#-ad_banner-#The rapid surge in the dollar has thus far had little impact on the stock market. But it soon will.  In the upcoming earnings season, you’ll be hearing a lot about how many companies in the S&P 500 are having a tough time racking up sales in their foreign subsidiaries. And when you consider that few expect the dollar to pull back any time soon, this trend is likely to persist for at least the rest of 2015.  As we’ve noted in the past, larger companies tend to have much greater global exposure than smaller companies. And in the face… Read More

#-ad_banner-#The rapid surge in the dollar has thus far had little impact on the stock market. But it soon will.  In the upcoming earnings season, you’ll be hearing a lot about how many companies in the S&P 500 are having a tough time racking up sales in their foreign subsidiaries. And when you consider that few expect the dollar to pull back any time soon, this trend is likely to persist for at least the rest of 2015.  As we’ve noted in the past, larger companies tend to have much greater global exposure than smaller companies. And in the face of rising global sales challenges, you would think large cap stocks would be losing favor. Yet the S&P 500 has actually outperformed the Russell 2000 (a small-cap index) over the past 13 months. The simple explanation: global uncertainty tends to lead to a “flight to quality” as larger companies are generally seen as safer investments. Yet as Q1 earnings season will likely show, these aren’t “quality” times for big companies.  That’s why I am focusing my research these days on small-cap stocks. A number of individual stocks in the Russell 2000 are now trading far from their 52-week high,… Read More

While insider action can provide valuable hints about where a stock is headed, many investors consider this activity most helpful with buying decisions. After all, as legendary fund manager Peter Lynch once noted, insiders might sell their firm’s stock for any number of reasons. But they only buy it for one reason: they think it’s going to go up. And who better to make such a call than the people most closely associated with a company? Trouble is, keeping abreast of insider buying trends in such a large universe of stocks is much too time-consuming for most individual investors. But… Read More

While insider action can provide valuable hints about where a stock is headed, many investors consider this activity most helpful with buying decisions. After all, as legendary fund manager Peter Lynch once noted, insiders might sell their firm’s stock for any number of reasons. But they only buy it for one reason: they think it’s going to go up. And who better to make such a call than the people most closely associated with a company? Trouble is, keeping abreast of insider buying trends in such a large universe of stocks is much too time-consuming for most individual investors. But no matter. There’s a simpler way to own stocks with heavy insider buying, and recent performance suggests it’s capable of generating market-beating returns. The method: investing in exchange-traded funds designed specifically to offer broad exposure to stocks with robust insider buying. Currently, there are two choices, the Guggenheim Insider Sentiment ETF (NYSE: NFO) and the Direxion All Cap Insider Sentiment ETF (NYSE: KNOW). Both are index funds (with reasonable expense ratios of less than 70 basis points). NFO tracks the Sabrient Insider Sentiment Index, an equal-weight benchmark of the 100 stocks with the highest composite rankings incorporating four factors: the… Read More

In recent years, investors increasingly use exchange-traded funds (ETFs) on the short end of their portfolio. Shorting these funds provides an easy way to hedge a portfolio managers’ position in individual stocks. Yet some ETFs with high short interest are simply the target of speculators that are anticipating a big decline for an industry or asset class. When this happens, the short interest can grow to alarming levels. For individual investors that are able to wait out near-term bears and focus on the long-term, it can mean a strong upside when sentiment turns. The Market Loves To Hate Oil… Read More

In recent years, investors increasingly use exchange-traded funds (ETFs) on the short end of their portfolio. Shorting these funds provides an easy way to hedge a portfolio managers’ position in individual stocks. Yet some ETFs with high short interest are simply the target of speculators that are anticipating a big decline for an industry or asset class. When this happens, the short interest can grow to alarming levels. For individual investors that are able to wait out near-term bears and focus on the long-term, it can mean a strong upside when sentiment turns. The Market Loves To Hate Oil As you’d expect, energy-related ETFs are an especially popular target for short sellers these days. In fact, almost every share held in long accounts for the SPDR S&P Oil & Gas Explorers ETF (NYSE: XOP) is also currently borrowed for short seller accounts.   The latest headache for oil prices and oil stocks: fears are growing that U.S. oil storage tanks could reach capacity in April. While Petroleum Administration for Defense District (PADD 1) storage is near capacity at around 85%, total storage is only at 60% capacity. The PADD regions were created during WWII to… Read More

The past few years have been cruel to gold, a casualty of a relentless bull market in stocks and, more recently, the U.S. dollar. Since October 2013, the price has plunged from nearly $1,800 an ounce to about $1,150 — roughly a 35% drop. The bear market in gold blindsided most precious metals investors. In the early days of the Great Recession, many were convinced that gold — and not stocks — had many years of big gains ahead. These gold bulls assumed that the Federal Reserve’s massive “money printing” program would lead to runaway inflation. Yet six… Read More

The past few years have been cruel to gold, a casualty of a relentless bull market in stocks and, more recently, the U.S. dollar. Since October 2013, the price has plunged from nearly $1,800 an ounce to about $1,150 — roughly a 35% drop. The bear market in gold blindsided most precious metals investors. In the early days of the Great Recession, many were convinced that gold — and not stocks — had many years of big gains ahead. These gold bulls assumed that the Federal Reserve’s massive “money printing” program would lead to runaway inflation. Yet six years and three rounds of stimulus later, inflationary pressures remain non-existent. This is why you may be surprised to hear that now could be the best time in a while to own the yellow metal. With the global economy in flux, there are several potential catalysts for substantially higher gold prices in 2015. A Hamstrung Fed After a long stretch of zero-rate policy, investors are finally realizing the Fed wants to start raising interest rates as soon as possible, maybe as early as June. This has been a headwind for gold recently, because higher rates would further boost an already… Read More

  In recent weeks, bullish optimism and a resilient market have given investors a bit of a reprieve from rising levels of volatility. But don’t get too comfortable. The next spike in volatility can arrive without notice. Here’s how you can invest in stocks with the least volatility.   The CBOE Volatility Index, also known as the fear index, or VIX, has been trending lower for most of the year. The VIX, which gauges expectations for stock market volatility in the next 30 days, is now only around 16 —… Read More

  In recent weeks, bullish optimism and a resilient market have given investors a bit of a reprieve from rising levels of volatility. But don’t get too comfortable. The next spike in volatility can arrive without notice. Here’s how you can invest in stocks with the least volatility.   The CBOE Volatility Index, also known as the fear index, or VIX, has been trending lower for most of the year. The VIX, which gauges expectations for stock market volatility in the next 30 days, is now only around 16 — 20% below the historical average of 20.   But 2015 is still young, and severe volatility could return as investors face potential shocks to the market. A shift in U.S. monetary policy or a potential Greek exit from the eurozone are just a few potential triggers for higher volatility.   #-ad_banner-#Though volatility has been largely absent from the market in the past few years, recall that it was a key theme in 2011, when the market fell nearly 20% as part of a summer swoon. The VIX reflected investor angst during that… Read More

  The European Central Bank’s (ECB) recent announcement of a huge bond-buying program has made investors understandably giddy. The move could help jumpstart Europe’s flagging economy.   #-ad_banner-#Moreover, a similar program of so-called quantitative easing by the Federal Reserve was a major tailwind in the multi-year run-up of U.S. stocks to all-time highs. So investors are anticipating a similar effect on European stocks from ECB stimulus.   The impact on exchange-traded funds (ETFs) that invest in European stocks, bonds and commodities is already evident, as they are seeing record inflows. In January, these funds took in an all-time one-month high… Read More

  The European Central Bank’s (ECB) recent announcement of a huge bond-buying program has made investors understandably giddy. The move could help jumpstart Europe’s flagging economy.   #-ad_banner-#Moreover, a similar program of so-called quantitative easing by the Federal Reserve was a major tailwind in the multi-year run-up of U.S. stocks to all-time highs. So investors are anticipating a similar effect on European stocks from ECB stimulus.   The impact on exchange-traded funds (ETFs) that invest in European stocks, bonds and commodities is already evident, as they are seeing record inflows. In January, these funds took in an all-time one-month high of $13.7 billion, with the lion’s share going to equity-focused ETFs, according to BlackRock, Inc. (NYSE: BLK).   European stocks have risen nearly 5% thus far in 2015, based on the performance of the MSCI EAFE (Europe, Australasia and Far East) Index. In contrast, the S&P 500 is roughly flat thus far this year.   If you’re bullish on Europe, then there’s a key risk factor to consider before you dive in: the strong U.S. dollar. The greenback is at a 10-year high against a basket of foreign currencies, including the euro. For U.S. Read More

Thanks to the sharp pullback in bond yields in recent months, focus is shifting back to their counterpart in the equities sphere: dividend stocks. Investors can now choose from solid, yet safe, payouts, companies that generate impressive dividend growth and an industry that is likely to be a magnet for dividend hikes in the coming year. #-ad_banner-#But let’s face it. There are so many stocks to choose from that produce solid and growing income streams that it can be hard to truly know which stocks are best. Perhaps… Read More

Thanks to the sharp pullback in bond yields in recent months, focus is shifting back to their counterpart in the equities sphere: dividend stocks. Investors can now choose from solid, yet safe, payouts, companies that generate impressive dividend growth and an industry that is likely to be a magnet for dividend hikes in the coming year. #-ad_banner-#But let’s face it. There are so many stocks to choose from that produce solid and growing income streams that it can be hard to truly know which stocks are best. Perhaps the basket approach is better. In the past few years, the field of exchange-traded funds (ETFs) that focus on dividend producers has continued to expand. Dozens of solid options now exist, and if you own three or four of them, then you can get all the exposure you’ll need to this category of securities. Investors can also seek out mutual funds in their pursuit of dividend stocks, but as I recently noted ETFs offer similar exposure with lower costs. Vanguard Dividend Appreciation ETF (NYSE: VIG) With more than $20 billion in assets under management (AUM), this is the largest fund… 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

In an era of ultra-low interest rates, stocks continue to be the obvious choice for most investors. But is that approach wise?   Even as stocks continually post new highs (and carry stretched valuations), a variety of serious economic and geopolitical risks means this is not a good time to be over-exposed to equities. In the current environment, the S&P 500 could easily fall 15%-to-20% or more if the global landscape delivers one of its periodic shocks.   #-ad_banner-#Maybe this is a time to give bonds fresh consideration. And one of my favorite ways to get exposure is the Dodge &… Read More

In an era of ultra-low interest rates, stocks continue to be the obvious choice for most investors. But is that approach wise?   Even as stocks continually post new highs (and carry stretched valuations), a variety of serious economic and geopolitical risks means this is not a good time to be over-exposed to equities. In the current environment, the S&P 500 could easily fall 15%-to-20% or more if the global landscape delivers one of its periodic shocks.   #-ad_banner-#Maybe this is a time to give bonds fresh consideration. And one of my favorite ways to get exposure is the Dodge & Cox Income (NYSE: DODIX) fund.   It carries a respectable 3% yield. By comparison, the overall bond market is yielding 2.5%, and the dividend yield on the S&P 500 now stands below 2.0%. To deliver the superior yield, you might presume that the fund takes on extra risk by loading up on so-called corporate junk or maybe even foreign bonds issued by developing countries at high risk for default.   But I assure you, it doesn’t.   Foreign bonds account for just 12% of Dodge & Cox’s assets, with only modest amounts of emerging markets debt. The portfolio has an… Read More

Among the highlights of 2014 was the blockbuster $25 billion initial public offering for Alibaba Group Holding Ltd (Nasdaq: BABA), which may rank as the biggest deal ever for some time to come. Hiding in Alibaba’s shadow is another historic IPO that occurred exactly two months later. The $2.6 billion offering for Paramount Group, Inc. (NYSE: PGRE) is the biggest deal in the history of real estate investment trusts, or REITs. Prior to Paramount’s debut, Douglas Emmett, Inc. (NYSE: DEI) set the record in 2006 by raising $1.6 billion. Read More

Among the highlights of 2014 was the blockbuster $25 billion initial public offering for Alibaba Group Holding Ltd (Nasdaq: BABA), which may rank as the biggest deal ever for some time to come. Hiding in Alibaba’s shadow is another historic IPO that occurred exactly two months later. The $2.6 billion offering for Paramount Group, Inc. (NYSE: PGRE) is the biggest deal in the history of real estate investment trusts, or REITs. Prior to Paramount’s debut, Douglas Emmett, Inc. (NYSE: DEI) set the record in 2006 by raising $1.6 billion. While Paramount Group — and other REITs — won’t deliver the meteoric growth rates of tech stocks like Alibaba, they do represent a chance to own hard, stable assets that fare well in a range of economic climates. Paramount’s IPO has performed moderately well since it went public, but investors are coming to term with the fact that it offers a tepid 2.1% dividend yield. That figure lags the 3.1% yield for the MSCI U.S. REIT index, a broad indicator of the domestic real… Read More