The stock market is off to one of its worst Januarys ever. That’s bad news for those of us with significant exposure to stocks. But in a sense, it’s good news for those of us looking to buy great companies at attractive valuations. This winter blizzard has buried many excellent stocks without regard for their individual fundamentals — creating bargains for investors with the fortitude to buy in the face of the storm. I’ve looked into the best stocks to own in a market downturn.  Some experts are pointing to the current selloff as a harbinger of a bear market. Read More

The stock market is off to one of its worst Januarys ever. That’s bad news for those of us with significant exposure to stocks. But in a sense, it’s good news for those of us looking to buy great companies at attractive valuations. This winter blizzard has buried many excellent stocks without regard for their individual fundamentals — creating bargains for investors with the fortitude to buy in the face of the storm. I’ve looked into the best stocks to own in a market downturn.  Some experts are pointing to the current selloff as a harbinger of a bear market. They say the U.S. economy is in its seventh year of recovery and overdue for a recession. China is imploding and the Federal Reserve blundered by raising short-term interest rates at the exact wrong time, they argue. So any seeming bargains in the stock market now are nothing but fool’s gold. #-ad_banner-#Or so they say. From my perspective, certain stocks are buy-and-hold candidates whenever they’re relatively cheap: large, financially strong companies with established brands and commanding shares in growing markets. Under normal circumstances, you can’t buy them at reasonable valuations because of their sterling qualities. But pessimism creates opportunity for… Read More

It’s been clear for years now that those who bet on the demise of major automakers were on the wrong side of history.  A report this week confirmed that car makers are doing just fine, thank you. About 17.5 million cars and trucks were sold in the United States last year, beating the previous record of 17.3 million set in 2000. Last year’s tally represented a 6% increase from 2014 and was up 68% from the 10.4 million sold in 2009. Americans spent a whopping $437 billion on cars and trucks last year, and that number has risen for six… Read More

It’s been clear for years now that those who bet on the demise of major automakers were on the wrong side of history.  A report this week confirmed that car makers are doing just fine, thank you. About 17.5 million cars and trucks were sold in the United States last year, beating the previous record of 17.3 million set in 2000. Last year’s tally represented a 6% increase from 2014 and was up 68% from the 10.4 million sold in 2009. Americans spent a whopping $437 billion on cars and trucks last year, and that number has risen for six straight years. #-ad_banner-#In some ways, 2015 was a perfect environment for vehicle sales. More Americans have jobs (unemployment dropped to only 5%) and gasoline prices fell sharply along with the price of oil — at year-end, the average price nationally was $2.03 a gallon, down 28 cents from the year-earlier price. And interest rates were at rock bottom most of the year, as the Federal Reserve raised interest rates only in mid-December. Meanwhile, many Americans have been deferring new-car purchases; the average car on the road is more than 11 years old. It’s a far cry from the auto industry’s… Read More

Another year, another overreaction. Stocks plunged in China on Monday after December’s industrial manufacturing number came in lower than expected. After dropping 7%, trading was halted prematurely for the first time ever. U.S. stocks sold off sharply on the open, though they calmed after that and rallied at day’s end. When it was over, the S&P 500 dropped about 1.5%. Not a great start to the year! #-ad_banner-#While it’s scary to experience a sharp downward trend after the holiday lull, calmer heads seemed to prevail — at least in U.S. markets — and that makes sense. China’s economic slowdown has… Read More

Another year, another overreaction. Stocks plunged in China on Monday after December’s industrial manufacturing number came in lower than expected. After dropping 7%, trading was halted prematurely for the first time ever. U.S. stocks sold off sharply on the open, though they calmed after that and rallied at day’s end. When it was over, the S&P 500 dropped about 1.5%. Not a great start to the year! #-ad_banner-#While it’s scary to experience a sharp downward trend after the holiday lull, calmer heads seemed to prevail — at least in U.S. markets — and that makes sense. China’s economic slowdown has been common knowledge for several quarters, and the December numbers were far from catastrophic. And China’s economy is far less dependent on manufacturing than it was a decade ago. The country’s burgeoning middle class has created a fast-growing consumer sector that is relatively healthy. Even if China’s economic growth is lower than expected in 2016, it’s still expected to continue to grow faster than ours, and the U.S. economy is chugging along fairly well and should remain in an expansion mode. U.S. companies and consumers have spent the past several years getting their balance sheets in order and accumulating cash. Read More

The past year was an eventful one for U.S. stocks, with volatility picking up considerably in August, China’s economic slowdown casting a long shadow and the Fed finally pulling the trigger on a long-telegraphed interest-rate hike. #-ad_banner-#What will 2016 bring? Here are six trends to watch: Interest rates. No one was surprised when the Fed increased the Fed Funds rate by 25 basis points (0.25 percentage points) in mid-December. Fed Chair Janet Yellen carefully telegraphed the increase for months, and better-than-expected jobs reports in the fall made it a near-certainty. What comes next is harder to predict, though an educated… Read More

The past year was an eventful one for U.S. stocks, with volatility picking up considerably in August, China’s economic slowdown casting a long shadow and the Fed finally pulling the trigger on a long-telegraphed interest-rate hike. #-ad_banner-#What will 2016 bring? Here are six trends to watch: Interest rates. No one was surprised when the Fed increased the Fed Funds rate by 25 basis points (0.25 percentage points) in mid-December. Fed Chair Janet Yellen carefully telegraphed the increase for months, and better-than-expected jobs reports in the fall made it a near-certainty. What comes next is harder to predict, though an educated guess isn’t too difficult: slow, gradual upticks in rates are the most likely course. My prediction is that Yellen & Company ease rates higher only once or twice in 2016, several months apart each time. Why? Despite low unemployment, the labor market clearly retains some slack, with historically high rates of non-participation and wages not keeping pace with productivity. And with energy prices still low (more on that later) and tepidly growing China unlikely to fuel an unexpected increase in global demand for commodities, inflation remains well under control. Some analysts are even calling for a recession to begin in… Read More

If you regularly follow the advice of StreetAuthority experts, you probably sold some winning investments in 2015. That’s great news — but of course, there’s a downside: the capital gains tax you’ll owe on those profits. So as we wind down to the final days of the year, it’s worth considering an investment maneuver that can lower those taxes, or even eliminate them. Smart investors use capital losses to offset gains in years when they’ve sold a lot of winners. By selling losing investments before December 31, you can lower your net gain and significantly reduce the tax bill you’ll… Read More

If you regularly follow the advice of StreetAuthority experts, you probably sold some winning investments in 2015. That’s great news — but of course, there’s a downside: the capital gains tax you’ll owe on those profits. So as we wind down to the final days of the year, it’s worth considering an investment maneuver that can lower those taxes, or even eliminate them. Smart investors use capital losses to offset gains in years when they’ve sold a lot of winners. By selling losing investments before December 31, you can lower your net gain and significantly reduce the tax bill you’ll pay for 2015. But as with anything involving the IRS, you’ll need to do it the right way: in this case, without running afoul of the “wash sale rule.” #-ad_banner-#The IRS wash sale rule prohibits investors from claiming a capital loss on a sale if they buy back the same security within 30 calendar days. The rule applies to all of your accounts as well as your spouse’s. Furthermore, you can’t buy a “substantially identical” security as a replacement — e.g., selling an S&P 500 index fund and buying another one. And don’t try to get clever with options, convertible… Read More

Last week, I discussed why aerospace and defense stocks could be among the market’s biggest winners over the next two years. #-ad_banner-#Essentially, Congress and President Obama have unfrozen the defense budget from spending caps, agreeing to spend $37 billion more than expected over the next two fiscal years. The bottom line: instead of a continuation of steep spending cuts in defense, the budget will actually increase for the first time in six years. And no one is breathing a bigger sigh of relief than defense contractors, many of whose revenues and earnings depend substantially on Department of Defense procurement. While… Read More

Last week, I discussed why aerospace and defense stocks could be among the market’s biggest winners over the next two years. #-ad_banner-#Essentially, Congress and President Obama have unfrozen the defense budget from spending caps, agreeing to spend $37 billion more than expected over the next two fiscal years. The bottom line: instead of a continuation of steep spending cuts in defense, the budget will actually increase for the first time in six years. And no one is breathing a bigger sigh of relief than defense contractors, many of whose revenues and earnings depend substantially on Department of Defense procurement. While the budget agreement only covered the next two years, analysts expect that regardless of who is elected president next November, defense spending will continue to rise in the coming years.  Here are two more stocks that also are likely to capitalize on the trend: Boeing (NYSE: BA) is the world’s largest aerospace company and one of the largest defense contractors in the world. With Airbus (OTC: EADSY), it is one of only two major makers of commercial wide-body aircraft. Its business is split among commercial aircraft, defense and space — all of them growth sectors in… Read More

The last two months have been good for U.S. aerospace and defense companies — and the next two years could mark a bull market for stocks of those best-positioned for this new environment. The turning point came in late October, when Congress and the Obama Administration agreed to a two-year budget deal that authorizes Pentagon spending over the next two years by about $37 billion more than the spending caps established by the so-called sequester budget agreement that began in 2012. That $37 billion was actually less than President Obama requested, but it’s still a major shot in the arm… Read More

The last two months have been good for U.S. aerospace and defense companies — and the next two years could mark a bull market for stocks of those best-positioned for this new environment. The turning point came in late October, when Congress and the Obama Administration agreed to a two-year budget deal that authorizes Pentagon spending over the next two years by about $37 billion more than the spending caps established by the so-called sequester budget agreement that began in 2012. That $37 billion was actually less than President Obama requested, but it’s still a major shot in the arm for the defense industry. #-ad_banner-#To understand why, let’s review the trend in U.S. defense spending this century. After an uninterrupted annual rise since 9/11 — due in large part to the wars in Iraq and Afghanistan but also to substantial spending on new weapons programs for every branch and the burgeoning Homeland Security sector — defense spending fell about 15% total from fiscal 2011 (ended September 2011) through fiscal 2015.  Part of the decrease was due to the U.S. winding down combat operations in Iraq, which corresponded to a contraction in the size of our armed forces. But the reduction… Read More

The U.S. stock market has been in a holding pattern of sorts, awaiting the Federal Reserve Board’s decision about whether or not to raise short-term interest rates. By tomorrow, we’ll likely hear the announcement of their decision to boost rates by 25 basis points (0.25 percentage points). The move has been telegraphed so effectively, it would be almost dangerous for the Fed not to move at this point — that’s how much the world expects the hike. Investors probably will take the much-predicted news calmly, though it’s possible that some higher-yielding stocks fall on the news. That’s because some money… Read More

The U.S. stock market has been in a holding pattern of sorts, awaiting the Federal Reserve Board’s decision about whether or not to raise short-term interest rates. By tomorrow, we’ll likely hear the announcement of their decision to boost rates by 25 basis points (0.25 percentage points). The move has been telegraphed so effectively, it would be almost dangerous for the Fed not to move at this point — that’s how much the world expects the hike. Investors probably will take the much-predicted news calmly, though it’s possible that some higher-yielding stocks fall on the news. That’s because some money will be shifted toward money market and short-term fixed-income instruments, which will become relatively more attractive as yields rise. #-ad_banner-#The short-term selloff could represent an opportunity to snatch up shares of high-quality, dividend-paying stocks that take a hit on the news. To improve my odds, I’ll be focusing on stocks that are already somewhat unloved, for short-term reasons that won’t matter much in the long run. Here are two such candidates to consider for both capital appreciation and income: Emerson Electric (NYSE: EMR) is one of the most diversified electrical-equipment conglomerates in the United States, a $25-billion global manufacturing leader… Read More

The U.S. stock market has demonstrated rising volatility of late, as jittery investors are focusing less on economic or stock-specific fundamentals and more on external factors: terrorism, the climate-change talks, Donald Trump’s latest remarks. #-ad_banner-#But look past the short-term noise and you’ll see the market in a holding pattern over the past two months. The S&P 500’s high and low since October 12 are about 5% apart. The reason for this muted range, I believe, is that investors have been waiting for the Federal Reserve’s first increase in short-term interest rates in seven years. If the rate hike occurs next… Read More

The U.S. stock market has demonstrated rising volatility of late, as jittery investors are focusing less on economic or stock-specific fundamentals and more on external factors: terrorism, the climate-change talks, Donald Trump’s latest remarks. #-ad_banner-#But look past the short-term noise and you’ll see the market in a holding pattern over the past two months. The S&P 500’s high and low since October 12 are about 5% apart. The reason for this muted range, I believe, is that investors have been waiting for the Federal Reserve’s first increase in short-term interest rates in seven years. If the rate hike occurs next week, the cloud will lift and investors will start to trade a bit more freely, perhaps after taking a holiday break. The timing of the Fed’s hike couldn’t be better for undervalued stocks. Coming at the end of the year, when professional and individual investors alike dump some of their losing stocks to harvest capital losses for tax purposes, the cloud-lifting environment I anticipate could raise interest in some down-and-out stocks that don’t deserve their recent rough treatment. Both of the following stocks have suffered this year but they boast top shares in growing markets and are excellent candidates for… Read More

The U.N.-sponsored COP-21 conference taking place in Paris this month is expected to result in a binding international agreement to reduce emissions of greenhouse gases, especially carbon dioxide. All of the largest economies have already made commitments, and political momentum for an agreement has never been higher — especially given the mounting scientific evidence that the world is reaching a point of irreversible consequences if nothing changes. #-ad_banner-#While details remain under discussion, there’s little doubt about the areas that will be impacted. The biggest carbon emitters are power plants, especially coal plants; cars; and factories, especially chemical plants. Governments are… Read More

The U.N.-sponsored COP-21 conference taking place in Paris this month is expected to result in a binding international agreement to reduce emissions of greenhouse gases, especially carbon dioxide. All of the largest economies have already made commitments, and political momentum for an agreement has never been higher — especially given the mounting scientific evidence that the world is reaching a point of irreversible consequences if nothing changes. #-ad_banner-#While details remain under discussion, there’s little doubt about the areas that will be impacted. The biggest carbon emitters are power plants, especially coal plants; cars; and factories, especially chemical plants. Governments are expected to accelerate the trend toward using cleaner fuels for these purposes — and over the long run, to shift considerably away from fossil fuels toward renewable fuel sources. I wrote about the industries I expect to suffer from any agreements made at the COP-21 here. In short, the industries that will be most hurt will be coal; oil and natural gas; paper and packaging; and chemicals. As for the industries that should get a boost(renewable energy (solar and wind); power storage; equipment makers; and infrastructure), I wrote in length about those industries here. Today, I’m presenting three specific stocks… Read More