The S&P/ASX 300 (Index: ^AXKO) (ASX: XKO) has recovered from the lows of the day hit earlier this morning but still remains 0.5% down at 5,076.40 points.

Almost all sectors are in the red, apart from telecommunications and utilities. Looks like investors are seeking out the defensive telcos and power and energy companies to help with the volatility.

Among the companies rising on the ASX today are these four…

Orocobre Limited (ASX: ORE) has seen its share price rise 6% to $4.57. That came after broker Morgans upgraded the lithium producer upgraded the stock to Add from Hold and also raised its price target to $5.66 – well above today's share price. The broker has reportedly factored in much stronger lithium prices into its valuation.

In fact, Morgans' optimism has rubbed off on other lithium producers, with Altura Mining Ltd (ASX: AJM) and Pilbara Minerals Ltd (ASX: PLS) soaring 9.1% and 5.2% respectively.

BetaShares Australian Equities Strong Bear Hedge Fund (ASX: BBOZ) saw its share price rise 1.8% to $26.11 on heavy volumes. The reasons should be fairly obvious. The ETF aims to magnify profits from declines in the Australian share market. A 1% fall in the ASX should result in a 2% to 2.75% increase in the value of the fund. Investors should also be aware that it also works vice versa. (Full details here if you are interested).

Spark New Zealand Ltd (ASX: SPK) saw its share price rise 1.4% to $3.305. The mobile network operator and broadband retailer is likely being sought out by investors looking for the relative safety of defensive stocks. Telstra Corporation Ltd (ASX: TLS) is also rising today for similar reasons. We recently covered Spark in more detail here.

IRN MTN CDI 1:1 (ASX: INM) – or Iron Mountain as it is known – saw its share price rise 1.4% to $51.71. The US company specialises in document management and storage, and took over Recall Holdings in a $2.6 billion deal earlier this year. As part of the deal, Iron Mountain decided to list on the ASX – hence the IRN MTN shares. It too could be classified as a defensive stock, which we discussed in more detail earlier today.

The post 6 stocks soaring on the ASX today appeared first on The Motley Fool Australia.

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A simple path to financial wellbeing

I recently pleaded with investors to avoid the overpriced Australian property market. Now, as promised I'll outline one strategy that both I and the funds management star, Peter Morgan, believe will put you in front.

Peter Morgan was the brilliant fund manager of 452 Capital. He was recently featured in the Australian Financial Review giving advice so wise it was Foolish – note the capital F. We'll come back to Peter and his advice in a moment.

Champagne for the price of cheap sparkling wine

You may recall that I attended a wedding recently. Upon hearing I was an investment analyst, one guest suggested that these must be tough times for me.

Without hesitation I replied that these are the investing times I live for. I absolutely love bear sharemarkets as they give me the opportunity to buy fantastic companies at bargain prices.

It's like buying French champagne for the price of Asti Spumante. OK that might be a stretch, but you get the idea.

I was aware of possible confirmation bias as I swigged on Peter Morgan's advice. I may have even squealed with delight when I read his wise words, "I like these sort of markets. They provide opportunity – and what tends to happen is the baby gets thrown out with the bathwater."

Look beyond tomorrow's headlines

While global financial markets have many pressing problems, those able to look beyond tomorrow's gloomy headlines should profit.

Peter went on to say. "I firmly believe that if you take a three-year view, and pick up a good portfolio of stocks bought in these down times that are yielding around 4 or 5 percent – and they all are – then in three years' time you'll be in front."

I totally agree. With markets down and yields up, now is the time for conservative investors to create the cash generating portfolio that should be at the core of their equity portfolio.

Rules of play

Before diving into the five companies I think will put a smile on your dial for years to come, we need to establish some rules.

1. Now does not mean today. Now means while global financial markets continue to deteriorate. Patience is priceless when it comes to the sharemarket. Spread your buys over the coming months.

2. Once you buy one of your favourite cash cows, forgetabouit. The point of buying these companies is so you don't need to worry about daily sharemarket wiggles. Volatility is an investor's friend. It has little to do with risk.

3. Dividends, not capital growth, have delivered the majority of Australian sharemarket returns over the last hundred years. OK, that's not a rule. But it is a fact that must be embraced as a core belief.

The set and forget cash flow portfolio

Opportunistic buying of the following five companies this year will beat money in the bank. Heck, despite what I said about patience, buying these companies today will outperform money in the bank for years to come.

Telstra Corporation Limited (ASX: TLS). Despite out-performing the market over the last year, Telstra remains my number one high yield pick. Telecommunications will be a growth industry for years to come and there is no bigger brand than Telstra. With Telstra's refocus on customer acquisition and satisfaction, shareholders could get some capital gain to bolster the 13% gross yield.

QBE Insurance Group Ltd. (ASX: QBE) sold off again last week, despite offering a mouth-watering 11% gross yield. Yes QBE has problems, especially with U.S. Treasuries, but even if its dividend was slashed in half, the yield would still be pretty decent.

Westpac Banking Corporation (ASX: WBC) is my favourite placeholder for any major Australian bank. Any deterioration in Europe could see banks undeservedly revisit the ludicrous lows set during the GFC. Investors should be alert, and back up the truck to load up if that opportunity arises. With a gross yield of over 11% your money is better on the banks than in them.

OrotonGroup Ltd. (ASX: ORL) is the miser of this group, though with a 9% gross yield, one of the best management teams in Australian retail and plenty of growth opportunities, Oroton deserves a place as the growth kicker on this team.

Hunter Hall International Ltd. (ASX: HHL) edged out the better known fund manager Platinum Asset Management (ASX: PTM) for the final place in the starting line-up. Hunter Hall trades at a huge discount to Platinum on most metrics – price to asset under management, price to each dollar of earnings and importantly price to dividend. With a gross yield closing in on 16%, Hunter Hall investors will be well rewarded in the years to come. It's time to scoop up shares of this value investing manager at value prices.

Foolish Bottom Line

A portfolio of these five cash generating powerhouses delivers a trailing gross yield of around 12%. While dividends may fall this year, a sensibly selected portfolio of high dividend paying shares should increase its payout over the long haul. Investors who are able to focus on the long term and patiently accumulate shares during this bear market will be well rewarded in years to come.

If you're worried about Greece and the global economy then read The Motley Fool's free special report, Read This Before The Next Market Crash. The title says it all. To get instant access to the report, simply click here now. You won't be disappointed.

Dean Morel is The Motley Fool's Investment Analyst. Investing is best viewed as a business. Dean holds positions in Telstra and Hunter Hall to provide the cash flow his investing business requires. The Motley Fool has an enterprising disclosure policy.

The post The ultimate high yield dividend portfolio appeared first on The Motley Fool Australia.

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A 21st century upgrade for the payphone is big news for a small W.A. company, writes The Motley Fool.

Telstra Corporation Limited (ASX:TLS) announced the success of a trial deployment of 50 pieNETWORKS' Hotspot Webphones into Australian capital city airports. PieNetworks (ASX:PIE) and Telstra will now negotiate the terms for  the deployment of a larger network of pieNETWORKS' Hotspot Webphones in the Australian market.

Recently appointed pieNETWORKS chairman Justin Milne said the success of the trial, and the commencement of commercial negotiations with Telstra, was a significant event in the company's development.

Significant indeed. This deal could be transformational for this speculative W.A. company.

"Hotspot Webphones are a 21^st century upgrade for the payphone," Mr Milne said.

"These user-friendly touch screen and keyboard operated devices offer access to the internet, WiFi, online payments, telephony and direct access to a range of Telstra services," Mr Milne said.

It takes money to make money!

Many investors associate Western Australia with the mining boom, and the share price boom that has followed many exploration companies significantly higher over the past year.

For example, Bathurst Resources (ASX:BTU), Jupiter Mines (ASX:JMS), Gryphon Minerals (ASX:GRY), Beadell Resources (ASX:BDR), Alkane Resources (ASX:ALK) and Ampella Mining (ASX:AMX) are W.A.-domiciled miners with minimal revenues yet sharply higher share prices over the past 12 months.

Proving there's more to W.A. than loss-making mining companies, loss-making Perth-based PieNetworks is a small cap firm that has been burning through cash at a pace as it tries to mine the 21^st century communication products market.

To raise more money, they annually go cap in hand to shareholders, and are likely to do so again in the coming months. As of June 20 they had $1.4M in cash. Given a current burn rate of $900,000 a quarter, I expect news on funding in the coming quarter.

Will 2011 be remembered as pieNetworks breakthrough year?

It could be. With long term deals for webphones inked with Christchurch and Wellington airports, and now a deal with Telstra, pieNetworks may have struck gold.

Need to know

Why did pieNetworks change the jockey just as they were coming into the straight? The Chairman, Mr Peter Abery was replaced last week, with immediate effect. Mr Justin Milne was appointed Non Executive Chairman.

Time to buy?

With a share price of just 2.7 cents, pieNetworks is a highly speculative company.

When I feel the speculator inside me trying to get out I turn to the wise council of one of the greatest ever investors. Peter Lynch advised that you're better off to wait until small companies turn a profit before you invest.

Investors want to buy great companies which will grow for many years. Not jump on the latest speculative opportunity. So, for now, my money is staying in my pocket and PieNetworks is going on The Motley Fool watchlist.

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Dean Morel owns a slice of Telstra, he does not have a position in any other companies mentioned above, but he sure does enjoy the occasional slice of pie. The Motley Fool has a living and breathing disclosure policy.

The post PIE in the sky appeared first on The Motley Fool Australia.

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Debt talks are down to the wire.  Do this with your money now, says The Motley Fool.

Apple now has more cash than the U.S. Treasury. As of Wednesday last week, the U.S. government had an operating balance of $73.7 billion. Apple has $76 billion in the bank.

Laugh at that, feel free to shed a tear, and now here's the latest on the debt-ceiling debacle.

U.S. on the financial brink, says Bloomberg.

Gold falls 1 percent as U.S. close to debt deal, says Reuters.

Senate chaplain's prayers convey crisis, says The Washington Post.

U.S. debt talks have come down to the wire. As of writing, the debt-ceiling deadline clock has ticked down to 1 day, 15 hours, 18 minutes and 54 seconds.

Self-inflicted

What is the debt ceiling? It's a self-imposed limit on the U.S. Treasury's ability to borrow. Reaching the debt ceiling does not mean the U.S. is bankrupt. This is a purely self-inflicted crisis.

Importantly, raising the debt ceiling is not merely about making room for future spending. It's about Congress deciding whether it wants to pay for the laws Congress has already passed and is committed to. The ceiling has been raised 87 times since 1945, almost always without fanfare.

What happens to the government if the ceiling isn't raised? The Treasury says it will run out of cash on Tuesday. Others think higher-than-expected tax receipts could extend that by a few days. President Obama has indicated he's open to extending the debt ceiling for a few days if more time is needed to hammer out a last-minute deal.

If the Treasury does indeed run out of cash, someone won't get paid. Whether that ends up being bondholders who are owed interest — meaning defaulting on their debt — is unknown.

Money flows into the Treasury in lumpy amounts that can fluctuate wildly from month to month. It isn't a lack of annual revenue, but a cash-flow problem, that could cause the Treasury to default.

Bottom line: No one really knows what will happen. We've never before faced this problem.

The trillion dollar question

What happens to markets if the ceiling isn't raised? That's the trillion-dollar question. In an actual default, there would undoubtedly be some degree of panic, particularly in the banking sector (think September 2008).

Banks and money-market funds that rely on Treasury bonds as bedrock assets would be thrown into disarray. The financial system is held together by confidence. Losing it is not something you want to play with.

But the odds of default are low. More likely is a credit downgrade from one of the major rating agencies if a deal to raise the debt ceiling doesn't also significantly cut future deficits.

This would probably push the nation's credit score from AAA (perfect) to AA (still good). All major rating agencies have the U.S. on "negative" credit watch, meaning a downgrade could happen in the near future. Historically, countries are downgraded 56% of the time they find themselves on negative watch.

No catastrophe

A downgrade wouldn't be catastrophic, but it shouldn't be taken lightly. In general, an AA-rated nation pays more to borrow money than an AAA-rated nation — interest rates are higher by 0.7%, on average. A rise of that magnitude could hammer the stock market and increase the cost of mortgages, credit cards, and other forms of borrowing.

A 0.7% rise in interest rates would add $100 billion a year to federal borrowing costs and could slow economic growth by around 1% a year. As a rule of thumb, that could cost roughly 1 million jobs.

Don't panic – this too will pass

What should you do with your money? Probably nothing. There's never a good time to panic, and decisions made during emotional upheavals are usually regrettable.

Come Wednesday morning, if the debt-ceiling isn't lifted, are companies like Rio Tinto (ASX: RIO), Fortescue Metals (ASX: FMG), Crown (ASX: CWN), Orica (ASX: ORI), Campbell Brothers (ASX: CPB) and Treasury Wine Estates (ASX: TWE) going to suddenly be worth substantially less than they are today?

If you were happy with your portfolio last week, you should be happy with it next week. This, too, will pass.

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Motley Fool staff and contractors may have positions in any stocks mentioned above, and this can change at any time. More is revealed in The Motley Fool's disclosure policy.

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We'd respectfully suggest they are either continually buying the wrong shares, continually selling at the wrong time, investing using borrowed money, or making any number of other basic investing mistakes.

Most casino gamblers lose money. The odds are stacked in the casino's favour, of course, so in the long-run, most gamblers end up losing.

Spin Your Way To A Guaranteed Loss

Take the game of roulette, and the most basic bet, choosing a red number or a black number. There are 18 reds, 18 blacks, and one dastardly green, the dreaded zero.

The payout for a winning wager is even money (i.e. a $10 winning bet makes a $10 profit).

The green zero number gives the casino its edge. There is a probability of 18/37 that the player wins the bet, and a 19/37 chance that the player loses the bet. The result is a 2.7% edge to the house, every single time you place that bet.

Over time, the punter will lose money. Guaranteed.

A Fresh Food Winner

Played properly, the share market is different. It is made up of thousands of individual companies. Each of those quoted companies is trying to generate and grow their profits, over the long-term.

Over time, good to great companies will create economic value. Woolworths (ASX: WOW) generated around $300 million profit in 2000, and over $2 billion profit in 2010. That's what I call economic value.

Undoubtedly some share market investors do lose money. People have even lost money investing in Woolworths shares, despite the supermarket giant having generated all that economic value over the past 10 years.

Don't Do This At Home

How?

They've sold the shares at the wrong time.

In late 2007, Woolworths shares were trading at above $34. Around that time, the global economy was strong, inflation relatively benign, their competitors (primarily Coles) were a mess, and the future looked particularly rosy.

In 2010, Woolworths shares trade at around $27. Share market investors who bought at $34 and bailed out at $27 lost a cool 20%. It might be enough for them to turn to the casino for solace, especially as you can 'only' lose 2.7% on each red or black bet.

What about the investor who bought at $34 but is still holding onto their Woolies shares? They are sitting on a 20% paper loss, but since they haven't sold, it's not a realised loss.

Over time, if Woolworths keeps generating economic value, their shares will almost certainly rise in value.

I say almost certainly, because if Woolworths shares were richly valued in 2007, it may take a very long time (or even forever) for the share price to catch up with the company's economic value.

Time In On Your Side

With investing, and particularly when investing in companies as great as Woolworths has been, time is on your side.

But if you treat the share market like a casino, focussing on the ever-swinging share prices and not the underlying business, you can and likely will lose money.

As leading US hedge fund Kovitz Investment Group puts it such…

"As an investor you have a choice. You can decide to invest in a business as an owner and share in the profits generated. Or you can decide to buy a piece of paper in hopes that someone will buy your paper at a higher price than what you paid for it.

The problem most investors face is that the first method takes time and patience. Also, many measure the value of a business by the daily market price of the shares.

We believe that thinking only about short-term price swings as opposed to the business operation's performance places you in a game that's hard to win. To play that game, you are forsaking logic and critical thinking for guessing how others are thinking and how others may react."

Inevitable Losers

Not all your share market investments will be winners. In fact, if only 60% of your share picks are winners, you still should have a nicely profitable portfolio.

How is it so? The main reason is your losers can only go down by 100%, whereas your winners can go up by hundreds or even thousands of percent.

Just ask shareholders who bought JB Hi-Fi (ASX: JBH) at their float price of $1.55 how a couple of huge winners can massively outweigh the inevitable losers. In 2010, JB Hi-Fi shares traded around $19, a cool 1225% up on their float price.

On the flip side, T2 shareholders who paid $7.40 for their Telstra (ASX: TLS) shares back in 1999, are sitting on a fine loss, and one that is hard to see them clawing back in the years ahead, if ever.

The 3 Keys To Share Market Success

There are many mistakes share market investors can and will make. But if you stick to these 3 simple rules, you should be able to rack up a decent nest-egg in the decades ahead.

1)   Invest for a lifetime, not for a few weeks, months or years.

2)   Keep investing regularly, ideally monthly.

3)   Avoid speculating, and instead concentrate on the economic value created.

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The post Sharemarket trading versus gambling appeared first on The Motley Fool Australia.

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