Last week, I read a paper called “How the Wealth Was Won: Factor Shares as Market Fundamentals.” For a slightly wonky student of the markets like me, this paper is the equivalent of a horror movie.  It’s a rather technical paper, and I won’t bore you with all the details. But for those who’d like to really dive in to all the math and details, the paper can be found here. This paper explained why the profit margin contraction I wrote about last week is a long-term problem for investors. Data in the paper confirmed my view… Read More

Last week, I read a paper called “How the Wealth Was Won: Factor Shares as Market Fundamentals.” For a slightly wonky student of the markets like me, this paper is the equivalent of a horror movie.  It’s a rather technical paper, and I won’t bore you with all the details. But for those who’d like to really dive in to all the math and details, the paper can be found here. This paper explained why the profit margin contraction I wrote about last week is a long-term problem for investors. Data in the paper confirmed my view that the future for investors is much different than what investors have come to believe is normal based on their experience of the past few decades.  —Recommended Link— [Free Webinar] The Secret to Making $125,000 In a Year On May 9th at 1 p.m. investing legend Jim Fink is going to share four ways to tap the market for gains of 114%, 211%, 246% and 433%. Sometimes in as little as 36 hours. His new system is so powerful, we’re promising anyone who uses it will have the opportunity to make $125,000 in the next… Read More

April showers bring May flowers.  As with most proverbs, this one should not be taken literally. Ostensibly about the weather, the wisdom of this saying goes much deeper: it shows a cause-and-effect relationship, with an inevitable conclusion that good things often follow (and even result from) things less pleasant.  Case in point: The market’s first-quarter rally that was preceded by fourth-quarter volatility.  —Recommended Link— Little-Known Gov’t-Backed “Paychecks” Deliver $65,572 Extra Per Year Ordinary Americans are collecting $8,760… $16,771… and even $65,572 in checks every year. Now, this little-known program is set to deliver even bigger… Read More

April showers bring May flowers.  As with most proverbs, this one should not be taken literally. Ostensibly about the weather, the wisdom of this saying goes much deeper: it shows a cause-and-effect relationship, with an inevitable conclusion that good things often follow (and even result from) things less pleasant.  Case in point: The market’s first-quarter rally that was preceded by fourth-quarter volatility.  —Recommended Link— Little-Known Gov’t-Backed “Paychecks” Deliver $65,572 Extra Per Year Ordinary Americans are collecting $8,760… $16,771… and even $65,572 in checks every year. Now, this little-known program is set to deliver even bigger payments… up to a staggering $225,326. It’s your turn to get started collecting. Click here to learn how to collect your first check. And what a rally it’s been… The S&P 500 index has already rebounded 17% year-to-date, and it’s now trading just points off its all-time highs. These are the levels many observers expected by year-end 2019, not by April, and it took many by surprise that it has only taken this market four months to deliver 12 months-worth of returns.  But is it a good or a bad thing that the market has rallied… Read More

Two and twenty… that’s the typical fees that hedge funds charge. With this fee structure, it means that they charge a flat 2% of total assets as a management fee and an additional 20% of any profits earned. There’s a good reason that hedge funds can charge this much, and that’s because they usually earn outsized returns for their investors. Of course, that’s not always the case. Just as with us regular investors, hedge funds go through rough patches.  For instance, Bill Ackman’s Pershing Square Holdings has lost money in the previous three years (he’s since turned that around and… Read More

Two and twenty… that’s the typical fees that hedge funds charge. With this fee structure, it means that they charge a flat 2% of total assets as a management fee and an additional 20% of any profits earned. There’s a good reason that hedge funds can charge this much, and that’s because they usually earn outsized returns for their investors. Of course, that’s not always the case. Just as with us regular investors, hedge funds go through rough patches.  For instance, Bill Ackman’s Pershing Square Holdings has lost money in the previous three years (he’s since turned that around and is doing quite well so far this year). And David Einhorn’s Greenlight Capital (Nasdaq: GLRE) has greatly underperformed over the last three years. The investing environment hasn’t been easy on hedge funds over the last couple of years. Since 2017, more than 16 hedge funds have returned money to investors and closed their doors. One such hedge funder, Whitney Tilson, who folded his fund in September 2017, talked about the biggest mistakes that lead him to close his doors.  And I was shocked by what he said… #-ad_banner-#First, you must understand that Tilson ran a long/short hedge fund, with an… Read More

In case any investor needed a reminder about the importance of value, we can look at Lyft’s initial public offering.  Last Friday, Lyft began trading to great fanfare. It opened significantly higher that day, delivering large gains to some of Wall Street’s biggest investors. That’s how IPOs often work.  #-ad_banner-#​How IPOs Work In an IPO, in general, we can say that the company sells shares to Wall Street. Specifically, early investors in the company and insiders are selling shares to large Wall Street firms. The sellers are doing so, at least in part, because they want to cash out. Read More

In case any investor needed a reminder about the importance of value, we can look at Lyft’s initial public offering.  Last Friday, Lyft began trading to great fanfare. It opened significantly higher that day, delivering large gains to some of Wall Street’s biggest investors. That’s how IPOs often work.  #-ad_banner-#​How IPOs Work In an IPO, in general, we can say that the company sells shares to Wall Street. Specifically, early investors in the company and insiders are selling shares to large Wall Street firms. The sellers are doing so, at least in part, because they want to cash out. This indicates the company is potentially overvalued.  Initial buyers of the stock receive their shares after the close the day before the stock begins trading. They are large customers of the firms handling the IPO. There are two reasons for that…  One is simply efficiency. It’s easier to allocate shares to buyers asking for hundreds of thousands of shares than to individuals asking for less than 100 shares.  The second reason is based on the fact that the share price is expected to rise when trading starts. Investors who got their shares the day before will enjoy an immediate gain. Read More

Loss aversion is a real thing. Whether it’s a game of Monopoly, a friendly bet, or a heated argument, people hate to lose. Entire businesses and industries are predicated not only on the excitement of winning but also on our innate desire to win back whatever we might just have lost. This isn’t just because humans are a competitive bunch. (Though many of us are.) It’s also because, psychologically, we perceive losses much more powerfully than gains. Psychologists know that, for most people, pain associated with losing something is about twice as powerful as the pleasure related to gaining the… Read More

Loss aversion is a real thing. Whether it’s a game of Monopoly, a friendly bet, or a heated argument, people hate to lose. Entire businesses and industries are predicated not only on the excitement of winning but also on our innate desire to win back whatever we might just have lost. This isn’t just because humans are a competitive bunch. (Though many of us are.) It’s also because, psychologically, we perceive losses much more powerfully than gains. Psychologists know that, for most people, pain associated with losing something is about twice as powerful as the pleasure related to gaining the same thing. As a famous quote from social science giants Amos Tversky and Daniel Kahneman goes, “Losses loom larger than gains.” Losing $100 feels worse than making $100 feels good. The concept of loss aversion, therefore, is particularly relevant to investing. The fear of losing can overwhelm our other logic-based thoughts when making a decision to sell a stock at a loss. Anything that hinders objectivity and logic shouldn’t be such a large component of our decision-making process — but, after all, we are human. That’s why I want to focus on minimizing the impact of this powerful loss-aversion factor. Read More

David Tran arrived in Los Angles from Vietnam in 1978 with no job and broken English. Yet, he was determined to achieve the “American Dream.” And he did just that… creating a brand that is now recognizable across the United States.  More impressively, Tran accomplished this without hiring a single salesperson or spending a cent on advertising. Even today, his company doesn’t have a Twitter (Nasdaq: TWTR) handle or Facebook (Nasdaq: FB) account.  —Recommended Link— The Most Underrated Wealth-Building Move in History Wall Street pretty much ignores it. but more than 150 years of data prove that doing this… Read More

David Tran arrived in Los Angles from Vietnam in 1978 with no job and broken English. Yet, he was determined to achieve the “American Dream.” And he did just that… creating a brand that is now recognizable across the United States.  More impressively, Tran accomplished this without hiring a single salesperson or spending a cent on advertising. Even today, his company doesn’t have a Twitter (Nasdaq: TWTR) handle or Facebook (Nasdaq: FB) account.  —Recommended Link— The Most Underrated Wealth-Building Move in History Wall Street pretty much ignores it. but more than 150 years of data prove that doing this beats every other investment approach hands down. By a LOT. An investor using this trick turned $10,000 into $1,568,157. But another one who didn’t ended up with just $161,054. And they both invested in the exact same stocks. You can get started with one mouse click. Take care of it here. It only takes a minute. You might not be familiar with Tran’s company, Huy Fong Foods, but you’ve probably come across his product in the red (or rather, clear) bottle with a green cap, sporting a rooster on the front. If you’re still at a loss, I’m referring to the… Read More

There are two big stories to watch in the stock market right now. One involves the Federal Reserve… …and the other involves Lyft, Uber, Pinterest, and other tech companies expected to complete initial public offerings (IPOs) in the near future. First, let’s look at the Fed, which recently announced some changes in their outlook. Story #1: The Fed Just three months ago, their forecast indicated we should expect two more interest rate hikes before the end of 2019. Last week, that changed, and the forecast now is for no additional rate hikes this year. Read More

There are two big stories to watch in the stock market right now. One involves the Federal Reserve… …and the other involves Lyft, Uber, Pinterest, and other tech companies expected to complete initial public offerings (IPOs) in the near future. First, let’s look at the Fed, which recently announced some changes in their outlook. Story #1: The Fed Just three months ago, their forecast indicated we should expect two more interest rate hikes before the end of 2019. Last week, that changed, and the forecast now is for no additional rate hikes this year. That indicates the Fed believes the economy will slow, and their forecasts for economic growth confirmed that. GDP is now expected to grow 2.1% this year, a cut of 0.2% from the December forecast. The Fed also announced changes to its plans for drawing down its balance sheet. During the financial crisis, the Fed’s balance sheet increased from less than $1 trillion to more than $4 trillion. In the past year, they have been selling off assets to bring the balance sheet down to a normal level. They had been selling $50 billion worth of securities a month. Read More

You know you’ve stumbled across something good when other financial publishing outlets begin using it.  It is a bit of a catch-22, however, because on the one hand it’s an idea that we here at StreetAuthority developed and made popular, but don’t get credit for… On the other hand, imitation is the sincerest form of flattery. To be sure, it’s not as if we developed an iPhone model that every other competitor began mimicking, or some other ground-breaking technology. We simply came up with giving a sound, time-tested way of investing, a couple of catchy phrases. They aren’t proprietary, trademarked… Read More

You know you’ve stumbled across something good when other financial publishing outlets begin using it.  It is a bit of a catch-22, however, because on the one hand it’s an idea that we here at StreetAuthority developed and made popular, but don’t get credit for… On the other hand, imitation is the sincerest form of flattery. To be sure, it’s not as if we developed an iPhone model that every other competitor began mimicking, or some other ground-breaking technology. We simply came up with giving a sound, time-tested way of investing, a couple of catchy phrases. They aren’t proprietary, trademarked or patented. Nor should they be. But now, whenever I come across them on the Web, I simply smile and know that the history behind these popular headlines and marketing commentary all started here. You see, we’ve published thousands of in-depth research reports. Everything from high-dividend payers, game-changing innovations, top tech stocks, best plays in emerging markets — you name it, we’ve told you how to profit from it. But there are two pieces of research that have spread like wildfire since we first began publishing them over a decade ago. In fact, I hardly even mention or use the… Read More

Once again, an old-school company fails to keep up. Or just fails. General Electric (NYSE: GE), which just a month or so ago seemed to be out of the woods after two years of declining earnings and dividend cuts, just warned investors of another year of lower profits and forecasted that its industrial operations — formerly its bread and butter — could be up to $2 billion cash-flow negative this year. Just a month ago, the market was cheering GE’s decision to sell one of its important assets, the company’s biopharma unit, to Danaher (NYSE: DHR) for $21.4 billion. The… Read More

Once again, an old-school company fails to keep up. Or just fails. General Electric (NYSE: GE), which just a month or so ago seemed to be out of the woods after two years of declining earnings and dividend cuts, just warned investors of another year of lower profits and forecasted that its industrial operations — formerly its bread and butter — could be up to $2 billion cash-flow negative this year. Just a month ago, the market was cheering GE’s decision to sell one of its important assets, the company’s biopharma unit, to Danaher (NYSE: DHR) for $21.4 billion. The deal is expected to close in the fourth quarter. But the proceeds won’t be reinvested in the business. Rather, the proceeds will be used to reduce GE’s enormous debt. At year-end, GE had $108 billion in debt (almost as much as it had taken in revenue during the entire year, which was $121.6 billion). ​ The decision to reduce debt is the right one. The size of a company’s debt matters, especially when business suddenly slows. Too much debt can often lead to bankruptcy — even in a strong economy like ours today, let alone in leaner times. But when… Read More

The ongoing situation with Boeing (NYSE: BA) is important for investors to watch.  As you probably know, on Sunday, March 10, a Boeing 737 MAX 8 aircraft crashed just six minutes after takeoff in Ethiopia, killing all 157 passengers and crew aboard.  Authorities have begun investigating the cause of the crash, which was the second crash involving that particular model within the span of several months. In the meantime, a number of countries issued orders to ground the Boeing model, with the U.S. following suit on Wednesday.  Safety concerns about the airplane maker’s 737 MAX aircraft are a tragedy, and… Read More

The ongoing situation with Boeing (NYSE: BA) is important for investors to watch.  As you probably know, on Sunday, March 10, a Boeing 737 MAX 8 aircraft crashed just six minutes after takeoff in Ethiopia, killing all 157 passengers and crew aboard.  Authorities have begun investigating the cause of the crash, which was the second crash involving that particular model within the span of several months. In the meantime, a number of countries issued orders to ground the Boeing model, with the U.S. following suit on Wednesday.  Safety concerns about the airplane maker’s 737 MAX aircraft are a tragedy, and I don’t have any intention of minimizing them. And we don’t have a clear idea of just how much this will affect Boeing just yet. But from an investment perspective, history shows that problems in a single company can spark a significant decline in an overvalued market. Let me explain… #-ad_banner-#Historic examples include the October 1989 market crash that followed the collapse of a leveraged buyout deal for United Airlines. That crash was small, with the S&P 500 falling a little more than 6% that day, but the deal’s collapse showed traders that buyouts were risky. The news pushed prices down… Read More