Today, I want to tell you about an investing strategy that defies logic. It shouldn’t work based on everything we’ve learned about the stock market. #-ad_banner-#Yet it does. In fact, for over half a century, investors and traders have used this strategy to produce unparalleled results. And no, for those of you who may be wondering, this strategy doesn’t involve options, derivatives or any other obscure financial product. What’s more, what I’m about to show you can be used as part of any general investing strategy — regardless of whether you’re focusing on income, growth, blue chips, small caps or… Read More

Today, I want to tell you about an investing strategy that defies logic. It shouldn’t work based on everything we’ve learned about the stock market. #-ad_banner-#Yet it does. In fact, for over half a century, investors and traders have used this strategy to produce unparalleled results. And no, for those of you who may be wondering, this strategy doesn’t involve options, derivatives or any other obscure financial product. What’s more, what I’m about to show you can be used as part of any general investing strategy — regardless of whether you’re focusing on income, growth, blue chips, small caps or even commodities. Specifically, I’m talking about relative strength investing. Relative strength investing is simply a type of momentum investing. It involves buying the best-performing stocks (relative to the market) and holding them until their momentum changes course. To most investors, especially those considered value investors, this strategy probably sounds ridiculous. After all, most people have heard the phrase “buy low, sell high.” Since relative strength investors buy stocks that are already outperforming, many view this style of investing as counterintuitive. But that’s a mistake — and it’s one many people make when they approach a stock pick. Most… Read More

  The global economy can deliver a jolt to stock markets at any moment. These “Black Swan” events are hard to predict or anticipate, but are always on the back of our minds.     #-ad_banner-#Sometimes, we can even develop a vague sense that something is brewing. For example, investors could sense that market trouble was coming in 2000 and 2008, but the likelihood of trouble was so far outside of market sentiment that few were prepared.   With central banks and investors around the world completely preoccupied with deflation, could rising price pressures be the next unexpected event for… Read More

  The global economy can deliver a jolt to stock markets at any moment. These “Black Swan” events are hard to predict or anticipate, but are always on the back of our minds.     #-ad_banner-#Sometimes, we can even develop a vague sense that something is brewing. For example, investors could sense that market trouble was coming in 2000 and 2008, but the likelihood of trouble was so far outside of market sentiment that few were prepared.   With central banks and investors around the world completely preoccupied with deflation, could rising price pressures be the next unexpected event for which you should be preparing?   The clues are all there and we may be in for a trend of low growth, high unemployment and increasing prices. That combination, last seen several decades ago, is referred to as “stagflation.”   Disco Fever And The Great Stagflation The last time stagflation reared its ugly head, bell bottoms were all the rage and Richard Nixon was just starting his second term in the White House. Economic growth — adjusted for inflation — was an anemic 3% for the rest of that decade. Indeed ample price pressures meant that  the… Read More

  In recent weeks, bullish optimism and a resilient market have given investors a bit of a reprieve from rising levels of volatility. But don’t get too comfortable. The next spike in volatility can arrive without notice. Here’s how you can invest in stocks with the least volatility.   The CBOE Volatility Index, also known as the fear index, or VIX, has been trending lower for most of the year. The VIX, which gauges expectations for stock market volatility in the next 30 days, is now only around 16 —… Read More

  In recent weeks, bullish optimism and a resilient market have given investors a bit of a reprieve from rising levels of volatility. But don’t get too comfortable. The next spike in volatility can arrive without notice. Here’s how you can invest in stocks with the least volatility.   The CBOE Volatility Index, also known as the fear index, or VIX, has been trending lower for most of the year. The VIX, which gauges expectations for stock market volatility in the next 30 days, is now only around 16 — 20% below the historical average of 20.   But 2015 is still young, and severe volatility could return as investors face potential shocks to the market. A shift in U.S. monetary policy or a potential Greek exit from the eurozone are just a few potential triggers for higher volatility.   #-ad_banner-#Though volatility has been largely absent from the market in the past few years, recall that it was a key theme in 2011, when the market fell nearly 20% as part of a summer swoon. The VIX reflected investor angst during that… Read More

Trying to perfectly time a bottom in the market, a sector or a stock can make a fool of any of us. Even investing gurus like Warren Buffett rarely try to call one. #-ad_banner-#But that doesn’t mean investors can’t uncover opportunities on the way down. Short-term panic often leads to discounted buys in companies with solid long-term fundamentals. One of my favorite options strategies allows traders to get into stocks at an even cheaper price or book a quick profit if shares turn up. 7 Billion Hungry Mouths and Counting Exceptional global harvests pushed grain… Read More

Trying to perfectly time a bottom in the market, a sector or a stock can make a fool of any of us. Even investing gurus like Warren Buffett rarely try to call one. #-ad_banner-#But that doesn’t mean investors can’t uncover opportunities on the way down. Short-term panic often leads to discounted buys in companies with solid long-term fundamentals. One of my favorite options strategies allows traders to get into stocks at an even cheaper price or book a quick profit if shares turn up. 7 Billion Hungry Mouths and Counting Exceptional global harvests pushed grain prices down to multiyear lows in 2014 and dragged related stocks down. PowerShares DB Agriculture ETF (NYSE: DBA) fell 15% last year from its April high and is now 47% below its 2008 high. Some may be worried about a farm bust like we saw in the 1980s. While another record harvest this year could send prices even lower, the 2014 Farm Act’s safety net provision should prevent massive losses. University of Nebraska economist Brad Luebben expects substantial payments to go out to farmers this year if prices stay low. U.S. farm… Read More

Few investors have heard about China’s Winland Ocean Shipping Corp. or Denmark’s Copenship A/S. But these firms are the proverbial “canary in the coal mine.” #-ad_banner-#Both have declared bankruptcy in recent weeks, and they may soon have plenty of company. That’s what happens when heavily-indebted companies square up against deep industry distress. That industry: dry bulk shipping, which involves everything from iron ore and other commodities to processed industrial materials. The major shippers build massive (and expensive) boats and then hope that those boats can garner sufficiently high daily lease rates. Those rates,… Read More

Few investors have heard about China’s Winland Ocean Shipping Corp. or Denmark’s Copenship A/S. But these firms are the proverbial “canary in the coal mine.” #-ad_banner-#Both have declared bankruptcy in recent weeks, and they may soon have plenty of company. That’s what happens when heavily-indebted companies square up against deep industry distress. That industry: dry bulk shipping, which involves everything from iron ore and other commodities to processed industrial materials. The major shippers build massive (and expensive) boats and then hope that those boats can garner sufficiently high daily lease rates. Those rates, as measured by the Baltic Dry Index, have just moved to levels not seen since the 1980s. The index typically had support in the 650 range during past downturns, but we’ve now shot past that mark. (Remarkably, this index hit almost 12,000 back in 2008.) Why is this index plumbing fresh lows with each passing week? Demand for dry goods, especially in China, appears to be quickly slowing. Moreover, dry bulk shippers ordered a lot of new ships in 2013, many of which started plying the waters in the past 12 months. Too many ships chasing too little… Read More

All major U.S. indices closed higher for the third consecutive week, led by the tech-heavy Nasdaq 100, which gained 1.4% and is now up 4.9% for the year. As I’ve stated in previous reports, this is particularly important because technology issues, ideally with some help from small-cap stocks, typically lead the broader market both higher and lower. #-ad_banner-#From a sector standpoint, last week’s rally was led by health care and industrials, with the recently rejuvenated energy sector the only one in negative territory. Meanwhile, materials, which were extremely weak during the fourth quarter, have quietly been the strongest sector year… Read More

All major U.S. indices closed higher for the third consecutive week, led by the tech-heavy Nasdaq 100, which gained 1.4% and is now up 4.9% for the year. As I’ve stated in previous reports, this is particularly important because technology issues, ideally with some help from small-cap stocks, typically lead the broader market both higher and lower. #-ad_banner-#From a sector standpoint, last week’s rally was led by health care and industrials, with the recently rejuvenated energy sector the only one in negative territory. Meanwhile, materials, which were extremely weak during the fourth quarter, have quietly been the strongest sector year to date, up 6.9%. This suggests the opportunity I pointed to in copper futures and PowerShares DB Base Metals ETF (NYSE: DBB) in the Dec. 8 Market Outlook could begin to get some traction in the marketplace. I continue to watch the materials sector and copper as emerging investment opportunities in 2015. Cisco Leading Technology Higher In the previous report, I highlighted an emerging breakout in the Nasdaq 100 following 10 weeks of investor indecision that targeted a 5% rise to 4,600. In the past week alone, the index gained 1.4% to… Read More

Less than a year ago, over 35,000 people flocked to the “Woodstock for Capitalists” just for a chance to sit in on a six-hour Q&A with the world’s greatest investor — Warren Buffett. #-ad_banner-#To give you an idea of what kind of spectacle this is, just look at sales for Berkshire-owned Nebraska Furniture Mart located in Omaha where the Berkshire Hathaway shareholder meeting takes place every year. In the week surrounding the prestigious shareholder meeting, Nebraska Furniture Mart did over $40 million in sales… which is typically what they do in one month. The… Read More

Less than a year ago, over 35,000 people flocked to the “Woodstock for Capitalists” just for a chance to sit in on a six-hour Q&A with the world’s greatest investor — Warren Buffett. #-ad_banner-#To give you an idea of what kind of spectacle this is, just look at sales for Berkshire-owned Nebraska Furniture Mart located in Omaha where the Berkshire Hathaway shareholder meeting takes place every year. In the week surrounding the prestigious shareholder meeting, Nebraska Furniture Mart did over $40 million in sales… which is typically what they do in one month. The shareholder meeting is one of the greatest financial-education experiences in the world. Attendees get peppered with useful financial information about not only Berkshire, but investing and the economy as a whole. Here are a few great tips that he shared at his recent shareholder meeting. Using Insurance “Float” For Success “Our investment in the insurance companies reflects a first major step in our efforts to achieve a more diversified base of earning power.” — 1967 Annual Report Insurance is Berkshire’s core operation and the engine that has consistently propelled their… Read More

  Some stocks are like elite athletes. They may come with some extraneous baggage, but they still warrant a sizeable investment because they perform at such a high level.   #-ad_banner-#Perhaps the best example of this: Monsanto Co. (NYSE: MON), the well-known agricultural biotechnology firm that has sparked a lot of controversy thanks to its aggressive marketing tactics in the agricultural sector.   It all started about 20 years ago when Monsanto introduced the first genetically modified or GMO seed, an herbicide-resistant soybean that enabled farmers to spray weed killers without damaging their soybean crop. Since then, Monsanto has gotten… Read More

  Some stocks are like elite athletes. They may come with some extraneous baggage, but they still warrant a sizeable investment because they perform at such a high level.   #-ad_banner-#Perhaps the best example of this: Monsanto Co. (NYSE: MON), the well-known agricultural biotechnology firm that has sparked a lot of controversy thanks to its aggressive marketing tactics in the agricultural sector.   It all started about 20 years ago when Monsanto introduced the first genetically modified or GMO seed, an herbicide-resistant soybean that enabled farmers to spray weed killers without damaging their soybean crop. Since then, Monsanto has gotten a lot of bad press and been involved in numerous lawsuits related to its genetically modified seeds, herbicides and pesticides.   That’s the baggage. But the fact remains that Monsanto’s products remain extremely popular with farmers. Otherwise, it wouldn’t be generating industry-leading sales and profits or delivering impressive stock returns. Consider the company’s performance over the past few years.   Monsanto Financial Performance 2011-2014   2011 2012 2013 2014 Growth Rate Revenue (in billions) $11.8  $13.5  $14.9  $15.9 10.5% Net income (in billions) $1.6  $2.1 $2.5  $2.7 19.1% Earnings per share  $2.96  $3.79 $4.60  $5.22 20.8% Dividends per… Read More

Frankly, I’m a news junkie. I’m the guy in the office that people come to for explanations on what’s going on in the Middle East, or how the latest political buzz may affect markets. One practice I’ve become accustomed to in my daily stroll through the news is to question everything. It helps me remember the details and often leads to solid investments. Apple, Inc.’s (Nasdaq: AAPL) recent announcement of a nearly $850 million investment in solar energy is a perfect example. Apple has partnered with First Solar, Inc. (NYSE: FSLR) to build a solar farm that will generate 280… Read More

Frankly, I’m a news junkie. I’m the guy in the office that people come to for explanations on what’s going on in the Middle East, or how the latest political buzz may affect markets. One practice I’ve become accustomed to in my daily stroll through the news is to question everything. It helps me remember the details and often leads to solid investments. Apple, Inc.’s (Nasdaq: AAPL) recent announcement of a nearly $850 million investment in solar energy is a perfect example. Apple has partnered with First Solar, Inc. (NYSE: FSLR) to build a solar farm that will generate 280 megawatts, or MW, of electricity — 130 MW of which will fuel all of Apple’s California operations, the other 150 MW will be sold back to a utility company. To give you context, 280 MW is enough electricity to power more than 70,000 homes, according to the Solar Energy Industries Association. My first line of questioning is why solar and why now? Apple had stated its goal for a number of years: to power all of its facilities using renewable energy. So, this new project is a natural progression toward that mission. But the answer to “why now” lies in… Read More