If you’re not familiar, OPEC is group of 13 oil-producing countries that collude (in the most legal of ways) to help control oil prices (i.e. keep prices at levels where they can make the most money by selling the most product the market will bear). Love them or hate them, they do control more than 80% of the world’s oil reserves. But their influence is becoming less powerful, as they only account for less than half of global oil production. #-ad_banner-#There’s been a lot of whoop-dee-doo about OPEC’s recent decision to cut oil output, and even non-OPEC members are supposedly… Read More

If you’re not familiar, OPEC is group of 13 oil-producing countries that collude (in the most legal of ways) to help control oil prices (i.e. keep prices at levels where they can make the most money by selling the most product the market will bear). Love them or hate them, they do control more than 80% of the world’s oil reserves. But their influence is becoming less powerful, as they only account for less than half of global oil production. #-ad_banner-#There’s been a lot of whoop-dee-doo about OPEC’s recent decision to cut oil output, and even non-OPEC members are supposedly getting in on the action to scare oil prices higher. Fortunately for us, these scare tactics are mostly baseless. The deceptive headlines seem ominous, but the data reveal the truth. These “massive cuts” really only bring production down slightly from record levels and are only temporary. Even excluding U.S. production, oil is still being pumped at near record amounts. OPEC’s “cuts” still leave production higher than it has been in all of history. OPEC sneakily boosted production leading up to the cut to make it look like they were really doing something drastic — but it was all a shell… Read More

The run in the S&P 500 since the election, accounting for more than 13% of the market’s 14.7% increase over the last year, has pushed stocks to rare valuations. Stocks in the broad-market index are now trading at an average of 17.5 times analysts’ expectations for earnings over the next year, a premium of 25% on the 10-year average price-to-expected earnings. The optimism is in contrast to the fact that earnings forecasts are starting to come down, with analysts now expecting growth of just 9% when first-quarter numbers start coming out. This is considerably lower than the 12% earnings growth… Read More

The run in the S&P 500 since the election, accounting for more than 13% of the market’s 14.7% increase over the last year, has pushed stocks to rare valuations. Stocks in the broad-market index are now trading at an average of 17.5 times analysts’ expectations for earnings over the next year, a premium of 25% on the 10-year average price-to-expected earnings. The optimism is in contrast to the fact that earnings forecasts are starting to come down, with analysts now expecting growth of just 9% when first-quarter numbers start coming out. This is considerably lower than the 12% earnings growth expected when the quarter started in January. One sector in particular has boomed with last year’s stimulus in China and hopes for stimulus this year in the world’s largest economy. Bull markets don’t die of old age, and this one could be ready to move higher if Washington comes through with tax reform and fiscal stimulus. I’ve found three value plays in a sector that stands to benefit directly from this upside. These three names will allow investors to participate in potential growth and should provide protection from downside risks. Can Materials Build Off Recent Gains? Morningstar calls recent… Read More

One broker I know was fond of saying, “If you hold on to a good stock long enough, you’ll end up making money.” Coming from a stock broker, this was meant to be a bit tongue-in-cheek, but it actually makes sense: In the long term, strong stocks with good fundamentals win. So the key word here is “good.” For the stock to move higher, investors must have reasons to like it. They look at the business’ future promise and determine whether or not today’s price fully reflects those expectations. #-ad_banner-#Investing isn’t a game of chance. Days, weeks and sometimes months… Read More

One broker I know was fond of saying, “If you hold on to a good stock long enough, you’ll end up making money.” Coming from a stock broker, this was meant to be a bit tongue-in-cheek, but it actually makes sense: In the long term, strong stocks with good fundamentals win. So the key word here is “good.” For the stock to move higher, investors must have reasons to like it. They look at the business’ future promise and determine whether or not today’s price fully reflects those expectations. #-ad_banner-#Investing isn’t a game of chance. Days, weeks and sometimes months of painstaking research go into figuring out what’s good and what’s not, and millions of active investors do this work constantly. What makes it more complicated is that we all invest based on the outlook for the future, and the future is good at delivering surprises. But because so many analysts and investors do their homework, they are rarely collectively wrong. Without having a special knowledge of the future, the market processes all available information and makes a determination about the company’s future — and a stock’s ultimate direction is a reflection of that collective opinion. Of course, the markets… Read More

When I first started investing, outside of a few books, there was very limited information on how to pick winning stocks. Today, things are radically different. There is a tremendous number of stock screeners, advice gurus, and stock rating services. But the trick is to find one that works… #-ad_banner-#Investors are always looking for an edge. This is an advantage or unique tactic for locating winning stocks. Some stock market investors choose to find an edge on their own. While this can be a lucrative method, it is often very costly, and may lead down a never-ending rabbit hole of… Read More

When I first started investing, outside of a few books, there was very limited information on how to pick winning stocks. Today, things are radically different. There is a tremendous number of stock screeners, advice gurus, and stock rating services. But the trick is to find one that works… #-ad_banner-#Investors are always looking for an edge. This is an advantage or unique tactic for locating winning stocks. Some stock market investors choose to find an edge on their own. While this can be a lucrative method, it is often very costly, and may lead down a never-ending rabbit hole of misinformation and dead ends. Other investors prefer to take the easy way out by following proven stock rating services to help locate potential winning stocks in a sea of mediocrity. Personally, I utilize nearly every credible resource available, including self-developed screening criteria to pick winning stocks. When I do use a stock rating service, I like to know how it works. In other words, I want to understand the secret sauce behind the stock picks. One of the most popular stock rating services is TheStreet.com’s TheStreet Ratings, which specializes in providing winning stock picks for investors. If you’re already familiar… Read More

2016 was a record year at the box office, with sales hitting $11.2 billion. This success is expected to continue this year, with sales projected to eclipse $12 billion. Hollywood is pretty much booming. Today, I want to reveal the best way to profit. This global media giant owns the industry’s best portfolio of media companies and brands. I expect it to achieve record revenue in 2017. Even better, shares are trading at one of the biggest discount to sales in the last five years. The Walt Disney Corporation (NYSE: DIS) should be a familiar name. Disney is the second-largest… Read More

2016 was a record year at the box office, with sales hitting $11.2 billion. This success is expected to continue this year, with sales projected to eclipse $12 billion. Hollywood is pretty much booming. Today, I want to reveal the best way to profit. This global media giant owns the industry’s best portfolio of media companies and brands. I expect it to achieve record revenue in 2017. Even better, shares are trading at one of the biggest discount to sales in the last five years. The Walt Disney Corporation (NYSE: DIS) should be a familiar name. Disney is the second-largest media company in the world by revenue, behind only Comcast (Nasdaq: CMCSA). Disney owns one of the most valuable portfolios of companies in the entire global media industry. Its valuable properties include Walt Disney Studios, Pixar Animation Studios, ESPN, ABC, the Disney Channel, Lucasfilms, and the Star Wars franchise. #-ad_banner-#Beyond its media properties, Disney operates Disney Theme Parks, a collection of 14 theme parks with locations around the world. The company also owns the merchandising rights for its collection of brands under its consumer brands division, another huge source of revenue. Despite its industry-leading portfolio of media companies, Disney shares… Read More

Many of the traders I talk to are wondering what Bill Ackman could be thinking. Ackman is a hedge fund manager, the founder and CEO of Pershing Square Capital Management, which has about $11 billion under management. Ackman is considered a contrarian investor who tends to buy when companies are down, and an activist investor who sometimes takes a role in managing companies he invests in. He has achieved incredible success by some measures and has a reported wealth of about $1.4 billion. Ackman recently shared a chart showing his performance with investors… There is an obvious problem… Read More

Many of the traders I talk to are wondering what Bill Ackman could be thinking. Ackman is a hedge fund manager, the founder and CEO of Pershing Square Capital Management, which has about $11 billion under management. Ackman is considered a contrarian investor who tends to buy when companies are down, and an activist investor who sometimes takes a role in managing companies he invests in. He has achieved incredible success by some measures and has a reported wealth of about $1.4 billion. Ackman recently shared a chart showing his performance with investors… There is an obvious problem with recent performance. As Ackman explained, “The substantial decline in performance from August 2015 through March 31, 2016 is largely due to Valeant’s decline…” Valeant is now the investment traders are talking about. Ackman took a large stake in Valeant Pharmaceuticals International (NYSE: VRX) as the company was growing rapidly through acquisitions. The strategy largely relied on buying other companies and then raising prices, a tactic that we know was widespread in the drug sector. But regulators began to question the strategy after it was discovered VRX was using in-house pharmacists to potentially overbill insurance companies. Traders reacted to the… Read More

As equity markets grind higher and investors complain about the absence of value, they continue to flock toward cheap and efficient exchange-traded funds (ETFs). Money directed to equity ETFs grew 13% in 2016, pushing the assets under management to $2.4 trillion in the U.S. alone. While the ETF growth stampede continues, seemingly ignoring valuations in some cases, an ocean of value is being ignored among the ETF’s grandparents: the venerable closed-end fund (CEF). #-ad_banner-#I’ve always had a soft spot for the good old CEF. They tend to fly under the radar. So, before we go shopping, here’s a little historical… Read More

As equity markets grind higher and investors complain about the absence of value, they continue to flock toward cheap and efficient exchange-traded funds (ETFs). Money directed to equity ETFs grew 13% in 2016, pushing the assets under management to $2.4 trillion in the U.S. alone. While the ETF growth stampede continues, seemingly ignoring valuations in some cases, an ocean of value is being ignored among the ETF’s grandparents: the venerable closed-end fund (CEF). #-ad_banner-#I’ve always had a soft spot for the good old CEF. They tend to fly under the radar. So, before we go shopping, here’s a little historical background. CEFs trace their origin to investment trusts organized in Great Britain during the 1860s. The objective was to raise money for investment in the British Empire’s colonial possessions as well as to provide capital to the rapidly expanding railroads in the United States. Financed using bank leverage or the sale of debentures, their primary objective was income rather than capital appreciation. CEFs gained popularity in the United States during the Roaring Twenties. Prior to the Crash of 1929, CEF assets topped $4.5 billion, a significant chunk of the stock market’s total capitalization. But with the market excesses of that… Read More

It’s hard to believe, but the first quarter of 2017 is nearly in the books. And so far the market has continued its torrid pace. In fact, ever since the November election, the investing landscape has gone through a dramatic change of expectations with respect to economic growth, market valuations and inflation. And those expectations seem to be coming to fruition… #-ad_banner-#On March 10, the U.S. Bureau of Labor Statistics released employment data. Total nonfarm payroll employment increased by 235,000 in February, and the unemployment rate remained about the same at 4.7%. The consumer price index, which measures inflation, came… Read More

It’s hard to believe, but the first quarter of 2017 is nearly in the books. And so far the market has continued its torrid pace. In fact, ever since the November election, the investing landscape has gone through a dramatic change of expectations with respect to economic growth, market valuations and inflation. And those expectations seem to be coming to fruition… #-ad_banner-#On March 10, the U.S. Bureau of Labor Statistics released employment data. Total nonfarm payroll employment increased by 235,000 in February, and the unemployment rate remained about the same at 4.7%. The consumer price index, which measures inflation, came in at 2.74% last month, compared with 1.02% in February 2016. And residential housing starts jumped 6.2% in February over the same time last year. All these economic factors gave the Federal Reserve the green light to tighten the money supply by bumping interest rates up 25 basis points on March 15. Right now everything seems to be firing on all cylinders. Consumer confidence is at the highest level it’s been in 17 years. Unemployment is low, inflation is on target, housing is continuing to recover and the stock market is reaching new highs. As I’ve said many times before,… Read More

There are two young co-workers, Mark and Lizzy, who are both serious about setting aside money for the future. After doing some research, Lizzy finds a reputable blue-chip dividend mutual fund and decides to open with a modest $1,000 investment. After that, she contributes $100 from every bi-weekly paycheck. She doesn’t see much accumulation at first. But over time, her account value starts to build. After 25 years at an average compounded annual return of 8.0% after expenses, Lizzy would be sitting on a nice sum of $204,722. #-ad_banner-#Meanwhile, across the office, Mark finds a similar equity income fund and… Read More

There are two young co-workers, Mark and Lizzy, who are both serious about setting aside money for the future. After doing some research, Lizzy finds a reputable blue-chip dividend mutual fund and decides to open with a modest $1,000 investment. After that, she contributes $100 from every bi-weekly paycheck. She doesn’t see much accumulation at first. But over time, her account value starts to build. After 25 years at an average compounded annual return of 8.0% after expenses, Lizzy would be sitting on a nice sum of $204,722. #-ad_banner-#Meanwhile, across the office, Mark finds a similar equity income fund and invests the same amount. His fund delivers an identical annual return, with one difference. It carries an extra 50 basis points (one-half of one percent) in additional yearly fees and expenses. Because of that extra drag, Mark’s account grows to just $189,644 over the same time frame — a difference of more than $15,000. For the sake of illustration, let’s suppose we start with a $10,000 upfront investment and assume a stronger annual return of 9%. Under that scenario, the two accounts would grow to around $316,000 and $290,000, respectively — a difference of $26,000. And keep in mind, that… Read More