Mark Twain understood the mind of an investor. The world-renowned author once proclaimed: “A dollar picked up in the road is more satisfaction to us than the 99 which we had to work for, and the money won in the stock market snuggles into our hearts in the same way.” Twain acknowledged the rush that can accompany earning money without any labor. He understood that the human brain is not wired for clear thinking in regard to money. That’s because the area of the brain that responds to financial reward is the same part… Read More

Mark Twain understood the mind of an investor. The world-renowned author once proclaimed: “A dollar picked up in the road is more satisfaction to us than the 99 which we had to work for, and the money won in the stock market snuggles into our hearts in the same way.” Twain acknowledged the rush that can accompany earning money without any labor. He understood that the human brain is not wired for clear thinking in regard to money. That’s because the area of the brain that responds to financial reward is the same part that lights up from cocaine. This presents a major problem. Investors can become insatiable, searching high and low for the next “big winners.” What they’re really interested in is a get-rich-quick scheme. That’s a terrific way to lose money — and quickly. However, if you are a regular reader of my Game-Changing Stocks newsletter, then you know that I have been making a habit of finding stocks with the most “big winner” potential for a while. In fact, I’ve found more than 23 triple-digit winners since joining StreetAuthority… Read More

Arguably the hottest media stock of the past year, Netflix (Nasdaq: NFLX), has been in serious decline for the past five weeks. And by serious I mean it has shed nearly a quarter of its market capitalization since peaking in early August.  This has bargain hunters chomping at the bit. But a look at the chart tells us at its current “sale” price it is not cheap and could drop another 20% from here in a hurry.  In short, this is a stock for short-term bears that may present a good buying opportunity for long-term bulls… Read More

Arguably the hottest media stock of the past year, Netflix (Nasdaq: NFLX), has been in serious decline for the past five weeks. And by serious I mean it has shed nearly a quarter of its market capitalization since peaking in early August.  This has bargain hunters chomping at the bit. But a look at the chart tells us at its current “sale” price it is not cheap and could drop another 20% from here in a hurry.  In short, this is a stock for short-term bears that may present a good buying opportunity for long-term bulls in a few weeks. Since this column focuses on trading, not long-term investing, let’s take a look at the reasons why Netflix has a fork stuck in it.  The rather obvious technical pattern on the chart is the ubiquitous head-and-shoulders with its central high (head) flanked by two lower highs (shoulders) on each side. The bottom of the pattern is bound by the neckline, which connects the troughs between the peaks. Whether it is drawn flat or with a slight downward slope from left to right is not important. #-ad_banner-# What is important… Read More

“The market has already done the Fed’s dirty work.”   That’s a refrain you’ll hear quite often these days, because so many interest rate-sensitive sectors have already sold off sharply in anticipation of higher interest rates. When rates do finally start rising (perhaps as soon as mid-September considering the August employment report), investors will likely realize that they have over-reacted. After all, the Federal Reserve is expected to act “low and slow,” meaning that interest rates are expected to be boosted at a very slow pace over an extended period. That means that 12-18 months from now, rates… Read More

“The market has already done the Fed’s dirty work.”   That’s a refrain you’ll hear quite often these days, because so many interest rate-sensitive sectors have already sold off sharply in anticipation of higher interest rates. When rates do finally start rising (perhaps as soon as mid-September considering the August employment report), investors will likely realize that they have over-reacted. After all, the Federal Reserve is expected to act “low and slow,” meaning that interest rates are expected to be boosted at a very slow pace over an extended period. That means that 12-18 months from now, rates aren’t likely to be much more than 50 or 75 basis points higher than they are today. And by anybody’s math, a Federal funds rate under 2.0% is still extremely low by historical standards. Interest rate fears have really hurt sentiment in yield-focused investments such as the master limited partnerships (MLPs). A wide range of bargains have now emerged in that group, led by Enterprise Product Partners (NYSE: EPD).   Yet it’s hard to find any group that has been tarnished as badly as the business development companies (BDCs). These firms act as lender and investor to small… Read More

Warren Buffett is one of the greatest investors of all time. His net worth jumped to $65 billion in 2014, ranking him as one of the very richest people in the world, and I’m going to show you how to start investing like Warren Buffett. His average annual return of 20% in the past 55 years doesn’t just put him ahead of all peers… it means he doesn’t even have any peers. #-ad_banner-#Buffett loves a great deal. This was on full display in the financial crisis of 2008, when he lent Goldman Sachs $5… Read More

Warren Buffett is one of the greatest investors of all time. His net worth jumped to $65 billion in 2014, ranking him as one of the very richest people in the world, and I’m going to show you how to start investing like Warren Buffett. His average annual return of 20% in the past 55 years doesn’t just put him ahead of all peers… it means he doesn’t even have any peers. #-ad_banner-#Buffett loves a great deal. This was on full display in the financial crisis of 2008, when he lent Goldman Sachs $5 billion at the height of the panic. He landed amazing terms on the deal as the financial sector scrambled for cash, securing options to purchase 43.5 million shares of Goldman at or below $125 before October 2013. All told, Buffett netted a gain of of $2 billion in addition to lucrative dividend payments. Not long after, in 2009, Buffett and his holding company, Berkshire Hathaway, went “all in on America’s future” with a $34 billion investment in rail shipper Burlington Northern Santa Fe. Once again Buffett bought at the exact right time after prices had swung lower… Read More

You might think we are crazy for going long a stock that has posted revenue declines in 15 of the past 16 quarters — a stock that has also underperformed the S&P 500 by 24 percentage points over the past 52 weeks.  But we are. And we have good reason.  Both fundamentally and technically, Hewlett-Packard (NYSE: HPQ) appears to be on the verge of an important turnaround that should send shares significantly higher. For starters, HPQ is selling at a bargain-basement valuation compared to other tech stocks.  Its current P/E is 11.1 while the S&P 500 Information Technology Index trades… Read More

You might think we are crazy for going long a stock that has posted revenue declines in 15 of the past 16 quarters — a stock that has also underperformed the S&P 500 by 24 percentage points over the past 52 weeks.  But we are. And we have good reason.  Both fundamentally and technically, Hewlett-Packard (NYSE: HPQ) appears to be on the verge of an important turnaround that should send shares significantly higher. For starters, HPQ is selling at a bargain-basement valuation compared to other tech stocks.  Its current P/E is 11.1 while the S&P 500 Information Technology Index trades at 18.8 times earnings. And HPQ’s forward P/E of 7.3 is less than half that of its sector index. #-ad_banner-# If you argue that many fast-growing tech stocks like Apple (Nasdaq: AAPL) and Google (Nasdaq: GOOGL) skew the broader valuation, it should be pointed out that in the top 10 index weightings are several mature stalwarts like IBM (NYSE: IBM), Cisco Systems (Nasdaq: CSCO) and Intel (Nasdaq: INTC).  Plus, the valuation doesn’t just come through when looking at earnings. HPQ is currently trading for a price-to-sales (P/S) ratio of 0.48 versus a ratio of 3.1 for the Information Technology Index. Read More

If you’ve been watching late night television, you’ve surely come across many infomercials that tout the promise of real estate riches. Six-figure incomes are promised — on just one single-family home — with  the use of massive amounts of leverage. To hear the pitchmen, you can simply have the renters pay off the mortgage. It’s a persuasive argument, but one that falls apart in action. #-ad_banner-#My own experience buying single-family (SFR) houses started in 2002, and by 2006 I owned as many as six homes. I still own a few rentals after selling most just before the housing bubble burst,… Read More

If you’ve been watching late night television, you’ve surely come across many infomercials that tout the promise of real estate riches. Six-figure incomes are promised — on just one single-family home — with  the use of massive amounts of leverage. To hear the pitchmen, you can simply have the renters pay off the mortgage. It’s a persuasive argument, but one that falls apart in action. #-ad_banner-#My own experience buying single-family (SFR) houses started in 2002, and by 2006 I owned as many as six homes. I still own a few rentals after selling most just before the housing bubble burst, but in my experience, I found that real estate is far from passive income. Calls come in at all hours for repairs and the bookkeeping can be a part-time job itself. I now prefer a simpler way to invest in real estate:  real estate investment trusts (REITs). Until just a few years ago, REITs exclusively focused on commercial property. In 2013, new REITs were launched that focused on single-family properties. I’ve found one REIT in particular could be a perfect substitute for managing your own portfolio of houses. A Great Time To Get Your Start In This Popular Investment… Read More

There is an old trading adage I’ve always liked: “The market will scare investors out or wear investors out.” Prior to Aug. 20, we were in a wear-you-out stage. The Dow was trading in the narrowest range in more than 100 years of just 7.7% from top to bottom. #-ad_banner-# To make things worse, the S&P 500 had crossed its 50-day moving average a total of 35 times, exceeding the number of crosses ever seen in a full calendar year in the first eight months alone. And the vacillating, whipsaw nature of the sideways trend aggravated investors. Just prior to… Read More

There is an old trading adage I’ve always liked: “The market will scare investors out or wear investors out.” Prior to Aug. 20, we were in a wear-you-out stage. The Dow was trading in the narrowest range in more than 100 years of just 7.7% from top to bottom. #-ad_banner-# To make things worse, the S&P 500 had crossed its 50-day moving average a total of 35 times, exceeding the number of crosses ever seen in a full calendar year in the first eight months alone. And the vacillating, whipsaw nature of the sideways trend aggravated investors. Just prior to the violent sell-off, I wrote about how the massive pickup in new lows indicated a stealth correction occurring in stocks. At the time, about 60% of S&P 500 stocks were down at least 10% for the year — i.e., in official correction territory — yet the index was basically flat.  Then, on Aug. 20, the market entered a scare-you-out stage. Traders embarked on a selling spree sparked by global growth fears that brought the index into full-blown correction territory in just four days. The chart below shows the gargantuan spike in stocks making new 52-week lows as traders… Read More

All major U.S. indices finished roughly 2% to 3% lower last week as stocks gave back some of the gains from the prior week’s rebound following the deepest decline since October 2014. On the heels of a quick 11% collapse between Aug. 18 and Aug. 25, the S&P 500 now appears to be in the process of digesting those losses as it drifts into what may turn out to be the accumulation phase for a fourth-quarter advance. All sectors of the S&P 500 closed in negative territory last week, led by utilities and health care. Utilities, which had… Read More

All major U.S. indices finished roughly 2% to 3% lower last week as stocks gave back some of the gains from the prior week’s rebound following the deepest decline since October 2014. On the heels of a quick 11% collapse between Aug. 18 and Aug. 25, the S&P 500 now appears to be in the process of digesting those losses as it drifts into what may turn out to be the accumulation phase for a fourth-quarter advance. All sectors of the S&P 500 closed in negative territory last week, led by utilities and health care. Utilities, which had been among the strongest sectors over the past three months, have really taken it on the chin in the past two weeks. This was due in large part to the late-August rebound in long-term U.S. interest rates. Investors shifted assets out of utilities and back into U.S. government bonds to take advantage of the higher yield while eliminating credit risk. #-ad_banner-# Later in this report, I’ll discuss how the typically prescient bond market is likely to become a leading indicator of stock market direction between now and year end. Apprehensive Investors Signal Emerging Bottom In the previous… Read More

When I was a kid, I had a friend named Corey. His folks were loaded: His dad was a successful gynecologist, and his mom “came from money,” as polite people used to say. The family cars were all Mercedes-Benzes. I was fortunate to have a relatively affluent upbringing, so luxury cars were not unknown to me. But one thing set Corey’s family’s cars apart: They had cell phones installed in them. #-ad_banner-#During the 1980s in Wichita, Kansas, cellular telephones were an exorbitantly expensive device limited mainly to very serious oilmen and very important physicians. Read More

When I was a kid, I had a friend named Corey. His folks were loaded: His dad was a successful gynecologist, and his mom “came from money,” as polite people used to say. The family cars were all Mercedes-Benzes. I was fortunate to have a relatively affluent upbringing, so luxury cars were not unknown to me. But one thing set Corey’s family’s cars apart: They had cell phones installed in them. #-ad_banner-#During the 1980s in Wichita, Kansas, cellular telephones were an exorbitantly expensive device limited mainly to very serious oilmen and very important physicians. But when I could finally afford it a decade later during my sophomore year of college, I became an early adopter of the technology and bought a Nokia handheld model. It was expensive-ish, I suppose, but the convenience made sense to me, and it wasn’t like I had a mortgage to worry about at the time. Well, you know what happened. It wasn’t much longer before the cell phone trend caught on and then took off. The technology grew better and better, and so did the service, which simultaneously became cheaper and cheaper. Now,… Read More