There’s a potential time bomb right under our improving economy. #-ad_banner-#This explosive situation affects over 40 million Americans. You probably know at least one person who is feeling its effects. The silver lining in this problem is that it is creating a limited-time opportunity for investors. I was first made aware of this quandary several years ago, when a close friend of mine, a former business owner whose business was made irrelevant by changing technology, decided to follow his dream and get a college degree.   After four years, he graduated with a bachelor’s degree and over $100,000 of student… Read More

There’s a potential time bomb right under our improving economy. #-ad_banner-#This explosive situation affects over 40 million Americans. You probably know at least one person who is feeling its effects. The silver lining in this problem is that it is creating a limited-time opportunity for investors. I was first made aware of this quandary several years ago, when a close friend of mine, a former business owner whose business was made irrelevant by changing technology, decided to follow his dream and get a college degree.   After four years, he graduated with a bachelor’s degree and over $100,000 of student loan debt. He went into the workforce and was shocked that only minimum wage jobs were available to him. There was no way he could make the payments on his college loans.  He even looked into bankruptcy to lift the burden — but was shocked  to find out that student loan debt is not dischargeable.   My friend took a low-paying job with the hopes of advancing but was unable to pay back his loans. He’s now living in his parents’ house with trashed credit and little prospects for getting a better job. My friend is not alone with his… Read More

While at a party several months ago, I was asked: Which stock I would choose for my retirement if I had to pick just one? #-ad_banner-#Initially, I was taken aback by the question. My immediate answer was to never rely on a single stock for any investment portfolio, let alone for a retirement portfolio. I launched into a spiel about the importance of diversification and balance, and simply how dangerous betting something as critical as your retirement on a single stock choice would be. The person continued to push me for an answer, so instinctively I blurted out the SPDR… Read More

While at a party several months ago, I was asked: Which stock I would choose for my retirement if I had to pick just one? #-ad_banner-#Initially, I was taken aback by the question. My immediate answer was to never rely on a single stock for any investment portfolio, let alone for a retirement portfolio. I launched into a spiel about the importance of diversification and balance, and simply how dangerous betting something as critical as your retirement on a single stock choice would be. The person continued to push me for an answer, so instinctively I blurted out the SPDR S&P 500 Index Fund ETF (NYSE: SPY). My new friend wasn’t satisfied at all with this answer. He continued to prod me for a single company. I finally told him that I did not have an answer to his question offhand but I would do some research. After looking into his question, I determined that a company would have to satisfy the following criteria to be considered for this unique honor. 1. Stability Safety and security should be the top goal of any retirement portfolio. The company should operate in a nearly recession-proof business so that it can more easily… Read More

History has shown us that America was built on the back of positive rivalries. #-ad_banner-#Like the long-standing feud between the New York Yankees and the Boston Red Sox… or the U.S. vs. Russia in the Olympics. That’s to say nothing of more serious rivalries like the political feud between Democrats and Republicans. Nothing can drive competitors to perform their best like a well-matched rivalry. This is particularly true in the world of business. Think of Microsoft (Nasdaq: MSFT) and Apple (Nasdaq: AAPL), Ford (NYSE: F) and General Motors (NYSE: GM), or AT&T (NYSE: T) and Sprint (NYSE: S). All of… Read More

History has shown us that America was built on the back of positive rivalries. #-ad_banner-#Like the long-standing feud between the New York Yankees and the Boston Red Sox… or the U.S. vs. Russia in the Olympics. That’s to say nothing of more serious rivalries like the political feud between Democrats and Republicans. Nothing can drive competitors to perform their best like a well-matched rivalry. This is particularly true in the world of business. Think of Microsoft (Nasdaq: MSFT) and Apple (Nasdaq: AAPL), Ford (NYSE: F) and General Motors (NYSE: GM), or AT&T (NYSE: T) and Sprint (NYSE: S). All of these (and dozens of others) have resulted in increased innovation, industry growth and — most critically for investors — shareholder value. One rivalry in particular stands out to me in terms of longevity, pure competitive zeal and using nearly every trick in the book for the upper hand: the epic cola war between Coca-Cola (NYSE: KO) and Pepsico (NYSE: PEP).   Both of these companies have made great investments over the years, both offer solid growing dividend yields, and both excel in a particular niche. However, going forward, I think one of these companies has the edge on the other… Read More

There are very few guarantees when it comes to stock investing. The ever-changing nature of the stock market can make speaking in absolutes a fool’s errand. However, stock market behavior does repeat itself enough to create some high-probability setups. Recognizing these setups is one of the ways professional investors differentiate themselves — along with the patience to wait for these setups to occur before entering positions.   #-ad_banner-#One of my favorites among these setups is “fading,” or going against, extreme market moves. This can be done with indicators such as the relative strength index (RSI) and Bollinger bands where extreme… Read More

There are very few guarantees when it comes to stock investing. The ever-changing nature of the stock market can make speaking in absolutes a fool’s errand. However, stock market behavior does repeat itself enough to create some high-probability setups. Recognizing these setups is one of the ways professional investors differentiate themselves — along with the patience to wait for these setups to occur before entering positions.   #-ad_banner-#One of my favorites among these setups is “fading,” or going against, extreme market moves. This can be done with indicators such as the relative strength index (RSI) and Bollinger bands where extreme readings often signal a change in trend. My favorite “fade” move is buying the most heavily shorted stocks on the market. These stocks are generally hated by most investors and often have terrible fundamentals that support the heavy short positions. However, not only do many heavily shorted companies possess the potential for a explosive upward move due to a short squeeze, they often outperform the market. A Goldman Sachs research report last October titled “Investors Focused on the Results of High Short Interest Stocks” found that stocks with high short interest were most likely to outperform during the quarter. The… Read More

People love lists and rankings. Everything from school districts and neighborhoods to athletes and musicians get ranked on lists. Sometimes these lists are based on real accomplishments, like the medal rankings at the Olympics. Other lists are based on public sentiment and often have nothing to do with objective rankings. For example, consider Fortune magazine’s annual ranking of the world’s most admired companies, based on a survey of 3,950 respondents. Fortune’s Top 10 Most Admired Companies #-ad_banner-#It’s hardly a scientific way to discover the world’s best companies — but regardless of its flaws,… Read More

People love lists and rankings. Everything from school districts and neighborhoods to athletes and musicians get ranked on lists. Sometimes these lists are based on real accomplishments, like the medal rankings at the Olympics. Other lists are based on public sentiment and often have nothing to do with objective rankings. For example, consider Fortune magazine’s annual ranking of the world’s most admired companies, based on a survey of 3,950 respondents. Fortune’s Top 10 Most Admired Companies #-ad_banner-#It’s hardly a scientific way to discover the world’s best companies — but regardless of its flaws, the list is an excellent starting point for discover rewarding investment opportunities for the coming year. My favorite investment target from this year’s top 50 list is Microsoft (Nasdaq: MSFT). Coming in at #24 on Fortune’s list, the software giant is best known for its Windows operating system, which remains the most used operating system on Earth. However, competition from Google (Nasdaq: GOOG) and Apple (Nasdaq: AAPL) has shifted the investor spotlight away from Microsoft. This has created an opportunity for investment. Boasting a market cap of $327.8 billion, revenue of $83.4 billion with quarterly growth of 14.3% year over… Read More

As you may have noticed, the stock market has sent investors on quite a ride already this year. #-ad_banner-#The market lost nearly 7% in just a couple of weeks between mid-January and early February, sparking fears that a sharp correction was imminent. Those fears have turned out to be a bit premature, as the market has since nearly recouped those losses. Hype and perception often have a more powerful effect than reality on short-term stock price movement. It may seem counterintuitive, but that’s the typical pattern. Of course, many other factors can cause stock prices to drop. Macroeconomic fears affect… Read More

As you may have noticed, the stock market has sent investors on quite a ride already this year. #-ad_banner-#The market lost nearly 7% in just a couple of weeks between mid-January and early February, sparking fears that a sharp correction was imminent. Those fears have turned out to be a bit premature, as the market has since nearly recouped those losses. Hype and perception often have a more powerful effect than reality on short-term stock price movement. It may seem counterintuitive, but that’s the typical pattern. Of course, many other factors can cause stock prices to drop. Macroeconomic fears affect the broad market in a negative way, and individual stocks can get knocked down for dozens of reasons: missed earnings estimates, poor quarterly results, negative rumors, management shenanigans, even simple profit-taking. The good news is that savvy investors can profit from this inevitable negative stock market action in three primary ways. 1. Shorting Shares The most popular way to profit from a down market or stock is through shorting. This means you place a trade in anticipation of the price falling rather than appreciating. I know it sounds complicated, but it’s actually quite easy. The way it works is, your… Read More

Imagine buying AT&T (NYSE: T) for $25 a share, Cisco (Nasdaq: CSCO) at $16 or Microsoft (Nasdaq: MSFT) for $20. And imagine not only buying these or any stock at a much lower price — but actually being paid to do so. #-ad_banner-#Sound too good to be true? I know it seems like a dream, but sophisticated investors accomplish this on a regular basis. Here’s how… Limit Orders: You Set The Price The average investor accomplishes buying stocks lower than the current asking price by using a limit order. By specifying a chosen share price, your order isn’t filled… Read More

Imagine buying AT&T (NYSE: T) for $25 a share, Cisco (Nasdaq: CSCO) at $16 or Microsoft (Nasdaq: MSFT) for $20. And imagine not only buying these or any stock at a much lower price — but actually being paid to do so. #-ad_banner-#Sound too good to be true? I know it seems like a dream, but sophisticated investors accomplish this on a regular basis. Here’s how… Limit Orders: You Set The Price The average investor accomplishes buying stocks lower than the current asking price by using a limit order. By specifying a chosen share price, your order isn’t filled until the stock dips to your set price. If the stock never reaches your limit order price, then you get to keep your money. The downside is that it can take forever for the stock to dip to your price and you don’t get paid for waiting. Also, limit orders often cost slightly more commission than traditional market orders from most stock brokers. But this method actually pays you for the time you spend waiting for the price to dip. The best part? If the share price never hits your buying level, then you get to keep the money… Read More

Led by some of the smartest people on earth, the hedge fund industry wields market-moving power. The industry’s assets grew by nearly $229 billion last year, to just over $2 trillion. #-ad_banner-#By following these behemoths of the financial world, investors can obtain an edge in creating their own market-beating returns. Without being an insider, how can individual investors know what hedge funds are buying or selling? The Security and Exchange Commission requires hedge fund managers who manage over $100 million to file a Form 13F every quarter. These documents quietly reveal what hedge funds and other large institutional investors are… Read More

Led by some of the smartest people on earth, the hedge fund industry wields market-moving power. The industry’s assets grew by nearly $229 billion last year, to just over $2 trillion. #-ad_banner-#By following these behemoths of the financial world, investors can obtain an edge in creating their own market-beating returns. Without being an insider, how can individual investors know what hedge funds are buying or selling? The Security and Exchange Commission requires hedge fund managers who manage over $100 million to file a Form 13F every quarter. These documents quietly reveal what hedge funds and other large institutional investors are buying and selling. One of my favorite investment tactics is to look for patterns in 13F filings. Companies that have attracted interest from multiple hedge funds can signal a great buying or selling opportunity. I call these buying and selling patterns hedge fund swarms. My basic definition of a hedge fund swarm is when three or more hedge funds buy or sell a particular stock during a single quarter. Obviously, the more funds in the swarm buying or selling, the more powerful the signal. I recently discovered a company that has attracted a swarm of hedge fund activity in the… Read More

There is no question that one of the safest and surest ways to build long-term wealth in the stock market is through dividend reinvestment. This reinvestment allows for a form of interest compounding to take place that builds up the portfolio’s value over time. #-ad_banner-#While this makes perfect investing sense, there is more to it than simply buying high-dividend stocks. I learned this the hard way, but my experience helped me to develop an easy three-step method to determine the best dividend-paying stocks for a dividend reinvestment portfolio. First, here’s what happened to me. I bought Sandridge Mississippian Trust (NYSE:… Read More

There is no question that one of the safest and surest ways to build long-term wealth in the stock market is through dividend reinvestment. This reinvestment allows for a form of interest compounding to take place that builds up the portfolio’s value over time. #-ad_banner-#While this makes perfect investing sense, there is more to it than simply buying high-dividend stocks. I learned this the hard way, but my experience helped me to develop an easy three-step method to determine the best dividend-paying stocks for a dividend reinvestment portfolio. First, here’s what happened to me. I bought Sandridge Mississippian Trust (NYSE: SDT), an oil and gas royalty-earning company that pays a tremendous dividend, in February 2013 at $14. At the time of my purchase, the dividend yield was around 10%. The yield is now over 20% — yet I lost money on the investment. SDT has dropped 50% over the past year, to its current trading range near $7. My buy decision was based purely on the high dividend yield, nothing else. What I failed to take into consideration is the fact that yield is a function of the stock price. With everything else being equal, the lower the share price,… Read More

Big Tobacco is among the most hated and controversial industries on earth. It has been vilified as the leading cause of cancer, forced to pay profit-crushing settlements, and even coerced into launching ad campaigns against its products. Despite massive government pressure and strong public disapproval of its products, Big Tobacco still generates an estimated $500 billion in annual revenue and $35 billion in annual profits. I was surprised to learn that close to 15% of all Americans still use tobacco. In developing nations, 49% of men and 11% of women use tobacco, according to the World Health Organization. Within these… Read More

Big Tobacco is among the most hated and controversial industries on earth. It has been vilified as the leading cause of cancer, forced to pay profit-crushing settlements, and even coerced into launching ad campaigns against its products. Despite massive government pressure and strong public disapproval of its products, Big Tobacco still generates an estimated $500 billion in annual revenue and $35 billion in annual profits. I was surprised to learn that close to 15% of all Americans still use tobacco. In developing nations, 49% of men and 11% of women use tobacco, according to the World Health Organization. Within these numbers lies opportunity for savvy investors. In fact, a special situation is about to occur within the U.S. Big Tobacco sector that promises solid profits for those investors who are prepared to make their move. I’ll let you in on this special situation later. First, let’s look at the facts behind Big Tobacco’s current adverse environment. Between 1964, when the U.S. surgeon general’s office published its first report proving the negative health effects of smoking, and 1994, more than 800 private suits were filed against Big Tobacco in state courts. In 1998, a master settlement was reached between the tobacco… Read More