Did you know that Congressmen and Senators consistently outperform the stock market year after year? On average, the lower house members beat the market by about 6% a year while those of the higher chamber wrack up a 10% level of outperformance annually. Now, if you believe that’s purely coincidental, well, I have a bridge I can sell you cheap.

Do Politicians Profit from Insider Info?

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Markets Tread Water

Volume was thin, volatility high, and despite all the excitement over the LinkedIn IPO, the averages finished little changed from the levels of last week. This is a market that requires patience and fortitude.

LinkedIn IPO connected investors with big bucks

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The flooding of the Mississippi River will be the worst disaster in the Delta farming region’s history since1927. Millions of fertile acres in Missouri, Tennessee, Louisiana, Mississippi and Arkansas are under water. Farms along that riverbank could take a $2 billion hit, but to us it simply underscores our argument that agriculture is a long term growth area.

Ag prices rise on Mississippi flooding

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Game Changer

The sell off in commodities over the last two weeks has investors re-thinking the markets. Commodity stocks, especially in the energy area, have led the markets for over a year. Will this pull back in the commodity sphere prove temporary and shallow or is there something deeper afoot?

No question, most commodities have suffered a serious set-back led by silver, which at its worst, experienced a 25% decline before bouncing later this week. Oil also dropped over 13% and a long list of hard and soft commodities had similar declines. This selling spree has dragged the stock market with it.

“That makes absolutely no sense,” argues one Bennington,VT client who rightfully believes that declining prices for commodities is a good thing for the economy, the consumer, corporations and the market.

sector rotation time?

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It started last week with a 25% plunge in silver prices. Gold, oil, corn, and coffee followed in sympathy, and by the end of the week it was a full scale route across the commodity spectrum. These price declines will save corporations and consumers untold trillions of dollars. So why isn’t the stock market celebrating?

Oil and gas decline has silver lining

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 ”You sold silver too soon,” grumbled a client, “Look, it’s almost $50 an ounce.”

That was just one of the conversations I had with disgruntled investors only one week ago. There is no question I felt bad since I had advised readers to sell at least half their silver investments between $36-37/ounce a few weeks ago. Beginning Monday silver began to drop as the CME hiked margin requirements. By Friday silver had dropped over 25% to as low as $33.05/ounce.

Down 25% in a week

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Given that the stock market has almost doubled since its low in March, 2009, one would expect that an entirely new crop of youngsters would be clamoring to become the next generation of America’s stock brokers. So far the evidence points to the opposite conclusion.

Are brokers a dying breed?

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Ben does it Again

This week’s pivotal event was Fed Chairman Ben Bernanke’s first press conference with the media. Judging from the price action in the stock market, Ben passed with flying colors.

Fed Flashes a Green Light to the Markets

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Waiting for a loan

“Then we’d own those banks of marble,
With a guard at every door;
And we’d share those vaults of silver,
That we have sweated for”
“Banks are made of Marble” by Pete Seeger

Over the last few years, the Federal Reserve has practically given money away to any entity that calls itself a bank. Individual states have also tried, but so far the banks have just been hoarding this growing pile of cash instead of loaning it out. Why? (more…)

“Don’t stand there moaning, talking trash
If you wanna have some fun,
You’d better go out and spend some cash
And let the good times roll
Let the good times roll
I don’t care if you young or old,
Get together and let the good times roll”
B.B. King, Bobby Bland

It appears Monday’s low in the stock market averages concluded this last little sell off. The decline occurred, courtesy of Standard and Poor’s credit agency. It reduced its outlook for U.S. Treasury bonds from neutral to negative. Since then the markets have climbed back and are now preparing to test the next level of resistance.

Blue skies ahead

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