When it comes to growth-investing, trend spotters like to get in early on a theme that is just getting started. However, lucrative opportunities can also be found in themes that are coming to an end.   #-ad_banner-#A key long-term theme in the U.S. economy that has peaked and is in retreat: full-time employment.   The historical contract of traditional employment, which provided workers with a specific job description, set compensation and greater job security (or at least the perception of it) is no longer the obvious choice — for business owners and workers alike. Indeed, since the recession, this… Read More

  When it comes to growth-investing, trend spotters like to get in early on a theme that is just getting started. However, lucrative opportunities can also be found in themes that are coming to an end.   #-ad_banner-#A key long-term theme in the U.S. economy that has peaked and is in retreat: full-time employment.   The historical contract of traditional employment, which provided workers with a specific job description, set compensation and greater job security (or at least the perception of it) is no longer the obvious choice — for business owners and workers alike. Indeed, since the recession, this employment model has been on its way out.   Tepid economic growth has led employers to grow more cautious when it comes to new hires. The rising cost of healthcare benefits, along with other forms of overhead, has led many firms to turn to independent contractors — self-employed freelancers who work from home or onsite full- or part-time as needed, often on a per-project basis.   Independent contractors can be more cost-effective for many reasons. Employers don’t have to share in their payroll taxes, buy benefits for them or provide them with other perks, like paid vacation and sick time. Read More

  When investors hear the word “bonds,” they usually think safety. But maybe it’s time to re-evaluate.   #-ad_banner-#With the Federal Reserve set to start raising interest rates from historic lows soon, bonds could be riskier now than at any time in the past 30 years. Even just a 50-basis-point gain in rates could knock 3% off the value of a bond fund that tracks the overall bond market, since bond prices move in the opposite direction of yields.   Losses could be quite a bit steeper in more speculative segments of the bond market, including the high-yield or “junk”… Read More

  When investors hear the word “bonds,” they usually think safety. But maybe it’s time to re-evaluate.   #-ad_banner-#With the Federal Reserve set to start raising interest rates from historic lows soon, bonds could be riskier now than at any time in the past 30 years. Even just a 50-basis-point gain in rates could knock 3% off the value of a bond fund that tracks the overall bond market, since bond prices move in the opposite direction of yields.   Losses could be quite a bit steeper in more speculative segments of the bond market, including the high-yield or “junk” portion, which has enjoyed an extended popularity streak. As the Fed’s multi-year stimulus program progressively compressed yields on Treasuries and other safe government bonds, income investors increasingly flocked to junk bonds (higher-interest debt issued by financially vulnerable companies) for better returns despite the higher default risk.   Yet, the bond backdrop is poised for a change. Imminent rate increases, concerns about an energy sector high-yield debt bubble and weakness in the global economy, means it may be time to tread especially lightly in high-yield bonds. There are a couple ways to do this, starting with reducing exposure to the asset class. Read More

  When investors think of initial public offerings (IPOs), they often think of the impressive first-day gainers. Box, Inc. (NYSE: BOX), for example, surged 66% on its first day of trading last week.   Yet, it’s unwise to focus all of your attention on buzzworthy IPOs. Some just need time to gain traction and while they are slow to get out of the starting gate, clear opportunities emerge.   Take Papa Murphy’s Holdings, Inc. (Nasdaq: FRSH), as an example. The popular Washington-based premium pizza chain debuted in May 2014 to a tepid investor reception.   #-ad_banner-#Shares, which had been priced… Read More

  When investors think of initial public offerings (IPOs), they often think of the impressive first-day gainers. Box, Inc. (NYSE: BOX), for example, surged 66% on its first day of trading last week.   Yet, it’s unwise to focus all of your attention on buzzworthy IPOs. Some just need time to gain traction and while they are slow to get out of the starting gate, clear opportunities emerge.   Take Papa Murphy’s Holdings, Inc. (Nasdaq: FRSH), as an example. The popular Washington-based premium pizza chain debuted in May 2014 to a tepid investor reception.   #-ad_banner-#Shares, which had been priced at $11 at the offering, eventually slumped roughly 25% by July. Since then, shares have begun to build a following and now trade nearly 20% above the IPO price.   That’s not bad at all, but it pales in comparison to other, hotter IPOs. Since going public in September, Chinese e-commerce giant Alibaba Holding Group (NYSE: BABA) has seen its stock soar more than 50% above the initial offering price.   Papa Murphy’s might have gotten off to a better start were it not for a considerable debt burden and a $23 million lawsuit by disgruntled franchisees.   The key… Read More

When uncertainty reigns in the global economy, you can count on stocks to be even more volatile. #-ad_banner-#That has been the case recently as investors try to simultaneously get a handle on a range of complex issues: crashing oil, possible interest rate hikes in the United States, slowing growth in China and central bank stimulus in Europe, to name a few. By keeping investors so on edge, these and other worrisome signs of instability are clearly influencing the CBOE Volatility Index. This popular measure of investor expectations for stock market volatility… Read More

When uncertainty reigns in the global economy, you can count on stocks to be even more volatile. #-ad_banner-#That has been the case recently as investors try to simultaneously get a handle on a range of complex issues: crashing oil, possible interest rate hikes in the United States, slowing growth in China and central bank stimulus in Europe, to name a few. By keeping investors so on edge, these and other worrisome signs of instability are clearly influencing the CBOE Volatility Index. This popular measure of investor expectations for stock market volatility during the next 30 days is often referred to as the fear index or VIX, after its ticker symbol. As you can see, the VIX has been elevated since early December. And it’s now regularly topping the historical norm of 20, suggesting investors think rougher-than-usual times are ahead. That doesn’t necessarily mean it’s time to bail on the market, but a thorough portfolio review is wise at this point. Depending on your risk tolerance, consider reducing more speculative positions and make room for safer, dividend-paying stocks. A stable favorite:  Automatic… Read More

  Although legendary stock picker Peter Lynch hasn’t been in the spotlight for many years now, his insights and experience are still very relevant.   Lynch, famous for guiding the Fidelity Magellan fund to market-beating returns from 1977 to 1990, excelled at identifying stocks with a long runway of growth ahead of them. It didn’t matter to him if a stock’s value had already increased sharply. If he thought it could still deliver the goods, then he’d buy it — even if the prevailing market sentiment was to take profits and look elsewhere for outsized gains.   If Lynch was… Read More

  Although legendary stock picker Peter Lynch hasn’t been in the spotlight for many years now, his insights and experience are still very relevant.   Lynch, famous for guiding the Fidelity Magellan fund to market-beating returns from 1977 to 1990, excelled at identifying stocks with a long runway of growth ahead of them. It didn’t matter to him if a stock’s value had already increased sharply. If he thought it could still deliver the goods, then he’d buy it — even if the prevailing market sentiment was to take profits and look elsewhere for outsized gains.   If Lynch was working on Wall Street today, then I bet that’s exactly the way he’d feel about Under Armour, Inc. (NYSE: UA), the youth-oriented athletic wear retailer currently best known for stylish athletic pants, shirts, hoodies and other types of apparel.       While Under Armour is up a whopping 1000% since its NYSE debut in 2005, market sentiment could finally be turning against it. The stock is off 11% since peaking at more than $73 in late November, compared with less than a 3% drop in the S&P 500 during the same period.  … Read More

  From Lehman Brothers to Worldcom to the Soviet Union, many seemingly robust institutions can disappear in a flash.   #-ad_banner-#Other institutions can gradually fade away, which appears to be happening with meat, which has also been an institution itself.   Though people have relied on meat for centuries, as it played a central role in many cultures, meat’s predominance has begun to fade. Here at home, Americans are eating less meat, particularly red varieties like beef and pork.   The reasons for declining meat consumption aren’t a mystery. Doctors have been warning about greater cancer and other health… Read More

  From Lehman Brothers to Worldcom to the Soviet Union, many seemingly robust institutions can disappear in a flash.   #-ad_banner-#Other institutions can gradually fade away, which appears to be happening with meat, which has also been an institution itself.   Though people have relied on meat for centuries, as it played a central role in many cultures, meat’s predominance has begun to fade. Here at home, Americans are eating less meat, particularly red varieties like beef and pork.   The reasons for declining meat consumption aren’t a mystery. Doctors have been warning about greater cancer and other health risks from eating too much red meat for quite some time, and people finally got the message and have started cutting back.   What’s shocking, though, is the extent of the change.   Annual per capita red meat consumption in the U.S. fell 15% to 101 pounds in the past 10 years, according to the U.S. Department of Agriculture. It’s down by a third since the early 1970s, when per capita consumption was pushing 150 pounds per year. And the downward consumption trend could soon accelerate, with major negative implications for the meat industry.   The potential catalyst: the release… Read More

  Momentum, the tendency for rising stocks to soar higher and slumping ones to keep dropping, is a market anomaly investing theorists still don’t fully understand.   However, the fact remains: Once a popular growth stock gets going up, its ability to deliver big profits commonly far surpasses all expectations.   An excellent example of this is the Boston Beer Co., Inc. (NYSE: SAM), best known for its Samuel Adams brand and currently the leading domestic manufacturer of premium craft beers. Shares of Boston Beer climbed nearly 20% last year and are up about 500% in the past five years,… Read More

  Momentum, the tendency for rising stocks to soar higher and slumping ones to keep dropping, is a market anomaly investing theorists still don’t fully understand.   However, the fact remains: Once a popular growth stock gets going up, its ability to deliver big profits commonly far surpasses all expectations.   An excellent example of this is the Boston Beer Co., Inc. (NYSE: SAM), best known for its Samuel Adams brand and currently the leading domestic manufacturer of premium craft beers. Shares of Boston Beer climbed nearly 20% last year and are up about 500% in the past five years, compared with a 78% gain for the S&P 500 during the same period.                                                                                                   After such a meteoric rise and with its price-to-earnings ratio now pumped up to nearly 44, Boston Beer could pull back substantially in the near future. Ultimately, however, I think the stock is set for at least another year of outperformance, with a strong possibility of delivering double-digit gains in 2015.   One key reason: It still has… Read More

Commodities have been stumbling badly.   To get a sense of how badly, take a look at the Greenhaven Continuous Commodity ETF (NYSE: GCC), a diversified exchange-traded fund that uses futures contracts to provide exposure to 17 commodities like wheat, gold, oil and others. Since peaking at the end of April, GCC has fallen about 20%. That’s bear territory, and it might be cause for concern. Sharply falling commodities suggest demand for raw materials is weakening and the global economy is headed for a recession, possibly dragging down the U.S. economy along with it. Read More

Commodities have been stumbling badly.   To get a sense of how badly, take a look at the Greenhaven Continuous Commodity ETF (NYSE: GCC), a diversified exchange-traded fund that uses futures contracts to provide exposure to 17 commodities like wheat, gold, oil and others. Since peaking at the end of April, GCC has fallen about 20%. That’s bear territory, and it might be cause for concern. Sharply falling commodities suggest demand for raw materials is weakening and the global economy is headed for a recession, possibly dragging down the U.S. economy along with it.   #-ad_banner-#Plunging oil prices in particular have typically been one of the more reliable signs of a looming recession, but maybe not anymore. Normally, the nearly 60% price drop we’ve seen in the past six months would be a major red flag. But because the U.S. fracking boom has vastly increased global oil supplies in a relatively short time, it’s tough to say how much of the decline is demand-related.   So to get a better idea of the state of the economy, investors might want to look instead to copper.   Copper is tremendously versatile, with applications in many… Read More

With oil now below $50 a barrel and still in search of a bottom, talk of an energy sector rebound may seem awfully premature. However, sharp gains in the price of “black gold” may not be all that far off. A Reuters poll of 30 economists, conducted at the end of December, puts Brent crude back at $74 per barrel sometime this year (from a current $49) and at around $80 a barrel in 2016. #-ad_banner-#Oil tycoon T. Boone Pickens expects an even greater rebound to $100 a barrel in 12-to-18 months as current low prices stimulate demand and weaker… Read More

With oil now below $50 a barrel and still in search of a bottom, talk of an energy sector rebound may seem awfully premature. However, sharp gains in the price of “black gold” may not be all that far off. A Reuters poll of 30 economists, conducted at the end of December, puts Brent crude back at $74 per barrel sometime this year (from a current $49) and at around $80 a barrel in 2016. #-ad_banner-#Oil tycoon T. Boone Pickens expects an even greater rebound to $100 a barrel in 12-to-18 months as current low prices stimulate demand and weaker prices force U.S. shale producers to decrease output. Legendary oil trader and hedge fund manager Andrew John Hall recently predicted $150 oil within five years. As he sees it, the current supply glut won’t last because the U.S. shale boom is set to fizzle out much sooner than expected, with production markedly declining after a 2016 peak. Even some of the more modest near-term price forecasts still represent significant upside for oil. Analysts at Citigroup, for example, project Brent crude will average $63 this year and $70 in 2016. A logical conclusion: Despite current weakness, oil is way oversold and… Read More

  The current extended bull market is both exciting and scary.   #-ad_banner-#The higher the market goes, the more nervous investors become about the risk of a crash. Such skittishness sometimes prompts dramatic overreactions to relatively minor performance issues — even with the best companies. Astute long-term investors love when this happens because it can create brief opportunities to buy great stocks at more attractive valuations.   The well-known metal parts and castings fabricator Precision Castparts Corp. (NYSE: PCP) is a perfect example of this.   Precision Castparts is a global market leader that has been around for more than… Read More

  The current extended bull market is both exciting and scary.   #-ad_banner-#The higher the market goes, the more nervous investors become about the risk of a crash. Such skittishness sometimes prompts dramatic overreactions to relatively minor performance issues — even with the best companies. Astute long-term investors love when this happens because it can create brief opportunities to buy great stocks at more attractive valuations.   The well-known metal parts and castings fabricator Precision Castparts Corp. (NYSE: PCP) is a perfect example of this.   Precision Castparts is a global market leader that has been around for more than six decades. During that time, it evolved from a tiny provider of chain saw cutters to a diversified giant worth $32 billion. The company now makes specialized metal castings, parts, forgings and fasteners for multiple industries including aerospace, energy, healthcare and defense.   The company has a superb long-term track record. Annual revenues have risen nearly 13% a year since 2006, from $3.6 billion to a projected $10.3 billion in fiscal (March) 2015. During the same period, earnings per share raised at a 21% pace, to an expected $13.50 a share in fiscal 2015.  The gross, operating and net margins… Read More