Stock market investors are a very fickle bunch. Once-wildly popular stocks can quickly be relegated to the dustbin of history. Other times, barely-known companies can trigger an investor stampede, sending share prices into the stratosphere.  Most investors like to own stocks while they are in this viral phase. It’s exciting and can be very profitable to follow the hype. However, popular-stock chasing can have a dark side.  Investors who buy stocks on the upswing, called momentum buyers, always run the risk that they are late to the party. This can sometimes leave them facing a selloff as soon as they… Read More

Stock market investors are a very fickle bunch. Once-wildly popular stocks can quickly be relegated to the dustbin of history. Other times, barely-known companies can trigger an investor stampede, sending share prices into the stratosphere.  Most investors like to own stocks while they are in this viral phase. It’s exciting and can be very profitable to follow the hype. However, popular-stock chasing can have a dark side.  Investors who buy stocks on the upswing, called momentum buyers, always run the risk that they are late to the party. This can sometimes leave them facing a selloff as soon as they buy in to the stock.  I prefer to take the opposite tact by investing in stocks that have fallen out of favor with the masses. These forgotten stocks can often provide outsized returns with barely any attention.  My theory is that despite being forgotten, investors are still familiar with these companies from their glory days. Therefore, just a tiny bit of good news will instantly attract investors on name recognition. In other words, investors are already psychologically “sold” on the stock, making the buy decision much easier than for an unknown company.  Today, I’ve found three forgotten stocks that have… Read More

Alan Greenspan is back in the news. The former chairman of the Federal Reserve is now 91 years old but still sounds just like he did 30 years ago when he burst onto the world stage. I’ve always found that he speaks in a reassuring tone, which was important back in 1987, when he was beginning his tenure at the Fed. You see, in October of that year — just months after Greenspan’s nomination was confirmed by the Senate — the market suffered a major crash. While investors were reacting, Greenspan reassured the world that the Fed would be the lender of… Read More

Alan Greenspan is back in the news. The former chairman of the Federal Reserve is now 91 years old but still sounds just like he did 30 years ago when he burst onto the world stage. I’ve always found that he speaks in a reassuring tone, which was important back in 1987, when he was beginning his tenure at the Fed. You see, in October of that year — just months after Greenspan’s nomination was confirmed by the Senate — the market suffered a major crash. While investors were reacting, Greenspan reassured the world that the Fed would be the lender of last resort, ensuring the financial system didn’t fail. In the end, Greenspan never needed to act because the stock market stopped its decline as quickly as it began. Maybe the markets calmed down because Greenspan jumped in front of the news so quickly. We’ll never know what caused the panic selling to end but we know Greenspan continued to exert a calming influence on the markets. —Sponsored Link— Buy These 5 Stocks To Cash In On The Marijuana Megatrend Legalization of marijuana for medicinal and recreational use is creating a multibillion-dollar industry. But don’t think… Read More

After a tough 2016 due to political pressure, drug-makers looked to be having a good year. The SPDR S&P Pharmaceuticals ETF (NYSE: XPH) reached a 2017 high of $44.32 in late July, up nearly 14% on the year.  Even the hardest hit among the group were finding new life, such as when Valeant Pharmaceuticals (NYSE: VRX) (which had suffered from seemingly daily negative headlines) surged 96% from its April low through July. But second-quarter earnings have not been kind. A chorus of poor earnings reports, especially in generics makers, has wiped 6.3% of the value off XPH in just 10… Read More

After a tough 2016 due to political pressure, drug-makers looked to be having a good year. The SPDR S&P Pharmaceuticals ETF (NYSE: XPH) reached a 2017 high of $44.32 in late July, up nearly 14% on the year.  Even the hardest hit among the group were finding new life, such as when Valeant Pharmaceuticals (NYSE: VRX) (which had suffered from seemingly daily negative headlines) surged 96% from its April low through July. But second-quarter earnings have not been kind. A chorus of poor earnings reports, especially in generics makers, has wiped 6.3% of the value off XPH in just 10 trading days. New fears around increased competition and high levels of debt are dragging the entire industry lower. At the same time, this is an industry with an immense amount of support from multiple demographics. This could force government regulation that could start to clear the way for faster drug approvals. That means a rebound could be in the making for the best names in the group — those pulled lower with the industry but with strong fundamentals and upside potential. I’ve found three drug-makers trading at attractive valuations, without the debt that overhangs much of the group, and that… Read More

It wasn’t a surprise that the U.S. Federal Reserve didn’t hike interest rates its July meeting.  The Fed already hiked short-term interest rates twice this year, raising rates by a quarter percentage point in March and again in June.  After years of near-zero interest rate policies, the benchmark rate has now been hiked to a range between 1% and 1.25%. Of course, rates are still low by any historical measure. But they are significantly higher than just a year ago. Also important is the speed with which short-term interest rates have increased over the past year. The two charts below… Read More

It wasn’t a surprise that the U.S. Federal Reserve didn’t hike interest rates its July meeting.  The Fed already hiked short-term interest rates twice this year, raising rates by a quarter percentage point in March and again in June.  After years of near-zero interest rate policies, the benchmark rate has now been hiked to a range between 1% and 1.25%. Of course, rates are still low by any historical measure. But they are significantly higher than just a year ago. Also important is the speed with which short-term interest rates have increased over the past year. The two charts below show how fast a three-month Treasury note rate and a one-year rate have jumped:  3-Month Treasury  1-Year Treasury Unfortunately for income investors, these rate increases are being felt especially in closed-end funds, or funds that issue a fixed number of shares and can also borrow in order to enhance dividends and returns.  The mechanism is quite simple. Higher short-term rates are making the cost of leverage more expensive. And because many closed-end funds use leverage to enhance returns and dividends, the costs for these closed-end funds are also going up.  —Recommended Link— Why The… Read More

The number of S&P 500 companies paying a dividend just hit a new all-time high. As of July 1, 84% (424) of the S&P 500 companies paid a dividend — up from 74% 10 years ago.   That’s an extra 54 dividend payers to choose from in just the S&P. It means that, on average, you’ve had five new choices each year.   On one hand it’s great. These companies are building reputations as solid dividend payers. And investors have more options than ever.   #-ad_banner-#But on the other hand, not all dividends are created equally. On the surface two… Read More

The number of S&P 500 companies paying a dividend just hit a new all-time high. As of July 1, 84% (424) of the S&P 500 companies paid a dividend — up from 74% 10 years ago.   That’s an extra 54 dividend payers to choose from in just the S&P. It means that, on average, you’ve had five new choices each year.   On one hand it’s great. These companies are building reputations as solid dividend payers. And investors have more options than ever.   #-ad_banner-#But on the other hand, not all dividends are created equally. On the surface two stocks with a current yield of 2.6% may look similar, but underneath the hood they can be very different.   The newest dividend payers don’t have the history to demonstrate they can sustain a dividend through a recession, a depression, or a stock market crash, and certainly not through a couple of world wars.   If you want a dividend payer with that kind of resume, you need to zero in on the most reliable dividend payers on earth, companies that are in one of the most exclusive clubs in the entire global stock market.    Companies That Have Been… Read More

Change can be difficult. I was reminded of this when I saw Spencer Johnson’s obituary in The New York Times.  I didn’t recognize the name at first, but after reading the headline, I immediately knew who he was:  If you’ve ever worked for the government or in a large company, you probably read one of the 28 million copies that have been sold.  This was a short book — 94 pages of very large type. According to the article, the book “told the story of two mice, Sniff and Scurry, and two tiny people, Hem and Haw, looking… Read More

Change can be difficult. I was reminded of this when I saw Spencer Johnson’s obituary in The New York Times.  I didn’t recognize the name at first, but after reading the headline, I immediately knew who he was:  If you’ve ever worked for the government or in a large company, you probably read one of the 28 million copies that have been sold.  This was a short book — 94 pages of very large type. According to the article, the book “told the story of two mice, Sniff and Scurry, and two tiny people, Hem and Haw, looking for cheese in a maze. When the cheese supply runs out at Cheese Station C, the mice leave without angst to find more. But Hem and Haw resist, refusing to accept change. Haw overcomes his anxiety and ventures out of his comfort zone — at first timidly, but then, gradually, with more confidence — in search of a new supply of cheese.”  “Before long, he knew why he felt good,” Mr. Johnson wrote about Haw. “He stopped to write again on the wall: ‘When you stop being afraid, you feel good!'”  Johnson’s obituary noted that although the book was short,… Read More