I do not trust this market. While deals are starting to pop up in the energy space after a sell-off in crude, the rest of the market is getting expensive, and the slightest hint of weakness seems to send it down.  Take October, for example. No sooner had third-quarter earnings started than the market went into a tailspin, falling nearly 8% before starting its recent rebound.  Some nervousness and profit-taking is to be expected after more than five years of a bull run, but there was really no reason for the market to sell off. Earnings promised to surprise as… Read More

I do not trust this market. While deals are starting to pop up in the energy space after a sell-off in crude, the rest of the market is getting expensive, and the slightest hint of weakness seems to send it down.  Take October, for example. No sooner had third-quarter earnings started than the market went into a tailspin, falling nearly 8% before starting its recent rebound.  Some nervousness and profit-taking is to be expected after more than five years of a bull run, but there was really no reason for the market to sell off. Earnings promised to surprise as the U.S. economy zipped higher. Sluggish growth in Europe had been an issue for more than a year, and the Ukraine conflict was still just simmering.  When even a strong earnings season fails to keep stocks from swooning, you know market valuation is getting stretched. When this happens, I start looking to protect my portfolio from the next bout of irrational selling. #-ad_banner-#The traditional method of put option buying for protection involves a bet that the shares I hold are on their way lower. But I like the stocks I… Read More

The wave of Republican victories in mid-term elections blew past everyone’s expectations and sparked a rally in the markets. Investors are hoping for a range of business-friendly changes in Washington from a less intrusive energy policy to a partial repeal of some Obamacare regulations. The market may be disappointed next year as Republicans find many areas on their wish list off limits against a Presidential veto. The President looks to be crafting his legacy on environmental and healthcare issues and will not give up easily. #-ad_banner-#There is one area where the President and Congress may find balance, and it could mean… Read More

The wave of Republican victories in mid-term elections blew past everyone’s expectations and sparked a rally in the markets. Investors are hoping for a range of business-friendly changes in Washington from a less intrusive energy policy to a partial repeal of some Obamacare regulations. The market may be disappointed next year as Republicans find many areas on their wish list off limits against a Presidential veto. The President looks to be crafting his legacy on environmental and healthcare issues and will not give up easily. #-ad_banner-#There is one area where the President and Congress may find balance, and it could mean big savings for companies and even bigger profits for investors. Both the President and the Republicans in Congress have talked up the need for tax reform. The President has pointed out the many tax breaks incorporated in the tax code, while Republicans point out high statutory rates. If the two sides can come together for a bipartisan deal, then it could mean hundreds of billions in tax savings for companies and a wave of special dividends for investors. That’s because any reform will likely include some form of a repatriation holiday, allowing companies to bring back overseas profits without paying… Read More

One of the most interesting changes in the market over the past few years is the resurgence in investor interest for U.S.-led profits. This is in stark contrast to before the financial crisis when many investors passed over domestic stocks for emerging market growth. You couldn’t watch 10 minutes of CNBC without hearing how developing world growth would crush the stagnant economies of the United States, Japan and Europe.  The iShares MSCI Emerging Markets (NYSE: EEM) surged more than 200% in the four years to September 2007, compared with 46% for the S&P 500, and it seemed investor sentiment couldn’t… Read More

One of the most interesting changes in the market over the past few years is the resurgence in investor interest for U.S.-led profits. This is in stark contrast to before the financial crisis when many investors passed over domestic stocks for emerging market growth. You couldn’t watch 10 minutes of CNBC without hearing how developing world growth would crush the stagnant economies of the United States, Japan and Europe.  The iShares MSCI Emerging Markets (NYSE: EEM) surged more than 200% in the four years to September 2007, compared with 46% for the S&P 500, and it seemed investor sentiment couldn’t get more bullish. And of course, it didn’t. The emerging market fund is down almost 10% since September 2007 against a 36% gain on stocks in the S&P 500. #-ad_banner-#But have things really changed that much? The U.S. will probably eke out 2% GDP growth this year, according to the IMF, which is still well below the 4.4% growth projection for the emerging world. The United States is still running a nearly $500 billion deficit, and the greenback is more than 10% weaker over the past decade against a basket of peers.  The weakness in emerging market stocks will not… Read More

Shares of retailers have struggled to hold on to gains this year, even as the rest of the market enjoys record highs.  Employment growth has only just started to turn higher and real hourly wages fell for almost every segment of the workforce during the first half of the year. Against the backdrop of sluggish sales and the unknown of the holiday shopping season, you probably wouldn’t be surprised if retailers played it safe with their advertising as we move through third quarter earnings. But one retail giant is stepping out into the limelight with… Read More

Shares of retailers have struggled to hold on to gains this year, even as the rest of the market enjoys record highs.  Employment growth has only just started to turn higher and real hourly wages fell for almost every segment of the workforce during the first half of the year. Against the backdrop of sluggish sales and the unknown of the holiday shopping season, you probably wouldn’t be surprised if retailers played it safe with their advertising as we move through third quarter earnings. But one retail giant is stepping out into the limelight with a new series of ads directed by an up-and-comer from one of America’s most celebrated movie families.  #-ad_banner-#Instead of putting out the traditional drivel of holiday hopes and dreams, the company is taking a chance on something memorable enough to move the needle on sales.  While holiday sales disappointed investors last year, things are looking up for the upcoming shopping season and this company’s striking new ads may bring buyers back in a big way. Can ‘Endearingly Weird’ Save This Fashion Heavyweight? The Gap, Inc. (NYSE: GPS) shares plunged 12.4% on October 9 with the release of… Read More

If you had any doubt about the market’s manic-depressive nature and the fact that rational investors can make out-sized gains, then October should have fully dismissed any remaining disbelief. By mid-September, the market had shrugged off late-summer jitters and jumped higher to a gain of nearly 9% on the year. The economic picture in the United States was looking great and even the shadow of rising rates next year could not keep stocks from new highs. #-ad_banner-#Then October hit and the S&P 500 plunged 7.4% from its high on relatively little new information. Sure the crisis in Ukraine was flaring… Read More

If you had any doubt about the market’s manic-depressive nature and the fact that rational investors can make out-sized gains, then October should have fully dismissed any remaining disbelief. By mid-September, the market had shrugged off late-summer jitters and jumped higher to a gain of nearly 9% on the year. The economic picture in the United States was looking great and even the shadow of rising rates next year could not keep stocks from new highs. #-ad_banner-#Then October hit and the S&P 500 plunged 7.4% from its high on relatively little new information. Sure the crisis in Ukraine was flaring and Ebola gave doomsayers something to talk about, but none of this was new or had a realistic probability of hitting earnings. Just as soon as the so-called “smart money” started to call for profit-taking and a larger correction, the market rebounded. The S&P 500 has jumped 8.5% since its October low and looks just as healthy as it ever did. Against the roller coaster ride of market prices in October, investors made an even bigger mistake in one company. This company has dominated one of the fastest growing themes for years and shares have surged more than sevenfold in… Read More

Retirement is supposed to be a relaxing reward for decades of hard work and responsible saving. Unfortunately the reality is that too many either cannot afford to retire or cannot relax as they see the rising cost of healthcare eat away at their nest egg. #-ad_banner-#The growing cost of aging does not appear to be getting any easier. Healthcare inflation is among the highest across all groups of goods and services at an average rate of 3.4% over the last 10 years, against an average 2.3% rate of inflation in consumer prices. The… Read More

Retirement is supposed to be a relaxing reward for decades of hard work and responsible saving. Unfortunately the reality is that too many either cannot afford to retire or cannot relax as they see the rising cost of healthcare eat away at their nest egg. #-ad_banner-#The growing cost of aging does not appear to be getting any easier. Healthcare inflation is among the highest across all groups of goods and services at an average rate of 3.4% over the last 10 years, against an average 2.3% rate of inflation in consumer prices. The graph below shows inflation in healthcare costs and the difference between healthcare inflation and the increase across all consumer prices. In only two of the last twenty years have healthcare costs not increased faster than general inflation. And when that happened, costs jumped the following years. Not only do healthcare costs grow faster than other costs, but people over 65 years old pay a disproportionate amount of their income to healthcare — an average of $5,069 a year in healthcare costs, 12.2% of their total spending and well above the 7.1% spent by all others. Fortunately for investors looking… Read More

Though investors don’t always capitalize on it, history has a way of repeating itself. In fact, when I saw this last trend, I had to dust off my DVD copy of Back to the Future just to reminisce. If you’ve been around long enough, you no doubt remember the prevailing fear that Japan was going to own the United States through its massive buying of real estate in the 1980s. #-ad_banner-#​Back then, strong economic growth in Japan drove a buying spree for U.S. commercial property and businesses. A weakening dollar after the historic… Read More

Though investors don’t always capitalize on it, history has a way of repeating itself. In fact, when I saw this last trend, I had to dust off my DVD copy of Back to the Future just to reminisce. If you’ve been around long enough, you no doubt remember the prevailing fear that Japan was going to own the United States through its massive buying of real estate in the 1980s. #-ad_banner-#​Back then, strong economic growth in Japan drove a buying spree for U.S. commercial property and businesses. A weakening dollar after the historic 1985 Plaza Accord made dollar-denominated assets cheaper and foreign investors jumped in to take advantage of the opportunity. Nearly 30 years later and we seem to be right back to where we started. It looks like stronger U.S. economic growth and a surging dollar is driving foreign investment this time but the ultimate effect is still the same; real estate prices in the United States are heading higher. Take a lesson from history and position your portfolio to take advantage of a foreign buying spree in real estate. The Greenback Makes A Comeback While… Read More

The California Public Employees’ Retirement System (CalPERS) shocked the investing world in September when it announced that it was pulling its $4 billion investments in hedge funds. The pension fund is the largest in the United States — nearly $300 billion in size. Many investors follow its lead when it comes to asset allocation. The decision to sell out of 30 hedge fund and fund-of-funds investments was made by the board to reduce complexity and costs in the pension fund. Many hedge funds use complex algorithms to pick and pair stocks, and… Read More

The California Public Employees’ Retirement System (CalPERS) shocked the investing world in September when it announced that it was pulling its $4 billion investments in hedge funds. The pension fund is the largest in the United States — nearly $300 billion in size. Many investors follow its lead when it comes to asset allocation. The decision to sell out of 30 hedge fund and fund-of-funds investments was made by the board to reduce complexity and costs in the pension fund. Many hedge funds use complex algorithms to pick and pair stocks, and usually charge a 20% fee on profits, on top of a 2% administration fee. The withdrawal of CalPERS is a recognition that the high costs may not be worth the hedge funds’ modest returns. CalPERs made another disclosure that may be just as important, possibly even more so. The Largest Asset Class In The World On October 8, CalPERS announced that it will increase its allocation in real estate by $7 billion — to $33 billion, or 11% of the fund’s assets. The… Read More

Few sectors have been hit as hard this year as agriculture. Record-high crop production and a strong dollar are driving grain prices to multi-year lows. Since April, the price of corn and wheat have both fallen by more than 30%. Shares of companies in the sector performed relatively well over the first half of the year, following the broader market closely, but broke down quickly over the last five months. The Market Vectors Agribusiness ETF (NYSE: MOO) has dropped 6.9% so far this year, with nearly a 10% drop since the July high. Yes,… Read More

Few sectors have been hit as hard this year as agriculture. Record-high crop production and a strong dollar are driving grain prices to multi-year lows. Since April, the price of corn and wheat have both fallen by more than 30%. Shares of companies in the sector performed relatively well over the first half of the year, following the broader market closely, but broke down quickly over the last five months. The Market Vectors Agribusiness ETF (NYSE: MOO) has dropped 6.9% so far this year, with nearly a 10% drop since the July high. Yes, prices have fallen dramatically over the latter half of the year, but it was only two years ago that both corn and wheat hit all-time highs. In 2012, corn prices surged more than 50% in six weeks as drought destroyed production. While lower crop prices have producers sweating it out until next year’s growing season, investors may want to take advantage of lower prices now. That is exactly what one director at an agricultural equipment-maker is doing, increasing her controlling interest to more than a tenth of the company before what could be a boon for… Read More

The market has yet to start talking much about the effect of the Republicans winning a majority in the Senate next month in the midterm elections. While the longer-term effect on stocks based on which party controls Congress is widely debated, there is good reason to believe that a change in power this year could lead to a surge in today’s pick.  Despite the correction in the past few weeks, stocks have been on an amazing run since the market bottomed in 2009. Much of the jump in asset prices is thanks to extremely accommodative Federal Reserve policies, and I… Read More

The market has yet to start talking much about the effect of the Republicans winning a majority in the Senate next month in the midterm elections. While the longer-term effect on stocks based on which party controls Congress is widely debated, there is good reason to believe that a change in power this year could lead to a surge in today’s pick.  Despite the correction in the past few weeks, stocks have been on an amazing run since the market bottomed in 2009. Much of the jump in asset prices is thanks to extremely accommodative Federal Reserve policies, and I would not normally be inclined to bet one way or another on midterm elections. #-ad_banner-#​Except for this year. The market has been so preoccupied with October volatility, Ebola and geopolitical concerns that it hasn’t yet reacted to the possibility that congressional control may be about to change. The Republicans currently hold the House of Representatives with 233 members versus 199 Democrats. The Democrats hold the Senate with 55 seats compared with 45 Republican seats.  Most polls give the Republicans a strong chance at winning the six seats needed to take the Senate. For example, the Senate… Read More