Risk is a fundamental part of investing. It might be easiest to understand by using bonds as an example.#-ad_banner-#​ With bonds, the only investment that is considered to be risk free is short-term Treasury bills. For now, risk-free investing offers a return of 0.04%. At that rate, $1 million in retirement savings will provide $400 in income. Most investors don’t have $1 million, so their actual return from safe investments would be even lower. Because risk-free investments offer the smallest returns, pursuing higher income means accepting more risk. Treasury bills that mature in a year are an example… Read More

Risk is a fundamental part of investing. It might be easiest to understand by using bonds as an example.#-ad_banner-#​ With bonds, the only investment that is considered to be risk free is short-term Treasury bills. For now, risk-free investing offers a return of 0.04%. At that rate, $1 million in retirement savings will provide $400 in income. Most investors don’t have $1 million, so their actual return from safe investments would be even lower. Because risk-free investments offer the smallest returns, pursuing higher income means accepting more risk. Treasury bills that mature in a year are an example of how income and risk can be increased. This investment carries the risk that inflation could decrease the value of the principal invested in the bills. One-year T-bills are currently yielding about 0.1%, an amount that does not keep up with inflation. Investors are losing money, on an after-inflation basis, on all Treasurys with less than five years to maturity. This demonstrates that inflation risk might not be well understood by many investors because rational investors should not accept a nearly guaranteed loss in buying power. To beat inflation, investors are forced to accept what bond investors call credit risk. Read More

Despite the ongoing technological revolution in farming, Mother Nature has her limitations.  Nutrient-rich topsoil continues to erode, limited water resources remain depleted, and natural disasters continue to wreak havoc on production.#-ad_banner-# Compounding those issues, demand worldwide — particularly from emerging markets — is projected to increase drastically in the next few decades. The United Nations estimates that the global population will grow from 7.2 billion to 10 billion over the next 30 years. That growth will come mostly from emerging markets. The population in developed countries is expected to stay about the same at 1.3 billion, but the… Read More

Despite the ongoing technological revolution in farming, Mother Nature has her limitations.  Nutrient-rich topsoil continues to erode, limited water resources remain depleted, and natural disasters continue to wreak havoc on production.#-ad_banner-# Compounding those issues, demand worldwide — particularly from emerging markets — is projected to increase drastically in the next few decades. The United Nations estimates that the global population will grow from 7.2 billion to 10 billion over the next 30 years. That growth will come mostly from emerging markets. The population in developed countries is expected to stay about the same at 1.3 billion, but the combined population of the 49 least-developed countries is expected to double, to 2 billion.  That sets the stage for the emergence of a 3 billion-person global middle class that is going to need a lot of food. The U.N.’s Food and Agriculture Organization (FAO) projects food production will have to increase almost 70% in the next 30 years just to keep pace with demand. The Best Way To Cash In On A Global Food Crisis But investing in food companies is a terrible way to invest in the growing demand for food. That’s because rising prices at the grocery… Read More

As traders, we constantly deal with various levels of uncertainty. If anyone tells you that they have found a “sure thing” when it comes to your investments, you should run (not walk) in the opposite direction.#-ad_banner-# Instead of dealing with certainties, we must constantly seek the optimum balance between high probability (having a strong chance of success) and high profitability (generating a high rate of return). Most of the time, these two dynamics work inversely. If you find a trade that has the potential to triple your money, the probability of that trade will likely be very low. Read More

As traders, we constantly deal with various levels of uncertainty. If anyone tells you that they have found a “sure thing” when it comes to your investments, you should run (not walk) in the opposite direction.#-ad_banner-# Instead of dealing with certainties, we must constantly seek the optimum balance between high probability (having a strong chance of success) and high profitability (generating a high rate of return). Most of the time, these two dynamics work inversely. If you find a trade that has the potential to triple your money, the probability of that trade will likely be very low. On the other hand, you can set up a trade with a very high probability of success, but the actual return on that trade will likely be small (think Treasury bonds). As covered call traders, we have a unique ability to pick out specifically where on the probability/profitability continuum we want our trade to sit. Depending on how aggressive or conservative we want to be, we can pick an options contract that gives us the right amount of protection, or the amount of potential returns that we are looking for. Setting Up Covered Call Positions Based On Probability For… Read More

After a big year, many investors are wondering whether they should lock in their gains. The SPDR S&P 500 (NYSE: SPY) exchange-traded fund (ETF) provided a total return of 32.3% in 2013.#-ad_banner-# Unfortunately, there is no way to know for sure whether there is additional upside or if a decline will begin, but using covered calls could help investors lock in gains or cushion the downside. A covered call strategy involves selling call options on stocks or ETFs that you own. If you own SPY, for example, you can sell call… Read More

After a big year, many investors are wondering whether they should lock in their gains. The SPDR S&P 500 (NYSE: SPY) exchange-traded fund (ETF) provided a total return of 32.3% in 2013.#-ad_banner-# Unfortunately, there is no way to know for sure whether there is additional upside or if a decline will begin, but using covered calls could help investors lock in gains or cushion the downside. A covered call strategy involves selling call options on stocks or ETFs that you own. If you own SPY, for example, you can sell call options to generate income while still benefiting from the potential upside. Additionally, the income generated from selling options offsets potential losses in the stock or ETF by decreasing your dollar amount at risk. A call option gives the buyer the right to buy 100 shares of stock for a predetermined price (the strike price) at any time prior to the expiration date. Call sellers have an obligation to sell the shares if the buyer exercises their right to buy the stock, which they will do if the stock price is above the strike price when the option expires. SPY is… Read More

Wicked winter weather has been rocking the entire country. According to the National Weather Service, the Northeast and Midwest have been experiencing “life-threatening” wind chill, with temperatures hitting multi-decade lows.#-ad_banner-# But while these extreme conditions have led to school closures, government shutdowns and massive traffic jams, they’ve also supported one of my favorite long-term investments. With the country suffering through a deep freeze, demand for natural gas has been surging. The United States Natural Gas (NYSE: UNG) exchange-traded fund is up 17% in the past three months and back within striking distance of the 52-week high just above $24. That… Read More

Wicked winter weather has been rocking the entire country. According to the National Weather Service, the Northeast and Midwest have been experiencing “life-threatening” wind chill, with temperatures hitting multi-decade lows.#-ad_banner-# But while these extreme conditions have led to school closures, government shutdowns and massive traffic jams, they’ve also supported one of my favorite long-term investments. With the country suffering through a deep freeze, demand for natural gas has been surging. The United States Natural Gas (NYSE: UNG) exchange-traded fund is up 17% in the past three months and back within striking distance of the 52-week high just above $24. That strong finish helped natural gas gain 32% in 2013, making it the year’s top-performing commodity. Cold weather has been a great short-term catalyst for natural gas. But the long-term outlook is even better: The natural gas boom is expected to last for decades. According to the U.S. Energy Information Administration, natural gas is on pace to become the country’s leading source of energy by the end of the decade. Source: U.S. Energy Information Administration That bullish trend is great news for energy investors operating ahead of the curve. But with that growth potential comes volatility. Energy… Read More

In a stellar year for most sectors, many health-related stocks have outperformed. iShares US Medical Devices (NYSE: IHI) is up 32% year to date compared to a 25% gain in the S&P 500. And among that fund’s holdings is Boston Scientific (NYSE: BSX), whose stellar run in 2013 has led to shares doubling. Beginning the year just below $6 a share, BSX has climbed higher in $2 increments in a methodical stair-step pattern. Each push above technical resistance from $6 to $8 to $10 held the previous ceiling as solid price support. The recent $10 to $12 range projects a… Read More

In a stellar year for most sectors, many health-related stocks have outperformed. iShares US Medical Devices (NYSE: IHI) is up 32% year to date compared to a 25% gain in the S&P 500. And among that fund’s holdings is Boston Scientific (NYSE: BSX), whose stellar run in 2013 has led to shares doubling. Beginning the year just below $6 a share, BSX has climbed higher in $2 increments in a methodical stair-step pattern. Each push above technical resistance from $6 to $8 to $10 held the previous ceiling as solid price support. The recent $10 to $12 range projects a move to $14 on an upside breakout through $12 resistance. Only a weekly close below $10 would negate the bullish bias. #-ad_banner-#The $14 target is about 22% higher than recent prices, but traders who use a capital-preserving, stock substitution strategy could see a 100% return on a move to that level. One major advantage of using a long call option rather than buying a stock outright is putting up much less capital to control 100 shares — that’s the power of leverage. But with all of the potential strike and expiration combinations, choosing an option can be a… Read More

The holiday season can bring cheer to retailers that count on it to deliver a large portion of yearly sales. It’s been a good year for the sector so far, with the SPDR S&P Retail ETF (NYSE: XRT) outperforming the broader market with a 40%-plus year-to-date gain. But not all retailers have shared in the prosperity. Abercrombie & Fitch (NYSE: ANF), which was once a leader in the fickle world of fashion, is off 28% in the past 52 weeks. Even more striking is its underperformance in the past five years, which can be seen in the chart below. Read More

The holiday season can bring cheer to retailers that count on it to deliver a large portion of yearly sales. It’s been a good year for the sector so far, with the SPDR S&P Retail ETF (NYSE: XRT) outperforming the broader market with a 40%-plus year-to-date gain. But not all retailers have shared in the prosperity. Abercrombie & Fitch (NYSE: ANF), which was once a leader in the fickle world of fashion, is off 28% in the past 52 weeks. Even more striking is its underperformance in the past five years, which can be seen in the chart below. ANF has largely traded in a range between $54 and $34 with solid support just below at $30. Bullish divergence, i.e., new lows in price without new highs in volatility, may be a sign that a bottom is forming. The first recovery objective is the $44 midpoint of the two-year trading range. A break above $54 projects a $20 move and a secondary target of $74. #-ad_banner-#The $44 target is about 32% higher than recent prices, but traders who use a capital-preserving, stock substitution strategy could see a 146% return on a move to that level. One… Read More

Anytime you can boast a 100% win-rate in anything, it’s nothing short of remarkable. The best political pundits struggle to predict how an election will turn out… Meteorologists often miss forecasts for where and when the next hurricane will hit… even the best baseball players only manage to get a hit 30% of the time.  And when it comes to the stock market, as we all know, even the brightest minds in the business can get it dead wrong.  But somehow, Amber Hestla, Chief Investment Strategist of our recently-launched Income Trader newsletter, has managed to pull… Read More

Anytime you can boast a 100% win-rate in anything, it’s nothing short of remarkable. The best political pundits struggle to predict how an election will turn out… Meteorologists often miss forecasts for where and when the next hurricane will hit… even the best baseball players only manage to get a hit 30% of the time.  And when it comes to the stock market, as we all know, even the brightest minds in the business can get it dead wrong.  But somehow, Amber Hestla, Chief Investment Strategist of our recently-launched Income Trader newsletter, has managed to pull off a 100% win-rate on every single one of her recommended trades. #-ad_banner-#I challenge you to find a single stock picker, market pundit or investment manager that can say the same thing about their record in 2013. Can Amber’s run continue? Well, nothing last forever. But one thing is for certain — her record so far has been nothing short of impressive. But how has she managed such an amazing streak?  We’ve talked a lot about Amber’s Income Trader newsletter recently. You can view our previous articles on the subject here… Read More

The S&P 500 has been on fire in 2013 — up an impressive 30%. But the question I’m getting the most from readers right now is, “Is the market about to correct?”  It’s not hard to see why. The S&P 500 is up more than 160% since the bull market started in March 2009. But I’m not worried about a correction… and neither should followers of my “Instant Income” strategy. Rather than engaging in panic selling or trying to buy on a dip (potentially catching a “falling knife”), they’re taking the emotion out… Read More

The S&P 500 has been on fire in 2013 — up an impressive 30%. But the question I’m getting the most from readers right now is, “Is the market about to correct?”  It’s not hard to see why. The S&P 500 is up more than 160% since the bull market started in March 2009. But I’m not worried about a correction… and neither should followers of my “Instant Income” strategy. Rather than engaging in panic selling or trying to buy on a dip (potentially catching a “falling knife”), they’re taking the emotion out of investing by telling the market exactly what they want to pay for quality stocks they want to own.​ Even better, they get paid to wait until they buy. By utilizing a conservative strategy that involves selling put options contracts, you can in effect get paid to buy stocks at a discount. To recap, “put” options give investors the right — but not the obligation — to sell a stock at a specified price before a specified date, known as the expiration date. Selling a put obligates us to purchase that stock from the put… Read More

I want to show you something that will likely raise a lot of eyebrows. Some of these claims might seem “outrageous” or “improbable.” But keep in mind, they come straight from readers of my premium newsletter, Income Trader — voluntarily, just six months after we launched the service earlier this year. Some of you won’t believe they’re true. But by the time you’ve finished reading this essay, my goal is to change your mind and show you how it’s possible for you to see similar results. ​“When I first started using [Amber’s] picks, my goal was… Read More

I want to show you something that will likely raise a lot of eyebrows. Some of these claims might seem “outrageous” or “improbable.” But keep in mind, they come straight from readers of my premium newsletter, Income Trader — voluntarily, just six months after we launched the service earlier this year. Some of you won’t believe they’re true. But by the time you’ve finished reading this essay, my goal is to change your mind and show you how it’s possible for you to see similar results. ​“When I first started using [Amber’s] picks, my goal was to earn $500. Then I quickly realized I can earn at least $1,000 per month. I use the profits to buy more… “ –Nathan S., West Long Branch, N.J. “About $30,000/ yr. Bought a Porsche” — Carter B., Clemmons, N.C. “I will never own a stock again if I can help it… since March, I have increased my account by $150,000. Keep the recommendations coming!” — Richard K., Dallas $1,000 per month… $30,000 per year… $150,000 since March… It’s enough to make anyone skeptical. You may be thinking that to make this kind of income from investing,… Read More