SEC Ripped Over Analyses of Rules by Mercatus Study

“Significant weaknesses” existed in the Securities and Exchange Commission’s economic analysis of several rules it made prior to the SEC’s 2012 updated guidance on ways the agency could beef up its analysis, a working paper released Monday by the Mercatus Center at George Mason University has found.  

Using the Mercatus Regulatory Report Card methodology, senior research fellows Hester Peirce and Jerry Ellig found that “the quality and use of regulatory analysis at the SEC prior to 2012 was significantly inferior to the quality and use of regulatory analysis by executive branch agencies.”

In their working paper, “SEC Regulatory Analysis: A Long Way to Go and a Short Time to Get There,” Peirce and Ellig cite recent requests by Congress that the SEC conduct a more robust economic analysis when it determines whether new rules are in the public interest, as well as federal appeals courts recently vacating several SEC rules due to “inadequate” economic analysis.

The SEC published staff economic analysis guidance in March 2012 similar to the requirements for impact analyses that executive branch agencies are expected to conduct when making major rules.

SEC economists and the agency’s general counsel jointly issued the 2012 economic analysis guidance after the agency “kept losing in court because of its poor economic analysis,” Peirce told ThinkAdvisor in an email.

“The SEC’s decision to publish new economic analysis guidance was a necessary and appropriate response to the significant flaws” that existed in rulemaking prior to 2012, Ellig and Peirce say.

Peirce and Ellig used the Mercatus Scorecard — a standardized scoring system for executive agency rulemaking that measures openness, analysis and use of economic analysis — to analyze seven rules issued from each SEC division. They intended “to ensure that we captured a broad view of rulemaking issues within the SEC’s regulatory jurisdiction” and to offer “a useful cross section of significant SEC rulemaking.”

The rules the senior Mercatus fellows assessed included the creation of the SEC’s Office of the Whistleblower, the requirement that private fund advisors file form PF with the agency, the switching of advisors under Dodd-Frank from federal to state registration, and the net worth standard for accredited investors.

Peirce and Ellig concluded that the SEC’s rulemakings “read more like justifications of the final rule than careful analyses of the underlying problems and the various ways that those problems could be addressed.”

The analyses failed, they said, “beyond sporadic references, to take advantage of the academic literature that would help them analyze the rulemaking. The analyses often deferred to the statute rather than asking fundamental questions about the need for it and what its objectives would be. In designing many of these rules, the SEC did not appear to have a clear picture of what it was trying to achieve.”

The pre-2012 SEC analyses also “often ignored important alternatives that should be obvious to an expert agency,” as well as “significant costs and asserted significant benefits without providing evidence that the regulation was likely to achieve them,” the paper states.

However, both senior fellows express optimism that the SEC’s economic analysis “will improve” as the agency’s “retooled regulatory analysis takes hold and the SEC applies it more.”

Because the SEC has only promulgated “a handful of major rules” with the full benefit of the 2012 guidance, Peirce and Ellig write, “It is too early to conclude whether the analysis has improved.” /* .premium-promo { border: 1px solid #ddd; padding: 10px; margin: 0 10px 10px 0; width: 200px; float: left; } .premium-promo li, .premium-promo ul { list-style-type: none; margin: 0; padding: 0; } .premium-promo li { margin: 0 0 10px; padding: 0 0 10px; border-bottom: 1px dotted #ddd; } .premium-promo h3 { text-transform: uppercase; font-size: 11px; } .premium-promo h4 { font-size: 16px; } .premium-promo a { text-decoration: none !important; } .premium-promo .btn { background: #0069a1; border-radius: 4px; display: inline-block; padding: 5px 10px; clear: both; color: #fff; font-weight: bold; } .premium-promo .btn:hover { background: #034c92; } */ Indeed, SEC Commissioner Daniel Gallagher said recently that the economic analysis the SEC is currently performing on its potential rule to put brokers under a fiduciary mandate will “help the agency to determine whether we need” to move forward.

Peirce and Ellig conclude that while a “more comprehensive economic analysis may be more costly to the agency in the short run,…in the long run [it] may significantly increase the benefits or reduce the costs of the regulations adopted.”

The role of economic analysis in SEC rulemaking could also "reveal best practices from which other agencies could learn or highlight significant pitfalls they should avoid in economic analysis of their own rules," the two senior fellows say. What's more, the SEC’s "interpretation of its statutory rulemaking obligations can provide insights for Congress as it considers various regulatory reform bills designed to foster the use of economic analysis in agency decision making."

---

Check out these related stories on ThinkAdvisor:

Reports That Will Move Markets This Week

With a fresh week just around the corner, a new set of economic data reports are on their way. Since these reports have a large effect on Dow Jones Industrial Average (DJINDICES: ^DJI  ) and the other major indexes, it can be helpful for investors to know what's being released in the coming week. So let's look at what's on the way.

Economic reports
On Monday the only major economic report will be the Institute for Supply Management Chicago Purchasing Managers' Index. Economists expect the index reading for March to be a 59.2, down from last month's reading of 59.8. The PMI reading is seen as a good indicator of overall U.S. economic health, even though the survey covers only the Chicago area.  

Tuesday's PMI report, which covers the full U.S. market and different regions of the world, will overshadow Monday's report. After coming in at a reading of 55.5 in February and the market flash PMI reading for March hitting 57.1, economists are expecting the final March reading to be 56.8.

Also on Tuesday will be the motor vehicle sales numbers for March, and economists are looking for 15.8 million vehicles sold during the month, after February's reading of 15.3 million. The construction spending figure for February will also come out, and it's expected that spending will not have changed from January. Lastly, we'll get the Institute for Supply Management's manufacturing report. This reading tells investors about overall factory trends and whether they're experiencing increased or decreased demand. Economists believe the manufacturing report will come in at a 54, after a 53.2 reading in February.  

Wednesday will bring the ADP employment figure and factory orders. The ADP figure is the first of three job reports investors will get this week, and economists believe the number will come in at 193,000, after hitting 139,000 in February. As for factory orders, it's believed that industry picked up in February and that we'll see a 0.5% increase over January, which itself fell 0.7% from December.  

On Thursday, we'll see the weekly jobless claims figure, and economists believe the figure will come in at 320,000 after hitting 311,000 this past week. While the weekly figure typically jumps a lot, the more stable four-week moving average is what investors should be watching and hoping it moves lower. The other important report coming out Thursday is the trade deficit number, which was at $39.1 billion in January and is believed to have risen to $39.4 billion in February.  

On Friday we'll get more employment data, but this time from the Labor Department. The non-farm payroll report will indicate how many jobs were created in March and will tell investors what the national unemployment rate is. Economists expect the payroll number to be 192,000 and the unemployment rate to fall to 6.6%, after February saw it rise to 6.7%, with 175,000 new jobs being created.  

3 stocks to own for the rest of your life
As every savvy investor knows, Warren Buffett didn't make billions by betting on half-baked stocks. He isolated his best few ideas, bet big, and rode them to riches, hardly ever selling. You deserve the same. That's why our CEO, legendary investor Tom Gardner, has permitted us to reveal The Motley Fool's 3 Stocks to Own Forever. These picks are free today! Just click here now to uncover the three companies we love. 

Down on the Farm

Crops and livestock are delivering among the biggest returns of any investment category so far in 2014.

With US stocks more or less flat so far this year, many food and grain commodities are up at least 15 percent. These include cattle, hogs, soybeans, wheat, corn, coffee and orange juice. The Commodities Research Bureau’s US Spot Foodstuff Index recently was up 19 percent in 2014.

As the Standard & Poor’s 500 surged 30 percent in 2013, the agricultural index tumbled 22 percent. There are several reasons for the reversal of fortune so far in 2014, all related to global supply problems.

These include cold weather in much of the US; drought in California, Brazil and elsewhere; a hog virus in the US; and concerns about exports of wheat and corn from the Ukraine and Russia.

Meanwhile, the Dept. of Labor’s Bureau of Labor Statistics says that the consumer price index rose just 1.1 percent in the 12 months through February. But the food index rose 0.4 percent in February alone, its largest increase since September 2011. The index for meats, poultry, fish, and eggs climbed 1.2 percent while fruits and vegetables rose 1.1 percent.

The supply disruptions may or may not hold true over the rest of the year. The US Dept. of Agriculture said this week that various measures of US food price inflation are expected to rise by 2.5-3.5 percent in 2014. This would be roughly in line with the historical norm, after subpar price increases last year.

But the USDA said its forecast was based on an assumption of normal weather conditions. The agency acknowledged that the ongoing drought in California could have “large and lasting effects on fruit, vegetable, dairy and egg prices.”

Taking the long view, the global population is expected to climb to 9 billion by 2050, up from 7 billion today.

The growth in population and food consumption will occur primarily in! the emerging markets. As incomes rise in the developing world, people eat more meat. Livestock production requires large quantities of grain and water. And water is becoming an ever-scarcer commodity.

Ways to Profit

There are several exchange-traded funds (ETFs) that track agricultural commodities. The biggest by far is PowerShares DB Agriculture Fund (DBA). After three consecutive down years, it has surged 17 percent so far this year.

The fund offers exposure to a basket of 15 agricultural commodity futures covering cattle, hogs, wheat, corn, soybeans, sugar, cocoa, coffee and more.

Among the 18 or so other agricultural commodities alternatives, almost all thinly traded, here are three standouts:

iPath DJ-UBS Livestock TR Sub-Index ETN (COW) has jumped 19 percent in 2014. It’s devoted to lean hogs and live cattle.iPath DJ-UBS Agriculture TR Sub-Index ETN (JJA) holds futures contracts for corn, soybeans, sugar, wheat, soybean oil, cotton and coffee. It has gained 16 percent over the year’s first three months.iPath DJ-UBS Grains TR Sub-Index ETN (JJG) holds corn, soybeans and wheat futures. It also has climbed 16 percent.Note that futures-based commodities exchange-traded products carry certain quirks that make them more complicated than vehicles that hold common stocks.

In the latter category, the leader and only practical choice for investing in agriculture-related issues is the highly liquid Market Vectors Agribusiness ETF (MOO).

The bad news is that this stock sector hasn’t caught on yet: The ETF is down 1 percent in 2014, after lagging the Standard & Poor’s 500 since 2011. But the good news is that the stocks are undervalued and out of favor, and a rally in this equity sector would suggest a longer-lasting advance for agricultural commodities.

You can buy either the Agribusiness ETF itself or choose among individual stock beneficiaries of a rebound in agriculture. The ETF’s largest stock holdings provide a goo! d shoppin! g list.

Among these are Syngenta (NYSE: SYT); Monsanto (NYSE: MON); Deere & Co. (NYSE: DE); Potash Corp. of Saskatchewan (NYSE: POT); Archer Daniels Midland (NYSE: ADM); Mosaic (NYSE: MOS); Agrium (NYSE: AGU); and CF Industries Holdings (NYSE: CF).

First Allied to Expand Mentoring Program for Female Reps

First Allied Securities says a pilot mentoring program for female advisors has “proven successful,” and the independent broker-dealer will roll out the broader program at its national conference in June.

The first phase of the Women Advisor Mentoring Program matched several younger advisors and mentors, who guided the younger reps in building their business. The initial program grew out of First Allied’s Women’s Impact Network (WIN).

“We are extremely pleased with the first results of our women’s mentoring program,” said Marissa Fox-Foley, senior managing director of marketing at First Allied, in a statement. “We initiated a careful screening process to match mentors and mentees with compatible personalities and professional goals, and this resulted in relationships that yielded both qualitative and quantitative results.”

According to Fox-Foley, the mentees met agreed-upon goals, received actionable advice and benefited from direction that helped them increase their business and improve their performance, while the mentors found the experience gratifying and enjoyable. “We are excited about offering this program on a larger scale throughout our organization in the very near future, as well as to our Legend Group sister company,” she noted.

Out of 800 affiliated advisors, First Allied has 127 female reps, while Legend’s 400-strong advisor force (which focuses on providing financial services to nonprofit organizations) includes some 60 female advisors.

“As a new advisor, I came to the program hoping to learn how to increase my book of business and to gain new perspectives on how to be successful in my career,” said Stacey Stanek-Byars of the Thom Group in San Luis Obispo, Calif., in a press release.

“The strategies I learned directly helped me to retain several new clients. I highly recommend the program to other young advisors.”

In addition to the mentoring program, First Allied’s WIN hosts events and resources geared to furthering the successful careers of its female advisors.

“As women increasingly play a greater role in our economy and in our industry, both as advisors and investors, we feel it is our responsibility to nurture our women advisors’ professional development as well as help all advisors service the distinct needs that often arise among female clients,” stressed Fox-Foley.

First Allied Securities is in the process of being acquired by RCAP Holdings (RCAP), which is led by Nicholas Schorsch.

Oculus Rift: The reality of virtual reality

Back in January at the Consumer Electronics Show in Las Vegas — and before he became the newest recipient of Facebook's riches — Oculus VR co-founder and CEO Brendan Iribe opined on the future of virtual reality, and Oculus' place in it. "We believe it will blow open the virtual-reality category," Iribe boasted of the mind-altering Oculus Rift virtual-reality 3D goggles I had just worn for the first time.

Maybe it's not a fair comparison, but I found my maiden Oculus Rift demo way more thrilling than the first time I wore the early prototype of what is now Google Glass.

Oh sure, I understood then and now the challenges and realities of virtual reality, which, despite years of promise and potential, really hadn't gotten very far. But this Oculus moment was a time to revel in what might be, not what wasn't. I dismissed the fact that I was wearing large geeky-looking headgear, that spending more than a few minutes with the prototype might possibly induce nausea, not to mention that we didn't know what Oculus might cost, when exactly it would be ready for consumers or which developers would embrace it in a major way.

OCULUS ACQUISITION: Why Facebook and not Google?

WHO THEY ARE: A look at the brains behind Oculus

WHAT IT IS: Five questions about Oculus VR

We still don't have all the answers. But we now know where the money is going to come from (thank you, Facebook, which is shelling out $2 billion to acquire the start-up). And we have a decent sense of the vision. Oculus made its initial mark in gaming, where it is an obvious fit. What's more interesting to me — and apparently to Facebook CEO Mark Zuckerberg — is how it then moves much further afield and evolves into a new social paradigm.

Facebook Chairman and CEO Mark Zuckerberg.(Photo: Manu Fernandez, AP)

Some early examples Iribe laid out to me at CES sounded intriguing but weren't as social as the reality it was standing in for. He hinted at virtual-reality vacations: "Imagine putting a 360-camera with audio as well on the top of Mount Everest or a beach in Barcelona."(As someone who doesn't love heights, loathes the cold and appreciates oxygen, Oculus is going to be as close to the summit of Everest as I ever get.)

Iribe moved on to mention futuristic applications in architecture, education, real estate, medicine and, of course, other forms of entertainment.

At South By Southwest in Austin, I got to experience Oculus for a second time. Using four Kinect cameras that were paired with four high-end Canon EOS 5D Mark III digital cameras, my body was scanned from all sides and then "teleported" into outer space.

Shortly afterwards, I put on the Oculus headset and watched my newly scanned virtual alter ego explore digital worlds. As I moved my head, my clone moved too, navigating immersive 3-D scenes that alternated between a frozen tundra, marshy volcanic environment and a desert landscape. It was awesome stuff.

So where are we? A Facebook-backed Oculus appears to give virtual reality its biggest lift yet. But as we've seen with Sony's recent unveiling of its own Project Morpheus virtual reality headset, competition is likely to be formidable, with certain big-name companies yet to be heard from (Apple? Google?).

However it evolves, this is still a long-term play. But virtual reality and the related technology of augmented reality — visual layers of information tied to your location that appear on top of whatever reality you're seeing — seem inevitable. As Zuckerberg reminded us in his post announcing Facebook's acquisition of Oculus: "Virtual reality was once the dream of science fiction. But the Internet was also once a dream, and so were computers and smartphones."

Palmer Luckey, the 21-year-old founder of the Oculus VR, at company headquarters in Irvine, Calif. Facebook announced the acquisition of Oculus for $2 billion on Tuesday.  (Photo: Jefferson Graham, USA TODAY)View Fullscreen Yahoo bought the Summly mobile app, the brainchild of then-17-year-old Nick D'Aloisio, for a reported 30 million in 2013. He became Yahoo's youngest employee.  (Photo: Matt Dunham, AP)View Fullscreen Yahoo bought Tumblr for $1.1 billion in 2013, saying it would be independently operated as a separate business" with founder David Karp, then-26, staying on as CEO.  (Photo: Ethan Miller, Getty Images)View Fullscreen Facebook snapped up photo-sharing service Instagram for $1 billion in cash and stock in 2012. It was a megapayday for Instagram's then 27-year-old founder and CEO, Kevin Systrom.  (Photo: Spencer Platt, Getty Images)View Fullscreen Google acquired YouTube in 2006 for a reported $1.65 billion, netting a nice payday for co-founders Steven Chen left, and Chad Hurley, both in their early '30s at the time.  (Photo: Noah Berger, AP)View FullscreenLike this topic? You may also like these photo galleries:ReplayAutoplayShow ThumbnailsShow CaptionsLast SlideNext Slide

Top 10 Value Companies To Buy For 2014

When it comes to investing, there is no shortage of theories on what makes the markets tick or what a particular market move means. The two largest factions on Wall Street are split along theoretical lines into adherents to an efficient market theory and those who believe the market can be beat. Although this is a fundamental split, many other theories attempt to explain and influence the market - and the actions of investors in the markets. In this article, we will look at some common (and uncommon) financial theories.

Efficient Market Hypothesis
Very few people are neutral on efficient market hypothesis (EMH). You either believe in it and adhere to passive, broad market investing strategies, or you detest it and focus on picking stocks based on growth potential, undervalued assets and so on. The EMH states that the market price for shares incorporates all the known information about that stock. This means that the stock is accurately valued until a future event changes that valuation. Because the future is uncertain, an adherent to EMH is far better off owning a wide swath of stocks and profiting from the general rise of the market.

Top 10 Value Companies To Buy For 2014: Schlumberger N.V.(SLB)

Schlumberger Limited, together with its subsidiaries, supplies technology, integrated project management, and information solutions to the oil and gas exploration and production industries worldwide. The company?s Oilfield Services segment provides exploration and production services; wireline technology that offers open-hole and cased-hole services; supplies engineering support, directional-drilling, measurement-while-drilling, and logging-while-drilling services; and testing services. This segment also offers well services; supplies well completion services and equipment; artificial lift; data and consulting services; geo services; and information solutions, such as consulting, software, information management system, and IT infrastructure services that support oil and gas industry. Its WesternGeco segment provides reservoir imaging, monitoring, and development services; and operates data processing centers and multiclient seismic library. This segment also offers variou s services include 3D and time-lapse (4D) seismic surveys to multi-component surveys for delineating prospects and reservoir management. The company?s M-I SWACO segment supplies drilling fluid systems to improve drilling performance; fluid systems and specialty tools to optimize wellbore productivity; production technology solutions to maximize production rates; and environmental solutions that manages waste volumes generated in drilling and production operations. Its Smith Oilfield segment designs, manufactures, and markets drill bits and borehole enlargement tools; and supplies drilling tools and services, tubular, completion services, and other related downhole solutions. The company?s Distribution segment markets pipes, valves, and fittings, as well as mill, safety, and other maintenance products. This segment also provides warehouse management, vendor integration, and inventory management services. Schlumberger Limited was founded in 1927 and is based in Houston, Texas.

Advisors' Opinion:

• [By R.P.H. Broens]

  Halliburton (NYSE: HAL  ) �and�Schlumberger (NYSE: SLB  ) �are two larger competitors with market capitalizations two and five times that of Baker Hughes, respectively. Schlumberger, which is the industry leader, trades at the highest valuation multiples: 2.7 times 2012's annual revenues and 21 times earnings. Halliburton and Baker Hughes trade at lower and more acceptable earnings ratios of around 18 times earnings for 2012. Note that these competitors have seen rapid growth and margin expansion in recent years as well.

Top 10 Value Companies To Buy For 2014: Tupperware Corporation(TUP)

Tupperware Brands Corporation operates as a direct seller of various products across a range of brands and categories through an independent sales force. The company engages in the manufacture and sale of kitchen and home products, and beauty and personal care products. It offers preparation, storage, and serving solutions for the kitchen and home, as well as kitchen cookware and tools, children?s educational toys, microwave products, and gifts under the Tupperware brand name primarily in Europe, Africa, the Middle East, the Asia Pacific, and North America. The company provides beauty and personal care products, which include skin care products, cosmetics, bath and body care, toiletries, fragrances, nutritional products, apparel, and related products principally in Mexico, South Africa, the Philippines, Australia, and Uruguay. It offers beauty and personal care products under the Armand Dupree, Avroy Shlain, BeautiControl, Fuller, NaturCare, Nutrimetics, Nuvo, and Swissgar de brand names. The company sells its Tupperware products directly to distributors, directors, managers, and dealers; and beauty products primarily through consultants and directors. As of December 26, 2009, the Tupperware distribution system had approximately 1,800 distributors, 61,300 managers, and 1.3 million dealers; and the sales force representing the Beauty businesses approximately 1.1 million. The company was formerly known as Tupperware Corporation and changed its name to Tupperware Brands Corporation in December 2005. The company was founded in 1996 and is headquartered in Orlando, Florida.

Advisors' Opinion:

• [By Monica Gerson]

  Tupperware Brands (NYSE: TUP) is expected to report its Q3 earnings at $1.03 per share on revenue of $623.34 million.

  Varian Medical Systems (NYSE: VAR) is projected to post its Q4 earnings at $1.12 per share on revenue of $779.02 million.

Top Information Technology Stocks For 2014: Dollar Tree Inc.(DLTR)

Dollar Tree, Inc. operates discount variety stores in the United States and Canada. Its stores offer merchandise primarily at the fixed price of $1.00. The company operates its stores under the names of Dollar Tree, Deal$, Dollar Tree Deal$, Dollar Giant, and Dollar Bills. Its stores offer consumable merchandise, including candy and food, and health and beauty care, as well as household consumables, such as paper, plastics, household chemicals, in select stores, and frozen and refrigerated food; variety merchandise, which includes toys, durable housewares, gifts, party goods, greeting cards, softlines, and other items; and seasonal goods, such as Easter, Halloween, and Christmas merchandise. As of April 30, 2011, it operated 4,089 stores in 48 states and the District of Columbia, as well as 88 stores in Canada. The company was founded in 1986 and is based in Chesapeake, Virginia.

Advisors' Opinion:

• [By Lawrence Meyers]

  The finance sector, as mentioned, can make money in many ways. The second-highest growth sector is expected to be consumer discretionary, with a 6.2% increase. When you look at earnings from luxury brands like Tiffany & Co. (TIF), and that the hotel sector continues to do very well, it suggests that those people who are in good financial shape are spending their money. Meanwhile, dollar players like Dollar Tree (DLTR) continue to perform very well, suggesting that folks with less money are spending it on cheaper items.

• [By Mani]

  Dollar Tree, Inc. (NASDAQ:DLTR) is one of the companies that are set to exploit the ongoing trend of consumers' increasing focus on value with significant opportunity to grow its store base, and expand margins.

• [By Dan Moskowitz]

  The shiniest dollar
  Many investors and analysts like to debate which dollar store offers the best investment opportunity. The truth is that Dollar General, Dollar Tree Stores (NASDAQ: DLTR  ) , and Family Dollar Stores (NYSE: FDO  ) are all likely to be quality long-term investments.

• [By Demitrios Kalogeropoulos]

  Costly market share gains
  The problem is that Family Dollar has had to pay up for its increasing market share and sales levels. The company's gross profit margin fell by more than a full percentage point, to 34.7% last quarter. In contrast, Dollar Tree (NASDAQ: DLTR  ) booked an expansion of profits, to 35.2%, continuing a trend that's seen it pull away from Family Dollar.

Top 10 Value Companies To Buy For 2014: Caterpillar Inc.(CAT)

Caterpillar Inc. manufactures and sells construction and mining equipment, diesel and natural gas engines, industrial gas turbines, and diesel-electric locomotives worldwide. It operates through three lines of businesses: Machinery, Engines, and Financial Products. The Machinery business offers construction, mining, and forestry machinery, including track and wheel tractors, track and wheel loaders, pipelayers, motor graders, wheel tractor-scrapers, track and wheel excavators, backhoe loaders, log skidders, log loaders, off-highway trucks, articulated trucks, paving products, skid steer loaders, underground mining equipment, tunnel boring equipment, and related parts. It also manufactures diesel-electric locomotives; and manufactures and services rail-related products and logistics services for other companies. The Engines business provides diesel, heavy fuel, and natural gas reciprocating engines for Caterpillar machinery, electric power generation systems, marine, petrol eum, construction, industrial, agricultural, and other applications. It offers industrial turbines and turbine-related services for oil and gas, and power generation applications. This business also remanufactures Caterpillar engines, machines, and engine components; and offers remanufacturing services for other companies. The Financial Products business provides retail and wholesale financing alternatives for Caterpillar machinery and engines, solar gas turbines, and other equipment and marine vessels, as well as offers loans and various forms of insurance to customers and dealers. It also offers financing for vehicles, power generation facilities, and marine vessels. The company markets its products directly, as well as through its distribution centers, dealers, and distributors. It was formerly known as Caterpillar Tractor Co. and changed its name to Caterpillar Inc. in 1986. Caterpillar Inc. was founded in 1925 and is headquartered in Peoria, Illinois.

Advisors' Opinion:

• [By Paul Ausick]

  Today�� big gainer among the Dow stocks was Caterpillar Inc. (NYSE: CAT). Competitor Joy Global Inc. (NYSE: JOY) reported rotten results this morning, largely due to anemic sales to coal miners. Caterpillar doesn�� do a lot of business with coal companies, so that�� a plus the firm. Cat�� shares traded up 1.4% at $97.71 in a 52-week range of $84.79 to $98.24 just ahead of the closing bell. Volume is on track to be about 25% below the daily average of around 6 million shares traded.

• [By Sue Chang]

  Other companies scheduled to release quarterly results on Monday include Caterpillar Inc. (CAT) , Seagate Technology Inc. (STX) , United States Steel Corp. (X) , and Zions Bancorp (ZION) .

Inside the Madness of the Stock Market

Originally printed in the Baltimore Sun on Oct. 17, 1989, after U.S. stocks dropped 6.9% on Oct. 13, it still circulates widely on Wall Street. ("The nation's most important financial institution" was the New York Stock Exchange.)

Remarkably, new research suggests that KAL might not just have been using his imagination to make fun of the way investors can turn on a dime for no reason whatsoever. He might also have put his finger on a psychological process that can make investors turn on a dime for a reason they're entirely unaware of.

Hearing or seeing a word that sounds like an action can prime you into taking that action, according to "From Bye to Buy: Homophones as a Phonological Route to Priming," to be published next month in the Journal of Consumer Research. Despite its infelicitous title, the paper may help explain, at least in small part, the mystery at the heart of KAL’s cartoon: How do contagions spread through financial markets?

The study, run by marketing professor Derick Davis at the University of Miami, exposed people to homophones (words that are pronounced the same but spelled differently) like "bye" and "buy."

For example, participants read a short blogpost about travel in Canada that ended either with "Bye bye!" or "So long!" Then they were asked how much they would pay for a name-your-own-price dinner for two at a local restaurant.

Those who had read the version of the blogpost that ended with "Bye bye!" were willing to pay up to 55.5% more than those who read the "So long" version. Merely seeing the word "bye" apparently made them more eager to buy. That was especially true for those who had to memorize a seven-digit number beforehand – the kind of distraction that many experiments have shown can reduce the mind's reliance on logical reasoning.

You should probably buy a few grains of salt to sprinkle onto these findings. Recently, critics have argued that related claims about "priming" or unconscious influences on behavior are fragile and difficult to replicate, while psychologist Uri Simonsohn of the University of Pennsylvania has shown that many similar studies are statistically underpowered.

Prof. Davis, who ran this study, concedes that the effects he found are small. However, he adds, the people in his experiments weren't just college students in a lab but were recruited online from a broader cross section of the population. And, he points out, people often fail to detect the incorrect use of homophones while proofreading, because the identical sound of the wrong word puts them in mind of the right word. (Think of all the times you didn't even notice that you typed "they're" for "their" or "there.")

If "people are distracted by noise, time pressure and other commotion," says Prof. Davis, their behavior may be more easily swayed by the homophone effect. When prompted by the sound "bye," he says, "on average across many people, a small change in 'buying' behavior may be possible." Prof. Davis, emphasizing that this is a speculation, adds that "a distracted investor primed with 'bye' might misremember reading that the stock was rated a 'buy.'"

KAL isn't surprised by the research. "The notion of human behavior being influenced by outside suggested stimuli certainly makes sense," he told me in a recent email. Almost 25 years after he drew his brilliant cartoon, he still gets requests for reprints every week, he says.

The contagious panic that KAL captured in his image was unsettling. On Oct. 13, 1989 – a Friday the 13th – the Dow closed down 190.58 points, or 6.91%. At the time, that was the second-worst point decline (after the October crash of 1987, when stocks fell 23% in a day) and the 12th-worst percentage drop on record. The crash was said to have been triggered by the collapse of takeover bids for airline stocks UAL and AMR, but nearly all the collapse came in the final hour of trading, well after the news that the takeover bids had fizzled.

The next trading day, The Wall Street Journal tried to explain the crash:

One takeover stock speculator says that with individual investors frightened away from the market, the remaining participants are mainly institutions, all with instant access to the same information, and the same ability to sell in an instant – that is, until all try to sell at once.

"If this is something that had happened over the last few weeks, nobody would have noticed," the speculator says. "But now it just happens in an hour. The information is very quick; it's often inaccurate; and reactions can be irrational."

In a guest essay published in the New York Times on Oct. 29, 1989, called "Fear of a Crash Caused the Crash," future Nobel Prize-winning economist Robert Shiller described a survey he had done of 101 market professionals the Monday and Tuesday after the tumble. Asked whether the drop was driven by "a change in the stock market fundamentals" or "psychology and emotion," only 19% cited fundamentals; 77% blamed psychology and emotion. Shiller and his colleague William Feltus also asked the professionals if they thought the latest drop could turn into a replay of the 1987 crash; 35% thought it could, while 41% thought other investors thought so.

So, when KAL poked fun at traders overreacting to what others say, he was right on the money.

To this day, says KAL, brokers buying copies of the cartoon "inevitably" tell him, "It was so funny because it was so true."

So if you walk into a brokerage or financial adviser's office and you hear "Bye Bye Love" and "American Pie" and "Bye Bye Blackbird" playing on the sound system, hang on to your wallet. You may be more easily swayed than you think.

The Next Chapter in the Domestic Energy Saga

Source: AES.

As the photovoltaic and wind markets mature in the United States and around the world, attention is shifting toward the next step in the market's evolution: battery storage. Gaining some exposure recently, battery storage conversations swirled through the media with news of Tesla Motors' (NASDAQ: TSLA  ) Gigafactory; however, the applications for battery storage greatly transcend those pertaining to electric vehicles.

Utility applications
According to a research report published by IHS, grid-connected energy storage is bound to experience substantial growth over the next few years. Approximately 340 MW of grid-connected energy storage was installed in 2012 and 2013; however, IHS solar research manager Sam Wilkinson and report co-author Abigail Ward suggest that the annual rate of installations will grow to more than 6GW by 2017 and more than 40 GW by 2022. Perhaps this is an underestimate. California alone has set a lofty target. The California Public Utilities Commission has an energy storage target of 1.325 GW by 2020 for its three largest utilities.

Where will these and other utilities look in order to meet these targets? One company is The AES Corporation (NYSE: AES  ) . Located in the United States and South America, AES has more than 200 MW of storage-based resources in operation and construction, and it has more than 1,000 MW in development. Last week, AES revealed its Advancion storage offering, which the company characterizes as "a complete battery-based grid resource -- delivering the services expected from peaking power plants, with added benefits." Supplying AES with the power conversion system for Advancion is Parker Hannifin. The two companies have previously worked together on other storage projects, namely on the AES Laurel Mountain Storage Array, a 64 MW advanced battery-based resource, which helps a 98 MW wind farm to supply grid stability services.

Closer to home
Energy storage isn't just a concern for utilities; companies are l! ooking to provide solutions for the residential market as well. Power-One, a member of the ABB (NYSE: ABB  ) Group, will be offering home owners the REACT energy storage system later this year. Paired with one of the company's Aurora inverters, the system affords homeowners the opportunity to store excess PV-generated energy during peak times for periods with higher energy demands. Having only completed the acquisition of Power-One last July, ABB has already acknowledged the benefit. In its 2013 annual report, ABB credits Power-One with contributing significantly to the 4% increase in revenues and 2% increase in orders.

Although SolarCity (NASDAQ: SCTY  ) uses Power-One's Aurora inverters in its PV systems, it's doubtful that it will choose to offer the REACT system to its customers. Instead, SolarCity has chosen to partner with Tesla in providing residential customers with the ability to add battery backup to their PV systems. The energy storage option is available in certain California, Connecticut, and Massachusetts markets at the moment, but SolarCity plans on rolling out the service nationwide in the near future. In addition to the residential offerings, SolarCity began offering businesses the ability to incorporate energy storage systems. Similar to the popular PV system model, SolarCity plans on offering consumers the option of adding a battery backup without any initial cost. Instead, the customer would lease the system, making monthly payments, over a term of about 10 years.

The company foresees battery solutions as an inextricable complement to the PV systems. When asked on the most recent earnings conference call about the role of battery systems in the future, Peter Rive, SolarCity's chief technology officer, acknowledged the importance: "Yes, I think if you look at the business over the long term, we aspire to eventually deploy a battery with every single solar panel system that we deploy."

Final Foolish thoughts
Long gone are the days when discussions regarding energy addressed only coal and oil. Renewables are assuming a larger part of the discourse, and while the residential, commercial, and utility-scale markets make headlines with their sizable solar farms and wide-reaching wind projects, energy storage is quickly emerging as the next act in the domestic energy story. Which company belongs in your portfolio? That's up to you to decide after further research. But, AES, ABB, and SolarCity all offer compelling theses for investment.

Get ready for the next energy boom
Record oil and natural gas production is revolutionizing the United States' energy position. Finding the right plays while historic amounts of capital expenditures are flooding the industry will pad your investment nest egg. For this reason, The Motley Fool is offering a comprehensive look at three energy companies set to soar during this transformation in the energy industry. To find out which three companies are spreading their wings, check out the special free report, "3 Stocks for the American Energy Bonanza." Don't miss out on this timely opportunity; click here to access your report -- it's absolutely free. 

Amazon raises price of Prime membership to $99

That Amazon Prime membership is going to get more expensive.

The online retail giant revealed it is raising the price of an annual subscription to Prime from $79 to $99. The price for the student version of Prime will also rise to $49.

Amazon Prime is an annual subscription service that offers free two-day shipping on select items, access to a host of free videos through the streaming service Amazon Instant Video and access to the Kindle Owners' Lending Library used to borrow books.

Shares of Amazon are up more than 2% in early trading following news of the price increase.

The price increase was first reported by Cnet.

Amazon first hinted at a price increase for Prime in January during its fourth-quarter earnings call, when the company also revealed its shipping costs surged 19% to $1.21 billion.

"They're getting caught in the cost of getting it to you in 48 hours," says Gartner analyst Gene Alvarez.

Last month, a survey from Bizrate Insights conducted after Amazon's quarterly call found many Prime users would consider cancelling their subscription if the price was raised.

However, based on initial sentiments from readers on Twitter, it appears many will hang on to their Prime membership:

@usatodaytech $99/yr for streaming movies/TV shows, Kindle Borrowing Library, %26 free 2-Day shipping is still a monster deal. I'm keeping it.

— Joe Casabona (@jcasabona) March 13, 2014

@usatodaytech@USATODAY keep it. Not too happy with paying more but Amazon's customer service ROCKS and that makes me happy customer.

— Cynthia Lea (@cynsmith1972) March 13, 2014

Follow Brett Molina on Twitter: @bam923.

Judge puts Toyota on probation for 3 years

A federal judge in New York accepted for the $1.2-billion penalty that ends the criminal investigation of Toyota over sudden acceleration in its vehicles and, in essence, put the company on three-year probation.

U.S. District Judge William Pauley III referred to Toyota as having created a "reprehensible picture of corporate misconduct" in the way it handled the cases, the Associated Press reports. Toyota admits it deceived regulators about sticky accelerators and floor mats that can jam under pedals.

As part of the "deferred prosecution agreement," Toyota will be closely watched until March, 2017. If there are any further instances safety flaws being covered up, the case gets reopened.

The wreck of a 2009 Toyota Camry driven by Harry William, a retired Army colonel, after what he alleges was a sudden, unintended acceleration accident in 2009 in Virginia  (Photo: Business Wire)View Fullscreen Toyota Group Vice President Bob Carter is surrounded by the media after introducing the 2011 Toyota Avalon at the 2010 Chicago Auto Show. Most of the questions were about Toyota's recall issues  (Photo: Jim Prisching AP)View Fullscreen Tony Raasch, 30, stands with a Toyota Corolla that was involved in an accident in this 2010 file photo from Hales Corners, Wis. He says his gas pedal stuck when he tried to brake to avoid another car.  (Photo: Carrie Antlfinger AP)View Fullscreen Television cameramen look on as a 2008 Toyota Prius' brakes are tested after a news conference in 2010. At the time, there were allegations of unintended acceleration in the Prius, which Toyota denied. The allegations were never proven.  (Photo: Denis Poroy AP)View Fullscreen Toyota Motor President Akio Toyoda reacts during a press conference in Tokyo.  (Photo: Shizuo Kambayashi AP)View Fullscreen Toyota models that have been withdrawn for sale, identified by stickers on the windshield or by a single windshield wiper pointing skyward, when they were taken off sale for sticky accelerators, seen here at a storage lot for Keyes Toyota in the Van Nuys area of Los Angeles in 2010  (Photo: Reed Saxon AP)View Fullscreen At one point, Toyota ran newspaper ads to explain why it had stopped selling many models until they could be repaired under recall  (Photo: Toyota)View Fullscreen Earl Stewart, owner of Earl Stewart Toyota, shows the faulty accelerator pedal on one of the recalled vehicles in North Palm Beach, Fla., in 2010  (Photo: Alan Diaz AP)View Fullscreen Toyota put out a diagram to show how it was going to fix sticky accelerator pedals that could cause unintended acceleration.  (Photo: Toyota)View Fullscreen Steve St. Angelo was named as Toyota's first North American chief quality officer as the automaker tried repair its image in 2010  (Photo: YOSHIKAZU TSUNO AFP/Getty Images)View Fullscreen House Oversight and Government Reform Committee member Rep. John Mica, R-Fla., holds a Toyota memo while asking a question of Toyota CEO Akio Toyoda  (Photo: Alex Brandon AP)View Fullscreen Toyota CEO Akio Toyoda, left,and Toyota Motor North Ameica CEO Yoshiumi Inaba testify before the House Oversight and Government Reform Committee on Capitol Hill  (Photo: Mark Wilson Getty Images)View FullscreenLike this topic? You may also like these photo galleries:Replay

Top 5 Managed Healthcare Stocks To Own For 2014

BALTIMORE (Stockpickr) --�Put down the 10-K filings and the stock screeners. It's time to take a break from the traditional methods of generating investment ideas. Instead, let the crowd do it for you.

>>5 Hated Earnings Stocks You Should Love

From hedge funds to individual investors, scores of market participants are turning to social media to figure out which stocks are worth watching. It's a concept that's known as "crowdsourcing," and it uses the masses to identify emerging trends in the market.

Crowdsourcing has long been a popular tool for the advertising industry, but it also makes a lot of sense as an investment tool. After all, the market is completely driven by the supply and demand, so it can be valuable to see what names are trending among the crowd.

While some fund managers are already trying to leverage social media resources like Twitter to find algorithmic trading opportunities, for most investors, crowdsourcing works best as a starting point for investors who want a starting point in their analysis. Today, we'll leverage the power of the crowd to take a look at some of the most active stocks on the market today.

Top 5 Managed Healthcare Stocks To Own For 2014: Pacific Drilling SA (PACD)

Pacific Drilling S.A., incorporated on March 22, 2011, is an international offshore drilling Company. The Company is a provider of ultra-deepwater drilling services to the oil and natural gas industry through the use of high-specification drilling rigs. The Company�� primary business is to contract its ultra-deepwater drilling rigs, related equipment and work crews, primarily on a dayrate basis, to drill wells for its customers. The Company is primarily focused on the ultra-deepwater market. The Company generally consider ultra-deepwater to begin at water depths of more than 7,500 feet and to extend to the maximum water depths, in which rigs are capable of drilling, which is approximately 12,000 feet.

The Company operates four drillships and has four drillships under construction, two of which are under customer contract. In connection with the Restructuring, the Company�� Predecessor was contributed to a wholly owned subsidiary of the Company by a subsidiary of Quantum Pacific International Limited.

Advisors' Opinion:

• [By Aaron Levitt]

  Management recently announced a hefty 50% hike in its quarterly dividend to 37.5 cents per share of NE stock. And with a 4.8% dividend yield, NE stock is now one of the best-paying dividend stocks in the energy sector.

  Dividend Stocks To Buy #5 — Pacific Drilling (PACD)

  Estimated Dividend Yield: 6.5%

• [By Roberto Pedone]

  Pacific Drilling (PACD) is an international offshore drilling contractor committed to becoming the preferred provider of ultra-deepwater drilling services to the oil and natural gas industry through the use of high-specification rigs. This stock closed up 1% to $9.94 in Thursday's trading session.

  Thursday's Range: $9.87-$10.00
  
  52-Week Range: $8.63-$10.99
  
  Thursday's Volume: 450,000
  
  Three-Month Average Volume: 308,772

  From a technical perspective, PACD bounced modestly higher here right above its 50-day moving average of $9.67 with above-average volume. This stock has been trending sideways and consolidating for the last five months, with shares moving between $8.89 on the downside and $10.23 on the upside. Shares of PACD are now starting to trend within range of triggering a breakout trade above the upper-end of its recent sideways trading chart pattern. That trade will hit if PACD manages to take out some key overhead resistance levels at $10.14 to $10.23 with high volume.

  Traders should now look for long-biased trades in PACD as long as it's trending above its 50-day at $9.81 and then once it sustains a move or close above those breakout levels with volume that hits near or above 308,772 shares. If that breakout triggers soon, then PACD will set up to re-test or possibly take out its next major overhead resistance levels at $10.71 to its 52-week high at $10.99. Any high-volume move above $10.99 will then put its all-time high at $11.47 within range for shares of PACD.

• [By David Smith]

  Chevron has been working hand-in-glove in implementing DGD with offshore rig operator Pacific Drilling (NYSE: PACD  ) . Pacific's drillship Pacific Santa Ana was specifically built to Chevron's DGD-enhancing specifications and is working for the big company in the Gulf of Mexico.

Top 5 Managed Healthcare Stocks To Own For 2014: Ellie Mae Inc (ELLI)

Ellie Mae, Inc., incorporated October 14, 2007, is a provider of on-demand automation solutions for the mortgage industry. The Company offers an end-to-end solution, delivered using a Software-as-a-Service model that serves as the core operating system for mortgage originators and spans customer relationship management, loan origination and business management. It also hosts the Ellie Mae Network that allows Encompass users to electronically conduct business transactions with the lenders and settlement service providers they work with to process and fund loans. The Company's offerings include range of Encompass services and the DataTrac mortgage management software system. On August 15, 2011, it completed the acquisition of Del Mar Datatrac,Inc. (DMD).

Using the Company�� network technology, it has helped connect a fragmented world of mortgage bankers, mortgage brokers, community banks, credit unions, lenders, investors and service providers, all of which are integral to the origination and funding of residential mortgages. Its Encompass360 solutions include Encompass Product & Pricing Service; Ellie Mae Total Quality Loan Program; Encompass Compliance Service; Encompass Appraisal Service; Encompass CenterWise; Encompass Commissions; Encompass TPO WebCenter and Encompass Docs Solution.

Ellie Mae�� Total Quality Loan program helps in identifying compliance, income and fraud issues early in the origination process; help protect business from loan buy-backs, and fortify workflow and uncover and correct possible issues before you close the loan.Encompass Appraisal Service, integrated inside Encompass360, is that solution helps in completing order right from the loan file in Encompass360; import complete appraisal reports directly into eFolder, and customize appraisal workflow by type of loan and control, which its users can order appraisals. Its Encompass CenterWise wraps two essential Web and electronic document solutions into one unified package. Encompass Commissions is a ! commission management solution integrated inside Encompass360 that automates the calculation, reconciliation and communication of variable pay across your organization. Hosted Encompass360 Banker Edition users can connect directly with third-party originators (TPOs) without leaving Encompass360, and have them connect back in a secure, synchronized, and easy-to-use Web-based environment. Encompass Docs Solution provides a single, integrated application incorporating both initial disclosures and closing documents.

Advisors' Opinion:

• [By SA Pro Top Ideas]

  Stock Movers and Great Calls
  Alpha-Rich long and short ideas regularly move stocks and identify stocks that are about to move. Some notable recent calls subscribers had early access to:

  Saidal Mohmand argued Wednesday that Tellabs (TLAB) was a strong assets play on the verge of a turnaround. The stock is +5.9% since. Read article » On June 13, Stephen Lin said that Ellie Mae's (ELLI) dominant position could mean 45% upside. Shares are +30.7% since. Read article »

  To Come Today
  Don't forget to check your SA Pro dashboard later today for the latest Alpha-Rich ideas, including a REIT with strong management and many catalysts. Any thoughts to share on the latest Alpha-Rich ideas? Leave a comment here. Have a great weekend.
  
  SA Pro Editors
  …............
  
  The SA Pro team is Eli Hoffmann (Editor in Chief), Rachael Granby (Editorial Product Manager), Daniel Shvartsman, Samir Patel, Michael McDonald, and Jeffrey Fischer (Senior Pro Editors). You can reach us at pro-editors@seekingalpha.com.

• [By Simon Erickson]

  Rule Breakers analyst Simon Erickson believes Ellie Mae (NYSE: ELLI  ) , an innovator in the mortgage industry, could be in a perfect place to capitalize on the situation. In the video below, he presents three reasons he thinks the stock is a buy today.

Top 5 Warren Buffett Stocks To Own Right Now: Receptos Inc (RCPT)

Receptos, Inc. (Receptos), incorporated on June 9, 2008, is a biopharmaceutical company. The Company is focused on discovering, developing and commercializing therapeutics for immune disorders. The Company�� product candidates span three specialty disease areas. The Company�� lead asset, RPC1063, is being developed as an oral therapy for the treatment of relapsing multiple sclerosis (RMS) and inflammatory bowel disease (IBD). Its second asset, RPC4046, is being developed for the treatment of an allergic/immune-mediated disorder, eosinophilic esophagitis (EoE), which is an orphan disease. RPC1063 is an oral, once daily, selective and potent sphingosine 1-phosphate 1 receptor (S1P1R) modulator. RPC4046 is a monoclonal antibody selective to interleukin-13 (IL-13) and produced by recombinant deoxyribonucleic acid (DNA) technology.

As of December 31, 2012, RPC1063 was being tested in the Phase II portion of an accelerated design, randomized Phase II/III study for the treatment of RMS. In addition, Receptos has obtained special protocol assessment (SPA) agreement from the United States food and drug administration (FDA) on its clinical trial design for the planned Phase III portion of the Phase II/III study, as well as a second planned RMS Phase III study. RPC1063 is also being tested in a randomized Phase II study for the treatment of ulcerative colitis (UC), a gastrointestinal (GI) disea se.

As of December 31, 2012, the Company was enrolling a randomized Phase II study evaluating the ability of RPC1063 to induce clinical remission in patients with moderately-to-severely active UC called TOUCHSTONE. The Company�� second asset, RPC4046 for the treatment of EoE, builds upon its competencies in immunology and GI diseases. In-licensed from AbbVie Bahamas Ltd. and AbbVie Inc. (AbbVie) RPC4046 is a monoclonal antibody directed against the IL-13 target, which has been validated in Asthma, a predominantly allergic/immune-mediated disorder.

Advisors' Opinion:

• [By Roberto Pedone]

  Receptos (RCPT) is a biopharmaceutical company engaged in discovering, developing and commercializing therapeutics for immune disorders. This stock closed up 5% at $23.19 in Monday's trading session.

  Monday's Volume: 69,000
  
  Three-Month Average Volume: 55,356
  
  Volume % Change: 50%

  From a technical perspective, RCPT ripped higher here right above some key near-term support at $21 with decent upside volume. This move is quickly pushing shares of RCPT within range of triggering a major breakout trade. That trade will hit if RCPT manages to take out its all-time high at $25 with high volume.

  Traders should now look for long-biased trades in RCPT as long as it's trending above support at $21 and then once it sustains a move or close above its all-time high at $25 with volume that's near or above 55,356 shares. If that breakout hits soon, then RCPT will set up to enter new all-time-high territory, which is bullish technical price action. Some possible upside targets off that breakout are $30 to $35.

• [By John Udovich]

  Small cap �biopharmaceutical stock Receptos Inc (NASDAQ: RCPT) was one of the many hot biotech IPOs of last year and its also up 72.4% since the start of this year alone, meaning its time to take a closer look at this small cap stock with potential treatments for Relapsing Multiple Sclerosis (RMS) and Inflammatory Bowel Disease (IBD) along with the performance of biotech ETF benchmarks like the iShares NASDAQ Biotechnology Index ETF (NASDAQ: IBB) and SPDR S&P Biotech ETF (NYSEARCA: XBI).

Top 5 Managed Healthcare Stocks To Own For 2014: IFM Investments Ltd (CTC)

IFM Investments Limited, incorporated on November 30, 2005, is a real estate services provider with the network of real estate sales offices in People�� Republic of China. The Company is the exclusive franchisor in People�� Republic of China for the CENTURY 21 brand As of December 31, 2012, its CENTURY 21 China network covered 27 cities. The Company operates under four business lines: Company-owned brokerage services, Primary and commercial services, mortgage management services and franchise services. As of December 31, 2012, the Company had approximately 321 Company-owned sales offices, representing approximately 34.7% of its CENTURY 21 China network. Its Company-owned brokerage services business owns and operates regional sub-franchisors and sales offices in the CENTURY 21 China network. The Company�� mortgage management services business provides mortgage advisory services to home buyers and home owners and interim guarantee services to commercial banks.

Company-owned Brokerage Services

As of December 31, 2012, the Company directly owns 318 CENTURY 21 sales offices located in Beijing, Shanghai and Shenzhen, cities in People�� Republic of China with a number of secondary market real estate transactions per year. Through its Company-owned brokerage services business, the Company participates in sales and leasing transactions primarily with respect to middle to high grade residential properties in the secondary real estate market. Its services include property listing, advisory services and transaction negotiation and documentation. The Company also promotes its mortgage management services to its customers to provide real estate brokerage services. It also participates in real estate sales and leasing transactions with respect to properties in the primary and commercial real estate markets. The Company operates its Company-owned brokerage services business under the CENTURY 21franchise network.

The Company competes with Centaline (China) Property Cons! ultants Limited Shanghai, Shenzhen and Chengdu.

Primary and commercial services

The Company�� primary and commercial services business consists of two business units, one that provides agency services to primary residential real estate developers and one that provides planning, consulting and brokerage services to commercial property developers. The Company generates revenues from its primary services by earning sales commissions from primary residential property developer clients, and it generate revenues from its commercial services by collecting service fees for consultancy services provided to commercial property developers.

The Company competes with World Union Properties Consulting Co., Limited and Syswin Inc., E-House (China) Holdings Limited, CB Richard Ellis and Jones Lang Lasalle.

Mortgage Management Services

The Company operates its mortgage management services as a separate segment under the brand of Kaisheng. Its mortgage management services include advisory services in connection with the selection and procurement of mortgage products offered by commercial banks. Its mortgage consultants promote and introduce various mortgage products, and advise home buyers or home owners in the selection of the appropriate mortgage product based on each mortgagor�� individual needs. The Company also has a call center in Shanghai to promote its mortgage management services business directly to its customers. The Company also provides mortgage management services to customers outside of its CENTURY 21 China network.

The Company competes with Beijing Houze Investment, Guarantee Company Limited and Shanghai Haoyonghang Investment Management Company Limited.

Franchise Services

The Company�� franchise network consists of three levels of franchise rights. First, through IFM Company Limited (IFM Co.), its wholly owned subsidiary, the Company is the exclusive franchisor for the CENTURY 21 brand in China. ! IFM Co. i! n-turn grants the right to franchise the CENTURY 21 brand within specific geographical regions to sub-franchisors whom the Company refers to as regional sub-franchisors. As of December 31, 2012, the Company had 25 regional sub-franchisors with franchise networks in 27 cities in People�� Republic of China with a total of 924 franchised sales offices. Second, each regional sub-franchisor pays the Company ongoing service fees based on its revenue from the sales offices within its respective region, subject to minimum service fee requirements. In addition to generating revenue from its regional sub-franchisors, the Company leverages the geographic breadth and local market expertise of its CENTURY 21 franchise network.

The Company competes with Coldwell Banker.

Advisors' Opinion:

• [By Eric Lam]

  With 12 REIT IPOs in Canada since the beginning of 2012 and at least another coming from retailer Canadian Tire Corp. (CTC) in the near future, Taylor said the market has become saturated.

Top 5 Managed Healthcare Stocks To Own For 2014: United Continental Holdings Inc.(UAL)

United Continental Holdings, Inc., through its subsidiaries, engages in the provision of passenger and cargo air transportation services. As of February 24, 2011, it operated a total of approximately 5,675 flights a day to 372 airports on 6 continents from their hubs in Chicago, Cleveland, Denver, Guam, Houston, Los Angeles, New York, San Francisco, and Tokyo, as well as in Washington, D.C. The company was formerly known as UAL Corporation and changed its name to United Continental Holdings, Inc. on October 1, 2010. United Continental Holdings, Inc. was founded in 1934 and is headquartered in Chicago, Illinois.

Advisors' Opinion:

• [By Sean Williams]

  At 11 times forward earnings, Southwest isn't particularly expensive, but it's also in the process of fully integrating AirTran, which it purchased two years ago. There are innumerable benefits to Southwest's purchase, including international exposure that it previously didn't have; a hub in the world's largest airport, Atlanta-Hartsfeld; and access to busy metropolises. Then again, mergers and acquisitions in the airline space don't always go as planned. United and Continental merged to create United Continental Holdings (NYSE: UAL  ) in 2010 to realize synergies, reduce expenses, and better compete against the nation's largest airlines. However, last year the merger actually resulted in more costs, not less, for United!

• [By Adam Levine-Weinberg]

  For that reason, Delta Air Lines (NYSE: DAL  ) announced a plan last year to reduce its 50-seat regional jet fleet to no more than 125 aircraft by the end of 2015, down from a high of 550 planes in 2008 and 2009. It is replacing that capacity with larger regional jets (mostly seating 76 passengers) and small mainline aircraft (110 seats). United Continental (NYSE: UAL  ) is also replacing many of its 50-seat jets with larger regional jets, although it remains well behind Delta in that process.

• [By Lisa Levin]

  Analysts at JP Morgan downgraded United Continental Holdings (NYSE: UAL) from ��eutral��to ��nderweight.��The target price for United Continental Holdings has been lowered from $32.50 to $25.

• [By Rich Smith]

  It wasn't as big as the Boeing 314, with a smaller wingspan and a shorter range. Yet Boeing modestly calls the DC-3, first flown in 1935, "the greatest airplane of its time," and perhaps "the greatest of all time." Many people agree. Originally built for American Airlines (now US Airways (NYSE: LCC  ) ), the plane soon gained a fan in United Airlines (now United Continental (NYSE: UAL  ) ) -- and then it went on to win sales contracts at nearly three dozen airlines and to (in alliance with its DC-2 predecessor) capture more than 90% of the air-passenger market. The DC-3 carried 28 passengers, or slept 14, which doesn't sound like a lot in today's terms. But it was the first plane capable of carrying enough passengers, and carrying them fuel-efficiently enough, to earn its airline owners a profit.

Stocks: Set to close week with a gain

Click on chart to track premarkets

NEW YORK (CNNMoney) This week saw tweaks to Federal Reserve policy, rising tensions between the West and Russia and continued concerns about slowing growth in China.

But for the most part, markets kept pushing higher. As it stands now, the major U.S. indexes look set to close out the week with a healthy gain.

U.S. stock futures were edging up Friday, with investors feeling relatively calm after a Fed freak out in the middle of the week.

Stocks could be volatile Friday as it's also the day when four futures and options contracts expire -- known as quadruple witching.

"That's the main driver of the day," said Peter Cardillo, chief market economist at Rockwell Global Capital. "There is really no economic news out there other than the fact that there was some good news out there last night on the [Federal Reserve's] stress test: 29 of the 30 big banks passed."

Markets were rattled Wednesday after Fed chair Janet Yellen suggested that the central bank could begin hiking interest rates sooner than expected. But stocks have climbed every other day this week.

The latest reading on the CNNMoney Fear & Greed index shows markets are getting greedy again.

But the mood isn't quite so perky in Russia, where the stock market and ruble are under pressure after the U.S. announced sanctions against more high-ranking Russian individuals and a bank. Western nations are trying to put pressure on Russia after it annexed Crimea, a region in southern Ukraine.

There's little U.S. economic or corporate news on the docket Friday. Before the bell, Tiffany (TIF) reported full-year earnings and sales that fell short of forecasts.

Shares of Nike (NKE, Fortune 500) slid 3% after the company said earnings could be squeezed over the ! next few quarters.

Shares of Symantec (SYMC, Fortune 500) plunged after the company fired its CEO.

European markets were all rising in morning trading.

Asian markets mostly closed with gains. The main stock market indexes in Hong Kong and China pushed higher.

The Nikkei in Japan was closed for the Vernal Equinox.

Kodak ends 2013 with smaller losses

ROCHESTER, N.Y. — Eastman Kodak Co. has spent years investing in new businesses; harvesting returns from its old, declining ones; and cutting costs, all in an effort to turn profitable.

While it is today in many ways a new company — new CEO, new ticker symbol, many of its old legacy expenses wiped away with its bankruptcy — it still remains a work in progress toward that profitability goal.

The iconic Rochester, N.Y.-based company put out its fourth-quarter 2013 and 2013 overall financial results Wednesday after the market's close. The printing technology company's losses were far smaller than in the previous year. And its expectations for 2014 put it close to — though still not at — profitability.

STORY: Kodak names Clarke new CEO
STORY: Kodak CEO outlines growth strategy

Kodak's 2013 overall sales of $2.35 billion were $150 million short of what the company previously had forecast.

Chief Financial Officer Becky Root said in a conference call Wednesday that sales were down for the quarter and the year largely because of:

• An accelerated decline in the company's motion picture film business.

• Slumping desktop inkjet sales as the company got out of the printer business in 2012 (it now just sells replacement inks).

• Overall "customer reluctance to make commitments to us while we were in bankruptcy proceedings."

But even with that sales shortfall, Root said, Kodak beat earnings targets for 2013, thanks to high profit margins on desktop inkjet inks, lower-than-expected commodity costs and income from brand and intellectual property licensing. It ended the year with operational earnings of $160 million, not counting certain expenses such as taxes and depreciation.

If you remove both those various business expenses, plus reorganization and restructuring spending, Kodak had an operational profit of $46 million for the quarter, versus a $50-million loss the same quarter a year earlier.

For 2014, Kodak is not projecting a majo! r turnaround, with anticipated sales of $2.1 billion to $2.3 billion and comparable earnings of $145 million to $165 million.

STORY: Kodak bankruptcy officially ends

For the businesses that represent its future, such as various aspects of printing technology, Kodak expects sales to be flat to up as much as 8% in 2014. For one of its flagship products, the Prosper high-speed inkjet printing system, Kodak is expecting to double the number installed this year, CEO Jeff Clarke said.

Meanwhile, judging by how quickly their fortunes are plummeting, motion picture film and desktop inkjet inks may not be long for this world. Those businesses meant $521 million in sales for Kodak in 2013. The company is expecting them to bring in $275 million to $325 million this year.

The company also anticipates yet more cost cutting in 2014.

"We still have significant restructuring to do" in general and administrative operations, Clarke said. "There's never a company that's worked hard enough on cost reduction and productivity improvement."

These latest financial figures — covering the last three months of 2013 — are the first look at Kodak completely post bankruptcy, as the company ended its 20-month Chapter 11 in September 2013. It filed for bankruptcy protection in January 2012.

That bankruptcy saw the company hugely reducing costs — and headcount. The last time Kodak was in this kind of watershed moment was arguably the first half of 2008, after it had finished wrapping up its massive 2004-2007 restructuring that similarly saw it widely cutting costs.

"Kodak is fundamentally a new company," Clarke said.

Kodak shares were up 1.7% to close at $27.60, before earnings were released. Shares rose nearly 2.5% in after-hours trading.

Daneman also reports for the Rochester (N.Y.) Democrat and Chronicle

Wal-Mart Stores, Inc. Announces Video Game Trade-In Service; GameStop Corp. Shares Tumble (WMT, GME)

Early on Tuesday, Wal-Mart Stores (WMT) announced that it will be starting a program that will allow customers to trade in video games and have the value applied to buying anything at Wal-Mart or Sam’s Club stores.

Wal-Mart’s new program will see the video games traded in, sent to be refurbished, and then sold through its stores. This is similar to the service that GameStop (GME) currently offers, and subsequently GME stock was substantially in pre-market trading. WMT’s new program differs from GME’s, as WMT customers will have a wider variety of products to choose from when spending the video game’s trade-in value.

Walmart U.S. chief merchandising and marketing officer Duncan Mac Naughton had the following comments about the new service: ”Gaming continues to be an important business for us and we're actively taking aim at the $2 billion pre-owned video game opportunity. When we disrupt markets and compete, our customer wins. They'll save money on video games and have the flexibility to spend it however they want.”

GameStop shares were down $1.95, or 4.91%, in pre-market trading. The company’s stock is down 19.94% YTD.

Wal-Mart shares were up 32 cents, or 0.43%, in pre-market trading. WMT stock is down 5.36% YTD.

Old Bull Shows Its Age

At the start of 2013, investors were worried about the uncertain U.S. and Chinese economies, about the prospect of a withdrawal of Federal Reserve stimulus and about signs stocks were getting overpriced. The Dow Jones Industrial Average responded with an 11% gain at this time last year, on its way to a 26% full-year binge.

Now, investors are worried about pretty much the same things. And the Dow? It is down 3% this year.

Why the big shift in stock performance? Although it doesn't look like it on the surface, investors and analysts think some basic things are changing. Many see 2013 as an exceptional year, not a harbinger of things to come. Even if stocks finish 2014 with gains, a growing number expect indexes to endure a pullback of more than 10% at some point.

"It is going to be a bumpier ride," said Jim Dunigan, chief investment officer at PNC Wealth Management, which manages $127 billion for its clients.

Part of the problem is last year's gain. Stocks rise 10% to 12% in the average year, including dividends and not adjusting for inflation. But the S&P 500 gained 30% (32% including dividends) in 2013, its biggest advance in 16 years. The Dow's gain was its biggest in 18 years.

Many analysts warned last year that investors, full of hope for 2014, were simply pulling returns ahead. Now the market is paying the price. While corporations and the economy are doing as well as investors had hoped, the news isn't dazzling enough to push stocks still higher.

And there is more to it than that. Some of the vague fears investors dealt with last year, such as the reduction in Fed stimulus or the slowdown in China, have become reality. The lackluster stock market could be what one gets in a world where China is slowing its breakneck growth and the Fed is gradually ending the program that pumps billions of dollars into financial markets each month.

Maybe this year, with its ups, downs and uncertainties, is a taste of what is to come.

"We saw some outsize returns last year," said Bob Browne, chief investment officer at Northern Trust Corp., which oversees $880 billion in Chicago. "We think we are in an environment that can support a 6-8% return a year, including dividends."

Investors "are going to get that in a very lumpy way," and after last year, this year's return could be closer to the low end than the high end, he added.

"You had very significant Fed accommodation and now it is less so," said Mr. Dunigan of PNC. Stocks gradually now will have to shift to being supported more by economic fundamentals and less by Fed stimulus.

"In my experience, those transitions are sort of sloppy," he said.

Some of the tectonic plates under the market also are shifting.

Bit by bit, stocks have become more expensive compared with the profits of the corporations that issue them. High stock prices make would-be buyers wary, just like high prices for anything. At these prices, the goods, in the form of corporate sales and profits, have to be very high quality.

There are many ways to gauge stock prices and they mostly tell the same story: Stock prices are well above average. While they aren't yet at extremes, they are getting closer.

FactSet, for example, compares stock prices to companies' earnings from operations for the past 12 months. That figure today is 16.4, up from 14.5 a year ago. That is well above the historical average of 14. Stocks topped out at this level in 2007 but in 2010, they returned to this price-to-earnings level and kept rising.

Other p/e calculations based on other earnings measures tell similar stories: P/e ratios are high but not outrageous. Stocks have sometimes topped out with p/e ratios at this level; at other times they have kept rising.

Ned Davis Research recently looked at yet another way to gauge this sort of thing. It used Fed data to calculate how much money is sitting in cash on the sidelines, available to be shifted into stocks.

Cash and other liquid assets represent a little over 22% of household financial assets, close to the low of 22% hit at the stock-market peak in 2007 although not yet close to the low of 19% when stocks hit their high in 2000. When cash was this low in the past, stocks have risen, on average, 2% a year, Ned Davis Research calculates.

Foreign purchases of U.S. stocks, however, are well below 2007 and 2000 levels, the study finds, suggesting that foreigners still could buy more U.S. stocks. U.S. corporations, big buyers of their own stocks, retain plenty of cash to keep buying. And bondholdings still are a bit above average, meaning investors could shift money to stocks from bonds.

Although Fed policy still supports stocks, Mr. Davis concluded, stock prices are high and both institutions and households are heavily invested, leaving less available cash. While he didn't predict imminent trouble, he added his voice to the generalized warning that there are "risks that we could see a substantial pullback this year."

After five years, the bull market is no longer young. It probably isn't dead yet, but is likely in for more of the ups and downs that have characterized this year. Barring a return to the irrational exuberance of the 1990s, stocks could find it hard to repeat 2013's exceptional returns, and they could be in for a pullback.