Earlier this month, I showed you just how oversold pharmaceutical makers and developers have become after presidential hopeful Hillary Clinton’s tweet about price gouging.  I recommended Gilead as a great rebound play on this theme. Since then, it’s recovered as much as 8.3% of its share price. Today, we have a different development. Pfizer (NYSE: PFE) announced that it approached Allergan (NYSE: AGN), the maker of Botox, about a deal to combine forces.  Allergan confirmed this news and told reporters that it is indeed a friendly negotiation and that it would create the largest pharmaceutical company in the world —… Read More

Earlier this month, I showed you just how oversold pharmaceutical makers and developers have become after presidential hopeful Hillary Clinton’s tweet about price gouging.  I recommended Gilead as a great rebound play on this theme. Since then, it’s recovered as much as 8.3% of its share price. Today, we have a different development. Pfizer (NYSE: PFE) announced that it approached Allergan (NYSE: AGN), the maker of Botox, about a deal to combine forces.  Allergan confirmed this news and told reporters that it is indeed a friendly negotiation and that it would create the largest pharmaceutical company in the world — topping even Johnson & Johnson (NYSE: JNJ).The combined company would be worth around $330 billion. That would make it the sixth largest company in the world, ahead of General Electric (NYSE: GE), J&J and Procter & Gamble (NYSE: PG). And it’s not because Pfizer thinks more people are going to heading into the Botox fad.  Allergan is located in Ireland. In other words, U.S. politicians wouldn’t be able to touch the new company if it keeps its Dublin address. Although the merger was first proposed by Pfizer it will actually only benefit Allergan shareholders.  You see, Allergan has serious baggage. Read More

​As someone who was taught as a kid to hate waste, I love efficiency. That means doing little things that enable me to run my household for less — and deposit the savings into my portfolio. I wouldn’t necessarily call it penny pinching, just a conscious effort to maximize the return from every dollar spent. As an investor, I look for managers with the same mindset because even minor improvements with multi-billion dollar organizations can mean a big difference on the bottom line. #-ad_banner-#​Take UPS (NYSE: UPS), for example. In an effort to increase efficiency, the… Read More

​As someone who was taught as a kid to hate waste, I love efficiency. That means doing little things that enable me to run my household for less — and deposit the savings into my portfolio. I wouldn’t necessarily call it penny pinching, just a conscious effort to maximize the return from every dollar spent. As an investor, I look for managers with the same mindset because even minor improvements with multi-billion dollar organizations can mean a big difference on the bottom line. #-ad_banner-#​Take UPS (NYSE: UPS), for example. In an effort to increase efficiency, the company has used technology to optimize delivery routes, calculating that a reduction of one mile per driver per day can save $50 million a year. You can’t get at the heart of this important concept by looking at familiar measures like operating margins and earnings. Those earnings must be placed in the proper context. Suppose there are two popular restaurant chains vying for a spot in your portfolio. One posted $515 million in net income last year, while the other earned $710 million. We can’t draw many conclusions from this information alone, except that the second business… Read More

One of my favorite setups in the stock market takes advantage of the tendency for the sector tide to float most boats. Numerous studies have shown that a substantial percentage of a stock’s performance is linked to the performance of its sector or industry group.  In other words, if the group is doing well, then the odds that an individual stock within it will do well go up. Currently, technology, and semiconductors in particular, are doing very well.  Tech has led the market’s comeback in October, gaining 11.5% for the month compared with 8.9% for the S&P 500. Read More

One of my favorite setups in the stock market takes advantage of the tendency for the sector tide to float most boats. Numerous studies have shown that a substantial percentage of a stock’s performance is linked to the performance of its sector or industry group.  In other words, if the group is doing well, then the odds that an individual stock within it will do well go up. Currently, technology, and semiconductors in particular, are doing very well.  Tech has led the market’s comeback in October, gaining 11.5% for the month compared with 8.9% for the S&P 500. Semiconductor’s have done even better, up 12.4%. Talk about your rising tide. #-ad_banner-# The problem is that given the run in the past month, many stocks may have already delivered the majority of their short-term gains. My strategy is to find stocks in the group just starting to make their move, leaving them with plenty of upside potential as they play catch up.  Applied Materials (Nasdaq: AMAT) is one such stock. While the semiconductor equipment maker has been steadily moving higher since late September, it is much closer to its 52-week low than high.  Of course, we know the old… Read More

With Halloween coming up this weekend, what better time to reflect on the stock market’s recent ups and downs? After all, the market headlines have been a little scary lately. If you don’t like big changes, you may feel a little spooked this fall. Check out this chart of the VIX Index, the commonly accepted measure of S&P 500 volatility. After a long period of relative tranquility, volatility jumped in August and took a while to calm down. There are many reasons for the volatility. Leading the list are signs of weakness in the U.S. economy, concerns about… Read More

With Halloween coming up this weekend, what better time to reflect on the stock market’s recent ups and downs? After all, the market headlines have been a little scary lately. If you don’t like big changes, you may feel a little spooked this fall. Check out this chart of the VIX Index, the commonly accepted measure of S&P 500 volatility. After a long period of relative tranquility, volatility jumped in August and took a while to calm down. There are many reasons for the volatility. Leading the list are signs of weakness in the U.S. economy, concerns about slowing growth rates for China’s economy, uncertainty about the Fed’s intentions regarding short-term interest rates and worse-than-expected earnings from some prominent companies. Despite these negatives, stocks have overcome their August-September swoon with an impressive rebound in October, as investors snatched up high-quality stocks. I’ve advised keeping cash out of the S&P 500 during periods of high volatility. In addition, the overall market’s valuation remains a little high relative to earnings, and all of the concerns listed above remain valid. Don’t Let Fear Blind You To The Real Opportunities In The Stock Market Now, I don’t want you to worry. Read More

Several years ago, an investment-manager friend told me about the thirty-second rule. It’s a powerful (yet remarkably simple) way to think about investment analysis — one that has stuck with me ever since that initial conversation. “When you look at any investment,” he said, “you should know if it works within thirty seconds or less.” At first I was skeptical. This sounded more like getting a psychic reading than a sound strategy for investing. But — as he went on to explain — there’s actually a lot to be said for first impressions, whether it’s for people or stocks. Here’s… Read More

Several years ago, an investment-manager friend told me about the thirty-second rule. It’s a powerful (yet remarkably simple) way to think about investment analysis — one that has stuck with me ever since that initial conversation. “When you look at any investment,” he said, “you should know if it works within thirty seconds or less.” At first I was skeptical. This sounded more like getting a psychic reading than a sound strategy for investing. But — as he went on to explain — there’s actually a lot to be said for first impressions, whether it’s for people or stocks. Here’s how his rule works. Basically, you divide potential investments into three groups. The first group consists of ideas that clearly don’t work. These have an obvious flaw. My friend estimated this amounts to about 5% of all the investment pitches out there. These are the ones we instantly reject. The next group of potential investments is the “in-betweens.” My friend theorized that most investments out there fall into this category. As the name suggests, these ideas are all plausible. To varying degrees, they have good points and weaker points. But none of them is so strong that it jumps out… Read More

The yield on the 10-year Treasury note jumped to its highest close in two weeks Friday when a surprise rate cut by China’s central bank boosted markets and eased demand for safe haven assets. The People’s Bank of China cut its one-year lending and deposit rates by 0.25 percentage points to bolster economic growth. Fears over a rate hike by the Federal Reserve have subsided lately. Little is expected from today’s Federal Open Market Committee (FOMC) meeting announcement, and investors put the odds of a rate hike in December at 34%. #-ad_banner-# Yet, even without an… Read More

The yield on the 10-year Treasury note jumped to its highest close in two weeks Friday when a surprise rate cut by China’s central bank boosted markets and eased demand for safe haven assets. The People’s Bank of China cut its one-year lending and deposit rates by 0.25 percentage points to bolster economic growth. Fears over a rate hike by the Federal Reserve have subsided lately. Little is expected from today’s Federal Open Market Committee (FOMC) meeting announcement, and investors put the odds of a rate hike in December at 34%. #-ad_banner-# Yet, even without an actual increase in the federal funds rate, several other factors are likely to drive interest rates higher through the end of the year. That’s bad news for bond investors because bond prices fall as interest rates increase. With today’s trade, you could turn their pain into a 79% gain in less than three months. Bonds Could Take A Hit Even If The Fed Does Nothing As the Federal Reserve increases the fed funds rate — the rate banks charge each other on loaned reserves — the rate on all interest products increases. However, that’s not the only thing that could… Read More

In a world with zero-bound interest rates, excessive quantitative easing (QE) and free trade negotiations everywhere you look, it’s tough to imagine we are still on the brink of recession.  But if you ask any industrial company, especially any that sells its products globally, they might tell you we have already crossed that line. #-ad_banner-#Energy prices have put nearly 10% of the entire U.S. economy into a tailspin. For countries like Canada and Australia, which rely on exporting commodities, the situation is even more dire.  But what has really held back many companies here in the United States from growing… Read More

In a world with zero-bound interest rates, excessive quantitative easing (QE) and free trade negotiations everywhere you look, it’s tough to imagine we are still on the brink of recession.  But if you ask any industrial company, especially any that sells its products globally, they might tell you we have already crossed that line. #-ad_banner-#Energy prices have put nearly 10% of the entire U.S. economy into a tailspin. For countries like Canada and Australia, which rely on exporting commodities, the situation is even more dire.  But what has really held back many companies here in the United States from growing in such a lush monetary environment is the surging dollar. As you can see, the Dollar Index — which measures the strength of the U.S. dollar against a basket of other widely held currencies — the greenback is in high demand. The reason is simple.  Despite interest rates remaining at zero — which is likely to continue for some time — other countries have been participating in QE like the U.S. did over the last several years. Meanwhile, the Fed is still expected to raise rates as early as this year. That threat is enough for investors to… Read More

Some time ago, I recommended a number of leading oil companies as mid-term investments to my premium Game-Changing Stocks readers. Usually, I stick to recommending little-known “game-changing” companies working on groundbreaking new products or technology that are set to change the way we live our lives. If you allocate, say, 20% of your portfolio to these kinds of stocks (with the other 80% in blue-chip stocks and index funds), and if you’re able to reap the triple-digit potential these stocks hold, then it can dramatically alter your portfolio’s yearly performance. I call this strategy my “80/20” solution. But lately I’ve… Read More

Some time ago, I recommended a number of leading oil companies as mid-term investments to my premium Game-Changing Stocks readers. Usually, I stick to recommending little-known “game-changing” companies working on groundbreaking new products or technology that are set to change the way we live our lives. If you allocate, say, 20% of your portfolio to these kinds of stocks (with the other 80% in blue-chip stocks and index funds), and if you’re able to reap the triple-digit potential these stocks hold, then it can dramatically alter your portfolio’s yearly performance. I call this strategy my “80/20” solution. But lately I’ve been warning my readers that the market is on dicey footing, so I’ve made it a point to offer up picks suitable for the other 80% of your portfolio. My reasoning behind my energy-related recommendations are simple: I don’t know when the price of oil is going to go up, but it will. Short-term conventional wisdom always yields to the statistical reality of the law of large numbers. Sooner or later, all outcomes regress to the mean. Right now, oil is hovering in the $50 range. But it wasn’t too long ago that crude was at $140, and my Spidey… Read More

It could be the most important meeting you haven’t heard about: in China this week, the Central Committee of the Communist Party is meeting to come up with a new Five-Year Plan for the world’s most populous nation — the 13th such blueprint since Chairman Mao started the practice in 1953. Much has changed since the 1950s. Thanks to its strategic shift toward a market-based economy over the past three decades, China’s GDP has grown more than 25-fold since 1990, and more than 10-fold in the past decade alone. China is now the world’s second-largest economy to the United States… Read More

It could be the most important meeting you haven’t heard about: in China this week, the Central Committee of the Communist Party is meeting to come up with a new Five-Year Plan for the world’s most populous nation — the 13th such blueprint since Chairman Mao started the practice in 1953. Much has changed since the 1950s. Thanks to its strategic shift toward a market-based economy over the past three decades, China’s GDP has grown more than 25-fold since 1990, and more than 10-fold in the past decade alone. China is now the world’s second-largest economy to the United States — and its future is increasingly important to ours. China’s economy has helped drive sales for thousands of publicly traded U.S. stocks, from exporters of specialized equipment such as General Electric to consumer-goods and restaurant companies like Coca-Cola, Procter & Gamble and Yum! Brands. Consider that China is a bigger market for Apple than Europe is; it’s no longer an emerging market — it’s the market that counts the most outside of our borders. And that’s why recent signs of pronounced slowdown in China’s rate of growth are so concerning. We’re not talking about a recession, or anything close to… Read More

What do you do when you find a stock that absolutely dominates its industry… pays steadily rising dividends year after year… and trades at a 43% discount to the S&P 500? You buy it and hold it forever. I’m not the only one who thinks so either. Many of America’s wealthiest and most well-connected investors will back me up on that. They would know… they’ve been stuffing billions of dollars into stocks like this for more than a decade now. Let me give you an example. According to Berkshire Hathaway’s most recent annual report, Warren Buffett’s company now owns more… Read More

What do you do when you find a stock that absolutely dominates its industry… pays steadily rising dividends year after year… and trades at a 43% discount to the S&P 500? You buy it and hold it forever. I’m not the only one who thinks so either. Many of America’s wealthiest and most well-connected investors will back me up on that. They would know… they’ve been stuffing billions of dollars into stocks like this for more than a decade now. Let me give you an example. According to Berkshire Hathaway’s most recent annual report, Warren Buffett’s company now owns more than 483 million shares of banking giant Wells Fargo (NYSE: WFC). The total stake is worth upwards of $10 billion. That’s a long way from his initial $290 million investment in the company back in 1990. And he’s not the only well-connected investor who loves Wells Fargo either. In fact, you may not be aware of it, but average American investors are actually able to see what stocks are owned by their Congressional representatives. Why is this important? Well, a recent study found that members of the House of Representatives beat the average stock market investor by 6.8% per year. Read More