Income investors often use government bond yields as their benchmark. Securities issued by a stable government offer nearly guaranteed income since a government is unlikely to default on its debt. The problem is that government bonds offer so little income right now. U.S. 10-year Treasury notes yield about 2.2%, while Canadian investors are earning just 1.5% on 10-year notes. In Europe, the situation is even worse. Swiss bonds are providing negative yields while bonds issued by Germany, France and the Netherlands are yielding less than 1%. Rates this low will not protect income investors against inflation. The average… Read More

Income investors often use government bond yields as their benchmark. Securities issued by a stable government offer nearly guaranteed income since a government is unlikely to default on its debt. The problem is that government bonds offer so little income right now. U.S. 10-year Treasury notes yield about 2.2%, while Canadian investors are earning just 1.5% on 10-year notes. In Europe, the situation is even worse. Swiss bonds are providing negative yields while bonds issued by Germany, France and the Netherlands are yielding less than 1%. Rates this low will not protect income investors against inflation. The average rate of inflation over the past 100 years, according to InflationData.com, has been 3.22%. When inflation is greater than the interest rate, consumers lose buying power. #-ad_banner-# While the Federal Reserve is likely to raise interest rates this week, I don’t believe it will help income investors much. In the past, the Fed has raised rates slowly. It could take years for rates to return to levels that are comfortably above the rate of inflation. In our current low-rate environment, income investors are looking beyond Treasuries. But high-quality corporate bonds aren’t much better. The iShares iBoxx $ Investment Grade Corporate… Read More

Editor’s note: On Friday, Dec. 18, trading prodigy Jared Levy is going on camera to reveal his most lucrative secret. It’s a little-known Wall Street “insider” trade that he’s used to make millions. But here’s the best part: At the end of the event, you’ll have the chance to stake your claim in the up to $1 million we’re giving out. Click here to register and immediately get a sneak peek of how the strategy works.  The choppiness that has characterized the U.S. stock market since November continued last week, but this time with… Read More

Editor’s note: On Friday, Dec. 18, trading prodigy Jared Levy is going on camera to reveal his most lucrative secret. It’s a little-known Wall Street “insider” trade that he’s used to make millions. But here’s the best part: At the end of the event, you’ll have the chance to stake your claim in the up to $1 million we’re giving out. Click here to register and immediately get a sneak peek of how the strategy works.  The choppiness that has characterized the U.S. stock market since November continued last week, but this time with what appears to be some near-term directional implications. All major indices closed well in the red for the week, led by the small-cap Russell 2000, which lost 5.1%, bringing its year-to-date loss to 6.7%. Just two weeks ago, I pointed out that the index was on the verge of a bullish breakout that could set it up for a retest of the June highs. #-ad_banner-# Since then, however, the Russell 2000 has failed miserably, and the weakness in small-cap stocks is now spreading to the other market-leading sector, technology. This suggests that if Santa… Read More

Longtime readers know that I make it my business to identify “the next big thing.” This can come in the form of a product, service, technology or a company that materially disrupts the baseline assumptions for doing business in a particular industry.  In my premium newsletter, Game-Changing Stocks, I usually focus on a big idea and give readers my take on stocks that could deliver triple-digit gains for investors. I also recommend allocating about 20% of your portfolio to these kinds of picks in order to really juice your portfolio while compounding the other 80% of your money in “autopilot”… Read More

Longtime readers know that I make it my business to identify “the next big thing.” This can come in the form of a product, service, technology or a company that materially disrupts the baseline assumptions for doing business in a particular industry.  In my premium newsletter, Game-Changing Stocks, I usually focus on a big idea and give readers my take on stocks that could deliver triple-digit gains for investors. I also recommend allocating about 20% of your portfolio to these kinds of picks in order to really juice your portfolio while compounding the other 80% of your money in “autopilot” mode through safe, stable index funds or blue-chip stocks. But lately I’ve been making the case that the market is too overvalued and volatile for anything but the most tactical of new investment dollars. Until things return to normal, it’s the prudent thing to do right now.  So recently, I had a reader ask me this: Andy, if I’m sidelining new S&P 500 allocations, is there anything I should invest in in the meantime? If the S&P 500 is a no-go for a while, do you have any suggestions that meet YOUR criteria for a good 80% “Autopilot” stock? It… Read More

As interest rates hit historic lows, many investors piled into high-yield energy stocks for yield believing that the U.S. energy revolution would keep dividend payments increasing.  The crash in oil prices has put cash flow in danger and high debt loads from the heady acquisition days is weighing on balance sheets. Share prices have tumbled, sending yields on some energy plays to 10% and higher.  But dividends are being cut to protect cash flow and investors are being trapped into stocks with huge losses and without the yield they were expecting. Is your favorite energy stock about to make the… Read More

As interest rates hit historic lows, many investors piled into high-yield energy stocks for yield believing that the U.S. energy revolution would keep dividend payments increasing.  The crash in oil prices has put cash flow in danger and high debt loads from the heady acquisition days is weighing on balance sheets. Share prices have tumbled, sending yields on some energy plays to 10% and higher.  But dividends are being cut to protect cash flow and investors are being trapped into stocks with huge losses and without the yield they were expecting. Is your favorite energy stock about to make the announcement? Learn the warning signs and check out two names that may be in trouble. Energy Companies Are Bleeding Cash As if last year’s selloff in oil was not enough, the price of West-Texas Intermediate (WTI) has fallen 20% since the end of the third quarter and broke $36 a barrel recently. For the fourth quarter, energy companies in the S&P 500 are expected to post a 34% decline in year-over-year sales and a staggering 65% drop in earnings. Many in the space have already begun protecting cash by cutting dividend payments or reducing capital expenditures. E&P giant Chesapeake… Read More

The U.S. stock market has demonstrated rising volatility of late, as jittery investors are focusing less on economic or stock-specific fundamentals and more on external factors: terrorism, the climate-change talks, Donald Trump’s latest remarks. #-ad_banner-#But look past the short-term noise and you’ll see the market in a holding pattern over the past two months. The S&P 500’s high and low since October 12 are about 5% apart. The reason for this muted range, I believe, is that investors have been waiting for the Federal Reserve’s first increase in short-term interest rates in seven years. If the rate hike occurs next… Read More

The U.S. stock market has demonstrated rising volatility of late, as jittery investors are focusing less on economic or stock-specific fundamentals and more on external factors: terrorism, the climate-change talks, Donald Trump’s latest remarks. #-ad_banner-#But look past the short-term noise and you’ll see the market in a holding pattern over the past two months. The S&P 500’s high and low since October 12 are about 5% apart. The reason for this muted range, I believe, is that investors have been waiting for the Federal Reserve’s first increase in short-term interest rates in seven years. If the rate hike occurs next week, the cloud will lift and investors will start to trade a bit more freely, perhaps after taking a holiday break. The timing of the Fed’s hike couldn’t be better for undervalued stocks. Coming at the end of the year, when professional and individual investors alike dump some of their losing stocks to harvest capital losses for tax purposes, the cloud-lifting environment I anticipate could raise interest in some down-and-out stocks that don’t deserve their recent rough treatment. Both of the following stocks have suffered this year but they boast top shares in growing markets and are excellent candidates for… Read More

Today I want to talk about an investing topic that may seem a little dry. But make no mistake: It’s one of the most important determinants of long-term investing success. They say it’s not what you make. It’s what you keep. And understanding the tax implications of different types of investment accounts can help income investors keep more. I get a lot of questions from my Daily Paycheck subscribers about which holdings in my premium newsletter are appropriate for the many different types of brokerage accounts. I’d like to briefly review the different types of accounts… Read More

Today I want to talk about an investing topic that may seem a little dry. But make no mistake: It’s one of the most important determinants of long-term investing success. They say it’s not what you make. It’s what you keep. And understanding the tax implications of different types of investment accounts can help income investors keep more. I get a lot of questions from my Daily Paycheck subscribers about which holdings in my premium newsletter are appropriate for the many different types of brokerage accounts. I’d like to briefly review the different types of accounts and which types of securities are most appropriate for them. Now before I go any further, I know this might seem like an odd time to think about investment-related taxes. But I find this is the best time of year to review your investment accounts. For one thing, it gives you time to minimize your 2015 tax burden. If you had a capital gain or loss in a taxable account during the year, you may want to find an offsetting trade to make before the end of the year. Also, if you have any questions about individual securities and taxation,… Read More

As companies release their profit outlooks for 2016, some investors are getting worried about the six-year bull market. One of the largest companies based in my hometown just released its outlook and it sent shares skidding down toward 52-week lows.  But we’ve heard this story before. Management lowers expectations so the market doesn’t get too far ahead of itself only to consistently beat when results are reported. In fact, this company has beaten expectations in 11 of the past 12 quarters. What more, I’m expecting one key trend to turn very soon, leading to big upside and a… Read More

As companies release their profit outlooks for 2016, some investors are getting worried about the six-year bull market. One of the largest companies based in my hometown just released its outlook and it sent shares skidding down toward 52-week lows.  But we’ve heard this story before. Management lowers expectations so the market doesn’t get too far ahead of itself only to consistently beat when results are reported. In fact, this company has beaten expectations in 11 of the past 12 quarters. What more, I’m expecting one key trend to turn very soon, leading to big upside and a much stronger 2016 than anyone expects, which is why I’m getting positioned now. Des Moines, Iowa-based Principal Financial Group (NYSE: PFG) provides 401(k) employer plans, annuity and insurance products to 20 million global customers, many of which are small and medium-sized businesses. The company has built an attractive position in the market by targeting firms that don’t generally show up on the radar of larger insurance companies. #-ad_banner-# While most insurance companies are dependent on investment income, Principal has focused on growing its fee-based revenue through asset management and retirement services. Since investment income and other rate-sensitive products… Read More

Analysts have been trying to predict when the Federal Open Market Committee (FOMC) will raise interest rates for years now, but no real steps have been taken… yet. The next chance for the Fed to decide to raise rates is coming up this month, and many believe it will actually happen this time.   So how do you react? Do you play it safe and settle for whatever short-term yield you can get, or roll the dice and bet on longer-term securities with higher payouts? The more cautious approach will earn you next to nothing in this meager environment. The… Read More

Analysts have been trying to predict when the Federal Open Market Committee (FOMC) will raise interest rates for years now, but no real steps have been taken… yet. The next chance for the Fed to decide to raise rates is coming up this month, and many believe it will actually happen this time.   So how do you react? Do you play it safe and settle for whatever short-term yield you can get, or roll the dice and bet on longer-term securities with higher payouts? The more cautious approach will earn you next to nothing in this meager environment. The average 12-month bank CD is currently paying a paltry 0.27%. A one-year Treasury will only get you double that, about 0.50% — that’s just $500 in annual income on a $100,000 investment. Good luck living off that. On the bright side, at least your principal will be secure if and when rates finally do start to climb. On the other hand, you can find corporate bonds paying almost ten times as much. The average 20-year A-rated corporate bond is currently yielding 4.4%. That’s $4,400 in annual income instead of $500. Now we’re talking. Unfortunately, these bonds won’t mature for another… Read More

Let me start off today’s issue with a warning…  I’m not trying to sound alarmist. It does absolutely zero good if you walk away from today’s essay with a “the sky is falling” mentality. I certainly don’t think that, and neither should you.  That being said, I’ve been spending a lot of time around the office thinking about a topic that has dominated headlines recently — one that StreetAuthority’s Andy Obermueller has been spot-on with his analysis since Day 1.  #-ad_banner-#I’m talking about pandemics.  Now, again, I want to be perfectly clear that we’re not saying some sort of global… Read More

Let me start off today’s issue with a warning…  I’m not trying to sound alarmist. It does absolutely zero good if you walk away from today’s essay with a “the sky is falling” mentality. I certainly don’t think that, and neither should you.  That being said, I’ve been spending a lot of time around the office thinking about a topic that has dominated headlines recently — one that StreetAuthority’s Andy Obermueller has been spot-on with his analysis since Day 1.  #-ad_banner-#I’m talking about pandemics.  Now, again, I want to be perfectly clear that we’re not saying some sort of global pandemic is imminent. But if you’ve paid any attention to the news regarding the Ebola outbreaks in Africa — and its move to the United States — you know that the next potential outbreak of some kind is always around the corner.  Since first being discovered in 1976, the most recent outbreak of Ebola has been the most deadly. At last count the World Health Organization concluded it has infected 24,797 people in West Africa and killed an astonishing 8,764. This deadly strain of Ebola has a 60 percent fatality rate. To put that in perspective, the 1918 flu pandemic… Read More

The U.N.-sponsored COP-21 conference taking place in Paris this month is expected to result in a binding international agreement to reduce emissions of greenhouse gases, especially carbon dioxide. All of the largest economies have already made commitments, and political momentum for an agreement has never been higher — especially given the mounting scientific evidence that the world is reaching a point of irreversible consequences if nothing changes. #-ad_banner-#While details remain under discussion, there’s little doubt about the areas that will be impacted. The biggest carbon emitters are power plants, especially coal plants; cars; and factories, especially chemical plants. Governments are… Read More

The U.N.-sponsored COP-21 conference taking place in Paris this month is expected to result in a binding international agreement to reduce emissions of greenhouse gases, especially carbon dioxide. All of the largest economies have already made commitments, and political momentum for an agreement has never been higher — especially given the mounting scientific evidence that the world is reaching a point of irreversible consequences if nothing changes. #-ad_banner-#While details remain under discussion, there’s little doubt about the areas that will be impacted. The biggest carbon emitters are power plants, especially coal plants; cars; and factories, especially chemical plants. Governments are expected to accelerate the trend toward using cleaner fuels for these purposes — and over the long run, to shift considerably away from fossil fuels toward renewable fuel sources. I wrote about the industries I expect to suffer from any agreements made at the COP-21 here. In short, the industries that will be most hurt will be coal; oil and natural gas; paper and packaging; and chemicals. As for the industries that should get a boost(renewable energy (solar and wind); power storage; equipment makers; and infrastructure), I wrote in length about those industries here. Today, I’m presenting three specific stocks… Read More