I have a feeling that some growth-oriented readers out there might groan a little at this stock pick. But in my experience, some of the most successful investments come from “boring” industries that may not be all what they appear. In today’s fast-paced digital world, the mundane money transfer business seems so last century. Who even carries cash anymore, right? #-ad_banner-#To some, this service is about as relevant as a telegram. That argument is largely true here in the United States. But Western Union (NYSE: WU) serves customers in 200 countries — 199 of… Read More

I have a feeling that some growth-oriented readers out there might groan a little at this stock pick. But in my experience, some of the most successful investments come from “boring” industries that may not be all what they appear. In today’s fast-paced digital world, the mundane money transfer business seems so last century. Who even carries cash anymore, right? #-ad_banner-#To some, this service is about as relevant as a telegram. That argument is largely true here in the United States. But Western Union (NYSE: WU) serves customers in 200 countries — 199 of which are not the United States. And while cash may no longer be fashionable in New York or Los Angeles, it’s still the preferred means of exchange in cities like Johannesburg, South Africa, and Mumbai, India. Here’s what is happening. There is a planet-wide population shift of workers moving from poor countries to wealthier ones in search of higher pay. Odds are, you have probably crossed paths with one of these transplants. My wife has one co-worker from Bosnia and another from Nepal. I recently met a young sales person who had traveled all… Read More

Since the Financial Crisis of 2008, the United States, when compared to the rest of the world’s monetary policy or economic performance, has been referred to as “the cleanest dirty shirt”, “the prettiest woman in the ugly woman beauty contest”, and, my personal favorite, “the tallest midget in the circus”. The primary benchmark is the yield on U.S. Treasury bonds versus the sovereign bonds of other nations.  Global government bond yields have been kept stubbornly low mainly due to the enormous supply of cash created by central bank quantitative easing (QE) in which central banks such as the Federal Reserve,… Read More

Since the Financial Crisis of 2008, the United States, when compared to the rest of the world’s monetary policy or economic performance, has been referred to as “the cleanest dirty shirt”, “the prettiest woman in the ugly woman beauty contest”, and, my personal favorite, “the tallest midget in the circus”. The primary benchmark is the yield on U.S. Treasury bonds versus the sovereign bonds of other nations.  Global government bond yields have been kept stubbornly low mainly due to the enormous supply of cash created by central bank quantitative easing (QE) in which central banks such as the Federal Reserve, the Bank of Japan (BOJ) or the European Central Bank (ECB) buy government bonds from financial institutions in hopes that the institutions will lend the cash to create demand at both the corporate and consumer level. In theory, increased consumption will stimulate business growth and lead to mild inflation. Interest rates will then gradually rise to head off rampant inflation keeping the business cycle steady while also rewarding investors with a little more return for their risk. #-ad_banner-#That hasn’t happened.  In fact, rates have done the opposite by continuing to fall. While the Fed in the United States has ended… Read More

Over the years, I’ve observed a myriad of financial experts try to beat the S&P 500 and reduce volatility in their portfolios. There are literally hundreds of methodologies traders and investors use to this end — everything from basic diversification to proprietary, complex mathematical algorithms that select the best stocks to buy. #-ad_banner-#But reality and theory are different beasts, especially when markets aren’t trending smoothly. When the market trades in a volatile, sideways pattern, which has been the case since the start of 2015, many investing tactics are rendered all but useless. Read More

Over the years, I’ve observed a myriad of financial experts try to beat the S&P 500 and reduce volatility in their portfolios. There are literally hundreds of methodologies traders and investors use to this end — everything from basic diversification to proprietary, complex mathematical algorithms that select the best stocks to buy. #-ad_banner-#But reality and theory are different beasts, especially when markets aren’t trending smoothly. When the market trades in a volatile, sideways pattern, which has been the case since the start of 2015, many investing tactics are rendered all but useless. However, there is one uncommon yet simple strategy that reduces volatility and allows you to make money whether a stock goes up, sideways or even down. Think about that for a moment. When you buy a stock, you have a 50/50 shot at winning. But the little-known strategy I’ll introduce you to today increases your odds to 70%, 80%, even 90% per trade. And it usually costs under $1,000 no matter what stock you’re trading. So even expensive stocks like Apple (Nasdaq: AAPL), Alphabet (Nasdaq: GOOGL) and Amazon.com (Nasdaq:… Read More

Sector work is a big part of the stock selection process. Right now, financial stocks from banks to specialty finance are lagging the major indices. However, property and casualty insurer and member of the blue-chip Dow 30, Travelers Companies (NYSE: TRV), has been bucking that trend… until now. After gaining almost 17% from its January low through this week’s high, the stock ran into stiff resistance set by last year’s highs. Now, TRV slightly overshot that level, but don’t let that fool you. The stock was never able to put any space between itself and the resistance line,… Read More

Sector work is a big part of the stock selection process. Right now, financial stocks from banks to specialty finance are lagging the major indices. However, property and casualty insurer and member of the blue-chip Dow 30, Travelers Companies (NYSE: TRV), has been bucking that trend… until now. After gaining almost 17% from its January low through this week’s high, the stock ran into stiff resistance set by last year’s highs. Now, TRV slightly overshot that level, but don’t let that fool you. The stock was never able to put any space between itself and the resistance line, and numerous technical indicators signal trouble. In short, it looks like it’s time for Travelers to succumb to the pressures dragging down its peers. #-ad_banner-# Aside from simple waning momentum, as indicated by a flat to lower trend in indicators such as the Relative Strength Index (RSI), there is now a fairly reliable “end-of-rally” signal appearing in the Bollinger Bands.  Bollinger Bands are modified versions of trading envelopes. The difference is that instead of the trader setting the width as a fixed percentage of price, the market sets it as a function of volatility. In this way, volatile… Read More

What’s better, a stock that appreciates 7% over the next year along with a 3% dividend yield, or one that appreciates 3% and yields 7%?  Tax implications aside, there isn’t much difference. Both will give you a total return of about 10%. If anything, option two would be preferable, as it throws off income more quickly and would net a slightly higher return when factoring in dividend reinvestment.  #-ad_banner-#But when it comes to popular valuation metrics, all the focus is on the growth side of the equation, while income is all but forgotten. So investors that rely on these yardsticks… Read More

What’s better, a stock that appreciates 7% over the next year along with a 3% dividend yield, or one that appreciates 3% and yields 7%?  Tax implications aside, there isn’t much difference. Both will give you a total return of about 10%. If anything, option two would be preferable, as it throws off income more quickly and would net a slightly higher return when factoring in dividend reinvestment.  #-ad_banner-#But when it comes to popular valuation metrics, all the focus is on the growth side of the equation, while income is all but forgotten. So investors that rely on these yardsticks will be inclined to buy the stock that is poised to grow 7% and overlook the one that is poised to grow just 3%.  That can lead to missed opportunities. Earnings growth usually translates into a rising share price over time. And generally speaking (although there are certainly exceptions), companies that return most of their excess profit through dividends will have slower growth than companies that pump their profits back into the business.  So let’s rewind back to the beginning on the two stocks above. Let’s suppose the first stock had projected earnings growth of 10%, while the second had… Read More

A couple of years ago, my wife and I took a trip to St. Louis, Missouri. Jen and I drove more than a thousand miles, spent six nights in a hotel, ate however many meals and did some shopping. We each have a debit card, a credit card and a gas card, and Jen has a few store cards. We were gone a week, and I came home with the same ten $50 bills I’d gotten at the bank before we left. It dawned on me how seldom I have any physical currency in my wallet — usually only when… Read More

A couple of years ago, my wife and I took a trip to St. Louis, Missouri. Jen and I drove more than a thousand miles, spent six nights in a hotel, ate however many meals and did some shopping. We each have a debit card, a credit card and a gas card, and Jen has a few store cards. We were gone a week, and I came home with the same ten $50 bills I’d gotten at the bank before we left. It dawned on me how seldom I have any physical currency in my wallet — usually only when I travel. It’s certainly not because I go without any of the things I need or want; it’s because I simply don’t need to carry cash. #-ad_banner-#I do, of course, need my smartphone. And thanks to what may experts are calling the “mobile payment revolution,” it’s quickly becoming “the next big thing” that will lead to the death of debit cards and cash. For the past few years, I’ve been telling readers of my premium Game-Changing Stocks Advisory about mobile payments. In fact, well before Apple announced its Apple Pay platform, I predicted that the company would develop this technology. Read More

The price of a barrel of oil has rebounded from February lows, but most analysts are not yet ready to sound the all-clear on the sector. Promises of a production cap from OPEC and Russia mean little without action, and North American production has yet to come down appreciably. #-ad_banner-#The plunge from $105 per barrel has been a nightmare for exploration & production (E&P) companies, sinking the price of their shares along with revenue.  However, it hasn’t all been dark clouds for companies in the space. In fact, a few are taking advantage of fear in the market to position… Read More

The price of a barrel of oil has rebounded from February lows, but most analysts are not yet ready to sound the all-clear on the sector. Promises of a production cap from OPEC and Russia mean little without action, and North American production has yet to come down appreciably. #-ad_banner-#The plunge from $105 per barrel has been a nightmare for exploration & production (E&P) companies, sinking the price of their shares along with revenue.  However, it hasn’t all been dark clouds for companies in the space. In fact, a few are taking advantage of fear in the market to position themselves for faster growth when energy prices rebound. These proactive companies will emerge as some of the most financially fit, and investors may want to follow their lead.  A Financial Silver Lining On Energy Storm Clouds The price of oil has come down slightly from its 50% rally off of February lows. The industry isn’t yet out of the woods after price drops of nearly 75% in less than two years, but there does seem to be a renewed optimism in energy.  That sense of optimism is giving companies in the E&P space the power to do… Read More

#-ad_banner-#As some of you may know, I use technical analysis extensively, incorporating it into my trading strategy along with fundamental and quantitative analysis.  In simple terms, technical analysis requires a study of the past, as market patterns tend to repeat over time. Beyond that, though, technical analysis can vary; some analysts use charts, some use indicators and computer testing, and some rely on history books. I think all three techniques are important to consider.  Chart patterns do tend to repeat over time. While it is possible to take this idea too far (which many people do), we can often spot… Read More

#-ad_banner-#As some of you may know, I use technical analysis extensively, incorporating it into my trading strategy along with fundamental and quantitative analysis.  In simple terms, technical analysis requires a study of the past, as market patterns tend to repeat over time. Beyond that, though, technical analysis can vary; some analysts use charts, some use indicators and computer testing, and some rely on history books. I think all three techniques are important to consider.  Chart patterns do tend to repeat over time. While it is possible to take this idea too far (which many people do), we can often spot broad patterns on charts that help us identify major trends. For example, the chart below highlights bullish double-bottom patterns (blue boxes) that developed in the S&P 500 over the past year. But it’s also important to remember that no pattern will ever work 100% of the time, as this chart illustrates. In the red box, you’ll see a double-bottom pattern that didn’t work.  And that’s where indicators and computer testing come in: They quantify how effective different indicators actually are.  There are hundreds, if not thousands, of technical indicators. I have tested many of them and found almost… Read More

With interest rates still in decline, the stodgy, old utilities sector is leading the pack.  Of course, with a more than 20% gain under its belt since early December, it’s unlikely the Dow Jones Utility Average can sustain its recent pace. After all, utilities are not likely to explode higher as an Internet or biotech stock could. The industry is too mature for that. #-ad_banner-#In an age when investors are starved for yield, though, utilities still have appeal, even if only for their dividends. But there are some that offer income and the potential for gains. We have… Read More

With interest rates still in decline, the stodgy, old utilities sector is leading the pack.  Of course, with a more than 20% gain under its belt since early December, it’s unlikely the Dow Jones Utility Average can sustain its recent pace. After all, utilities are not likely to explode higher as an Internet or biotech stock could. The industry is too mature for that. #-ad_banner-#In an age when investors are starved for yield, though, utilities still have appeal, even if only for their dividends. But there are some that offer income and the potential for gains. We have all heard the investment mantra of buying the strongest stocks in the strongest sectors, which is sound advice. However, my favorite strategy is to buy previously lagging stocks in strong sectors when they are just emerging from technical patterns. OGE Energy (NYSE: OGE) is one such stock. There have been numerous studies that show sector performance to be a large component of individual stock performance.  That makes sense from a fundamental perspective. If there is business for the sector, chances are there is enough business for most member companies. But the word “most” is key, because an out-of-favor company can… Read More