After large gains following successful IPOs, it is common for a company to do a follow-on offering, allowing for pre-IPO shareholders to cash out. Recent history in hot Internet follow-on offerings have signaled a top in the stock, at least temporarily.

While most would debate if the IPO was really successful, currently hot Facebook announced plans to sell 70 million shares by the company and its shareholders. The leading social media firm follows other hot social media stocks, including LinkedIn and Yelp that had similar offerings. Those stocks have underperformed the markets in the months following the related offerings.

Facebook offering details
On Dec. 20, Facebook priced 70 million shares, with the company selling 27 million shares. The total proceeds to Facebook are nearly $1.5 billion.

Considering the normal trend is to boost a balance sheet with limited cash, this Facebook offering makes no sense. The company already had over $9 billion in cash, with this offering pushing the total to nearly $11 billion. Are shareholders getting any benefit by diluting shares at all-time highs?

The interesting part of the offering is that CEO Mark Zuckerberg is unloading 41,350,000 shares. The press release suggests that the shares are being sold to satisfy the exercise of outstanding stock options to purchase 60 million shares. The public float will have another 41 million shares. Facebook's previous offerings didn't have executives selling massive amounts of shares.

Other offerings killed those stocks
Both LinkedIn and Yelp had similar offerings that killed their momentum. At least in those cases, neither company had cash balances like Facebook, but nonetheless, the stocks dropped even while the market continued to gain.

On Sept. 3, LinkedIn offered to sell over 6 million shares in a follow-on offering to increase financial flexibility and strengthen its balance sheet. The offering was eventually priced at $223, providing the company with $1.2 billion in proceeds. The stock traded at $246 prior to the offering being announced, and even surged to all-time highs of $257 in the following days. Since the offering closed, shares have plunged to lows below $210 and the stock still trades below $220 months later.

On Oct. 29, Yelp offered to sell $250 million of shares, and underwriters granted an option to purchase another $37.5 million of shares. The company priced the shares at $67, for an aggregate of 4,875,000 shares. Ironically, the stock hit nearly $75 roughly 10 trading days prior to the announcement. Yelp later plunged below $60 after the pricing, while the Nasdaq gained during the same period.

Following very large gains in 2013, both LinkedIn and Yelp struggled after their follow-on offerings. Considering the additional details involving the CEO dumping a substantial amount of shares, the Facebook offering would appear even more harmful than the other two.

Common valuation theme
A main theme with all three Internet stocks are valuations that most investors would consider expensive. In fact, all three stocks had valuations of roughly 20 times trailing 12-month revenues. The group is mostly profitable, but many investors would consider all of the stocks expensive on an earnings basis.

Bottom line
The stocks of hot Internet companies have failed to perform well after recent follow-on offerings. All three were trading near all-time highs, with valuation multiples that would make anything but momentum traders run for cover. With Facebook most resembling the LinkedIn scenario that led to a 15% decline, investors have been warned. Facebook faces the additional pressure of having the CEO sell substantial shares, even if it was only to pay taxes.

At best, the situation could provide long-term investors the opportunity to buy at lower prices in the future. At worst, it could signal the top in social media stocks that have all failed to reach new highs following secondary offerings. Investors should be concerned when the CEO or the company is selling stock at all-time highs.

Corning has been at the forefront of technology for decades, ironically using one of the oldest substances in civilization -- glass -- to make products for use in everything from vast fiber-optic networks to your handheld mobile device. Yet, as much attention as Corning gets from its prominent placement within smartphones from Apple , Samsung, and other popular device makers, Corning's turnaround stems from a much broader-based recovery that has wider implications for the entire industry. Let's take a closer look at what happened with Corning this year, and whether its stock will keep rising in 2014.

Corning's Willow Glass. Source: Corning.

What made Corning shine brighter this year?
As instrumental as Corning has been for many industries in its long history, the company's Gorilla Glass product has been a huge blockbuster. In a conference call early this year, Corning revealed that more than a billion devices containing Gorilla Glass had been sold, with 500 different product lines containing the material. With so many people buying smartphones, tablets, and other devices using Gorilla Glass, it's easy to assume that the fortunes of Corning are inexorably linked to those of Apple, Samsung, and other manufacturers of those devices.

But the beginning of Corning's upswing in late April and early May came after Corning CEO Wendell Weeks gave an enthusiastic view of the company's prospects. Simply because of the sheer amount of glass involved, LCD televisions have been an incredibly important market segment for Corning, and that industry has seen weak sales cause poor demand for glass. Corning, however, gave positive guidance that price declines in the LCD market would finally slow down, helping to boost potential demand. That bore out in Corning's second-quarter earnings, with Display Technologies posting a 21% jump in revenue.

In addition, Corning also stands to benefit from greater activity in telecommunications and life sciences, both of which are areas of growth potential for the company. Corning's $730 million acquisition of most of the Discovery Labware unit of Becton Dickinson late last year gave it greater exposure to the pharmaceutical and health-care diagnostics sectors, with products including plastic lab tubes, flasks, and analysis dishes, as well as products for handling liquids. That move helped the Life Sciences segment earnings double from previous-year levels in the second quarter.

Corning Total Return Price data by YCharts

Some have noted that Corning's relationship with Apple isn't necessarily permanent. Fears at midyear that Apple might replace Gorilla Glass with a sapphire-based alternative proved unfounded -- at least for purposes of the fall release of the iPhone 5s and 5c. Yet, just last month, Apple entered into a major deal with sapphire producer GT Advanced Technologies , once again raising the question of Corning's staying power. For now, sapphire use might be limited to especially sensitive areas, but expanded use could threaten Gorilla Glass in the long run.

That made Corning's biggest news of the year all the more important, as shares surged when the company made a deal with Samsung whereby Corning took over full control of the Samsung Corning Precision Materials joint venture in exchange for Samsung taking a 7% stake in Corning. The move deepens Corning's relationship with the mobile-device giant, and puts it in a better bargaining position with Apple and other customers, all the while hopefully allowing Corning to benefit when Samsung's display sales finally start to accelerate.

Stats on Corning

Source: S&P Capital IQ.

What's next for Corning?
One question that remains largely unanswered is the prospect for Corning's Willow Glass, a flexible glass product that many believe could revolutionize the mobile world by making smart watches possible, as well as having applications in solar energy and other industries. Corning's competitive edge has traditionally kept it ahead of the pack, and so making the most of the Willow Glass opportunity could help shares power higher.

For the most part, though, the key to Corning's growth will come from its Samsung deal. If the integration of the Precision Materials business goes well, then Corning could see much further gains than it enjoyed in 2013.

Click here to add Corning to My Watchlist, which can find all of our Foolish analysis on it and all your other stocks.

The Department of Defense announced 12 new defense contracts Thursday worth $974.9 million combined. Among the publicly traded companies winning contracts:

• Science Applications International Corp was awarded a $25 million contract modification instructing it to continue providing support for the issuance, storage, and receipt of Class V munitions for the U.S. Army's 1st Theater Support Command and other Central Command forces at the theater storage area in Camp Arifjan, Kuwait. This contract will now run through Dec. 29, 2014.
• Lockheed Martin won an $11.1 million firm-fixed-price, indefinite-delivery/indefinite-quantity partial-foreign military sales contract to provide logistics and engineering services in support of U.S. Marine Corps, Marine Corps Reserve, U.S. Coast Guard, and Kuwait Air Force C/KC-130J transport and refueling tanker aircraft through December 2014.
• Raytheon was awarded an $8.5 million task order under a previously awarded cost-plus-fixed-fee basic ordering agreement to provide technical support on overhauling and refurbishing NATO SEASPARROW Surface Missile System and Test Acquisition Systems (TAS) for the U.S. Navy. Work under this task order is expected to be completed by September 2014.

Although we don't believe in timing the market or panicking over daily movements, we do like to keep an eye on market changes -- just in case they're material to our investing thesis.

With the stock market soaring to new heights again today, many investors might think that gold, and other precious metals, would inevitably drop in response. Yet, even though bond-market interest rates climbed Thursday to levels not seen in two years, metals prices generally gained, with platinum leading the way with a rise of $23 per ounce. Gold climbed $6, to $1,211, but trading activity was muted, with SPDR Gold sporting less than half its normal daily volume Thursday. Freeport-McMoRan Copper & Gold posted solid gains, while Hecla Mining and Coeur Mining led silver stocks higher. Stillwater Mining also rose.

Image Sources: Wikimedia Commons; Creative Commons/Armin Kubelbeck.

Freeport-McMoRan rose almost 2% today as the company benefited from its multiple areas of exposure to commodities. Copper prices rose about $0.02, to $3.31 per pound, continuing an upward move from about $3.15 at the beginning of December. As the economy starts to pick up steam, copper has responded favorably to the potential for greater industrial and construction-related demand. Meanwhile, modest gains in gold prices, plus the company's new energy exposure from its acquisitions earlier this year, have given Freeport a much more diversified business across many major commodities.

Hecla and Coeur gained about 3% and 2%, respectively, on a good day for silver, which rose $0.31, to $19.80 per ounce today. Both stocks are closely linked to the changing price of silver, but Hecla arguably has the better long-term prospects as its Lucky Friday mine continues to rebound from its year-long closure in 2012. Meanwhile, Coeur faces the challenges of relatively high production costs for its silver, and even cost-cutting measures might prove insufficient to rescue the mining company from the consequences of falling profit margins and potential cash shortages in the future.

Finally, Stillwater Mining climbed 1%, with the sole public U.S. producer of platinum and palladium benefiting from gains in prices of platinum-group metals. In particular, palladium has performed much better than gold and silver this year, with prices remaining close to unchanged for 2013. Palladium's use in the automotive industry has helped bolster demand for the metal, and put it in a much more favorable situation than its fellow precious metals. As long as car sales continue to climb, palladium and platinum could easily outperform the yellow metal, giving Stillwater a key advantage over miners without exposure to the platinum-group metals.

Although we don't believe in timing the market or panicking over daily movements, we do like to keep an eye on market changes -- just in case they're material to our investing thesis.

The stock market has been the gift that keeps giving in 2013, and it continued its remarkable year by hitting fresh all-time highs just a day after Christmas. Strong retail data, and declining jobless claims, sparked today's rally, as filings for unemployment benefits slumped from 380,000 to 338,000 last week, an 11% decrease that underlines the U.S. economy's recovering labor markets. The S&P 500 Index added eight points, or 0.5%, to end at 1,842, a record closing high. 

Ironically, online retailer eBay ended as the S&P's single worst performer on Thursday, slumping 2% after the third week of December sales failed to match revenue in December's second week. Declining sales in the period leading up to online retail's most anticipated time of year is about the last thing you'd want to see as an eBay investor, and overshadows any progress the company might have seen this year from its PayPal service. Personally, I have a hard time believing that one week of subpar sales threatens eBay's position as a leader in online retail, but with little more to go on, Wall Street sold off the stock today. 

Shares of NVIDIA , which makes PC graphics chips and system-on-a-chip processors for mobile devices, slipped 1% in trading today. NVIDIA's Tegra business division, which, in a nutshell, focuses on the mobile side of the market, hasn't been as successful as some investors had hoped. In fact, it has churned out nothing but losses so far this fiscal year. Success in this burgeoning and highly competitive industry doesn't come overnight, however, and certainly doesn't come without significant investment. It remains to be seen what Tegra's future will hold, but I applaud the company for its long-term vision; if NVIDIA can capture even a small piece of the ever-growing pie that is the mobile market, patient investors could be primed for some heady gains down the line. 

Lastly, cloud performance service provider Akamai Technologies saw shares fall 0.9% Thursday. A "sell-off" of less than 1% is hardly anything to lose sleep over, especially when volume was about 50% lighter than an average day. Something I might worry about, though, if I were an Akamai shareholder, is the increasingly tough competition in Akamai's line of business, as the $8.5 billion company goes up against corporate behemoths like Verizon and Amazon.com. Verizon just acquired EdgeCast -- a company that streams video, houses web content, and improves download speeds -- earlier this month, an acquisition that reportedly cost the telecom more than $350 million.

Although we don't believe in timing the market or panicking over daily movements, we do like to keep an eye on market changes -- just in case they're material to our investing thesis.

Santa Claus delivered the much-anticipated rally on the day after the Christmas holiday, as investors were heartened by early estimates that the holiday season went better than some had expected. Even as 10-year bond yields hit the 3% level, experts saw the move as simply stressing the importance of moving more money into stocks. Among the day's biggest gainers, Ambarella , Bitauto Holdings , and FireEye showed up near the top of the list.

Ambarella gained 6% as the chipmaker continued its upward run from late last week, when the high-definition video-chip maker announced a deal with Google to work on a wearable camera. Both companies expect to show off their proposed design at the Consumer Electronics Show in Las Vegas early next month, and Google hopes to use the camera in conjunction with its Helpouts service to connect instructors to students via live video in order to provide training and other interactive learning. Given Google's recent gains, tying up with the online search giant is a smart choice for Ambarella.

Bitauto climbed almost 8% as the Chinese auto-website operator attracted investors looking to cash in on China's rising middle class. As more Chinese residents reach the point financially at which they can start looking at buying a car, Bitauto stands to gain if it can bolster its reputation as a source of vehicle information. The company certainly has plenty of competition in the Chinese auto-marketing space, but Bitauto has been on growth investors' radars for months, and could take more than its share of the market if it can use its early mover status to its advantage.

FireEye jumped more than 8%. The maker of malware protection systems has seen its shares bounce up and down since its September IPO, but over the past month, the company has added nearly 30% on enthusiasm over FireEye's ability to support companies trying to use data analytics to make the best use of the information they collect from customers and others. Products like its cloud-based email threat prevention platform are quite timely, given the hacking attack on Target that put 40 million customers' financial information at risk.

The Department of Defense announced 12 new defense contracts Thursday, worth $974.9 million combined. One single company -- Boeing -- captured more than two-thirds of the funding on offer, mainly by virtue of its winning the single biggest contract of the day.

This award, a $617.7 million contract modification, calls for Boeing to remanufacture 22 CH-47F Chinook helicopters, and build six more, for the U.S. Army. The contract modification also includes funding "long-lead" funding to acquire parts needed to remanufacture a further 13 Chinooks. These helicopters are expected to be delivered by December 31, 2020.

In other news, Boeing also won a new $43.2 million cost-plus-fixed-fee, indefinite-delivery/indefinite-quantity partial-foreign military sales contract to provide engineering and technical field services training for U.S. Navy and Marine Corps military and civilian personnel -- and also Kuwaiti military personnel. The subject of the training will be on how to install, operate, and maintain equipment on AV-8B Harrier jumpjets, EA-18G electronic warfare aircraft, and F/A-18 fighter-bombers. Boeing's work on this contract will run through December 2018.

The Department of Defense announced 12 new defense contracts Thursday, worth $974.9 million combined. The big winner of the day was defense contractor General Dynamics , which won three of the 12 contracts available:

• $6.6 million: a cost-plus-fixed-fee contract to provide the U.S. Army with engineering services and logistics work on a tactical airspace integration air traffic control system. This work will continue through Jun 30, 2016.
• $26.5 million: a contract modification instructing General Dynamics to sort and classify equipment turned in by units, and to reissue serviceable material to deploying units in Kuwait. This contract runs through Dec. 29, 2014.
• Its big win of the day: $172 million funding an undefinitized contract action modifying a previously awarded contract to perform maintenance on the dock landing ship USS Carter Hall (LSD-50) while it is in drydock in Norfolk through April 2015.

The StressTest column appears every Thursday on Fool.com. Check back weekly, and follow @TMFStressTest.

Photo credit: OakleyOriginals.

Bank of America's  stock lost around 60% of its value over the past decade. Obviously, it's not the bank I'm referring to in the headline. Not that Bank of America was alone -- plenty of banks performed worse, and many simply failed.

Wells Fargo  could have been the answer if we were talking about the biggest banks in the country. And fellow Warren Buffett banking favorite U.S. Bancorp  wasn't too far behind Wells.

But both of those banks were clobbered by Bank of the Ozarks .

OZRK data by YCharts.

It's understandable -- if not reasonable -- that in recent years, the financial media has been obsessed by what makes a bank fail. What's received a lot less attention is a bank's path to success. Sure, lots of banks proved to be abject disasters during the financial crisis, but I find it even more fascinating that a small, lesser-known bank like Bank of the Ozarks not only survived, but thrived in the shadow of the meltdown.

Between year-end 2003 and the third quarter of this year, Bank of the Ozarks' assets expanded from $1.4 billion to $4.7 billion. Over the same period, earnings jumped from $20 million to more than $80 million.

The earnings of Bank of America ($8.7 billion over the past 12 months) and Wells Fargo ($21 billion) are orders of magnitude larger than Bank of the Ozarks', but the disparity in growth -- particularly on a share-adjusted basis -- is huge.

Bank of the Ozark's small size helped it a decade ago. It's far easier to grow a bank with $1.4 billion in assets than one with more than $700 billion -- as Bank of America did in 2003. But that's hardly the whole story. There were a lot of small banks in 2003, and most didn't fare anywhere near as well as Bank of the Ozarks -- and some outright failed.

So, what's the secret?
Poring over the bank's annual reports and letters to shareholders over the past 10 years in search of the special sauce behind its success, I came to one conclusion that was hard to avoid: Good banking is boring banking.

There's little that was fancy or out-of-the-box about what Bank of the Ozarks has done. Except, of course, the way it's exhibited an impressive level of self control during a period when most bankers were acting like Augustus Gloop from Charlie and the Chocolate Factory.

The letter CEO George Gleason wrote to shareholders in 2012 illustrates the bank's dedication to simple, straightforward banking (emphasis mine):

Our net income of $77 million reflects our commitment to three disciplines which have become hallmarks of our Company: superb net interest margin, favorable efficiency and excellent asset quality. 

At a time when Gleason would have been little blamed for taking a victory lap, he instead focused on three basic and supremely boring factors. 

Yet it's hard to get around the fact that these three things were critical to Bank of the Ozarks' success. Regarding asset quality, in 2009, the bank's nonperforming loan ratio peaked at 1.2%. It dropped all the way down to 0.6% the next year. Even as of the third quarter of this year, neither Bank of America nor Wells Fargo have managed to get their nonperforming loans back under 2%. In other words, while many banks spent the mid-2000s lending to anyone with a pulse, Bank of the Ozarks primarily made loans to borrowers in a position to pay them back.

Though Wells Fargo has been an objectively successful bank, its efficiency ratio -- the percentage of revenue that goes to non-interest costs -- reached a decade low of 54% in 2008. Bank of the Ozarks' efficiency ratio didn't breach 50% for a single year over that stretch. Cost discipline may not be sexy, but it's a proven winner time and again.

This wasn't simply the result of coincidence. Bank of the Ozarks' early decade growth strategy set it up well to achieve these results via consistent discipline and culture. Through 2009, it was focused on a "de novo" expansion strategy, which centered on opening new branches in a specific geography -- Arkansas and Northeastern Texas. This was a relatively plodding strategy at a time when many banks were swinging big with large, expensive, far-flung acquisitions they hoped would lead to massive growth in a frothy lending market. 

The latter strategy blew up in the faces of those banks that pursued it -- Bank of America not least among them. The slow-and-steady approach of Bank of the Ozarks, meanwhile, positioned it well to participate in many advantageous FDIC-assisted acquisitions in the wake of the crisis. This led to further expansion for Bank of the Ozarks at a time when most banks were forced to retrench.

Not fair
In a sense, it's not fair to compare Bank of the Ozarks -- which today is still only valued at $2 billion -- to banking leviathans like Bank of America and Wells Fargo. But we're investors, and it's not about being fair -- it's about finding the best returns we can.

Over the past decade, Bank of the Ozarks was a small, growing bank. It was a bank that, like Jim Collins' Good to Great hedgehogs, seemed to know one big thing: In the end, good, disciplined banking wins. 

But just like the companies in Collins' classic, just because Bank of the Ozarks has done it right over the past decade doesn't mean it will automatically repeat its successes over the next 10 years. Maintaining that focus and discipline will be key.

The lessons remain regardless of the future outcome for Bank of the Ozarks, though. When trying to find the best returns in the banking industry, it helps to be a smaller player. It's also key that the bank has an eye toward growing. But above all else, in a risk-management business like banking, staying focused and disciplined is the only way to have the longevity to get the chance to talk about "long-term" returns.

Stock buybacks often get a bad name in the financial press, but evidence continues to mount that, outside of a few glaring issues, the concept rewards shareholders. One recently unlikely success was the massive 2012 stock buyback programs by Seagate  a leading supplier in the commodity enterprise storage sector that has seen its stock soar in 2013, along with fellow storage player Western Digital .

With the PC market in decline, the storage business, and new methods of storage lurking to overtake the historical disk-drive-based systems of Seagate and Western Digital, the tandem thrived anyway. At the time, EMC was the dominant stock to own in the storage space. Ironically, that stock hasn't seen any gains in the last couple of years, despite better growth. Ironically, the lagging stock is now ramping up buybacks.

Solid profits without growth
In general, a lot of the rebound in storage stocks was tied to beating expectations more than growth. For a stock to gain, surviving a period of weakness can provide more rewards to shareholders than thriving during a period of expected strength. A beaten down stock only needs stability to reward investors.

Seagate generated roughly $14.4 billion in revenue for fiscal 2013. Analyst expectations for both fiscal 2014 and 2015 amount to a decline in revenue during that two-year period. The key, though, is the expansion of earnings from $5.31 in fiscal 2013 to nearly $6.00 in fiscal 2015. It's not earth-shattering for a technology company, but definitely substantial progress for a stock that traded below $10 near the end of 2011. Considering the market cap was around $4 billion and the company still generated $14.4 billion in sales, you can quickly surmise why the company might have been eager with the buybacks.

Western Digital has a similar financial position with stable revenue and growing earnings per share. Also, the stock trades at a similar price to sales ratio around 1.25. The irony, again, is that EMC has better growth metrics, but only now trades at a similar multiple to Seagate and Western Digital. Taking into account growth rates, EMC should probably trade at higher multiples.

Speaking of stock buybacks
While Seagate wasn't attractive to investors back in 2010-2012, the company was generating enough cash flow to pull off substantial stock buybacks. The chart below shows the amount of quarterly buybacks and the net buyback yield over the last five years:

STX Stock Buybacks (Quarterly) data by YCharts

Buybacks were material enough at the end of 2012 to send the net buyback yield soaring to over 25%. In essence, the company was buying enough stock to purchase a quarter of the company over the previous 12 months, based on the market cap. Notice how the buyback mostly took place below $35, while the stock has now soared to $55.

Now what?
The board of directors placed a major hold on the stock buyback plans while the stock soared during 2013. Interestingly, Seagate repurchased a net $143 million worth of shares during the quarter ending in September, after the stock swooned below $40. The company hasn't been aggressively buying shares during the last year, and investors should probably take this as a hint from the board.

Bottom line
With higher valuation metrics, Seagate and Western Digital no longer provide the solid return potential from the past couple of years. In addition, Seagate no longer sees valuation potential, suggesting that shareholders should go elsewhere. New forms of flash storage might finally take a hit out of the traditional disks sold by Seagate and Western Digital, as the cash generated these days isn't large enough to handle the much-higher market valuation.

Fundamentally, EMC is the better company, with annual revenue growth in the 8% range. After valuation metrics have declined over the last couple of years, EMC is more attractive. As 2011 progressed, EMC got too pricey, while Seagate and Western Digital became incredibly undervalued. Seagate's buybacks were a signal to investors, but went ignored by most. Now, EMC is growing buybacks, while Seagate has mostly eliminated them. Investors should take note of this shift and follow the leads of the associated board of directors.

Although we don't believe in timing the market or panicking over daily movements, we do like to keep an eye on market changes -- just in case they're material to our investing thesis.

Investors happily added riskier assets to their portfolios today, selling safer investments like bonds as the 10-year Treasury yield hit 3% for the first time since 2011. Fears about interest rates didn't hold major stock market indexes back, but some stocks missed out on the post-holiday rally. BlackBerry , Textura , and iShares MSCI Turkey were among the laggards on Thursday.

BlackBerry dropped 9% as former CEO Michael Lazaridis officially ended his quest to buy out the company he helped found. Instead, he started selling off his position in the mobile-device maker, with SEC filings from Tuesday showing sales of 3.5 million shares, cutting his position to 26.3 million shares. The move comes as a major about-face for investors who had seen Lazaridis' willingness to buy the company as a sign of its continued viability, and even last week's announcement of an extended relationship with Foxconn doesn't seem like any guarantee of BlackBerry's future prospects.

Textura plunged 17% as the construction-industry software maker was the latest target of a negative report from Citron Research. The report [opens PDF] includes various allegations of fraudulent behavior and material misrepresentations, as well as criticism of Textura's business, arguing that its flagship software product has only limited value. Citron concludes that the stock's value is closer to $4 -- about 90% below the stock's closing price Tuesday. Textura responded to the report by rejecting any allegation of fraud, collusion, or deception in its IPO and subsequent filings with the SEC. As with most negative reports, it'll be interesting to see whether Citron's allegations pan out in the long run.

iShares MSCI Turkey fell 7%. The country-tracking ETF suffered from allegations of corruption among Turkish Prime Minister Recep Tayyip Erdogan's cabinet members. Erdogan fired four of his ministers, and announced changes for up to 10 positions, sending the Turkish currency to a new record low, and sending the country's stock market index to its lowest level in more than a year. The move reminds U.S. investors that political risk is an important consideration in any international investment, and with continuing unrest likely, it could be a while before shares start to rebound.

Core Laboratories isn't an oil services company that garners lots of attention from the news; but that may be better for investors in this company. During the past year alone, shares in the company are up an astounding 75%, and statements from management seem to hint that this company is far from running out of steam. This is one of the reasons why Core Labs is on our list of favorite energy stocks for the year.

So what makes Core so unique? The company has positioned itself to play one of the most critical aspects of the oil and gas industry today: It's getting more expensive and complicated to find new sources. Core's business is aiding companies that spend billions of dollars on development, like Petrobras and Conocophillips , to more accurately define potential resources and how to most effectively extract those resources over the life of a reservoir. This business model has turned into a vertiable cash machine that produces loads of free cash for shareholder friendly moves like share buybacks. Tune into the video below to find out other reasons why Fool.com contributor Tyler Crowe picked Core for his top energy stock list.

This series, brought to you by Yahoo! Finance, looks at which upgrades and downgrades make sense, and which ones investors should act on. Today, fat and happy after their Christmas dinners, it appears Wall Street analysts are in a lazy and mostly positive mood. In all the investing universe, there seem to be only three ratings tweaks of any moment. And here they are:

Eagle Rock -- caged no more
We begin with Eagle Rock Energy , our only true "upgrade" of the day. Houston-based Eagle Rock is primarily a storer, processor, and transporter of natural gas liquids, with an adjacent oil production business. Until Tuesday, the stock had been rated an underperform by investment banker Raymond James -- and rightly so. The stock has lost 25% of its value over the past year, while the S&P 500 gained 29%. But today, Raymond relented and upgraded the shares to market perform.

Why? Well, you can read the whole story in my Foolish colleague Matt DiLallo's column here. But the upshot is that Eagle Rock is selling its nat-gas business to Regency Energy Partners for about $1.3 billion in total compensation, and will double down on hydrocarbons production.

Matt thinks this is a good deal for Eagle Rock, which will be left as a pure-play exploration and production oil company with "proved reserves totaling 350 billion cubic feet equivalent in Texas, the Mid-Continent and the Gulf Coast." Thanks to the infusion of cash from Regency, it will have a "significantly" improved balance sheet as well.

Personally, though, I look at the company and the 6.1% operating profit margin it earned from its upstream oil business last year, and wonder if what remains of Eagle Rock after the transformation is really a business worth owning. Rival Linn Energy, for example, sports an operating profit margin several times as big as what Eagle Rock earned last year. While I agree that a debt-free Eagle Rock is a more attractive prospect than an Eagle Rock burdened by $1.2 billion in debt, and that for this reason if no other, Raymond James is right to upgrade it, I'm still not convinced that this Eagle will soar.

Heritage-Crystal's future looks clearer
Next up, we find the analysts at Wunderlich upping their price target on buy-rated Heritage-Crystal Clean . The waste management company sells for only a little above $20 today, so the potential for a 25% bump in share price should be good news for shareholders -- yet investors are instead bidding the shares down today. Why?

Perhaps the answer is as simple as this: Heritage shares are not cheap. Not by a long shot. With the company barely profitable, stock trades for the nosebleed P/E ratio of 236. It's even less attractive when valued on free cash flow, which has remained negative for four years running. With no free cash coming in the door, Heritage pays its shareholders no dividend.

By my count, that's strike one, two, and three -- and Wunderlich has struck out on this one.

Has FedEx finally arrived?
Last in line, today's news is dominated by stories about how parcel posters FedEx and UPS flubbed the Christmas delivery season, missing deadlines and delivering thousands of packages late. That sounds like bad news, but this morning analysts at Argus Research are taking the opposite view and raising their price target for FedEx by a whopping 42%, to $173 per share.

Believe it or not, that actually makes some sense. After all, if FedEx failed to keep up with demand this just-past delivery season, then that must mean demand was pretty incredible. Revenue, and profit for FedEx, could be just as incredible when management gets around to reporting earnings in March. This suggests that other analysts, who are predicting only 12.5% earnings growth this year, and 15.5% long term, could be surprised by how well FedEx actually does.

Even so, I'm not buying the shares -- once again, because of the valuation. At 27.6 times earnings, FedEx would have to grow a whole lot faster than just 15.5% annually over the next five years to justify its valuation on a P/E basis. Even if Argus is right, and near-term estimates are wrong, I don't see the company outgrowing estimates by more than 10 percentage points -- which is what I'd need to see to make the shares look "buyable."

Meanwhile, my concerns about FedEx's subpar rates of converting generally accepted accounting principles "income" into real free cash flow remain intact. Over the past 12 months, FCF of $1.4 billion has lagged reported income by 15%. While the discrepancy between the two numbers is less than it's been in years past, and does appear to be closing slowly, earnings quality remains a concern. And so I must disagree with this ratings move as well. While FedEx remains a great business, its stock is still too expensive to buy.

Although we don't believe in timing the market or panicking over daily movements, we do like to keep an eye on market changes -- just in case they're material to our investing thesis.

The holiday season has been a kind one for the Dow Jones Industrials , which managed to continue its six-day run of new record highs with a triple-digit gain Thursday. Favorable news on jobless claims, and a rosy picture of retail performance, helped send the Dow up 122 points on the day, marking its 50th record close during 2013, and leading the other major market benchmarks higher, as well. ExxonMobil and IBM were the biggest percentage gainers on the day, while JPMorgan Chase was the sole member of the Dow not to rise.

Exxon climbed 1.7%, vaulting above the $100 per-share mark for the first time in its history. Domestic oil prices also neared the $100 mark, but Exxon's gains have largely come from the recognition that value investors like Warren Buffett believe that the oil giant can successfully overcome the challenges that its size poses for future growth. Even with huge opportunities in hard-to-reach areas of the world, Exxon faces a mammoth task in producing enough oil and gas to replace falling production on existing wells. Nevertheless, as the economic recovery seems to be taking greater hold both in the U.S. and around the world, rising energy demand could help support oil and gas prices, and give Exxon more support for its impressive bottom line and cash flow.

IBM rose 1.2%, perhaps simply on speculation that stocks that did badly in 2013 will bounce in 2014. Even as the sole falling stock in the Dow so far in 2013, IBM hasn't benefited from some of the typical trends that help losing stocks. With a dividend yield of just 2.1%, and a price-to-earnings ratio that still approaches 13, IBM isn't even the cheapest tech stock in the Dow, with rivals offering better yields and more turnaround potential. IBM's valuation is below the average Dow stock, but many tech investors would argue that there are better picks among megacap technology stocks than Big Blue.

JPMorgan lost 0.1%, with the likely culprit coming from the rise in Treasury bond yields today. Treasury yields briefly hit the 3% mark, and JPMorgan has previously said that it was vulnerable to rising bond yields because of its extensive portfolio holdings. The big question facing the bank is whether yields will rise further in light of the Fed's decision to ease off on quantitative easing-based bond purchases, but JPMorgan will also have to deal with ongoing regulatory threats that could cost the bank even more in fines, settlements, and other costs.

Jack Kleinhenz, chief economist for the National Retail Federation, recently said, "There is a lot of competition in retail, and they have very thin margins. There's going to be a sorting among retailers." Rumors around that sorting process may have already started, and this may be what's fueling Tuesday Morning shares.

See below for a chart of diluted EPS over the past five years for Tuesday Morning, Target, Big Lots, and Dollar General. That's Tuesday Morning down at the bottom, and yet its shares are up over 140%. Note that Target is at the top, but slowly trending down and Dollar General is making a slow and steady climb upward. For the most part, the stock prices of these retailers mimic their earnings, but not with Tuesday Morning.

TUES EPS Diluted (TTM) data by YCharts

A little context
Much of this post refers to fiscal year 2013, which for Tuesday Morning ended in June of 2013. It is also important to note that Tuesday Morning has been struggling with earnings for the past five years.

Big Lots is the the larger version of Tuesday Morning, from a business model perspective. Like Tuesday Morning, Big Lots is also struggling, but its stock price is struggling too.

Target is a large box retailer like Big Lots. While Target is a considered a "high-end" discount retailer, they've also had some difficulty with earnings, which have been declining over the past year.

The one shining star is Dollar General, with positive earnings growth on top of positive earnings.

Tuesday Morning, on the other hand, has negative earnings growth on top of negative earnings. Then, in the second quarter of fiscal 2013, the company wrote off approximately 20% of its inventory, earnings took a nose dive, and the stock went up even more. One possibility is that it's in play to be acquired. Another possibility is that the market likes inventory writedowns.

BIG data by YCharts

Inventory devaluation charge
In 2012 and 2013 Tuesday Morning made significant investments in inventory management systems, which resulted in "an inventory devaluation charge recorded in the second quarter of fiscal 2013 in the amount of $41.8 million. The effect of this charge was a 5% decrease in gross margin rate." To put that into perspective, without the writedown the company would have only announced a $14 million loss instead of a $56 million loss.

Big Lots recently announced that it was going to close down its wholesale and Canadian operations. The company expects $44 million to $47 million in asset writedowns next year, but then again Big Lots stock is moving in the same direction as its earnings -- down.

Let's back up for a quick overview on the writedown process and the effect of writedowns on earnings and inventory.

What is a writedown
In accounting, a business can purchase inventory and never have the purchase hit the income statement. The inventory is stored on the balance sheet and only charged against net income if it is sold. If the value of inventory declines, its value is marked down or written off. A portion of the inventory is then transferred from the balance sheet to the income statement and deducted from the cost of sales as if it were sold. As a result, there's a decrease in earnings even though no cash has exchanged hands. This is why permanent writedowns are referred to as non-cash transactions. The actual inventory is still sitting in the warehouse and will be sold at a marked-down price in the future.

When a company writes down inventory it is communicating two things: gross margin is about to take a hit, and someone overpaid for inventory or misjudged customer appetite. These aren't value added events. Some analysts may argue that a write-off is a non-cash transaction that doesn't affect company cash flows, and therefore shouldn't be counted against the future cash flows of the company. This would be a decent argument for why the stock didn't go down, but it's a stretch as an argument for why the stock went up.

The point is, there's absolutely nothing about a writedown that should add value to a stock's price.That doesn't mean it doesn't help.

What's happening now
Management shouldn't make a practice of writing down inventory, but if Tuesday Morning's management is implementing a new inventory management system, a one-time writedown is understandable. Perhaps the anticipation of the system implementation is what's driving the stock. Maybe the writedown is being interpreted as a necessary step to get the earnings it deserves. Or, maybe the new management is thinking about selling the company. Only time will tell.

Although we don't believe in timing the market or panicking over daily movements, we do like to keep an eye on market changes -- just in case they're material to our investing.

After taking a day-and-half break to celebrate Christmas, the Dow Jones Industrial Average brushed off any concerns about an eggnog hangover as it scored yet another win today, jumping 122 points, or 0.8%, to 16,479, hitting a record high once again. A better-than-expected initial unemployment claims report helped boost markets at the opening bell as new jobless reports totaled 338,000, lower than expectations of 350,000, and down from last week's elevated tally of 380,000. New claims data is notoriously erratic during the holiday shopping season, however, as retailers are fast hiring and unloading short-term employees in an effort to meet the temporary spike in demand. Investors also seemed to applaud a late boost in holiday sales as heavy discounting helped spur more Christmas gift buying than was expected. Retail sales for the holiday shopping season are estimated to have hit $602.1 billion, a new record, and about 50% higher than the total back in 2000. The figure was 2.3% above 2012's mark, better than 0.7% growth last year, and the greatest in three years.

Retail stocks got a bounce from the upbeat numbers. Home Depot moved up 1.1%, benefiting not just from the holiday sales report -- as soldering irons were surprisingly not this year's "it" gift -- but from a report Tuesday showing new home sales in November coming in at 464,000, better than expectations of 434,000. The Commerce Department also revised its October total up by 30,000, to 474,000, evidence that the housing recovery continues to carry on. While Home Depot is not a direct beneficiary of Christmas shopping the way most retailers are, it is particularly sensitive to consumer spending trends as the home-improvement market is perhaps the most valuable discretionary spending category in retail.

Nike moved up 0.7%, keeping pace with the Dow's gains, as the ubiquitous sports brand figures to be a big winner from the better-than-expected holiday sales. The Swoosh has already had a stellar year, posting strong profit gains as it continues to find new growth areas in North America thanks to innovative ideas such as the Fuel band, and the company's beaten earnings estimates in its last four quarters, and seen shares increase 50% this year in the process. With the World Cup taking place in Brazil next year, a huge country with a burgeoning middle class ready to grab on to the kind of conspicuous consumption Nike represents, 2014 could be another stellar year for the sneaker maker. A recently announced goal of growing revenue to $36 billion by 2016 only sweetens the pot.

With 2013 almost over, it's a good time to look back and see how your investments performed during the year. For ETF investors, looking at the largest exchange-traded funds in the market can give you some clues about general trends that affected mainstream investors this year. With that in mind, let's take a look at the five biggest ETFs by assets under management: SPDR S&P 500 , iShares Core S&P 500 , iShares MSCI EAFE , Vanguard Emerging Markets , and PowerShares QQQ .

When matching the market is a smart move
Many investors have given up on trying to beat the market indexes by using active management, and that strategy worked out well for investors in the top two ETFs, both of which track the S&P 500. The SPDR ETF gained 31.7% since the beginning of the year, while its iShares counterpart performed a bit better, climbing 31.8%.

Part of the reason for the difference likely comes from the fact that the iShares ETF charges just 0.07% in annual expenses, while the SPDR weighs in at 0.0945%. But other factors, such as the regular rebalancing of component stocks within the S&P 500, as well as occasional substitutions and replacements of one stock for another in the index, can cause disparities in returns, as well. Funds from different fund families handle these events using their own particular proprietary trading methods, and some of those methods work better than others in certain situations. All in all, though, both ETFs did a good job of matching up with the S&P's total return for the year.

International stocks underperform
Meanwhile, the No. 3 and No. 4 ETFs on the list both invest internationally, and neither one did nearly as well as many ETFs that focused on U.S. stocks. The iShares MSCI EAFE ETF managed to gain almost 20% in 2013, with strong performance in the Japanese and European stock markets helping to produce what ordinarily would have looked like impressive returns if U.S. stocks hadn't done better still. One problem that weighed on the iShares ETF was that the U.S. dollar was extremely strong throughout much of the year against many major currencies, particularly the Japanese yen. That hurt the dollar-based returns for U.S. investors in comparison to their greater local-currency gains that Japanese investors enjoyed.

On the emerging market front, though, the news was far worse. The Vanguard Emerging Markets ETF fell more than 7% on the year, as poor performance throughout the major emerging markets of China, India, and Russia hurt the ETF's overall returns. Brazil, in particular, was a big drag on emerging markets, as a plunging Brazilian real worsened the impact of falling local markets on U.S. investors. With so many emerging-market economies reliant on commodities for their strength, the plunge in prices of many natural resources took their toll on the Vanguard ETF.

The Nasdaq tops the list
Even though the PowerShares QQQ ETF is the smallest of the five ETFs here, it did the best, gaining almost 36%. The year 2013 was a blockbuster one for the tech-heavy Nasdaq 100, with big gains in several major technology stocks, as well as a huge recovery in the social-media space helping to lift the index. Interestingly, the broader Nasdaq Composite is the only one of the three major U.S. market benchmarks not to hit record highs in 2013, as it still lags well below the levels it hit in early 2000 at the end of the tech boom. With many tech stocks still trading at attractive valuations, though, further gains in the bull market could push the PowerShares ETF higher still.

The year 2013 showed how diversification, once again, did its job, with strength in the U.S. offsetting weakness internationally to provide solid returns for stock investors with diversified ETF portfolios. These five ETFs weren't the best performers in the ETF universe, but overall, a reasonable asset allocation using these ETFs provided attractive returns for investors in 2013.

Although we don't believe in timing the market or panicking over daily movements, we do like to keep an eye on market changes -- just in case they're material to our investing thesis.

This bull market appears to be resolute on seeing the year out on a high note - literally - as stocks hit another record high on Thursday, with the S&P 500, and the narrower Dow Jones Industrial Average , gaining 0.5% and 0.7%, respectively. For the Dow, it was the sixth consecutive record high close, even as the yield on the 10-year Treasury note hit 3% intraday - its highest level since September.

We have a liftoff! Shares of Twitter look like they are headed to the moon after a stunning series of daily price rises that have lifted the stock 32% over the past five days, and close to 80% this month. That's no reason to get on this rocket.

TWTR data by YCharts

Relative to its $26 offering price at its Nov. 7 IPO, the stock, at $73.31, is now closing in on a triple. The remarkable thing about this meteoric rise is that it has occurred in the context of virtually no additional fundamental information concerning the company, which is now valued at an astounding $40 billion. As Bloomberg notes, this is more than Time Warner Cable, Viacom, or Target -- not bad for a company that will force shareholders to wait until 2016 to earn an annual profit, according to Wall Street's consensus estimates!

The stock's "light as a feather" rise does not convey the weight of the expectations that are now embedded in the price; however, at a market value of 41 times next 12 months' revenue estimate, they are Herculean. Or, as Wunderlich Securities' Blake Harper wrote on Christmas Eve:

Many investors who are long and bullish on Twitter at these prices are betting on the company becoming a dominant media and technology platform that executes flawlessly and takes a larger share of the advertising market over the next 5+ years while competing intensely with Facebook, Google, and many others. While this is possible, we don't believe the current valuation justifies the risk, especially with the company having yet to report a quarter as a public company.

I couldn't agree more with Mr. Harper, who has a sell rating on the stock, with a $36 price target. In fact, I'd go further: It appears highly likely that investors are now shunning fundamentals and valuation altogether in assessing Twitter, and are, instead, beginning to extrapolate promise and hope into "sky's the limit" dreams, producing a spectacle reminiscent of some of the excesses of the dot-com bubble.

Furthermore, the dream machine lending steam to the stock is also fueled by a very low float (i.e. a very small supply of freely tradeable shares): just 11% of fully diluted outstanding shares, according to Mr. Harper. As I wrote at the beginning of last year, high-profile/low-float technology IPOs have a spotty record in terms of delivering long-term returns. Twitter and its shareholders may be partying like it's 1999 right now, but the longer the party lasts, the more painful the hangover will ultimately be. For now, though, the market's refrain is: "Just one more drink!"

The year 2013 has been an exceptionally strong one for stock market investors, who scored big gains on their portfolios in a broad-based advance in the fifth year of the current bull market. One of the most surprising things about 2013 was that those gains came with very little volatility, with the Volatility Index staying at extremely low levels throughout nearly the entire year as the market, once again, avoided a 10% correction in 2013.

For investors in the volatility-tracking exchange-traded notes iPath S&P 500 VIX ST Futures ETN and VelocityShares Daily 2x VIX ST ETN , the lack of volatility proved disastrous, even as shareholders of the VelocityShares Daily Inverse VIX ST ETN scored impressive gains. But will that same strategy work in 2014, or will volatility finally rear up and return to more normal conditions next year? Let's take a look a closer look at the prospects for volatility in 2014.

^VIX data by YCharts

A painful year for thrill seekers
Coming into 2013, many investors expected the markets to start getting choppier. During 2012, pullbacks at midyear sent the Volatility Index to fairly high levels; yet the often-turbulent autumn months failed to deliver the usual rise in fear, leaving the index without a single reading above 30 for the first time since before the financial crisis. Even the year-end spike in volatility caused by Congressional debate about the fiscal cliff  gave way to a big celebration at the beginning of 2013, when lawmakers reached a successful resolution of the tax-related controversy.

As it turned out, however, 2013 proved to be an even more benign year for volatility than 2012 was. Volatility levels stayed below 22 all year, and the Volatility Index spent much of 2013 at levels not seen since the last year of the previous bull market in 2007.

Volatility ETN Total Return Price data by YCharts

That was good news for stock investors, but for those who bought volatility-linked investments hoping for more fear in the market, 2013 was a painful year. The unleveraged iPath ETN lost two-thirds of its value, while the leveraged VelocityShares ETN dropped more than 90%. Meanwhile, those who invested expecting the lack of volatility saw impressive gains, as the inverse VelocityShares ETN more than doubled.

What to expect in 2014
Obviously, it's impossible to predict what will happen with volatility in 2014. But you can get a hint by looking at the volatility futures markets.

Currently, futures contract prices show that investors still expect a gradual increase in volatility levels throughout 2014. From current levels of just over 12, futures predict a rise above 13 by January, with another point every month thereafter through April. From April to September, futures predict a rise from 16 to about 18.5, which would put volatility above the levels it reached throughout all but a few very brief periods during 2013.

The key to remember, though, is that futures investors have predicted just about exactly that same scenario for a long time now. Indeed, that's a big part of why the inverse VelocityShares ETN has performed so well, as it uses futures contracts to track volatility. Those same expectations have hurt the results of the other volatility-tracking ETNs, with losses that were worse than the corresponding drop in the Volatility Index itself.

Being prepared for volatility is always a prudent course for any investor. Counting on the timing of when that volatility will come, however, is a dangerous bet. Volatility-ETN investors learned that the hard way in 2013, and they'll be reluctant to repeat their experience in 2014.

In this video from Friday's Investor Beat, host Chris Hill and Motley Fool Million Dollar Portfolio and Inside Value analyst Ron Gross take a look back at the most important stories of 2013 for investors.

Despite myriad doom-and-gloom macroeconomic and political stories emerging in 2013, the markets surged upward 30% this year, making it an incredible year for investors. But does this big run-up show that we're in a bubble, and about to careen off the cliff of a major market correction? Ron talks investors through what he thinks of the market today, and whether he sees a bubble in today's valuations. He also discusses the Fed and its recent quantitative easing program that has been keeping interest rates at rock-bottom levels, and how that could affect the market when that program comes to an end.