By Patrick Watson

Today the Oklahoma ETF began trading on NYSE Arca under the symbol OOK. This is the first state-based ETF. If ETF investors had been asked a year ago which state would be first to have its own ETF, I doubt that Oklahoma would have been a popular guess. The Oklahoma based sponsors have plans for a similar Texas fund. Both will feature a portfolio of companies headquartered in their respective states.

10/28/09

The “Oklahoma Fund”, an exchange traded fund comprised of a basket of the Oklahoma state stocks, is set to be released tomorrow on the NYSE under the symbol (OOK). It will be interesting to see how well an ETF based primarily on state pride will be digested by the investment community.

The title of this article is of course borrowed from the brilliant book of the same name written in 1841 by Charles Mackay. The book deals with 3 “delusions”: "National Delusions", "Peculiar Follies", and "Philosophical Delusions". While dealing with The Crusades, alchemy, witch-hunts and other follies, the parts that interest us most today are the economic bubbles he discussed -- in 1841 -- and the national delusions he chronicled.

Mackay devoted a chapter each to the Dutch tulip mania of the early seventeenth century, the South Sea Company bubble of 1711–1720, and the Mississippi Company bubble of 1719–1720.

From our Interactive Earnings Report Database, below we have filtered out the US stocks that have historically been the most volatile on their earnings report days. To calculate this, we use the average absolute percentage change on all earnings report days for each stock that has reported earnings going back to 2001. (If a stock is up 10% on one day and down 20% on the next day, the average absolute 1-day change is 15%.)

The stocks below all have at least 10 quarterly earnings reports in our database and are trading higher than $5/share. As shown, FSLR has historically been the most volatile stock on earnings with an average daily change of +/-17.71%! in our database. MFLX isn't far behind at +/-17.03%. A stock that gains or loses nearly 20% of its value on every quarterly report is a day trader's dream. Other notables on the list of the most volatile stocks on earnings include ISRG, PCLN, UAUA, NFLX, and SNDK. For those interested, we also provide each stock's expected upcoming earnings report date.

Authors Note: There is such a -- great! -- flood of information on SA I’ve found if I respond to comments and questions after 24 or at most 48 hours, people don’t go back and read responses and answers there. Better to address questions asked more than once in a new posting for all who are interested:

The subject of buying MLPs arouses strong emotions and elicits all sorts of anecdotal information that is then (often incorrectly) extrapolated from the specific to the general. I’d like to clear up some misconceptions about MLPs, taxes, and K1s, having discussed the issue with two CPA colleagues, and answer the question a number of readers asked as to why I selected the 7 MLPs I selected from among such a large universe.

This concludes my trilogy of articles discussing why natural gas & why now, which exploration firms I think offer the best opportunity, and, below, the pipeline, gathering, storage, and processing firms I believe are poised to profit most.

Most natural gas pipeline companies are organized as MLPs – Master Limited Partnerships. MLPs are a little like REITs -- Real Estate Investment Trusts -- since they don’t pay income taxes directly. Instead, income is allocated among all partners (that would be you and me as shareholders) in proportion to the number of shares we own. Typically, there will be a general partner, whose responsibility it is to actually run the business, and we shareholders are the limited partners.

Does gold’s move this past week suggest that the rest of the world has lost faith?

Dr. Michael Crichton was best known as an author whose books sold over 150 million copies worldwide. He was also the only artist to ever chart #1 at the same time in television, as creator of ER; in film, with the adaptation of his novel Jurassic Park; and in book sales, with Disclosure.

He was a scientist by training, by which I mean he was both curious about the world around him and empirical in his observations about it. In a world where uninformed opinion, shouted at ever-higher decibel levels on hot media like TV and YouTube, seem to carry the day, I submit that curiosity and empiricism are under-rated; loudness and loutishness are over-rated.

As many thoughtful commenters contributed after Part I of this article appeared, there are inescapable realities we must address if we are to strike an intelligent balance between quality of life, real cost of energy, and an environment that is in balance.

The first reality we must square is our love of our way of life with our environmental goals. We take for granted the freedom to drive to work, fly to meetings, visit friends and family no matter how far-flung, and drive to the mountains, the beach or other weekend and vacation destinations. We want to leave our computers on standby for ease of starting up the next morning, to keep our homes warm in winter and cool in summer, and to enjoy our flat screen TVs, electric blenders, Wii devices, and so much more. Don’t look now, but what we have is exactly what 1 billion Indians and 1.3 billion Chinese and another 3 or 4 billion people across the planet want.

Given the multi-month recovery in energy prices (aided by the ongoing long term weakness in the US dollar in which energy is priced), one sees a lot written on how to play energy’s recovery.

What do you get when you want yield that is growing along with sales and earnings over a period of years, less than sky high valuation, and evidence of a rising price pattern?

The answer today is not very many stocks, and not necessarily the most exciting names. Not every exploration finds gold. Some of the results of this search are interesting, but we aren’t crying eureka.

For dividend income investors not familiar with options, here are some simple ideas you should consider for getting higher yields with little or no additional risk.

This article is intended purely to introduce some simple, conservative options strategies for both decreasing risk and increasing income. Dividend investors, who are often unfamiliar with options, can then decide if these are worth further investigation. Readers will need to do more homework before implementing these strategies, and stay tuned for follow-up articles.

Here I'll briefly review the stocks that help you avoid the Seven Deadly Sins of Income Investors.

These are similar in a number of ways to their U.S. version, the Energy Infrastructure Master Limited Partnerships. Those U.S. MLPs that we’ve recommended offer yields around 9% that are very reliable. Because they operate almost exclusively in the U.S., they don’t offer a USD hedge. However, their monopoly supplier status for vital oil and gas in their areas of operation gives them pricing power (tempered by regulators) to pass along cost increases, thus providing a considerable degree of inflation protection. Significantly, they don’t have the uncertainty of the Canadian 2011 tax changes. They will continue to be tax free at the entity level, passing along both income and expenses to share holders.

Before ever considering investing in stocks, we must always first look at the overall market, since almost all stocks follow the major indices.

A. The Short Version

As stocks are still trending down, invest only funds not needed for the near term expenses. While there may be rallies, even multi-week or month ones, the fundamental problems remain and there is no credible plan to fix them at this time. Markets are news driven and thus even more unpredictable than usual.

<<< Read part 1

<<< Read part 2

MARKET STATUS

Before continuing to examine the case for the U.S. Dollar and how high yield stock investors can hedge it while getting high yields, we first must look at the overall market, since almost all stocks follow the major indices.

High-yield stocks are a form of cash. Thus inflation eats away at both yield and principle. As governments inflate their money supply to ease credit, most oberservers believe inflation is inevitable.

My blog for the past couple of weeks has been focused on income generating securities such as high dividend paying stocks and master limited partnerships (MLPs). In my previous post, we found that although MLPs trade exactly like stocks, they are structured differently as limited partnerships and not as corporations. This type of structuring avoids corporate taxation which is great on one hand because it allows a larger distribution (dividend) to be passed through to the unit holder (shareholder). On the other hand, the unit holder is ultimately responsible for the taxes which can become a complicated task at tax time.

Last week Barron’s mentioned master limited partnerships as juicy yield opportunities with strong appreciation potential.  Reuters followed up the next day with an article about the Barron’s article.  Investors seem to have rallied around those articles causing major gains among pipeline companies.

It certainly is refreshing to see a group that has not been viewed as fundamentally flawed (like banks), moving strongly up in unison.  A number of markets had a positive week last week, but not as strong as pipelines.