WARNING: A Major Correction Could Begin This Week A trading prodigy is predicting the biggest stock market correction since 2008.  In short, an important market event will take place on Wednesday that could trigger a freefall in stocks.  He’s been tracking this situation for months. I urge you… Read More

I recently learned that hot water can freeze faster than cold water. Perhaps you already knew this but it was news to me. It’s a phenomenon known as the Mpemba Effect. This Mpemba Effect seems counterintuitive. Water freezes at 32 degrees. Since cold water is closer to 32 degrees than hot water, most would assume that cold water freezes first. Yet it has been studied extensively by scientists and experiments have shown hot water can freeze first. This isn’t true 100% of the time, but it does happen when the conditions are right. There are a number of theories about… Read More

I recently learned that hot water can freeze faster than cold water. Perhaps you already knew this but it was news to me. It’s a phenomenon known as the Mpemba Effect. This Mpemba Effect seems counterintuitive. Water freezes at 32 degrees. Since cold water is closer to 32 degrees than hot water, most would assume that cold water freezes first. Yet it has been studied extensively by scientists and experiments have shown hot water can freeze first. This isn’t true 100% of the time, but it does happen when the conditions are right. There are a number of theories about why this occurs. The leading explanation is that hot water evaporates more than cold water, leaving less water to freeze. It could also be due to convection currents, which are stronger in warmer water, allowing for ice crystals to spread faster. Others believe it may be related to the chemical structure of water. In all likelihood, it is the interplay of various factors. #-ad_banner-# You might be asking what this has to do with investing. To me, the Mpemba Effect illustrates that logic alone may not be enough to find the right answer. You have to dig… 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 two years. And so far, the results have been astounding — each of the 85 trades I’ve closed has been a winner. 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… 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 two years. And so far, the results have been astounding — each of the 85 trades I’ve closed has been a winner. 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… Read More

Whether it’s possible to beat the market has been the subject of much research and debate by academics and practitioners. Perhaps you’ve heard of the Efficient Market Hypothesis (EMH), which was developed around the 1960s. This academic theory states that a stock’s current price reflects all known information about that stock. This means stocks are always perfectly priced, and price changes occur efficiently as new information becomes available. Academics will tell you that, based on this theory, it’s impossible to beat the market by picking stocks. #-ad_banner-# Yet, people do. We know… Read More

Whether it’s possible to beat the market has been the subject of much research and debate by academics and practitioners. Perhaps you’ve heard of the Efficient Market Hypothesis (EMH), which was developed around the 1960s. This academic theory states that a stock’s current price reflects all known information about that stock. This means stocks are always perfectly priced, and price changes occur efficiently as new information becomes available. Academics will tell you that, based on this theory, it’s impossible to beat the market by picking stocks. #-ad_banner-# Yet, people do. We know Warren Buffett has beaten the market for more than 50 years, as just one example. In response to the EMH, Buffett argues that there are “wide discrepancies between price and value in the marketplace.” But EMH proponents argue that Buffett is an anomaly. It turns out researchers have uncovered a number of anomalies to the EMH. They have found that stocks with low price-to-earnings (P/E) ratios or PEG ratios outperform the market over the long run, and they named this the “value anomaly.” Small caps generally outperform large caps, which results in the “size anomaly.” Stocks that have beaten… Read More

Forty thousand-plus people flocked to Omaha, Neb., the first weekend of May for Berkshire Hathaway’s (NYSE: BRK-B) 50th-anniversary shareholder meeting. Along with many of my peers, I always spend a good deal of time dissecting what Warren Buffett says at these annual meetings. And one of the things I gleaned from this year’s event is that the Oracle of Omaha values stocks based on dynamic variables. Buffett appeared on CNBC’s “Squawk Box” the Monday after the meeting. When asked about whether stocks are overvalued, he told co-anchor Becky Quick that stocks look cheap as long… Read More

Forty thousand-plus people flocked to Omaha, Neb., the first weekend of May for Berkshire Hathaway’s (NYSE: BRK-B) 50th-anniversary shareholder meeting. Along with many of my peers, I always spend a good deal of time dissecting what Warren Buffett says at these annual meetings. And one of the things I gleaned from this year’s event is that the Oracle of Omaha values stocks based on dynamic variables. Buffett appeared on CNBC’s “Squawk Box” the Monday after the meeting. When asked about whether stocks are overvalued, he told co-anchor Becky Quick that stocks look cheap as long as interest rates remain low. He added, “If interest rates normalize, we’ll look back and say stocks weren’t so cheap.” This indicates Buffett values stocks based partly on interest rates. It also signals he is willing to pay more for a company when rates are low, and that companies deserve lower valuations when rates rise. #-ad_banner-#​Like Buffett, I also use dynamic variables when I value stocks. And my favorite dynamic variable is the PEG ratio.  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… Read More

May will be the 71st month of economic expansion for the United States. That seems like a long time, but it’s not abnormal. The last three expansions lasted an average of 95 months, with the longest lasting 10 years. Using this recent history as a guide, we can reasonably guess how far away we might be from the next recession (about two years). But we have no way of knowing for sure. Not even economists know when we’ll transition from one phase into the next. In fact, economists generally don’t know… Read More

May will be the 71st month of economic expansion for the United States. That seems like a long time, but it’s not abnormal. The last three expansions lasted an average of 95 months, with the longest lasting 10 years. Using this recent history as a guide, we can reasonably guess how far away we might be from the next recession (about two years). But we have no way of knowing for sure. Not even economists know when we’ll transition from one phase into the next. In fact, economists generally don’t know that we’re even in a recession until six-to-12 months after it begins. The same is true when a recession ends. Knowing that we’re most likely nearing a later stage of our expansion, my focus has turned to what comes next. #-ad_banner-#More specifically, I want to know whether the companies I’m investing in are prepared for a possible recession. While it’s not possible to know what’s happening with the economy in real time, we can work around that by investing in companies that perform well during both feast and famine. If a… Read More

With interest rates at extreme lows for the past few years and looking likely to remain that way for some time, it’s tempting to think that finding opportunities to profit would be like shooting fish in a barrel. Indeed, former Federal Reserve Chairman Ben Bernanke recently wrote in a blog post: “If the real interest rate were expected to be negative indefinitely, almost any investment is profitable.” #-ad_banner-#We’ve certainly seen this play out with the stock market. But it’s also been great news for companies undertaking big ticket construction projects. #-ad_banner-#Businesses… Read More

With interest rates at extreme lows for the past few years and looking likely to remain that way for some time, it’s tempting to think that finding opportunities to profit would be like shooting fish in a barrel. Indeed, former Federal Reserve Chairman Ben Bernanke recently wrote in a blog post: “If the real interest rate were expected to be negative indefinitely, almost any investment is profitable.” #-ad_banner-#We’ve certainly seen this play out with the stock market. But it’s also been great news for companies undertaking big ticket construction projects. #-ad_banner-#Businesses use accounting models to assess the feasibility of such projects. Models show a higher expected return on investment (ROI) when rates are low. Higher ROIs mean more investment projects will meet minimum requirements for approval. Indeed, non-residential construction spending in the United States is estimated to rise 5.6% this year to just over $390 billion, according to Statista, and continue at about that growth rate over the next several years. I’m looking at investment opportunities in the companies that can help businesses complete these projects. AECOM (NYSE: ACM) is one such… Read More

I saw a headline last week warning that an analyst at a major Wall Street firm believes the S&P 500 is at risk of a 5%-10% decline.  I have no doubt Deutsche Bank’s (NYSE: DB) David Bianco is correct. Down moves in the stock market actually come fairly often. One study found that a 5% correction occurs, on average, three times a year, while we see a 10% decline about once a year.  The last 10% decline in the S&P 500 occurred about three and a half years ago in October 2011. So, are we overdue for a… Read More

I saw a headline last week warning that an analyst at a major Wall Street firm believes the S&P 500 is at risk of a 5%-10% decline.  I have no doubt Deutsche Bank’s (NYSE: DB) David Bianco is correct. Down moves in the stock market actually come fairly often. One study found that a 5% correction occurs, on average, three times a year, while we see a 10% decline about once a year.  The last 10% decline in the S&P 500 occurred about three and a half years ago in October 2011. So, are we overdue for a 10% correction? That is a silly question. When I hear an analyst say, “We are overdue,” or “This bull market is long in the tooth,” I discount everything else they have to say. Markets don’t follow a schedule. They go up and down based on earnings and sentiment, among other factors. But prices never have and never will change direction just because the calendar changes. #-ad_banner-#The better question to ask is: “What would I do if I knew a 10% correction was coming?” I was in New York recently and had a chance to catch up with one my mentors,… Read More

April will be the 70th month of economic expansion for the United States. That seems like a long amount of time, but it’s not abnormal. The last three expansions in the United States lasted an average of 95 months, with the longest lasting 10 years. Using recent history as a guide, we can estimate how far away we are from the next recession (about two years based on the average expansion length). But we have no way of knowing if our current expansion will end before then or maybe set a new record. Not even economists know when we’ll transition… Read More

April will be the 70th month of economic expansion for the United States. That seems like a long amount of time, but it’s not abnormal. The last three expansions in the United States lasted an average of 95 months, with the longest lasting 10 years. Using recent history as a guide, we can estimate how far away we are from the next recession (about two years based on the average expansion length). But we have no way of knowing if our current expansion will end before then or maybe set a new record. Not even economists know when we’ll transition from one phase into the next. In fact, economists generally don’t know that we’re even in a recession until 6-12 months after it begins. Knowing that we’re most likely nearing a later stage of our expansion, my focus has turned to what comes next. More specifically, I want to know whether the companies I’m investing in are prepared for the end of this expansion. #-ad_banner-#While it’s not possible to know when the next recession will start, we can work around that by investing in companies that perform well during both feast and famine. If a company… Read More

I didn’t expect to win the award. I was really looking for feedback from other financial professionals regarding my trading ideas. But a group of market experts critically reviewed my work and determined that the strategy I present my readers each week is an example of one of the best ideas in technical analysis. My research paper is the foundation of my current streak of 86-for-86 winning closed trades. Recently, I had the honor of attending the 2015 Market Technicians Association’s Gala Awards Dinner in New York City. There I was presented with the Charles H. Dow Award, which is… Read More

I didn’t expect to win the award. I was really looking for feedback from other financial professionals regarding my trading ideas. But a group of market experts critically reviewed my work and determined that the strategy I present my readers each week is an example of one of the best ideas in technical analysis. My research paper is the foundation of my current streak of 86-for-86 winning closed trades. Recently, I had the honor of attending the 2015 Market Technicians Association’s Gala Awards Dinner in New York City. There I was presented with the Charles H. Dow Award, which is an award that highlights outstanding research in technical analysis. And today I wanted to give you a glimpse of my award winning research. #-ad_banner-#I spend a great deal of time studying and building on the works of successful investors. One of the most influential on my investing career has been Larry Williams, a well-known trader and author of 2003 book, “The Right Stock at the Right Time.” But it was actually an article he wrote in 2007 that has been one of the keys to my success. Many traders follow the Volatility S&P 500 Index (VIX) — a measure of… Read More