What do Campbell’s Soup, Johnson & Johnson and Deere & Co. all have in common? All three companies have survived and thrived through two world wars, the Great Depression, countless financial panics and periods of booms and busts… and for more than 100 years, they’ve continually generated wealth for their owners. These companies survived, while hundreds of other companies came and went along with hard times. All three of these names, alongside some others, owe their good fortune to what I call a “legacy asset investment,” which has allowed them to throw off huge dividends and return capital to shareholders… Read More

What do Campbell’s Soup, Johnson & Johnson and Deere & Co. all have in common? All three companies have survived and thrived through two world wars, the Great Depression, countless financial panics and periods of booms and busts… and for more than 100 years, they’ve continually generated wealth for their owners. These companies survived, while hundreds of other companies came and went along with hard times. All three of these names, alongside some others, owe their good fortune to what I call a “legacy asset investment,” which has allowed them to throw off huge dividends and return capital to shareholders for decades — regardless of interest rates, the economy or commodity prices. It’s also helped generate massive wealth for investors. Over the past 14 years, for every $1 the market gained, these stocks typically have gained $4 — that’s four times the growth and dividends — for their shareholders. #-ad_banner-#So what makes these companies special? First, I should explain what a “legacy asset” is. Legacy assets are companies or resources that have rewarded owners for generations, often thanks in part to a durable brand or service or infrastructure system that has stood the test of time. And as I mentioned… Read More

Shorting the yen and going long Japanese stocks have basically been no-brainer investments for the past couple of years. That’s especially true when you consider there’s an exchange-traded fund (ETF) that accomplishes both: the WisdomTree Japan Hedged Equity Fund (NYSE: DXJ).  DXJ has gained 48% over the past two years and 25% this year, but it’s been flat or slightly negative for the past six months. One reason DXJ has slowed is that talk of a U.S. government shutdown sent investors to the yen as a safe haven, pushing it… Read More

Shorting the yen and going long Japanese stocks have basically been no-brainer investments for the past couple of years. That’s especially true when you consider there’s an exchange-traded fund (ETF) that accomplishes both: the WisdomTree Japan Hedged Equity Fund (NYSE: DXJ).  DXJ has gained 48% over the past two years and 25% this year, but it’s been flat or slightly negative for the past six months. One reason DXJ has slowed is that talk of a U.S. government shutdown sent investors to the yen as a safe haven, pushing it higher.  I suspect now that all is quiet on that front that the yen will continue its downward trend.#-ad_banner-# Still, there’s speculation that this trade may be dead. It all boils down to whether Japanese Prime Minister Shinzo Abe sticks to his loose monetary policy, aka Abenomics, which has been in place since he took office in December 2012. Abe vowed to kick-start Japan’s stagnant economy by deploying a bond-buying program of 7.5 trillion yen ($75 billion) a month, much like the U.S. is doing. The strategy was designed to reflate the world’s third-largest economy by devaluing the… Read More

I don’t care what the bearish pundits are saying about the U.S. economy. While I don’t hesitate to turn bearish if the data bolster that view, I have learned to tune out the unsupported fear-mongering, political posturing and cherry picked-data of the prophets of doom.#-ad_banner-#​ Not only are these agenda-driven observers wrong most of the time, they rarely change their bearish tune. This means that when we actually enter a bear market, the bearish prognosticators claim victory. However, just like a stuck clock that’s right twice a day, the reality of their consistent errors is usually apparent. Clearly,… Read More

I don’t care what the bearish pundits are saying about the U.S. economy. While I don’t hesitate to turn bearish if the data bolster that view, I have learned to tune out the unsupported fear-mongering, political posturing and cherry picked-data of the prophets of doom.#-ad_banner-#​ Not only are these agenda-driven observers wrong most of the time, they rarely change their bearish tune. This means that when we actually enter a bear market, the bearish prognosticators claim victory. However, just like a stuck clock that’s right twice a day, the reality of their consistent errors is usually apparent. Clearly, the current super-bull market is one of global impact. I think the auto sector is undoubtedly supportive of my current ultra-bullish stance. Global auto sales have soared this year on the strength of the continued U.S. economic recovery. Virtually all the major automakers surpassed analysts’ earnings estimates in the second quarter, and 70% came out ahead of revenue estimates. Earnings climbed just over 14% and revenues pushed ahead by nearly 5% year over year. In the United States, auto sales hit a five-year high last year, rising 13% to 14.5 million vehicles. In August of this year, auto sales jumped… Read More

When you think of stalwart mega-cap industrial stocks, Caterpillar (NYSE: CAT) certainly is one that comes to mind. The earth-moving equipment blue chip, Dow component, and long-time bellwether for the global economy, has been a big winner for investors and traders over the years, and for good reason. During the past decade, there’s been a huge infrastructure buildup in the emerging markets of Asia, especially China, and Russia, India and Brazil. The massive demand for heavy-duty construction equipment has made the iconic brand a mainstay on big building projects in nearly every corner of the… Read More

When you think of stalwart mega-cap industrial stocks, Caterpillar (NYSE: CAT) certainly is one that comes to mind. The earth-moving equipment blue chip, Dow component, and long-time bellwether for the global economy, has been a big winner for investors and traders over the years, and for good reason. During the past decade, there’s been a huge infrastructure buildup in the emerging markets of Asia, especially China, and Russia, India and Brazil. The massive demand for heavy-duty construction equipment has made the iconic brand a mainstay on big building projects in nearly every corner of the globe. Recently, however, demand for Caterpillar’s products has waned, and that’s caused a marked slowdown in the company’s earnings growth, as well as a significant decline in CAT shares. On the earnings front, the company recently released results for the third quarter, and they were anything but impressive. Third-quarter earnings sank 44% year over year, missing consensus estimates by a wide margin. The company reported earnings per share (EPS) of $1.45, down from $2.54 in the same quarter last year. Revenue disappointed as well, coming in at $13.4 billion, down from $16.5 billion in the same quarter a year ago. Read More

Investors are always looking for the newest strategies and tactics to extract profits from the financial markets. Newer and faster is often believed to be superior to the old, traditional ways of doing things.#-ad_banner-#​ Thanks to technology, this belief holds particularly true when it comes to the financial markets. Today, with the advent of personal computers, stock-screening programs, technical analysis tools with hundreds of built-in indicators, and near-instant news services, investing is easier and more efficient — and hopefully more profitable — than ever. However, sometimes it pays to slow down and look back at the old ways… Read More

Investors are always looking for the newest strategies and tactics to extract profits from the financial markets. Newer and faster is often believed to be superior to the old, traditional ways of doing things.#-ad_banner-#​ Thanks to technology, this belief holds particularly true when it comes to the financial markets. Today, with the advent of personal computers, stock-screening programs, technical analysis tools with hundreds of built-in indicators, and near-instant news services, investing is easier and more efficient — and hopefully more profitable — than ever. However, sometimes it pays to slow down and look back at the old ways of doing things. Taking a step back and slowing down provides an opportunity to locate an overlooked and mostly forgotten money-making tool, method or strategy that remains a solid edge in today’s market. I rediscovered one such strategy — a way to purchase financial assets at a discount — that was first used more than a century ago, in 1893. These investments are often passed down from generation to generation, and they keep on churning out profits for each new holder. Some even have been in continuous operation for the past half-century with the same management team in place. While there… Read More

Stocks closed up for the third week in a row. This could be the signal that a pullback is finally near. Look For More Gains Into Year End SPDR S&P 500 (NYSE: SPY) gained 0.89% last week and reached another new all-time high. This was the third week in a row that SPY closed higher. Market prices do not move randomly, and consecutive runs (periods of time when the market closes up or down for a number of weeks in a row) mean something.#-ad_banner-#​ In general, runs show the direction of the trend. If prices were random,… Read More

Stocks closed up for the third week in a row. This could be the signal that a pullback is finally near. Look For More Gains Into Year End SPDR S&P 500 (NYSE: SPY) gained 0.89% last week and reached another new all-time high. This was the third week in a row that SPY closed higher. Market prices do not move randomly, and consecutive runs (periods of time when the market closes up or down for a number of weeks in a row) mean something.#-ad_banner-#​ In general, runs show the direction of the trend. If prices were random, there should be a 50/50 chance that they will be up or down in any week. Testing shows that SPY has actually closed up in 56% of the weeks since 2001. Over the long term, stock markets have an upward bias, and this results in slightly more up weeks than expected from a random process. In the short term, markets tend to revert to mean. That means we would expect a pullback after a gain. If you had bought SPY after an up week and sold one week later, you would have enjoyed winning trades 50.2% of the time, but… Read More

Don’t get me wrong, I closely follow what Warren Buffett says and does with his money. And yes, he’s one of the most successful investors in history — his returns over more than 60 years have made him the fourth-wealthiest person on the planet. He is rarely wrong, but Buffett is not perfect, and a recent comment he made is, in fact, incorrect. Let me explain… The Wall Street Journal found that Buffett made $10 billion on the investments he made at the height of the financial crisis. With characteristic humility, Buffett said, “In terms of simple profitability, an average… Read More

Don’t get me wrong, I closely follow what Warren Buffett says and does with his money. And yes, he’s one of the most successful investors in history — his returns over more than 60 years have made him the fourth-wealthiest person on the planet. He is rarely wrong, but Buffett is not perfect, and a recent comment he made is, in fact, incorrect. Let me explain… The Wall Street Journal found that Buffett made $10 billion on the investments he made at the height of the financial crisis. With characteristic humility, Buffett said, “In terms of simple profitability, an average investor could have done just as well investing in the stock market if they bought during the panic period.” Actually, an individual investor could have done significantly better than Buffett. #-ad_banner-#To earn $10 billion, Buffett invested $26 billion. His return on investment was about 38%, or 6.7% a year over the past five years. The Journal article says Buffett made his first crisis investment in April 2008 and added to his investments throughout the crisis. He made a number of deals late in 2008 and one as late as April 2009, after the stock market had bottomed. Assuming an individual… Read More

Striking it rich in the precious metal business is a goal far older than the United States.   In the 19th century, many Americans’ ancestors traveled west across the country with dreams of building new lives. Some ventured west to find freedom and land, others moved west in search of fortune. It was the lure of riches — in the form of precious metals — that attracted these fortune-seekers to the faraway land of California.#-ad_banner-# Known as the California Gold Rush, over 300,000 fortune hunters traveled from all over the world to find wealth in the form of gold nuggets. Read More

Striking it rich in the precious metal business is a goal far older than the United States.   In the 19th century, many Americans’ ancestors traveled west across the country with dreams of building new lives. Some ventured west to find freedom and land, others moved west in search of fortune. It was the lure of riches — in the form of precious metals — that attracted these fortune-seekers to the faraway land of California.#-ad_banner-# Known as the California Gold Rush, over 300,000 fortune hunters traveled from all over the world to find wealth in the form of gold nuggets. Known as forty-niners in reference to the gold rush of 1849, many of the early gold seekers struck it rich while gold was easy to find and retrieve.   As the numbers of fortune seekers increased, however, it became more difficult to discover new sources of gold. Soon, the equation shifted, with most of the new miners losing money on their venture. The easy pickings were gone forever, and only the merchants selling mining supplies and the dream continued to create wealth.    Today, it is still possible — though far more difficult — to build great wealth in the… Read More

With the recent decline in interest rates thanks to a strong bond market, dividend stocks are back in favor. Sectors that do well when bonds rally are setting up for a nice move higher. HCP (NYSE: HCP) is a real estate investment trust (REIT) that owns and manages health care properties. I am not big on trying to figure out what stocks will do well under the Affordable Care Act (aka Obamacare) — I’d rather look for stocks with charts that signal they are ready to go higher. With a generous 4.9% dividend yield and improving technical indicators, HCP is… Read More

With the recent decline in interest rates thanks to a strong bond market, dividend stocks are back in favor. Sectors that do well when bonds rally are setting up for a nice move higher. HCP (NYSE: HCP) is a real estate investment trust (REIT) that owns and manages health care properties. I am not big on trying to figure out what stocks will do well under the Affordable Care Act (aka Obamacare) — I’d rather look for stocks with charts that signal they are ready to go higher. With a generous 4.9% dividend yield and improving technical indicators, HCP is indeed set up for price gains.#-ad_banner-# As a group, stocks offering big dividends peaked in May when the bond market began to fall. At the time, the Fed first hinted that it was considering the tapering of its bond buying program. Utilities, REITs, housing and many consumer staples stocks headed lower as traders thought interest rates would rise. Now that tapering seems to be off the table for a few months, dividend-paying stocks have regained favor. HCP in particular bottomed in early October and has been moving higher ever since. On Oct. 3, there was a management shake-up, and the… Read More

Throughout the summer, investors were treated to a steady drumbeat of sobering news. Retail sales were flattening out. China and other emerging markets appeared set to consume less of our exports. The steady implementation of the budget sequester was leading to a drop in government spending on technology and services. And many companies showed a lot more interest in buybacks and dividends than capital spending, which is a sure a sign of CEO pessimism.#-ad_banner-# So how do you explain the surprisingly robust profit picture being delivered in the current earnings season?  With roughly 40% of… Read More

Throughout the summer, investors were treated to a steady drumbeat of sobering news. Retail sales were flattening out. China and other emerging markets appeared set to consume less of our exports. The steady implementation of the budget sequester was leading to a drop in government spending on technology and services. And many companies showed a lot more interest in buybacks and dividends than capital spending, which is a sure a sign of CEO pessimism.#-ad_banner-# So how do you explain the surprisingly robust profit picture being delivered in the current earnings season?  With roughly 40% of the S&P 500 weighing in thus far (and another 25% to go next week), 68% of all reporting companies have delivered a positive earnings surprise, according to Standard & Poor’s. That compares with just 18% of companies reporting negative surprises. Frankly, I wouldn’t have been shocked if those numbers were reversed. The odds against yet another stellar earnings season seemed quite long. Year-over-year comparisons tell the story. Among companies in the S&P 500 that have reported third-quarter results thus far, profits are up 8.4% from a year ago, more than triple the expectations of 2.5% for these… Read More