Interest rates have jumped on stronger economic growth in the United States and abroad causing prices for rate-sensitive investments to plunge. Traditionally low-risk investments like the iShares 20+ Year Treasury Bond Fund (NYSE: TLT) and the Utilities Select Sector SPDR ETF (NYSE: XLU) have booked large losses that will likely extend when the Fed finally starts to lift rates. But utilities still play a vital role for many investors that need consistent income and can be a blessing when the general market tumbles. #-ad_banner-# Using one of my favorite options strategies for reducing… Read More

Interest rates have jumped on stronger economic growth in the United States and abroad causing prices for rate-sensitive investments to plunge. Traditionally low-risk investments like the iShares 20+ Year Treasury Bond Fund (NYSE: TLT) and the Utilities Select Sector SPDR ETF (NYSE: XLU) have booked large losses that will likely extend when the Fed finally starts to lift rates. But utilities still play a vital role for many investors that need consistent income and can be a blessing when the general market tumbles. #-ad_banner-# Using one of my favorite options strategies for reducing risk can provide extra income for those investors while maintaining a position in the sector for longer-term portfolio diversification. Taper Tantrum, Round 4 — Rates Surge Volatility due to rapidly rising interest rates is nothing new for investors in utility stocks. Rates on the 10-year Treasury jumped 1.3% in 2013 when the Federal Reserve announced that it would begin tapering its $70 billion monthly bond purchases. Shares of the SPDR utility fund dropped 10.2% in the four months leading up to September of that year. Markets have seen two other periods of rate hike fears since then. The first was… Read More

The great bond exodus may have begun. Fears of Federal Reserve-induced interest rate increases are pushing bond yields up and bond prices down. In fact, more than $1.2 trillion in value has been wiped out in the global bond market since April.  The selloff has accelerated when the June employment report showed that wages in May increased by the most since August 2013. Signs of an economic recovery in Europe have also pushed losses on global bonds even further. The yield on the German 10-year bund has jumped nearly ten-fold since late April. #-ad_banner-#The fallout is already being… Read More

The great bond exodus may have begun. Fears of Federal Reserve-induced interest rate increases are pushing bond yields up and bond prices down. In fact, more than $1.2 trillion in value has been wiped out in the global bond market since April.  The selloff has accelerated when the June employment report showed that wages in May increased by the most since August 2013. Signs of an economic recovery in Europe have also pushed losses on global bonds even further. The yield on the German 10-year bund has jumped nearly ten-fold since late April. #-ad_banner-#The fallout is already being felt with bond funds. The iShares 20+ Year Treasury Bond Fund (NYSE: TLT) and the SPDR Barclays Long-term Corporate Bond ETF (NYSE: LWC) have both lost roughly 10% in the past two months. Despite the idea that bonds are a safe investment and a hedge against stock market losses, the correlation between global bonds and stocks has recently increased to 0.30, the highest correlation since the Federal Reserve announced it would begin tapering quantitative easing in 2013. That means returns on stocks and bonds are moving in similar directions and there may be nowhere to hide for investors. Looking for… Read More

If you’re a regular reader of StreetAuthority, you know I love getting and reinvesting dividend paychecks. Simply put, my goal is to earn a paycheck every day of the month by owning a basket of solid income securities, then grow the size of those paychecks by harnessing the power of compounding through dividend reinvestment. So far, the results have been very rewarding. From an initial $200,000 investment, I’m earning $18,613 in dividends a year (more than $1,551 a month) using this strategy. And that doesn’t even include a penny from the healthy capital gains I’ve made from… Read More

If you’re a regular reader of StreetAuthority, you know I love getting and reinvesting dividend paychecks. Simply put, my goal is to earn a paycheck every day of the month by owning a basket of solid income securities, then grow the size of those paychecks by harnessing the power of compounding through dividend reinvestment. So far, the results have been very rewarding. From an initial $200,000 investment, I’m earning $18,613 in dividends a year (more than $1,551 a month) using this strategy. And that doesn’t even include a penny from the healthy capital gains I’ve made from most of my holdings. But as I said, you may have already heard this before. My goal today is to show you how to get the most out of your income investments using a simple, yet effective, three-part strategy. I like to think of it as a dividend “trifecta,” and it’s the cornerstone of my Daily Paycheck Retirement Strategy. The great thing about this trifecta is that it’s fully customizable to your own needs. You can use it to multiply your wealth over time, preserve capital, even bring in a second income to fund… Read More

Despite the fact that Southwest Airlines’ (NYSE: LUV) fundamental metrics are the strongest they have been in a long time and the shares are dirt cheap, the stock has spent most of 2015 torturing the bulls. While oil prices are still relatively low, their recent jump helped knock the stock 25% off its January highs in less than four months. Then, after a brief bounce, LUV was driven to a new year-to-date low following a slew of negative stories. First, the airline launched a huge, “unexpected” fare sale on June 2. The aggressive sale went… Read More

Despite the fact that Southwest Airlines’ (NYSE: LUV) fundamental metrics are the strongest they have been in a long time and the shares are dirt cheap, the stock has spent most of 2015 torturing the bulls. While oil prices are still relatively low, their recent jump helped knock the stock 25% off its January highs in less than four months. Then, after a brief bounce, LUV was driven to a new year-to-date low following a slew of negative stories. First, the airline launched a huge, “unexpected” fare sale on June 2. The aggressive sale went viral and brought millions of people to the Southwest site to look at tickets. Overwhelmed by traffic, the website crashed. It was not functioning properly for nearly a day and a half, leaving thousands unable to book travel online, and phone lines were busy as well. #-ad_banner-# Southwest extended the sale in the hopes of capturing additional business, but in the end this blunder was a huge positive catalyst that got shot down. More selling hit airlines when American Airlines (NASDAQ: AAL) lowered its second-quarter outlook this week. Meanwhile, Southwest CEO Gary Kelly… Read More

Major U.S. indices were essentially unchanged in a week that featured a lot of day-to-day volatility but not much directional movement. When markets move in a sideways range, as the U.S. stock market has been doing since February, it indicates temporary investor indecision.  #-ad_banner-#These periods of indecision almost always lead to the next meaningful directional move, which is precisely where the market finds itself heading into this week. The big question is: “Which way from here?” That is the focus of this week’s report. At the sector level, financials and consumer staples were last week’s best performers. The recent strength… Read More

Major U.S. indices were essentially unchanged in a week that featured a lot of day-to-day volatility but not much directional movement. When markets move in a sideways range, as the U.S. stock market has been doing since February, it indicates temporary investor indecision.  #-ad_banner-#These periods of indecision almost always lead to the next meaningful directional move, which is precisely where the market finds itself heading into this week. The big question is: “Which way from here?” That is the focus of this week’s report. At the sector level, financials and consumer staples were last week’s best performers. The recent strength in financials, which are up 1.9% in the past month, has been driven by the spike in long-term U.S. interest rates amid a steepening yield curve. Both of these factors will help make banks more profitable.   The weakest sector last week was energy, which lost 0.9% and is down 4.5% over the past month. This has been driven by a strong outflow of investor assets, according to Asbury Research’s own metric, as shown in the table below. The biggest inflow of investor assets over the past one-week and one-month periods went into the financial sector. Stocks Need… Read More

It’s easy to get overwhelmed by the sheer number of differing opinions regarding the market. Talking heads shout them at you through the TV. Your financial advisor suggests a different strategy. A close relative swears by yet another completely unique way to put your hard-earned money to work. For some it might seem impossible to separate the noise from the advice that can secure the future you desire for yourself and your family. But actually, there’s one simple thing that can help you ignore the false prophets and identify true winners. Read More

It’s easy to get overwhelmed by the sheer number of differing opinions regarding the market. Talking heads shout them at you through the TV. Your financial advisor suggests a different strategy. A close relative swears by yet another completely unique way to put your hard-earned money to work. For some it might seem impossible to separate the noise from the advice that can secure the future you desire for yourself and your family. But actually, there’s one simple thing that can help you ignore the false prophets and identify true winners. Follow the results. #-ad_banner-#You see, anyone can get lucky enough to stumble upon triple-digit gains once… maybe even twice. But I’ve done it 23 times in the four years since I joined the Game-Changing Stocks newsletter. That means, on average, I’ve helped my readers identify at least one stock that gains 100% or more every other month. That’s somewhere around six triple-digit winners per year, in addition to the many double-digit winners I’ve uncovered. One area, in particular, where I’ve been able… Read More

In theory, successful stock investing hinges on a single, simple premise: buy low, sell high. If only it were that easy. In the real world, knowing when a stock is truly undervalued or overvalued  can be terribly difficult, even with the cache of valuation metrics that investors have at their disposal. Take The Middleby Corp. (Nasdaq: MIDD), a prominent worldwide food service equipment supplier with roughly $1.7 billion in annual revenue. During the past 15 years, Middleby’s stock rose more than 8,300%. Recent gains have pushed the price-to-earnings (P/E) ratio to 31, which is about 10 points higher than the… Read More

In theory, successful stock investing hinges on a single, simple premise: buy low, sell high. If only it were that easy. In the real world, knowing when a stock is truly undervalued or overvalued  can be terribly difficult, even with the cache of valuation metrics that investors have at their disposal. Take The Middleby Corp. (Nasdaq: MIDD), a prominent worldwide food service equipment supplier with roughly $1.7 billion in annual revenue. During the past 15 years, Middleby’s stock rose more than 8,300%. Recent gains have pushed the price-to-earnings (P/E) ratio to 31, which is about 10 points higher than the S&P 500’s earnings multiple. Thus, it might seem safe to conclude that Middleby has run its course, at least for now. After all, this is a company that makes everyday commercial and residential kitchen appliances, like foodwarmers, ovens, cooktops and refrigerators. With its roots in such a mundane industry, how much higher could its stock be expected to rise from current levels? Actually, several catalysts portend substantially higher stock prices in the coming years. These include a knack for acquiring state-of-the-art innovations that complement a growing product portfolio. Earlier this year, for example, Middleby purchased New Jersey-based oven… Read More

Exchange-traded funds (ETFs) are exploding in popularity with retail and institutional investors alike. Financial services firm Price Waterhouse Coopers expects the ETF industry to at least double to $5 trillion in assets under management by 2020. This will mean big profits for two asset management companies who are leaders in the industry. Exchange-traded funds are mostly commodity products. There are dozens of companies that offer an S&P 500 ETF, for example, and all hold the exact same companies. The best way an asset manager can differentiate itself among competitors is to become the lowest cost provider,… Read More

Exchange-traded funds (ETFs) are exploding in popularity with retail and institutional investors alike. Financial services firm Price Waterhouse Coopers expects the ETF industry to at least double to $5 trillion in assets under management by 2020. This will mean big profits for two asset management companies who are leaders in the industry. Exchange-traded funds are mostly commodity products. There are dozens of companies that offer an S&P 500 ETF, for example, and all hold the exact same companies. The best way an asset manager can differentiate itself among competitors is to become the lowest cost provider, which means being the biggest. ​BlackRock, Inc. (NYSE: BLK) is a global asset management business and the world’s largest provider of ETFs. It has more than $1 trillion under management, spread across its many iShares funds. Blackrock is  growing assets under management in the iShares business at a compounded annual growth rate of 16% over the past five years. This rapid growth combined with a scalable business and low fixed costs, allows Blackrock to keep costs to customers low, which attracts more customers and assets. iShares is only one quarter of Blackrock’s total business, but the evidence of the business’… Read More

I recently learned that hot water can freeze faster than cold water. Perhaps you already knew this but it was news to me. It’s a phenomenon known as the Mpemba Effect. This Mpemba Effect seems counterintuitive. Water freezes at 32 degrees. Since cold water is closer to 32 degrees than hot water, most would assume that cold water freezes first. Yet it has been studied extensively by scientists and experiments have shown hot water can freeze first. This isn’t true 100% of the time, but it does happen when the conditions are right. There are a number of theories about… Read More

I recently learned that hot water can freeze faster than cold water. Perhaps you already knew this but it was news to me. It’s a phenomenon known as the Mpemba Effect. This Mpemba Effect seems counterintuitive. Water freezes at 32 degrees. Since cold water is closer to 32 degrees than hot water, most would assume that cold water freezes first. Yet it has been studied extensively by scientists and experiments have shown hot water can freeze first. This isn’t true 100% of the time, but it does happen when the conditions are right. There are a number of theories about why this occurs. The leading explanation is that hot water evaporates more than cold water, leaving less water to freeze. It could also be due to convection currents, which are stronger in warmer water, allowing for ice crystals to spread faster. Others believe it may be related to the chemical structure of water. In all likelihood, it is the interplay of various factors. #-ad_banner-# You might be asking what this has to do with investing. To me, the Mpemba Effect illustrates that logic alone may not be enough to find the right answer. You have to dig… Read More