I used to be a notorious Apple (Nasdaq: AAPL) hater. From the roll out of the first overpriced iPhone, I’d look for any opportunity to rile up the fan boys. I’d yell at the television when they’d show file footage of the legions of fans standing in line at the Manhattan Apple store. I wrote bear cases for the stock.  That was then. This is now. I’ve grown up and so has Apple. And I believe it should be a core holding in your equity portfolio. #-ad_banner-#​Apple Is A Huge Bargain At Current Prices Simply… Read More

I used to be a notorious Apple (Nasdaq: AAPL) hater. From the roll out of the first overpriced iPhone, I’d look for any opportunity to rile up the fan boys. I’d yell at the television when they’d show file footage of the legions of fans standing in line at the Manhattan Apple store. I wrote bear cases for the stock.  That was then. This is now. I’ve grown up and so has Apple. And I believe it should be a core holding in your equity portfolio. #-ad_banner-#​Apple Is A Huge Bargain At Current Prices Simply defined, a stock’s margin of safety is the difference between the intrinsic value of a stock and its market price. For example, if you determine that a stock’s intrinsic value is $10 per share and your purchase price is $7 per share, you’re getting $3 worth of upside and enough cushion if the intrinsic value of the stock winds up being $9. This valuation method was pioneered by Warren Buffett’s mentor, Benjamin Graham; the godfather of securities analysis. The concept of margin of safety is the foundation of Berkshire Hathaway’s (NYSE: BRK-A) investment process. AAPL would totally fall under their… Read More

  My parents are aging rapidly. Whenever I would bring up the topic of long-term care insurance with my dad, he would laugh. I was his long-term care policy, he’d say.   He might be on to something.   #-ad_banner-#Aging Americans, especially baby boomers, are facing a conundrum: longer life spans thanks to advances in medicine and extremely low interest rates are changing the retirement math.   Don’t look for either situation to change any time soon. In fact, low rates may stay in place for another twenty years or so.   Can we blame low rates on a sluggish… Read More

  My parents are aging rapidly. Whenever I would bring up the topic of long-term care insurance with my dad, he would laugh. I was his long-term care policy, he’d say.   He might be on to something.   #-ad_banner-#Aging Americans, especially baby boomers, are facing a conundrum: longer life spans thanks to advances in medicine and extremely low interest rates are changing the retirement math.   Don’t look for either situation to change any time soon. In fact, low rates may stay in place for another twenty years or so.   Can we blame low rates on a sluggish economy? Not really. The Fed? Not yet.  Looks like aging populations are a driving factor.   Retirees depend on conservative, high quality, fixed income investments to supply predictable income during their retirement years. Typically that means U.S. Treasury securities, high quality bonds or investments holding those types of securities such as mutual funds or exchange traded funds (ETFs).   The same goes for the institutions that manage those income streams, such as pension funds or insurance companies. Those entities need to lock in interest rates on a long-term basis in order to manage their long-term liabilities.   With a huge… Read More

    I’ll share a secret with you. My academic background isn’t finance. Originally, I was trained as a historian and in my professional opinion; Europe has been a mess since the fall of the Roman Empire.   #-ad_banner-#That’s why the agreement in 1999, when 19 eurozone countries decided to put the past behind them and join together under a common currency was nothing short of historic.   The fact that a monetary union was born without an underlying political union has repeatedly led many pundits to predict eventual failure for the European Union (EU). But, love it or hate… Read More

    I’ll share a secret with you. My academic background isn’t finance. Originally, I was trained as a historian and in my professional opinion; Europe has been a mess since the fall of the Roman Empire.   #-ad_banner-#That’s why the agreement in 1999, when 19 eurozone countries decided to put the past behind them and join together under a common currency was nothing short of historic.   The fact that a monetary union was born without an underlying political union has repeatedly led many pundits to predict eventual failure for the European Union (EU). But, love it or hate it, it’s here to stay.   Of course, since the financial crisis of 2008, Europe has been experiencing a series of economic crises, most recently the sovereign debt crisis of 2011-2012. And austerity imposed by Northern European countries upon Southern European countries has led to ongoing economic weakness ever since.   Recent years have been marked by shockingly high rates of unemployment — especially among Europe’s youth — and ongoing social unrest. Even mighty German is now feeling the effects, slashing its 2015 GDP growth outlook by 35% to 1.3% from 2%.   Now, as the eurozone economy faces deflation,… Read More

  Flea markets crack me up.    Most of the vendors seem like they cleaned the junk from their garage and assigned an arbitrary, often overvalued, price to it.   There are times when financial markets resemble a flea market. And lately that’s exactly how it seems.     The U.S stock market has been on a tear over the last five years.   Since the market bottom during the 2008 financial crisis, the S&P 500 has turned in an average annual total return of close to 15%. Not bad for a market everyone… Read More

  Flea markets crack me up.    Most of the vendors seem like they cleaned the junk from their garage and assigned an arbitrary, often overvalued, price to it.   There are times when financial markets resemble a flea market. And lately that’s exactly how it seems.     The U.S stock market has been on a tear over the last five years.   Since the market bottom during the 2008 financial crisis, the S&P 500 has turned in an average annual total return of close to 15%. Not bad for a market everyone thought was going out of business.   But as we’ve discovered, trees never grow to the sky. If you’re familiar with my work, you’d know that paying close attention to valuations is a core tenet of my investment philosophy.   I wrote about my concerns with broader market valuations recently. This week, I want to drill down to valuations in a few specific sectors and stocks.     Utilities 2014 was a banner year for utility stocks. Fear of volatility and attractive yields pushed the Dow Jones Utility Index up 28% for the year, trumping the S&P… Read More

  Over the holidays, I decided to drive to Orlando and give the Walt Disney Co. (NYSE: DIS) a few of my hard earned dollars. My 12 year-old son talked me into riding the Tower of Terror at Disney’s Hollywood Studios.   #-ad_banner-#As a thrill ride, the Tower of Terror plays on three of humankind’s most basic fears: falling, the unknown and the dark. I wasn’t that concerned.  In the investment biz, that’s just another day at the office.   But when it comes to the investing, I’ll be honest. I am a concerned about the stock market in 2015. Read More

  Over the holidays, I decided to drive to Orlando and give the Walt Disney Co. (NYSE: DIS) a few of my hard earned dollars. My 12 year-old son talked me into riding the Tower of Terror at Disney’s Hollywood Studios.   #-ad_banner-#As a thrill ride, the Tower of Terror plays on three of humankind’s most basic fears: falling, the unknown and the dark. I wasn’t that concerned.  In the investment biz, that’s just another day at the office.   But when it comes to the investing, I’ll be honest. I am a concerned about the stock market in 2015.   Here’s why: It’s all about earnings.   At the end of the day, an investor should buy a stock based on the underlying company’s ability to deliver quality, consistent earnings. Those earnings should also be purchased at a fair-to-discounted price as measured by a stock’s price-to-earnings ratio (PE).   In more bullish times, investors are sometimes a bit too optimistic about the future and will push stock prices and their attached PE’s higher. In bearish times, they often become too pessimistic and drive prices and PE’s down.   I took notice after working on this chart of peak PE… Read More

To say that Uber has been disruptive to the taxi industry is quite the understatement. In New York City, some investors are already wondering if the traditional yellow cab may soon vanish from the streets of Manhattan.   The threat posed by Uber was not yet fully evidenced when I profiled Medallion Financial Corp. (NASDAQ: TAXI), earlier this year. The company’s namesake business involves financing taxi cab medallions, which are required to operate a taxi cab in many major cities like New York City.   Since my profile, the stock has taken a healthy drubbing.  … Read More

To say that Uber has been disruptive to the taxi industry is quite the understatement. In New York City, some investors are already wondering if the traditional yellow cab may soon vanish from the streets of Manhattan.   The threat posed by Uber was not yet fully evidenced when I profiled Medallion Financial Corp. (NASDAQ: TAXI), earlier this year. The company’s namesake business involves financing taxi cab medallions, which are required to operate a taxi cab in many major cities like New York City.   Since my profile, the stock has taken a healthy drubbing.   Uber, a smart phone-based application that lets users hail a ride in a privately-owned car, has done an impressive job of grabbing the media spotlight. If I had a dollar for every time I heard “Uber” uttered on CNBC or Bloomberg, then I’d have a lot of dollars.   This startup is viewed as a classic disruptive business that turns the traditional standing-on-the curb-waving-your-arm-to-hail-a-cab business model on its ear. Lyft is a rival app targeting the same niche.   #-ad_banner-#The herd has sold off their Medallion shares in fear of the inevitable death by Uber or Lyft. Read More

      As the debate rages in the U.S. over the minimum wage, we can all agree that it’s awfully hard to support a family on the current $7.25 an hour rate.   #-ad_banner-#Yet for many people living in emerging markets, $7.25 a day — let alone $7.25 an hour — has  meant a ticket to the swelling ranks of the middle class.   In fact, $10 a day seems to be the magic number. In many emerging market economies, that’s the pay rate at which consumers start to consider discretionary purchases.   China is a prime example. According… Read More

      As the debate rages in the U.S. over the minimum wage, we can all agree that it’s awfully hard to support a family on the current $7.25 an hour rate.   #-ad_banner-#Yet for many people living in emerging markets, $7.25 a day — let alone $7.25 an hour — has  meant a ticket to the swelling ranks of the middle class.   In fact, $10 a day seems to be the magic number. In many emerging market economies, that’s the pay rate at which consumers start to consider discretionary purchases.   China is a prime example. According to a report published by McKinsey and Company, Chinese consumers purchase appliances, such as refrigerators and washing machines, as their incomes approach $10,000 annually.   One company is prepared to smack what Warren Buffett refers to as the “fat pitch”: Whirlpool Corp. (NYSE: WHR).     In two years’ time, the stock has more than tripled, which leads to the question: Can this stock  go higher?    Yes it can. By 2030, 60% of the world’s one billion households will be earning $20,000 a year or more. Almost all of the growth will be coming… Read More

During the Renaissance and the Age of the Exploration, where did everyone want to go? India. Christopher Columbus found Hispaniola (today, the Dominican Republic and Haiti) by accident while sailing westward to India, thus naming the newly discovered islands the “West Indies.” #-ad_banner-#Even the Beatles went to India seeking enlightenment. I like Indian food. Ravi Shankar’s trippy sitar tones are incredibly cool. But what I truly dig about India is the yet-to-be-realized investment potential. Right now, an amazing collision of timing and fundamentals are priming the region for incredible growth. As the chart of the iShares India Index ETF (NYSE:… Read More

During the Renaissance and the Age of the Exploration, where did everyone want to go? India. Christopher Columbus found Hispaniola (today, the Dominican Republic and Haiti) by accident while sailing westward to India, thus naming the newly discovered islands the “West Indies.” #-ad_banner-#Even the Beatles went to India seeking enlightenment. I like Indian food. Ravi Shankar’s trippy sitar tones are incredibly cool. But what I truly dig about India is the yet-to-be-realized investment potential. Right now, an amazing collision of timing and fundamentals are priming the region for incredible growth. As the chart of the iShares India Index ETF (NYSE: INDA) demonstrates, the Indian market outperformed its Chinese and American counterparts handily. More importantly, the India growth story is just starting to sprout legs and still has room to run. The Right Stuff The Indian economy is growing in all the right places by transitioning from an agriculture-based workforce to a manufacturing one. Consider these numbers: Over the past 12 years, agricultural employment, as a percent of the total economy, shrank to 47.2% from 59.8%. During the same period, industrial employment grew to 24.7% from 16.1% and services grew to 28.1% from 24.1%. The most important sector in… Read More

The first rule of contrarian investing: “Buy when there’s blood in the streets.” And the coal sector sure has been hemorrhaging. The chart of the Market Vectors Coal ETF (NYSE: KOL) speaks for itself. The reasoning behind the deep hatred for coal is simple. Investors expect the energy source to be regulated out of existence, which has already led a number of electric utilities to switch from coal-fired plants to natural gas.  ​But those fears may be overblown. After all, the U.S. government has yet to craft a concrete and comprehensive energy policy and, thanks to the Republican… Read More

The first rule of contrarian investing: “Buy when there’s blood in the streets.” And the coal sector sure has been hemorrhaging. The chart of the Market Vectors Coal ETF (NYSE: KOL) speaks for itself. The reasoning behind the deep hatred for coal is simple. Investors expect the energy source to be regulated out of existence, which has already led a number of electric utilities to switch from coal-fired plants to natural gas.  ​But those fears may be overblown. After all, the U.S. government has yet to craft a concrete and comprehensive energy policy and, thanks to the Republican sweep of the midterm elections, the status quo will remain. #-ad_banner-#Investors are also concerned about a slump in coal exports, as demand wanes in emerging markets such as China — one of the world’s largest coal burners and consumers of metallurgical coal used in steel making. As Chinese government officials engineer a soft economic landing, investors are limiting their risk by reducing coal exposure, anticipating even weaker demand ahead. To my mind,  coal represents a huge contrarian play.  What’s Demand Really Like? Global demand for coal is not quite as bleak as the headlines suggest. Despite regulatory hostility in… Read More

In the final showdown of the film Wall Street, Bud Fox reminds his former mentor, Gordon Gekko to “…never get emotional.” As an investment professional, I remind myself that constantly. Recently, I started looking at Ford Motor Co. (NYSE: F), the world’s second largest auto manufacturer. As a historical figure, Henry Ford was truly a despicable character. From a total disregard for labor to openly financing racist propaganda, his actions remind me of the despicable captain of industry, Montgomery Burns, from The Simpsons. But he built a helluva business. Typically, I’m not crazy about car stocks. At times, they’re almost too… Read More

In the final showdown of the film Wall Street, Bud Fox reminds his former mentor, Gordon Gekko to “…never get emotional.” As an investment professional, I remind myself that constantly. Recently, I started looking at Ford Motor Co. (NYSE: F), the world’s second largest auto manufacturer. As a historical figure, Henry Ford was truly a despicable character. From a total disregard for labor to openly financing racist propaganda, his actions remind me of the despicable captain of industry, Montgomery Burns, from The Simpsons. But he built a helluva business. Typically, I’m not crazy about car stocks. At times, they’re almost too sensitive to the whims of the economy and the consumer, which is often too much so for my taste and investment philosophy. However, a confluence of conditions in the United States and around the world has made the stock relevant — not to mention it’s a bargain. Recently, my colleague David Sterman, outlined the bull case for Ford’s archrival General Motors Co. (NYSE: GM) in a side by side comparison of the two firms. I’ll examine that later. The Stars Align The car business, both domestic and global, could not be in a better position. The… Read More