There’s an old saying that trees don’t grow to the sky. In other words, there is a natural limit to growth. In the case of a tree, maybe the tree’s structure makes it impossible for nutrients to reach above a certain height. As with so many sayings, this one is often applied to the stock market. For example, companies cannot continue growing earnings at 100% per year forever. There is a natural limit to a company’s growth. The same is true for stock prices. I think of this old saying whenever I see a long streak of up or down… Read More

There’s an old saying that trees don’t grow to the sky. In other words, there is a natural limit to growth. In the case of a tree, maybe the tree’s structure makes it impossible for nutrients to reach above a certain height. As with so many sayings, this one is often applied to the stock market. For example, companies cannot continue growing earnings at 100% per year forever. There is a natural limit to a company’s growth. The same is true for stock prices. I think of this old saying whenever I see a long streak of up or down closes. In the chart below, you can see that the S&P 500 has closed higher for eight weeks in a row.  This is not unprecedented. There have been 30 previous instances when a streak lasted at least eight weeks. The longest winning streak on record is only 12 weeks.  So, we know the current streak will end. But what does history tell us about this scenario? When is it likely to end? And what happens after that? To help answer that question, I ran some tests to see what’s happened in the past. The results are summarized in the table… Read More

Value investing is one of the most popular investment strategies used today by individual investors and portfolio managers.  Value investors seek out stocks that can be purchased at a discount to a company’s “real” worth. It’s an approach that’s been refined over the years, but its foundation goes back roughly 85 years with the publishing of Benjamin Graham and David Dodd’s college textbook, “Security Analysis.” Benjamin Graham is properly credited as one of the fathers of value investing. Disciples of his include such notables as Warren Buffett (who is reportedly the only student to receive an “A” in his class),… Read More

Value investing is one of the most popular investment strategies used today by individual investors and portfolio managers.  Value investors seek out stocks that can be purchased at a discount to a company’s “real” worth. It’s an approach that’s been refined over the years, but its foundation goes back roughly 85 years with the publishing of Benjamin Graham and David Dodd’s college textbook, “Security Analysis.” Benjamin Graham is properly credited as one of the fathers of value investing. Disciples of his include such notables as Warren Buffett (who is reportedly the only student to receive an “A” in his class), Walter J. Schloss, Seth Klarman, and Bill Ackman. Graham’s approach was to identify stocks that were trading at a discount to their intrinsic value. And although Graham never fully explained how to determine “intrinsic” value for a stock, we do know that he felt a firm’s tangible assets were a particularly important component. Other factors included earnings, dividends, financial strength, and stability.  Graham knew that identifying such neglected, undervalued stocks was a protracted and patience-trying experience. But he also knew the rewards could be great. And so did his most famous student…  —Recommended Link— The most powerful market research you’ll… Read More

S&P 500 companies have now posted healthy double-digit earnings growth for five straight quarters — maintaining a 20%-plus pace for a few of those. While the first quarter of 2019 could fall on either side of zero, full-year 2019 profits are expected to climb another 5% over last year’s record levels. In short, it’s been a good environment for dividend growth. That’s exactly what we like to see over at my premium newsletter, High-Yield Investing.  As my premium subscribers know, I keep tabs on companies that are likely to announce dividend hikes in the coming month and share my findings… Read More

S&P 500 companies have now posted healthy double-digit earnings growth for five straight quarters — maintaining a 20%-plus pace for a few of those. While the first quarter of 2019 could fall on either side of zero, full-year 2019 profits are expected to climb another 5% over last year’s record levels. In short, it’s been a good environment for dividend growth. That’s exactly what we like to see over at my premium newsletter, High-Yield Investing.  As my premium subscribers know, I keep tabs on companies that are likely to announce dividend hikes in the coming month and share my findings in regular issues. And while the companies mentioned may not end up being official portfolio recommendations right away, it’s always a good exercise that could eventually lead to another long-term winner. Here are four more prospects likely to reward investors with increased payouts starting next month. #-ad_banner-#1. Air Products and Chemicals (NYSE: APD) — APD is a leading global supplier of industrial gases. The company provides oxygen, nitrogen, and carbon dioxide, as well as rarer gases such as neon and xenon. These products are marketed to many fields including aerospace, food/beverage, metals fabrication, and healthcare. With stronger sales volumes and… Read More

Should I stay or should I go? If you’ve been singing this 1981 tune by the English punk rock band The Clash to yourself since late September, you are not alone.  In the fourth-quarter selloff last year, U.S. equities lost $4 trillion in combined market value. For those who had chosen to stay and not to go, a sharp market bounce has helped recover much of the losses: after the 17% rally off the December low, the S&P 500 has now returned to early January 2018 levels. For the tech-heavy Nasdaq 100, the decline was deeper, but the bounce was… Read More

Should I stay or should I go? If you’ve been singing this 1981 tune by the English punk rock band The Clash to yourself since late September, you are not alone.  In the fourth-quarter selloff last year, U.S. equities lost $4 trillion in combined market value. For those who had chosen to stay and not to go, a sharp market bounce has helped recover much of the losses: after the 17% rally off the December low, the S&P 500 has now returned to early January 2018 levels. For the tech-heavy Nasdaq 100, the decline was deeper, but the bounce was sharper. At its lowest levels of 2018, the Nasdaq was down 23% from its highs. Since its December lows, though, it has rallied some 19%.  As a result, the Nasdaq is now higher by about 10% from its 2017 levels. —Recommended Link— How I hacked the stock market and got away with thousands. Make $30,000 in 2 months exploiting mispriced stocks like Apple, Starbucks and other quality blue chips. Click here for the easy (and legal) secret… Hardly a record, but still better than money-market returns. It Pays To Hold Fast But stocks are risky, you might… Read More

As a child, I wanted to be a weatherman. I knew more than any ten-year-old should about barometric pressure and relative humidity and spent countless hours in the winter staring at the radar praying for snow (understand, it’s a rarity in my home state of Louisiana).  Back then, one of our local network meteorologists never predicted any of the white stuff, even when his colleagues assured kids that several inches were coming and schools would be closed the next day. I hated that guy. But my ski gloves and sled never got much use — he was right 99% of… Read More

As a child, I wanted to be a weatherman. I knew more than any ten-year-old should about barometric pressure and relative humidity and spent countless hours in the winter staring at the radar praying for snow (understand, it’s a rarity in my home state of Louisiana).  Back then, one of our local network meteorologists never predicted any of the white stuff, even when his colleagues assured kids that several inches were coming and schools would be closed the next day. I hated that guy. But my ski gloves and sled never got much use — he was right 99% of the time.  Of course, you can’t really blame the weatherman for the forecast. They are simply the messengers. Please keep that in mind when I tell you the stock market forecast appears rather stormy right now.  I’d much prefer to say that conditions look lovely — but honestly, you might want to keep an umbrella handy the next few weeks.  Here’s what’s got me worried.  This chart shows the change in S&P first-quarter earnings estimates over the past 18 weeks. Back in September, analysts were anticipating a decent 6.7% increase. By December 31, that projection had been cut in half… Read More

For the fourth time since this market selloff began in October, the S&P 500 has successfully broken above its 200-day moving average (MA).  If you’ve been following along with my recent commentary, then you know I’ve weighed in on this simple indicator several times in the past few weeks, due to its psychological significance. The first three crosses (all during the last few months of 2018) are marked by arrows in the chart below. Each breakthrough was short lived, and selling pressure quickly pushed prices back below the MA. Which brings me to this week’s question: Will Friday’s breakthrough be… Read More

For the fourth time since this market selloff began in October, the S&P 500 has successfully broken above its 200-day moving average (MA).  If you’ve been following along with my recent commentary, then you know I’ve weighed in on this simple indicator several times in the past few weeks, due to its psychological significance. The first three crosses (all during the last few months of 2018) are marked by arrows in the chart below. Each breakthrough was short lived, and selling pressure quickly pushed prices back below the MA. Which brings me to this week’s question: Will Friday’s breakthrough be any different?  —Recommended Link— 9 Game-Changing Predictions for 2019 Want to know where the money will be in 2019? Discover over a dozen potentially life-changing recommendations inside our special new report, 9 Game-Changing Investment Predictions for 2019. Click here for the full details now. ​To answer that question, we need to consider how the rally compares to the overall decline. The decline, which lasted 65 trading days, was sharp. The S&P 500 fell 20.2% from its intraday high on September 21 to its intraday low on the day after Christmas.  Through Friday, this most recent recovery has lasted 35 trading… Read More