Over the years, one thing has become abundantly clear: that is being a contrarian makes sense in the stock market. To be clear, I am not talking about going against my research. When I say contrarian, what I mean is going against the prevailing public/media sentiment. Often, when everyone is saying one thing, it’s time to take the opposite side. #-ad_banner-#For example, when everyone is overtly bullish, it’s time to look for compelling reasons to get short. The same thing can be said when the entire financial press has turned bearish, meaning it’s actually a superb time to search for… Read More

Over the years, one thing has become abundantly clear: that is being a contrarian makes sense in the stock market. To be clear, I am not talking about going against my research. When I say contrarian, what I mean is going against the prevailing public/media sentiment. Often, when everyone is saying one thing, it’s time to take the opposite side. #-ad_banner-#For example, when everyone is overtly bullish, it’s time to look for compelling reasons to get short. The same thing can be said when the entire financial press has turned bearish, meaning it’s actually a superb time to search for reasonable long ideas. Along with offering a reliable supporting case for the contrarian view, the recent Presidential election made several additional market axioms clear. First, things are not always as they seem. The media tends to exaggerate the harmful to obtain viewership. Second, it is critical to look behind the headlines and think for yourself when it comes to making investment decisions. This can be tough, but the rewards for bucking media bias and the consensus are often handsome. Even the mighty George Soros has been carried away with biases and media hype. One particular error in judgment resulted in… Read More

There are few things more exciting in stock investing than buyout rumors. Since the stock market runs on an anticipatory mechanism, just the talk of a buyout can light the bullish fire under the shares. The old “buy the rumor, sell the fact” mantra can be very right when it… Read More

Being extremely wealthy can be lonely. Most of us can only imagine what it is like to no longer be concerned about money or possessions. To be able to do nearly everything you have ever imagined, with the world truly being a playground of opportunity and adventure. If you want… Read More

Working for IBM (NYSE: IBM) was the dream of many students in my business school. A job with the world’s leading high-tech company was far and away the most popular goal of both the graduate and undergraduate students. The talk was always very positive about the disciplined environment, the uniform of a dark suit, crisp white shirt, sober looking tie, the respect from others, and of course the relatively high pay for their sales representatives. When this company would visit the campus for career day interviews, it was insane. Everyone jockeyed to look their best and get an interview. #-ad_banner-#Perhaps… Read More

Working for IBM (NYSE: IBM) was the dream of many students in my business school. A job with the world’s leading high-tech company was far and away the most popular goal of both the graduate and undergraduate students. The talk was always very positive about the disciplined environment, the uniform of a dark suit, crisp white shirt, sober looking tie, the respect from others, and of course the relatively high pay for their sales representatives. When this company would visit the campus for career day interviews, it was insane. Everyone jockeyed to look their best and get an interview. #-ad_banner-#Perhaps best known for their work in the very early days of the personal computer, “Big Blue” is sometimes credited with its invention, a disputed fact. But one thing is for sure: they certainly popularized the PC. The world changed on August 12, 1981; the company announced the personal computer with the unheard-of price tag of $1,565. Just twenty years earlier, machines with similar capabilities could cost millions of dollars, demanded an entire office building floor, and required a large staff to maintain. This initial mass-produced PC was powered by an Intel 8088 microprocessor running at speeds measured in millionths of… Read More

The biggest bull market in history was triggered by the Federal Reserve pouring money into the economy to prevent financial Armageddon during the 2008 meltdown. Since that time, the Dow has soared from a low in the mid-6000s to just below 20,000 in seven short years. The lesson we can learn here is that the government is the most powerful influence over stock prices. Investors who went long the market just before the bailout are sitting on handsome profits. Watching carefully for additional governmental actions in global economies is the way smart investors rack up outsized gains. The good news… Read More

The biggest bull market in history was triggered by the Federal Reserve pouring money into the economy to prevent financial Armageddon during the 2008 meltdown. Since that time, the Dow has soared from a low in the mid-6000s to just below 20,000 in seven short years. The lesson we can learn here is that the government is the most powerful influence over stock prices. Investors who went long the market just before the bailout are sitting on handsome profits. Watching carefully for additional governmental actions in global economies is the way smart investors rack up outsized gains. The good news is that I have identified another governmental “cash injection” that will likely fuel strong gains in the respective stock market. First, let’s look at what happened in the United States, then drill into how to profit from the next governmental cash injection. #-ad_banner-#The United States was on the brink of financial disaster. Stalwart financial institutions were failing. Century-old names like Lehman Brothers collapsed in the rubble of over-leveraged positions and decades of hubris. If you were investing during these risky times, you understand what it is like to be on the front lines of a global superpower’s economic collapse. Many… Read More

Things are finally turning around for income investors. Years of ultra-low interest rates forced income investors to crowd into just a few risky, relatively high-yielding investments. But in 2016, a trifecta of economic occurrences began to improve the income investing landscape for everyone. #-ad_banner-#The first reason is that the FOMC has started to raise interest rates. The December 2015 decision was the first time in a decade that this rate had been changed. The committee made a unanimous vote to increase the Fed’s main interest rate by a quarter-point, to the 0.25% to 0.50% range from the previous 0.00% to… Read More

Things are finally turning around for income investors. Years of ultra-low interest rates forced income investors to crowd into just a few risky, relatively high-yielding investments. But in 2016, a trifecta of economic occurrences began to improve the income investing landscape for everyone. #-ad_banner-#The first reason is that the FOMC has started to raise interest rates. The December 2015 decision was the first time in a decade that this rate had been changed. The committee made a unanimous vote to increase the Fed’s main interest rate by a quarter-point, to the 0.25% to 0.50% range from the previous 0.00% to 0.25%. This rate has since been increased again, this past December, to the range of 0.50% to 0.75%. The increase signals the FOMC’s confidence in the strengthening U.S. economy and what officials see as nascent signs of climbing inflation. Second, the election of Donald Trump resulted in a sharp increase in bond yields. This selloff augmented a trend that started before the presidential election. Yields on the benchmark U.S. bond, the 10-year Treasury note, have surged to 2.31% from a 52-week low of 1.32%. The new administration is expected to put policies in place that will increase inflation, which… Read More

If I had to provide just two words of guidance to investors about 2017, I would say “expect change.” The new administration will soon be shaking things up in a manner not seen for many decades. There will likely be a loosening of regulatory oversight, a massive uptick in infrastructure spending, and a substantial increase in defense spending as America takes a more hawkish stance on global affairs. #-ad_banner-#While each of these expected macro changes will create opportunity and risk for investors, some of the best opportunities will be created in the defense sector. Over the last five years, defense… Read More

If I had to provide just two words of guidance to investors about 2017, I would say “expect change.” The new administration will soon be shaking things up in a manner not seen for many decades. There will likely be a loosening of regulatory oversight, a massive uptick in infrastructure spending, and a substantial increase in defense spending as America takes a more hawkish stance on global affairs. #-ad_banner-#While each of these expected macro changes will create opportunity and risk for investors, some of the best opportunities will be created in the defense sector. Over the last five years, defense spending has been stifled under the Budget Control Act of 2011. Despite the cuts, the largest firms in the aerospace and defense sector have weathered the storm remarkably well. If you look carefully, this success was only possible with aggressive management action. Stock buybacks, workforce cuts, and ramping up efficiency have all been effectively used to survive. Defense firms have also sought profits via foreign markets and commercial businesses while neglecting their core defense competencies. Even worse, budget cuts have curtailed long term planning, as it’s difficult to take on contracts in an uncertain funding environment. But this tide might… Read More

There are few things more profitable in the stock market than finding a long-term bullish economic trend and identifying a backdoor way to invest in the trend. #-ad_banner-#Major economic trends are often well known the observant investor, and many of them invest directly into the major companies riding the trend. While this tactic can and does work miracles at the start of any economic or societal trend, the profit potential becomes diluted when the trend matures. Shifting consumer tastes can turn one company’s products from a huge hit into a has-been at the drop of a hat. The key to… Read More

There are few things more profitable in the stock market than finding a long-term bullish economic trend and identifying a backdoor way to invest in the trend. #-ad_banner-#Major economic trends are often well known the observant investor, and many of them invest directly into the major companies riding the trend. While this tactic can and does work miracles at the start of any economic or societal trend, the profit potential becomes diluted when the trend matures. Shifting consumer tastes can turn one company’s products from a huge hit into a has-been at the drop of a hat. The key to long-term success is to locate those under the radar, backdoor companies that are crucial for supporting the overall trend but aren’t the obvious financial media darlings. These companies are often those that support or complement the more obvious ones. Today’s Big Trend A major trend that appears poised to continue is the shift to dining out and away from at-home meals. In 2015, for the first time, restaurant spending surpassed grocery store expenditures. The U.S. Department of Commerce reported that Americans spent $52.3 billion at restaurants and bars compared to $49.7 billion in grocery stores. It is the first… Read More

We are in the midst of the greatest technological revolution of all time. After years in its nascent stages, the internet has become a critical fixture in all aspects of our lives. High-tech turning high-touch, to borrow a phrase from futurist John Naisbitt, has become our reality. All one needs… Read More

The casual dining sector has fallen on hard times. Hit by a triple whammy of consumer burnout, lack of innovation, and improving value and quality at fast food outlets, this once-thriving sector is in need of life support. #-ad_banner-#Despite a bustling economy, casual dining sales are forecasted to climb only… Read More