Although flying is one of the most attractive ways to travel, the airline industry has been one of the worst investments over the past decade.#-ad_banner-#​ Yet thanks to consolidation, the industry is getting more rational. With fewer airlines competing for customer dollars, the number of available seats should fall more in line with demand. This will allow the current operators the ability to maintain strong pricing and avoid having to drop prices to fill seats.  Given this newfound rationality, combined with a stabilizing of fuel prices and a potential rebounding of the economy, the airline industry could be… Read More

Although flying is one of the most attractive ways to travel, the airline industry has been one of the worst investments over the past decade.#-ad_banner-#​ Yet thanks to consolidation, the industry is getting more rational. With fewer airlines competing for customer dollars, the number of available seats should fall more in line with demand. This will allow the current operators the ability to maintain strong pricing and avoid having to drop prices to fill seats.  Given this newfound rationality, combined with a stabilizing of fuel prices and a potential rebounding of the economy, the airline industry could be a great investment over the next few years. The other beauty of the industry is the strong barriers to entry. Airports have a limited number of takeoff and landing slots, and the major airlines enjoy long-term leases on airport gates that help shut out the competition.  Southwest Airlines (NYSE: LUV) is one of the best picks in the industry given its stronghold on the short-haul market and renewed focus for returning capital to shareholders. The fact that it tailors to the short-haul market helps it keep fuel costs down and enjoy the lowest cost structure of the major airlines.  The… Read More

Investing can be exciting, but most of the time, the real winners are more staid if not outright boring. After all, Tesla (Nasdaq: TSLA) selling electric cars is fun. Bonds are for widows and orphans (or so the conventional wisdom goes).#-ad_banner-# If you like making money, whether in the form of capital gains or dividends, then I have a boring stock for you. Actually, it is a closed-end fund, but it pays a nice dividend and just broke out from a technical basing pattern. The Nuveen Quality Preferred Income Fund (NYSE: JTP) invests primarily in preferred… Read More

Investing can be exciting, but most of the time, the real winners are more staid if not outright boring. After all, Tesla (Nasdaq: TSLA) selling electric cars is fun. Bonds are for widows and orphans (or so the conventional wisdom goes).#-ad_banner-# If you like making money, whether in the form of capital gains or dividends, then I have a boring stock for you. Actually, it is a closed-end fund, but it pays a nice dividend and just broke out from a technical basing pattern. The Nuveen Quality Preferred Income Fund (NYSE: JTP) invests primarily in preferred stocks, and it has most of the characteristics I like to see in a stock or fund. No doubt, income-producing investments such as Treasury bonds and utility stocks were out of favor for much of the past year. Between May and August of last year, JTP shed more than 20%. But since August, trading has taken place in a range. Chart watchers call that a base, and the longer it lasts, the longer the rally should last if and when it finally breaks out. That breakout happened in JTP earlier this week and on nice volume. The past… Read More

Financial market prices are moved by participants anticipating changes in supply or demand, the fundamental forces of economic activity. Prices move based on what is expected to happen at some point in the future.#-ad_banner-#​ This is why markets often seem to move in the opposite direction many investors expect. The anticipation of a sharp change in supply or demand is often much more powerful than the actual confirmation of the change. The old market saying “Buy the rumor, sell the fact” is a great way to think of this concept. Nowhere is this better demonstrated than in the… Read More

Financial market prices are moved by participants anticipating changes in supply or demand, the fundamental forces of economic activity. Prices move based on what is expected to happen at some point in the future.#-ad_banner-#​ This is why markets often seem to move in the opposite direction many investors expect. The anticipation of a sharp change in supply or demand is often much more powerful than the actual confirmation of the change. The old market saying “Buy the rumor, sell the fact” is a great way to think of this concept. Nowhere is this better demonstrated than in the commodity markets. Rumors and forecasts of supply disruptions due to weather, government action or a host of other factors can send short-term commodity prices skyrocketing. Next, after the disruptive event occurs (or doesn’t), prices fall back to the norm. (Regular readers of Dave Forrest’s Junior Resource Advisor are kept abreast of potential changes in investors’ perception of supply & demand in the commodity markets.)   Recently, this is being witnessed in the natural gas market. Forecasts and the reality of an ultra-cold winter in the northeastern U.S. have pushed the spot price of natural gas prices from $3 per million… Read More

There is perhaps no better investment opportunity than when a company comes out and says it’s worth more after receiving a takeover offer. This is especially true when there are a number of suitors for that same company. #-ad_banner-#​In these situations, the “belle of the ball” becomes sought after, and the bidding war begins. The highest bidder wins the prize — and shareholders make off with a bunch of money and profits. This could well be what plays out with Time Warner Cable (NYSE: TWC). Charter Communications (Nasdaq: CHTR), backed by billionaire John Malone’s Liberty Media… Read More

There is perhaps no better investment opportunity than when a company comes out and says it’s worth more after receiving a takeover offer. This is especially true when there are a number of suitors for that same company. #-ad_banner-#​In these situations, the “belle of the ball” becomes sought after, and the bidding war begins. The highest bidder wins the prize — and shareholders make off with a bunch of money and profits. This could well be what plays out with Time Warner Cable (NYSE: TWC). Charter Communications (Nasdaq: CHTR), backed by billionaire John Malone’s Liberty Media (Nasdaq: LMCA), has offered to buy Time Warner Cable for $132.50 a share. If Time Warner Cable and Charter can swing a deal, the combined company would have cable systems stretching from Maine to California. However, TWC rejected Charter’s bid as too low; TWC is looking for $160 a share. The most interesting aspect of the Charter offer is that it’s an opening bid, which is a bid that gets the two sides to the negotiating table.  Another company that is interested in buying Time Warner Cable is Comcast Corp. (Nasdaq: CMCSA). Comcast is the largest cable provider in the… Read More

Recently, one of StreetAuthority’s most popular newsletter personalities, Nathan Slaughter, sat down for an exclusive interview with one of the brightest up-and-coming minds in finance — Mebane Faber. If you haven’t heard of Meb before, chances are you will be hearing a lot more about him soon. That’s because Meb has been taking the financial world by storm with his groundbreaking research into an investing concept that is so compelling — yet so simple — that we can’t believe this hasn’t been widely talked about before. #-ad_banner-#Later in today’s issue, we’re going to share excerpts of that interview with you. You’re… Read More

Recently, one of StreetAuthority’s most popular newsletter personalities, Nathan Slaughter, sat down for an exclusive interview with one of the brightest up-and-coming minds in finance — Mebane Faber. If you haven’t heard of Meb before, chances are you will be hearing a lot more about him soon. That’s because Meb has been taking the financial world by storm with his groundbreaking research into an investing concept that is so compelling — yet so simple — that we can’t believe this hasn’t been widely talked about before. #-ad_banner-#Later in today’s issue, we’re going to share excerpts of that interview with you. You’re sure to find it as fascinating as we have, and with any luck, it might make you a better, smarter investor. See, both Meb and Nathan are no strangers to the virtues of income investing. Many of you are likely already familiar with Nathan — he’s been with StreetAuthority for over 10 years and heads up one of the most successful income-oriented newsletters in the country — High-Yield Investing. Meb has written several bestselling financial books, including The Ivy Portfolio and Shareholder Yield, and was classmates with StreetAuthority co-founder Paul Tracy nearly 20 years ago at the University of Virginia. Read More

I couldn’t believe my eyes when I read the name of the company whose stock ticker triggered a buy alert on my quantitative stock screener.#-ad_banner-# My first thought was, “Didn’t these guys go out of business in the technology stock crash at the turn of the century?” Next, memories of my professional day-trading career came flooding back. This was the same company with which more than a few friends of mine earned over $100,000 a week for weeks on end, trading in and out of the stock by using insane amounts of leverage and proprietary trading firm capital. I don’t… Read More

I couldn’t believe my eyes when I read the name of the company whose stock ticker triggered a buy alert on my quantitative stock screener.#-ad_banner-# My first thought was, “Didn’t these guys go out of business in the technology stock crash at the turn of the century?” Next, memories of my professional day-trading career came flooding back. This was the same company with which more than a few friends of mine earned over $100,000 a week for weeks on end, trading in and out of the stock by using insane amounts of leverage and proprietary trading firm capital. I don’t want to name any names, but suffice it to say that several of these gentlemen went on to become successful hedge fund managers. Others used their massive good fortune to open a variety of businesses, but unfortunately, several went broke during the tech bust. Needless to say, this company was the darling of both investors and short-term day traders during the high-tech boom years of the 1990s. This stock provided huge trading volume and monster volatility on a daily basis. These factors, combined with virtually unlimited leverage, is how numerous day traders made their fortunes during the glory days of… Read More

When companies are set to go public, investors are often abuzz with anticipation. But not all initial public offerings (IPOs) are greeted with enthusiasm. #-ad_banner-# A decade ago, for example, more than one analyst expressed doubt about the IPO of one well-known company. High leverage and operational inefficiency made the stock dubious at best, they warned. The stock was volatile right off the bat, dropping 24% in its IPO year of 2004 and then rising 27% in 2005. Then the market began consistently punishing the company for its heavy debt, cumbersome business model and faltering profits, sending shares down 2%… Read More

When companies are set to go public, investors are often abuzz with anticipation. But not all initial public offerings (IPOs) are greeted with enthusiasm. #-ad_banner-# A decade ago, for example, more than one analyst expressed doubt about the IPO of one well-known company. High leverage and operational inefficiency made the stock dubious at best, they warned. The stock was volatile right off the bat, dropping 24% in its IPO year of 2004 and then rising 27% in 2005. Then the market began consistently punishing the company for its heavy debt, cumbersome business model and faltering profits, sending shares down 2% in 2006 and 19% in 2007. With the added weight of the financial crisis, the stock sank 83% in 2008. Just four years after debuting at about $27 per share, this stock was hitting lows in the $1.40 to $2 range. Well, things are a whole lot different now. The stock has staged one of the most impressive comebacks of the past half decade, soaring 1,960% since the beginning of 2009. It now trades above $70 a share. This would have impossible if the firm, automotive parts supplier TRW Automotive (NYSE: TRW), hadn’t slashed debt and stayed focused on restructuring… Read More

The covered call strategy can be a very effective approach to boosting the amount of income you generate from your investment portfolio. In fact, when things are going well and the stocks that you use remain stable or increase in price, it is not unreasonable to target returns between 25% and 35% per year.#-ad_banner-# The approach takes a certain amount of maintenance, as we typically set up trades that expire over a four- to eight-week timeframe. But the time investment usually turns out to be worthwhile considering the reliable income stream that is available. Although the… Read More

The covered call strategy can be a very effective approach to boosting the amount of income you generate from your investment portfolio. In fact, when things are going well and the stocks that you use remain stable or increase in price, it is not unreasonable to target returns between 25% and 35% per year.#-ad_banner-# The approach takes a certain amount of maintenance, as we typically set up trades that expire over a four- to eight-week timeframe. But the time investment usually turns out to be worthwhile considering the reliable income stream that is available. Although the covered call strategy is fairly easy to implement, the true key to long-term success is being able to manage risk when trades do not go as planned. Proper risk management will allow you to keep your capital base intact, which in turn allows you to make up any losses quickly and continue your process of generating investment income. Before I explain how to manage risk when stocks decline, let’s first take a quick look at how the covered call strategy works. To begin with, we purchase shares of a stock that we believe will be stable or move higher. We… Read More

To profit from the short-term openings the market hands you, it takes the right strategy.#-ad_banner-# That’s a lesson I had to learn after correctly predicting that the U.S. would be in for a remarkably cold winter. Though temperatures in much of the U.S. have fallen to the lowest levels in years, the stock picks I suggested simply didn’t have enough leverage to weather as I anticipated. As I noted in late December, those picks rose only modestly as winter dug in, even as natural gas-focused exchange-traded funds (ETFs) fared a lot better. The explanation is straightforward. As I noted last month,… Read More

To profit from the short-term openings the market hands you, it takes the right strategy.#-ad_banner-# That’s a lesson I had to learn after correctly predicting that the U.S. would be in for a remarkably cold winter. Though temperatures in much of the U.S. have fallen to the lowest levels in years, the stock picks I suggested simply didn’t have enough leverage to weather as I anticipated. As I noted in late December, those picks rose only modestly as winter dug in, even as natural gas-focused exchange-traded funds (ETFs) fared a lot better. The explanation is straightforward. As I noted last month, “Many energy traders don’t trust quick moves in energy prices, and they assume that profit-taking will soon ensue. If gas prices move back below $4 per thousand cubic feet (Mcf), then these companies will generate a lesser benefit.” Since then, natural gas prices have kept surging, and these stocks still haven’t budged much. Yet a change in the weather provides a shot at redemption. Those rapidly surging ETFs appear set to reverse course, and you can even invest in this strategy without initiating a short sale. Plunging Storage The surge in gas prices is due to rising gas… Read More