Fundamental analysts generally focus on a company’s financial statement. They use tools like the price-to-earnings (P/E) ratio and dividend yields to find value. Many investors like to buy when these indicators are low. There are studies showing that this approach works in the long term. However, most of those studies could never be implemented by individual investors.#-ad_banner-# When studying P/E ratios or other fundamental measures of value, researchers generally divide the market into… Read More

Fundamental analysts generally focus on a company’s financial statement. They use tools like the price-to-earnings (P/E) ratio and dividend yields to find value. Many investors like to buy when these indicators are low. There are studies showing that this approach works in the long term. However, most of those studies could never be implemented by individual investors.#-ad_banner-# When studying P/E ratios or other fundamental measures of value, researchers generally divide the market into 10 groups. Each stock is assigned to one of those groups. Researchers then measure the performance of the group and usually find that the group with the lowest P/E ratio or the lowest dividend yield provides the best returns. There are at least 6,500 stocks being traded on U.S. exchanges. To duplicate a value strategy that is likely to outperform the market, you might need to buy 650 stocks. You could just select the stocks with the lowest ratios in… Read More

Markets moved quickly after Federal Reserve Chairman Ben Bernanke indicated the central bank‘s quantitative easing (QE) programs would end one day. That move left stocks oversold and ready to rebound. Bernanke Might Be Too Optimistic SPDR S&P 500 (NYSE: SPY) fell from about $165 on Wednesday to close the week at $159.07. The down move began when the Fed chairman held a… Read More

Markets moved quickly after Federal Reserve Chairman Ben Bernanke indicated the central bank‘s quantitative easing (QE) programs would end one day. That move left stocks oversold and ready to rebound. Bernanke Might Be Too Optimistic SPDR S&P 500 (NYSE: SPY) fell from about $165 on Wednesday to close the week at $159.07. The down move began when the Fed chairman held a press conference. Offering a hypothetical example, Bernanke said that the Fed could begin decreasing its monthly purchases of $85 billion in bonds later this year and stop buying next year if the economy improves.#-ad_banner-# Without any evidence that the economy is improving, SPY dropped more than 4% and the Dow Jones industrial average grabbed headlines with a fall of more than 500 points in two days. This drop occurred without any fundamental change in… Read More

In a paper titled “Value and Momentum Everywhere,” a team of researchers found that “value and momentum ubiquitously generate abnormal returns for individual stocks within several countries, across country equity indices, government bonds, currencies, and commodities.” This conclusion is so widely accepted that value and momentum are considered to be anomalies to the Efficient Market Hypothesis (EMH). Proponents of EMH believe markets efficiently price stocks using all available information. The strictest form… Read More

In a paper titled “Value and Momentum Everywhere,” a team of researchers found that “value and momentum ubiquitously generate abnormal returns for individual stocks within several countries, across country equity indices, government bonds, currencies, and commodities.” This conclusion is so widely accepted that value and momentum are considered to be anomalies to the Efficient Market Hypothesis (EMH). Proponents of EMH believe markets efficiently price stocks using all available information. The strictest form of the hypothesis says that no individual could beat the market because each stock is trading at exactly the right price at all times. #-ad_banner-# However, researchers have repeatedly demonstrated that investors can beat the market by applying value and momentum strategies. We believe that volatility can also be used to outperform a buy-and-hold strategy. Recently, we introduced the Income Trader Volatility (ITV) indicator and provided test results showing that… Read More

Markets moved quickly after Federal Reserve Chairman Ben Bernanke indicated the central bank‘s quantitative easing (QE) programs would end one day. That move left stocks oversold and ready to rebound. Bernanke Might Be Too Optimistic SPDR S&P 500 (NYSE: SPY) fell from about $165 on Wednesday to close the week at $159.07. The down move began when the Fed chairman held a… Read More

Markets moved quickly after Federal Reserve Chairman Ben Bernanke indicated the central bank‘s quantitative easing (QE) programs would end one day. That move left stocks oversold and ready to rebound. Bernanke Might Be Too Optimistic SPDR S&P 500 (NYSE: SPY) fell from about $165 on Wednesday to close the week at $159.07. The down move began when the Fed chairman held a press conference. Offering a hypothetical example, Bernanke said that the Fed could begin decreasing its monthly purchases of $85 billion in bonds later this year and stop buying next year if the economy improves.#-ad_banner-# Without any evidence that the economy is improving, SPY dropped more than 4% and the Dow Jones industrial average grabbed headlines with a fall of more than 500 points in two days. This drop occurred without any fundamental change in… Read More

In a paper titled “Value and Momentum Everywhere,” a team of researchers found that “value and momentum ubiquitously generate abnormal returns for individual stocks within several countries, across country equity indices, government bonds, currencies, and commodities.” This conclusion is so widely accepted that value and momentum are considered to be anomalies to the Efficient Market Hypothesis (EMH). Proponents of EMH believe markets efficiently price stocks using all available information. The strictest form… Read More

In a paper titled “Value and Momentum Everywhere,” a team of researchers found that “value and momentum ubiquitously generate abnormal returns for individual stocks within several countries, across country equity indices, government bonds, currencies, and commodities.” This conclusion is so widely accepted that value and momentum are considered to be anomalies to the Efficient Market Hypothesis (EMH). Proponents of EMH believe markets efficiently price stocks using all available information. The strictest form of the hypothesis says that no individual could beat the market because each stock is trading at exactly the right price at all times. #-ad_banner-# However, researchers have repeatedly demonstrated that investors can beat the market by applying value and momentum strategies. We believe that volatility can also be used to outperform a buy-and-hold strategy. Recently, we introduced the Income Trader Volatility (ITV) indicator and provided test results showing that… Read More

On Monday, I explained to readers how a simple trading tool could have shown investors when to sell American Capital Agency (Nasdaq: AGNC) near its peak back in September 2012. And before that I showed readers how the same trading tool could have been used to sell Apple (Nasdaq: AAPL) before its crash started in November. Today, I want to show you a stock you can buy right now according to the same indicator… But first, let me explain a little more about this trading tool. It’s called… Read More

On Monday, I explained to readers how a simple trading tool could have shown investors when to sell American Capital Agency (Nasdaq: AGNC) near its peak back in September 2012. And before that I showed readers how the same trading tool could have been used to sell Apple (Nasdaq: AAPL) before its crash started in November. Today, I want to show you a stock you can buy right now according to the same indicator… But first, let me explain a little more about this trading tool. It’s called relative strength, or RS. I know for many individual investors that may sound overly technical, but it’s really very simple. #-ad_banner-#Relative strength is a factor I use to find stocks that are outperforming the market now. You see, value investors often pride themselves on patience. Relative strength helps eliminate the need for this virtue. Buying value stocks only when RS is high can help you avoid the value trap that comes from buying… Read More

The stock market has not made a decisive breakout yet, but gold has. Volatility Points to a Possible Decline in Stocks SPDR S&P 500 (NYSE: SPY) closed down 1% last week. On Friday, the ETF fell 0.63%, the fourth day in a row with a move larger than 0.5% (in absolute value). On an average day, since 1928, the… Read More

The stock market has not made a decisive breakout yet, but gold has. Volatility Points to a Possible Decline in Stocks SPDR S&P 500 (NYSE: SPY) closed down 1% last week. On Friday, the ETF fell 0.63%, the fourth day in a row with a move larger than 0.5% (in absolute value). On an average day, since 1928, the S&P 500 has moved an average of 0.02%. A 0.5% move is 25 times greater than average and four in a row is an unusual pattern. In the history of the S&P 500 index back to 1928, volatile periods like this have occurred about four times a year, on average. The index has a downward bias over the next week and the next month. Over those time frames, traders would have enjoyed a small profit, on average, from a… Read More

If you’re a long-time reader of StreetAuthority, you know by now that we almost never recommend stocks with yields higher than 10%.  If the yield is higher than that, it’s usually a sign that the company’s fundamentals are sagging, investors are bracing for a dividend cut — or worse… But today, I’m going to show you how to break one of the cardinal rules of safe income… Read More

If you’re a long-time reader of StreetAuthority, you know by now that we almost never recommend stocks with yields higher than 10%.  If the yield is higher than that, it’s usually a sign that the company’s fundamentals are sagging, investors are bracing for a dividend cut — or worse… But today, I’m going to show you how to break one of the cardinal rules of safe income investing and buy a stock yielding 17% without losing a single night’s sleep. #-ad_banner-#All you have to do is think more like a trader. Now, I know that doesn’t come easy to most income investors, but it’s easier than it sounds. In fact, I’m going to show you how one simple tool allows you to know when it’s safe to buy stocks with ridiculously high yields, hold them for a period of time and collect any dividends you might receive, and then know when… Read More

Stock markets jumped after the unemployment rate rose on hopes that the Fed will continue pumping up the… Read More

Stock markets jumped after the unemployment rate rose on hopes that the Fed will continue pumping up the… Read More