Some call Prem Watsa the Warren Buffett of Canada. He is the CEO of Fairfax Financial (OTC: FRFHF), an insurance holding company modeled in much the same way as Berkshire Hathaway. And over the last 30 years, he compounded the book value of this business by more than 21%. Not only does he have a remarkable track record, but as early as 2004 he accurately predicted, and was warning of, the impending doom facing the housing market. #-ad_banner-#Recently, he began warning of a new danger to the markets: deflation. The United States… Read More

Some call Prem Watsa the Warren Buffett of Canada. He is the CEO of Fairfax Financial (OTC: FRFHF), an insurance holding company modeled in much the same way as Berkshire Hathaway. And over the last 30 years, he compounded the book value of this business by more than 21%. Not only does he have a remarkable track record, but as early as 2004 he accurately predicted, and was warning of, the impending doom facing the housing market. #-ad_banner-#Recently, he began warning of a new danger to the markets: deflation. The United States is six years into an incredible bull market: the S&P 500 has nearly tripled from its March 2009 bottom, and the markets continue reaching new highs every month. On the surface everything looks rosy. Underneath, though, Watsa warns of serious trouble brewing. In Fairfax’s most recent investor conference call, Watsa referred to the fact that current levels of inflation are now at 60-year lows. That by itself is somewhat alarming, but remember that those low levels were reached despite the fact that the United States and almost the entire world has been engaged in easy-money policies on an unprecedented level. Read More

It finally ended… The Federal Reserve recently announced that it would end its third (and possibly final) round of quantitative easing (QE). #-ad_banner-#This brings to close the $1.7 trillion that was pumped into the economy in this round alone. October marked the last month of the $15 billion in monthly bond purchases — down from $85 billion when QE3 started in 2012 — and ends the nearly six-year bond purchasing program. You can see what the program has done to the balance sheet of the Federal Reserve: The central bank’s bond purchasing program has sent the… Read More

It finally ended… The Federal Reserve recently announced that it would end its third (and possibly final) round of quantitative easing (QE). #-ad_banner-#This brings to close the $1.7 trillion that was pumped into the economy in this round alone. October marked the last month of the $15 billion in monthly bond purchases — down from $85 billion when QE3 started in 2012 — and ends the nearly six-year bond purchasing program. You can see what the program has done to the balance sheet of the Federal Reserve: The central bank’s bond purchasing program has sent the stock market soaring… and hopefully you’ve been able to capitalize on this tremendous bull market. To put the recent bull market in perspective, we only need to look at the returns from what is considered the “lost decade” and compare that time frame when the Fed turned on the printing presses. The term “lost decade” stemmed from the sluggish performance of the Japanese economy after its real estate bubble burst in the 1980s and has also been used to describe the state of the U.S. economy from 2000 to 2009. Our analysts have surely enjoyed this latest bull… Read More

The wave of Republican victories in mid-term elections blew past everyone’s expectations and sparked a rally in the markets. Investors are hoping for a range of business-friendly changes in Washington from a less intrusive energy policy to a partial repeal of some Obamacare regulations. The market may be disappointed next year as Republicans find many areas on their wish list off limits against a Presidential veto. The President looks to be crafting his legacy on environmental and healthcare issues and will not give up easily. #-ad_banner-#There is one area where the President and Congress may find balance, and it could mean… Read More

The wave of Republican victories in mid-term elections blew past everyone’s expectations and sparked a rally in the markets. Investors are hoping for a range of business-friendly changes in Washington from a less intrusive energy policy to a partial repeal of some Obamacare regulations. The market may be disappointed next year as Republicans find many areas on their wish list off limits against a Presidential veto. The President looks to be crafting his legacy on environmental and healthcare issues and will not give up easily. #-ad_banner-#There is one area where the President and Congress may find balance, and it could mean big savings for companies and even bigger profits for investors. Both the President and the Republicans in Congress have talked up the need for tax reform. The President has pointed out the many tax breaks incorporated in the tax code, while Republicans point out high statutory rates. If the two sides can come together for a bipartisan deal, then it could mean hundreds of billions in tax savings for companies and a wave of special dividends for investors. That’s because any reform will likely include some form of a repatriation holiday, allowing companies to bring back overseas profits without paying… Read More

All major U.S. stock indices finished in positive territory for the third consecutive week, but just barely, led by the broad market S&P 500, which gained just 0.7%. All are also in the black for 2014, led by the technology-heavy Nasdaq 100, but the small-cap Russell 2000 has trailed the pack all year and is currently up just 0.8%. #-ad_banner-#The defensive consumer staples and utilities sectors led last week, which is uncharacteristic of a healthy and sustainable broad market advance. Moreover, my own ETF-based metric shows that the biggest inflow of sector bet-related investor assets over the past one-week, one-month… Read More

All major U.S. stock indices finished in positive territory for the third consecutive week, but just barely, led by the broad market S&P 500, which gained just 0.7%. All are also in the black for 2014, led by the technology-heavy Nasdaq 100, but the small-cap Russell 2000 has trailed the pack all year and is currently up just 0.8%. #-ad_banner-#The defensive consumer staples and utilities sectors led last week, which is uncharacteristic of a healthy and sustainable broad market advance. Moreover, my own ETF-based metric shows that the biggest inflow of sector bet-related investor assets over the past one-week, one-month and three-month periods were into consumer staples. This establishes favorable conditions for its trend of relative outperformance versus the S&P 500, which began in August, to potentially extend through year end. The longer defensive sectors lead the market higher, the more likely the current advance will be short lived. However, for the time being, things look good as all major indices except for the Russell 2000 set fresh 2014 highs last week. Nasdaq 100 Hits 14-Year High Since the Aug. 25 Market Outlook, I have pointed to important overhead resistance at 4,147 as a major obstacle… Read More

Something unusual is happening as I write this. The stock market has once again been making new highs. #-ad_banner-#At least, it feels like an unusual occurrence after last month’s steady selloff. This quick “correction” followed by an equally swift rebound, has a lot of observers feeling jittery. Many of my Top 10 Stocks subscribers have written in to ask advice on our portfolio holdings during this period. With that in mind, let me just say one thing… I do not think it’s time to start running for the exits. I believe there a few reasons for the early October selloff–… Read More

Something unusual is happening as I write this. The stock market has once again been making new highs. #-ad_banner-#At least, it feels like an unusual occurrence after last month’s steady selloff. This quick “correction” followed by an equally swift rebound, has a lot of observers feeling jittery. Many of my Top 10 Stocks subscribers have written in to ask advice on our portfolio holdings during this period. With that in mind, let me just say one thing… I do not think it’s time to start running for the exits. I believe there a few reasons for the early October selloff– none of which have to do with decaying corporate fundamentals, or an impending stock market collapse, as some analysts would have you believe. But before I get into my take on the recent decline, let’s look at what actually happened — and how far stocks really fell. In overall terms, last month’s dip has, in fact, been minor. While it felt like stocks took a big hit in many cases, the overall Dow was down “only” about 700 points — or less than 4%. It’s also important to keep in mind that this relatively small decline came from a high… Read More

The past month has been a rollercoaster for the markets. #-ad_banner-#Within one week the Dow Jones Industrial Average completely erased its 2014 gains, only to rebound over the following weeks, leaving it up a measly 1.3%. One of my goals as Chief Investment Strategist of Alpha Trader is to alleviate the emotion that naturally comes with watching your investment portfolio wildly fluctuate up and down. I do this with a rules-based, systematic approach to the market. Throughout the latest bout of market weakness, our Alpha Trader system responded precisely as it was designed to. Since the market began to show… Read More

The past month has been a rollercoaster for the markets. #-ad_banner-#Within one week the Dow Jones Industrial Average completely erased its 2014 gains, only to rebound over the following weeks, leaving it up a measly 1.3%. One of my goals as Chief Investment Strategist of Alpha Trader is to alleviate the emotion that naturally comes with watching your investment portfolio wildly fluctuate up and down. I do this with a rules-based, systematic approach to the market. Throughout the latest bout of market weakness, our Alpha Trader system responded precisely as it was designed to. Since the market began to show weakness in July, we’ve closed out a total of 59 positions while only adding 28 new stocks to our portfolios. During this period, we were able to sell positions well before they moved further to the downside in sympathy with the wider markets. Moreover, our trading rules allowed us to capture some exceptionally large gains since July: Company Holding Period (Days) Return Amkor Technology (Nasdaq: AMKR) 168 57.7% Hi-Crush Partners LP (NYSE: HCLP) 365 66.1% ANI Pharmaceuticals (Nasdaq: ANIP) 252 114.1% Bitauto Holdings (NYSE: BITA) 365 242.2% Closing out winning positions in the face of a crumbling market is… Read More

Do you want to become a millionaire? That’s obviously a rhetorical question… the majority of us would love it. But what’s your plan for achieving that goal? #-ad_banner-#If your plan is to make that sort of wealth in the stock market, what’s your strategy? Blue-chip stocks, index funds, or are you an income investor who wants to watch their dividend “paychecks” (as my colleague Amy Calistri would say) roll in by the truckload? All of those strategies are great. There’s nothing wrong with them, and they’ll probably make you money in the long run. But I doubt they’ll make you… Read More

Do you want to become a millionaire? That’s obviously a rhetorical question… the majority of us would love it. But what’s your plan for achieving that goal? #-ad_banner-#If your plan is to make that sort of wealth in the stock market, what’s your strategy? Blue-chip stocks, index funds, or are you an income investor who wants to watch their dividend “paychecks” (as my colleague Amy Calistri would say) roll in by the truckload? All of those strategies are great. There’s nothing wrong with them, and they’ll probably make you money in the long run. But I doubt they’ll make you a millionaire… at least in time for you to enjoy it. They’re not going to give you those “knocked out of the park” returns that you’ve heard about since you first learned of the stock market. No, I’m convinced that if your goal is to reach a seven-figure bank account, you need to follow something I like to call the “20% solution.” The idea behind it is simple. If your goal is to become a millionaire in the market, then you need to dedicate a portion of your portfolio to swing for the fences. Let me explain… My… Read More

Amazon.com (NASDAQ: AMZN) may have disappointed shareholders Friday with another earnings miss, but all I see is opportunity.  At this very moment, there is a screaming post-earnings buy signal on the charts that has worked out 100% of the time over the past two years. This signal is not something most investors would spot, but I use it frequently — and with great success.  It doesn’t hurt that I’m intimate with Amazon’s chart patterns, statistics and earnings trends. Our last technical trade in AMZN (although not an earnings-related trade) netted us 51% in less than two… Read More

Amazon.com (NASDAQ: AMZN) may have disappointed shareholders Friday with another earnings miss, but all I see is opportunity.  At this very moment, there is a screaming post-earnings buy signal on the charts that has worked out 100% of the time over the past two years. This signal is not something most investors would spot, but I use it frequently — and with great success.  It doesn’t hurt that I’m intimate with Amazon’s chart patterns, statistics and earnings trends. Our last technical trade in AMZN (although not an earnings-related trade) netted us 51% in less than two months. This time, I see an opportunity for 65% gains before year end. AMZN sold off to the tune off 8% Friday following its third-quarter earnings release after the close on Thursday. If investors were truly running for the hills, though, we would have seen a much more violent move and the rally from the pre-market prices would have been absent. #-ad_banner-#​CEO Jeff Bezos has been very clear with investors and the media that he is focused on the bigger picture rather than quarterly results. Back in 1997, he informed them that he would be spending… Read More

All major U.S. stock indices finished in positive territory last week, for the first time since Aug. 29, led by the tech-heavy Nasdaq 100, which gained 5.9%. #-ad_banner-#​At face value, the outperformance by market-leading technology issues is a positive sign for the fourth quarter. But my proprietary metric shows that the biggest outflow of sector-related assets over the past one-week and one-month periods actually came from tech. Unless these outflows stop, the sustainability of last week’s strength in technology is suspect. Overall, last week’s market activity was encouraging as, in addition to the outperformance… Read More

All major U.S. stock indices finished in positive territory last week, for the first time since Aug. 29, led by the tech-heavy Nasdaq 100, which gained 5.9%. #-ad_banner-#​At face value, the outperformance by market-leading technology issues is a positive sign for the fourth quarter. But my proprietary metric shows that the biggest outflow of sector-related assets over the past one-week and one-month periods actually came from tech. Unless these outflows stop, the sustainability of last week’s strength in technology is suspect. Overall, last week’s market activity was encouraging as, in addition to the outperformance by technology, European stocks rebounded nicely as market volatility declined here in the United States. However, a little more upside follow through on last week’s U.S. market rebound is necessary before I am convinced that the September correction is over and the larger 2014 advance has resumed. Europe Still Key to the U.S. Market In last week’s Market Outlook, I discussed the bearish head-and-shoulders pattern in Germany’s DAX index, which has been positively correlated to the S&P 500 over the past 20 years. I said it targeted a decline to… Read More

Lately, thanks to financial television’s hunger for content, money managers are starting to behave a little bit like professional wrestlers trash talking outside of the ring. Ackman versus Icahn. Gross versus El-Arian. Imagine “Nature Boy” Ric Flair or Dusty “The American Dream” Rhodes  (Okay, I’m dating myself) with an MBA, running a couple hundred billion dollars. #-ad_banner-#Strangely, Warren “The Oracle of Omaha” Buffett has been dragged into the fray by Carl “The Raider” Icahn.  In a sideline interview at the annual Robin Hood Investor’s Conference, Ichan suggested that Buffett take a more active corporate governance role in some of Berkshire… Read More

Lately, thanks to financial television’s hunger for content, money managers are starting to behave a little bit like professional wrestlers trash talking outside of the ring. Ackman versus Icahn. Gross versus El-Arian. Imagine “Nature Boy” Ric Flair or Dusty “The American Dream” Rhodes  (Okay, I’m dating myself) with an MBA, running a couple hundred billion dollars. #-ad_banner-#Strangely, Warren “The Oracle of Omaha” Buffett has been dragged into the fray by Carl “The Raider” Icahn.  In a sideline interview at the annual Robin Hood Investor’s Conference, Ichan suggested that Buffett take a more active corporate governance role in some of Berkshire Hathaway, Inc.’s (NYSE: BRK-A)  higher profile holdings. There’s no denying that Ichan is one of the sharpest value investors in the game. And Buffett’s reputation is the stuff of American legend. But really, Carl? Buffett chants his core investment belief like a mantra: buy great companies with deep-moat franchises and good management, and leave them alone. The result makes money for shareholders — activism isn’t his style. Icahn’s style is activist. He’s also a deeper value kind of guy, buying the stock of a company that’s stumbled. If he buys enough stock, then he gets seats on the board and… Read More