There’s an old saying that trees don’t grow to the sky. In other words, there is a natural limit to growth. In the case of a tree, maybe the tree’s structure makes it impossible for nutrients to reach above a certain height. As with so many sayings, this one is often applied to the stock market. For example, companies cannot continue growing earnings at 100% per year forever. There is a natural limit to a company’s growth. The same is true for stock prices. I think of this old saying whenever I see a long streak of up or down… Read More

There’s an old saying that trees don’t grow to the sky. In other words, there is a natural limit to growth. In the case of a tree, maybe the tree’s structure makes it impossible for nutrients to reach above a certain height. As with so many sayings, this one is often applied to the stock market. For example, companies cannot continue growing earnings at 100% per year forever. There is a natural limit to a company’s growth. The same is true for stock prices. I think of this old saying whenever I see a long streak of up or down closes. In the chart below, you can see that the S&P 500 has closed higher for eight weeks in a row.  This is not unprecedented. There have been 30 previous instances when a streak lasted at least eight weeks. The longest winning streak on record is only 12 weeks.  So, we know the current streak will end. But what does history tell us about this scenario? When is it likely to end? And what happens after that? To help answer that question, I ran some tests to see what’s happened in the past. The results are summarized in the table… Read More

For the fourth time since this market selloff began in October, the S&P 500 has successfully broken above its 200-day moving average (MA).  If you’ve been following along with my recent commentary, then you know I’ve weighed in on this simple indicator several times in the past few weeks, due to its psychological significance. The first three crosses (all during the last few months of 2018) are marked by arrows in the chart below. Each breakthrough was short lived, and selling pressure quickly pushed prices back below the MA. Which brings me to this week’s question: Will Friday’s breakthrough be… Read More

For the fourth time since this market selloff began in October, the S&P 500 has successfully broken above its 200-day moving average (MA).  If you’ve been following along with my recent commentary, then you know I’ve weighed in on this simple indicator several times in the past few weeks, due to its psychological significance. The first three crosses (all during the last few months of 2018) are marked by arrows in the chart below. Each breakthrough was short lived, and selling pressure quickly pushed prices back below the MA. Which brings me to this week’s question: Will Friday’s breakthrough be any different?  —Recommended Link— 9 Game-Changing Predictions for 2019 Want to know where the money will be in 2019? Discover over a dozen potentially life-changing recommendations inside our special new report, 9 Game-Changing Investment Predictions for 2019. Click here for the full details now. ​To answer that question, we need to consider how the rally compares to the overall decline. The decline, which lasted 65 trading days, was sharp. The S&P 500 fell 20.2% from its intraday high on September 21 to its intraday low on the day after Christmas.  Through Friday, this most recent recovery has lasted 35 trading… Read More

We’re barely a month into 2019, but the 2020 election season is already in full swing.  Personally, I don’t have any opinion on the candidates who have thrown their hat into the ring (other than that I’m not sure we need politicians running for president almost two years before the election, but that seems to be the current system).  Over the next two years, many political commentaries will focus on whether we can afford the programs candidates propose. Some will argue that deficits are already too high and adding trillions in spending will push them even higher.  Once upon a… Read More

We’re barely a month into 2019, but the 2020 election season is already in full swing.  Personally, I don’t have any opinion on the candidates who have thrown their hat into the ring (other than that I’m not sure we need politicians running for president almost two years before the election, but that seems to be the current system).  Over the next two years, many political commentaries will focus on whether we can afford the programs candidates propose. Some will argue that deficits are already too high and adding trillions in spending will push them even higher.  Once upon a time, governments were expected to balance their budgets, but then economist John Maynard Keynes realized that governments could stimulate growth by running deficits when the economy contracted. Keynes also suggested running a surplus to offset the deficits when the economy was expanding, but politicians seem to have forgotten about that part of his work. If they followed that advice, deficits would rise and fall, and, in the long run, the government’s budget would be balanced (in theory).  That theory illustrates the concept of mean reversion, where a value fluctuates above and below its average. Mean reversion has also been applied… Read More

I saw an interesting chart recently that I believe summarizes the current state of the stock market.  Essentially, it shows that U.S. stocks are extremely overvalued compared to the rest of the world.  Why does this matter? And, more importantly, how can we profit? Now, those are the key questions… But first, let’s use what we know as investors to unpack the information.  The chart below shows the cyclically adjusted price-to-earnings (CAPE) ratio for both U.S. and global stocks. It was developed by Nobel Prize-winning economist Dr. Robert Schiller.  —Recommended Link— “It’s like getting 26 paychecks advanced to you in… Read More

I saw an interesting chart recently that I believe summarizes the current state of the stock market.  Essentially, it shows that U.S. stocks are extremely overvalued compared to the rest of the world.  Why does this matter? And, more importantly, how can we profit? Now, those are the key questions… But first, let’s use what we know as investors to unpack the information.  The chart below shows the cyclically adjusted price-to-earnings (CAPE) ratio for both U.S. and global stocks. It was developed by Nobel Prize-winning economist Dr. Robert Schiller.  —Recommended Link— “It’s like getting 26 paychecks advanced to you in ONE LUMP SUM!” Executive Dividends are one of Wall Street’s best-kept secrets, paying out a small fortune in unannounced cash seemingly at random — and today, Nathan Slaughter shows you where to find them. Read more here. ​Source: Global Financial Data via MebFaber.com  Cyclical, in this case, means the indicator measures over 10 years, the amount of time Schiller believes covers an economic cycle. Ben Graham, the father of fundamental analysis (and Warren Buffett’s business school professor), explained the importance of accounting for the economic cycle when calculating earnings. Graham suggested averaging earnings over eight years to account for… Read More

One of the most important lessons I learned during my days in the Army was the KISS principle: Keep it simple, stupid. Outside of the military, one of the greatest minds of all time believed in the KISS philosophy, but Albert Einstein expressed the idea in more poetic terms: “Everything should be made as simple as possible, but not simpler.” —Recommended Link— A Hacker’s Guide To Stock Arbitrage… (And Getting Away With $37,000) (All you need is an online brokerage account and your laptop.)  Click here for all the details… I bring that same mindset to investment analysis. I… Read More

One of the most important lessons I learned during my days in the Army was the KISS principle: Keep it simple, stupid. Outside of the military, one of the greatest minds of all time believed in the KISS philosophy, but Albert Einstein expressed the idea in more poetic terms: “Everything should be made as simple as possible, but not simpler.” —Recommended Link— A Hacker’s Guide To Stock Arbitrage… (And Getting Away With $37,000) (All you need is an online brokerage account and your laptop.)  Click here for all the details… I bring that same mindset to investment analysis. I want every process to be as simple as possible, but not so simple that I’m leaving out anything important. While I have spent a great deal of time studying complex investment techniques, what I discovered is that the KISS principle applies in investment analysis as well as it did in the military. #-ad_banner-#For example, although I look at complex valuation models, the simple PEG ratio consistently identifies undervalued stocks. The PEG ratio compares the price-to-earnings (P/E) ratio to the growth rate of earnings per share (EPS). A stock is considered fairly valued when the PEG ratio is equal to 1,… Read More

The next week will be an interesting week in the stock market. Of course, there’s never any shortage of events that could change the outlook for the market one way or another… But according to a chart of the S&P 500, it looks like we’re at an important technical resistance level. Resistance is an important technical term for a price level where a security’s advance is expected to stall. In other words, it’s a price level where sellers appear, and their actions can often be anticipated. In the chart below, I’ve labeled three factors that are all pointing toward resistance… Read More

The next week will be an interesting week in the stock market. Of course, there’s never any shortage of events that could change the outlook for the market one way or another… But according to a chart of the S&P 500, it looks like we’re at an important technical resistance level. Resistance is an important technical term for a price level where a security’s advance is expected to stall. In other words, it’s a price level where sellers appear, and their actions can often be anticipated. In the chart below, I’ve labeled three factors that are all pointing toward resistance near the S&P 500’s current level around 2,600… 1. The March lows (blue dashed line): Many investors like to buy stocks when they approach previous lows, as it often represents a “safe” bargain price. We saw this in action back in October and November, when stocks fell to their March lows (which then represented “support”) and were met with aggressive buying. However, stocks suffered a rapid loss in December, so anyone who bought at last year’s lows is just getting back to even. From what I’ve observed, many traders tend to sell the moment their positions get back… Read More

Generally, I believe, people are optimistic by nature. Many of us always look for that proverbial silver lining. That is especially true when it comes to investing. Optimism explains the popularity of buy-and-hold investing. Individuals following this model say things like, “Prices always come back.” And, so far, prices in the U.S. stock market have always come back. —Recommended Link— Dear StreetAuthority Reader, I want you to be the FIRST to hear about this. A stock market “hack” we’ve been tweaking is actually working. I’m talking about gains like +20% in 14 days, +83% in 28 days, +64% in… Read More

Generally, I believe, people are optimistic by nature. Many of us always look for that proverbial silver lining. That is especially true when it comes to investing. Optimism explains the popularity of buy-and-hold investing. Individuals following this model say things like, “Prices always come back.” And, so far, prices in the U.S. stock market have always come back. —Recommended Link— Dear StreetAuthority Reader, I want you to be the FIRST to hear about this. A stock market “hack” we’ve been tweaking is actually working. I’m talking about gains like +20% in 14 days, +83% in 28 days, +64% in 48 days, +118% in 86 days…+266% in less than a year. Click here to learn more. But it took 13 years for the S&P 500 index to fully recover from the 2000 bear market. Prices did reach new highs in 2007 but then fell to new lows. It took 11 years to recover after prices peaked in 1968 and 25 years to recover from the 1929 peak. #-ad_banner-#In global markets, the track record is worse. Japanese stocks still remain more than 40% below their 1989 highs. That’s an extreme example but it’s been almost 30 years since Japanese stocks peaked. Read More

About four years ago, our publisher introduced me to a man who knows more about options trading than anyone I’ve ever met. This man is something of a wunderkind. He began trading options at age 16 and quickly found himself making upward of $600,000 a year. Nowadays, you might find him as a regularly featured guest on financial news programs over at CNBC or Fox Business. If you’ve been a regular reader of StreetAuthority Insider, then you probably know who I’m talking about: Jared Levy, Chief Investment Strategist of Profit Amplifier. Now, those of you who have followed… Read More

About four years ago, our publisher introduced me to a man who knows more about options trading than anyone I’ve ever met. This man is something of a wunderkind. He began trading options at age 16 and quickly found himself making upward of $600,000 a year. Nowadays, you might find him as a regularly featured guest on financial news programs over at CNBC or Fox Business. If you’ve been a regular reader of StreetAuthority Insider, then you probably know who I’m talking about: Jared Levy, Chief Investment Strategist of Profit Amplifier. Now, those of you who have followed Jared over the years know that his read on the market is nearly impeccable. That’s thanks to years of experience in the trenches of the high-stakes trading pits in Philadelphia and New York, as well as his sophisticated-yet-simple method of trading. But when Jared came to us with a “crazy hunch” nearly a year ago… we thought he was kidding, or absolutely bonkers. “Is Jared OK?” This question, raised by one of our younger employees around the StreetAuthority offices, was a fair one. He just simply had the stones, or was naïve enough, to ask it out loud. But those… Read More

The super-rich are different from the rest of us. —Recommended Link— This “HIDDEN” Stock Score made us 266%! Developed by an independent advisory firm in Texas… proven through years of use by insiders — now it’s YOUR TURN to start cashing in! Click here to get started. First, many super-rich pay far less a percentage of their income to taxes. Secondly, many super-wealthy individuals pay less for things than regular consumers. Whether this is due to knowledge of the marketplace, inside connections, or simply designers and merchants wanting to get on their good side, these folks know the smart… Read More

The super-rich are different from the rest of us. —Recommended Link— This “HIDDEN” Stock Score made us 266%! Developed by an independent advisory firm in Texas… proven through years of use by insiders — now it’s YOUR TURN to start cashing in! Click here to get started. First, many super-rich pay far less a percentage of their income to taxes. Secondly, many super-wealthy individuals pay less for things than regular consumers. Whether this is due to knowledge of the marketplace, inside connections, or simply designers and merchants wanting to get on their good side, these folks know the smart way to buy.   #-ad_banner-#However, it is not just taxes and buying things that the super-rich approach differently. They also don’t buy stocks the same way ordinary investors do. Believe it or not, billionaire stock market investors often buy shares at a discount or get paid for trying.   In fact, these investors only pay what they have determined to be a discounted price for the stock. If they cannot snap up the share at the discounted price, the market will pay them for trying.   The method is even used by ultra-conservative investor Warren Buffett.  Although Buffett is famous… Read More

My favorite scene in Martin Scorsese’s hit movie “Casino” is when Nicky (Joe Pesci) expounds on Ace’s (Robert De Niro) uncanny knack for picking winners. —Recommended Link— The Tech Boom Begins TODAY Today at 1 p.m. EST, legendary tech investor Dr. Thomas Carr is going… Read More