The Democrats have nearly wrapped up their national convention making history by nominating Barack Obama the first African-American, or person of any color for that matter, to lead a major celebration in pursuit of the presidency. Tonight they put a big bow on the whole affair and begin the next leg of the race.

Talking of large bows it might be in order for Barack to be giving thank-you gifts to the women in his life, Michelle and Hillary — a tiny blue box might be just the ‘ticket’. In her daily Before the Bell post my colleague Melly Alazraki reported about Tiffany’s super quarter:

• U.S. jeweler Tiffany & Co (NYSE: TIF) posted double the quarterly profit from a year ago on Thursday, benefiting from strong international sales and solid tourist spending at its New York flagship store. Net profit was $80.8 million, or 63 cents per share, in its fiscal second quarter, up from $40.5 million, or 29 cents per share a year earlier, and beating estimates of 55 cents per share. Revenue grew 11%. Tiffany also raised its 2008 profit outlook on strong sales in Europe and Asia and expected improvement in the U.S.

TIF has been up and down this year, like most stocks, since I wrote about it last February in Serious Money: Pondering: Home Depot, Tiffany & Wells Fargo. Shares have jumped this morning by nearly 10%, trading as high as $44.45 after closing yesterday at $39.61.
After suggesting investors keep on eye on TIF, in April we bought in at $36. I would be very surprised to ever see that number again and I continue to support the value investing style of ‘my pal Warren‘ and another investing star that does not get as much credit: Ken Heebner, America’s Hottest Investor, although this is changing.

At this point I think it is anybody’s guess as to how high this stock can rise in the near term. In the long term, I still think it is a market beater. TIF does pay a 1.7% dividend yield, which I like, but I tend not to buy when things are heated up as they’re today.

Obama and Tiffany seemed to be all a glow at the same time. Next up: McCain picks his running mate, and if he has the ability to find as much value as investors did in Tiffany & Co. this year then he might do well also.

Sheldon Liber is the CEO of a small private investment company and the principal for design and research at an architecture & planning firm. He writes the columns Chasing Value and Serious Money. DISCLOSURE: I currently own shares of TIF.

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The Federal Open Market Committee (FOMC) released the minutes of its recent meeting on August 5. The event itself was a bit of an anti-climax because of the comments by Fed Chairman Ben Bernanke at the current Wyoming summit.

Everyone knew that even though members of the Fed are quite concerned about inflation, they’re even more concerned about the deteriorating economic situation. This was clearly indicated in comments made at the Jackson Hole meeting. In addition, as I mentioned in my earlier analysis, the decisions by Fed Governors Plosser and Stern to vote to leave rates unchanged instead of dissenting indicates the gravity of the economic and monetary problems facing the United Says. This was nearly a complete reversal of the recent hawkish comments by both individuals.

The FOMC minutes actually give us insight into the thinking of the Fed. The Fed is very concerned about the fragile nature of the economy. It clearly believes that a rise in interest rates prematurely could damage the already battered credit situation.

However, the Fed is concerned about the inflation situation. It is particularly concerned that inflation could become embedded in expectations. This phenomenon is much more difficult to control once it begins.

It believes that the weak economic situation, combined with the current decline in oil prices, may help to resolve this dilemma in the coming months. It may require a rise in interest rates if this does not occur.

However, because of the weak economic situation, the Fed is implying that such an event won’t take place anytime in the near future. The minutes also indicate that it “did not see the current stance of policy as particularly accommodative” and thus sees no reason to raise rates prematurely.

The dilemma between growth and inflation is likely to persist for some time. With oil prices declining, the Fed might be able to mitigate some of the problem with inflationary expectations by raising rates. However, this could also change a painful slowdown into a severe recession. In this case, the cure to the inflation problem might be worse than the disease.

Doug Roberts is the Founder and Chief Investment Strategist for ChannelCapitalResearch.com, an independent research firm focusing on investment strategies using the Federal Reserve’s impact on the stock prices, and is the author of Follow the Fed(R) to Investment Success: The Effortless Strategy for Beating Wall Street (www.FollowtheFedtheBook.com ). He previously held executive positions at Morgan Stanley Group and Sanford C. Bernstein & Co.

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In the margins of Barron’s this week there was a smallish note about the government of Venezuela nationalizing Cemex’s (NYSE: CX) operations in that country. For some reason the government of Hugo Chavez thinks that stealing all of the private companies in ‘his’ country will lead to greater prosperity for ‘his’ people.

While it is a long journey from Venezuela to Zimbabwe, with its exponential inflation rate and a near-total economic breakdown, each journey begins with a first step. Mr. Chavez will move much closer to this inevitable outcome if he continues on his chosen path.

Motley Fool has a good write-up on the subject in which they detail the sour relations between Chavez and foreign businesses. Chavez recently offered to re-open negotiations with Cemex, but since he has already decided to take the company, that offer is suspect — you can’t negotiate with a gun pointing at you. To date, Chavez has nationalized the telecommunications industry, electricity, and oil. How many steps down the road is that? Why would anyone want to invest in Venezuela?

If Chavez thinks foreign companies are cheating his country then he should take them to court and formally charge them with a crime. Otherwise, he’s going to find that the people of Venezuela are most assuredly being cheated as he scares away foreign investment, leaving the companies in the hands of managers with less skill and no personal interest in the success of the company.

CX shut yesterday at $20.27 and is down in mid-day trading. The company was on an acquisition binge prior to the U.S. housing slump. Expanding into a slowing economy has contributed to a decrease in earnings as the company has notable debt weighing it down. Even though Venezuela represents only 4% of Cemex’s earnings, Chavez’s actions aren’t helping the stock this day.

UPDATE: CX shut this day at $19.87 down -$0.40 (-1.97%)

Sheldon Liber is the CEO of a small private investment company and the principal for design and research at an architecture & planning firm. He writes the columns Chasing Value and Serious Money. DISCLOSURE: I currently own shares of CX.

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The first major economic act of presidential hopeful Barack Obama will be to add Hillary Clinton to the lower half of the democratic ticket. If he does not, he will be throwing caution to the wind.

All indications are that he does not want to do this and hopes he’ll not have to — but he might not have any choice.

It is just good business and if he is too stubborn, too arrogant, or just misguided by favorable polling numbers, he should think again. There are several Hillary supporters who will find McCain more centrist than Obama and switch parties. There will be very few, if any, to the right of McCain who will vote for Obama. They are more prone to not vote than support Obama.

Adding Hillary Clinton, in most people’s eyes, will slam dunk the presidential race and if Obama does not make this tough decision, putting success in front of politics and personalities, then I am afraid all his speak of being able to stand up to special interests and take the heat in the kitchen is just that.

You can’t hope to lead the nation if you cannot make a tough call before you even get to the Oval Office. Success in business, as with life in general, is all about making the tough call. Earlier in the month I did so with Serious Money: Tempting fate with 10 financials.

Today I’ll do so again by suggesting that it is time to get back into Home Depot (NYSE: HD) and Lowes Co (NYSE: LOW), two stocks that would be on the most hated list if there was one.

Both companies reported continued losses and most people hate the stocks right now. The prognosis for the housing market is still poor and consumers are cash-strapped and credit-restrained. However, Home Depot remains optimistic. Both companies have clean balance sheets and Home Depot is my favorite of the two because of the absence of debt and the 3.27% yield.

Home Depot shut yesterday at $26.96 and Lowes closed at $24.54. They are about 50% off their respective highs. If you think it’s too early, put them on your watch list and if you are correct you can purchase them cheaper. Or for you options players, perhaps doing puts would grant you to make some side money while you wait.

In my thought, you would be buying quality enterprises cheap for the long haul that’ll have competitive advantages over any upstarts when the economy picks up. Even if it does not do so soon, historically, homeowners and do-it-your-selfers will lend support to the stocks at these levels.

A glimpse of my track record: Serious Money: How safe were BRK, BUD, PG, SO, & UPS?

Sheldon Liber is the CEO of a small private investment company and the principal for design and research at an architecture & planning firm. He writes the columns Chasing Value and Serious Money. DISCLOSURE: I do not own shares of HD or LOW today.

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Barron’s (subscription required) cites a government source who warns that absent raising at least $10 billion in capital each, Fannie Mae (NYSE: FNM) and Freddie Mac (NYSE: FRE) common and preferred shareholders will be wiped out or severely wounded in a government takeover of the two Government-Sponsored Entities (GSEs).

The problem with Fannie and Freddie is that depending on how you count the beans, their liabilities are worth more than their assets. Using so-called fair value bookkeeping — which marks their assets and liabilities to immediate market value — Fannie is worth $12.5 billion (a sliver of equity supporting $2.8 trillion in assets) and Freddie has a negative net worth of $5.6 billion. Others compute that both have a negative net worth of $50 billion.

The Bush administration wants to gut these GSEs (they’re Democratic strongholds). How will the GSEs perish? Barron’s reports that if Fannie and Freddie fail to raise at least $10 billion in fresh capital, the administration is “likely to mount its own recapitalization, with Treasury infusing taxpayer money into the enterprises. The infusion would take the form of a preferred stock with such seniority, dividend preference and convertibility rights that Fannie’s and Freddie’s existing common shares effectively would be wiped out, and their preferred shares left bereft of dividends.” But wait, there’s more.

The White House also wants to exact vengeance on Fannie and Freddie’s management. It will replace management, limit their investments, and sell their assets before reselling them to the public or merging them with other GSEs. In particular, Barron’s writes that “Treasury would install new management and directors at both, curb the GSEs’ sometimes reckless investment and guarantee operations, and liquidate in an orderly fashion the GSEs’ troubled $1.6 billion in on-balance-sheet investments. Then the companies could be resold to the public without their explicit government debt guarantees, or folded into government agencies like Ginnie Mae or the FHA.”

Whatever amount of taxpayer money is used to bail out Fannie and Freddie, I hope that the government uses the $38 million earned by taxpayers such as Richard Syron, Freddie’s CEO, and the other executives and directors of Fannie and Freddie, before it uses my taxes. Then they have the ability to go after the pay of those government regulators who were supposed to be supervising them.

They should pay the first price for their mistakes.

Peter Cohan is President of Peter S. Cohan & Associates. He also teaches management at Babson College and edits The Cohan Letter. He has no financial interest in the securities mentioned.

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Republican presidential nominee-in-waiting, John McCain is going to be all smiles as we approach the November election. If you are a conspiracy theorist, or just find it a curious irony as I do, you must be noting that, just this week, the Federal Reserve decided to leave the Fed loan rate at 2%, the Iraq and U.S. governments are negotiating a withdrawal timetable for our troops, and oil prices are falling fast.

All of these headline-worthy items will benefit the Republicans more than the Democrats. Furthermore, all of these improvements will help the folks on Wall Street and Main Street. The stock market is way up today, they state on dropping oil prices: Stocks jump as oil prices fall sharply.

This has the taint of political engineering or “electioneering,” even if it is just coincidence. Maybe the world is just happy to see Dubya go into retirement … who knows?

Earlier I posted Obama’s $1000 giveaway is a take away! and now it’s time to rant about Dear John. He’s on record as claiming he has the ability to balance the federal budget by the end of his first term without raising taxes. I think we have heard that before. It’s not going to happen. Why do politicians insist on uttering such nonsense?

This ridiculous campaign rhetoric comes with ZERO corresponding thought about what major programs could be cut to even come close to this worthy goal. The answer is none that I know of.

The only way that the federal government will balance the budget will be if officials simply take more expenditures off-budget and pretend to have accomplished something. If you ask the American people what things government does extremely well, you will find agreement that it ‘pretends’ excellently.

If John McCain’s budget balancing act continues to be discussed, then he’s truly the more experienced candidate, for he can pretend with the best of them.

Sheldon Liber is the CEO of a small private investment company and the principal for design and research at an architecture & planning firm. He writes the columns Chasing Value and Serious Money.

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If Barack Obama is receiving advice from “my pal Warren” then he must not be listening. There’s no way that Warren Buffett, the national debt hawk, would support Obama’s stupid idea of giving another $1,000 back to every family in America. It is reported that he would pay for this by creating a windfall profit tax on oil companies.

This give-away program is an attempt to purchase votes plain and simple. It would add to the national debt, discourage oil companies from investing and worse it would handicap American companies more than others and mortgage more of our children’s futures.

The last thing the the people of the United Says need is more deficit spending. If we did tax oil companies, which I am against, I would only support using the funds for expanding education, research and development in science and engineering with the goal of maintaining our waning leadership in technology.

We need to do things that increase our productivity. Increasing our dependency on government handouts is a colossal mistake.

The so-called windfall profits of the oil companies is another thing I question. The profits are large because the demand is high and the gross receipts are high. It is simply a large number, not necessarily a high margin. When the profits were absent during periods of lower oil prices, nobody stated anything.

Here are some net profit margin facts.

Three oil companies:

• Exxon Mobile (NYSE: XOM) 11.32%
• ConocoPhillips (NYSE: COP) 6.93%
• Chevron Corp (NYSE: CVX) 9.16%

Three popular large non-oil companies in three different industries:

• Apple Inc. (NASDAQ: AAPL) 14.56%
• Johnson and Johnson (NYSE: JNJ) 17.31%
• General Electric (NYSE: GE) 13.09%

I would much prefer to hear anything about balancing budgets, or even just slowing down spending, not more government taxing and spending. In the end Obama’s give-away would be a take-away!

Sheldon Liber is the CEO of a small private investment company and the principal for design and research at an architecture & planning firm. He writes the columns Chasing Value and Serious Money. Disclosure: I own shares of COP, GE, & JNJ.

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Yesterday California’s Attorney General, Edmund G. Brown Jr., announced a lawsuit against YourTravelBiz.com (YTB) for being a “gigantic pyramid scheme.” He states that the multi-level marketing company recruited tens of thousands of members with false earnings claims.

YTB was supposed to a business through which members could operate on the internet travel agencies. In reality, it was nothing more than a pyramid scheme meant to make those at the top rich, while thousands of people below them lost a lot of money. The operation is accused of being a pyramid scheme because the members were paid for recruiting new members, regardless of whether they sold any travel services.

Members pay $450 to join the scheme, and a monthly fee of $50 to stay active. In 2007, it is alleged that there were over 200,000 members, and that only 38% of them made any money from selling travel services. The median income for those making commission on travel services was only $39. (You read that correctly… not even enough made all year to pay for one month of fees!)

Continue reading YourTravelBiz (YTB) sued by Attorney General for being “gigantic pyramid scheme”

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Invotrak is a simple to use, on the internet invoicing tool for small businesses or freelancers produced by Draconis Software. While we have covered it before some new additions make it worth another mention.

Basically this is a easy invoice app that you can use to create and track invoices and time sheets for yourself or your small business. You can use limited services for free or pay for three levels of account depending on how many invoices you plan to send.

Updates features include: the ability to upload invoices you have created yourself, add line items from time sheets to the invoice and adding reports to your invoices. You can also save your invoices as PDF or TXT files.

You can also read the Invotrak blog to get tips on using the new features and general small business tips - like how to get paid on time.

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The Federal Open Market Committee issued its decision to leave interest rates at 2%. This was as expected. However, the statement was much more dovish than expected. Language in the previous statement indicating that downside risks to growth ” appear to have diminished somewhat” was deleted, and the focus clearly remained on the economic situation even though inflation risks continue to be acknowledged.

The U.S. equity markets rallied prior to the statement being released and continued after the decision was issued. Oil prices also continued their retreat.

The dovish nature of the decision was indicated by the fact that there was only one member voting for an increase. As many as three members were expected to vote for an increase. Despite the recent hawkish statements, all members voted to maintain the 2% level.

This confirms what I have said in current posts that hawkish talk does not necessarily translate into hawkish action. As I’ve stated in my book, Follow the Fed to Investment Success, “watch what the Fed does not what it says.”

The economy is still far too weak for the Fed to begin raising rates.

Doug Roberts is the Founder and Chief Investment Strategist for ChannelCapitalResearch.com, and is the author of Follow the Fed(R) to Investment Success: The Effortless Strategy for Beating Wall Street. He previously held executive positions at Morgan Stanley Group and Sanford C. Bernstein & Co.

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