Sixteen years ago I was thinner and had more hair. I also had a front-row seat to watch what was billed at the time as “the merger of the century”: AOL and Time Warner. What began as a perfect marriage of one of the best content and broadcast distribution complexes on the planet to the media distribution platform of tomorrow — a combo that would have an initial market cap of $350 billion (unheard of at the time) — ended in a whimpering split with both entities deeply discounted.  #-ad_banner-#After the divorce, AOL evolved from its original persona as an… Read More

Sixteen years ago I was thinner and had more hair. I also had a front-row seat to watch what was billed at the time as “the merger of the century”: AOL and Time Warner. What began as a perfect marriage of one of the best content and broadcast distribution complexes on the planet to the media distribution platform of tomorrow — a combo that would have an initial market cap of $350 billion (unheard of at the time) — ended in a whimpering split with both entities deeply discounted.  #-ad_banner-#After the divorce, AOL evolved from its original persona as an internet service provider to an actual, online content destination featuring sites such as the Huffington Post and MapQuest. AOL was acquired by AT&T’s chief wireless rival Verizon (NYSE: VZ) in 2015. Time Warner carried on business as usual, creating a seemingly endless stream of media content and distributing it via its cable networks and movie studios. But the more things change, the more they stay the same. Now, as a dominant force in wireless telecom, internet, and television distribution with its recent acquisition of DIRECTV, AT&T (NYSE: T) is determined to not only control every screen we watch but what… Read More

I’m the lucky dad of teenage boys. Financial markets remind me of teenage boys: brilliant, rewarding, inspiring at times and other times frustrating, erratic, and just plain stupid. I’ve found the key to dealing with both is consistency, clear objectives, and conviction. #-ad_banner-#And although many market observers may describe the language of the Federal Reserve as vague and obtuse, I’m starting to think that Dr. Yellen and Company share my “the market as teenage boy” philosophy. They want rates to return to some form of normalcy, but the economic conditions must warrant the action first. They waited and waited before… Read More

I’m the lucky dad of teenage boys. Financial markets remind me of teenage boys: brilliant, rewarding, inspiring at times and other times frustrating, erratic, and just plain stupid. I’ve found the key to dealing with both is consistency, clear objectives, and conviction. #-ad_banner-#And although many market observers may describe the language of the Federal Reserve as vague and obtuse, I’m starting to think that Dr. Yellen and Company share my “the market as teenage boy” philosophy. They want rates to return to some form of normalcy, but the economic conditions must warrant the action first. They waited and waited before finally taking action in December 2015, raising the base federal funds rate a quarter of a percent. This signaled a desire to return to more realistic interest rates while reiterating that it will be an exceedingly long process to get back to their target rates. And the market, like a teenager, pouted as the S&P 500 pulled back 11% from December 2015 to February 2016. Do we expect the market to go down when the fed raises the rate again? Maybe not as much, as perhaps it’s “learned” the consequences. Then again, I’m an optimist. No, any pullback will be… Read More

My dad is an attorney who’s practiced for over 50 years and has specialized in commercial real estate law on the builder and developer side. Many of my clients are part of successful, multi-generational, family real estate businesses. Being around it for as long as I have, I know enough to be dangerous mainly through osmosis. #-ad_banner-# Real estate investment trusts (REIT’s) are a bit of a different animal than traditional real estate investing, because the investors only hold a securitization of physical real estate. However, the idea is the same: a steady income stream derived from rents and leases… Read More

My dad is an attorney who’s practiced for over 50 years and has specialized in commercial real estate law on the builder and developer side. Many of my clients are part of successful, multi-generational, family real estate businesses. Being around it for as long as I have, I know enough to be dangerous mainly through osmosis. #-ad_banner-# Real estate investment trusts (REIT’s) are a bit of a different animal than traditional real estate investing, because the investors only hold a securitization of physical real estate. However, the idea is the same: a steady income stream derived from rents and leases with capital appreciation thanks to sales and increased property values. In the current, multi- year, sub-basement interest rate environment, REITs have been a default go to sector for yield hungry investors. Naturally, the sector has performed well. The other day, I stumbled across (literally) a recent research report from Lazard’s (NYSE: LAZ) asset management arm. Looks like REITs have delivered some strong as rope five year numbers. So does it make sense to put new money to work in the sector? I believe so. Drilling down a bit more into the report, Lazard sees net operating income (NOI)… Read More

Typically, I’m an optimistic, glass is half full kind of guy. I have to be. I’m an investment guy. Doesn’t mean I’m not realistic, though. In September 2011, Stifel Nicolaus macro strategist Barry Bannister published a report stating “We believe a ‘Depression’ began in 2000, moderated by U.S. reserve currency status and coordinated monetary and fiscal intervention.” That’s a mouthful. My translation: when the Tech Bubble burst, everything started heading downhill, culminating with the financial crisis of 2008. However, thanks to central bank and government policies like quantitative easing and TARP, things didn’t look or feel like Great Depression 2.0. … Read More

Typically, I’m an optimistic, glass is half full kind of guy. I have to be. I’m an investment guy. Doesn’t mean I’m not realistic, though. In September 2011, Stifel Nicolaus macro strategist Barry Bannister published a report stating “We believe a ‘Depression’ began in 2000, moderated by U.S. reserve currency status and coordinated monetary and fiscal intervention.” That’s a mouthful. My translation: when the Tech Bubble burst, everything started heading downhill, culminating with the financial crisis of 2008. However, thanks to central bank and government policies like quantitative easing and TARP, things didn’t look or feel like Great Depression 2.0.  #-ad_banner-#In 2008 and 2009, there was even a lot of talk about massive, New Deal style “shovel ready” projects to help rebuild America’s rapidly aging infrastructure, which would create jobs and stimulate all facets of the nation’s foundering economy. A hybrid federal/municipal bond called a Build America Bond (BAB) was created to finance some of the projects that actually made it to the street.  But most of the projects never materialized and our infrastructure continues to crumble. Flint, Michigan’s lead-tainted drinking water is stark evidence. According to the American Society of Civil Engineers, American infrastructure, from dams to roads to… Read More

Humans are creatures of habit. And since financial markets are, basically, a gigantic stew of the basest and most extreme of human nature, they too are creatures of habit. Things look bad? Get in there and sell, sell, sell! Things look good? Get in there and buy, buy, buy! Basic patterns often result in predictable results, and after a year or so into the energy bear market I’ve identified an interesting inflection point in the price of oil. It’s in the relationship between the prices of the two main oil benchmarks: West Texas Intermediate (WTI) and Brent crude. I’ve noticed… Read More

Humans are creatures of habit. And since financial markets are, basically, a gigantic stew of the basest and most extreme of human nature, they too are creatures of habit. Things look bad? Get in there and sell, sell, sell! Things look good? Get in there and buy, buy, buy! Basic patterns often result in predictable results, and after a year or so into the energy bear market I’ve identified an interesting inflection point in the price of oil. It’s in the relationship between the prices of the two main oil benchmarks: West Texas Intermediate (WTI) and Brent crude. I’ve noticed that whenever the prices of the two benchmarks reach parity, there’s typically a decent rally in oil prices. These charts show that.       When both Brent and WTI reached $44 a barrel, oil bounced better than 10%. It looks like we’re approaching the same inflection point. Here’s how to profit. The best way I’ve found to play oil directly is through using the iPath S&P GSCI Crude Total Return Index Exchange Traded Note (NYSE: OIL). OIL trades closest with WTI. Currently, OIL trades at around $5.39. This security pays no dividend or distribution so… Read More

Ok. I was a little early with my call on rising bond yields. In fact, they actually went down a little after I wrote that article. However, last week, bonds saw a healthy sell off which, naturally, bumped interest rates up. The blame fell on hawkish comments from a Fed official concerned about an economy that could overheat due to stubbornly low interest rates. Maybe someone should remind him that they’ve already gone up in the past year. When the Federal Reserve raised their target Fed funds rates (the interest rate they charge member banks) towards the end of… Read More

Ok. I was a little early with my call on rising bond yields. In fact, they actually went down a little after I wrote that article. However, last week, bonds saw a healthy sell off which, naturally, bumped interest rates up. The blame fell on hawkish comments from a Fed official concerned about an economy that could overheat due to stubbornly low interest rates. Maybe someone should remind him that they’ve already gone up in the past year. When the Federal Reserve raised their target Fed funds rates (the interest rate they charge member banks) towards the end of last year, they literally more than doubled interest rates. And with Fed Funds being right at 40 basis points, the Fed is within striking distance of its current target for the Fed Funds rate of 50 basis points. Stock markets reacted negatively to the change, and stayed depressed until spring of this year. But bond yields stayed stubbornly low. That may be changing. Since bottoming in July, the yield on the 10-year treasury has risen 22%. The longer end of the treasury yields has also gone up. #-ad_banner-#On average, long rates are up 17%; a significant number. With… Read More

Sometimes, you’d think that the worst diseases to threaten mankind come from tropical environments. They do.  #-ad_banner-#AIDS came from sub equatorial Africa, as did the Ebola virus. Malaria, tropical. Yellow fever, for which there is no cure or vaccine, tropical. Now the Zika virus which, like Malaria and Yellow Fever, is mosquito borne. With multiple cases and one death being reported in the continental United States, it’s becoming a major public health concern, specifically due to the threat it poses to pregnant women. The babies of pregnant women infected with the virus face the risk of a birth defect known… Read More

Sometimes, you’d think that the worst diseases to threaten mankind come from tropical environments. They do.  #-ad_banner-#AIDS came from sub equatorial Africa, as did the Ebola virus. Malaria, tropical. Yellow fever, for which there is no cure or vaccine, tropical. Now the Zika virus which, like Malaria and Yellow Fever, is mosquito borne. With multiple cases and one death being reported in the continental United States, it’s becoming a major public health concern, specifically due to the threat it poses to pregnant women. The babies of pregnant women infected with the virus face the risk of a birth defect known as microcephaly or a smaller-than-normal skull which can lead to developmental disabilities, brain damage and death. There has been a speculative run up in a handful of biotech companies working on vaccines or treatment. But I’ve been buying shares of a large cap, deeply discounted global pharmaceutical giant who is currently working with the U.S. Army to develop a Zika vaccine that should be ready for human trials by October of this year. You should, too. Sanofi (NYSE: SNY), isn’t exactly a household name when compared to peers such as Pfizer (NYSE: PFE), Eli Lilly (NYSE: LLY) or Merck (NYSE:… Read More

There’s no arguing that utility stocks have knocked it out of the park this year. Year to date, the Dow Jones Utility Average is up better than 18%. Utility stocks are always attractive to income oriented investors because of their dividend yields. But is now the time to buy?  Probably not. In fact, I recently recommend taking profits in utility bellwether Southern Company (NYSE: SO). But it looks like investors will get an opportunity relatively soon to pick up some high quality names in this dependable, dividend paying sector. It’s been quite… Read More

There’s no arguing that utility stocks have knocked it out of the park this year. Year to date, the Dow Jones Utility Average is up better than 18%. Utility stocks are always attractive to income oriented investors because of their dividend yields. But is now the time to buy?  Probably not. In fact, I recently recommend taking profits in utility bellwether Southern Company (NYSE: SO). But it looks like investors will get an opportunity relatively soon to pick up some high quality names in this dependable, dividend paying sector. It’s been quite a run for the average. Utility stocks have returned more than twice the S&P 500 year to date; 18.1% versus 8.29%. However, it looks as if the utility rally is running out of gas. The average is down 4.1% since its July peak. #-ad_banner-#Why? Interest rates, maybe? Probably not. Typically, as rates rise, utility stock prices soften. Utility companies are heavily dependent on the debt markets for operational financing. Usually, utility stock holders become nervous when interest rates rise. Higher borrowing costs can put the squeeze on margins, earnings and eventually the beloved dividends utility companies are known for paying. Read More

I’ve always had a soft spot for asset manager stocks, especially mutual fund managers. As an advisor/portfolio manager, I’ve been dealing with them on a daily basis for over two decades. Honestly, I don’t use a lot of mutual funds in my practice, but it’s a stylistic choice, not an indictment of the product.  That said, over the years I have owned a decent handful of mutual fund management company stocks. They can be great businesses and, in turn, great investments. I’ve written about asset managers off and on over the years. Here’s a piece from a few years back. … Read More

I’ve always had a soft spot for asset manager stocks, especially mutual fund managers. As an advisor/portfolio manager, I’ve been dealing with them on a daily basis for over two decades. Honestly, I don’t use a lot of mutual funds in my practice, but it’s a stylistic choice, not an indictment of the product.  That said, over the years I have owned a decent handful of mutual fund management company stocks. They can be great businesses and, in turn, great investments. I’ve written about asset managers off and on over the years. Here’s a piece from a few years back.  Recently, another asset manager has piqued my interest, primarily on a yield and valuation basis. Running $86.5 billion out of their Overland Park, KS headquarters, Waddell and Reed Financial (NYSE: WDR) has a fund complex and distribution model that merits a look. The stock has had a bit of a ride over the last few years, climbing over 200% only to give it all back. But it just might be time to get back in. Here’s why. #-ad_banner-#At its core, the asset management business is pretty simple, at least from a model standpoint. You take in… Read More

As technology progresses, sometimes it amazes me at how fast things become obsolete. I have two teenage sons. When they were pre-teens, Microsoft’s (Nasdaq: MSFT) Xbox game console was all the rage. New releases of ActivisionBlizzard’s (Nasdaq: ATVI) “Call of Duty” series were pre-ordered and eagerly anticipated. #-ad_banner-#It wasn’t that long ago, but it almost seems the gaming console platform is dead and gone, at least in our house. Most gaming done by my kids is handheld, whether on smartphone or tablet. When I hear Xbox generated gunfire and explosions coming from the back, I figure that they must be… Read More

As technology progresses, sometimes it amazes me at how fast things become obsolete. I have two teenage sons. When they were pre-teens, Microsoft’s (Nasdaq: MSFT) Xbox game console was all the rage. New releases of ActivisionBlizzard’s (Nasdaq: ATVI) “Call of Duty” series were pre-ordered and eagerly anticipated. #-ad_banner-#It wasn’t that long ago, but it almost seems the gaming console platform is dead and gone, at least in our house. Most gaming done by my kids is handheld, whether on smartphone or tablet. When I hear Xbox generated gunfire and explosions coming from the back, I figure that they must be feeling nostalgic. With the rise of digital payment systems, I get a bit nostalgic at times when it comes to physical banking, whether it’s making a deposit in the drive through of an actual branch, writing a check, or even using an ATM. Birthed in the mid 1960’s, the ATM has become a staple of the modern convenience life. However, it could go the way of the pay phone. So what does the future hold for Diebold, Inc. (NYSE: DBD), one of the world’s leading manufacturers of ATMs? Is the stock worth owning? On a price… Read More