Look solely at the major indices, nothing seems amiss. The S&P 500, Nasdaq Composite and Wilshire 5000 Total Market Index are off only 2% to 3% from their 52-week highs. But despite the relative calm on the surface, hundreds of stocks are quietly tanking. A classic technical indicator… Read More

One of the proven ways to become a great investor is to study great investors. Every time an investing legend makes a successful trade, a clue is left behind. For instance, every buy and sell decision Warren Buffett makes tells us more about his process, and those insights can help us create our own success. #-ad_banner-#Today, I’m going to focus on an important lesson from a lesser-known, but wildly successful investor. While I’m sure you’re familiar with Buffett, Peter Lynch and other well-known investors, you might not be familiar with Lynn… Read More

One of the proven ways to become a great investor is to study great investors. Every time an investing legend makes a successful trade, a clue is left behind. For instance, every buy and sell decision Warren Buffett makes tells us more about his process, and those insights can help us create our own success. #-ad_banner-#Today, I’m going to focus on an important lesson from a lesser-known, but wildly successful investor. While I’m sure you’re familiar with Buffett, Peter Lynch and other well-known investors, you might not be familiar with Lynn Tilton. Tilton is the CEO of the $8 billion private equity firm Patriarch Partners and one of the more obscure money managers I follow. She has a number of critics and has seen her fair share of controversy. But many of her investments have been successful and uncontroversial, and we can learn a great deal from them. Tilton is known for her ability to turn around struggling companies in basic industries, and she’s credited with saving 700,000 jobs at the roughly 75 companies Patriarch invests in, including MD Helicopters, Stila Cosmetics and Gorham Paper… Read More

It’s become conventional wisdom that the U.S. labor market has an awful lot of embedded slack. Wage growth remains anemic, and millions of Americans are still looking for work, fully six years after the last recession ended. #-ad_banner-#But the conventional wisdom  is wrong. For employees with the right set of skills (and typically a college degree), we have already reached what economists call “full employment.” That was the message that Stanley Fischer, the Vice Chairman of the Federal Reserve, noted in a round of interviews with Bloomberg News, The Wall Street Journal, and others in early August. … Read More

It’s become conventional wisdom that the U.S. labor market has an awful lot of embedded slack. Wage growth remains anemic, and millions of Americans are still looking for work, fully six years after the last recession ended. #-ad_banner-#But the conventional wisdom  is wrong. For employees with the right set of skills (and typically a college degree), we have already reached what economists call “full employment.” That was the message that Stanley Fischer, the Vice Chairman of the Federal Reserve, noted in a round of interviews with Bloomberg News, The Wall Street Journal, and others in early August.  Indeed the job market is far tighter than many might think. The Federal Reserve has found that over long periods, roughly 2.0% of college grads are without work, on average, at any given time. By their measure, that figure is closer to 1.0% right now, indicating a current adjusted unemployment rate in negative territory.  Here’s the remarkable thing about the current employment picture: The construction industry, which is heavily dependent on the housing sector, remains weak, but is finally getting stronger as housing starts begin to build steam. Housing starts have been very strong recently, hitting… Read More

The stock market has been quite choppy in recent weeks, and concerns are growing that the six-year bull market may be at an end. But catalysts for further upside remain: valuations in the energy sector have fallen along with oil prices and many of the world’s largest central banks are still pumping money into their economies to fuel growth. Even in China, where slowing growth is causing chaos in commodity prices, economic growth remains solid, with the government taking steps to boost the economy. #-ad_banner-#This environment creates a perfect stock picker’s market. Instead of a one-way bet on higher prices,… Read More

The stock market has been quite choppy in recent weeks, and concerns are growing that the six-year bull market may be at an end. But catalysts for further upside remain: valuations in the energy sector have fallen along with oil prices and many of the world’s largest central banks are still pumping money into their economies to fuel growth. Even in China, where slowing growth is causing chaos in commodity prices, economic growth remains solid, with the government taking steps to boost the economy. #-ad_banner-#This environment creates a perfect stock picker’s market. Instead of a one-way bet on higher prices, investors will need to hedge market weakness by picking the losers along with the winners. Pairing your long positions against shorts offers the opportunity not only to hedge lower prices but gain on both sides of the trade. And two stocks in the relatively expensive tool and accessories industry may offer the perfect paired trade opportunity. Using The Right Tools For A Long-Short Strategy Within its coverage universe, Morningstar found tools and accessories to be one of the most expensive industries, at 1.47 times its fair value estimate. One company in the group still offers upside, as it is well-positioned… Read More

The other morning, I drove myself half-crazy looking for my car keys. It must have taken me almost a half hour to find them. And when I did, they were sitting — in plain sight — on my hall table. The reason I had trouble finding my keys, of course, was that they weren’t where I usually put them. I’m so used to looking in the same places that I walked right by my hall table without a glance. #-ad_banner-#The same thing happens to securities that pay irregular — or special — dividends. Read More

The other morning, I drove myself half-crazy looking for my car keys. It must have taken me almost a half hour to find them. And when I did, they were sitting — in plain sight — on my hall table. The reason I had trouble finding my keys, of course, was that they weren’t where I usually put them. I’m so used to looking in the same places that I walked right by my hall table without a glance. #-ad_banner-#The same thing happens to securities that pay irregular — or special — dividends. I call them “Wall Street Irregulars.”  These dividend payers offer above-average yields, yet most investors skip right over them. That’s because popular investment resources like Yahoo! Finance rarely reflect the total yield these companies offer. Most brokerage and investment websites only take a stock’s most recent dividend payment and multiply it times the payment frequency to get a stock’s annual dividend. The websites then use the computed annual dividend to calculate the yield. So while the “posted yield” — the yield investors see listed — may… Read More

With the vast majority of companies in the S&P 500 having reported earnings, it appears the index will post the first earnings decline since Q3 2012. Worse still, we will likely see the first back-to-back quarters of revenue decline since 2009, with Q2 sales estimated to drop 3.3%. Read More

The major U.S. indices managed to finish last week fractionally higher, led by the S&P 500, which gained 0.7%. However, nothing has been resolved as the broader market index, as well as the bellwether Dow industrials and PHLX Semiconductor (SOX) index, continue to hover just above major support levels.  S&P 500 2,077, Dow 17,342 and SOX 630 are major support levels that represent an important inflection point from which the next significant move, either up or down, is likely to begin.   Two weeks ago, I first stated that utilities were on my radar as a potential sector… Read More

The major U.S. indices managed to finish last week fractionally higher, led by the S&P 500, which gained 0.7%. However, nothing has been resolved as the broader market index, as well as the bellwether Dow industrials and PHLX Semiconductor (SOX) index, continue to hover just above major support levels.  S&P 500 2,077, Dow 17,342 and SOX 630 are major support levels that represent an important inflection point from which the next significant move, either up or down, is likely to begin.   Two weeks ago, I first stated that utilities were on my radar as a potential sector to overweight this quarter. And last week, I pointed out a bullish chart pattern in the Utilities Select Sector SPDR ETF (NYSE: XLU) that targeted a 4.8% rise to $46.50.  XLU jumped 2.7% last week and appears to be on track to meet that target, which is 2% above Friday’s close. The chart also shows that XLU is starting to edge above its 200-day moving average at $44.99. A sustained rise above this widely watched major trend proxy would suggest that a major bullish trend change is emerging in the ETF, which would potentially set the stage for… Read More

I’ve studied and utilized a plethora of market theories and indicators over the years, many of which I still use on a regular basis. Of all the methods out there, the Dow Theory is arguably the oldest market timing system. Created more than 100 years ago from editorials written by Charles Dow, the founder of The Wall Street Journal, it’s also a theory I can easily examine, deconstruct and “build” with relative ease because of my years of experience working with it. #-ad_banner-#Today, I’m going to explain what the Dow Theory is telling us… Read More

I’ve studied and utilized a plethora of market theories and indicators over the years, many of which I still use on a regular basis. Of all the methods out there, the Dow Theory is arguably the oldest market timing system. Created more than 100 years ago from editorials written by Charles Dow, the founder of The Wall Street Journal, it’s also a theory I can easily examine, deconstruct and “build” with relative ease because of my years of experience working with it. #-ad_banner-#Today, I’m going to explain what the Dow Theory is telling us today — and how I plan to profit from it.   Dow Theory is based on the premise that the economy grows when manufacturers are producing as much as possible. Economic growth translates into profits for companies in the industrials sector, which should show up in the performance of their stocks. Getting goods to market requires that the transportation industry also be growing, which should drive the stocks of transport companies higher. This makes sense considering increased consumer activity and health should mean more cars being driven (automobiles and fuel), more goods being shipped… Read More

When picking stocks, I favor established leaders — typically larger companies that have solid balance sheets and can dominate in flourishing industries. Stick with those types of stocks, and it’s tough to go wrong. #-ad_banner-# Tough, but not impossible. Indeed, there’s a distinct danger to this strategy in the electronic payments space, where industry front-runner PayPal Holdings Inc. (Nasdaq: PYPL) generated lots of buzz with its July spin-off from e-commerce stalwart eBay Inc. (Nasdaq: EBAY). Many market watchers probably see PayPal as a virtually bulletproof investment. After all, it has been number one in electronic payments for nearly two decades… Read More

When picking stocks, I favor established leaders — typically larger companies that have solid balance sheets and can dominate in flourishing industries. Stick with those types of stocks, and it’s tough to go wrong. #-ad_banner-# Tough, but not impossible. Indeed, there’s a distinct danger to this strategy in the electronic payments space, where industry front-runner PayPal Holdings Inc. (Nasdaq: PYPL) generated lots of buzz with its July spin-off from e-commerce stalwart eBay Inc. (Nasdaq: EBAY). Many market watchers probably see PayPal as a virtually bulletproof investment. After all, it has been number one in electronic payments for nearly two decades and currently has nearly 170 million active users in 200 countries. PayPal’s market capitalization of more than $45 billion already exceeds that of eBay by nearly $13 billion.       Plus, recent performance is promising. In the second quarter, PayPal accounted for about half of eBay’s $4.4 billion of revenue and reported large increases in key growth metrics such as the number of active customer accounts and transactions per account. Analysts foresee revenue of nearly $11 billion next year and a 17% pace of earnings growth in the coming five years.   Mobile Payments: A Breeding Ground For Competition… Read More

It’s increasingly obvious that the Federal Reserve Open Market Committee (FOMC) will start to raise short-term interest rates by the end of this year. For banks, insurance companies, and many other financial institutions, higher rates can’t come soon enough, as they will start to generate higher interest income on their vast cash balances. Yet one financial services company in particular has especially strong leverage to rising rates, making it a timely investment. #-ad_banner-# Federated Investors (NYSE: FII) is an asset management firm with a focus on equity, fixed income, and money market accounts. Money market funds are investment… Read More

It’s increasingly obvious that the Federal Reserve Open Market Committee (FOMC) will start to raise short-term interest rates by the end of this year. For banks, insurance companies, and many other financial institutions, higher rates can’t come soon enough, as they will start to generate higher interest income on their vast cash balances. Yet one financial services company in particular has especially strong leverage to rising rates, making it a timely investment. #-ad_banner-# Federated Investors (NYSE: FII) is an asset management firm with a focus on equity, fixed income, and money market accounts. Money market funds are investment vehicles in which the primary focus is protection of principal. Fund managers invest in only very short-term bonds where the risk of loss is nearly zero. In normal interest rate environments, the firm keeps a sliver of the investment profits for itself. But these are not normal interest rate times. With short-term yields at nearly zero, Federated Investors has not been able to cover the costs of running the funds. Instead of charging the cost difference to fund investors, Federated Investors has voluntarily issued “fee waivers” to its clients. The waived fees, which would constitute a significant source of revenue… Read More