Sitting in front of me on my desk is history’s most popular brand. Every year this centuries-old brand sells $100 billion all around the world from the United States to Europe to India to China. It’s almost certainly the oldest brand known to mankind — with documented occurrences dating back over 6,000 years. And since its inception, the brand has moved an estimated $6.7 trillion worth of product, using today’s prices. The brand I’m talking about is gold. #-ad_banner-#The nugget of gold in front of me on my desk is the size of a quarter. Beside it, I have much… Read More

Sitting in front of me on my desk is history’s most popular brand. Every year this centuries-old brand sells $100 billion all around the world from the United States to Europe to India to China. It’s almost certainly the oldest brand known to mankind — with documented occurrences dating back over 6,000 years. And since its inception, the brand has moved an estimated $6.7 trillion worth of product, using today’s prices. The brand I’m talking about is gold. #-ad_banner-#The nugget of gold in front of me on my desk is the size of a quarter. Beside it, I have much larger pieces of other valuable minerals — copper, zinc and quartz, to name a few. But despite the utility of the latter materials, these samples are worth just a couple of dollars each. My small gold nugget would sell for more than $1,000. Physically and chemically, there’s really no reason for this difference. Certainly gold has some unique properties: it doesn’t tarnish, and it’s also extremely soft and easy to work into new forms. But the same is true of copper. And yet the metal sells for just $3 per pound, or about $45 per troy ounce, while the same… Read More

While biotech has been the clear market leader recently, there is another leading sector that is flying under the radar. Defense stocks have quietly outperformed the market since summer, and corrective pauses for many appear ready to resolve to the upside. When we talk about defense, the first thing most investors think of is aerospace and high-tech communications. However, there is a member of the group that serves the military in a different capacity. Huntington Ingalls Industries (NYSE: HII) builds and maintains nuclear and non-nuclear ships for the U.S. Navy and Coast Guard. The stock has been a… Read More

While biotech has been the clear market leader recently, there is another leading sector that is flying under the radar. Defense stocks have quietly outperformed the market since summer, and corrective pauses for many appear ready to resolve to the upside. When we talk about defense, the first thing most investors think of is aerospace and high-tech communications. However, there is a member of the group that serves the military in a different capacity. Huntington Ingalls Industries (NYSE: HII) builds and maintains nuclear and non-nuclear ships for the U.S. Navy and Coast Guard. The stock has been a top performer with a 60%-plus gain since August and a nearly 30% gain year to date. Compare that with the S&P 500’s 2.6% gain in 2015. Normally, I am less enthusiastic about chasing top performers after they have already had big gains. For example, many biotech stocks are soaring at ever increasing speeds. The sector is overbought, which is not necessarily bad, but no stock moves straight up forever, and corrections could be severe. So when I find a strong stock in a strong sector that is already in the midst of an orderly correction, my interest is… Read More

The European Central Bank (ECB) has finally joined the global bond-buying party with its 19-month program to inject more than $1.2 trillion into the region. The program calls for the central bank’s monthly purchase of more than $60 billion of sovereign bonds along with asset-backed and agency debt.   #-ad_banner-#The new buying program could have some unforeseen consequences. Liquidity in sovereign bonds has already been a global concern, as evidenced by a 70% decrease in the amount of 10-year U.S. Treasury notes available to buy or sell over the last year. With the ECB program buying… Read More

The European Central Bank (ECB) has finally joined the global bond-buying party with its 19-month program to inject more than $1.2 trillion into the region. The program calls for the central bank’s monthly purchase of more than $60 billion of sovereign bonds along with asset-backed and agency debt.   #-ad_banner-#The new buying program could have some unforeseen consequences. Liquidity in sovereign bonds has already been a global concern, as evidenced by a 70% decrease in the amount of 10-year U.S. Treasury notes available to buy or sell over the last year. With the ECB program buying up European bonds, that same liquidity problem could hit the eurozone.   For example, a lack of liquidity in Italian bonds has already caused transaction costs to rise. In fact,  the volume of  futures contracts has surged 800% since 2009, as investors use derivatives to take a position that they can’t get in the bond market.   The new competition in bonds pushed the average yield to maturity of eurozone government debt to 0.538% in late February, the lowest since at least 1995 (when Bank of America started tracking this rate index).   Weak economic growth in Europe, coupled with… Read More

#-ad_banner-#Even blue-chip stocks can be bad investments.   Take American Tower Corp. (NYSE: AMT) as an example. It is the world’s largest independent operator of wireless and broadcast communication sites, and is looking at an onerous, possibly unmanageable debt load.   The company may seem bulletproof, operating roughly 70,000 wireless cell tower sites across the globe.   Financial results have been superb, with revenues more than doubling since 2009 to $4.1 billion. The firm’s stock delivered a market-trouncing 17% rate of return during the past five years.     But American Tower… Read More

#-ad_banner-#Even blue-chip stocks can be bad investments.   Take American Tower Corp. (NYSE: AMT) as an example. It is the world’s largest independent operator of wireless and broadcast communication sites, and is looking at an onerous, possibly unmanageable debt load.   The company may seem bulletproof, operating roughly 70,000 wireless cell tower sites across the globe.   Financial results have been superb, with revenues more than doubling since 2009 to $4.1 billion. The firm’s stock delivered a market-trouncing 17% rate of return during the past five years.     But American Tower is losing steam. After increasing earnings 19% annually from fiscal years 2009 to 2014, growth is set to downshift to about an 11% pace, analysts say.   And that forecast may be optimistic in view of the firm’s heavy exposure to weakening foreign currencies, which are showing progressively smaller dollar values as the greenback soars. This headwind is apt to worsen as central bank stimulus outside the United States causes foreign currencies to tumble further and as foreign sales account for an increasingly larger chunk of American Tower’s business. Such sales are projected to rise to 40% of total revenue… Read More

“Cord-cutter” has become the new buzzword. From Sony (NYSE: SNE) to Apple (NASDAQ: AAPL), major entertainment names are throwing their hat into the on-demand video streaming ring. The arrival of the big players has renewed fears that consumers would cut their cable cords en masse and send shares of cable content providers plummeting. While uncertainty has weighed on these stocks, the fears are overblown and have led to extremely cheap valuations on some really good assets.  Against the hype of the imminent demise of cable content companies is the fact that 85% of households still subscribe to cable. While Netflix… Read More

“Cord-cutter” has become the new buzzword. From Sony (NYSE: SNE) to Apple (NASDAQ: AAPL), major entertainment names are throwing their hat into the on-demand video streaming ring. The arrival of the big players has renewed fears that consumers would cut their cable cords en masse and send shares of cable content providers plummeting. While uncertainty has weighed on these stocks, the fears are overblown and have led to extremely cheap valuations on some really good assets.  Against the hype of the imminent demise of cable content companies is the fact that 85% of households still subscribe to cable. While Netflix (NASDAQ: NFLX) carved out a niche in this area, other providers have had a harder time convincing consumers to make the switch. Even the upcoming launch of the Apple TV subscription service is being met with some indifference. More likely than the death of cable providers will be consolidation in the industry. Companies will merge to gain negotiating leverage over the streaming service providers, allowing them to regain some control in both forms of distribution. #-ad_banner-# In fact, rumors are already building around… Read More

#-ad_banner-#The commodity slump of the past few years, divergent growth rates between the United States and other developed economies and a sudden glut in crude oil have been dominating the headlines. Yet the major U.S. stock markets indexes continue to toil near all-time highs. It’s not a coincidence. The United States has clearly become a safe port in stormy seas, and many of the world’s leading hedge funds and sovereign wealth funds are selling assets abroad and doubling down on U.S. stocks. As a perhaps unintended side effect, the surging dollar has absolutely decimated a wide range of other currencies. Read More

#-ad_banner-#The commodity slump of the past few years, divergent growth rates between the United States and other developed economies and a sudden glut in crude oil have been dominating the headlines. Yet the major U.S. stock markets indexes continue to toil near all-time highs. It’s not a coincidence. The United States has clearly become a safe port in stormy seas, and many of the world’s leading hedge funds and sovereign wealth funds are selling assets abroad and doubling down on U.S. stocks. As a perhaps unintended side effect, the surging dollar has absolutely decimated a wide range of other currencies. And that spells opportunity as a wide range of global securities can now be had for fire-sale prices, at least in dollar-denominated terms. Too Soon? While the dollar continues to rally, many assume it is wise to let the process play out before starting to pick up assets among the global carnage. Yet we may be closer to the end of the currency shifts than many realize. Right around the time the Fed acts (perhaps in June) “it will be embedded in the dollar” said Jens Nordvig, Nomura’s global head of currency strategy, to… Read More

#-ad_banner-#​Two weeks ago, I said that as long as technology and small-cap issues continued to outperform, I viewed the broader market’s recent weakness as a temporary countertrend correction rather than a sustainable decline. My expectations materialized last week as all major U.S. stock indices closed sharply higher, led once again by the tech-heavy Nasdaq 100 and small cap Russell 2000. Both are now up more than 5% for the year.  Last week’s rally was triggered by the Federal Reserve’s March 18 statement and Chair Janet Yellen’s subsequent comments, which were collectively… Read More

#-ad_banner-#​Two weeks ago, I said that as long as technology and small-cap issues continued to outperform, I viewed the broader market’s recent weakness as a temporary countertrend correction rather than a sustainable decline. My expectations materialized last week as all major U.S. stock indices closed sharply higher, led once again by the tech-heavy Nasdaq 100 and small cap Russell 2000. Both are now up more than 5% for the year.  Last week’s rally was triggered by the Federal Reserve’s March 18 statement and Chair Janet Yellen’s subsequent comments, which were collectively viewed as being dovish and likely to postpone the inevitable rise in U.S. interest rates to later this year.  Adding fuel to the fire was the fact that investors were bearishly over-committed headed into the meeting, according to the elevated extreme in the CBOE Put/Call Ratio that I pointed out in in the previous Market Outlook. This increased the initial buying pressure on Wednesday as these bearish investors scrambled to readjust their portfolios.  The strong rebound was led by the defensive health care and utilities sectors and pushed all major U.S. indices back into positive territory for the year.  New… Read More

“Don’t run for the exits just yet…”… Read More

“Don’t run for the exits just yet…” That’s what my colleague Jimmy Butts and I told readers in the most recent issue of our premium newsletter, Maximum Profit. #-ad_banner-#Yet it seems like every day for the past week or so, we’ve seen headlines about the possibility of the Federal Reserve raising interest rates in June. And depending on how investors… Read More

Although the market may seem expensive to many investors, solid bargains remain in many individual stocks.  You can find opportunity in both value stocks and riskier stocks. Risk-tolerant investors might consider Puma Biotechnology, Inc. (NYSE: PBYI), a development-stage pharmaceutical firm. Puma is on the cusp of receiving FDA approval for a promising new breast cancer treatment. Investors have already shown their growing interest in Puma, boosting shares 1,600% in the past five years. Yet, I’d argue that Puma has by much more room to run. The firm’s appeal stems in large part from its value as a buyout target. If… Read More

Although the market may seem expensive to many investors, solid bargains remain in many individual stocks.  You can find opportunity in both value stocks and riskier stocks. Risk-tolerant investors might consider Puma Biotechnology, Inc. (NYSE: PBYI), a development-stage pharmaceutical firm. Puma is on the cusp of receiving FDA approval for a promising new breast cancer treatment. Investors have already shown their growing interest in Puma, boosting shares 1,600% in the past five years. Yet, I’d argue that Puma has by much more room to run. The firm’s appeal stems in large part from its value as a buyout target. If you’re familiar with biotech, then you know mergers and acquisitions, or M&A, has been a major industry theme for many years. Larger drug makers have been snapping up smaller ones in their quest for growth and deeper product pipelines, pushing M&A activity back to levels not seen in more than half a decade. To illustrate that, take a look this chart I saw in Reuters recently. In Puma’s case, its flagship breast cancer drug, neratinib, could fetch a hefty premium from any number of the big pharmaceutical names. Indeed, analysts at RBC Capital Markets have called… Read More

On March 18, the Federal Reserve gave  its clearest hint yet that interest rate hikes are coming. The Fed will no longer “remain patient,” which suggests that the time for action is near. Against that backdrop,  real estate investment trusts, or REITs, have been punished. In the last month and half the Vanguard REIT Index (NYSE: VNQ) has fallen 3%. #-ad_banner-#Yet is such concern warranted? After all, the yield on the 10-Year Treasury bill just slipped back below 2.0%, even after the Fed shifted its tone. Even if 10-year yields were to rise from the current level to 2.5% or… Read More

On March 18, the Federal Reserve gave  its clearest hint yet that interest rate hikes are coming. The Fed will no longer “remain patient,” which suggests that the time for action is near. Against that backdrop,  real estate investment trusts, or REITs, have been punished. In the last month and half the Vanguard REIT Index (NYSE: VNQ) has fallen 3%. #-ad_banner-#Yet is such concern warranted? After all, the yield on the 10-Year Treasury bill just slipped back below 2.0%, even after the Fed shifted its tone. Even if 10-year yields were to rise from the current level to 2.5% or 3%, investors in search of income will not completely abandon REITs that yield between 4% and 6%. Another way to look at an eventual rebound in rates: it signals a firmer economy, which should be beneficial to real estate firms. In the end, speculation about interest rates is just distracting noise. Your goal should be to add great businesses to your portfolio at opportune prices. Use the volatility in high-yield securities to add long-term winners to your portfolio. HCP, Inc. (NYSE: HCP), Digital Realty Trust, Inc. (NYSE: DLR) and Omega Healthcare Investors, Inc. (NYSE: OHI) are all down 8% or… Read More