Friday Charts: Rebalancing Acts, Billionaires In The Prairies

Why use lots of words when a handful of pictures will suffice?

That’s the philosophy I embrace each Friday when I share a few graphics to put important economic and investing news into perspective for you.

So, like a wrecking ball (sans Miley Cyrus), here comes the first edition of 2014′s Friday Charts…

The Bull Gets Gored… or Not
Remember when everyone feared that a Fed taper would abruptly end the bull market?

Well, the Fed announced a taper in December… and stocks kept hitting new highs.

And remember when everyone feared that interest rates rising above 3% again would put a stop to runaway stock prices?

Not so much…

In the final week of 2013, 10-Year Treasury yields hit a two-and-a-half-year high at 3.02%. Yet stocks maintained their upward momentum…

“The market loves to prove people wrong,” says Bespoke Investment Group. Indeed!
 
So, loyal readers, let’s conduct a little experiment, shall we?                
 
I present to you the toughest question for 2014: What do you think will finally gore this bull market?
 
Billionaires Flocking to the Prairie
Who needs Swiss bank accounts when we have South Dakotan dynasty trusts?            
 
You see, according to Bloomberg, in the past four years, the amount of money sheltered from the long arm of the IRS in the state tripled to $121 billion.

“We have a tax haven in our midst,” says Edward McCaffery, a professor at the University of Southern California’s Gould School of Law.

You think?

If borrowing costs for the federal government keep rising, which they will, it’s only a matter of time before Sioux Falls becomes the hot topic in Washington, D.C.

Enough with the observations, though. It’s time for an opportunity…

No College Degree Required
We all know that betting on dropouts pays off. Think Bill Gates with Microsoft (MSFT) and the late Steve Jobs with Apple (AAPL).

Now, here’s a new twist on the phenomenon, courtesy of Ryan Detrick at Schaeffer’s Investment Research.

In 2013, the 11 stocks that were dropped from the all-tech index, the Nasdaq, ended up schooling the new entrants. More specifically, they rallied an average of 56.8% – a full 22 percentage points more than the companies added to the index.
 
What’s more impressive is that only one of the dropouts, BlackBerry Limited (BBRY), fell in price for the year.
 
If this trend rings true in 2014, too, the latest stocks to get the boot from the Nasdaq – Fossil Group (FOSL), Microchip Technology (MCHP), Nuance Communications (NUAN), Sears Holdings (SHLD) and DENTSPLY International (XRAY) – could be big winners this year.
 
Fundamentally speaking, I think Sears is a sucker’s bet. However, I think Nuance could easily double (hint, hint).
 
If you’re reluctant to follow my lead, follow a billionaire’s, instead. Carl Icahn recently upped his stake in Nuance by almost $725,000.
 
Tech & Innovation Daily’s Chief Technology Analyst, Marty Biancuzzo, loves the company, too. As he pointed out last month, “Nuance possesses one of the most robust intellectual property portfolios around, with nearly 1,500 U.S. patents and another 348 patent applications.”

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