One of the coolest things about the stock market is that money can be made regardless of the direction of a stock. I’ve often heard investors lament that they missed a sharp upward move. Often, these same investors will commit the investing sin of chasing stocks that have made extreme short-term moves to the upside in the hope of momentum carrying shares even higher. While upward momentum can and does take stocks higher, more often than not, prices will quickly retrace the upward spike.#-ad_banner-# This leaves the stock chasers jumping from one hot stock to the next, wondering why many… Read More

One of the coolest things about the stock market is that money can be made regardless of the direction of a stock. I’ve often heard investors lament that they missed a sharp upward move. Often, these same investors will commit the investing sin of chasing stocks that have made extreme short-term moves to the upside in the hope of momentum carrying shares even higher. While upward momentum can and does take stocks higher, more often than not, prices will quickly retrace the upward spike.#-ad_banner-# This leaves the stock chasers jumping from one hot stock to the next, wondering why many of their investments are losers. One solution to this dilemma is to learn how to short. Shorting allows investors to profit from downward moves in price. For those of you unfamiliar with shorting stocks, my recent article on shorting biotech stocks  describes the method. The same tactic can be applied to any stock, regardless of sector. Stocks that have spiked higher often drop in price. This is particularly true if the increase is due to questionable news, hype or other dubious reasons. Just like the stock chasers, short sellers scan the market for stocks that have soared higher in a… Read More

“Water, water everywhere, nor any drop to drink.” This line from Samuel Taylor Coleridge’s poem “The Rime of the Ancient Mariner” is apropos not only for those lost at sea but for the Earth in general. The Earth is indeed the “water planet,” with more than 70% of its surface covered with the liquid. However, more than 97% of this water is unusable salt water, meaning freshwater accounts for less than 3% of the world’s supply. Of that total, more than 70% is frozen, resulting in a very limited supply of usable freshwater. Only 0.007% of all of Earth’s water… Read More

“Water, water everywhere, nor any drop to drink.” This line from Samuel Taylor Coleridge’s poem “The Rime of the Ancient Mariner” is apropos not only for those lost at sea but for the Earth in general. The Earth is indeed the “water planet,” with more than 70% of its surface covered with the liquid. However, more than 97% of this water is unusable salt water, meaning freshwater accounts for less than 3% of the world’s supply. Of that total, more than 70% is frozen, resulting in a very limited supply of usable freshwater. Only 0.007% of all of Earth’s water is available for human use. Fortunately, the hydrological cycle constantly renews the supply through rain and snow. Despite the cycle, droughts, inadequate supplies and arid climates render many regions unfit for human use. Some of these regions are otherwise ideal except for their lack of usable water.#-ad_banner-# Fortunately, science has developed a solution: desalination. This water treatment method removes the salt from ocean water, turning it into fresh water. Techniques such as reverse osmosis and multi-stage flash distillation have made desalination economically viable in many regions. As the… Read More

Every home has at least one. From the White House to a shotgun shack in Appalachia, this product is notable for its widespread use across every demographic. Virtually all of us spend nearly a third of our lives using this product, which commands a wide range of prices — from less than $100 for basic versions to well over $10,000 for custom-built ones. In addition, this product is so commonplace you might not give it a second thought after the purchasing decision. U.S. manufacturers produce about 35 million units a year, and the industry’s revenues neared $6 billion in 2009.#-ad_banner-#… Read More

Every home has at least one. From the White House to a shotgun shack in Appalachia, this product is notable for its widespread use across every demographic. Virtually all of us spend nearly a third of our lives using this product, which commands a wide range of prices — from less than $100 for basic versions to well over $10,000 for custom-built ones. In addition, this product is so commonplace you might not give it a second thought after the purchasing decision. U.S. manufacturers produce about 35 million units a year, and the industry’s revenues neared $6 billion in 2009.#-ad_banner-# If you haven’t guessed it yet, I am referring to the lowly mattress. I recently had a great experience with a particular brand over the last several years, but right now I would avoid or even short the stock. When my wife and I were newlyweds, one of the most important purchases for our new household was a mattress. I’m a restless sleeper, and my wife sleeps so silently and still that sometimes I have to check to be sure she’s still breathing. My rolling about at night disturbs my wife when we sleep on spring-based mattress, so much so… Read More

Having been born and raised outside of Pittsburgh, I know firsthand of the ravages of factory pollution. My grandfather told me stories about the streetlights coming on midday because of the amount of smog in the downtown area. Many of the region’s streams and rivers were void of life back in the 1960s due to industrial waste deliberately and inadvertently seeping into the waterways. Things have improved greatly since those dark days. I have fond memories of fishing local streams for pollution-resistant fish like carp and catfish. Those same streams had been void of life just a decade or so… Read More

Having been born and raised outside of Pittsburgh, I know firsthand of the ravages of factory pollution. My grandfather told me stories about the streetlights coming on midday because of the amount of smog in the downtown area. Many of the region’s streams and rivers were void of life back in the 1960s due to industrial waste deliberately and inadvertently seeping into the waterways. Things have improved greatly since those dark days. I have fond memories of fishing local streams for pollution-resistant fish like carp and catfish. Those same streams had been void of life just a decade or so prior. Today, many of these Pittsburgh streams hold healthy populations of clean water fish like smallmouth bass and trout. This is a great testament to the success of the U.S. environmental movement, as well as commercial firms dedicated to pollution reduction. Personally, I like it when the free market helps improve the environment. It’s a great feeling to be able to earn a profit by doing a good thing for the environment. The free market has spawned firms like Illinois-based Fuel-Tech (NASDAQ: FTEK), which specializes in pollution reduction technology. Not only do the company’s products help mitigate the negative effects… Read More

There’s a long-standing argument between finance academics and investors. #-ad_banner-# Most academics assert that the market is efficient and there is very little edge available for traders and short-term investors. When challenged with long-term success stories of traders who consistently beat the market, the academics say those individuals are presently the statistical outliers. In other words, they are simply lucky — just like the folks who win the lottery several times or consistently succeed at any game of “chance.” I am fortunate to be married to a woman who holds a doctorate in finance and is a great resource when… Read More

There’s a long-standing argument between finance academics and investors. #-ad_banner-# Most academics assert that the market is efficient and there is very little edge available for traders and short-term investors. When challenged with long-term success stories of traders who consistently beat the market, the academics say those individuals are presently the statistical outliers. In other words, they are simply lucky — just like the folks who win the lottery several times or consistently succeed at any game of “chance.” I am fortunate to be married to a woman who holds a doctorate in finance and is a great resource when it comes to programming trading strategies and understanding market microstructure. However, we are often at odds when it comes to the viability of active trading. I love to prove her ideas wrong by showing her papers by respected academics who take my side. I am certain she gets the same vicarious thrill when my market ideas are proven inaccurate. The one thing my wife and I agree upon is the wisdom of long-term dividend investing. (In that respect, we’re also in agreement with regular readers of Amy Calistri’s Daily Paycheck advisory, which emphasizes the portfolio-growing power of dividends.) My wife… Read More

It goes without saying that the stock market is an extremely competitive arena. Money management firms spend millions to find profitable niches, strategies and tactics. Where short-term trading is concerned, the advent of high-frequency trading has made speed more important than ever. This niche has become so competitive that some firms have relocated their operations to their stock exchange’s facilities to get their orders to the exchange before the competition’s.#-ad_banner-# Fortunately, long-term investors don’t have to concern themselves with the arms race in high-frequency trading. While large firms fight it out for microsecond advantages, long-term investors can exploit time-tested niches. Read More

It goes without saying that the stock market is an extremely competitive arena. Money management firms spend millions to find profitable niches, strategies and tactics. Where short-term trading is concerned, the advent of high-frequency trading has made speed more important than ever. This niche has become so competitive that some firms have relocated their operations to their stock exchange’s facilities to get their orders to the exchange before the competition’s.#-ad_banner-# Fortunately, long-term investors don’t have to concern themselves with the arms race in high-frequency trading. While large firms fight it out for microsecond advantages, long-term investors can exploit time-tested niches. One such niche outperformed the S&P 500 Index by an average of 13% from January 1995 to July 2012, including a period of 45% outperformance between 2000 and 2005. However, the success of this strategy hasn’t captured investors’ interest. One reason, to be frank, is that it’s a little boring in comparison to other investing strategies. Another is that after the catalyst for this strategy occurs, shares often trade lower for the first month or so. A third is that this strategy was decimated during the 2008 financial crisis. These factors appear to work in unison to spook many investors… Read More

Change is the only constant in the world. This is particularly true when it comes to the Internet. It was only in 1989 when the first commercial dial-up Internet service provider (ISP) was launched. Few realized that this ISP, named The World, would spark a radical global revolution. Visionary companies jumped on board as the public started using the Internet as a means of shopping, information and entertainment. Many companies took to the stock markets to raise capital for a foray into the Internet frontier. If your company name included “dot-com,” investment banks were probably clamoring to take it public. Read More

Change is the only constant in the world. This is particularly true when it comes to the Internet. It was only in 1989 when the first commercial dial-up Internet service provider (ISP) was launched. Few realized that this ISP, named The World, would spark a radical global revolution. Visionary companies jumped on board as the public started using the Internet as a means of shopping, information and entertainment. Many companies took to the stock markets to raise capital for a foray into the Internet frontier. If your company name included “dot-com,” investment banks were probably clamoring to take it public. Companies that were little more than an idea and some rented office space were able to raise millions quickly and easily. Not since the Dutch tulip mania of the 1600s had the world seen such an investment frenzy, but the vast majority of these companies failed to gain traction after the initial hype. Names like Webvan, eToys.com, Flooz.com and Kozmo.com, plus hundreds of others, have been relegated to the dustbin of history despite massive funding and the leadership of aggressive, intelligent entrepreneurs. Many of these firms were simply before their time, as consumers and businesses just weren’t ready to use… Read More

Carl Icahn, Henry Kravitz, Sumner Redstone and a host of other financial pros make their money by using complex strategies that reduce risk while maximizing potential gains. However, there is one strategy that towers above all others when it comes to minting members of the billionaires’ club.#-ad_banner-# The best part is that today, every investor can participate in this strategy — without the need for hundreds of millions of dollars, inside information, or a seat at the corporate roundtable. This strategy, which was very popular in the 1980s, has enjoyed a dramatic resurgence during the bull market of the past… Read More

Carl Icahn, Henry Kravitz, Sumner Redstone and a host of other financial pros make their money by using complex strategies that reduce risk while maximizing potential gains. However, there is one strategy that towers above all others when it comes to minting members of the billionaires’ club.#-ad_banner-# The best part is that today, every investor can participate in this strategy — without the need for hundreds of millions of dollars, inside information, or a seat at the corporate roundtable. This strategy, which was very popular in the 1980s, has enjoyed a dramatic resurgence during the bull market of the past several years, thanks to huge corporate cash reserves, low interest rates and volatility, and the increasing importance of cutting costs and boosting growth to keep shareholders happy. That’s the funny thing about bull markets: No matter how high the market climbs or the returns earned, it’s never enough to gratify investors. That’s why this strategy has become so popular that more than $650 billion of transactions have taken place this year alone, with the biggest deals creating headlines around the world. The strategy I’m talking about is mergers and acquisitions, or M&A. You may have heard of the Warren Buffett-led… Read More

Apple (Nasdaq: AAPL) is one of the great high-tech success stories. Led by the visionary, charismatic and sometimes controversial Steve Jobs until his recent untimely death, Apple has become one of the world’s leading companies. After starting out as a personal computer maker, Apple is now best known for its mobile devices, which have catapulted it from a cult brand into the mainstream.#-ad_banner-# In less than five months, AAPL shares have soared from below $400 to about $520 currently. This 30% increase is impressive but well below the stock’s all-time high above $700 last year. Unfortunately for many investors, Apple’s… Read More

Apple (Nasdaq: AAPL) is one of the great high-tech success stories. Led by the visionary, charismatic and sometimes controversial Steve Jobs until his recent untimely death, Apple has become one of the world’s leading companies. After starting out as a personal computer maker, Apple is now best known for its mobile devices, which have catapulted it from a cult brand into the mainstream.#-ad_banner-# In less than five months, AAPL shares have soared from below $400 to about $520 currently. This 30% increase is impressive but well below the stock’s all-time high above $700 last year. Unfortunately for many investors, Apple’s success has made trading its shares difficult. You have to be swinging a big stick to be able to commit $500,000-plus to trade just 1,000 shares. Options can be used as alternative tools to capture profits from Apple’s moves, but there is another, simpler way to profit from its success — and that is to purchase shares in companies that supply products and services to Apple. When these products or services are a critical part of the supply chain for Apple’s products, the company supplying them may ride Apple’s coattails to great success. The key is to identify a supplier… Read More

I believe in China.  I have no doubt that this nation of 1.35 billion consumers will continue to lead the global growth boom over the next several decades. In addition, I want to share with you an underserved Chinese market that will likely explode over the next several years. There are several companies poised to capture this consumer wave that has swept over the Western world but is in its infancy in China.#-ad_banner-# Although China might not see a double-digit economic growth rate again, its current growth in the mid-single digits appears sustainable with continued government support. In… Read More

I believe in China.  I have no doubt that this nation of 1.35 billion consumers will continue to lead the global growth boom over the next several decades. In addition, I want to share with you an underserved Chinese market that will likely explode over the next several years. There are several companies poised to capture this consumer wave that has swept over the Western world but is in its infancy in China.#-ad_banner-# Although China might not see a double-digit economic growth rate again, its current growth in the mid-single digits appears sustainable with continued government support. In the most recent quarter, growth sank a two-decade low of 7.5% — but compared with any other economy, this remains a very impressive rate. China’s leading economic figure, Premier Li Keqiang, has vowed to keep growth at 7.5% or higher, though it’s important to note that other Chinese officials have forecast lower growth over the next several years. The truth is, the actual growth rate doesn’t really matter much for investors. In fact, the International Monetary Fund (IMF) recently indicated that slowing growth will actually lead to a higher quality of growth, which in turn will… Read More