No matter how much we think we know what to expect, there are always surprises. As an investor, I know this means I have to look at all the information available, rather than assume I know what the data says. That’s what led me to find an investment opportunity in an unexpected place: retail. This is a sector filled with bad news. According to CNBC, “Retail bankruptcies march toward [a] post-recession high.” So far this year, we have seen nine major retailers file bankruptcy, including Limited Stores and the parent of Radio Shack, which already went bankrupt once before. Analysts… Read More

No matter how much we think we know what to expect, there are always surprises. As an investor, I know this means I have to look at all the information available, rather than assume I know what the data says. That’s what led me to find an investment opportunity in an unexpected place: retail. This is a sector filled with bad news. According to CNBC, “Retail bankruptcies march toward [a] post-recession high.” So far this year, we have seen nine major retailers file bankruptcy, including Limited Stores and the parent of Radio Shack, which already went bankrupt once before. Analysts believe other will follow. Moody’s Investors Service says that 19 retailers are distressed and may not survive the year. Their list includes 99 Cents Stores, Payless, Claire’s, David’s Bridal and, of course, Sears. Some investors may want to avoid the entire sector, but there must be some winners hidden among all the struggling stores because retailing can’t disappear completely. While looking over relative strength screens of the market, I was surprised to see one company doing well in one of the more beaten-down sectors. Best Buy (NYSE: BBY) has been a market leader for the past six months, the only… Read More

It’s one of the easiest and safest ways to generate 20%-plus returns on a regular basis. Once you’ve mastered the technique, I wouldn’t be surprised if you stopped trading stocks or only buying and holding investments altogether. #-ad_banner-#That’s how powerful this strategy is: It can drastically improve the way you make money in the markets. That goes for conservative income investors and aggressive traders alike. The technique involves selling options. If you’ve never tried your hand at options before, don’t worry — the kind of options strategy I’m talking about is perhaps the safest, easiest way to execute a trade… Read More

It’s one of the easiest and safest ways to generate 20%-plus returns on a regular basis. Once you’ve mastered the technique, I wouldn’t be surprised if you stopped trading stocks or only buying and holding investments altogether. #-ad_banner-#That’s how powerful this strategy is: It can drastically improve the way you make money in the markets. That goes for conservative income investors and aggressive traders alike. The technique involves selling options. If you’ve never tried your hand at options before, don’t worry — the kind of options strategy I’m talking about is perhaps the safest, easiest way to execute a trade for income that you’ll ever come across. Specifically, I’m referring to selling call options. A call option gives the buyer the right — but not the obligation — to buy a stock from the call seller if it’s trading above a specified price before a specified date. When you sell a call option, you accept the potential obligation to sell a particular stock at a specified price at a set time in the future. When you sell a call, you generate what I call “Instant Income,” also known as a premium, upfront. I only recommend selling covered calls. A covered… Read More

Many of the traders I talk to are wondering what Bill Ackman could be thinking. Ackman is a hedge fund manager, the founder and CEO of Pershing Square Capital Management, which has about $11 billion under management. Ackman is considered a contrarian investor who tends to buy when companies are down, and an activist investor who sometimes takes a role in managing companies he invests in. He has achieved incredible success by some measures and has a reported wealth of about $1.4 billion. Ackman recently shared a chart showing his performance with investors… There is an obvious problem… Read More

Many of the traders I talk to are wondering what Bill Ackman could be thinking. Ackman is a hedge fund manager, the founder and CEO of Pershing Square Capital Management, which has about $11 billion under management. Ackman is considered a contrarian investor who tends to buy when companies are down, and an activist investor who sometimes takes a role in managing companies he invests in. He has achieved incredible success by some measures and has a reported wealth of about $1.4 billion. Ackman recently shared a chart showing his performance with investors… There is an obvious problem with recent performance. As Ackman explained, “The substantial decline in performance from August 2015 through March 31, 2016 is largely due to Valeant’s decline…” Valeant is now the investment traders are talking about. Ackman took a large stake in Valeant Pharmaceuticals International (NYSE: VRX) as the company was growing rapidly through acquisitions. The strategy largely relied on buying other companies and then raising prices, a tactic that we know was widespread in the drug sector. But regulators began to question the strategy after it was discovered VRX was using in-house pharmacists to potentially overbill insurance companies. Traders reacted to the… Read More

There are a lot of hard problems facing Washington. Healthcare will take time, as will many other issues. Tax policy seems to offer the most immediate path to a significant accomplishment for the president and Congress. President Donald Trump has made a number of proposals related to taxes. Among the most important would be a reduction in the highest corporate income tax rate from 35% to 15%. I am fairly certain tax reform will require negotiations and Trump won’t get everything he wants. But the good news is that lower corporate and personal income taxes seem likely. #-ad_banner-#Lower corporate taxes… Read More

There are a lot of hard problems facing Washington. Healthcare will take time, as will many other issues. Tax policy seems to offer the most immediate path to a significant accomplishment for the president and Congress. President Donald Trump has made a number of proposals related to taxes. Among the most important would be a reduction in the highest corporate income tax rate from 35% to 15%. I am fairly certain tax reform will require negotiations and Trump won’t get everything he wants. But the good news is that lower corporate and personal income taxes seem likely. #-ad_banner-#Lower corporate taxes will have an immediate impact on company earnings. Standard & Poor’s estimates that every 1% reduction in the corporate tax rate could add 1% to the earnings per share (EPS) of companies in the S&P 500. However, Trump isn’t looking for a small reduction in taxes… he’s targeting a 20% drop. Let’s assume he settles for a rate in the middle, a 10% cut. EPS for the companies in the S&P 500 could then be about $146. A P/E ratio of 17 provides a price target of about 2,500. A P/E ratio of 20, which could easily be justified by… Read More

Earnings season is virtually over, and with 99% of the companies in the S&P 500 reporting, results are a little better than expected. About two-thirds of companies beat analysts’ expectations, in line with the long-term average rate. Earnings per share (EPS) came in about 4.9% higher than they were a year ago, the first time we’ve seen year-over-year growth in earnings for two consecutive quarters in two years. It seems as if the earnings outlook should be bullish for the stock market based on the growth in EPS, but many analysts are warning that the market is overvalued. Such warnings… Read More

Earnings season is virtually over, and with 99% of the companies in the S&P 500 reporting, results are a little better than expected. About two-thirds of companies beat analysts’ expectations, in line with the long-term average rate. Earnings per share (EPS) came in about 4.9% higher than they were a year ago, the first time we’ve seen year-over-year growth in earnings for two consecutive quarters in two years. It seems as if the earnings outlook should be bullish for the stock market based on the growth in EPS, but many analysts are warning that the market is overvalued. Such warnings are often based on charts like the one below, which shows the price-to-earnings (P/E) ratio is higher than average. This chart looks back at the past 10 years. Interestingly, to me, the P/E ratio reached its high in the first quarter of 2010, as the stock market was bottoming. Bears were arguing the market was overvalued when it was at the beginning of what would prove to be an extended bull market. #-ad_banner-#You could argue that the recession was an extraordinary time for the economy and no one could forecast what would happen next. The president, Congress, the… Read More

As 2017 rushes forward, I’m seeing confirmation of my market outlook from the beginning of this year. In the past week, it’s become clear that Warren Buffett now agrees with my assessment of airline stocks. I’ll admit I was nervous as I dove into the sector… Read More

Elections have consequences, and one of the most surprising consequences of November’s election has been the sharp increase in economic optimism. This can be seen in surveys of investors or business owners. The general mood of the nation is captured by Gallup, which published a number of surveys. Their Economic Confidence Index shows some recent weakness, but is up sharply since the election. Digging deeper, we see that there is a sharp divide based on political affiliation but, on average, Americans seem happier today than they were in early November. The same is true of small businesses, according… Read More

Elections have consequences, and one of the most surprising consequences of November’s election has been the sharp increase in economic optimism. This can be seen in surveys of investors or business owners. The general mood of the nation is captured by Gallup, which published a number of surveys. Their Economic Confidence Index shows some recent weakness, but is up sharply since the election. Digging deeper, we see that there is a sharp divide based on political affiliation but, on average, Americans seem happier today than they were in early November. The same is true of small businesses, according to the National Federation of Independent Business (NFIB) Small Business Optimism Index. NFIB notes that “the stunning improvements in the Index components that occurred after post-election were improved in December and confirmed in January.” These improvements should lead to higher business spending and more jobs. If we see that, economic growth this year will begin to outperform 2016’s. Surveys are important, but economic growth will result only if spending follows the optimism. We should know by the middle of the year whether that’s the case. I’ll be watching economic data to see whether business and consumer spending rise… Read More

The president is surrounded by a host of unsavory characters, and concerns begin to brew that businesses are using the office for personal profits. Talk of impeachment begins, largely along party lines, with the opposition growing increasingly vocal. Large public protests are mostly peaceful, but the occasional act of violence generates publicity. This is the news out of South Korea. That’s right — the United States isn’t the only country with sharp political divisions. In fact, that’s the situation in many countries around the world right now. South Korea may just be further along the path of turmoil and could… Read More

The president is surrounded by a host of unsavory characters, and concerns begin to brew that businesses are using the office for personal profits. Talk of impeachment begins, largely along party lines, with the opposition growing increasingly vocal. Large public protests are mostly peaceful, but the occasional act of violence generates publicity. This is the news out of South Korea. That’s right — the United States isn’t the only country with sharp political divisions. In fact, that’s the situation in many countries around the world right now. South Korea may just be further along the path of turmoil and could offer some lessons for investors in countries that are just starting the journey toward regular chaos. —Recommended Link— This President’s Day, Get An Entire Year Of Maximum Profit — 60% Off In honor of President’s Day, we’re offering our most popular (AND most profitable) investment research service to date. It’s so precise at picking winners we call it Maximum Profit. Save 60% on a one-year subscription by using it risk-free for 90 days. But you must hurry… this offer closes for good on Thursday  at 11:59 pm. The political saga is highlighted in the chart below. The iShares MSCI… Read More

If you’re frustrated with the low yields this market has to offer, you’re not alone. Finding dependable yields over 4%, much less double-digit yields, is nearly impossible in the current market environment. For instance, the S&P 500 throws off a yield of just 2.1%. Even after the December hike, bonds are barely beating inflation, and the yields on blue-chip stocks are pathetic. This had led some investors to “reach for yield,” i.e., buy risky stocks with higher payouts. More often than not, this strategy leads to big losses. To make matters worse, stocks are trading near all-time highs and carry… Read More

If you’re frustrated with the low yields this market has to offer, you’re not alone. Finding dependable yields over 4%, much less double-digit yields, is nearly impossible in the current market environment. For instance, the S&P 500 throws off a yield of just 2.1%. Even after the December hike, bonds are barely beating inflation, and the yields on blue-chip stocks are pathetic. This had led some investors to “reach for yield,” i.e., buy risky stocks with higher payouts. More often than not, this strategy leads to big losses. To make matters worse, stocks are trading near all-time highs and carry lofty valuations. This makes owning them a riskier proposition than usual. For conservative income investors in particular, this is an incredibly tough market to navigate. Fortunately, there is still a way to generate more income than you ever thought possible from the safest stocks out there. —Recommended Link— You May Not Like Hearing This… Everyone knows that Social Security is in bad shape. But most people don’t realize just how desperate the situation is… to fix Social Security benefits have to be cut by 22% immediately. Or payroll taxes have to jump by 32%. So you’re facing pain whether… Read More

There was an important news story in the latter half of December that seems to have been overlooked by many news sources. Bloomberg’s headline was “Calpers Rings Pension Warning Bell.” The response has been muted, but the truth is this story will affect millions of retirees and taxpayers around the country. Bloomberg explained, “The chief investment officer of the $303 billion California Public Employees’ Retirement System just recommended that it lower its annual assumed rate of return to 7% from 7.5%, which will require workers to contribute more money to the plan.” That’s bad news for most pensions. This news… Read More

There was an important news story in the latter half of December that seems to have been overlooked by many news sources. Bloomberg’s headline was “Calpers Rings Pension Warning Bell.” The response has been muted, but the truth is this story will affect millions of retirees and taxpayers around the country. Bloomberg explained, “The chief investment officer of the $303 billion California Public Employees’ Retirement System just recommended that it lower its annual assumed rate of return to 7% from 7.5%, which will require workers to contribute more money to the plan.” That’s bad news for most pensions. This news presents a problem because many pension funds assume returns of 7.5% or more. Lowering the level of assumed returns means employees and taxpayers need to contribute more or benefits must be cut. The pension problem will obviously affects taxes, public services, schools, and a number of other areas. But I want to focus on a less obvious question, which is what an individual investor should expect to earn from their investments. We all need to ask ourselves if we can really do better than Calpers, which has access to the best investment managers in the world. I believe we can,… Read More