There’s nothing like not getting your package delivered in time for Christmas.#-ad_banner-#​ This happened to a number of consumers this holiday season. The online retailers blamed the major shipping companies. The shipping companies blamed the online retailers. Customers were outraged. They took to social media, calling out both online retailers and the major delivery companies. Surprisingly, the market stood by the shipping stocks and none took a major hit on the negative news. Investors should take this as a sign of confidence. FedEx (NYSE: FDX) was one of the companies at the center of the… Read More

There’s nothing like not getting your package delivered in time for Christmas.#-ad_banner-#​ This happened to a number of consumers this holiday season. The online retailers blamed the major shipping companies. The shipping companies blamed the online retailers. Customers were outraged. They took to social media, calling out both online retailers and the major delivery companies. Surprisingly, the market stood by the shipping stocks and none took a major hit on the negative news. Investors should take this as a sign of confidence. FedEx (NYSE: FDX) was one of the companies at the center of the ruined package delivery debacle, but investors shouldn’t let their holiday mishaps interfere with their investing. Gearing Up For 2014 The short Thanksgiving-to-Christmas timeframe and an overwhelming number of e-commerce purchases showed just how unprepared the major shippers were. FedEx has been throwing money into its infrastructure and will be more than prepared for the steady rise in e-commerce next holiday season. FedEx will have three to five new hubs available for ground delivery next holiday season. The fact remains that as retailers battle for customers, the one sure winner will be shippers like FedEx.  In the eyes of the… Read More

The covered call strategy can be a very lucrative approach to investing, especially during periods of uncertainty, when most traders are lucky to simply maintain their capital base.#-ad_banner-# As a brief overview, this strategy includes buying a stock and then selling call options against the position. For selling the call option contract, we collect a premium, and in return, become obligated to sell our stock at the option’s strike price, assuming the market price is above that level before… Read More

The covered call strategy can be a very lucrative approach to investing, especially during periods of uncertainty, when most traders are lucky to simply maintain their capital base.#-ad_banner-# As a brief overview, this strategy includes buying a stock and then selling call options against the position. For selling the call option contract, we collect a premium, and in return, become obligated to sell our stock at the option’s strike price, assuming the market price is above that level before the option expires. As a general rule, I prefer to set up covered call trades that will expire in four to eight weeks. This allows us to sell calls at an attractive price and still close out our trades for profits relatively quickly. Typically, we can expect to book a profit of 3% to 5% over the time period, which means that our per-year returns are in the neighborhood of 25% to 35%. Dividends Add Firepower To A Covered Call Strategy Covered call trades are powerful enough on their own. But when you add in the extra income from… Read More

There are overreactions in the stock market all the time, leading to mispriced securities. This happens as investors tend to overreact to news or earnings. Almost no company is immune.#-ad_banner-#​ Unjustified downward pressure can even happen to companies that offer products that touch every aspect of our lives. One thing that investors should remember is that these are usually near term pressures and can make for great buying opportunities. This is especially true if there is a long-term growth story is intact.  One recent example is blue-chip retailer Target (NYSE: TGT), which said last month… Read More

There are overreactions in the stock market all the time, leading to mispriced securities. This happens as investors tend to overreact to news or earnings. Almost no company is immune.#-ad_banner-#​ Unjustified downward pressure can even happen to companies that offer products that touch every aspect of our lives. One thing that investors should remember is that these are usually near term pressures and can make for great buying opportunities. This is especially true if there is a long-term growth story is intact.  One recent example is blue-chip retailer Target (NYSE: TGT), which said last month that it had sustained a security breach of customer account info. The news continued to get worse for the stock as Target disclosed last week that additional info — including phone numbers and street and email addresses — might have been compromised. As a result, the company lowered its earnings outlook for its fiscal fourth quarter due to notably lower store traffic and sales stemming from news of the data breach. However, the recent headlines are overshadowing the long-term potential for the stock. Yes, some 40 million credit and debit card accounts were breached, but Target doesn’t think PINs were… Read More

If you were a regular watcher of the business news channels in the spring of 2011, you couldn’t escape one of the hottest, most heavily hyped stocks we’ve seen in the modern investing era.#-ad_banner-#​ An out-of-nowhere company suddenly sported a billion-dollar market value, and analysts and hedge fund managers alike proclaimed that it was still sharply undervalued. Its smooth-talking CEO made the rounds with the financial media, casually claiming that his company was on the cusp of a mining revolution that would outshine the 1849 gold rush. Yet with each passing quarter, it became apparent that the whole… Read More

If you were a regular watcher of the business news channels in the spring of 2011, you couldn’t escape one of the hottest, most heavily hyped stocks we’ve seen in the modern investing era.#-ad_banner-#​ An out-of-nowhere company suddenly sported a billion-dollar market value, and analysts and hedge fund managers alike proclaimed that it was still sharply undervalued. Its smooth-talking CEO made the rounds with the financial media, casually claiming that his company was on the cusp of a mining revolution that would outshine the 1849 gold rush. Yet with each passing quarter, it became apparent that the whole story was mere smoke and mirrors. Rare earth miner Molycorp (NYSE: MCP) become a dirty name among the legions of investors that got caught up in the hype, and its stock has been tossed into the discard bin. In hindsight, about the only thing this company was good for was its ability to separate investors from their money. At the time of its IPO in the summer of 2010, Molycorp had roughly 38 million shares outstanding. A series of capital raises led to the issuance of 130 million more shares, and the company still… Read More

It’s a country that rarely gets any mention by the mainstream financial media. Sure, you hear about India, China, Russia, and Brazil. And for good reason — those countries are growing at incredible rates, which has made many investors rich already… and will make even more people wealthy in the years ahead. But for my money, I don’t know if there is a better place to invest than Chile. #-ad_banner-#It’s small — its total GDP is roughly $325.8 billion. That’s about 50 times smaller than the United States’ economy. Meanwhile, only 17.2 million people call Chile home… giving it a… Read More

It’s a country that rarely gets any mention by the mainstream financial media. Sure, you hear about India, China, Russia, and Brazil. And for good reason — those countries are growing at incredible rates, which has made many investors rich already… and will make even more people wealthy in the years ahead. But for my money, I don’t know if there is a better place to invest than Chile. #-ad_banner-#It’s small — its total GDP is roughly $325.8 billion. That’s about 50 times smaller than the United States’ economy. Meanwhile, only 17.2 million people call Chile home… giving it a smaller population than Florida. Right now, Chile’s economy is growing at a 4.7% annual rate — more than twice as fast the United States. That growth is accompanied by perhaps the most fiscally conservative government on the planet. National debt in the United States sits at 70% of GDP according to the CIA World Factbook. But Chile’s public debt totals just 12% of GDP. In fact, it is required by law to run a budget surplus unless there are extreme circumstances. In 2012, it ran a surplus of 0.5%. For comparison, the United States ran a deficit of nearly 7%… Read More

What do you call 10,000 baby boomers turning 65 every day for the next 20 years? If you’re a big pharmaceutical company, you might call it an ATM.#-ad_banner-# Investors got a taste of this in the late ’90s when drugmaker Pfizer (NYSE: PFE) introduced the erectile dysfunction wonder drug Viagra. Money was made as competitors came out with “me too” products, and Big Pharma threw itself into R&D for products tailored to serve this huge (65 million-plus) and aging market.  However, after a rally at the end of the 20th century, pharma stocks came back to earth with… Read More

What do you call 10,000 baby boomers turning 65 every day for the next 20 years? If you’re a big pharmaceutical company, you might call it an ATM.#-ad_banner-# Investors got a taste of this in the late ’90s when drugmaker Pfizer (NYSE: PFE) introduced the erectile dysfunction wonder drug Viagra. Money was made as competitors came out with “me too” products, and Big Pharma threw itself into R&D for products tailored to serve this huge (65 million-plus) and aging market.  However, after a rally at the end of the 20th century, pharma stocks came back to earth with the rest of the market and spent almost a decade chugging sideways. But as markets crawled out of the wreckage of the financial crisis, pharma stocks have quietly broken out and moved higher. Five years ago, I began including shares of Eli Lilly (NYSE: LLY) in my clients’ equity portfolios. At the time, the meat-and-potatoes metrics of the stock were impressive: single-digit trailing and forward price-to-earnings (P/E) ratios, a dividend yield over 5%, a mountain of cash, skilled and committed management, and a full, promising new product pipeline — which is the difference between life and death in the pharma… Read More

Who doesn’t love to indulge with a sweet treat every now and then? (Especially when it’s chocolate…) #-ad_banner-#​ The likes of Oreos, Nabisco cookies and Cadbury chocolates are great places to start. To the rest of the world, these decadent goodies are foreign concepts — but rising middle classes in emerging markets means these items are increasingly being made available to the masses. Meanwhile, snacks continue to be a staple in developed markets despite the rise in health consciousness.  The best way to play the expanding emerging market wallet and global snack demand is Mondelez International (Nasdaq: MDLZ). With… Read More

Who doesn’t love to indulge with a sweet treat every now and then? (Especially when it’s chocolate…) #-ad_banner-#​ The likes of Oreos, Nabisco cookies and Cadbury chocolates are great places to start. To the rest of the world, these decadent goodies are foreign concepts — but rising middle classes in emerging markets means these items are increasingly being made available to the masses. Meanwhile, snacks continue to be a staple in developed markets despite the rise in health consciousness.  The best way to play the expanding emerging market wallet and global snack demand is Mondelez International (Nasdaq: MDLZ). With revenue of more than $35 billion last year, Mondelez is the maker of those Oreos, Nabisco cookies and Cadbury chocolates that U.S. consumers love so much — but it also makes various other snacks and beverages, including Lu biscuits, Trident gums, Jacobs coffee and Tang drink powder. Mondelez is the international business that was left after Kraft Foods (Nasdaq: KRFT) spun off its North American grocery business in 2012. The company sells nearly 60 brands in more than 165 countries. According to Forbes, the Mondelez brand is among the 50 most powerful in the world.  The rapid rise of China’s… Read More

Risk is a fundamental part of investing. It might be easiest to understand by using bonds as an example.#-ad_banner-#​ With bonds, the only investment that is considered to be risk free is short-term Treasury bills. For now, risk-free investing offers a return of 0.04%. At that rate, $1 million in retirement savings will provide $400 in income. Most investors don’t have $1 million, so their actual return from safe investments would be even lower. Because risk-free investments offer the smallest returns, pursuing higher income means accepting more risk. Treasury bills that mature in a year are an example… Read More

Risk is a fundamental part of investing. It might be easiest to understand by using bonds as an example.#-ad_banner-#​ With bonds, the only investment that is considered to be risk free is short-term Treasury bills. For now, risk-free investing offers a return of 0.04%. At that rate, $1 million in retirement savings will provide $400 in income. Most investors don’t have $1 million, so their actual return from safe investments would be even lower. Because risk-free investments offer the smallest returns, pursuing higher income means accepting more risk. Treasury bills that mature in a year are an example of how income and risk can be increased. This investment carries the risk that inflation could decrease the value of the principal invested in the bills. One-year T-bills are currently yielding about 0.1%, an amount that does not keep up with inflation. Investors are losing money, on an after-inflation basis, on all Treasurys with less than five years to maturity. This demonstrates that inflation risk might not be well understood by many investors because rational investors should not accept a nearly guaranteed loss in buying power. To beat inflation, investors are forced to accept what bond investors call credit risk. Read More

One of the most overlooked aspects of the market is the fact that as the economy rebounds, consumers aren’t alone in loosening their purse strings — businesses do, too.#-ad_banner-#​ Specifically, 2014 should see a higher level of securities trading and companies looking to make strategic investments. That means companies will increasingly be looking for advice and to raise money and buy up competitors.  Thus, investment banks should perform fairly well in 2014. On the other side, there should be a higher level of trading this year, which is good news for brokerage firms.  One of the best growth… Read More

One of the most overlooked aspects of the market is the fact that as the economy rebounds, consumers aren’t alone in loosening their purse strings — businesses do, too.#-ad_banner-#​ Specifically, 2014 should see a higher level of securities trading and companies looking to make strategic investments. That means companies will increasingly be looking for advice and to raise money and buy up competitors.  Thus, investment banks should perform fairly well in 2014. On the other side, there should be a higher level of trading this year, which is good news for brokerage firms.  One of the best growth plays for 2014 is a company that has exposure to both the brokerage and investment banking industries. Stifel Financial (NYSE: SF) is just that, and it appears to be one of the best plays in this highly fragmented industry.  Stifel is also playing its part in consolidating the industry. The company has spent upwards of $2 billion on acquisitions since 1997, and now has total client assets under management of $154 billion and 5,800 employees. Acquisitions and mergers should continue to be a great way for Stifel to snatch up market share, as well as gaining market share through organic… Read More