Coming out of World War II, few Americans could have known about the great era of prosperity soon to arrive.#-ad_banner-# From 1946 through 1973, our economy expanded by a 3.8% annual pace. Sure, there were a few recessions along the way, but the rapid rise of the middle class, which enjoyed a rising standard of living, helped set the stage for the world’s greatest economy. Roughly one-fourth of all global economic activity takes place on U.S. shores. But as I noted last week, the U.S. is now in its sixth year of weak economic growth. Economists are growing increasingly concerned… Read More

Coming out of World War II, few Americans could have known about the great era of prosperity soon to arrive.#-ad_banner-# From 1946 through 1973, our economy expanded by a 3.8% annual pace. Sure, there were a few recessions along the way, but the rapid rise of the middle class, which enjoyed a rising standard of living, helped set the stage for the world’s greatest economy. Roughly one-fourth of all global economic activity takes place on U.S. shores. But as I noted last week, the U.S. is now in its sixth year of weak economic growth. Economists are growing increasingly concerned that we’ve entered into an extended period of anemic growth. Indeed, the sole purpose of the Federal Reserve’s massive stimulus programs was to revive the economy’s “animal spirits.” But the economy has yet to respond. The Fed is pushing on a string. Investors may have a hard time seeing this notion as the stock market moves steadily higher. Profits are still rising, thanks to lean corporate expenses, but fully half of the companies in the S&P 500 are expected to boost sales by less than 5% next year. Blame goes to a stagnant income picture for many Americans. Read More

Last week, stock prices reacted to the news. Stock picking could become more important as the market reaches new highs, and one technical indicator could be helpful to traders looking to avoid downside surprises. It Is Becoming a Market of Stocks Fed chair nominee Janet Yellen confirmed that quantitative easing and low interest rates should continue for the foreseeable future. Traders seem to believe this is good news, and SPDR S&P 500 (NYSE: SPY) gained 1.56% last week.#-ad_banner-# The ETF has now closed up six weeks in a row. SPY has had a winning streak of this length 15… Read More

Last week, stock prices reacted to the news. Stock picking could become more important as the market reaches new highs, and one technical indicator could be helpful to traders looking to avoid downside surprises. It Is Becoming a Market of Stocks Fed chair nominee Janet Yellen confirmed that quantitative easing and low interest rates should continue for the foreseeable future. Traders seem to believe this is good news, and SPDR S&P 500 (NYSE: SPY) gained 1.56% last week.#-ad_banner-# The ETF has now closed up six weeks in a row. SPY has had a winning streak of this length 15 times in the past 20 years. In the short term, this winning streak offers us little information. The next week closed up seven times and lower eight times. Longer term, SPY was up six months later 80% of the time. The winning streak is interesting, but in the long run, stock prices are driven by earnings, and the trend in earnings is likely to determine whether prices are higher or lower six months from now. Earnings season came to an unofficial end when Wal-Mart (NYSE: WMT) reported last week. On this front, the results were mixed. Among the large-cap stocks… Read More

The past few years have been a great time to be an investor. Federal Reserve Chairman Ben Bernanke’s zero interest rate policy has fueled large gains in just about every market sector since 2009. There’s little question that his policies are bullish in the short term, but what happens when the Fed’s easy money stops? For an answer to this, we can take a page out of baseball history. In 1998, Mark McGwire set a record by hitting 70 home runs during the season, while Sammy Sosa hit 66. The previous record of 61 home runs had been set in… Read More

The past few years have been a great time to be an investor. Federal Reserve Chairman Ben Bernanke’s zero interest rate policy has fueled large gains in just about every market sector since 2009. There’s little question that his policies are bullish in the short term, but what happens when the Fed’s easy money stops? For an answer to this, we can take a page out of baseball history. In 1998, Mark McGwire set a record by hitting 70 home runs during the season, while Sammy Sosa hit 66. The previous record of 61 home runs had been set in 1961 by Roger Maris. In 2001, Barry Bonds broke McGwire’s record by hitting 73 home runs. At the time, baseball was an exciting sport to watch as home run records captured headlines. Later, fans learned that the hitters were abusing steroids. Home run outputs returned to normal after leaguewide steroid testing became the norm in 2003. Fed policy is acting like a performance-enhancing drug for the market. When it stops easing, I believe the markets will be unable to continue climbing at the frantic pace seen during the past year. Returns will be below average for some time, and stock… Read More

It might be pie-in-the-sky thinking that Rackspace Hosting (NYSE: RAX) could overtake Amazon Web Services as king of cloud hosting — at least not in the near future. That’s not necessarily a bad thing for investors. While Amazon.com’s (Nasdaq: AMZN) enormous profile has cast a shadow over Rackspace for some time now, being No. 2 in this arena is nothing to sneeze at. Back in March 2012, my StreetAuthority colleague David Sterman named RAX one of the most overvalued stocks in the market — but these days, Rackspace is getting some rather special attention at current prices. When Dave’s article… Read More

It might be pie-in-the-sky thinking that Rackspace Hosting (NYSE: RAX) could overtake Amazon Web Services as king of cloud hosting — at least not in the near future. That’s not necessarily a bad thing for investors. While Amazon.com’s (Nasdaq: AMZN) enormous profile has cast a shadow over Rackspace for some time now, being No. 2 in this arena is nothing to sneeze at. Back in March 2012, my StreetAuthority colleague David Sterman named RAX one of the most overvalued stocks in the market — but these days, Rackspace is getting some rather special attention at current prices. When Dave’s article was published last year, RAX sold for about $54. It subsequently grew even more expensive, to nearly $78 a share this January, but it has since fallen nearly 50% from that high. Last Monday, RAX’s share price of $49.31prompted investors to acquire 21,687 call options on the company, about 815% more than usual. That same day, Rackspace reported third-quarter earnings, showing higher than expected revenue ($389 million, up15.7% from a year ago) but lower than expected earnings per share (EPS), which came in at $0.11 compared with the $0.16 expected. So, you had some investors selling shares — price fell… Read More

It’s tough to watch the market rise sharply if your portfolio has been treading water.#-ad_banner-# That’s the reality facing many investors that stepped to the sidelines earlier this year after seeing their portfolios soar in value since the bottom in March 2009. But it could have been worse. You could have invested in some absolute duds. Morningstar keeps track of the performance of all major exchange-traded funds (ETFs) and calculates a major loss for hundreds of these funds in 2013. The key question for investors: Which of these 2013 duds will morph into 2014 heroes? Let’s take a closer look. Read More

It’s tough to watch the market rise sharply if your portfolio has been treading water.#-ad_banner-# That’s the reality facing many investors that stepped to the sidelines earlier this year after seeing their portfolios soar in value since the bottom in March 2009. But it could have been worse. You could have invested in some absolute duds. Morningstar keeps track of the performance of all major exchange-traded funds (ETFs) and calculates a major loss for hundreds of these funds in 2013. The key question for investors: Which of these 2013 duds will morph into 2014 heroes? Let’s take a closer look. Leveraged Gold? Yikes! It hasn’t paid to be bullish on gold this year, as the yellow metal lost its status as inflation hedge. But it’s proved to be downright foolhardy to buy leveraged ETFs that move at two or three times the rate of change in gold prices. These gold leveraged ETFs lost most of the money tied up in them and are clearly too risky to own. If you are bullish on gold for 2014, you may be better served by buying gold miners or straight-up gold funds that simply move in tandem with gold prices. No need… Read More

Having been born and raised outside of Pittsburgh, I know firsthand of the ravages of factory pollution. My grandfather told me stories about the streetlights coming on midday because of the amount of smog in the downtown area. Many of the region’s streams and rivers were void of life back in the 1960s due to industrial waste deliberately and inadvertently seeping into the waterways. Things have improved greatly since those dark days. I have fond memories of fishing local streams for pollution-resistant fish like carp and catfish. Those same streams had been void of life just a decade or so… Read More

Having been born and raised outside of Pittsburgh, I know firsthand of the ravages of factory pollution. My grandfather told me stories about the streetlights coming on midday because of the amount of smog in the downtown area. Many of the region’s streams and rivers were void of life back in the 1960s due to industrial waste deliberately and inadvertently seeping into the waterways. Things have improved greatly since those dark days. I have fond memories of fishing local streams for pollution-resistant fish like carp and catfish. Those same streams had been void of life just a decade or so prior. Today, many of these Pittsburgh streams hold healthy populations of clean water fish like smallmouth bass and trout. This is a great testament to the success of the U.S. environmental movement, as well as commercial firms dedicated to pollution reduction. Personally, I like it when the free market helps improve the environment. It’s a great feeling to be able to earn a profit by doing a good thing for the environment. The free market has spawned firms like Illinois-based Fuel-Tech (NASDAQ: FTEK), which specializes in pollution reduction technology. Not only do the company’s products help mitigate the negative effects… Read More

The Great Depression is an era few of us would choose to revisit. Though the economy isn’t especially perky these days, key measures of joblessness, poverty and hunger are nowhere near the levels seen back in the 1930s.#-ad_banner-# But by one key measure, the economy is actually in worse shape. From 1930 until 1933, the U.S. economy grew less than 3% each year. That was the longest such streak of the 20th century — and we’ve already broken it in the 21st century. We’re on pace for a sixth straight year of sub-3% GDP growth, and signs are pointing continued… Read More

The Great Depression is an era few of us would choose to revisit. Though the economy isn’t especially perky these days, key measures of joblessness, poverty and hunger are nowhere near the levels seen back in the 1930s.#-ad_banner-# But by one key measure, the economy is actually in worse shape. From 1930 until 1933, the U.S. economy grew less than 3% each year. That was the longest such streak of the 20th century — and we’ve already broken it in the 21st century. We’re on pace for a sixth straight year of sub-3% GDP growth, and signs are pointing continued anemic growth in the years ahead (which I’ll expand upon in a moment). Frankly, anything near 3% GDP growth would be welcome. We appear to have approached that level in the third quarter, hitting 2.8%. But almost a full percentage point of that was due to a buildup in inventories, and such gains tend to reverse in the following quarter. Translation: Get ready for 2% GDP growth — at best — in the fourth quarter. The recent government shutdown means we may end up closer to 1.5%. Of course the stock market seems to be simply ignoring the economic travails. Read More

There’s a long-standing argument between finance academics and investors. #-ad_banner-# Most academics assert that the market is efficient and there is very little edge available for traders and short-term investors. When challenged with long-term success stories of traders who consistently beat the market, the academics say those individuals are presently the statistical outliers. In other words, they are simply lucky — just like the folks who win the lottery several times or consistently succeed at any game of “chance.” I am fortunate to be married to a woman who holds a doctorate in finance and is a great resource when… Read More

There’s a long-standing argument between finance academics and investors. #-ad_banner-# Most academics assert that the market is efficient and there is very little edge available for traders and short-term investors. When challenged with long-term success stories of traders who consistently beat the market, the academics say those individuals are presently the statistical outliers. In other words, they are simply lucky — just like the folks who win the lottery several times or consistently succeed at any game of “chance.” I am fortunate to be married to a woman who holds a doctorate in finance and is a great resource when it comes to programming trading strategies and understanding market microstructure. However, we are often at odds when it comes to the viability of active trading. I love to prove her ideas wrong by showing her papers by respected academics who take my side. I am certain she gets the same vicarious thrill when my market ideas are proven inaccurate. The one thing my wife and I agree upon is the wisdom of long-term dividend investing. (In that respect, we’re also in agreement with regular readers of Amy Calistri’s Daily Paycheck advisory, which emphasizes the portfolio-growing power of dividends.) My wife… Read More

It’s official… the United States is about to become the largest energy producer in the world (if it’s not already).#-ad_banner-# According to the Energy Information Administration (EIA), the U.S. is currently producing about 22 million equivalent barrels of oil and natural gas a day — up from 18 million barrels in 2008. While no one knows the actual figures for Russia (the largest producer for the past several years), estimates out of Moscow are forecasting the country will produce 21.8 million barrels a day in 2013. Think about that for a second… Just five years ago, lofty energy prices in… Read More

It’s official… the United States is about to become the largest energy producer in the world (if it’s not already).#-ad_banner-# According to the Energy Information Administration (EIA), the U.S. is currently producing about 22 million equivalent barrels of oil and natural gas a day — up from 18 million barrels in 2008. While no one knows the actual figures for Russia (the largest producer for the past several years), estimates out of Moscow are forecasting the country will produce 21.8 million barrels a day in 2013. Think about that for a second… Just five years ago, lofty energy prices in the U.S. nearly crippled the state of the overall economy. Back then there was so much demand for energy — and such little supply — that companies like Cheniere Energy (NYSE: LNG) were working day and night to build natural gas import terminals to take advantage of cheaper prices overseas. Today, the landscape in the American energy market has completely changed. Thanks to new developments in horizontal drilling and hydraulic fracturing (“fracking”), the U.S. has unlocked waves of oil and gas reserves that were once thought unrecoverable. As you’d expect, the optimism surrounding this “shale boom” has made American energy… Read More

$142 million for a Francis Bacon triptych. $120 million for a pastel by Edvard Munch. $106 million for an oil painting by Picasso. After a slow 2012, the fine-art market is back. Stock market gains worldwide and growing wealth in Asia have lifted prices to new all-time highs. That includes the recent $142 million for the Francis Bacon triptych, eclipsing last year’s record $120 million for Munch’s “The Scream.”#-ad_banner-# The fine-art market is trading just like the stock market. Buyers are stepping out and lifting the bid. That’s putting a lot of cash into the pockets of investors with rare… Read More

$142 million for a Francis Bacon triptych. $120 million for a pastel by Edvard Munch. $106 million for an oil painting by Picasso. After a slow 2012, the fine-art market is back. Stock market gains worldwide and growing wealth in Asia have lifted prices to new all-time highs. That includes the recent $142 million for the Francis Bacon triptych, eclipsing last year’s record $120 million for Munch’s “The Scream.”#-ad_banner-# The fine-art market is trading just like the stock market. Buyers are stepping out and lifting the bid. That’s putting a lot of cash into the pockets of investors with rare collections. But art connoisseurs aren’t the only ones cashing in. I want to tell you about a global leader in the auctioneer business that is also cashing in on these nine-figure masterpieces. Not only does the company generate big commissions from conducting auctions for the world’s rarest art and wealthiest individuals, it enjoys a duopoly with just one competitor, is protected by high barriers to entrance, is highly leveraged against growth in Asia and also pays a quarterly dividend. That has fueled an outsize gain of 80% in the past two years. Take a look below. Sotheby’s (NYSE:… Read More