The only guarantees in life are death and taxes. I know this sounds a bit morbid, but it’s a common phrase used in the finance industry. The word “guarantee” is taught to be nixed from your vocabulary. And while this truth about death and taxes may be true, there are other near-certainties in life — some of which have made (and lost) investors millions of dollars over the last few centuries. One of these certainties is population growth. Every minute there are roughly 255 births worldwide, along with… Read More

The only guarantees in life are death and taxes. I know this sounds a bit morbid, but it’s a common phrase used in the finance industry. The word “guarantee” is taught to be nixed from your vocabulary. And while this truth about death and taxes may be true, there are other near-certainties in life — some of which have made (and lost) investors millions of dollars over the last few centuries. One of these certainties is population growth. Every minute there are roughly 255 births worldwide, along with about 108 deaths. That leaves 147 net additions to the world every single minute. That works out to be more than 211,000 people every day added to the world population. During 2015, the world’s population will grow by about 80 million — equal to the population of California, New York and Texas combined. My colleague Nathan Slaughter of Total Yield gave an interesting perspective on the stress that the growing global population has on the economy and the transportation industry, in particular. #-ad_banner-#Nathan discussed the drastic steps local officials have taken… Read More

I saw a headline last week warning that an analyst at a major Wall Street firm believes the S&P 500 is at risk of a 5%-10% decline.  I have no doubt Deutsche Bank’s (NYSE: DB) David Bianco is correct. Down moves in the stock market actually come fairly often. One study found that a 5% correction occurs, on average, three times a year, while we see a 10% decline about once a year.  The last 10% decline in the S&P 500 occurred about three and a half years ago in October 2011. So, are we overdue for a… Read More

I saw a headline last week warning that an analyst at a major Wall Street firm believes the S&P 500 is at risk of a 5%-10% decline.  I have no doubt Deutsche Bank’s (NYSE: DB) David Bianco is correct. Down moves in the stock market actually come fairly often. One study found that a 5% correction occurs, on average, three times a year, while we see a 10% decline about once a year.  The last 10% decline in the S&P 500 occurred about three and a half years ago in October 2011. So, are we overdue for a 10% correction? That is a silly question. When I hear an analyst say, “We are overdue,” or “This bull market is long in the tooth,” I discount everything else they have to say. Markets don’t follow a schedule. They go up and down based on earnings and sentiment, among other factors. But prices never have and never will change direction just because the calendar changes. #-ad_banner-#The better question to ask is: “What would I do if I knew a 10% correction was coming?” I was in New York recently and had a chance to catch up with one my mentors,… Read More

“Google” and the phrase “internet search” have become virtually synonymous. Google, Inc.’s (Nasdaq: GOOG) overwhelmingly dominant market share of web searches has helped the company to become the largest media company in the world, ranked by advertising revenue (as of 2013). The company’s projected 2015 sales of $65.8 billion mean that it will account for nearly 40% of the global digital advertising spend this year. With spending on digital advertising growing at 13% a year, well over the 3% growth in the broader marketing category, Google stands to continue posting great financial results. Its… Read More

“Google” and the phrase “internet search” have become virtually synonymous. Google, Inc.’s (Nasdaq: GOOG) overwhelmingly dominant market share of web searches has helped the company to become the largest media company in the world, ranked by advertising revenue (as of 2013). The company’s projected 2015 sales of $65.8 billion mean that it will account for nearly 40% of the global digital advertising spend this year. With spending on digital advertising growing at 13% a year, well over the 3% growth in the broader marketing category, Google stands to continue posting great financial results. Its shares trade for 25 times trailing earnings, which is not out of line with other fast-growth technology companies: If that was the entire story, then shares would be appealing. But a new patent filed by an up-and-coming competitor may mean trouble ahead. The patent applicant has already dominated one area of our virtual lives and could soon be taking huge market share from Google’s biggest money-maker. A Social Media Giant’s Strategic Advertising Plans Facebook, Inc. (Nasdaq: FB) recently filed for a patent that may underpin a lethal combination in internet data and advertising. The patent covers the use… Read More

Great companies share one key trait: They can sustain market leadership and growth for decades and even generations. Still, on rare occasion, a dependable blue chip will start to lose its way. Over time, factors like increased competition, changing product landscapes or simply a failure to adapt with the changing times can gradually — almost imperceptibly — erode a once-dominant market leader into an outmoded underperformer. Today, perhaps the most poignant example of this is the iconic food products manufacturer Campbell Soup Co. (NYSE: CPB). While Campbell is still formidable, the core products that drove its success for generations are… Read More

Great companies share one key trait: They can sustain market leadership and growth for decades and even generations. Still, on rare occasion, a dependable blue chip will start to lose its way. Over time, factors like increased competition, changing product landscapes or simply a failure to adapt with the changing times can gradually — almost imperceptibly — erode a once-dominant market leader into an outmoded underperformer. Today, perhaps the most poignant example of this is the iconic food products manufacturer Campbell Soup Co. (NYSE: CPB). While Campbell is still formidable, the core products that drove its success for generations are now a hindrance. Simply put, consumers have been shifting to fresh and organic foods, leaving fewer dollars for the company’s less healthful pre-packaged soups, vegetable-based beverages and sauces that account for the bulk of Campbell’s revenue. Because of this trend, the firm has been stunted for many years. At $8.3 billion, the top line increased a mere 9% in the past decade. Current earnings per share (EPS) of $2.41 represent a 4% compound growth rate during that time. In fact, profits have been stuck in neutral since 2010. Campbell’s stock, unsurprisingly, has lagged the broader market. Results are… Read More

The year 2004 was one of the most exciting times of my life. The future looked bright. That was the year I beat out hundreds of candidates to enter an exclusive bond-trading program for a multi-billion-dollar brokerage firm. I was going to dig deeper than ever into the market. I was going to be around market junkies all day. And most importantly, I was going to become a trading hotshot and make a few million bucks before I turned 30. #-ad_banner-#Three years later, two of those things had come true, and one had not… After spending years fully entrenched in… Read More

The year 2004 was one of the most exciting times of my life. The future looked bright. That was the year I beat out hundreds of candidates to enter an exclusive bond-trading program for a multi-billion-dollar brokerage firm. I was going to dig deeper than ever into the market. I was going to be around market junkies all day. And most importantly, I was going to become a trading hotshot and make a few million bucks before I turned 30. #-ad_banner-#Three years later, two of those things had come true, and one had not… After spending years fully entrenched in the markets and learning from the sharpest minds in the business, I had learned a valuable lesson: trading is no quick path to riches. The cumulative effect of making a few hundred trades a day for years had left me emotionally and financially spent. I found myself at a crossroads. I had loved the market ever since joining the stock market club in sixth grade. I wasn’t ready to walk away from it completely, but it was clear that my relationship with the market needed to evolve. Transitioning out of trading was one of the hardest things I’ve ever had… Read More

After nearly three years of extremely weak economic growth, the European Central Bank is finally delivering on Mario Draghi’s pledge to do “whatever it takes” to get the region back on track. The central bank is set to pump $64 billion into the economy through monthly bond purchases through September 2016. The quantitative easing program, alluded to in September, formally announced in January and started on March 9, may already be having an effect on the economy in terms of sentiment.  Q4 GDP growth of 0.3% beat expectations, and manufacturing data showed signs of life in March. Exports to the… Read More

After nearly three years of extremely weak economic growth, the European Central Bank is finally delivering on Mario Draghi’s pledge to do “whatever it takes” to get the region back on track. The central bank is set to pump $64 billion into the economy through monthly bond purchases through September 2016. The quantitative easing program, alluded to in September, formally announced in January and started on March 9, may already be having an effect on the economy in terms of sentiment.  Q4 GDP growth of 0.3% beat expectations, and manufacturing data showed signs of life in March. Exports to the United States could get a big boost this year on a massive depreciation in the euro versus the U.S. dollar. All things considered, I would say it could be a very good year for European stocks, and possibly most of 2016 as well. #-ad_banner-#There is one fly in the ointment. Greece is back in the headlines as officials were said to have informally approached the IMF to delay repayment on the country’s debt but were denied. Thanos Vamvakidis, head of European G10 FX strategy at BofA Merrill Lynch Global Research, said the country may run out of money if a… Read More

As we’ve noted on many occasions over the past few years, investors have shown a clear preference for companies that issue steadily rising dividends and super-sized share buyback plans. Such stocks not only produce solid income streams, but also tend to show above-average growth in earnings per share, thanks to steadily falling share counts. Of course, in StreetAuthority’s Total Yield newsletter, we’ve been clearly focused on this theme. (We define Total Yield as the net dollar value of dividend payments and share buybacks, divided by a company’s market value.)  #-ad_banner-#The newsletter has reaped big gains since it began in 2014. Read More

As we’ve noted on many occasions over the past few years, investors have shown a clear preference for companies that issue steadily rising dividends and super-sized share buyback plans. Such stocks not only produce solid income streams, but also tend to show above-average growth in earnings per share, thanks to steadily falling share counts. Of course, in StreetAuthority’s Total Yield newsletter, we’ve been clearly focused on this theme. (We define Total Yield as the net dollar value of dividend payments and share buybacks, divided by a company’s market value.)  #-ad_banner-#The newsletter has reaped big gains since it began in 2014. Southwest Airlines Co. (NYSE: LUV) is up 114% in 15 months; Anthem, Inc. (NYSE: ANTM) is up 29% in seven months; and Flextronics International Ltd. (Nasdaq: FLEX) is up 15% in just five months. Looking for a way to augment your gains using this approach? Keep a watchful eye for companies that have not yet embraced a Total Yield strategy, but likely soon will. The key is to spot companies that already have robust free cash flow yields. As we’ve seen in recent years, companies with strong free cash flow have focused on dividends and buybacks, rather than the traditional… Read More

All major U.S. indices declined last week. This followed a strong showing the week before, as the market continued its year-long trend of lurching back and forth while remaining essentially unchanged.   Last week’s decline was led by the Nasdaq 100, which could prove problematic this week because of the market-leading index’s position just above a key support level that I have been discussing here for some time. Another potential problem is the economically sensitive Dow Jones Transportation Average, which as I mentioned in last week’s report, continues to negotiate… Read More

All major U.S. indices declined last week. This followed a strong showing the week before, as the market continued its year-long trend of lurching back and forth while remaining essentially unchanged.   Last week’s decline was led by the Nasdaq 100, which could prove problematic this week because of the market-leading index’s position just above a key support level that I have been discussing here for some time. Another potential problem is the economically sensitive Dow Jones Transportation Average, which as I mentioned in last week’s report, continues to negotiate major support at its 200-day moving average, now at 8,689, and may be failing there. #-ad_banner-# While industrials and consumer discretionary led the broader market lower last week, energy was the only sector of the S&P 500 to finish in positive territory, gaining 2.2%. In the previous report, I said that energy “continues to look like an emerging investment opportunity over the next one to two quarters.” Last week’s strong showing within an otherwise weak market suggests the move… Read More

We’re now officially in the age of cybercrime. And the problem is reaching epidemic proportions. Consider these statistics: — An estimated one-in-three computers have been attacked by viruses, spyware or phishing programs. — Companies spend more than $46 billion on IT equipment, software, services and personnel to protect data, according to Allied Business Intelligence, a technology market research firm. — 20,000. That’s the number of malicious “apps” that exist on Android smartphone devices. That’s 20,000 different ways for a skilled hacker to break into your smartphone and steal your personal information. These are mind-blowing numbers, which depict the level of… Read More

We’re now officially in the age of cybercrime. And the problem is reaching epidemic proportions. Consider these statistics: — An estimated one-in-three computers have been attacked by viruses, spyware or phishing programs. — Companies spend more than $46 billion on IT equipment, software, services and personnel to protect data, according to Allied Business Intelligence, a technology market research firm. — 20,000. That’s the number of malicious “apps” that exist on Android smartphone devices. That’s 20,000 different ways for a skilled hacker to break into your smartphone and steal your personal information. These are mind-blowing numbers, which depict the level of danger we’re dealing with. But with any crisis, there is a great investing opportunity. #-ad_banner-#James Clapper, the director of National Intelligence, put cybercrimes at the top of his annual list of threats facing the United States. He ranked it above natural disasters, violent crimes, viral pandemics and nuclear weaponry. The scary part? Many of these cyberattacks aren’t just happening to one or two victims at a time. A lot of them are happening on a massive scale. Just think about the financial destruction cyberterrorists caused corporations — and their customers — in 2014 alone. In January, Target announced that hackers… Read More