Another year, another overreaction. Stocks plunged in China on Monday after December’s industrial manufacturing number came in lower than expected. After dropping 7%, trading was halted prematurely for the first time ever. U.S. stocks sold off sharply on the open, though they calmed after that and rallied at day’s end. When it was over, the S&P 500 dropped about 1.5%. Not a great start to the year! #-ad_banner-#While it’s scary to experience a sharp downward trend after the holiday lull, calmer heads seemed to prevail — at least in U.S. markets — and that makes sense. China’s economic slowdown has… Read More

Another year, another overreaction. Stocks plunged in China on Monday after December’s industrial manufacturing number came in lower than expected. After dropping 7%, trading was halted prematurely for the first time ever. U.S. stocks sold off sharply on the open, though they calmed after that and rallied at day’s end. When it was over, the S&P 500 dropped about 1.5%. Not a great start to the year! #-ad_banner-#While it’s scary to experience a sharp downward trend after the holiday lull, calmer heads seemed to prevail — at least in U.S. markets — and that makes sense. China’s economic slowdown has been common knowledge for several quarters, and the December numbers were far from catastrophic. And China’s economy is far less dependent on manufacturing than it was a decade ago. The country’s burgeoning middle class has created a fast-growing consumer sector that is relatively healthy. Even if China’s economic growth is lower than expected in 2016, it’s still expected to continue to grow faster than ours, and the U.S. economy is chugging along fairly well and should remain in an expansion mode. U.S. companies and consumers have spent the past several years getting their balance sheets in order and accumulating cash. Read More

Two of my joys in life are investing and poker. As it turns out, I’m not alone when it comes to pairing these vocations. The Dallas banker Andy Beal is famous for taking on the best professional poker players in the world, chronicled in the book “The Professor, the Banker and the Suicide King: Inside the Richest Poker Game of All Time.” But he didn’t make his billions playing poker. He ended up on The Forbes 400 list because he wisely invested in distressed assets during the financial crisis. #-ad_banner-#By the same token, David Einhorn has won over $5 million… Read More

Two of my joys in life are investing and poker. As it turns out, I’m not alone when it comes to pairing these vocations. The Dallas banker Andy Beal is famous for taking on the best professional poker players in the world, chronicled in the book “The Professor, the Banker and the Suicide King: Inside the Richest Poker Game of All Time.” But he didn’t make his billions playing poker. He ended up on The Forbes 400 list because he wisely invested in distressed assets during the financial crisis. #-ad_banner-#By the same token, David Einhorn has won over $5 million playing poker. But Einhorn amassed more than a billion dollars as a hedge fund manager. He made headlines when he shorted Lehman Brothers stock before the 158-year-old financial services company went bankrupt. There are a number of important lessons that I learned from poker and have successfully applied to investing. But I credit one lesson in particular for the strategy that has allowed me to nearly double my portfolio’s income in only a few years. Increase Your Bets On A Winning Hand People are generally adept at selecting a good investment, one that has the potential to produce solid… Read More

The story I’m about to share with you today is one I’ve shared with my High-Yield Investing premium subscribers before. But I think it bears repeating, because something big and entirely unexpected happened a couple of weeks ago, and few investors noticed. And to put it simply, the implications could be huge for many income investors. #-ad_banner-#But more on that in a moment… The day before Thanksgiving in 1996, Rich Kinder left his post at Enron. He was disappointed that Kenneth Lay had passed him over for the CEO job. Soon after, an old college buddy, Bill Morgan, approached Kinder… Read More

The story I’m about to share with you today is one I’ve shared with my High-Yield Investing premium subscribers before. But I think it bears repeating, because something big and entirely unexpected happened a couple of weeks ago, and few investors noticed. And to put it simply, the implications could be huge for many income investors. #-ad_banner-#But more on that in a moment… The day before Thanksgiving in 1996, Rich Kinder left his post at Enron. He was disappointed that Kenneth Lay had passed him over for the CEO job. Soon after, an old college buddy, Bill Morgan, approached Kinder with a business proposition. Morgan had just bought some assets Enron had no use for: a couple of small pipeline systems and a coal terminal. He needed someone like Kinder to run the business. Kinder agreed, and the partnership was christened Kinder Morgan Inc. in February 1997. Kinder doubled the company’s market capitalization to nearly half a billion dollars by watching costs and shipping more volume through the pipelines. He did all of that in just seven months. Today, Kinder Morgan Energy Partners (NYSE: KMI) is a $35 billion business, operating more than 80,000 miles of pipeline and roughly 180… Read More

Forecasting the price of oil has become the hot topic heading into 2016. There seems to be little consensus on direction, though. Just as many forecasts call for $20 oil as for $50 per barrel.  There have been record inflows into energy ETFs as investors try to time a bottom. In fact, Bloomberg reports “a wide range of investors collectively spent about $24 billion over the past 18 months trying — and failing — to call a bottom in oil.” While other traders franticly try to catch a falling knife, I’ve uncovered an alternative play that is all… Read More

Forecasting the price of oil has become the hot topic heading into 2016. There seems to be little consensus on direction, though. Just as many forecasts call for $20 oil as for $50 per barrel.  There have been record inflows into energy ETFs as investors try to time a bottom. In fact, Bloomberg reports “a wide range of investors collectively spent about $24 billion over the past 18 months trying — and failing — to call a bottom in oil.” While other traders franticly try to catch a falling knife, I’ve uncovered an alternative play that is all but guaranteed to rally if oil rebounds, but should also do well while we wait. Higher Oil Someday…  Despite the difficulty in timing a bottom, several factors point to an eventual rebound in oil prices. #-ad_banner-# More than $68 billion was slashed from capital spending across the energy industry in North America alone this year, with a survey by Barclays showing it could be cut by another 10% to 15% next year. Globally, the bank found capital expenditures were cut by 20% this… Read More

The major U.S. stock market indices limped to the 2015 finish line with weekly losses, leaving all but the Nasdaq indices in negative territory for the year. The Nasdaq 100 added 8.4% in 2015 while the broader Composite index gained 5.7%.  The broader market S&P 500 was down 0.7% for the year and the Dow Jones Industrial Average fell 2.2%. It was the small-cap Russell 2000 that led the way lower, though, losing 5.7% in 2015.   From a sector standpoint, consumer discretionary was the year’s best performer, gaining 8.3%, followed by health care, which added 5.3%. At the other… Read More

The major U.S. stock market indices limped to the 2015 finish line with weekly losses, leaving all but the Nasdaq indices in negative territory for the year. The Nasdaq 100 added 8.4% in 2015 while the broader Composite index gained 5.7%.  The broader market S&P 500 was down 0.7% for the year and the Dow Jones Industrial Average fell 2.2%. It was the small-cap Russell 2000 that led the way lower, though, losing 5.7% in 2015.   From a sector standpoint, consumer discretionary was the year’s best performer, gaining 8.3%, followed by health care, which added 5.3%. At the other end of the spectrum, energy was by far the weakest sector, declining 23.8%, followed by materials and utilities, which lost 10.6% and 8.3%, respectively. Editor’s note: Despite the poor performance of most financial assets, one indicator pegged stocks that delivered gains of 55%, 60% and 88% in 2015. It also uncovered many of the best-performing stocks of 2014. And now it has found the Top 10 Trades for 2016. If you want the names and tickers, follow this link. #-ad_banner-# All things considered, 2015 was a tough year for investors… Read More

Let’s be honest. When you hear about a stock that yields 12% or more, your first thought should be that the company is probably a basket case. If it’s offering a yield that sounds too good to be true, it probably is. And you’d be right most of the time. Usually, yields are this high because a company’s share price is falling — signaling underlying problems in its business. A lower share price leads to a higher dividend yield. That means profitable companies paying yields this high should be rare. #-ad_banner-#My staff and I… Read More

Let’s be honest. When you hear about a stock that yields 12% or more, your first thought should be that the company is probably a basket case. If it’s offering a yield that sounds too good to be true, it probably is. And you’d be right most of the time. Usually, yields are this high because a company’s share price is falling — signaling underlying problems in its business. A lower share price leads to a higher dividend yield. That means profitable companies paying yields this high should be rare. #-ad_banner-#My staff and I recently ran the numbers… When we looked only at the companies that turned a profit over the past year, we found just 119 U.S. common stocks paying yields of more than 12%. But did you know there are actually 204 other stocks that yield 12% or more? The difference is that many investors just don’t know where to find them. That’s because the majority of the world’s highest yields aren’t being paid by U.S. companies. My recent search found 204 additional stocks out there yielding 12% or more… all coming from international-based companies. Read More

For decades now, investors and companies have been trying to position for an emergent China. Foreign direct investment has grown to $289 trillion in 2014 from just $38 trillion in 2000. The Shanghai Composite index surged an annualized 21% a year over the seven years to mid-2007 as investors poured into the trade.  #-ad_banner-#However, the China trade hasn’t paid as well since the end of the Great Recession. Economic growth has slowed to just under 7% and the Shanghai index has returned just 1.6% annually over the six years to 2016. To make matters worse, the Chinese Yuan has depreciated… Read More

For decades now, investors and companies have been trying to position for an emergent China. Foreign direct investment has grown to $289 trillion in 2014 from just $38 trillion in 2000. The Shanghai Composite index surged an annualized 21% a year over the seven years to mid-2007 as investors poured into the trade.  #-ad_banner-#However, the China trade hasn’t paid as well since the end of the Great Recession. Economic growth has slowed to just under 7% and the Shanghai index has returned just 1.6% annually over the six years to 2016. To make matters worse, the Chinese Yuan has depreciated 6.8% against the U.S. dollar since 2014, meaning lower returns when translated to the greenback. The Chinese government has yet to be successful in its move to transition from manufacturing to a consumer-driven economy and weak growth abroad means export growth will remain sluggish.  Against this outlook, there is still one China play that’s working. Best yet, this group of stocks should do well whether that economy picks back up or not. Pollution In China Is At Dangerous Levels Beijing issued its highest smog alert of the year in early December, raising the warning level and reporting PM2.5 levels… Read More

The past year was an eventful one for U.S. stocks, with volatility picking up considerably in August, China’s economic slowdown casting a long shadow and the Fed finally pulling the trigger on a long-telegraphed interest-rate hike. #-ad_banner-#What will 2016 bring? Here are six trends to watch: Interest rates. No one was surprised when the Fed increased the Fed Funds rate by 25 basis points (0.25 percentage points) in mid-December. Fed Chair Janet Yellen carefully telegraphed the increase for months, and better-than-expected jobs reports in the fall made it a near-certainty. What comes next is harder to predict, though an educated… Read More

The past year was an eventful one for U.S. stocks, with volatility picking up considerably in August, China’s economic slowdown casting a long shadow and the Fed finally pulling the trigger on a long-telegraphed interest-rate hike. #-ad_banner-#What will 2016 bring? Here are six trends to watch: Interest rates. No one was surprised when the Fed increased the Fed Funds rate by 25 basis points (0.25 percentage points) in mid-December. Fed Chair Janet Yellen carefully telegraphed the increase for months, and better-than-expected jobs reports in the fall made it a near-certainty. What comes next is harder to predict, though an educated guess isn’t too difficult: slow, gradual upticks in rates are the most likely course. My prediction is that Yellen & Company ease rates higher only once or twice in 2016, several months apart each time. Why? Despite low unemployment, the labor market clearly retains some slack, with historically high rates of non-participation and wages not keeping pace with productivity. And with energy prices still low (more on that later) and tepidly growing China unlikely to fuel an unexpected increase in global demand for commodities, inflation remains well under control. Some analysts are even calling for a recession to begin in… Read More

The world is on high alert for terror after the savage attacks in Paris that left 130 people dead and many others injured. This terrible act reminds us that there are more important things than money. Yet, I fear that terrorism itself is becoming a wild-card factor that all investors must weigh and consider. #-ad_banner-#Before Paris, ISIS claimed responsibility for taking down a Russian passenger jet returning from Egypt. Investigators combing through the wreckage discovered evidence of a bomb. And there has since been another attack within the past few days by al-Qaeda that left dozens dead at a Radisson… Read More

The world is on high alert for terror after the savage attacks in Paris that left 130 people dead and many others injured. This terrible act reminds us that there are more important things than money. Yet, I fear that terrorism itself is becoming a wild-card factor that all investors must weigh and consider. #-ad_banner-#Before Paris, ISIS claimed responsibility for taking down a Russian passenger jet returning from Egypt. Investigators combing through the wreckage discovered evidence of a bomb. And there has since been another attack within the past few days by al-Qaeda that left dozens dead at a Radisson Hotel in Mali. There have been other recent attacks in Nigeria, Denmark, Lebanon and Turkey. I don’t know what will happen in the days and weeks ahead. I would like to think that the worst is over. We all would. But common sense says otherwise. By all accounts this jihadi cancer is spreading, and it’s far more likely that the United States and other western nations will be drawn into further conflict. Normally, I would be talking to you about economic or financial matters today. To be sure, I’d much rather be discussing employment reports or factory orders. But my… Read More

The warning given by any financial advisor is that past performance does not guarantee future success. However, performance can come in cycles where stocks that did the worst in one year rocket to the top of the charts in the next year. #-ad_banner-# In what could be one of those “worst to first” comeback stories, aluminum producer Alcoa (NYSE: AA) is poised for a nice recovery in 2016. After peaking at $17.75 in November 2014, the stock began a year-long slide to a low of $7.81 this November.  As an industrial metals stock, it was caught… Read More

The warning given by any financial advisor is that past performance does not guarantee future success. However, performance can come in cycles where stocks that did the worst in one year rocket to the top of the charts in the next year. #-ad_banner-# In what could be one of those “worst to first” comeback stories, aluminum producer Alcoa (NYSE: AA) is poised for a nice recovery in 2016. After peaking at $17.75 in November 2014, the stock began a year-long slide to a low of $7.81 this November.  As an industrial metals stock, it was caught in a sector-wide bear market. Indeed, most commodities declined significantly over that span as some pundits declared the world to be in a deflationary spiral. But Alcoa has done this before and recovered. In 2011, shares peaked at roughly the same high and slid to roughly the same low, although they stayed down for two years. The result was a giant trading range, which suggests the next move will attempt to follow previous rallies.  Several technical indicators already point to a tradable recovery on the horizon.  In trading ranges, my favorite momentum indicator is stochastics. The monthly version… Read More