As I noted in my preview of this multi-part look at dividend payers, few investors are pleased with the fact that 10-Year Treasuries yield is less than 2%. #-ad_banner-#Not only is that yield insufficient to generate acceptable income streams, but investors could see bond-oriented investments lose value when rates finally start to rise. To be sure, fixed-income rates are unlikely to budge much in 2015. The Fed may start to hike the Fed funds rate by mid-year, but they’ll be moving slowly. In normal times, a boost in the Fed funds rate would also have an impact on long-term rates… Read More

As I noted in my preview of this multi-part look at dividend payers, few investors are pleased with the fact that 10-Year Treasuries yield is less than 2%. #-ad_banner-#Not only is that yield insufficient to generate acceptable income streams, but investors could see bond-oriented investments lose value when rates finally start to rise. To be sure, fixed-income rates are unlikely to budge much in 2015. The Fed may start to hike the Fed funds rate by mid-year, but they’ll be moving slowly. In normal times, a boost in the Fed funds rate would also have an impact on long-term rates as well, which I noted in 2013 when discussing the yield curve.  But these are not normal times.  So the rate on the 10-Year may not move all that much, even as short-term rates rise. That’s why dividend stocks will likely remain in vogue once again this year. There are several ways to approach these stocks, and today, I am focusing on stocks that carry yields in excess of 4.0%, and equally important, are extremely likely to maintain stable payouts. To be sure, the ongoing bull market has lifted stock prices to such an extent that dividend yields in excess… Read More

As market strategists laid out their forecasts for 2014, they got many things right. Most predicted that the stock market would post another year of gains, unemployment rates would keep falling, corporate profit margins would stay near all-time #-highs and Europe would remain the weak spot in the global economy. But these strategists also missed one huge factor: Interest rates. While it was widely assumed that a firming economy and the eventual termination of the Fed’s quantitative easing (QE) program would lead a steady rise in interest rates, the bond market had a different plan. The precipitous… Read More

As market strategists laid out their forecasts for 2014, they got many things right. Most predicted that the stock market would post another year of gains, unemployment rates would keep falling, corporate profit margins would stay near all-time #-highs and Europe would remain the weak spot in the global economy. But these strategists also missed one huge factor: Interest rates. While it was widely assumed that a firming economy and the eventual termination of the Fed’s quantitative easing (QE) program would lead a steady rise in interest rates, the bond market had a different plan. The precipitous fall in the 10-Year Treasury Yield is surely the most unexpected trend of the past year.   Frankly, it’s hard to square a firming economy and falling interest rates. Economic textbooks suggest that’s not possible. But these textbooks often ignore exogenous conditions. The fact that Europe is gasping for air and the Chinese economy is cooling off means that domestic economic strength is being trumped by international economic weakness. #-ad_banner-#Another key factor: the world is awash in excess capital, as the top 1% of the global economy generates billions in new wealth each year. Much of the global elite… Read More

If every year brought a fresh investing theme, then 2014 was a time for a “flight to quality.” An uncertain global economy led both foreign and domestic investors to focus on the safest and fastest-growing economy in the developed world: The United States. #-ad_banner-#The S&P 500 once again scored double-digit gains and over the past three years, has generated a 21% annualized gain. That’s the best three-year showing since the late 1990’s. Bond markets also attracted lots of money, pushing yields back toward historical lows. A sizable chunk of the gains in our stock and bond markets is the result… Read More

If every year brought a fresh investing theme, then 2014 was a time for a “flight to quality.” An uncertain global economy led both foreign and domestic investors to focus on the safest and fastest-growing economy in the developed world: The United States. #-ad_banner-#The S&P 500 once again scored double-digit gains and over the past three years, has generated a 21% annualized gain. That’s the best three-year showing since the late 1990’s. Bond markets also attracted lots of money, pushing yields back toward historical lows. A sizable chunk of the gains in our stock and bond markets is the result of a tidal wave of foreign money flowing into our country. In October 2014, for example (the most current data available), foreigners spent a net $178 billion on U.S. assets. The move, in hindsight, is quite understandable. Europe remains sickly; Latin America, Africa and Asia are seeing stiff economic headwinds; and geopolitical tensions in Russia and the Middle East remind us that we live in an unstable world. Although many markets lost value in 2014, the rising dollar made the impact even more painful for U.S.-based investors. A Lost Year For A Range Of Markets… Read More

While the S&P 500 was racking up a 30% gain in 2013, short selling was a very unwise strategy. Even in the first six months of 2014, the rising market made a mockery of bearish investing. Yet over the past six months, as the market slowly began to move sideways, short sellers finally started to gain traction. And if the market makes only modest gains in 2015, short selling is likely to become an increasingly important arrow in the investing quiver, even for those investors that typically shun this seemingly risky strategy. That price chart explains the simple… Read More

While the S&P 500 was racking up a 30% gain in 2013, short selling was a very unwise strategy. Even in the first six months of 2014, the rising market made a mockery of bearish investing. Yet over the past six months, as the market slowly began to move sideways, short sellers finally started to gain traction. And if the market makes only modest gains in 2015, short selling is likely to become an increasingly important arrow in the investing quiver, even for those investors that typically shun this seemingly risky strategy. That price chart explains the simple and powerful appeal for short sellers: the market falls a lot faster than it rises. Said another way, when the market dropped roughly 7% (peak-to-trough) in October and around 5% in mid-December, stocks with a high beta — especially those with high short positions — fell to an even greater extent. #-ad_banner-#Short sellers can smell blood in the water when a high-flying (and overvalued) stock starts to appear vulnerable. Once those stocks start to lose value, then the shorts really pile on. For short sellers, success breeds confidence, and they appear to have had a successful year… Read More

The phrase “cost avoidance” doesn’t have the same cachet as “revenue growth.” Still, they have the same beneficial impact on the bottom line. In fact, in the electrical industry, cost avoidance is emerging as the dominant goal. And one small company is helping utilities achieve it. #-ad_banner-#Little-known EnerNOC (NASDAQ: ENOC) was founded just over a decade ago, but it recently hit a key milestone: According to the company, its customers have now saved more than $1 billion by using its software and services. And EnerNOC has barely scratched its total addressable market. Every year, the nation’s electrical grid… Read More

The phrase “cost avoidance” doesn’t have the same cachet as “revenue growth.” Still, they have the same beneficial impact on the bottom line. In fact, in the electrical industry, cost avoidance is emerging as the dominant goal. And one small company is helping utilities achieve it. #-ad_banner-#Little-known EnerNOC (NASDAQ: ENOC) was founded just over a decade ago, but it recently hit a key milestone: According to the company, its customers have now saved more than $1 billion by using its software and services. And EnerNOC has barely scratched its total addressable market. Every year, the nation’s electrical grid is pushed to capacity during heatwaves. When that happens, the local, regulated power companies must obtain power on the open market from wholesale power providers, often at exorbitant prices.   The regulated power companies hate it and so do consumers when they see their monthly bills spike. The power companies could build more power plants, but that’s an expensive option, especially when they will only be needed as backup when the grid is strained. That’s where EnerNOC’s expertise comes in. The company uses its Network Operating Center (NOC) to provide energy management and energy efficiency solutions to assist grid operators… Read More

All across the country, many companies held board meetings to review the plans and expectations for the year ahead. More than a few board discussions likely revolved around the disconnect between a brightening outlook and an undervalued share price. Some of those board attendees then picked up the phone to call their broker, making insider purchases that should pay off in the year ahead. #-ad_banner-#To be sure, insiders have been especially active in the energy sector, seeking to take advantage of deep share price pullbacks. Of course these insiders don’t have a crystal ball, and can’t be sure that oil… Read More

All across the country, many companies held board meetings to review the plans and expectations for the year ahead. More than a few board discussions likely revolved around the disconnect between a brightening outlook and an undervalued share price. Some of those board attendees then picked up the phone to call their broker, making insider purchases that should pay off in the year ahead. #-ad_banner-#To be sure, insiders have been especially active in the energy sector, seeking to take advantage of deep share price pullbacks. Of course these insiders don’t have a crystal ball, and can’t be sure that oil prices won’t fall yet further. So it’s best to hold off following the lead of insiders in this group right now. Any area that is always a fertile source of insider action is value stocks. Here are three companies that are either trading below book value, or sporting great dividend yields, that recently caught my eye. (All data supplied by insiderinsights.com) Endurance Specialty Holdings Ltd. (NYSE: ENH)   In mid-December, I noted that this re-insurer was unsuccessful in its efforts to acquire rival Aspen Insurance Holdings (NYSE: AHL). On November 3, when the company held its Q3 conference call,… Read More

Merriam-Webster defines inertia as the “lack of movement or activity especially when movement or activity is wanted or needed.” Inertia explains why most investors still have a large chunk of their portfolios tied up in mutual funds. They were great investment vehicles in past decades, but they are no longer the best choice for investors. #-ad_banner-#Shake off that inertia, sell your mutual funds now, and re-deploy those funds into similar exchange-traded funds (ETFs). Years from now, you’ll be very happy you did. Another Subpar Year Over the past decade, investors have grumbled that their mutual funds rarely seem to… Read More

Merriam-Webster defines inertia as the “lack of movement or activity especially when movement or activity is wanted or needed.” Inertia explains why most investors still have a large chunk of their portfolios tied up in mutual funds. They were great investment vehicles in past decades, but they are no longer the best choice for investors. #-ad_banner-#Shake off that inertia, sell your mutual funds now, and re-deploy those funds into similar exchange-traded funds (ETFs). Years from now, you’ll be very happy you did. Another Subpar Year Over the past decade, investors have grumbled that their mutual funds rarely seem to beat the broader market. And the past year really brought home that point. According to a recent report by Morningstar, 79% of mutual funds failed to beat their benchmarks (such as the S&P 500, Russell 2000, the CRB-Commodity index, etc.). 2014 “is likely to enter the record books as the year when active equity funds delivered their worst performance relative to the index, net of fees, since at least 1989,” said Denys Glushkov, a research analyst with Wharton Research Data Services, in an interview with the Wall Street Journal. Mutual funds’ tepid returns aren’t the biggest… Read More

For a slew of reasons, Vladimir Putin continues to garner remarkably high approval ratings in Russia, even as he has become a pariah in the rest of the world. Yet one small group of Russians is none too pleased with Putin’s reckless behavior: The Oligarchs. #-ad_banner-#These Russian billionaires are savvy enough to understand that the imploding Russian economy isn’t simply due to falling oil prices. It’s due to severe economic mismanagement. Billions in invested capital have been wiped out, both in the portfolios of these oligarchs and foreigners unlucky enough to have exposure to this BRIC economy. You would think… Read More

For a slew of reasons, Vladimir Putin continues to garner remarkably high approval ratings in Russia, even as he has become a pariah in the rest of the world. Yet one small group of Russians is none too pleased with Putin’s reckless behavior: The Oligarchs. #-ad_banner-#These Russian billionaires are savvy enough to understand that the imploding Russian economy isn’t simply due to falling oil prices. It’s due to severe economic mismanagement. Billions in invested capital have been wiped out, both in the portfolios of these oligarchs and foreigners unlucky enough to have exposure to this BRIC economy. You would think that ruinous government policies and an imploding economy would lead even the most stubborn autocrat to come to his senses. In fact, I expected Putin to fold his cards a few months ago suggesting that “after having boxed the Russian economy into a corner, Putin appears ready to alter course.” That was a naive view, though another $25 per barrel drop in oil prices and a subsequent run on the Russian ruble in the past two months didn’t help matters either.  Yet the Putin lesson has been played out time and time again, and as we approach to 2015, it’s… Read More

It’s not easy being a CEO. Their days are filled with back-to-back meetings as they try to keep track of the many small details that comprise a company’s daily operations. Still, it’s an incredibly well-paying job, and they are expected to perform at peak levels. #-ad_banner-#So it’s a bit unconscionable when a CEO overlooks clear problems. In September, shareholders of Hertz Global Holdings, Inc. (NYSE: HTZ) learned that the rental car firm was letting its vehicles rack up too many miles before being replaced, which led to lost business with key corporate accounts. They soon demanded CEO Mark Frissora’s resignation. Read More

It’s not easy being a CEO. Their days are filled with back-to-back meetings as they try to keep track of the many small details that comprise a company’s daily operations. Still, it’s an incredibly well-paying job, and they are expected to perform at peak levels. #-ad_banner-#So it’s a bit unconscionable when a CEO overlooks clear problems. In September, shareholders of Hertz Global Holdings, Inc. (NYSE: HTZ) learned that the rental car firm was letting its vehicles rack up too many miles before being replaced, which led to lost business with key corporate accounts. They soon demanded CEO Mark Frissora’s resignation. Luckily, activist investors helped locate a new CEO, and the damage will likely be repaired in 2015. In another instance, the board of directors waited far too long to replace a clearly unsuccessful leader. Dov Charney, the controversial head of American Apparel, Inc. (NYSE: APP), almost drove his company into bankruptcy, as I noted in 2011, yet the board waited until 2014 to get around to replacing him. American Apparel is one of many firms that suffered from what is known as a “pocket board,” whereby by all of the company’s directors have… Read More

  Over the course of my career as a Wall Street analyst, I had to continually pitch my best ideas to hedge fund, pension fund and mutual fund managers. And they all stressed the same constraint: “Tell me only about very liquid stocks.” #-ad_banner-#These managers often had massive sums of money available to invest in particular stocks, and any attempts to buy stocks that trade just 20,000 or 30,000 shares a day would simply push that stock price up too fast to make it worth the effort. That’s why most fund managers own stocks such as Apple, Inc. (Nasdaq: AAPL). Read More

  Over the course of my career as a Wall Street analyst, I had to continually pitch my best ideas to hedge fund, pension fund and mutual fund managers. And they all stressed the same constraint: “Tell me only about very liquid stocks.” #-ad_banner-#These managers often had massive sums of money available to invest in particular stocks, and any attempts to buy stocks that trade just 20,000 or 30,000 shares a day would simply push that stock price up too fast to make it worth the effort. That’s why most fund managers own stocks such as Apple, Inc. (Nasdaq: AAPL). When more than 50 million shares trade each day, it’s easy to get in and out of a big investment position. Over the years, I’ve tended to follow the view of these fund managers, avoiding any stocks that trade less than 100,000 shares a day. But a recent study helped me realize that these off-the-radar stocks are precisely where individual investors should be focusing. Recently, Roger Ibbotson, who has generated a long track record of ground-breaking investment analyses, has been focusing on the returns of popular stocks (ones with high trading volume) and unpopular stocks. He found an unusual performance… Read More