Google already dabbles in email, smartphones, self-driving cars, social networking, smart glasses, television, robots and now connected devices.

In the near future, these seemingly random interests may not seem so disconnected. Today's emerging technologies will eventually blend together. The divisions between smartphones, home automation, cars, smart glasses and watches and fitness trackers will fall away and our gadgets and data will work together to form a seamless experience.

  How the Nest thermostat was created

That means someday soon all of your devices will communicate with each other. Your self-driving car will share notifications from your smartphone, turn it over to your Google Glass when you park and start walking, and then a smart home can take over when you walk through your front door. Thanks to GPS on your phone and car, your house will know exactly when you are arriving and will turn on your favorite TV show when you walk inside. Your refrigerator will know what food is inside and when it expires, and security systems could send your smartphone a notification when they detect anything unusual.

Streams of data from all these devices will be collected in one place, where Google will analyze that information and learn about you over time. It will then program your hardware and software to meet your unique needs.

If this is the future, it's no mystery why Google would want to get into the business now. The potential business opportunity is massive.

A spokesman for Google declined to comment for this story.

But why smoke detectors and thermostats? While the devices have been popular, it's what's behind the scenes and inside the gadgets that makes Nest a coveted get for Google.

Related story: Tony Fadell explains why ! he sold Nest to Google

Nest makes impeccably designed hardware powered by clever algorithms. Its staff comes from major companies like Apple (AAPL, Fortune 500), Sling and Logitech (LOGI) and are experienced in machine learning, product design, artificial intelligence and robotics. Nest is a stand-out in the increasingly crowded connected-home market.

Eventually, Google will likely tap the Nest team's expertise to help with its own hit-and-miss attempts at creating and selling connected home devices and platforms (remember the Nexus Q or Android@Home?).

But Google owning another tool that would allow it to gather more data has immediately triggered privacy concerns. Fresh off of an unpopular decision to allow Google+ contacts to contact people in their circles through Gmail, Google already has users who are unsettled by the vast amounts of data the company can collect. Google has access to a person's data through its Chrome browser, Gmail accounts, Google search terms and the many advanced sensors on an Android smartphone.

As Google aims to become more ingrained in our digital lives, it will have to tread carefully to maintain users' trust.

Federal Debt Crisis? It's Over (And Overblown), So Stay With Stocks

The Wall Street Journal placed a large, misleading graph on page 1 last Thursday (Oct 16). In "Congress Strikes a Debt Deal," the graph highlighted the 20-year, fourfold increase in U.S. government debt and the historically large growth over the past four years. While the numbers are correct, the WSJ's presentation is not. Here's what's wrong and how the interpretation changes when the data are viewed appropriately.

First: Incomplete time period

While the 20-year span sounds long and meaningful, starting at 1993 leaves out the previous 30 years of significant changes in the U.S. Moreover, when examining the recent Great Recession and its repercussions, we must go back to the similarly problematic late-70s, early 80s to find relevant comparisons.

So, the first change is to reset the beginning date. I have chosen 1966 because 1965 was a key watershed year for a number of economic, financial and social changes. Major U.S. companies post-war superiority peaked, inflation and bond yields began their long ascents (the UST 10-year bond was 4-1/4%, a level not seen again until 2002), the Dow Jones Industrial Average hit ~1,000 (an all-time high not to be surpassed for 17 years), the sizeable Vietnam War expansion began and Medicare was born. Augmenting these items was growing social unrest, heightened by JFK's assassination (1963) and the Civil Rights Act's passage (1964).

So, let's see what happened from 1966 to today, using the WSJ's charting approach. (I have added my observations in the graphs, below.)

This graph's 55x growth is overstated because it includes inflation.

Second: Inflation-adjustment

We all know that today's dollar doesn't have the purchasing power of yesterday's – much less that of 1993 or 1966. Therefore, we need to adjust those nominal numbers for inflation to get comparable readings. Here's what happens when we do. (I used the Gross Domestic Product Implicit Price Deflator because the Federal Debt is often compared to GDP – as we will do later.)

The inflation-adjusted numbers show the "real" 10x growth in Federal Debt. However, the graph is still misleading because of dollar scaling. This makes the 100% move from $0.3T to $0.6T look puny compared to the same percentage move from $1.5T to $3.0T.

Third: Logarithmic (log) scale adjustment

To allow for visual examination of percentage growth, analysts use log scaling. Any series being analyzed for growth (think Google's stock price) requires such an adjustment.

Now we get our first "Ah-ha!" moment, seeing that the past few year's Federal Debt growth is not historically large. This adjusted series raises another issue, though: How about the growth "rate" – i.e., the speed of change. In the graph, this rate is shown by the slope of the line. However, as can be seen, the line is rarely straight, meaning the growth rate is changing. So, we need to do something else to our graph.

Will Starbucks COO Come Back?

Is Starbucks (SBUX) COO Troy Alstead gone for good?

Zuma Press

JP Morgan analyst John Ivankoe hints at just that in a note published today. He remarks that CEO Howard Schultz comments regarding Alstead's decision to take an unpaid leave of absence to spend more time with his wife and kids "read as a goodbye with nothing suggesting the waiting of Troy's return back to the company."

As Ivankoe himself suggests, you can interpret Schultz's comments from today's press release for yourself:

Looking back on the 23 years we spent together side-by-side as Starbucks colleagues, I can recall so many memorable moments and accomplishments in which Troy can take pride in a job well done. Troy is a beloved Starbucks partner and has played an invaluable role in our growth as an enterprise and in the development of our culture as a performance-driven company balanced with humanity, which is unique for our industry. Troy's humanity and humility will be missed and we wish him the best.

Alstead's departure, announced earlier today, sent a ripple through the investment community, pushing the shares down 3.2% to $79.88 in recent trading.

Starbucks offers sabbaticals of as long as 12 months to employees who want to travel, pursue additional education or spend time with family. Such claims are often met with a skeptical eye roll from Wall Street. And earlier today, a company spokesman assured Bloomberg that Alstead, widely considered a contender to succeed Schultz as CEO, isn't departing because of his health or the company's performance.

In fact, Alstead had considered taking a break in 2008, but was convinced by Shultz to stay as the company was reeling from a profit slump and store closing. And in an email to employees, Alstead wrote "the next year is for my wife and children, to give them my dedicated time and attention."

J.P. Morgan's Ivankoe, meanwhile, contends the mid to high $70 range remains a good entry point for the stock. He writes:

Our $89 price target on SBUX represents 24x C16 EPS of $3.71…To us, Starbucks classically fits a long term core growth investment profile. The 24x multiple we use is modestly above the company's 7-year 22x average but slightly below its historical ~8-point multiple premium to the S&P500.

Starbucks has climbed 6% over the past 12 months, lagging gains by the S&P 500.

Wells Fargo Continues Mortgage Staff Layoffs as Refinancing Volume Drops

Updated from 8:37 a.m. ET with market reaction and bank stock action, following the announcement of $920 million in fines against JPMorgan Chase.

NEW YORK (TheStreet) -- Wells Fargo (WFC) late Wednesday confirmed plans for 1,800 additional layoffs of mortgage production staff, according to a Bloomberg report.

The latest announcement brings the total of Wells Fargo layoffs announced during the third quarter to 4,800, including the 2,300 mortgage origination positions eliminated during August.

In the aftermath of the credit crisis of 2008, Wells Fargo took over from Bank of America (BAC) as the nation's leading mortgage loan originator. The sharp rise in long-term interest rates since April -- as the market has anticipated an eventual tapering of "QE3" bond purchases by the Federal Reserve -- has led to a sharp drop in mortgage refinance applications and overall mortgage lending volume across the industry. With mortgage interest rates bottoming out during 2012, the total volume of refinancing in the United States was a whopping $1.247 trillion during 2012, according to the Mortgage Bankers Association. The MBA projects a decline in mortgage refinancing volume to $973 billion this year, with an even sharper decline to $388 billion in 2014. The trade group expects total mortgage loan originations to decline from $1.750 trillion in 2012 to $1.592 trillion in 2013 and $1.091 trillion in 2014. Wells Fargo's head of mortgage origination, Franklyn Codel, at a conference in May said the company was very well positioned for the expected volume drop, with its sales staff 100% commission-based, and with frequent meetings to gauge staffing levels. The bank has been focused on holding down its efficiency ratio, which essentially is the number of pennies of overhead expense it incurs for each dollar of revenue. Wells Fargo's efficiency ratio improved to 57.3% in the second quarter from 58.3% the previous quarter and 58.2% a year earlier. During the company's second-quarter earnings conference call, Chief Financial Officer Timothy Sloan said the bank was expecting the efficiency ratio "to remain within our target range of 55% to 59%." Highlighting industry revenue concerns, JPMorgan Chase analyst Vivek Juneja in his third-quarter earnings preview for the largest banks on Wednesday estimated Wells Fargo's third-quarter revenue would total $20.724 billion, declining from $21.378 billion in the second quarter and $21.213 billion in the third quarter of 2012. Wells Fargo continues to be the earnings performer among the "big four" U.S. banks on a relative basis. Its second-quarter return on average assets (ROA) was 1.54% and its return on average tangible common equity (ROTCE) was 16.99%, according to Thomson Reuters Bank Insight. Well Fargo's ROA over the past five quarters had ranged from 1.40% to 1.54% over the past five quarters, while its ROTCE has ranged from 16.27% to 16.99%.

In comparison, the ROA for JPMorgan Chase (JPM) has ranged from 0.88% to 1.12% over the past five quarters, while JPM's ROTCE has ranged from 14.24% to 16.82%.

Citigroup (C)'s ROA has ranged from 0.10% to 0.88% over the past five quarters, while its ROTCE has ranged from 1.22% to 10.19%.

Bank of America (BAC)'s ROA has ranged from 0.06% to 0.73%, while its ROTCE has ranged from 0.85% to 10.16% over the past five quarters.

Wells Fargo's shares down 0.4% in early trading Thursday to $43.11 while the entire banking sector showed weakness. The KBW Bank Index (I:BKX) was down 1.3% to $63.85, with 22 of the 24 index components showing early declines, following the announcement of $920 million in regulatory fines fines against JPMorgan Chase. WFC data by YCharts Interested in more on Wells Fargo? See TheStreet Ratings' report card for this stock. RELATED STORIES: JPMorgan Slapped with $920 Million in 'London Whale' Fines -- Written by Philip van Doorn in Jupiter, Fla. >Contact by Email. Follow @PhilipvanDoorn

Philip W. van Doorn is a member of TheStreet's banking and finance team, commenting on industry and regulatory trends. He previously served as the senior analyst for TheStreet.com Ratings, responsible for assigning financial strength ratings to banks and savings and loan institutions. Mr. van Doorn previously served as a loan operations officer at Riverside National Bank in Fort Pierce, Fla., and as a credit analyst at the Federal Home Loan Bank of New York, where he monitored banks in New York, New Jersey and Puerto Rico. Mr. van Doorn has additional experience in the mutual fund and computer software industries. He holds a bachelor of science in business administration from Long Island University.

Array Begins Phase III Study on MEK162 - Analyst Blog

Array BioPharma Inc. (ARRY) recently initiated a phase III study (MILO: n=300) on MEK162 in patients suffering from low-grade serous ovarian cancer (LGSOC). Array consequently received a $5 million milestone payment from partner, Novartis (NVS), following the initiation of the study.

The multinational, randomized study will evaluate MEK162 in 300 patients suffering from recurrent or persistent LGSOC after a minimum of one platinum-based chemotherapy regimen and not more than three lines of prior chemotherapy regimens. The study will evaluate the effects of MEK162 in these patients in comparison to the physician's choice of standard chemotherapy treatments. The main objective of the study will be to evaluate progression-free survival and overall survival.

We note that in Apr 2010, Array and Novartis entered into a license agreement for MEK162 besides other specified MEK inhibitors. As per the terms of the deal, Novartis has the worldwide rights to co-develop and commercialize MEK162.

Array has already received $60 million (including the recent $5 million milestone payment) as an upfront fee and milestone payments under the deal. Array is eligible to receive further payments on achieving all the clinical, regulatory and commercial milestones stated in the agreement.

Array further stated in its press release that Novartis is gearing up to initiate phase III studies on MEK162 in both NRAS- and BRAF-mutant melanoma later this year.

Array also has ARRY-520 (refractory multiple myeloma) and ARRY-380 (breast cancer) in its oncology portfolio apart from MEK162. We are encouraged by the company's progress with its oncology candidates. However, the oncology market currently has big players such as Roche (RHHBY).

Currently, Array BioPharma carries a Zacks Rank #3 (Hold). However, biopharma stocks such as Jazz Pharmaceuticals (JAZZ) presently look better positioned with a Zacks Rank #1 (Strong Buy).

When Smart Investors Do Stupid Things

In his 2003 memoir, former Treasury Secretary Robert Rubin wrote:

There is one type of financial risk, the risk of remote contingencies -- which, if they occur, can be devastating -- that market participants of all kinds almost always systematically underestimate. The list of firms and individuals who have gone broke by failing to focus on remote risks is a long one.

This is smart, but depressingly ironic. While writing the book, Rubin was chairman of the executive committee at Citigroup (NYSE: C  ) . Five years later, while still under Rubin's watch, the bank added its name to the list of firms who went broke (or close to it) by failing to focus on remote risks. 

I remembered this story this weekend when reading a blog post from economist Noah Smith, one of the sharper commentators out there. Smith was discussing hedge fund returns (or lack thereof), and wrote:

To evaluate hedge funds -- or any investment -- you need to look not only at the return, but at the risk. If hedge funds have higher return-to-risk ratios (such as Sharpe ratios) than a passive stock-bond portfolio, then they are a better investment. Why? Because in that case you can borrow money and invest it in hedge funds, and your leverage will increase the returns (and the risk) of the hedge fund investment. 

Pardon me, but I disagree. 

The problem here is the definition of "risk." As defined in finance textbooks, including the Sharpe ratio Smith mentions, risk is volatility.

But volatility is a strange way to think about risk. Time and time again, investments utterly implode after periods of silky-smooth calmness.

Take Rubin's Citigroup. Before it blew up, it has a long record of stable, consistent profits:

Source: S&P Capital IQ.

Or consider AIG (NYSE: AIG  ) . Before it blew its top in 2008, the insurer enjoyed two decades of smooth, predictable, volatility-free profits:

Source: S&P Capital IQ.

In each case, equating volatility with risk would have sweet-talked you into a dangerous sense of complacency. The narrative, which is common among large companies, probably went like this: AIG earns stable profits year after year. That makes it a safe, low-risk investment. Maybe even safe enough to leverage up on. 

And then ... boom! Investors lost almost everything overnight.

To be fair, Smith was talking about hedge fund returns, not corporate profits. But there's a classic example of hedge fund investors getting duped to death by focusing on volatility as a measure of risk.

The hedge fund Long Term Capital Management is now infamous for being the largest hedge fund failure of all time. In 1998, during a period when seemingly no investor could lose money, the geniuses at LTCM -- including two Nobel laureates -- lost everything. They literally went bankrupt during a period when Barbra Streisand was a successful day trader.

But before LTCM's blowup, the fund was known for one thing: low volatility. A 1996 article in Institutional Investor describes it like this: "Before August, when returns dipped 0.24 percent, LTCM had not had a down month since February 1995, and only six down months in total."

And the fund's Sharpe ratio was an amazing 4.35, meaning it was earning big returns with low volatility. "If a fund manager can sustain a Sharpe ratio of 1, he is doing well," the magazine wrote. "But a Sharpe ratio of more than 4 is off the charts."

The article closes by asking, "how long can they produce those kinds of returns before suffering some spectacular crash?"

We now know the answer: about a year. 

LTCM was a glaring reminder that past volatility is a terrible measure of future risk. Yet we still obsess over volatility, convinced that it tells us how safe an investment is.

Nassim Taleb describes using volatility as a measure of risk as the "turkey problem." He writes in his book Antifragile:

A turkey is fed for a thousand days by a butcher; every day confirms to its staff of analysts that butchers love turkeys "with increased statistical confidence." The butcher will keep feeding the turkey until a few days before Thanksgiving. Then comes that day when it is really not a very good idea to be a turkey.

So if volatility isn't a good measure of risk, what is?

I like the Berkshire Hathaway (NYSE: BRK-B  ) credo:

Warren Buffett: "Risk comes from not knowing what you're doing."

Charlie Munger: "Risk to us is 1) the risk of permanent loss of capital, or 2) the risk of inadequate return."

Buffett's definition of risk is most applicable to individual investors. If you don't know what you're doing, you are rolling the dice at best. Add in fees, and you will you almost certainly lose.

Mugner's definition is more relevant to institutional investors. For pension funds, the biggest risk is not suffering a down month or a bad quarter; it's that, over a 20- to 50-year period, they won't earn high enough returns to cover their obligations.

But for both groups, past volatility tells you very little about future risk. "Using volatility as a measure of risk is nuts," Munger says.

Check back every Tuesday and Friday for Morgan Housel's columns on finance and economics.