Many years ago, I lived near the Culinary Institute of America, the alma mater of many of the world’s most celebrated chefs. After years of classes, the students’ final proving ground was cooking for the institute’s public restaurants. In the 1970s and 1980s, the institute’s premier restaurant was the Escoffier Room. It was expensive. And if you wanted to dine there, you had to plan ahead. In many cases, reservations had to be made a year in advance. Every night, students were expected to deliver culinary perfection. And for the unlucky student assigned… Read More

Many years ago, I lived near the Culinary Institute of America, the alma mater of many of the world’s most celebrated chefs. After years of classes, the students’ final proving ground was cooking for the institute’s public restaurants. In the 1970s and 1980s, the institute’s premier restaurant was the Escoffier Room. It was expensive. And if you wanted to dine there, you had to plan ahead. In many cases, reservations had to be made a year in advance. Every night, students were expected to deliver culinary perfection. And for the unlucky student assigned to the souffle station, the pressure was immense. In chef Anthony Bourdain’s book “Kitchen Confidential,” he tells how students prayed every night, hoping to avoid the assignment to make the puffy egg-based dish, which had a tendency to collapse if conditions weren’t perfect. To add insult to injury, the domineering head chef would berate any student responsible for a fallen souffle, loud enough for all to hear. The Federal Reserve is now standing in front of the economic equivalent of a souffle station. The Fed is likely to maintain historically low short-term interest rates… Read More

Over the past year, economists have noticed an unusual pattern as they digested the series of monthly reports on housing, consumer confidence, purchasing managers, trade flows and other key economic inputs.#-ad_banner-# These reports showed consistently mixed signals, though it was clear that the U.S. economy was faring OK. And that has led to hopes of more consistently positive reports in the second half of 2013 and into 2014. By next year, many economists have come to expect a firmer backdrop, with… Read More

Over the past year, economists have noticed an unusual pattern as they digested the series of monthly reports on housing, consumer confidence, purchasing managers, trade flows and other key economic inputs.#-ad_banner-# These reports showed consistently mixed signals, though it was clear that the U.S. economy was faring OK. And that has led to hopes of more consistently positive reports in the second half of 2013 and into 2014. By next year, many economists have come to expect a firmer backdrop, with GDP perhaps growing in the 2.5% to 3% range. Yet it may be time to start questioning that brightening outlook. Perhaps the greatest measure of economic activity — one ignored by most investors, unfortunately — is flashing yellow and may soon be flashing red.  85 Inputs While many economic surveys aim to capture a slice of the U.S. economy, the Chicago Fed’s National Activity Index (CFNAI) looks at 85 different economic inputs focused on production,… Read More

Fundamental analysts generally focus on a company’s financial statement. They use tools like the price-to-earnings (P/E) ratio and dividend yields to find value. Many investors like to buy when these indicators are low. There are studies showing that this approach works in the long term. However, most of those studies could never be implemented by individual investors.#-ad_banner-# When studying P/E ratios or other fundamental measures of value, researchers generally divide the market into… Read More

Fundamental analysts generally focus on a company’s financial statement. They use tools like the price-to-earnings (P/E) ratio and dividend yields to find value. Many investors like to buy when these indicators are low. There are studies showing that this approach works in the long term. However, most of those studies could never be implemented by individual investors.#-ad_banner-# When studying P/E ratios or other fundamental measures of value, researchers generally divide the market into 10 groups. Each stock is assigned to one of those groups. Researchers then measure the performance of the group and usually find that the group with the lowest P/E ratio or the lowest dividend yield provides the best returns. There are at least 6,500 stocks being traded on U.S. exchanges. To duplicate a value strategy that is likely to outperform the market, you might need to buy 650 stocks. You could just select the stocks with the lowest ratios in… Read More

Fundamental analysts generally focus on a company’s financial statement. They use tools like the price-to-earnings (P/E) ratio and dividend yields to find value. Many investors like to buy when these indicators are low. There are studies showing that this approach works in the long term. However, most of those studies could never be implemented by individual investors.#-ad_banner-# When studying P/E ratios or other fundamental measures of value, researchers generally divide the market into… Read More

Fundamental analysts generally focus on a company’s financial statement. They use tools like the price-to-earnings (P/E) ratio and dividend yields to find value. Many investors like to buy when these indicators are low. There are studies showing that this approach works in the long term. However, most of those studies could never be implemented by individual investors.#-ad_banner-# When studying P/E ratios or other fundamental measures of value, researchers generally divide the market into 10 groups. Each stock is assigned to one of those groups. Researchers then measure the performance of the group and usually find that the group with the lowest P/E ratio or the lowest dividend yield provides the best returns. There are at least 6,500 stocks being traded on U.S. exchanges. To duplicate a value strategy that is likely to outperform the market, you might need to buy 650 stocks. You could just select the stocks with the lowest ratios in… Read More

Markets moved quickly after Federal Reserve Chairman Ben Bernanke indicated the central bank‘s quantitative easing (QE) programs would end one day. That move left stocks oversold and ready to rebound. Bernanke Might Be Too Optimistic SPDR S&P 500 (NYSE: SPY) fell from about $165 on Wednesday to close the week at $159.07. The down move began when the Fed chairman held a… Read More

Markets moved quickly after Federal Reserve Chairman Ben Bernanke indicated the central bank‘s quantitative easing (QE) programs would end one day. That move left stocks oversold and ready to rebound. Bernanke Might Be Too Optimistic SPDR S&P 500 (NYSE: SPY) fell from about $165 on Wednesday to close the week at $159.07. The down move began when the Fed chairman held a press conference. Offering a hypothetical example, Bernanke said that the Fed could begin decreasing its monthly purchases of $85 billion in bonds later this year and stop buying next year if the economy improves.#-ad_banner-# Without any evidence that the economy is improving, SPY dropped more than 4% and the Dow Jones industrial average grabbed headlines with a fall of more than 500 points in two days. This drop occurred without any fundamental change in… Read More

So, what now, Mike? That’s the question I posed to the most recent addition to StreetAuthority’s stable of stock market strategists, Michael J. Carr, following a week that saw the steepest single-day drop in the stock market since November 2011. During the past month I’ve been telling you about Mike’s Maximum Profit trading system — a trading system that’s among the greatest investment strategies we’ve ever discovered. Every two weeks, Mike starts with about… Read More

So, what now, Mike? That’s the question I posed to the most recent addition to StreetAuthority’s stable of stock market strategists, Michael J. Carr, following a week that saw the steepest single-day drop in the stock market since November 2011. During the past month I’ve been telling you about Mike’s Maximum Profit trading system — a trading system that’s among the greatest investment strategies we’ve ever discovered. Every two weeks, Mike starts with about 150 individual stocks, partnerships and trusts that constitute the 10 portfolios in the premium StreetAuthority advisories — the same holdings that have already been recommended by Carla Pasternak, Elliott Gue, Amy Calistri and the rest of the StreetAuthority experts.#-ad_banner-# From there, Mike runs every pick through a test of relative strength — a measure that compares a stock’s performance of the past six months with the performance of the thousands of stocks that make up the entire market. Only those holdings that are rising faster than 70% of… Read More

As we head into the final week of the quarter, expect a fair number of companies to lower their guidance. And though it may seem counterintuitive, get ready to put some cash to work. When It Is An Overreaction? Of course, when these companies deliver a dose of bad news, their shares can get pummeled. Yet we’ve all seen those quick sell-offs followed up by a nice rebound. The key… Read More

As we head into the final week of the quarter, expect a fair number of companies to lower their guidance. And though it may seem counterintuitive, get ready to put some cash to work. When It Is An Overreaction? Of course, when these companies deliver a dose of bad news, their shares can get pummeled. Yet we’ve all seen those quick sell-offs followed up by a nice rebound. The key is to quickly research the situation to see which sell-offs are deserved and signal “dead money” for the coming months, and which sell-offs are likely to be short-lived. We can look to travel website Priceline.com (Nasdaq: PCLN) as an example. Over the past few years, I’ve noted how investors tend to dump the stock whenever short-term trends lead the company to lower near-term guidance. For example, in August 2011, I noted that a decent but not great outlook for the next quarter… Read More

In a paper titled “Value and Momentum Everywhere,” a team of researchers found that “value and momentum ubiquitously generate abnormal returns for individual stocks within several countries, across country equity indices, government bonds, currencies, and commodities.” This conclusion is so widely accepted that value and momentum are considered to be anomalies to the Efficient Market Hypothesis (EMH). Proponents of EMH believe markets efficiently price stocks using all available information. The strictest form… Read More

In a paper titled “Value and Momentum Everywhere,” a team of researchers found that “value and momentum ubiquitously generate abnormal returns for individual stocks within several countries, across country equity indices, government bonds, currencies, and commodities.” This conclusion is so widely accepted that value and momentum are considered to be anomalies to the Efficient Market Hypothesis (EMH). Proponents of EMH believe markets efficiently price stocks using all available information. The strictest form of the hypothesis says that no individual could beat the market because each stock is trading at exactly the right price at all times. #-ad_banner-# However, researchers have repeatedly demonstrated that investors can beat the market by applying value and momentum strategies. We believe that volatility can also be used to outperform a buy-and-hold strategy. Recently, we introduced the Income Trader Volatility (ITV) indicator and provided test results showing that… Read More

Markets moved quickly after Federal Reserve Chairman Ben Bernanke indicated the central bank‘s quantitative easing (QE) programs would end one day. That move left stocks oversold and ready to rebound. Bernanke Might Be Too Optimistic SPDR S&P 500 (NYSE: SPY) fell from about $165 on Wednesday to close the week at $159.07. The down move began when the Fed chairman held a… Read More

Markets moved quickly after Federal Reserve Chairman Ben Bernanke indicated the central bank‘s quantitative easing (QE) programs would end one day. That move left stocks oversold and ready to rebound. Bernanke Might Be Too Optimistic SPDR S&P 500 (NYSE: SPY) fell from about $165 on Wednesday to close the week at $159.07. The down move began when the Fed chairman held a press conference. Offering a hypothetical example, Bernanke said that the Fed could begin decreasing its monthly purchases of $85 billion in bonds later this year and stop buying next year if the economy improves.#-ad_banner-# Without any evidence that the economy is improving, SPY dropped more than 4% and the Dow Jones industrial average grabbed headlines with a fall of more than 500 points in two days. This drop occurred without any fundamental change in… Read More

As we head into the final week of the quarter, expect a fair number of companies to lower their guidance. And though it may seem counterintuitive, get ready to put some cash to work. When It Is An Overreaction? Of course, when these companies deliver a dose of bad news, their shares can get pummeled. Yet we’ve all seen those quick sell-offs followed up by a nice rebound. The key… Read More

As we head into the final week of the quarter, expect a fair number of companies to lower their guidance. And though it may seem counterintuitive, get ready to put some cash to work. When It Is An Overreaction? Of course, when these companies deliver a dose of bad news, their shares can get pummeled. Yet we’ve all seen those quick sell-offs followed up by a nice rebound. The key is to quickly research the situation to see which sell-offs are deserved and signal “dead money” for the coming months, and which sell-offs are likely to be short-lived. We can look to travel website Priceline.com (Nasdaq: PCLN) as an example. Over the past few years, I’ve noted how investors tend to dump the stock whenever short-term trends lead the company to lower near-term guidance. For example, in August 2011, I noted that a decent but not great outlook for the next quarter… Read More