Think about how much money you would have made had you bought property in the Bakken Shale eight years ago… #-ad_banner-#As recently as 2006, an acre of land in this desolate North Dakota region was selling for as little as $500. That means back then you could have purchased a 200-acre plot for no more than $100,000. Then the “American Energy Boom” hit. Suddenly, acreage that was once thought of as worthless farmland instantly became invaluable as people became aware that the Bakken was home to massive amounts of untapped oil and gas reserves. As a result, today that same… Read More

Think about how much money you would have made had you bought property in the Bakken Shale eight years ago… #-ad_banner-#As recently as 2006, an acre of land in this desolate North Dakota region was selling for as little as $500. That means back then you could have purchased a 200-acre plot for no more than $100,000. Then the “American Energy Boom” hit. Suddenly, acreage that was once thought of as worthless farmland instantly became invaluable as people became aware that the Bakken was home to massive amounts of untapped oil and gas reserves. As a result, today that same 200 acres could be worth over $4 million… Landowners weren’t the only ones who would have gotten rich on the deal either. Investors in companies exploring the Bakken were rewarded with small fortunes as floods of new capital poured into the region. For example, Kodiak Oil & Gas (NYSE: KOG), one of the first companies to start drilling here, ran from $0.25 a share in 2009 to $11.81 today — a staggering 4,438% gain over that time. It’s the same story for Continental Resources (NYSE: CLR) and Painted Pony Petroleum (TSX: PPY), two of the other major players… Read More

I love reading emails from subscribers. And in my capacity as Chief Investment Strategist for three of StreetAuthority’s most popular newsletters, I get a lot of them. I try to answer as many as I can, and even make a point to feature some of the best reader questions in my issues. One email recently came to my inbox that I thought was worth sharing with subscribers. I notice that the majority of companies in your portfolio are in the mining sector. Do you also cover oil and gas? — Tom W., Plover, Wis. The answer is an emphatic… Read More

I love reading emails from subscribers. And in my capacity as Chief Investment Strategist for three of StreetAuthority’s most popular newsletters, I get a lot of them. I try to answer as many as I can, and even make a point to feature some of the best reader questions in my issues. One email recently came to my inbox that I thought was worth sharing with subscribers. I notice that the majority of companies in your portfolio are in the mining sector. Do you also cover oil and gas? — Tom W., Plover, Wis. The answer is an emphatic yes. The petroleum sector has treated me very well over the years — one of my first recommendations as an analyst was Russian oil explorer Valkyries Petroleum, which returned 186% in under a year. #-ad_banner-#That said, there’s a well-worn saying among commodities investors: “If you’re not a contrarian, you’re a victim.” Natural resources are notoriously cyclical: When they’re at a low, they’re likely to go higher. And conversely, when a sector is flying high, there may be considerable downside ahead when the inevitable pullback or complete bust comes. The oil and gas sector strikes me more as the latter these… Read More

When it comes to IPOs, you can either be fortunate enough to buy into a deal on the offering price… or you must wait for shares to drop back to earth. #-ad_banner-#In recent years, many new issues have busted out of the starting gate and never looked back, leaving shares trading at valuations that can only be justified with a very long time horizon. Of further concern, many of these hot IPOs hold real risk when insiders are freed from holding shares as part of the lockup expiration. As an example, I recently cautioned that 465 million shares of Twitter… Read More

When it comes to IPOs, you can either be fortunate enough to buy into a deal on the offering price… or you must wait for shares to drop back to earth. #-ad_banner-#In recent years, many new issues have busted out of the starting gate and never looked back, leaving shares trading at valuations that can only be justified with a very long time horizon. Of further concern, many of these hot IPOs hold real risk when insiders are freed from holding shares as part of the lockup expiration. As an example, I recently cautioned that 465 million shares of Twitter (NYSE: TWTR) will be hitting the market in May — a powerful headwind for a cooling IPO. Instead of following hot IPOs, it makes better sense to follow the laggards. These are the companies that have either already fallen below their offering price, or fallen sharply from their post-IPO peaks. To be sure, many of these new issues deserve the drubbing they have received, but some companies just need to deliver better and more consistent results to build a shareholder base. Here are three 2013 IPOs that have fallen out of bed but show solid turnaround potential. 1.  SFX Entertainment… Read More

Buying stocks that are surrounded by negativity is not fun — but the best deals are often found in companies that are undergoing turnarounds yet still mired in bearish sentiment. #-ad_banner-#This should come as no surprise. After all, the reverse is true — as Warren Buffett has said, “You pay a very high price in the stock market for a cheery consensus.” The market is full of stories about struggling companies that were able to turn around difficult situations and become profitable — companies like Apple (Nasdaq: AAPL), General Motors (NYSE: GM) and Citibank (NYSE: C). Investors in those companies… Read More

Buying stocks that are surrounded by negativity is not fun — but the best deals are often found in companies that are undergoing turnarounds yet still mired in bearish sentiment. #-ad_banner-#This should come as no surprise. After all, the reverse is true — as Warren Buffett has said, “You pay a very high price in the stock market for a cheery consensus.” The market is full of stories about struggling companies that were able to turn around difficult situations and become profitable — companies like Apple (Nasdaq: AAPL), General Motors (NYSE: GM) and Citibank (NYSE: C). Investors in those companies who recognized and acted upon their turnarounds reaped large profits. To be sure, not every struggling company returns to profitability. Many wither and die on the vine, leaving investors with little to nothing to show for their trust and investment. There is no question that investing in turnaround candidates is risky. However, the substantial potential upside, combined with tactics to control risk, can make turnaround investing a profitable strategy. A prime example of profiting from a company that is mired in negativity but is in the process of turning things around is YRC Worldwide (Nasdaq: YRCW), a Kansas-based company that… Read More

Banks as a group have had a great couple of years with super-low interest rates and the essentially zero cost of money. The Financial Select Sector SPDR (NYSE: XLF) has risen almost 200% in the past five years, and monetary policy doesn’t appear to be changing anytime soon. The yearlong trading range between $18 and $22 targets a $4 move on a breakout and a 20% extension of the rally run. One stock that is lagging behind the sector and likely to play catch-up is Morgan Stanley (NYSE: MS). MS has support just below the technical pivot at… Read More

Banks as a group have had a great couple of years with super-low interest rates and the essentially zero cost of money. The Financial Select Sector SPDR (NYSE: XLF) has risen almost 200% in the past five years, and monetary policy doesn’t appear to be changing anytime soon. The yearlong trading range between $18 and $22 targets a $4 move on a breakout and a 20% extension of the rally run. One stock that is lagging behind the sector and likely to play catch-up is Morgan Stanley (NYSE: MS). MS has support just below the technical pivot at $28. An upside breakout of the four-month trading range between $28 and $32 targets a move to $36. Only a close below $24 on a weekly basis would negate the bullish trend. #-ad_banner-#The $36 target is about 18% higher than recent prices, but traders who use a capital-preserving, stock substitution strategy could make almost 70% on a move to that level. One major advantage of using a long call option rather than buying a stock outright is putting up much less capital to control 100 shares — that’s the power of leverage. But with all of the potential… Read More

When it comes to commodities, investors typically make a classic mistake: They shun them when they are out of favor, and they load up on them when prices are surging. The contrarian view is so much more profitable. #-ad_banner-#For example, I noted a few months ago that an extended period of oversupply had pushed coffee prices down to multi-year lows, but added that “signs are emerging that current coffee prices are causing too much distress among coffee growers. Yearlong protests in Brazil, the world’s largest coffee producer, has led the government to take action to prop up prices. The iPath… Read More

When it comes to commodities, investors typically make a classic mistake: They shun them when they are out of favor, and they load up on them when prices are surging. The contrarian view is so much more profitable. #-ad_banner-#For example, I noted a few months ago that an extended period of oversupply had pushed coffee prices down to multi-year lows, but added that “signs are emerging that current coffee prices are causing too much distress among coffee growers. Yearlong protests in Brazil, the world’s largest coffee producer, has led the government to take action to prop up prices. The iPath Pure Beta ETN (Nasdaq: CAFE), which had lost more than 30% of its value at that point in 2013, has rebounded 50% since then. Coffee prices are simply responding to the first rule of economics: Falling prices lead to falling supply, which eventually moves below levels of demand, providing a boost to prices. In the case of coffee, a change in growing conditions also affected those factors. Indeed, the impressive rebound in gold prices and natural gas prices are also the result of changes in demand. The factors impacting coffee, gold and natural gas are specific to those commodities and… Read More

If you racked up big gains in the stock market last year, you have Ben Bernanke and his cohorts at the Federal Reserve to thank. #-ad_banner-#The S&P 500’s 29.6% gain in 2013 (32.4% when dividends are included), which was the best year since 1997, was largely based on comments made by the Fed in December 2012. Back then, the economy was so weak that the Fed committed to keep the federal funds rate at historic lows in place until at least the middle of 2015, even later than many economists had assumed. Against such a favorable interest rate backdrop, stocks… Read More

If you racked up big gains in the stock market last year, you have Ben Bernanke and his cohorts at the Federal Reserve to thank. #-ad_banner-#The S&P 500’s 29.6% gain in 2013 (32.4% when dividends are included), which was the best year since 1997, was largely based on comments made by the Fed in December 2012. Back then, the economy was so weak that the Fed committed to keep the federal funds rate at historic lows in place until at least the middle of 2015, even later than many economists had assumed. Against such a favorable interest rate backdrop, stocks faced little resistance. Indeed, throughout 2013, the likelihood of an imminent increase in the federal funds rate remained off the table. And three Fed governors even suggested in December that interest rates would remain untouched into 2016. But in the early months of 2014, the Fed playbook is starting to look different. The recently released minutes from the past Fed meeting in late January show that some Fed governors are getting anxious. As The Wall Street Journal noted recently, Fed governors have begun discussing “the possibility of rate hikes in the near future.” An increasing number… Read More

For the past few months, I’ve been telling readers of my High-Yield Investing newsletter about the secrets of America’s privileged. You see, wealthy folks in the U.S. invest differently than most of us. And I believe it’s worth examining their investing habits and taking a cue from their practices. After all, America’s privileged have their wealth for a reason… It’s one thing to accumulate wealth, but they’re also incredibly successful at preserving and growing it for years on end. #-ad_banner-#I personally know about the perpetual income of America’s privileged because it’s also been in my family now for three generations. Read More

For the past few months, I’ve been telling readers of my High-Yield Investing newsletter about the secrets of America’s privileged. You see, wealthy folks in the U.S. invest differently than most of us. And I believe it’s worth examining their investing habits and taking a cue from their practices. After all, America’s privileged have their wealth for a reason… It’s one thing to accumulate wealth, but they’re also incredibly successful at preserving and growing it for years on end. #-ad_banner-#I personally know about the perpetual income of America’s privileged because it’s also been in my family now for three generations. Ever since I can remember, money was never a source of worry in our family. I don’t recall hard times while growing up. I know there were recessions… and I had friends whose fathers had been laid off. But somehow, we were isolated from the same hardships. You see, my grandfather came upon the perpetual income of America’s privileged 30 years ago and it has changed the way our family has lived ever since… Now, don’t get me wrong. I’m not claiming I come from a family of America’s privileged. We’re ordinary folks. The kind you meet every day. Both… Read More

I bet most investors, even risk-tolerant ones, would be fibbing if they said they weren’t nervous at all right now. #-ad_banner-#With so many top analysts, economists and money managers saying we’re due for a big correction or extended rough patch in stocks, who wouldn’t be at least a little jumpy? (I am, and I have very high risk tolerance.) With plenty of fear to go around, many investors probably wouldn’t mind injecting a good dose of safety into their portfolios — something a lot more conservative but still able to earn a decent return. With interest rates so low, cash,… Read More

I bet most investors, even risk-tolerant ones, would be fibbing if they said they weren’t nervous at all right now. #-ad_banner-#With so many top analysts, economists and money managers saying we’re due for a big correction or extended rough patch in stocks, who wouldn’t be at least a little jumpy? (I am, and I have very high risk tolerance.) With plenty of fear to go around, many investors probably wouldn’t mind injecting a good dose of safety into their portfolios — something a lot more conservative but still able to earn a decent return. With interest rates so low, cash, CDs and bonds won’t do — not on their own, anyway. Certainly, it’s necessary to have at least some exposure to stocks, but how much? And to what kinds? For instance, should there be exposure to foreign stocks, or are these too risky? What ratio of fixed-income and cash is appropriate? Clearly, investors seeking greater safety have many questions to consider. Fortunately, I’ve found an investment — an exchange-traded fund (ETF) — that I think has all the answers. This ETF hasn’t been around that long but plenty long enough to prove its mettle, in my opinion. In fact, a… Read More