Something troubling just took place in China… Last month, Chinese officials were caught stockpiling potentially rotten grains into the country’s reserves.  The situation “holds serious implications for global commodity prices” reported The Financial Times. “If the stockpiles include large amounts of unusable grain, China could be forced to increase imports sharply…” You see, in China the government guarantees a minimum price on sales of grain. By fudging the paperwork to say they paid full price, officials were filling their warehouses with rotten, discounted grains and pocketing the change.  China holds nearly 40% of the world’s corn. And if the rumors… Read More

Something troubling just took place in China… Last month, Chinese officials were caught stockpiling potentially rotten grains into the country’s reserves.  The situation “holds serious implications for global commodity prices” reported The Financial Times. “If the stockpiles include large amounts of unusable grain, China could be forced to increase imports sharply…” You see, in China the government guarantees a minimum price on sales of grain. By fudging the paperwork to say they paid full price, officials were filling their warehouses with rotten, discounted grains and pocketing the change.  China holds nearly 40% of the world’s corn. And if the rumors are true Chinese demand for imported grain could skyrocket.  This could be a huge catalyst for one company in particular.  With more than 250 processing plants in over 75 countries, Archer Daniels Midland Co. (NYSE: ADM) is the largest publicly-traded company in a relatively unknown, but vital, portion of the $2 trillion U.S. agribusiness sector: grain trading.  Essentially, these companies buy, process, transport and sell agricultural commodities like corn, wheat, soybeans and cocoa. They then turn these into food products, vegetable oils, livestock feed, chemicals and biofuels, selling the finished products to the industries that require them.  Here’s where ADM… Read More

What kind of companies can you count on to generate value, even when the rest of the market is in a slump? If history is any guide, then one class of stocks consistently enjoys solid demand from consumers. In fact, this sector is considered by many to be full of great “rainy day stocks.” The sector in question: consumer non-discretionaries, otherwise known as consumer staples. Here’s just one example of their resilience. Between January 1, 2007 and January 1, 2010, the S&P 500 plummeted, returning negative 21% over that period. In contrast, one of these stocks — which I’ll describe shortly… Read More

What kind of companies can you count on to generate value, even when the rest of the market is in a slump? If history is any guide, then one class of stocks consistently enjoys solid demand from consumers. In fact, this sector is considered by many to be full of great “rainy day stocks.” The sector in question: consumer non-discretionaries, otherwise known as consumer staples. Here’s just one example of their resilience. Between January 1, 2007 and January 1, 2010, the S&P 500 plummeted, returning negative 21% over that period. In contrast, one of these stocks — which I’ll describe shortly — went up 51%. In other words, if you owned it during the recession, then this stock would have earned you money. Not many companies can make that claim. Because of the products they sell — basic foodstuffs and household essentials like toothpaste and soap — these companies resist the cyclical swings of the market at large. Unlike their luxury counterparts, people can’t give up buying their products, even when the economy goes downhill. Cars and travel are the perfect counterexamples: people spend more on them during bull markets, but cut back when income gets tight. So in the case… Read More

Since the end of World War II, the United States has been unmatched in its role as a global superpower. No one can dispute the country’s influence shaping the world economically, politically and culturally.   However, in the last several decades, new powers have begun to emerge.  This inherent tension presents a wealth of opportunity for the companies that design and manufacture products for the cash-rich defense industry. Take, for example, the Asia-Pacific region. India, Singapore, South Korea, Vietnam, Mongolia, Laos and the Philippines are all on the rise. As nations grow, they aim for greater power and influence over… Read More

Since the end of World War II, the United States has been unmatched in its role as a global superpower. No one can dispute the country’s influence shaping the world economically, politically and culturally.   However, in the last several decades, new powers have begun to emerge.  This inherent tension presents a wealth of opportunity for the companies that design and manufacture products for the cash-rich defense industry. Take, for example, the Asia-Pacific region. India, Singapore, South Korea, Vietnam, Mongolia, Laos and the Philippines are all on the rise. As nations grow, they aim for greater power and influence over their neighbors. And while many of these nations are trade partners and allies with the U.S., all of these countries share a common concern: China. China — whose GDP has grown 90-fold since 1978 — overtook Japan as the world’s second largest economy in 2010. Despite slowing down in 2014, its economy is expected to grow by 7.4% in 2015, nearly tripling the expected growth of the United States. In 2013, U.S. military spending fell 7.8%, while China’s rose 7.4%. Between 2004 and 2013, China’s military spending grew 170% to $188.5 billion. Wary of China’s growing reach, the United States… Read More

I’m a pen and paper kind of guy. If I had my pick, I’d sit down with the newspaper or a book over reading from a screen any day.   #-ad_banner-#But this preference is becoming less and less common. Today, with Kindles, iPads, laptops and smartphones increasingly popular, we can now access entire libraries worth of information from a single, tiny device.   Newspapers and physical books have become — dare I say — inefficient. And it’s left me wondering, “What’s happening to traditional publishing? Is there still money to be made from physical publications?”   As it… Read More

I’m a pen and paper kind of guy. If I had my pick, I’d sit down with the newspaper or a book over reading from a screen any day.   #-ad_banner-#But this preference is becoming less and less common. Today, with Kindles, iPads, laptops and smartphones increasingly popular, we can now access entire libraries worth of information from a single, tiny device.   Newspapers and physical books have become — dare I say — inefficient. And it’s left me wondering, “What’s happening to traditional publishing? Is there still money to be made from physical publications?”   As it turns out, there is. But not in the way you might expect.   You see, when I started looking into this, I began with an assumption that turned out to be completely false.   These companies don’t rely on readers for revenue. Advertisers, not subscribers, drive their earnings.   And as I dug deeper into the business models of companies like The New York Times, The Wall Street Journal, and McGraw Hill to name a few, that insight helped me discover something even more important.   That is, the real reason the internet and mobile technologies have made it hard… Read More

  Sometimes good companies get beaten down by short-sighted investors. When that happens, it is good news for savvy investors.   #-ad_banner-#In 2012, Apple, Inc. (NYSE: APPL) fell more than 18% in less than two months following the release of the iPhone 5 and iPad mini, when investors became nervous that the company had reached its creative and competitive peak.   Monsanto Co. (NYSE: MON) sank 44% in the first half of 2010 when its licensing practices were called into question.   International Business Machines Corp. (NYSE: IBM) suffered a near 40% share price drop in late 1992, following its… Read More

  Sometimes good companies get beaten down by short-sighted investors. When that happens, it is good news for savvy investors.   #-ad_banner-#In 2012, Apple, Inc. (NYSE: APPL) fell more than 18% in less than two months following the release of the iPhone 5 and iPad mini, when investors became nervous that the company had reached its creative and competitive peak.   Monsanto Co. (NYSE: MON) sank 44% in the first half of 2010 when its licensing practices were called into question.   International Business Machines Corp. (NYSE: IBM) suffered a near 40% share price drop in late 1992, following its attempt to compete with the newly-popular personal computer.   Now look at where the first two companies are today: After continuing to fall another 25%, Apple has since climbed nearly 60%. Monsanto is back up 158% since its fall in 2010.   In 1993, IBM was in the midst of a downturn even worse than the other two I just mentioned. When Louis Gerstner finally stepped in as CEO in April 1993, the company was posting losses of $8 billion per year.   But, through an intensive corporate restructuring — selling off unprofitable divisions, integrating its strongest service offerings and… Read More