American companies are on a shopping spree for foreign companies. Four of the largest acquisitions of overseas companies in history were announced within the last five months. Qualcomm (Nasdaq: QCOM) announced its $47.7 billion acquisition of NXP Semiconductors (Nasdaq: NXPI) in October just a month before Praxair (NYSE: PX) offered $44.8 billion for Linde. #-ad_banner-#Kraft Heinz (Nasdaq: KHC) agreed to withdraw its $143 billion acquisition offer of U.K.-based Unilever (NYSE: UL) earlier this month but it set the stage for American interest in foreign companies. The takeover would have been the third-largest in history and the… Read More

American companies are on a shopping spree for foreign companies. Four of the largest acquisitions of overseas companies in history were announced within the last five months. Qualcomm (Nasdaq: QCOM) announced its $47.7 billion acquisition of NXP Semiconductors (Nasdaq: NXPI) in October just a month before Praxair (NYSE: PX) offered $44.8 billion for Linde. #-ad_banner-#Kraft Heinz (Nasdaq: KHC) agreed to withdraw its $143 billion acquisition offer of U.K.-based Unilever (NYSE: UL) earlier this month but it set the stage for American interest in foreign companies. The takeover would have been the third-largest in history and the largest ever purchase of a foreign firm by a U.S. company. These aren’t random buyouts for isolated reasons. U.S. firms are looking at strategic advantages and some strong macro-level factors are driving the buying spree across multiple sectors. These larger forces could lead to more announcements soon, driving headlines and prices for foreign companies. The Big Picture Driving The Buyout Search Abroad While the three examples above are from completely different industries, there are bigger forces making foreign acquisitions a smart move for U.S. firms. A strong dollar, available cash, business confidence, and the potential for tax reform that… Read More

If you’re like me, then you have probably entered your investments into a portfolio tracking service for easy monitoring. Instead of manually typing individual ticker symbols day after day for stock quotes, you can enter them once. After that, it just takes a click of the mouse to instantly see how all of your holdings are performing on one screen. It’s a real time saver. And many financial sites like Morningstar and Yahoo Finance offer this service for free. #-ad_banner-#Before long, you’ll notice that on up days when most stocks are in the green, some holdings always seem to ride… Read More

If you’re like me, then you have probably entered your investments into a portfolio tracking service for easy monitoring. Instead of manually typing individual ticker symbols day after day for stock quotes, you can enter them once. After that, it just takes a click of the mouse to instantly see how all of your holdings are performing on one screen. It’s a real time saver. And many financial sites like Morningstar and Yahoo Finance offer this service for free. #-ad_banner-#Before long, you’ll notice that on up days when most stocks are in the green, some holdings always seem to ride a little bit higher than others. If most stocks in the group are up 1% to 2%, these outliers might gain 3%. The opposite is true on down days. When most stocks are in the red by 1% to 2%, these typically get hit harder and might drop 3%. I’m not talking about an isolated good (or bad) day triggered by company-specific news, but simply the stock’s general sensitivity to market fluctuations over a period of months or years. There is a way to measure this sensitivity. It’s called beta, and it measures the degree to which a security rises… Read More

What an incredible time to be a stock market investor. Prices have been surging higher over the past few months, with the popular benchmark Dow Jones Industrial Average breaking the 20,000 barrier for the first time in its history. Driven by the new Presidential administration’s anti-regulatory, pro-infrastructure spending, and tax-slashing… Read More

In 1980, economist Julian Simon had had enough. For the past decade-plus, he had watched Stanford biologist Paul Ehrlich make all sorts of grim predictions about the human race. For example, in 1968, Ehrlich predicted that 20% of the world’s population would starve to death by 1985. Later, he predicted that England would not exist as a country by the year 2000. This kind of thinking has its roots in the theories of Thomas Malthus. (Not that you asked, but I think Malthusianism has had far too much influence in both academia and the larger public for far too long. Read More

In 1980, economist Julian Simon had had enough. For the past decade-plus, he had watched Stanford biologist Paul Ehrlich make all sorts of grim predictions about the human race. For example, in 1968, Ehrlich predicted that 20% of the world’s population would starve to death by 1985. Later, he predicted that England would not exist as a country by the year 2000. This kind of thinking has its roots in the theories of Thomas Malthus. (Not that you asked, but I think Malthusianism has had far too much influence in both academia and the larger public for far too long. It’s one of those theories that has a nasty habit of influencing some of history’s absolute worst ideas.) #-ad_banner-#Despite all of the hand-wringing and pearl-clutching, nothing seemed to ever come of these prognostications. So Simon thought it was time to make a little wager with Ehrlich… If the predicted world population explosion transpired, leading to the vast depletion of natural resources, then the prices of commodities would naturally skyrocket. So Simon challenged Ehrlich to buy $1,000 in any mix of commodities he chose. Then, after a 10-year period, if prices were higher, Simon would pay the difference. If prices were… Read More

The Trump rally has come in two phases, with an initial burst of optimism after the election and another run higher since Inauguration Day. But has hope for tax reform and fewer regulations taken the market as far as it can? Investors are starting to get skeptical about the prospect for economic growth this year and the market is struggling to make new highs. When the reality of a slow process for the President’s business agenda sets in, investor caution could turn into a full-blown rout. On the other hand, you don’t want to miss out on further gains if… Read More

The Trump rally has come in two phases, with an initial burst of optimism after the election and another run higher since Inauguration Day. But has hope for tax reform and fewer regulations taken the market as far as it can? Investors are starting to get skeptical about the prospect for economic growth this year and the market is struggling to make new highs. When the reality of a slow process for the President’s business agenda sets in, investor caution could turn into a full-blown rout. On the other hand, you don’t want to miss out on further gains if improved business sentiment turns into a rebound in corporate profits. That could quickly legitimize the rally and send shares even higher. Fortunately, I’ve found one segment of the market that can offer both protection from a selloff as well as participation in further gains. This dual protection makes them some of the best growth stocks for 2017. Is The Trump Rally Over? The Trump rally has taken stocks to all-time highs but has really come in two phases. The first, from the election to mid-December, gave investors new hope in a business-friendly environment and a 6% bump in asset… 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

Ever since I was a kid, I loved discount stores. I remember the old TG&Y five and dime store in my neighborhood. I’d trade in enough Coke (NYSE: KO) bottles at the A&P next door to cobble together twenty five cents to buy a bag of green plastic army men… Read More

Finding great stocks can be a daunting task. While many investors are happy letting a financial adviser select their stocks, others rely on tips they read in magazines or on the Internet. Given the amount of market volatility day to day, picking promising stocks seems more like a matter of luck than the result of any real due diligence. But this doesn’t have to be hard. In fact, finding stocks that will outperform the market is much easier if you keep three principles in mind… Good Companies Earn Money Reliably At the end of the day, successful companies earn… Read More

Finding great stocks can be a daunting task. While many investors are happy letting a financial adviser select their stocks, others rely on tips they read in magazines or on the Internet. Given the amount of market volatility day to day, picking promising stocks seems more like a matter of luck than the result of any real due diligence. But this doesn’t have to be hard. In fact, finding stocks that will outperform the market is much easier if you keep three principles in mind… Good Companies Earn Money Reliably At the end of the day, successful companies earn money year after year. Now, one of my favorite metrics I use to find stocks is a high return on invested capital (ROIC). ROIC is calculated by subtracting taxes from operating profits and dividing the result by invested capital. #-ad_banner-#ROIC makes a superior metric because it is a more consistent measure of profits than net income. Additionally, ROIC excludes non-GAAP tricks like using one-time charges and write-offs that muddy the accounting waters. So what’s a good ROIC reading? Well, good companies generate a ROIC greater than 10% annually. But really good companies have an ROIC of 20% or more over… Read More