Most sectors of the S&P 500 have been caught in the market sell-off lately, with all except utilities in the red for the year. #-ad_banner-#The market rout has left one staple of American progress down 12% year to date. But it has been battered, along with its entire sector, for nearly a year. Shares now trade for a 30% discount to their long-term P/E ratio, while numerous catalysts are lining up for a rebound.  Relief On The Horizon For Rail Stocks Weak commodity prices (especially for coal), falling industrial output and strength in the U.S. dollar have taken… Read More

Most sectors of the S&P 500 have been caught in the market sell-off lately, with all except utilities in the red for the year. #-ad_banner-#The market rout has left one staple of American progress down 12% year to date. But it has been battered, along with its entire sector, for nearly a year. Shares now trade for a 30% discount to their long-term P/E ratio, while numerous catalysts are lining up for a rebound.  Relief On The Horizon For Rail Stocks Weak commodity prices (especially for coal), falling industrial output and strength in the U.S. dollar have taken a major toll on railroad stocks. The Dow Jones U.S. Railroads Index has fallen roughly 40% in the past 12 months. Union Pacific (NYSE: UNP) — the No. 1 railroad company in the United States with 32,000 route miles running across 23 states in the western two-thirds of the country — is no exception. Earlier this month, UNP slid 3.5% in one day after it reported dismal fourth-quarter results. While pricing was 3.5% higher year over year, volume sank 9% and earnings per share fell 19%. Shares are now 45% off their 52-week high, set in February, and… Read More

Panic can lead humans to make very poor decisions. In the heat of the moment, we tend to revert to our most basic fight-or-flight instincts. For instance, in a market sell-off, when stocks keep going further and further down, many investors just want the pain to stop… so they sell, locking in a loss but ending the burden of the unknown. Unfortunately, that’s often the worst decision they can make. Stocks usually recover from market panics when investors finally come to their senses. It doesn’t always happen exactly like this, but the point is that panic can send stocks into… Read More

Panic can lead humans to make very poor decisions. In the heat of the moment, we tend to revert to our most basic fight-or-flight instincts. For instance, in a market sell-off, when stocks keep going further and further down, many investors just want the pain to stop… so they sell, locking in a loss but ending the burden of the unknown. Unfortunately, that’s often the worst decision they can make. Stocks usually recover from market panics when investors finally come to their senses. It doesn’t always happen exactly like this, but the point is that panic can send stocks into oversold territory without solid fundamental reasoning. Small-cap stocks are extremely sensitive to market panics and tend to be scapegoats for market stress. That’s what we’re currently seeing in the Russell 2000. The index has already fallen 10% this year, putting it more than 20% below its 52-week high and in extremely oversold territory. #-ad_banner-# While its problems may not be over, I think we’ll get a snapback rally over the next few months that could deliver double-digit profits to those who have the… Read More

The S&P 500 is close to 10% off its 52-week high, while all of its sectors are in the red for the year. Meanwhile, the small-cap Russell 2000 is teetering on the edge of a bear market. Stocks are at a critical point. They could rebound as they have over and over in this seven-year bull market, or we could be facing a major correction. #-ad_banner-#One important piece of data coming out this month could be the straw that breaks the market’s back and sends stocks tumbling. Market Head Fake Or Heading Down? Investors have enjoyed a great… Read More

The S&P 500 is close to 10% off its 52-week high, while all of its sectors are in the red for the year. Meanwhile, the small-cap Russell 2000 is teetering on the edge of a bear market. Stocks are at a critical point. They could rebound as they have over and over in this seven-year bull market, or we could be facing a major correction. #-ad_banner-#One important piece of data coming out this month could be the straw that breaks the market’s back and sends stocks tumbling. Market Head Fake Or Heading Down? Investors have enjoyed a great ride over the past seven years, though it hasn’t all been smooth sailing. The S&P 500 has undergone a 10% correction in three of the past five years. While the market recovered each time, rewarding investors with the guts to stay in, there is good reason to believe we won’t be so lucky this time. On Monday, Alcoa (NYSE: AA) kicked off the unofficial start to the fourth-quarter earnings season. FactSet expects companies in the S&P 500 will show a 5.3% year-over-year decline in profits. If earnings do come in lower, it will be the third consecutive quarter of falling… Read More

Shortly after Chinese stocks tanked last summer (dragging down global markets as well), I warned that the situation in China was much worse than you might think. Spurred by economic worries and the devaluation of the yuan, Chinese stocks were still up more than 40% year-to-date after the selloff. To put it simply, we saw more pain on the horizon. Here’s what my colleague Jared Levy said about the situation back then:         For a number of years, all we heard from government officials was how fast… Read More

Shortly after Chinese stocks tanked last summer (dragging down global markets as well), I warned that the situation in China was much worse than you might think. Spurred by economic worries and the devaluation of the yuan, Chinese stocks were still up more than 40% year-to-date after the selloff. To put it simply, we saw more pain on the horizon. Here’s what my colleague Jared Levy said about the situation back then:         For a number of years, all we heard from government officials was how fast the country was expanding… how quickly the middle class was expanding… how well the economy was performing… But we now know things weren’t as wonderful as they were made out to be. There’s a lot we don’t actually know about what’s going on inside the country’s walls, which has led to confusion over whether the market is cheap or about to tank. Here’s what we do know: 1) Government meddling has propped up China’s stock market. 2) Even as the Chinese stock market has stabilized, economic data… Read More

One of the best income strategies in the world involves a market some investors completely ignore. It allows individual investors to generate income from the best companies in the world without buying stocks most of the time. I’ve been recommending trades in this market for over a year. And so far, the results have been astounding — each of the 105 trades I’ve closed has been a winner. #-ad_banner-#I don’t want to beat around the bush or make this sound like some super-secret investing strategy only I can tell you about. I am talking about selling options. Now, before you… Read More

One of the best income strategies in the world involves a market some investors completely ignore. It allows individual investors to generate income from the best companies in the world without buying stocks most of the time. I’ve been recommending trades in this market for over a year. And so far, the results have been astounding — each of the 105 trades I’ve closed has been a winner. #-ad_banner-#I don’t want to beat around the bush or make this sound like some super-secret investing strategy only I can tell you about. I am talking about selling options. Now, before you decide that you never want to try options trading, let me show you what a recent subscriber to my Income Trader newsletter, which focuses on selling options, had to say about my strategy: “When I first started using [Amber’s] picks, my goal was to earn $500. Then I quickly realized I can earn at least $1,000 per month. I use the profits to buy more… Not only are your picks excellent with low risk, it teaches you to look for other options on your own, which I have done.” — Nathan S., West Long Branch… Read More

If there’s one lesson that stands out among all those I’ve learned in my 20 years of trading, it’s that even the best research, resources and skills can’t guarantee success. When I was coming up as a pit trader, I was fortunate enough to work alongside and learn from some of the best traders that have every played the market. Many generously revealed their favorite metrics and secret tips to finding market trends and picking the best stocks.  #-ad_banner-#But the thing we never talked about was how often or how badly they lost on trades. Unbeknownst to me, this was… Read More

If there’s one lesson that stands out among all those I’ve learned in my 20 years of trading, it’s that even the best research, resources and skills can’t guarantee success. When I was coming up as a pit trader, I was fortunate enough to work alongside and learn from some of the best traders that have every played the market. Many generously revealed their favorite metrics and secret tips to finding market trends and picking the best stocks.  #-ad_banner-#But the thing we never talked about was how often or how badly they lost on trades. Unbeknownst to me, this was a critical part of the equation, and one that most market gurus never address. I remember feeling inadequate because, as hard as I tried, I still couldn’t pick winners 100% of the time. It wasn’t until I became an options market maker that I learned how to add real odds to my trading. As a market marker, I was required to trade hundreds of contracts on a daily basis. For every trade I took, I was trying desperately to time the market so I could gain a sliver of an advantage. One of my competitors, a trader named Brett, noticed… Read More

Think for a moment about a roulette wheel. A novice might note that there are two colors: red and black. This is similar to the binary outcome of a regular stock trade: you bet it will either go up or down. That’s it. But upon closer inspection, there are also a couple of green spots on the wheel. So if you make a bet that the wheel will land on black, you actually have less than a 50% chance of being right. The casino has improved its odds of winning to just over 50%, and is thus… Read More

Think for a moment about a roulette wheel. A novice might note that there are two colors: red and black. This is similar to the binary outcome of a regular stock trade: you bet it will either go up or down. That’s it. But upon closer inspection, there are also a couple of green spots on the wheel. So if you make a bet that the wheel will land on black, you actually have less than a 50% chance of being right. The casino has improved its odds of winning to just over 50%, and is thus guaranteed to win over the long haul. #-ad_banner-#Now imagine if you could play just like the house does… tilting the odds in your favor so that you are practically guaranteed to come out ahead in the long run. That’s exactly what our resident options guru Jared Levy does with his new project we’ve been telling you about for the past couple weeks. Because it has to do with options, many novice investors may think it’s too “risky” or “complicated.” But nothing could be further from… Read More

“Jared Levy is insatiable,” I thought to myself. Between appearances on CNBC, Fox Business, flying his private airplane around the country and helming Profitable Trading’s successful options newsletter, Profit Amplifier, it would be easy for someone in his position to want to take a beat and enjoy the fruits of their labor. But if you know Jared, then you know that simply kicking back is not his style. A few weeks ago, I told our premium subscribers to be on the lookout for details regarding a secret project Jared has been… Read More

“Jared Levy is insatiable,” I thought to myself. Between appearances on CNBC, Fox Business, flying his private airplane around the country and helming Profitable Trading’s successful options newsletter, Profit Amplifier, it would be easy for someone in his position to want to take a beat and enjoy the fruits of their labor. But if you know Jared, then you know that simply kicking back is not his style. A few weeks ago, I told our premium subscribers to be on the lookout for details regarding a secret project Jared has been working on. I couldn’t reveal too much just then — other that it was going to be “big,” according to Profitable Trading’s publisher. Today, I’m pleased to announce that “all systems are go” for Jared’s big reveal. It will officially be launching Friday, December 18. And I promise… you won’t want to miss it. For the first time ever, Jared will be sharing his all-time personal favorite trading strategy — the one responsible for most of his personal fortune. But that’s not all… We’re putting a total of up to $1… Read More

Income investors often use government bond yields as their benchmark. Securities issued by a stable government offer nearly guaranteed income since a government is unlikely to default on its debt. The problem is that government bonds offer so little income right now. U.S. 10-year Treasury notes yield about 2.2%, while Canadian investors are earning just 1.5% on 10-year notes. In Europe, the situation is even worse. Swiss bonds are providing negative yields while bonds issued by Germany, France and the Netherlands are yielding less than 1%. Rates this low will not protect income investors against inflation. The average… Read More

Income investors often use government bond yields as their benchmark. Securities issued by a stable government offer nearly guaranteed income since a government is unlikely to default on its debt. The problem is that government bonds offer so little income right now. U.S. 10-year Treasury notes yield about 2.2%, while Canadian investors are earning just 1.5% on 10-year notes. In Europe, the situation is even worse. Swiss bonds are providing negative yields while bonds issued by Germany, France and the Netherlands are yielding less than 1%. Rates this low will not protect income investors against inflation. The average rate of inflation over the past 100 years, according to InflationData.com, has been 3.22%. When inflation is greater than the interest rate, consumers lose buying power. #-ad_banner-# While the Federal Reserve is likely to raise interest rates this week, I don’t believe it will help income investors much. In the past, the Fed has raised rates slowly. It could take years for rates to return to levels that are comfortably above the rate of inflation. In our current low-rate environment, income investors are looking beyond Treasuries. But high-quality corporate bonds aren’t much better. The iShares iBoxx $ Investment Grade Corporate… Read More

As companies release their profit outlooks for 2016, some investors are getting worried about the six-year bull market. One of the largest companies based in my hometown just released its outlook and it sent shares skidding down toward 52-week lows.  But we’ve heard this story before. Management lowers expectations so the market doesn’t get too far ahead of itself only to consistently beat when results are reported. In fact, this company has beaten expectations in 11 of the past 12 quarters. What more, I’m expecting one key trend to turn very soon, leading to big upside and a… Read More

As companies release their profit outlooks for 2016, some investors are getting worried about the six-year bull market. One of the largest companies based in my hometown just released its outlook and it sent shares skidding down toward 52-week lows.  But we’ve heard this story before. Management lowers expectations so the market doesn’t get too far ahead of itself only to consistently beat when results are reported. In fact, this company has beaten expectations in 11 of the past 12 quarters. What more, I’m expecting one key trend to turn very soon, leading to big upside and a much stronger 2016 than anyone expects, which is why I’m getting positioned now. Des Moines, Iowa-based Principal Financial Group (NYSE: PFG) provides 401(k) employer plans, annuity and insurance products to 20 million global customers, many of which are small and medium-sized businesses. The company has built an attractive position in the market by targeting firms that don’t generally show up on the radar of larger insurance companies. #-ad_banner-# While most insurance companies are dependent on investment income, Principal has focused on growing its fee-based revenue through asset management and retirement services. Since investment income and other rate-sensitive products… Read More