Short sellers get a bad rap. They are often villainized by the media for “ganging up” on troubled companies or even causing market crashes.  There is little evidence to support the latter, though, and the truth is short sellers are a necessary part of the market. They help provide liquidity and keep overpriced stocks in check.  #-ad_banner-#I don’t know about you, but I’m not content only making profits on the upside. There is an extraordinary amount of money to be made on the downside, especially in a market like this. But when you short a stock, you risk an unlimited… Read More

Short sellers get a bad rap. They are often villainized by the media for “ganging up” on troubled companies or even causing market crashes.  There is little evidence to support the latter, though, and the truth is short sellers are a necessary part of the market. They help provide liquidity and keep overpriced stocks in check.  #-ad_banner-#I don’t know about you, but I’m not content only making profits on the upside. There is an extraordinary amount of money to be made on the downside, especially in a market like this. But when you short a stock, you risk an unlimited loss for a limited gain. I’m a probability guy, and I don’t like those odds.  Plus, there is a strategy for profiting when stocks fall that offers limited risk and substantial (though not quite unlimited) gains. Given that, I’m not sure why anyone would choose to short stocks.  Now, my strategy involves options, another area of the market that gets a bad rap. But unlike short selling, options — when used properly — can actually help limit your risk.  Today, I want to cover how to use basic put options to profit as stocks fall. To do so, I’m going… Read More

It’s one of the most frustrating things an investor can experience: Thanks to some supposed global calamity in the making, the stock market enters a period of insane volatility. Each tiny bit of news is parsed by the financial media, and then the major indices swing wildly — sometimes even in direct conflict with the “goodness” or “badness” of the news itself.  After a few months of this — and more than a few sleepless nights — you check your computer screen to find the stocks in your portfolio are right back where they were before. #-ad_banner-#It’s times like this… Read More

It’s one of the most frustrating things an investor can experience: Thanks to some supposed global calamity in the making, the stock market enters a period of insane volatility. Each tiny bit of news is parsed by the financial media, and then the major indices swing wildly — sometimes even in direct conflict with the “goodness” or “badness” of the news itself.  After a few months of this — and more than a few sleepless nights — you check your computer screen to find the stocks in your portfolio are right back where they were before. #-ad_banner-#It’s times like this that can lead an investor to ask:  “Is all of this worry even worth it?” If you can identify with that feeling, then believe me when I tell you I understand. We’ve all been there. But what if I told you that you didn’t have to settle for this? It just so happens that these times of great market volatility are prime-time for one of the safest, most reliable ways around to earn extra income. And what’s more, you don’t even necessarily have to be “right” about the stocks you pick… I personally can’t think of a better strategy for… Read More

Investing is always about fear and greed.  And as we’ve all been witnessing over the last few weeks, fear has the upper hand right now, as U.S. stocks got off to their worst start in seven years.  #-ad_banner-#Despite a strong rally during the last few days January, the S&P 500 finished the month with a 5.1% decline. The Dow Jones Industrial Average fell 5.5%. The Nasdaq Composite dropped 7.9% — its worst performance since May 2010.  That kind of short-term volatility has lots of investors reaching for the Maalox. If you’re anxious about what lies ahead, you’re not alone. But… Read More

Investing is always about fear and greed.  And as we’ve all been witnessing over the last few weeks, fear has the upper hand right now, as U.S. stocks got off to their worst start in seven years.  #-ad_banner-#Despite a strong rally during the last few days January, the S&P 500 finished the month with a 5.1% decline. The Dow Jones Industrial Average fell 5.5%. The Nasdaq Composite dropped 7.9% — its worst performance since May 2010.  That kind of short-term volatility has lots of investors reaching for the Maalox. If you’re anxious about what lies ahead, you’re not alone. But keep reading, because I can help. I’m about to show you three ways you can actually profit during this current market pullback — and well beyond.  In fact, I’m going to show you how you could have collected $7,690 in profits from the last official market correction back in August, and how you could already have locked in $1,550 during January’s market dive — all with minimal risk.  Pullback Profit Strategy #1: Make Your Investments ‘Plunge Proof’ Imagine there’s a stock you really want to own, but market volatility is making you nervous about what price you’d be paying. Read More

Many investors are familiar with Buffett’s famous holding of Coca-Cola (NYSE: KO). He began buying shares in 1988. At the time, Buffett said he expected to hang on to this “outstanding business” for “a long time.” And over the ensuing years, he continued to build his position in the iconic company. Today, Coca-Cola is one of Buffett’s largest holdings. As of February 19, Berkshire Hathaway owned 400 million shares of Coca-Cola, valued at roughly $17.2 billion. That’s nearly a fifth of the company’s equity portfolio. #-ad_banner-#But what many investors don’t know is the story… Read More

Many investors are familiar with Buffett’s famous holding of Coca-Cola (NYSE: KO). He began buying shares in 1988. At the time, Buffett said he expected to hang on to this “outstanding business” for “a long time.” And over the ensuing years, he continued to build his position in the iconic company. Today, Coca-Cola is one of Buffett’s largest holdings. As of February 19, Berkshire Hathaway owned 400 million shares of Coca-Cola, valued at roughly $17.2 billion. That’s nearly a fifth of the company’s equity portfolio. #-ad_banner-#But what many investors don’t know is the story about when Buffett used options on Coca-Cola. That’s right. The king of buy-and-hold uses options. More importantly, it’s the way Buffett used options in the case of Coca-Cola — which happens to be a safe, conservative way — that too many investors often ignore… In 1993, Coca-Cola was trading around $39 per share. Buffett, always the bargain hunter, believed that was too pricey. But the billionaire wasn’t content to passively wait for the stock to fall to his preferred price. Instead, he decided to use a simple options strategy that eventually… Read More

In addition to huge daily swings, 2016 has been characterized by a flight to safety as the markets sharply corrected in the first few weeks of the new year.  Even though stocks have regained some of those losses in the past few weeks, the only sectors to show year-to-date gains are defensive utilities and consumer staples. In fact, the stampede to safety has pushed the latter to multiyear highs and lofty valuations. If the economic landscape is not as dire as many investors think in 2016 — and I don’t think it will be — we… Read More

In addition to huge daily swings, 2016 has been characterized by a flight to safety as the markets sharply corrected in the first few weeks of the new year.  Even though stocks have regained some of those losses in the past few weeks, the only sectors to show year-to-date gains are defensive utilities and consumer staples. In fact, the stampede to safety has pushed the latter to multiyear highs and lofty valuations. If the economic landscape is not as dire as many investors think in 2016 — and I don’t think it will be — we have a chance to capitalize on our fellow investors’ irrationality with a trade that could land you 78%. #-ad_banner-# How Much Are You Willing To Pay For Safety? I compiled the weekly returns of the Consumer Staples Select Sector SPDR ETF (NYSE: XLP) going back to its launch in 1998. Between Nov. 16 and Feb. 8, XLP outperformed the S&P 500 for 12 consecutive weeks, which has never happened before in the history of the fund. In addition to the recent rush to safety, the sector has benefited for years from yield-seeking investors leaving lower payouts in… Read More

The economy has been growing, albeit slowly, over the past six years, and the biggest banks have managed to survive and even thrive in some cases. But there’s a canary in the coal mine that’s giving me pause… one that no one is talking about. #-ad_banner-# Looking back at the recovery, I noticed an eerie phenomenon that could foretell the future for large banks. According to the Federal Deposit Insurance Corporation (FDIC), more than 455 banks have collapsed since the Great Recession… Read More

The economy has been growing, albeit slowly, over the past six years, and the biggest banks have managed to survive and even thrive in some cases. But there’s a canary in the coal mine that’s giving me pause… one that no one is talking about. #-ad_banner-# Looking back at the recovery, I noticed an eerie phenomenon that could foretell the future for large banks. According to the Federal Deposit Insurance Corporation (FDIC), more than 455 banks have collapsed since the Great Recession ended in June 2009. Depending on how closely you follow the banking sector, that may or may not seem like an astronomical number. So let me put it into context for you: In the six years before the recession began, there were 21 bank failures, and during the recession, only 70 banks went under. You’d think it would be the other way around, with the recession taking out all the weak banks and the recovery helping to keep closures at a minimum. At the very least, you’d expect a healthy recovery to spur new bank charters, but that hasn’t been… Read More

The roughly 70% drop in oil prices in less than two years has claimed many victims. The economies of entire countries such as Nigeria and Venezuela have been devastated. Shale oil boom towns like Fargo, N.D., have gone bust.  Shares of many energy companies have been decimated — some even to the point where it is probably too late to short them. For instance, stocks like Chesapeake Energy (NYSE: CHK) and Whiting Petroleum (NYSE: WLL) have lost more than 90% of their value since oil’s peak and now trade in the low single digits. However, one group has only recently… Read More

The roughly 70% drop in oil prices in less than two years has claimed many victims. The economies of entire countries such as Nigeria and Venezuela have been devastated. Shale oil boom towns like Fargo, N.D., have gone bust.  Shares of many energy companies have been decimated — some even to the point where it is probably too late to short them. For instance, stocks like Chesapeake Energy (NYSE: CHK) and Whiting Petroleum (NYSE: WLL) have lost more than 90% of their value since oil’s peak and now trade in the low single digits. However, one group has only recently begun to feel the heat from the plunge in crude: Canadian banks, which have significant exposure to oil and gas.   Of the six major banks in Canada, the one that looks the most vulnerable is The Bank of Nova Scotia (NYSE: BNS). #-ad_banner-# Commonly known as Scotiabank, it is the third largest bank in Canada, with assets of C$856 billion ($639 billion USD) at the end of fiscal 2015 (Oct. 31). The bank provides financial services to 23 million customers in more… Read More

There seem to be two kinds of investors right now: those who believe the next bear market is here and ready to destroy trillions of dollars in wealth, and those who proclaim every up day in the market is the end of the pullback.  #-ad_banner-#This is largely the fault of the financial media, with bombastic bloviators shouting over each other on television and giving the impression that action is required right now. If you don’t stay glued to the TV you might miss the start of the next bull market or get mauled by the bear! Really, nothing could be… Read More

There seem to be two kinds of investors right now: those who believe the next bear market is here and ready to destroy trillions of dollars in wealth, and those who proclaim every up day in the market is the end of the pullback.  #-ad_banner-#This is largely the fault of the financial media, with bombastic bloviators shouting over each other on television and giving the impression that action is required right now. If you don’t stay glued to the TV you might miss the start of the next bull market or get mauled by the bear! Really, nothing could be further from the truth. The argument that we are experiencing a pullback during a long-term bull market is difficult to make. I believe the bull market quietly died of old age sometime in the past year.  As we see on the chart below, stocks moved steadily higher from their bottom in March 2009 through July 2015, a six-year run. But the market has made little progress since the end of 2014. It has formed what looks to be an extended topping pattern and trended down since summer. Still, this doesn’t mean you need to panic.  According to a… Read More

The Chinese government thought it could outwit investors and foreign governments with its overblown economic growth figures, currency manipulation and complex market meddling… but the country’s game of smoke and mirrors is finally coming to an end. Bearish bets are piling up, and it’s only a matter of time before the house of cards comes tumbling down.  #-ad_banner-#My subscribers and I watched — and profited — as the country’s stock market collapsed in 2015. Here’s how we’ll profit again from a similar situation… China’s currency, the yuan, has been on the decline against the dollar and other currencies for some… Read More

The Chinese government thought it could outwit investors and foreign governments with its overblown economic growth figures, currency manipulation and complex market meddling… but the country’s game of smoke and mirrors is finally coming to an end. Bearish bets are piling up, and it’s only a matter of time before the house of cards comes tumbling down.  #-ad_banner-#My subscribers and I watched — and profited — as the country’s stock market collapsed in 2015. Here’s how we’ll profit again from a similar situation… China’s currency, the yuan, has been on the decline against the dollar and other currencies for some time. The currencies of weak countries can lose a tremendous amount of value relative to the currencies of countries with strong economies and less “accommodating” monetary policies (like the United States). Perhaps the most ironic piece of this story is the fact that, for years, the Chinese government purposefully kept the yuan artificially weak relative to other currencies in order to stoke its export market and drive competition away. A relatively cheap currency is good for exports because countries with relatively stronger currencies — like the United States — can afford to buy more goods. Big exporting countries like China… Read More

The market logged one of the worst starts to a year with the S&P 500 down more than 5% in January. This doesn’t bode well for the rest of 2016. According to the Stock Trader’s Almanac, a win or loss in January has accurately predicted the course of the year more than 75% of the time. Whether or not you believe in the so-called “January Effect,” there’s a lot working against the bulls. Namely, revenues for companies in the S&P 500 have declined for four consecutive quarters, and we have gotten confirmation of an earnings recession with two quarters of… Read More

The market logged one of the worst starts to a year with the S&P 500 down more than 5% in January. This doesn’t bode well for the rest of 2016. According to the Stock Trader’s Almanac, a win or loss in January has accurately predicted the course of the year more than 75% of the time. Whether or not you believe in the so-called “January Effect,” there’s a lot working against the bulls. Namely, revenues for companies in the S&P 500 have declined for four consecutive quarters, and we have gotten confirmation of an earnings recession with two quarters of declining profits. #-ad_banner-#Much of this is being blamed on the stronger U.S. dollar, which makes foreign sales worth less. In the past two years, the euro has lost 20% of its value against the dollar. This means that an American company that sold $1 million worth of goods in Europe in 2014 is now getting just $800,000 for those same sales. To maintain the same level of profitability, companies could increase the price of goods. So, the same iPhone that cost 500 euros in 2014 would now cost 625 euros. This kind of price increase usually turns off customers, though,… Read More