As an economist for the state of Iowa, I learned that economic stimulus can affect growth — but only if given time to work. Of course, patience is not something investors or the markets are known for.  The lagging nature of stimulus on the economy can be excruciating for those with a stake, especially when the market wants instant gratification. This often manifests in whipsaws, where stock prices jump on news of economic stimulus, only to fall when the stimulus doesn’t come through in immediate economic growth. With this in mind, and with a little patience, you can make good… Read More

As an economist for the state of Iowa, I learned that economic stimulus can affect growth — but only if given time to work. Of course, patience is not something investors or the markets are known for.  The lagging nature of stimulus on the economy can be excruciating for those with a stake, especially when the market wants instant gratification. This often manifests in whipsaws, where stock prices jump on news of economic stimulus, only to fall when the stimulus doesn’t come through in immediate economic growth. With this in mind, and with a little patience, you can make good money as the rest of the market misses out on the bigger picture.  #-ad_banner-# For instance, a surge in stimulus measures in one country may soon jumpstart its economy. As a result, a key trading partner could see its market jump as well. Plus, Warren Buffett has taken an interest in this beaten-down market. And one of my favorite strategies offers a chance to get paid while we wait for a rebound.  China Ramps Up Stimulus Measures As of July 8, the Hang Seng index in Hong Kong had plummeted 14% in just a month… Read More

A week ago, I warned that an event was taking place that could spark the biggest correction since 2008. That day, the S&P 500 plunged 1.7% and the VIX shot up 22%. While traders panicked, I closed two trades for annualized returns of 1,205% and 2,111%. Since then, however, the market has rebounded strongly as investors’ fears about Greece and China were temporarily assuaged. So, do I think we’re out of the woods? Not even close. Now I know some of you may be thinking things are getting better. Stocks… Read More

A week ago, I warned that an event was taking place that could spark the biggest correction since 2008. That day, the S&P 500 plunged 1.7% and the VIX shot up 22%. While traders panicked, I closed two trades for annualized returns of 1,205% and 2,111%. Since then, however, the market has rebounded strongly as investors’ fears about Greece and China were temporarily assuaged. So, do I think we’re out of the woods? Not even close. Now I know some of you may be thinking things are getting better. Stocks are trading at all-time highs, the housing market seems to be recovering and unemployment is going down. Unfortunately, when you look closer at the numbers, you get a different story. When I made my July 8 prediction calling for the most significant pullback of this decade, I pointed to four major red flags. While this secular bull market may still have some good years ahead of it, numerous warning signs foretell a correction in the near term.  #-ad_banner-# Today, I want to discuss one of the red flags I’m seeing in detail. Margin… Read More

The semiconductor industry has always been extremely cyclical and volatile. Demand for chips fluctuates widely with the product cycles of major tech companies like Apple (Nasdaq: AAPL) and Samsung (OTC: SSNLF). At present, it looks like the industry is signaling a slowdown.  Shares of Samsung are 16% off their year-to-date highs, and this week the company reported its seventh straight decline in quarterly profits. Taiwan Semiconductor Manufacturing (NYSE: TSM) is down 14% since late April on slowing smartphone shipments, and SK Hynix has dropped 20% on the Korean market since early June.  #-ad_banner-#… Read More

The semiconductor industry has always been extremely cyclical and volatile. Demand for chips fluctuates widely with the product cycles of major tech companies like Apple (Nasdaq: AAPL) and Samsung (OTC: SSNLF). At present, it looks like the industry is signaling a slowdown.  Shares of Samsung are 16% off their year-to-date highs, and this week the company reported its seventh straight decline in quarterly profits. Taiwan Semiconductor Manufacturing (NYSE: TSM) is down 14% since late April on slowing smartphone shipments, and SK Hynix has dropped 20% on the Korean market since early June.  #-ad_banner-# These semiconductor stocks have something in common besides their plunging stock prices. They are the three main customers of another company, accounting for more than 30% of its revenues. And while Samsung, Taiwan Semiconductor and SK Hynix are each down double digits in recent months, this shared supplier is only 8% off its year-to-date high. Plus, the stock is trading at a premium to its five-year average price-to-sales multiple.  With second-quarter earnings approaching, this semiconductor equipment supplier may be due for a correction that we can leverage into a 62% gain. Before we get to today’s trade, one… Read More

Financial statements offer a great deal of insight into the complex process that is investment analysis. Successful analysis requires understanding what these statements say… but also what they don’t say. For example, the income statement offers insight into how much a company is earning, but it doesn’t tell us whether earnings are likely to grow. To answer questions about the quality of earnings and whether earnings growth is sustainable, we need to look at the cash flow statement.  Personally, I believe cash flow is one of the most important fundamental indicators. To understand the importance of cash flow, think of… Read More

Financial statements offer a great deal of insight into the complex process that is investment analysis. Successful analysis requires understanding what these statements say… but also what they don’t say. For example, the income statement offers insight into how much a company is earning, but it doesn’t tell us whether earnings are likely to grow. To answer questions about the quality of earnings and whether earnings growth is sustainable, we need to look at the cash flow statement.  Personally, I believe cash flow is one of the most important fundamental indicators. To understand the importance of cash flow, think of your own financial situation. How much you earn is important, but it’s not the only factor in play. The key to success is managing your cash flow. If you spend less cash than you take home, you’re probably not going to be dealing with money problems. But consistently having bills that exceed the amount of cash coming in is simply an unsustainable model and a recipe for bankruptcy. #-ad_banner-# The same is true of businesses. Whether you’re looking at the components of a personal or professional budget, it’s crucial to understand where the money is coming from,… Read More

It’s one of the easiest and safest ways to generate 20%-plus returns on a regular basis. Once you’ve mastered the technique, I wouldn’t be surprised if you stopped trading stocks or buying and holding investments for years at a time. That’s how powerful this strategy is — it can drastically improve the way you make money in the markets, forever. That goes for conservative income investors and aggressive traders alike. #-ad_banner-#The technique is actually pretty simple, but it requires some investors to leave their comfort zone. You see, it involves options, one of the… Read More

It’s one of the easiest and safest ways to generate 20%-plus returns on a regular basis. Once you’ve mastered the technique, I wouldn’t be surprised if you stopped trading stocks or buying and holding investments for years at a time. That’s how powerful this strategy is — it can drastically improve the way you make money in the markets, forever. That goes for conservative income investors and aggressive traders alike. #-ad_banner-#The technique is actually pretty simple, but it requires some investors to leave their comfort zone. You see, it involves options, one of the most misunderstood corners of the financial world. Many investors steer clear of options because they have a reputation for being risky, but that’s not always the case. Covered calls, one my favorite ways to generate large income streams and capital gains, can be more conservative than buy-and-hold investing. In fact, The Wall Street Journal calls it “one of the most conservative… strategies available to professional and individual investors alike.” Simply put, covered calls allow you to get paid upfront to potentially sell a stock you own at a higher price sometime… Read More

WARNING: A Major Correction Could Begin This Week A trading prodigy is predicting the biggest stock market correction since 2008.  In short, an important market event will take place on Wednesday that could trigger a freefall in stocks.  He’s been tracking this situation for months. I urge you… Read More

Carmakers reported surprisingly strong U.S. light-vehicle sales in May with a seasonally adjusted annualized rate of 17.71 million units, the highest since 2005. Aided by five weekends, including the usual Memorial Day blowouts, daily sales of 62,558 units were 5.5% higher than the same month last year. Besides great weather for car shopping, manufacturers have benefited lately from stronger employment, low gasoline prices and increasing credit availability. But you wouldn’t know it to look at their stock prices. In fact, the First Trust NASDAQ Global Auto ETF (NYSE: CARZ) sank 2.7% over the week after the May sales report was… Read More

Carmakers reported surprisingly strong U.S. light-vehicle sales in May with a seasonally adjusted annualized rate of 17.71 million units, the highest since 2005. Aided by five weekends, including the usual Memorial Day blowouts, daily sales of 62,558 units were 5.5% higher than the same month last year. Besides great weather for car shopping, manufacturers have benefited lately from stronger employment, low gasoline prices and increasing credit availability. But you wouldn’t know it to look at their stock prices. In fact, the First Trust NASDAQ Global Auto ETF (NYSE: CARZ) sank 2.7% over the week after the May sales report was released.  Investors have been worried that strong economic data would encourage the Federal Reserve to raise interest rates and choke off big-ticket purchases like new cars. While this may eventually be the case, higher rates could actually be a tailwind for automakers in the second quarter.  Higher Rates May be Good Thing for Near-Term Investors  A surge in interest rates could end up helping car manufacturers in a way that investors have yet to grasp. The rate on the 10-year Treasury has shot up from 1.87% at the beginning of the quarter to around 2.5%. Read More

In February, I made the case to readers of my premium options service, Profit Amplifier, that a market correction could happen sometime this year. My analysis was primarily based on slowing economic data, downward revisions in corporate earnings growth and the S&P 500’s high price-to-earnings ratio. If I’m correct, then it means my readers and I have the chance to not only protect ourselves, but even profit handsomely from the fall. And we’ll do it in a very simple, easy-to-understand way: by using put options. #-ad_banner-#Given current market conditions, it’s crucial you understand how… Read More

In February, I made the case to readers of my premium options service, Profit Amplifier, that a market correction could happen sometime this year. My analysis was primarily based on slowing economic data, downward revisions in corporate earnings growth and the S&P 500’s high price-to-earnings ratio. If I’m correct, then it means my readers and I have the chance to not only protect ourselves, but even profit handsomely from the fall. And we’ll do it in a very simple, easy-to-understand way: by using put options. #-ad_banner-#Given current market conditions, it’s crucial you understand how options work. Earlier this month, I introduced you to the basics of call options. Today I’d like to discuss put options, which will be especially important when a market downturn occurs. If you’re completely new to buying put options, that’s okay. They’re one of the most basic and common of all options strategies. Puts 101 Puts are commonly used as a substitution for shorting stock. But with options, we have the opportunity to preserve our trading capital by risking less money upfront, while also amplifying our potential profits. You see,… Read More

The surge in natural gas production has changed the energy landscape in the United States. Production jumped 44% between 2005 and 2014 compared to a decline of 4.5% over the previous nine-year period. Prices for natural gas at the Henry Hub in Louisiana jumped 162% between 2002 and 2008 on lower production and an economic boom in emerging markets. By 2012, prices had fallen nearly 70% to $2.75 per million BTU. Beyond a few spikes on colder weather, prices have flatlined between $2.50 and $3.50 for the past two and a half years.  Futures prices on… Read More

The surge in natural gas production has changed the energy landscape in the United States. Production jumped 44% between 2005 and 2014 compared to a decline of 4.5% over the previous nine-year period. Prices for natural gas at the Henry Hub in Louisiana jumped 162% between 2002 and 2008 on lower production and an economic boom in emerging markets. By 2012, prices had fallen nearly 70% to $2.75 per million BTU. Beyond a few spikes on colder weather, prices have flatlined between $2.50 and $3.50 for the past two and a half years.  Futures prices on the Chicago Mercantile Exchange (CME) suggest traders are not expecting much to change this year, with the December contract priced at $3.17. But two catalysts may prove speculators wrong and spark a rally in natural gas prices. Traders who get positioned now stand to make up to 50% profits without ever touching a futures contract.  #-ad_banner-# Natural Gas Exports About to Surge Natural gas exports have increased along with the production surge, but regulations that prohibit export to non-free trade agreement countries without approval seriously limit how much can be exported.  Price differences between… Read More

Interest rates have jumped on stronger economic growth in the United States and abroad causing prices for rate-sensitive investments to plunge. Traditionally low-risk investments like the iShares 20+ Year Treasury Bond Fund (NYSE: TLT) and the Utilities Select Sector SPDR ETF (NYSE: XLU) have booked large losses that will likely extend when the Fed finally starts to lift rates. But utilities still play a vital role for many investors that need consistent income and can be a blessing when the general market tumbles. #-ad_banner-# Using one of my favorite options strategies for reducing… Read More

Interest rates have jumped on stronger economic growth in the United States and abroad causing prices for rate-sensitive investments to plunge. Traditionally low-risk investments like the iShares 20+ Year Treasury Bond Fund (NYSE: TLT) and the Utilities Select Sector SPDR ETF (NYSE: XLU) have booked large losses that will likely extend when the Fed finally starts to lift rates. But utilities still play a vital role for many investors that need consistent income and can be a blessing when the general market tumbles. #-ad_banner-# Using one of my favorite options strategies for reducing risk can provide extra income for those investors while maintaining a position in the sector for longer-term portfolio diversification. Taper Tantrum, Round 4 — Rates Surge Volatility due to rapidly rising interest rates is nothing new for investors in utility stocks. Rates on the 10-year Treasury jumped 1.3% in 2013 when the Federal Reserve announced that it would begin tapering its $70 billion monthly bond purchases. Shares of the SPDR utility fund dropped 10.2% in the four months leading up to September of that year. Markets have seen two other periods of rate hike fears since then. The first was… Read More