Turns in investor sentiment can make you double- and even triple-digit gains if you are early enough. The risk is being too early. The wait can be excruciating — and costly.  Just ask gold bugs.  Historic money printing by the largest central banks should have stoked inflation, deflating currencies and sending gold prices higher. And the 30% plunge in gold prices in 2013 should have led to production cuts and greater demand. Yet, gold prices have gone nowhere since the beginning of 2014. The wait for gold to rebound has led to big losses for many. SPDR Gold… Read More

Turns in investor sentiment can make you double- and even triple-digit gains if you are early enough. The risk is being too early. The wait can be excruciating — and costly.  Just ask gold bugs.  Historic money printing by the largest central banks should have stoked inflation, deflating currencies and sending gold prices higher. And the 30% plunge in gold prices in 2013 should have led to production cuts and greater demand. Yet, gold prices have gone nowhere since the beginning of 2014. The wait for gold to rebound has led to big losses for many. SPDR Gold Shares (NYSE: GLD) is nearly 11% off its 52-week highs, and the Market Vectors Gold Miners ETF (NYSE: GDX) is down 29% from its highs of the past year. #-ad_banner-# But for the leader in the space, this year may be a turning point. Better still, we can make double-digit returns even if the stock goes nowhere. Where are the Gold Bugs Now? Relative to the fervor for gold over the past several years, it seems you hardly hear pundits talk of the… Read More

On April 24, Starbucks Corp. (Nasdaq: SBUX) extended its history of matching or beating earnings expectations to nine consecutive quarters. No surprise there. After all, it owns one of the most recognizable brands in the world. Go to any given U.S. city and try walking a few blocks without seeing the Starbucks logo pasted across a green awning. It’s nearly impossible. Shares are already up 24% in 2015 and are poised to continue higher. That makes now the perfect time to execute my Income Multiplier strategy on Starbucks. It could earn you 5.4% in… Read More

On April 24, Starbucks Corp. (Nasdaq: SBUX) extended its history of matching or beating earnings expectations to nine consecutive quarters. No surprise there. After all, it owns one of the most recognizable brands in the world. Go to any given U.S. city and try walking a few blocks without seeing the Starbucks logo pasted across a green awning. It’s nearly impossible. Shares are already up 24% in 2015 and are poised to continue higher. That makes now the perfect time to execute my Income Multiplier strategy on Starbucks. It could earn you 5.4% in 64 days or allow you to buy the stock at a 9.5% discount. In the last 22 years, Starbucks has been one of the best-performing stocks in the S&P 500. Since going public in 1992, shares have increased nearly 16,000%, crushing the market’s 407% return. Although the company won’t repeat the same incredible performance, Starbucks still has plenty of room to grow. The company has more than 12,000 locations in the United States. This year, Starbucks plans to increase its store count by 650 in North America and by… Read More

Forty thousand-plus people flocked to Omaha, Neb., the first weekend of May for Berkshire Hathaway’s (NYSE: BRK-B) 50th-anniversary shareholder meeting. Along with many of my peers, I always spend a good deal of time dissecting what Warren Buffett says at these annual meetings. And one of the things I gleaned from this year’s event is that the Oracle of Omaha values stocks based on dynamic variables. Buffett appeared on CNBC’s “Squawk Box” the Monday after the meeting. When asked about whether stocks are overvalued, he told co-anchor Becky Quick that stocks look cheap as long… Read More

Forty thousand-plus people flocked to Omaha, Neb., the first weekend of May for Berkshire Hathaway’s (NYSE: BRK-B) 50th-anniversary shareholder meeting. Along with many of my peers, I always spend a good deal of time dissecting what Warren Buffett says at these annual meetings. And one of the things I gleaned from this year’s event is that the Oracle of Omaha values stocks based on dynamic variables. Buffett appeared on CNBC’s “Squawk Box” the Monday after the meeting. When asked about whether stocks are overvalued, he told co-anchor Becky Quick that stocks look cheap as long as interest rates remain low. He added, “If interest rates normalize, we’ll look back and say stocks weren’t so cheap.” This indicates Buffett values stocks based partly on interest rates. It also signals he is willing to pay more for a company when rates are low, and that companies deserve lower valuations when rates rise. #-ad_banner-#​Like Buffett, I also use dynamic variables when I value stocks. And my favorite dynamic variable is the PEG ratio.  The PEG ratio compares the price-to-earnings (P/E) ratio to the growth rate of earnings per share (EPS). A stock is considered fairly valued… Read More

A headline on Yahoo Finance one Friday morning caught my eye: “Could This Be the Beginning of the End of the Social Media Mania?” The article was penned by Scott Fearon, the founder and president of Crown Capital Management hedge fund, and it started like this: “I’m kicking myself for not following my instincts and shorting Yelp (NYSE: YELP) before it announced utterly rancid earnings on Thursday morning.” Shares of YELP plummeted 23% on April 30 after the company missed earnings estimates and showed a slowdown in user growth. For the first quarter, Yelp reported a loss of… Read More

A headline on Yahoo Finance one Friday morning caught my eye: “Could This Be the Beginning of the End of the Social Media Mania?” The article was penned by Scott Fearon, the founder and president of Crown Capital Management hedge fund, and it started like this: “I’m kicking myself for not following my instincts and shorting Yelp (NYSE: YELP) before it announced utterly rancid earnings on Thursday morning.” Shares of YELP plummeted 23% on April 30 after the company missed earnings estimates and showed a slowdown in user growth. For the first quarter, Yelp reported a loss of $0.02 per share, double what analysts had expected. Revenue also fell short. And while the number of monthly active users during the first quarter was up 8% year over year to 143 million, this paled in comparison to the 30% growth seen in the first quarter of 2014. The final nail in the coffin was a lower-than-anticipated revenue forecast for the current quarter. Investors quickly abandoned ship, and traders who did short the shares prior to the announcement made a nice sum for a day’s work. Despite Fearon’s concerns (to put it mildly) about Yelp and other social media companies’… Read More

May will be the 71st month of economic expansion for the United States. That seems like a long time, but it’s not abnormal. The last three expansions lasted an average of 95 months, with the longest lasting 10 years. Using this recent history as a guide, we can reasonably guess how far away we might be from the next recession (about two years). But we have no way of knowing for sure. Not even economists know when we’ll transition from one phase into the next. In fact, economists generally don’t know… Read More

May will be the 71st month of economic expansion for the United States. That seems like a long time, but it’s not abnormal. The last three expansions lasted an average of 95 months, with the longest lasting 10 years. Using this recent history as a guide, we can reasonably guess how far away we might be from the next recession (about two years). But we have no way of knowing for sure. Not even economists know when we’ll transition from one phase into the next. In fact, economists generally don’t know that we’re even in a recession until six-to-12 months after it begins. The same is true when a recession ends. Knowing that we’re most likely nearing a later stage of our expansion, my focus has turned to what comes next. #-ad_banner-#More specifically, I want to know whether the companies I’m investing in are prepared for a possible recession. While it’s not possible to know what’s happening with the economy in real time, we can work around that by investing in companies that perform well during both feast and famine. If a… Read More

Spotting emerging trends in the market is the best way I have found to make oversized returns in equities. By getting ahead of market sentiment for a particular sector, idea or theme, you can take advantage of the herd mentality without being part of the herd. This quarter, and potentially for much of the year, I am looking for two major themes to develop.  The first is a cooling or even reversal of the U.S. dollar’s rally, which began in force late last year and continued through March.  The second theme, which is indirectly related to the first, is a… Read More

Spotting emerging trends in the market is the best way I have found to make oversized returns in equities. By getting ahead of market sentiment for a particular sector, idea or theme, you can take advantage of the herd mentality without being part of the herd. This quarter, and potentially for much of the year, I am looking for two major themes to develop.  The first is a cooling or even reversal of the U.S. dollar’s rally, which began in force late last year and continued through March.  The second theme, which is indirectly related to the first, is a stabilization of oil prices and improved sentiment in the space. Oil prices have bounced off their March lows, and near-term catalysts could help support them and bring investors back into the space. If even one of these two themes plays out, it could mean strong upside for today’s pick. If both themes develop, as they should, it could mean up to 56% returns for traders. Oil’s Rebound and Europe’s Turn for Growth The European Central Bank (ECB) was slow to adopt quantitative easing, the kind of bond-buying program that spurred growth in the United States, instead opting for… Read More

With interest rates at extreme lows for the past few years and looking likely to remain that way for some time, it’s tempting to think that finding opportunities to profit would be like shooting fish in a barrel. Indeed, former Federal Reserve Chairman Ben Bernanke recently wrote in a blog post: “If the real interest rate were expected to be negative indefinitely, almost any investment is profitable.” #-ad_banner-#We’ve certainly seen this play out with the stock market. But it’s also been great news for companies undertaking big ticket construction projects. #-ad_banner-#Businesses… Read More

With interest rates at extreme lows for the past few years and looking likely to remain that way for some time, it’s tempting to think that finding opportunities to profit would be like shooting fish in a barrel. Indeed, former Federal Reserve Chairman Ben Bernanke recently wrote in a blog post: “If the real interest rate were expected to be negative indefinitely, almost any investment is profitable.” #-ad_banner-#We’ve certainly seen this play out with the stock market. But it’s also been great news for companies undertaking big ticket construction projects. #-ad_banner-#Businesses use accounting models to assess the feasibility of such projects. Models show a higher expected return on investment (ROI) when rates are low. Higher ROIs mean more investment projects will meet minimum requirements for approval. Indeed, non-residential construction spending in the United States is estimated to rise 5.6% this year to just over $390 billion, according to Statista, and continue at about that growth rate over the next several years. I’m looking at investment opportunities in the companies that can help businesses complete these projects. AECOM (NYSE: ACM) is one such… Read More

It has been a long time since banks were among the market’s leading groups. And while the broad market is trading near all-time highs, the SPDR S&P Bank ETF (NYSE: KBE), which tracks regional banks, has barely recovered half of what it lost during the financial crisis. It is truly a forsaken group. Or at least it was.  For the first time in a year, the relative performance of banks versus the S&P 500 has turned positive. And on an absolute basis, KBE is on the verge of a major upside breakout from a sideways pattern that has… Read More

It has been a long time since banks were among the market’s leading groups. And while the broad market is trading near all-time highs, the SPDR S&P Bank ETF (NYSE: KBE), which tracks regional banks, has barely recovered half of what it lost during the financial crisis. It is truly a forsaken group. Or at least it was.  For the first time in a year, the relative performance of banks versus the S&P 500 has turned positive. And on an absolute basis, KBE is on the verge of a major upside breakout from a sideways pattern that has trapped it since late 2013. Breakouts in both relative and absolute terms signify a positive shift for any sector and tell us that the group is now one of the strongest in a rising market. Most investment pros would tell us that finding the strongest sectors is the best starting point for selecting the best stocks to buy.  To be sure, the market as a whole is still working out some issues and has yet to make a clean break to the next level. But the bias in the overall market is still to the upside, and so is the… Read More

Normally this kind of information is kept secret. But due to regulatory requirements for its initial public offering (IPO), this company was forced to reveal the shocking wall street biggest scam. From 2009 to 2013, a secretive high-frequency trading firm named Virtu managed to only have one losing day. In 2014 it notched a perfect record. On its worst day, the firm was making between $800,000 and $1 million a day. It may sound too good to be true. But there it is, laid out in Virtu Financial’s… Read More

Normally this kind of information is kept secret. But due to regulatory requirements for its initial public offering (IPO), this company was forced to reveal the shocking wall street biggest scam. From 2009 to 2013, a secretive high-frequency trading firm named Virtu managed to only have one losing day. In 2014 it notched a perfect record. On its worst day, the firm was making between $800,000 and $1 million a day. It may sound too good to be true. But there it is, laid out in Virtu Financial’s IPO prospectus for any and everyone to see. But Virtu isn’t alone. J.P. Morgan didn’t have a single losing day in 2013. Bank of America notched a perfect performance of its own in the first quarter of 2013. Clearly, Wall Street trades and invests its own money differently than the traditional buy-and-hold strategy its clients typically use. I’ll let you in on one of Wall Street’s best-kept secrets: selling put options. Does that sound scary? Intimidating? If it does, there’s a very good reason for… Read More

As the S&P 500 clings to its all-time high and investors wonder if its 21 times earnings multiple is a little pricey, one market makes it look like a bargain-basement deal. This stock market is trading for a staggering 44 times trailing earnings and has more than doubled in the past year. What’s even more perplexing is that stocks keep making fresh highs even as fundamentals continue to deteriorate. The government has taken notice though, and may soon remove the punch bowl from the party. It may not be long before a correction turns into a full-blown market… Read More

As the S&P 500 clings to its all-time high and investors wonder if its 21 times earnings multiple is a little pricey, one market makes it look like a bargain-basement deal. This stock market is trading for a staggering 44 times trailing earnings and has more than doubled in the past year. What’s even more perplexing is that stocks keep making fresh highs even as fundamentals continue to deteriorate. The government has taken notice though, and may soon remove the punch bowl from the party. It may not be long before a correction turns into a full-blown market crisis. How Quickly Sentiment Can Turn Anyone invested in the Chinese market over the past decade knows how important sentiment is to prices. After a meteoric rise and subsequent crash during the global financial crisis, things seemed to improve quickly as the Shanghai Composite recovered off its late 2008 lows.  Hopes that stock prices would surge again as the world’s second largest economy became a global powerhouse were dashed as the Shanghai Composite lost close to 40% in the five years following its 2009 high.  But then, as the government sought to cool overheating in the property market, investors found… Read More