Many investors think in binary terms. Often times, that means when looking at a particular stock, they tend to distinguish between whether it is a “value” or “growth” stock.  Value investors like to focus on companies with low valuations — whether based on the price-to-earnings (P/E) ratio, price-to-book (P/B) ratio or something similar. Growth investors, on the other hand, focus on things like earnings growth, expecting share price to follow profits higher. #-ad_banner-#There are many studies showing specific valuation tools can work — if we define “working” as delivering market-beating results over a long-enough time horizon. In other words, value… Read More

Many investors think in binary terms. Often times, that means when looking at a particular stock, they tend to distinguish between whether it is a “value” or “growth” stock.  Value investors like to focus on companies with low valuations — whether based on the price-to-earnings (P/E) ratio, price-to-book (P/B) ratio or something similar. Growth investors, on the other hand, focus on things like earnings growth, expecting share price to follow profits higher. #-ad_banner-#There are many studies showing specific valuation tools can work — if we define “working” as delivering market-beating results over a long-enough time horizon. In other words, value investing often means you have to be patient through years of underperformance — a time horizon many growth investors don’t share.  But growth investing has its own caveats. For instance, a stock’s price can fall as quickly as it rose if a company’s growth slows or if a competitor bursts onto the scene.  Despite the seemingly stark contrast between value and growth investing, I tend to blur the lines between the two disciplines.  For instance, I often use the PEG ratio, which combines a company’s P/E ratio and its earnings per share (EPS) growth rate. The PEG ratio recognizes that… Read More

One of the best income strategies in the world involves a market some investors completely ignore. It allows individual investors to generate income from the best companies in the world without buying stocks most of the time. I’ve been recommending trades in this market for over a year. And so far, the results have been astounding — each of the 105 trades I’ve closed has been a winner. #-ad_banner-#I don’t want to beat around the bush or make this sound like some super-secret investing strategy only I can tell you about. I am talking about selling options. Now, before you… Read More

One of the best income strategies in the world involves a market some investors completely ignore. It allows individual investors to generate income from the best companies in the world without buying stocks most of the time. I’ve been recommending trades in this market for over a year. And so far, the results have been astounding — each of the 105 trades I’ve closed has been a winner. #-ad_banner-#I don’t want to beat around the bush or make this sound like some super-secret investing strategy only I can tell you about. I am talking about selling options. Now, before you decide that you never want to try options trading, let me show you what a recent subscriber to my Income Trader newsletter, which focuses on selling options, had to say about my strategy: “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… Not only are your picks excellent with low risk, it teaches you to look for other options on your own, which I have done.” — Nathan S., West Long Branch… Read More

Income investors often use government bond yields as their benchmark. Securities issued by a stable government offer nearly guaranteed income since a government is unlikely to default on its debt. The problem is that government bonds offer so little income right now. U.S. 10-year Treasury notes yield about 2.2%, while Canadian investors are earning just 1.5% on 10-year notes. In Europe, the situation is even worse. Swiss bonds are providing negative yields while bonds issued by Germany, France and the Netherlands are yielding less than 1%. Rates this low will not protect income investors against inflation. The average… Read More

Income investors often use government bond yields as their benchmark. Securities issued by a stable government offer nearly guaranteed income since a government is unlikely to default on its debt. The problem is that government bonds offer so little income right now. U.S. 10-year Treasury notes yield about 2.2%, while Canadian investors are earning just 1.5% on 10-year notes. In Europe, the situation is even worse. Swiss bonds are providing negative yields while bonds issued by Germany, France and the Netherlands are yielding less than 1%. Rates this low will not protect income investors against inflation. The average rate of inflation over the past 100 years, according to InflationData.com, has been 3.22%. When inflation is greater than the interest rate, consumers lose buying power. #-ad_banner-# While the Federal Reserve is likely to raise interest rates this week, I don’t believe it will help income investors much. In the past, the Fed has raised rates slowly. It could take years for rates to return to levels that are comfortably above the rate of inflation. In our current low-rate environment, income investors are looking beyond Treasuries. But high-quality corporate bonds aren’t much better. The iShares iBoxx $ Investment Grade Corporate… Read More

I call this little-known strategy a “heist.” That’s because when you use it, you’re almost “stealing” from Wall Street’s profits. To understand what I mean, think about how a casino works. Every day, people come in through the doors seeking that one big payout. Sure, some people hit the jackpot once in a while. Most are lucky to simply break even or only lose a little bit, while others completely lose their shirt. Either way, the house always wins. That’s exactly how the derivatives market works on Wall Street. This market is like a financial gambling casino where risk-loving speculators… Read More

I call this little-known strategy a “heist.” That’s because when you use it, you’re almost “stealing” from Wall Street’s profits. To understand what I mean, think about how a casino works. Every day, people come in through the doors seeking that one big payout. Sure, some people hit the jackpot once in a while. Most are lucky to simply break even or only lose a little bit, while others completely lose their shirt. Either way, the house always wins. That’s exactly how the derivatives market works on Wall Street. This market is like a financial gambling casino where risk-loving speculators come to place bets. And it’s for this very reason that it’s one of Wall Street’s main sources of income. You see, Wall Street acts as the casino operator in the derivatives market, collecting the money being lost on these bets. But what most ordinary investors don’t realize is that in this market, there are strategies that let you take on the role of the casino owner. In other words, it allows you to collect the money being lost instead of Wall Street. This strategy is used by many private investors who’ve caught on to this secret. In fact, my… Read More

My years in the military have allowed me to see the world in a totally different way. While deployed overseas, I tracked IED locations, went on convoy missions and gathered intelligence from local villages. I learned the importance of analyzing data to forecast what was likely to happen in the future, and I used this data to determine the level of risk our soldiers were dealing with. The typical mission was scheduled to take seven days but almost always ended up taking longer due to roadside bombs and the occasional unruly hostile who decided to shoot at us. These experiences… Read More

My years in the military have allowed me to see the world in a totally different way. While deployed overseas, I tracked IED locations, went on convoy missions and gathered intelligence from local villages. I learned the importance of analyzing data to forecast what was likely to happen in the future, and I used this data to determine the level of risk our soldiers were dealing with. The typical mission was scheduled to take seven days but almost always ended up taking longer due to roadside bombs and the occasional unruly hostile who decided to shoot at us. These experiences opened my eyes to the bigger picture — not just in the military, but in everyday life. My experience assessing risk in the military also allows me to think outside the box. And when it comes to the financial markets, it’s paid off in a big way. Today, there is an onslaught of different investing techniques and strategies. When I was first introduced to them, I found myself, like most, overwhelmed. That’s when my training came in handy. I immediately looked at the market from a different angle. I was soon drawn to a little-known but massive market… one that… Read More

In last week’s article issue, I detailed the first part of my two-part income strategy (if you missed that issue you can read it here). In simple terms, my strategy helps you collect extra payments from some of the best stocks on the market — in addition to dividends and capital gains. What’s more, the payments start arriving within a day or two of buying the stock… and are often much bigger than a dividend payment. My strategy, which involves selling covered calls, is one of the most basic options strategies around, making it easy for anyone to do. However, there… Read More

In last week’s article issue, I detailed the first part of my two-part income strategy (if you missed that issue you can read it here). In simple terms, my strategy helps you collect extra payments from some of the best stocks on the market — in addition to dividends and capital gains. What’s more, the payments start arriving within a day or two of buying the stock… and are often much bigger than a dividend payment. My strategy, which involves selling covered calls, is one of the most basic options strategies around, making it easy for anyone to do. However, there are certain times when this strategy works better than others. Likewise, there are certain stocks that are better to use this strategy with. That’s why I’ve developed a series of indicators that tell me when it’s time to pull the trigger on a particular company. For example, one of my special indicators lets me know if a stock is undervalued. I call it my “magic” number. It is much more useful for determining whether a stock is undervalued than popular valuation metrics like the price-to-earnings (P/E) ratio and price-to-sales (P/S) ratio. When the magic number is less than 1.0, it… Read More

Every investor wants to generate more income — and quicker. But how do you accomplish this without taking on extra risk? There’s a simple solution, but I bet only 1% of individual investors are doing it right now. It is not a complex trading strategy that involves a lot of time. But, then again, I’m also not simply buying and selling stocks either. My strategy is unique. Even Barron’s says, “One solution that deserves serious study is offsetting the expected lack of stock-investment returns with [this] strategy that, studies have shown, outperforms buy-and-hold investing.”  My strategy is a two-part approach… Read More

Every investor wants to generate more income — and quicker. But how do you accomplish this without taking on extra risk? There’s a simple solution, but I bet only 1% of individual investors are doing it right now. It is not a complex trading strategy that involves a lot of time. But, then again, I’m also not simply buying and selling stocks either. My strategy is unique. Even Barron’s says, “One solution that deserves serious study is offsetting the expected lack of stock-investment returns with [this] strategy that, studies have shown, outperforms buy-and-hold investing.”  My strategy is a two-part approach based on options — but not the tricky kind. Here’s how the first part works. Let’s say you own shares of Apple, and it’s trading for $100. You think Apple is a good, solid company that won’t necessarily skyrocket in the near term, but should reward you over the long haul. Your friend, however, thinks Apple’s share price is about to take off. He thinks that over the next few months it’s going to jump all the way to $200. So he comes to you with a proposal. He says he’ll pay you $500 today… if you agree to sell… Read More

Large swings in the Dow Jones Industrial Average and other major market averages always seem to increase the level of fear in business news headlines. Here are some good ones we’ve seen in the past few weeks: “Panic selling returns to fragile markets” “Investors urged to avoid panic moves as markets plunge” “Panic grips markets on ‘Bloody Monday’; global contagion keeps markets under pressure” “Chart shows the peak of US investor panic today” “European shares tumble as China panics investors” I don’t… Read More

Large swings in the Dow Jones Industrial Average and other major market averages always seem to increase the level of fear in business news headlines. Here are some good ones we’ve seen in the past few weeks: “Panic selling returns to fragile markets” “Investors urged to avoid panic moves as markets plunge” “Panic grips markets on ‘Bloody Monday’; global contagion keeps markets under pressure” “Chart shows the peak of US investor panic today” “European shares tumble as China panics investors” I don’t think these headlines truly reflect the attitude of most individual investors, though. Personally, I believe recent experience has taught many individual investors to take market pullbacks in stride. We’ve gone through two major bear markets in a little more than 15 years, and both times the markets have recovered. In the middle of the last major recession, Warren Buffett — one of the world’s greatest investors — wrote an op-ed for The New York Times explaining why he was still buying stocks. It wasn’t because he thought the market had bottomed. In fact, he clearly stated that… Read More

I’m fortunate to have spent time in the Army. Especially working in intelligence gathering. If you’ve served, you know that one of the core beliefs of the Army is teamwork. You never leave anybody behind to fend for himself. #-ad_banner-#I apply this same thinking to the markets and life in general. I figured if I could learn and understand the markets, I could help my friends and family save for retirement and avoid catastrophic losses. When I began applying my military training to the markets, I realized that I was in… Read More

I’m fortunate to have spent time in the Army. Especially working in intelligence gathering. If you’ve served, you know that one of the core beliefs of the Army is teamwork. You never leave anybody behind to fend for himself. #-ad_banner-#I apply this same thinking to the markets and life in general. I figured if I could learn and understand the markets, I could help my friends and family save for retirement and avoid catastrophic losses. When I began applying my military training to the markets, I realized that I was in a unique position. I could use my analytical training to improve upon the most profitable investment strategies. And that’s exactly what I’ve done.   I started researching and writing about options investing. I worked with expert stock traders and read countless books. Before long, my work was featured in major trading publications. Technical Analysis of Stocks & Commodities, Stocks, Futures and Options (SFO) and a UK trading magazine called Shares all started publishing my work. Soon, using options, I not only replaced the income from my previous military position, I… Read More

The announcement caught everyone by surprise. Last week, China devalued its currency, the yuan, by 1.9%. According to Bloomberg, it was the currency’s largest single-day move in two decades. #-ad_banner-#The move sent shockwaves throughout the global marketplace. Stock markets in Asia, Europe and the United States were down across the board. Nothing was spared. Yet, despite the struggles in the global markets, there are always a handful of stocks that can buck the downward trend. And I recently found such a company in a sector that’s been hit the hardest: energy. Read More

The announcement caught everyone by surprise. Last week, China devalued its currency, the yuan, by 1.9%. According to Bloomberg, it was the currency’s largest single-day move in two decades. #-ad_banner-#The move sent shockwaves throughout the global marketplace. Stock markets in Asia, Europe and the United States were down across the board. Nothing was spared. Yet, despite the struggles in the global markets, there are always a handful of stocks that can buck the downward trend. And I recently found such a company in a sector that’s been hit the hardest: energy. What’s more, my readers and I have made more than $1,910 without owning a single share of this company (I’ll explain exactly how we’ve done that in a moment). The energy sector has fallen nearly 15% since the beginning of the year — making it the worst performing sector over the past year. But like I mentioned above, there are always some resilient stocks that continue to rise. For example, there’s an oil refiner that operates six refineries in the western United States with a combined capacity of approximately 850,000 barrels… Read More