During bull markets, often the best way to trade is to go with the momentum. That’s usually the route I like to take, but there’s another way to trade that can also net you big results. That is to identify sectors that have come under fire that have the potential to move much higher — that is, value trades. The multi-national industrial mining sector fits this bill. One great way to invest in this sector is with iShares MSCI Global Metals & Mining Producers (NYSE: PICK). This exchange-traded fund (ETF) holds the biggest industrial mining companies, including BHP Billiton (NYSE:… Read More

During bull markets, often the best way to trade is to go with the momentum. That’s usually the route I like to take, but there’s another way to trade that can also net you big results. That is to identify sectors that have come under fire that have the potential to move much higher — that is, value trades. The multi-national industrial mining sector fits this bill. One great way to invest in this sector is with iShares MSCI Global Metals & Mining Producers (NYSE: PICK). This exchange-traded fund (ETF) holds the biggest industrial mining companies, including BHP Billiton (NYSE: BHP), Freeport-McMoRan Copper & Gold (NYSE: FCX) and Rio Tinto (NYSE: RIO). Although PICK is down 12% year to date, the fund has seen some strong buying during the past four months, rising 27% since its July 5 low. The reason for the buying in the industrial metals sector of late is partly due to the general rebound in global stocks, but it is also partly due to the global economic recovery thesis centered around China. Solid GDP data and good manufacturing numbers out of that country, one of the biggest consumers of industrial metals such as iron… Read More

Many investors look to buy and sell stocks based solely on near-term business conditions. If management raises guidance for the next quarter, shares rally. And if management takes note of some near-term headwinds, investors flee. A great example: Shares of insurance giant American International Group (NYSE: AIG) fell 6.5% on the day of its earnings release in late October when CEO Robert Benmosche noted that the company’s property and casualty insurance businesses were far healthier than a few years ago but still not generating the returns that they should. Investors were also disappointed that a planned asset sale of its… Read More

Many investors look to buy and sell stocks based solely on near-term business conditions. If management raises guidance for the next quarter, shares rally. And if management takes note of some near-term headwinds, investors flee. A great example: Shares of insurance giant American International Group (NYSE: AIG) fell 6.5% on the day of its earnings release in late October when CEO Robert Benmosche noted that the company’s property and casualty insurance businesses were far healthier than a few years ago but still not generating the returns that they should. Investors were also disappointed that a planned asset sale of its aircraft lease finance business may not happen. AIG could instead sell part of that business in an IPO and retain a majority stake. As a result, shares have now fallen below their 100-day moving average for the first time this year. Yet there is a simple reason to expect AIG to resume its upward move. The upside from here: a 40% gain over the next 12 months, and a lot more than that down the road. That reason: Shares still trade at a sharp discount to tangible book value. Over the past few years, this stock has posted… Read More

With stocks continuing to deliver gains week after week, the question is: Which ones should be the strongest over the short term? According to the charts, tech stocks might have an edge. Economic News Keeps Fed on Hold SPDR S&P 500 (NYSE: SPY) gained 0.61% last week, closing higher for the fifth week in a row. The gain was due to a 1.35% rally on Friday that reversed losses for the week.#-ad_banner-# SPY has now closed higher in 16 of the past 22 days (73%) since bottoming in early October. This is an unusually strong market. Over the past… Read More

With stocks continuing to deliver gains week after week, the question is: Which ones should be the strongest over the short term? According to the charts, tech stocks might have an edge. Economic News Keeps Fed on Hold SPDR S&P 500 (NYSE: SPY) gained 0.61% last week, closing higher for the fifth week in a row. The gain was due to a 1.35% rally on Friday that reversed losses for the week.#-ad_banner-# SPY has now closed higher in 16 of the past 22 days (73%) since bottoming in early October. This is an unusually strong market. Over the past 1,000 trading days, there has been an average of 12 up closes over 22 days (54.5%). Strength in the stock market is often followed by more strength, and I expect to see more gains in the stock market in the next few weeks. Friday’s gains could show that traders are getting comfortable with economic growth. GDP could grow as it did in the third quarter while unemployment remains high, a combination that should keep Fed policy on hold. This is bullish for the stock market. Friday’s reversal came after GDP beat expectations and stock prices fell on Thursday. On Friday,… Read More

For today’s essay, it would be wise to remember the old investing adage: “The trend is your friend.”  As most investors already know, investing in trends is one of surest ways to success in the stock market. But while the phrase itself is simple enough to understand, we often find that most investors don’t know which trends to follow… or even worse, invest in the wrong ones.  Specifically, we generally find that investors want to focus on economic trends… things like interest rates and global debt/GDP ratios. Some investors go so far as to follow the cover model for the… Read More

For today’s essay, it would be wise to remember the old investing adage: “The trend is your friend.”  As most investors already know, investing in trends is one of surest ways to success in the stock market. But while the phrase itself is simple enough to understand, we often find that most investors don’t know which trends to follow… or even worse, invest in the wrong ones.  Specifically, we generally find that investors want to focus on economic trends… things like interest rates and global debt/GDP ratios. Some investors go so far as to follow the cover model for the current year’s issue of the Sports Illustrated Swimsuit Edition, believing that when the model comes from the U.S., the S&P 500 is likely to outperform.  Not to berate the homemade economists of the day, but these investors are most likely wasting their time. The truth is, economic trends can (and should) be mostly ignored by investors.  Even economists — people who have dedicated their entire lives to following macroeconomics — can’t accurately predict when a major economic event has (or will) occur. It took the National Bureau of Economic Research (NBER) 15 months to announce that the recession ended in… Read More

Carl Icahn, Henry Kravitz, Sumner Redstone and a host of other financial pros make their money by using complex strategies that reduce risk while maximizing potential gains. However, there is one strategy that towers above all others when it comes to minting members of the billionaires’ club.#-ad_banner-# The best part is that today, every investor can participate in this strategy — without the need for hundreds of millions of dollars, inside information, or a seat at the corporate roundtable. This strategy, which was very popular in the 1980s, has enjoyed a dramatic resurgence during the bull market of the past… Read More

Carl Icahn, Henry Kravitz, Sumner Redstone and a host of other financial pros make their money by using complex strategies that reduce risk while maximizing potential gains. However, there is one strategy that towers above all others when it comes to minting members of the billionaires’ club.#-ad_banner-# The best part is that today, every investor can participate in this strategy — without the need for hundreds of millions of dollars, inside information, or a seat at the corporate roundtable. This strategy, which was very popular in the 1980s, has enjoyed a dramatic resurgence during the bull market of the past several years, thanks to huge corporate cash reserves, low interest rates and volatility, and the increasing importance of cutting costs and boosting growth to keep shareholders happy. That’s the funny thing about bull markets: No matter how high the market climbs or the returns earned, it’s never enough to gratify investors. That’s why this strategy has become so popular that more than $650 billion of transactions have taken place this year alone, with the biggest deals creating headlines around the world. The strategy I’m talking about is mergers and acquisitions, or M&A. You may have heard of the Warren Buffett-led… Read More

Apocalyptic fears have gripped the minds of Americans over the past few years, and Hollywood has capitalized on them with movies, television series and reality shows. While a zombie virus may be far-fetched, fears of inflation and market volatility are better grounded in reality. #-ad_banner-# Out of Alabama comes a story that underlines what becomes important if inflation really does get out of control. A would-be car buyer whose credit was less than exemplary made an unconventional down payment — a shotgun. While this is certainly more of a lesson in subprime lending standards going beyond real estate, there is… Read More

Apocalyptic fears have gripped the minds of Americans over the past few years, and Hollywood has capitalized on them with movies, television series and reality shows. While a zombie virus may be far-fetched, fears of inflation and market volatility are better grounded in reality. #-ad_banner-# Out of Alabama comes a story that underlines what becomes important if inflation really does get out of control. A would-be car buyer whose credit was less than exemplary made an unconventional down payment — a shotgun. While this is certainly more of a lesson in subprime lending standards going beyond real estate, there is a small sliver of knowledge to take away here. In a highly inflationary environment, gold becomes less important than “real” hard assets — practical items like food, water, shelter and, of course, weapons. Before the survivalists start sending this article to everyone they know, let’s step back and take a look at the gun-making industry from a pragmatic point of view. We know that fear creates opportunities for profit, and this is reflected in the number of gun sales amid the Obama administration’s position on gun control. Shares of gun makers have soared this year: Smith & Wesson (Nasdaq: SWHC)… Read More

Apple (Nasdaq: AAPL) is one of the great high-tech success stories. Led by the visionary, charismatic and sometimes controversial Steve Jobs until his recent untimely death, Apple has become one of the world’s leading companies. After starting out as a personal computer maker, Apple is now best known for its mobile devices, which have catapulted it from a cult brand into the mainstream.#-ad_banner-# In less than five months, AAPL shares have soared from below $400 to about $520 currently. This 30% increase is impressive but well below the stock’s all-time high above $700 last year. Unfortunately for many investors, Apple’s… Read More

Apple (Nasdaq: AAPL) is one of the great high-tech success stories. Led by the visionary, charismatic and sometimes controversial Steve Jobs until his recent untimely death, Apple has become one of the world’s leading companies. After starting out as a personal computer maker, Apple is now best known for its mobile devices, which have catapulted it from a cult brand into the mainstream.#-ad_banner-# In less than five months, AAPL shares have soared from below $400 to about $520 currently. This 30% increase is impressive but well below the stock’s all-time high above $700 last year. Unfortunately for many investors, Apple’s success has made trading its shares difficult. You have to be swinging a big stick to be able to commit $500,000-plus to trade just 1,000 shares. Options can be used as alternative tools to capture profits from Apple’s moves, but there is another, simpler way to profit from its success — and that is to purchase shares in companies that supply products and services to Apple. When these products or services are a critical part of the supply chain for Apple’s products, the company supplying them may ride Apple’s coattails to great success. The key is to identify a supplier… Read More

By many measures, 2013 is shaping up to be the best year for initial public offerings (IPOs) since 2007.#-ad_banner-# The volume of new offerings has surged, and hot new issues such as FireEye (Nasdaq: FEYE), Rally Software (Nasdaq: RALY) and Epizyme (Nasdaq: EPZM) have already bagged triple-digit gains. This week’s well-received IPO from Twitter (NYSE: TWTR) is merely icing on the cake. Yet amid the good news, some IPOs have been duds. Companies with short track records or an open-ended path to operating losses have been tossed in the IPO dust bin. But in the rubble, you can find some… Read More

By many measures, 2013 is shaping up to be the best year for initial public offerings (IPOs) since 2007.#-ad_banner-# The volume of new offerings has surged, and hot new issues such as FireEye (Nasdaq: FEYE), Rally Software (Nasdaq: RALY) and Epizyme (Nasdaq: EPZM) have already bagged triple-digit gains. This week’s well-received IPO from Twitter (NYSE: TWTR) is merely icing on the cake. Yet amid the good news, some IPOs have been duds. Companies with short track records or an open-ended path to operating losses have been tossed in the IPO dust bin. But in the rubble, you can find some deep value plays — and building products firm Ply Gem Holdings (NYSE: PGEM) is one of them. The recent IPO has traded down but now holds considerable upside. What Went Wrong? Ply Gem makes a range of products used in home construction and the repairs and upgrades of existing homes. The company has strong market share in windows, doors, paving stone, vinyl siding, and fencing. And as you’d suspect, sales have been rising for the past few years in tandem with the housing recovery: Sales rose 8% in 2012 to $1.12 billion, and operating income rose 56%… Read More

When I was a kid, I went to a Catholic grade school. And because our school was affiliated with a church, I volunteered to be an altar boy.#-ad_banner-# On the surface, it was a great way to make myself look good. I knew my parents would be happy. But in reality, it was just a good excuse to get out of class. I knew that every week, whether it was sunny, rainy, warm or cold, there were going to be a couple of funeral processions that would need altar boys to help celebrate Mass. Even though being an altar boy… Read More

When I was a kid, I went to a Catholic grade school. And because our school was affiliated with a church, I volunteered to be an altar boy.#-ad_banner-# On the surface, it was a great way to make myself look good. I knew my parents would be happy. But in reality, it was just a good excuse to get out of class. I knew that every week, whether it was sunny, rainy, warm or cold, there were going to be a couple of funeral processions that would need altar boys to help celebrate Mass. Even though being an altar boy at a funeral doesn’t sound like much fun, it was an early lesson about the nature of demand — mortality wasn’t just predictable, it was undeniable. But looking forward, that undeniable trend is accelerating. With more than 10,000 baby boomers retiring every day, the National Funeral Directors Association projects the U.S. death rate will increase from 8 deaths per 10,000 people to 10 by 2045.   That is setting the stage for a wave of demand for “death care” products and services. And there is one company ready to cash in. This little-known market leader is one of the largest… Read More

If I had to point to a segment of the natural resources sector with the lowest investor sentiment right now, it might well be coal.  Coal is thought of as antiquated and brutish, a relic that will soon be excised from the ranks of global energy markets.  It’s easy to see why. On the surface, there’s a lot to dislike about coal. The biggest strike against the industry is environmental. This month, the news has been rife with stories about record air pollution nearly shutting down a number of cities in northern China.  Whether it’s for these environmental reasons —… Read More

If I had to point to a segment of the natural resources sector with the lowest investor sentiment right now, it might well be coal.  Coal is thought of as antiquated and brutish, a relic that will soon be excised from the ranks of global energy markets.  It’s easy to see why. On the surface, there’s a lot to dislike about coal. The biggest strike against the industry is environmental. This month, the news has been rife with stories about record air pollution nearly shutting down a number of cities in northern China.  Whether it’s for these environmental reasons — or simply a matter of economics — there’s a sense that the world is turning away from coal.  #-ad_banner-#​Since 2009, China has been the driving force in global coal markets. Coal imports in that country exploded during the past five years, jumping to a peak of 35 million metric tons per month in December 2012. That’s a 1,500% increase from 2008 levels. But growth in China’s coal imports has stalled. Although imports are holding at a relatively high level, the days of explosive increases in import demand appear to have passed.  The sense then is that we may… Read More