Today I want to tell you about an investing strategy that defies logic. It shouldn’t work based on everything we’ve learned about the stock market. Yet it does. In fact, for over half a century, investors and traders have used this strategy to produce unparalleled results. And no, for those of you who may be wondering, this strategy doesn’t involve options, derivatives or any other obscure financial product. #-ad_banner-#What’s more, what I’m about to show you can be used as part of any general investing strategy — regardless of whether you’re focusing on income, growth, blue chips, small caps or… Read More

Today I want to tell you about an investing strategy that defies logic. It shouldn’t work based on everything we’ve learned about the stock market. Yet it does. In fact, for over half a century, investors and traders have used this strategy to produce unparalleled results. And no, for those of you who may be wondering, this strategy doesn’t involve options, derivatives or any other obscure financial product. #-ad_banner-#What’s more, what I’m about to show you can be used as part of any general investing strategy — regardless of whether you’re focusing on income, growth, blue chips, small caps or commodities. Specifically, I’m talking about relative-strength investing. Longtime readers might already be familiar with relative-strength investing. We’ve talked about it before in previous StreetAuthority Daily issues. But for those who need a refresher, allow me to provide a brief recap. Relative-strength investing is simply a type of momentum investing. It involves buying the best-performing stocks (relative to the market) and holding them until their momentum changes course. To most investors, especially those considered value investors, this strategy probably sounds ridiculous. After all, most people have heard the phrase “buy low, sell high.” Since relative-strength investors buy stocks that are already… Read More

A few weeks ago, I told you about a simple strategy that’s never lost money. Put simply, the longer you hold an investment, the better your chances of making a profit. The S&P 500 has never had a losing 20-year span, going all the way back to the 1950s. #-ad_banner-#The key is finding a handful of companies that enjoy huge (and lasting) advantages over the competition, pay fat dividends to their investors each year and buy back massive amounts of their own stock. Once you find them, the strategy is simple — just buy their shares and hold forever. But… Read More

A few weeks ago, I told you about a simple strategy that’s never lost money. Put simply, the longer you hold an investment, the better your chances of making a profit. The S&P 500 has never had a losing 20-year span, going all the way back to the 1950s. #-ad_banner-#The key is finding a handful of companies that enjoy huge (and lasting) advantages over the competition, pay fat dividends to their investors each year and buy back massive amounts of their own stock. Once you find them, the strategy is simple — just buy their shares and hold forever. But if you want to see the best reason why investing forever is the smartest way to let the market make you wealthy, pay attention to the table below. Earlier this year I ran a simple stock screen to find all the stocks in the United States that have returned more than 300% in the past year. To make sure we were dealing with solid companies, I only included firms with positive earnings. And to weed out the fly-by-night penny stocks, I kicked out anything with a market cap under $100 million. You can see the results for yourself.  … Read More

If you’re looking to capture yields, but often fall flat on your face when it comes to researching and picking stocks, then there’s a simple technique you should learn. #-ad_banner-#Among the many investing strategies is a perennial one that offers investors solid dividend yields and a history of proven returns — often beating the overall market. It is called “Dogs of the Dow.” This is the process of investing in the 10 highest-yielding stocks in the Dow Jones Industrial Average (DJIA) and holding them for one year. Since price drops create higher yields, these are often the worst performing companies… Read More

If you’re looking to capture yields, but often fall flat on your face when it comes to researching and picking stocks, then there’s a simple technique you should learn. #-ad_banner-#Among the many investing strategies is a perennial one that offers investors solid dividend yields and a history of proven returns — often beating the overall market. It is called “Dogs of the Dow.” This is the process of investing in the 10 highest-yielding stocks in the Dow Jones Industrial Average (DJIA) and holding them for one year. Since price drops create higher yields, these are often the worst performing companies in the index — hence the nomenclature “Dogs.” The idea is that these market laggards will turn around in the following year, resulting in modest, reliable gains. Investors who followed this strategy in 2014 have seen 12.6% returns year to date. To put this in context, the Dogs outperformed the Dow Jones Industrial Average’s overall 11.1% total return, but were shy of the S&P 500’s 15%. Investing doesn’t get much more simplistic than this strategy. In fact, the Dogs of the Dow have held up over time. Over the past 15 years, the Dogs returned 146%, handily outperforming DJIA’s 124%… Read More

All major U.S. indices posted gains last week, led by the small-cap Russell 2000, which advanced 1.6% and is now up 4.4% for the year. A sustained move above the 1,213 March high would confirm a bullish breakout from a year of sideways indecision and portend more strength into the early to middle part of 2015. #-ad_banner-#​The bad news is that, while small caps appear to be recovering, technology stocks have lagged lately with the Nasdaq 100 gaining just 0.8% last week. Since technology to a large degree has driven the 2014 broad… Read More

All major U.S. indices posted gains last week, led by the small-cap Russell 2000, which advanced 1.6% and is now up 4.4% for the year. A sustained move above the 1,213 March high would confirm a bullish breakout from a year of sideways indecision and portend more strength into the early to middle part of 2015. #-ad_banner-#​The bad news is that, while small caps appear to be recovering, technology stocks have lagged lately with the Nasdaq 100 gaining just 0.8% last week. Since technology to a large degree has driven the 2014 broad market advance, continued weakness by this index could become problematic, especially in January and February when seasonal factors begin to weigh on stocks. GE Lights The Way In last week’s Market Outlook, I said that one way to determine whether the previous week’s sharp market rebound, ignited by comments from the Federal Reserve, was sustainable was to keep a close eye on market bellwether General Electric (NYSE: GE). At the time, it was testing its 2009 major uptrend line as underlying support. GE aggressively reversed higher from this support on Dec. 17, the… Read More

This week I want to tell you about a strategy that could make you a lot of money. #-ad_banner-#You probably haven’t heard much about it. That’s because for the past year and a half, my colleagues and I at StreetAuthority have been quietly designing and beta-testing a new investment system with a select group of about 500 loyal StreetAuthority readers. It’s a system that we think could make you even more money in the stock market than anything we’ve ever created before. In short: it solves one of the most common… Read More

This week I want to tell you about a strategy that could make you a lot of money. #-ad_banner-#You probably haven’t heard much about it. That’s because for the past year and a half, my colleagues and I at StreetAuthority have been quietly designing and beta-testing a new investment system with a select group of about 500 loyal StreetAuthority readers. It’s a system that we think could make you even more money in the stock market than anything we’ve ever created before. In short: it solves one of the most common problems every investor faces — how to get bigger gains in a shorter amount of time. I have to admit, when we first began the project, I was a little skeptical. When we were given the task of creating an investing system that could deliver bigger gains in a shorter amount of time, my first thought was “this sounds an awful lot like trading.” And most people — including myself at first — equate trading with moving in and out of stocks in a matter of hours or days, racking up huge commissions and… Read More

Lost in all the headlines about the oil’s price plunge was an ominous comment by the energy minister of the United Arab Emirates earlier this month. Just weeks after OPEC shocked global energy markets by refusing to support crude prices with a supply cut, statements by decision makers seem to point to an oil price war.   #-ad_banner-#Oil prices have collapsed more than 40% since September. While unprofitable production will eventually need to be cut to support prices, record capital spending over the last couple of years will keep fields producing well into 2015.   The U.S. energy… Read More

Lost in all the headlines about the oil’s price plunge was an ominous comment by the energy minister of the United Arab Emirates earlier this month. Just weeks after OPEC shocked global energy markets by refusing to support crude prices with a supply cut, statements by decision makers seem to point to an oil price war.   #-ad_banner-#Oil prices have collapsed more than 40% since September. While unprofitable production will eventually need to be cut to support prices, record capital spending over the last couple of years will keep fields producing well into 2015.   The U.S. energy revolution will still be a strong investment theme over the longer-term, but can your portfolio survive several years of price wars?   Oil Prices: How Low And For How Long? Suhail Al-Mazrouei, UAE Energy Minister, said OPEC would be comfortable with crude prices as low as $40, which was followed by a nearly 5% price plunge in West Texas Intermediate — a benchmark for oil.   The statement was a shot across the bow of world oil production and a full commitment to protect market share against surging North American production.   The twelve members of OPEC produce 40% of… Read More

This time of year, market prognosticators, financial journalists and traders look back on what was hot and what was not in 2014. More importantly, all of us are trying to figure out what’s likely to work in 2015. #-ad_banner-#Now, there are two schools of thought. One is to sort through the most beaten-down sectors of the year (the most obvious being the bludgeoned energy sector) and try to find the hidden gems that have been unfairly caught up in the sell-off. The other school of thought is to look at sectors that outperformed the rest of the market. … Read More

This time of year, market prognosticators, financial journalists and traders look back on what was hot and what was not in 2014. More importantly, all of us are trying to figure out what’s likely to work in 2015. #-ad_banner-#Now, there are two schools of thought. One is to sort through the most beaten-down sectors of the year (the most obvious being the bludgeoned energy sector) and try to find the hidden gems that have been unfairly caught up in the sell-off. The other school of thought is to look at sectors that outperformed the rest of the market.  I prefer the latter tactic. Most investors are conditioned with a “buy low, sell high” mentality that can actually hurt their performance. Research has shown assets that are outperforming the market tend to continue outperforming. A screen of the major market sectors showed outstanding relative price performance year to date in two sectors that I suspect have the juice to continue delivering into 2015: biotech and tech.   For most of the year, stocks in the health care space have been on fire. Large-cap stocks in the iShares DJ US Healthcare ETF (NYSE: IYH)… Read More

It’s not easy being a CEO. Their days are filled with back-to-back meetings as they try to keep track of the many small details that comprise a company’s daily operations. Still, it’s an incredibly well-paying job, and they are expected to perform at peak levels. #-ad_banner-#So it’s a bit unconscionable when a CEO overlooks clear problems. In September, shareholders of Hertz Global Holdings, Inc. (NYSE: HTZ) learned that the rental car firm was letting its vehicles rack up too many miles before being replaced, which led to lost business with key corporate accounts. They soon demanded CEO Mark Frissora’s resignation. Read More

It’s not easy being a CEO. Their days are filled with back-to-back meetings as they try to keep track of the many small details that comprise a company’s daily operations. Still, it’s an incredibly well-paying job, and they are expected to perform at peak levels. #-ad_banner-#So it’s a bit unconscionable when a CEO overlooks clear problems. In September, shareholders of Hertz Global Holdings, Inc. (NYSE: HTZ) learned that the rental car firm was letting its vehicles rack up too many miles before being replaced, which led to lost business with key corporate accounts. They soon demanded CEO Mark Frissora’s resignation. Luckily, activist investors helped locate a new CEO, and the damage will likely be repaired in 2015. In another instance, the board of directors waited far too long to replace a clearly unsuccessful leader. Dov Charney, the controversial head of American Apparel, Inc. (NYSE: APP), almost drove his company into bankruptcy, as I noted in 2011, yet the board waited until 2014 to get around to replacing him. American Apparel is one of many firms that suffered from what is known as a “pocket board,” whereby by all of the company’s directors have… Read More

On Wednesday, the stock market reacted to Federal Reserve Chair Janet Yellen’s post-FOMC meeting press conference with a strong one-day rally that led into the S&P 500’s biggest two-day percentage gain since November 2011. After reading the Fed’s policy statement and watching the press conference, which included multiple attempts by Yellen to explain that nothing had materially changed from previous communications, my conclusion is that the market was intent on getting its Santa Claus Rally almost regardless of what was said. And it did, with bells on. #-ad_banner-#Last week’s rebound was atypically led by small-cap stocks as the Russell 2000… Read More

On Wednesday, the stock market reacted to Federal Reserve Chair Janet Yellen’s post-FOMC meeting press conference with a strong one-day rally that led into the S&P 500’s biggest two-day percentage gain since November 2011. After reading the Fed’s policy statement and watching the press conference, which included multiple attempts by Yellen to explain that nothing had materially changed from previous communications, my conclusion is that the market was intent on getting its Santa Claus Rally almost regardless of what was said. And it did, with bells on. #-ad_banner-#Last week’s rebound was atypically led by small-cap stocks as the Russell 2000 gained 3.8%, putting it back into positive territory for the year. On the surface this is good news for the market since small caps, which usually lead the market, have underperformed all year. The not-so-good news is that technology stocks, the other market leader, which have driven this year’s advance, underperformed. The Nasdaq 100 gained just 2% for the week. If last week’s rebound is the beginning of the stock market’s next leg higher, technology must resume its leadership role — and quickly. Without that, the sustainability of the rebound is suspect. Watch This Market Bellwether for Clues In a… Read More

  Over the course of my career as a Wall Street analyst, I had to continually pitch my best ideas to hedge fund, pension fund and mutual fund managers. And they all stressed the same constraint: “Tell me only about very liquid stocks.” #-ad_banner-#These managers often had massive sums of money available to invest in particular stocks, and any attempts to buy stocks that trade just 20,000 or 30,000 shares a day would simply push that stock price up too fast to make it worth the effort. That’s why most fund managers own stocks such as Apple, Inc. (Nasdaq: AAPL). Read More

  Over the course of my career as a Wall Street analyst, I had to continually pitch my best ideas to hedge fund, pension fund and mutual fund managers. And they all stressed the same constraint: “Tell me only about very liquid stocks.” #-ad_banner-#These managers often had massive sums of money available to invest in particular stocks, and any attempts to buy stocks that trade just 20,000 or 30,000 shares a day would simply push that stock price up too fast to make it worth the effort. That’s why most fund managers own stocks such as Apple, Inc. (Nasdaq: AAPL). When more than 50 million shares trade each day, it’s easy to get in and out of a big investment position. Over the years, I’ve tended to follow the view of these fund managers, avoiding any stocks that trade less than 100,000 shares a day. But a recent study helped me realize that these off-the-radar stocks are precisely where individual investors should be focusing. Recently, Roger Ibbotson, who has generated a long track record of ground-breaking investment analyses, has been focusing on the returns of popular stocks (ones with high trading volume) and unpopular stocks. He found an unusual performance… Read More