Investing Basics

The acquisition of wealth is paramount to our financial futures. Most Americans have historically depended on home ownership for accumulation of wealth, the recent crisis notwithstanding. But most people don’t realize that there’s a better way. One of the greatest… Read More

Five weeks into 2011, and investors are looking at their first bona fide bubble of 2011. All that money sloshing around global markets, led by the Federal Reserve’s massive easing policy, was bound to start igniting various speculative asset classes. Gold surely looked frothy in 2010, and in 2011, it’s copper that’s looking bubble-icious.     You have to take a 15-year look at copper prices to understand just how crazy the current market looks. For a decade up until 2005, copper usually traded for $75 to $100 a pound. That price reflected a nice equilibrium… Read More

Five weeks into 2011, and investors are looking at their first bona fide bubble of 2011. All that money sloshing around global markets, led by the Federal Reserve’s massive easing policy, was bound to start igniting various speculative asset classes. Gold surely looked frothy in 2010, and in 2011, it’s copper that’s looking bubble-icious.     You have to take a 15-year look at copper prices to understand just how crazy the current market looks. For a decade up until 2005, copper usually traded for $75 to $100 a pound. That price reflected a nice equilibrium between supply and demand. It was also a period of steadily declining output of copper, as second-tier and third-tier mines were hard-pressed to make money. China changed the whole dynamic. As its economy started to take off during the past decade, demand for copper, which is used in many industrial and construction applications, soared, pushing prices up above the $300 mark in 2006, 2007 and 2008. Although copper prices eventually cooled, China learned its lesson. The next time copper prices took off, China would have ample supplies on hand to draw upon… Read More

Another day, another gain. That’s been the story for the S&P 500 lately, which has rallied higher in 12 of the last 15 trading sessions since January 20. As they say, “this bull has legs.” A rising market is surely enjoyable, but the higher it moves, the greater the chance that profit-taking will be just around the corner. That may happen when market strategists begin to talk about stocks becoming expensive when measured by traditional metrics. So here are four items I watch to see if the bull can keep running… 1. Money pouring… Read More

Another day, another gain. That’s been the story for the S&P 500 lately, which has rallied higher in 12 of the last 15 trading sessions since January 20. As they say, “this bull has legs.” A rising market is surely enjoyable, but the higher it moves, the greater the chance that profit-taking will be just around the corner. That may happen when market strategists begin to talk about stocks becoming expensive when measured by traditional metrics. So here are four items I watch to see if the bull can keep running… 1. Money pouring into domestic stock funds — POSITIVE The direction of the stock market is simply a function of supply and demand. When fund managers are given more money to work with, they put it into stocks, pushing share prices up. And they got plenty of firepower last quarter, bringing $45.5 billion, according to Lipper Fund Services. (90% of that went to actively-managed funds and the rest went to exchange-traded funds, or ETFs.) That was more than funds took in for the first three quarters of 2010. And the spigot keeps flowing. In the past two weeks (ended… Read More

When a company is in deep distress, its board of directors is willing to take big chances. Acknowledging that its legacy Internet access business would soon stop throwing off gobs of cash, AOL (NYSE: AOL) handed the reins to Tim Armstrong, a thirty-something Google (Nasdaq: GOOG) veteran. He pitched a radical vision to the board: amass a broad roster of experienced journalists, develop a wide range of segment-leading websites, and watch the ad dollars roll in. That plan surely carries risk at a time when online ad rates continue to badly lag ad rates found in other… Read More

When a company is in deep distress, its board of directors is willing to take big chances. Acknowledging that its legacy Internet access business would soon stop throwing off gobs of cash, AOL (NYSE: AOL) handed the reins to Tim Armstrong, a thirty-something Google (Nasdaq: GOOG) veteran. He pitched a radical vision to the board: amass a broad roster of experienced journalists, develop a wide range of segment-leading websites, and watch the ad dollars roll in. That plan surely carries risk at a time when online ad rates continue to badly lag ad rates found in other forms of media. Indeed, the results of Armstrong’s turnaround plan have been unimpressive, but he’s sticking to his guns with a newly-announced acquisition of The Huffington Post. Armstrong is now approaching his two-year anniversary with AOL, and two years hence, the deal to acquire Huffington Post will be looked back as a make-or-break moment for the company. Let’s peer into the future to see how it will play out. No choice Doing nothing was not an option for AOL’s board. Sales had fallen 47% in the two years before Armstrong arrived, though they… Read More