Ever since I was a kid, I loved discount stores. I remember the old TG&Y five and dime store in my neighborhood. I’d trade in enough Coke (NYSE: KO) bottles at the A&P next door to cobble together twenty five cents to buy a bag of green plastic army men… Read More

James Carville, the colorful political strategist also known as the “Ragin’ Cajun,” once quipped about reincarnation, “I’d like to come back as the bond market. You can intimidate everybody.” That used to be the case. However, with half a decade of abnormally low bond yields, investors no longer seem to fear the bond market. That’s about to change. The equity markets shifted to wide-open rally mode with the ascendancy of Donald Trump to the Oval Office. Warren Buffett has often referred to the stock market as a voting machine. If that’s case, Trump won the popular vote in a landslide,… Read More

James Carville, the colorful political strategist also known as the “Ragin’ Cajun,” once quipped about reincarnation, “I’d like to come back as the bond market. You can intimidate everybody.” That used to be the case. However, with half a decade of abnormally low bond yields, investors no longer seem to fear the bond market. That’s about to change. The equity markets shifted to wide-open rally mode with the ascendancy of Donald Trump to the Oval Office. Warren Buffett has often referred to the stock market as a voting machine. If that’s case, Trump won the popular vote in a landslide, with the Dow advancing 12% since election night. But while a 12% move in stocks always gets my attention, this stopped me dead in my tracks. It seems that Trump’s Twitter app isn’t the only thing he’s pounding. Now, to be fair, as much as it may disappoint the President, he alone isn’t causing the 44% rise in 10-year Treasury yields. The most likely culprit is a combination of expected fiscally expansive government policy combined with a rapidly improving economy spurred by wide sweeping deregulation. An accelerating business cycle is long term bullish for stocks. However,… Read More

While the investing world continues to shovel money toward exchange-traded funds (ETFs) (full disclosure: I find myself using them more and more), it’s almost as if the grandfather of the ETF, the closed-end fund (CEF), has been reduced to a memory like dial phones or the Nehru jacket. But when I’m at a loss for finding value in an individual stock, I often find myself looking through CEF names like a millennial at a record shop. #-ad_banner-#CEFs can trace their origins back to the 1860s in Great Britain, when they were primarily used to raise money to build U.S. railroads. Read More

While the investing world continues to shovel money toward exchange-traded funds (ETFs) (full disclosure: I find myself using them more and more), it’s almost as if the grandfather of the ETF, the closed-end fund (CEF), has been reduced to a memory like dial phones or the Nehru jacket. But when I’m at a loss for finding value in an individual stock, I often find myself looking through CEF names like a millennial at a record shop. #-ad_banner-#CEFs can trace their origins back to the 1860s in Great Britain, when they were primarily used to raise money to build U.S. railroads. The first American CEFs appeared in 1893, 30 years prior to the first U.S. open-end mutual fund. Prior to the Crash of 1929, American CEFs claimed over $4 billion in assets, which was big money for the time. CEFs have evolved over the decades since, but their organization and basic features have remained relatively consistent. CEFs are and always have been professionally and actively managed, exchange-traded, internally leveraged, and income oriented. Recently, while screening a handful of CEFs, one piqued my interest: Calamos Convertible Opportunities and Income Fund (Nasdaq: CHI). As the name suggests, most of the fund’s heavy lifting… Read More

It’s hard to argue with the claim that retail chain Victoria’s Secret brought sexy lingerie to the mainstream, out from the backwater of catalogs and specialty stores that most consumers wouldn’t be caught dead in. Ironically, however, Victoria’s Secret’s original incarnation was as a specialty catalog. #-ad_banner-#Founded in 1977, the original target customers of the brand were men who were too embarrassed to buy lingerie for their wives or girlfriends at department stores. But after struggling to the edge of bankruptcy, the business was bought in 1982 by rising mall retailer The Limited, now L Brands (NYSE: LB). The new… Read More

It’s hard to argue with the claim that retail chain Victoria’s Secret brought sexy lingerie to the mainstream, out from the backwater of catalogs and specialty stores that most consumers wouldn’t be caught dead in. Ironically, however, Victoria’s Secret’s original incarnation was as a specialty catalog. #-ad_banner-#Founded in 1977, the original target customers of the brand were men who were too embarrassed to buy lingerie for their wives or girlfriends at department stores. But after struggling to the edge of bankruptcy, the business was bought in 1982 by rising mall retailer The Limited, now L Brands (NYSE: LB). The new owner shifted the brand’s focus toward women and translated the catalog into physical stores. And this strategy worked wonders; Victoria’s Secret was off to the races with over 300 locations by 1987. Why the focus on this division of L Brands? Because Victoria’s Secret is L Brands. The chain contributes 63% of the company’s annual revenue, which has averaged nearly $11.5 billion over the last three years. And the stock is on sale. As a whole, the retail sector has had a rough go, especially recently due to lackluster holiday sales reports. The performance of the Retail Sector SPDR ETF… Read More

My wife grew up in a largish Catholic family. It’s no surprise that most of her childhood was spent in the back of their Oldsmobile station wagon shuttling to different local grocery stores (this was pre-wholesale club) to take advantage of various sale items advertised in newspaper ads and circulars. For consumer staples, price ALWAYS matters. The same holds true when buying the stocks of packaged goods companies. At the bottom of the 2008 financial crisis, shell-shocked investors tiptoed back into equities via consumer staples stocks. The defensive nature of this sector and its dependable dividend streams made sense in… Read More

My wife grew up in a largish Catholic family. It’s no surprise that most of her childhood was spent in the back of their Oldsmobile station wagon shuttling to different local grocery stores (this was pre-wholesale club) to take advantage of various sale items advertised in newspaper ads and circulars. For consumer staples, price ALWAYS matters. The same holds true when buying the stocks of packaged goods companies. At the bottom of the 2008 financial crisis, shell-shocked investors tiptoed back into equities via consumer staples stocks. The defensive nature of this sector and its dependable dividend streams made sense in uncertain times. But, like with all investor trends, the sector became crowded and expensive. Until now. From its mid-year high, the Consumer Staples Select Sector SPDR ETF (NYSE: XLP), dropped nearly 10% before beginning a recovery in December. While the exchange traded fund basket approach is not a bad idea, especially with a discounted price and an attractive 2.5% dividend yield, there are better bargains available in individual names. Consumer staple titan General Mills (NYSE: GIS) has pulled back nearly 15% from its recent high, pushing the dividend yield to near 3%, a 20% pickup in yield over… Read More

Save for early punk rock and a few obscure power pop bands, I’m not a huge fan of ’70s rock-n-roll. Rooted as a blues band in the late ’60s, the Steve Miller Band grooved into the ’70s and managed to crank out a few catchy radio mega-hits that are still staples of classic rock radio to today. Ok. You know where I’m going with this, don’t you? When stocks rally big time, I can hear the “Hoo! Hoo!” vocal hook of the SMB’s “Take the Money and Run” in my head as valuations get pushed to what I consider silly… Read More

Save for early punk rock and a few obscure power pop bands, I’m not a huge fan of ’70s rock-n-roll. Rooted as a blues band in the late ’60s, the Steve Miller Band grooved into the ’70s and managed to crank out a few catchy radio mega-hits that are still staples of classic rock radio to today. Ok. You know where I’m going with this, don’t you? When stocks rally big time, I can hear the “Hoo! Hoo!” vocal hook of the SMB’s “Take the Money and Run” in my head as valuations get pushed to what I consider silly levels. I’m hearing it now as I look at a few stocks in the oil sector. Black gold has been on an absolute tear since the beginning of 2016. After a merciless pounding thanks to the one-two punch of a strong dollar and a global supply glut, oil has rallied 46% to nearly $54/bbl from its basement low of $37/bbl. Is there any room left in the oil rally? Maybe. OPEC members recently reached an agreement to curb production by 2% with the goal of creating price stability and curbing the surplus. On the domestic front, rig count… Read More

In a recent article, I discussed how to profit from an “Uber Moment”, referencing the wildly successful and revolutionary ridesharing app that has changed the transportation industry. Most industries are currently experiencing some sort of significant cultural or technological upheaval, an “Uber moment,” that will rapidly transform how they do business. And nowhere is that more apparent than in an industry that I know intimately, the financial advice business. #-ad_banner-#Historically dominated by large brokerage firms, the business of providing financial and investment advice and accompanying products to individuals has seen constant evolution in recent years. The rise of discount brokerage… Read More

In a recent article, I discussed how to profit from an “Uber Moment”, referencing the wildly successful and revolutionary ridesharing app that has changed the transportation industry. Most industries are currently experiencing some sort of significant cultural or technological upheaval, an “Uber moment,” that will rapidly transform how they do business. And nowhere is that more apparent than in an industry that I know intimately, the financial advice business. #-ad_banner-#Historically dominated by large brokerage firms, the business of providing financial and investment advice and accompanying products to individuals has seen constant evolution in recent years. The rise of discount brokerage houses, internet-enabled stock trading, and financial deregulation has enabled many other financial intermediaries to scramble after a slice of the pie. However, while these changes have shaped the business significantly over the past 30 years or so, no single moment has had a bigger impact than the forthcoming Department of Labor Fiduciary Rule. Issued by the DOL in April of this year, the rule sets guidelines for financial services firms in providing advice and products related to client retirement accounts. Put simply, financial intermediaries must act in their clients’ best interest when managing retirement money. The catalyst for this rule… Read More

Every now and then they let me take out my turban and crystal ball to do my Professor Marvel impression in regards to the market. So, as the embers flicker out on an interesting (to say the least) 2016, what does 2017 have in store for us? The Economy: Still Chugging Along Fiscal/economic stimulus junkies are still on a placebo high from President-elect Donald Trump’s suggested infrastructure improvement proposal that might range somewhere between $500 billion to $1 trillion. However, as I discussed in a previous article, it’s going to be a while before we see the effects of… Read More

Every now and then they let me take out my turban and crystal ball to do my Professor Marvel impression in regards to the market. So, as the embers flicker out on an interesting (to say the least) 2016, what does 2017 have in store for us? The Economy: Still Chugging Along Fiscal/economic stimulus junkies are still on a placebo high from President-elect Donald Trump’s suggested infrastructure improvement proposal that might range somewhere between $500 billion to $1 trillion. However, as I discussed in a previous article, it’s going to be a while before we see the effects of the inevitable infrastructure build-out. Until then, I’m afraid I’m going to sound a bit like a broken record: the economy will most likely continue to chug along at the tepid 2% or so rate we’re used to hearing. Inflation will remain moderate at best. Sure, we’ll see some inflation in selective areas such as healthcare, but nothing major. Interest Rates: A Hike On The Horizon? Currently, the market is almost 100% sure that Dr. Yellen and Co. are going to hike rates in December. While that may or may not be the case, the bond market has already accepted… Read More

The day after the election I tried to process it. Donald Trump? President? Of the United States? By the end of the day, I came to a conclusion. After the UK “Brexit” vote, I should’ve seen this coming. How could I have missed it? This was the “Uber moment” for American politics. #-ad_banner-#But what exactly is an “Uber moment”? Obviously named after the revolutionary ridesharing app, an “Uber moment” can best be described as the point at which a completely disruptive paradigm shift has emerged in the status quo or a specific institution.  Taxi cabs are swiftly being replaced by… Read More

The day after the election I tried to process it. Donald Trump? President? Of the United States? By the end of the day, I came to a conclusion. After the UK “Brexit” vote, I should’ve seen this coming. How could I have missed it? This was the “Uber moment” for American politics. #-ad_banner-#But what exactly is an “Uber moment”? Obviously named after the revolutionary ridesharing app, an “Uber moment” can best be described as the point at which a completely disruptive paradigm shift has emerged in the status quo or a specific institution.  Taxi cabs are swiftly being replaced by entrepreneurial Uber drivers thanks to the handy smartphone app. The competitive rise of Airbnb has turned hundreds of thousands of private property owners into would-be hoteliers, turning the traditional lodging industry on its head. And Donald J. Trump has defied conventional American political wisdom by winning a presidential election by relying on earned media (news coverage) and social media rather than the traditional, big-campaign infrastructure. As the Chinese expression goes, “May you live in interesting times.” So how do we profit from Uber moments as investors? We start by looking for obvious signs. In the mid 1990s, pundits always said… Read More

Quick, what’s 0.19% of $3.6 trillion? I’ll give you a hint: that’s how much, on average, passively “managed” mutual fund giant Vanguard Group collects in management fees annually. Since Vanguard is not a publicly traded entity, the actual revenue numbers are held pretty close to the vest. But the math comes out to be $6.8 billion in fees based on the average Vanguard fund expense ratio of 0.19%. #-ad_banner-#So, while the fund company prides itself on being shareholder owned, and pounds the table on passing value to the investor, make no mistake, Vanguard is a business and a profitable one… Read More

Quick, what’s 0.19% of $3.6 trillion? I’ll give you a hint: that’s how much, on average, passively “managed” mutual fund giant Vanguard Group collects in management fees annually. Since Vanguard is not a publicly traded entity, the actual revenue numbers are held pretty close to the vest. But the math comes out to be $6.8 billion in fees based on the average Vanguard fund expense ratio of 0.19%. #-ad_banner-#So, while the fund company prides itself on being shareholder owned, and pounds the table on passing value to the investor, make no mistake, Vanguard is a business and a profitable one at that. And while Vanguard founder John Bogle is nowhere close to being a Wall Street fat cat, his tenure at the company made him an incredibly wealthy man by most standards.  The other day while driving in to work, I listened to an interview with Mr. Bogle on Bloomberg radio, as always, trumpeting his case for cheap, passive index investing. He complained, like most of us, of the low-rate, low-growth environment. He said that the stock market is overvalued with a forward P/E of 20-plus (most estimates put it closer to 18), dividend yields barely around 2%, and U.S. Read More