I watch insider transactions closely, following the big selling just as much as the buying. The conventional wisdom is that the actions of these investors can tell you when to buy or sell a company. After all, directors and executive management are ALWAYS trading on insider information. Much of the time, scanning through recent Form 4 statements, the SEC document required when insiders buy or sell shares, is a big yawn. It’s either too small an amount to mean anything to the overall ownership or simply the insider adjusting their total wealth held in the company. But every once in… Read More

I watch insider transactions closely, following the big selling just as much as the buying. The conventional wisdom is that the actions of these investors can tell you when to buy or sell a company. After all, directors and executive management are ALWAYS trading on insider information. Much of the time, scanning through recent Form 4 statements, the SEC document required when insiders buy or sell shares, is a big yawn. It’s either too small an amount to mean anything to the overall ownership or simply the insider adjusting their total wealth held in the company. But every once in a while you come across something that makes you sit straight up: An insider with other intentions. Finding these instances gives investors the chance to piggyback on the insider trades before the market catches on. I think I’ve found one of those trades studying the insider buying from one of Wall Street’s most famous, or infamous, takeover kings. He’s turned his ability to turnaround struggling companies into a $12 billion fortune, making him the 36th richest person in America. Now it looks like he’s focused his aim on a company he’s already tried to buy out before. This Top Director… Read More

There are few things in the stock market as exciting as a mergers and acquisitions (M&A) announcement, which refers in this case to a consolidation of publicly-held companies.  Shares can soar or dive in price depending on how the market views the news. Investors try to gauge how effectively the combined company will be able to address its market, and whether the cost of the acquisition was worth it.  There are always multiple M&A opportunities pending, but at the moment there are only a few that everyday investors need to be keeping an eye on. Today’s Most Important M&A Deals … Read More

There are few things in the stock market as exciting as a mergers and acquisitions (M&A) announcement, which refers in this case to a consolidation of publicly-held companies.  Shares can soar or dive in price depending on how the market views the news. Investors try to gauge how effectively the combined company will be able to address its market, and whether the cost of the acquisition was worth it.  There are always multiple M&A opportunities pending, but at the moment there are only a few that everyday investors need to be keeping an eye on. Today’s Most Important M&A Deals  1. Bass Pro Shops’ Acquisition Of Cabela’s (NYSE: CAB) As an avid fisherman, I know both these firms and was quite surprised to learn of the buy-out. #-ad_banner-#The two heavyweights in the outdoor sporting goods market have decided to merge. Cabela’s shareholders recently voted to sell itself to privately held Bass Pro Shops for $5.5 billion or $65.50 per share.  The deal was approved by the FTC in early July and includes Cabela’s stores, website, and catalog business. There remains a hurdle to the deal closing. Cabela’s banking unit is agreed to be sold to Synovus Financial (NYSE: SNV)… Read More

Fears are growing that the U.S. stock market is in dangerous territory.  The chart below illustrates the return on each of the three major stock indices since the 2008 Financial Crisis.  As you can see, the Nasdaq Composite, up more than 243% since 2009, is leading the way higher. But lest you think the run-up is reminiscent of the tech bubble of 1999, both the S&P 500 and Dow Jones are also gunning higher — up more than 157% and 142% respectively.  All three indices are solidly at record high levels. Now, such a chart would… Read More

Fears are growing that the U.S. stock market is in dangerous territory.  The chart below illustrates the return on each of the three major stock indices since the 2008 Financial Crisis.  As you can see, the Nasdaq Composite, up more than 243% since 2009, is leading the way higher. But lest you think the run-up is reminiscent of the tech bubble of 1999, both the S&P 500 and Dow Jones are also gunning higher — up more than 157% and 142% respectively.  All three indices are solidly at record high levels. Now, such a chart would normally be interpreted as bullish — and rightly so. But we’re not in normal times. Currently, the S&P 500 is trading at 25.8 times earnings (on a GAAP basis) and at almost 30 times by the cyclically-adjusted price-to-earnings ratio (CAPE). That’s a whopping 78% higher than the historic CAPE average of 16.7.  #-ad_banner-#Even the “Buffet Valuation” metric, found by dividing the value of the stock market by GDP, sits at 1.2 ($23 trillion/$19 trillion), indicating the market is roughly 20% overvalued. In fact, there is really only one widely used financial metric that isn’t screaming about stock market valuations: The… Read More

Short sellers get a bad rap. They are often villainized by the media for “ganging up” on troubled companies or even causing market crashes. There is little evidence to support the latter, though, and the truth is short sellers are a necessary part of the market. They help provide liquidity and keep overpriced stocks in check. I don’t know about you, but I’m not content only making profits on the upside. There is an extraordinary amount of money to be made on the downside, especially in a market like this. But when you short a stock, you risk an unlimited… Read More

Short sellers get a bad rap. They are often villainized by the media for “ganging up” on troubled companies or even causing market crashes. There is little evidence to support the latter, though, and the truth is short sellers are a necessary part of the market. They help provide liquidity and keep overpriced stocks in check. I don’t know about you, but I’m not content only making profits on the upside. There is an extraordinary amount of money to be made on the downside, especially in a market like this. But when you short a stock, you risk an unlimited loss for a limited gain. I’m a probability guy, and I don’t like those odds. Plus, there is a strategy for profiting when stocks fall that offers limited risk and substantial (though not quite unlimited) gains. Given that, I’m not sure why anyone would choose to short stocks. Now, my strategy involves options, another area of the market that gets a bad rap. But unlike short selling, options — when used properly — can actually help limit your risk. —Recommended Link— $43K A Year For Life… (Takes 20 Minutes) Want an extra $43,543 a year in bonus income? You… Read More

On Wednesday, May 17, the Dow and S&P 500 took a nose dive, recording their worst day since last September as the political side-show in Washington D.C. threatened the market’s eight-year bull run. While stocks have recovered from the selloff, all eyes are still on Washington for risks to the market. But political risk isn’t the biggest hurdle to stock gains. The biggest risk, one that has been building for more than a year, is now spreading and could be about to put the brakes on consumer spending and the entire economy. Real evidence is mounting that a consumer credit… Read More

On Wednesday, May 17, the Dow and S&P 500 took a nose dive, recording their worst day since last September as the political side-show in Washington D.C. threatened the market’s eight-year bull run. While stocks have recovered from the selloff, all eyes are still on Washington for risks to the market. But political risk isn’t the biggest hurdle to stock gains. The biggest risk, one that has been building for more than a year, is now spreading and could be about to put the brakes on consumer spending and the entire economy. Real evidence is mounting that a consumer credit crisis is brewing in America. It’s an eerie reminder of the mortgage crisis and could turn out to be just as spectacular when it all comes crashing down. The Crisis In Auto Loans Is Spilling Into Consumer Loans The crisis has been building in auto loans for over a year, as rock-bottom interest rates sent sales of cars to consecutive annual records. When car prices started to increase, lenders relaxed standards and nearly doubled the amount of time people could pay on the loan. The total amount of auto loans outstanding has jumped 50% since 2010. But cracks started… Read More

As I repeatedly scan the markets for the best opportunities, my searches all seem to lead to two areas. The first is the social technology sector — Google, Facebook, Amazon, etc. It contains some great stocks, but most are so heavily bid up that it’s hard to justify an entry here — at least, not until a pullback. The second, equally exciting area is defense and travel technology. This area is less popular and less understood than social tech, creating more potential value on average. There are several companies that thrive in this genre, but one keeps rising to the… Read More

As I repeatedly scan the markets for the best opportunities, my searches all seem to lead to two areas. The first is the social technology sector — Google, Facebook, Amazon, etc. It contains some great stocks, but most are so heavily bid up that it’s hard to justify an entry here — at least, not until a pullback. The second, equally exciting area is defense and travel technology. This area is less popular and less understood than social tech, creating more potential value on average. There are several companies that thrive in this genre, but one keeps rising to the top of my list: Rockwell Collins (NYSE: COL). My original thesis was centered on COL becoming more of a “household name,” but both of our recent wins had little to do with Rockwell’s broad recognition as a great company. The first rally was attributed to a boost in the entire defense group (thanks to action from North Korea) followed by a better-than-expected earnings report. Both of these events are certainly great news for the company, but I still feel that Rockwell’s true value is underestimated and that its recent acquisition of BE Aerospace isn’t getting the credit it deserves. Rockwell… Read More

One year later and the story has completely changed… As we enter the traditional seasonally weak six-month period of the year, you will no doubt read and hear about the debate over whether the old Wall Street axiom “Sell In May And Go Away” is relevant this year. Of course, no one can predict what the market will do this summer, but one of the reasons that this old saying is still around is because it does have some validity to it, which I’ll touch on in a moment. Readers of my Maximum Profit premium newsletter know that this time… Read More

One year later and the story has completely changed… As we enter the traditional seasonally weak six-month period of the year, you will no doubt read and hear about the debate over whether the old Wall Street axiom “Sell In May And Go Away” is relevant this year. Of course, no one can predict what the market will do this summer, but one of the reasons that this old saying is still around is because it does have some validity to it, which I’ll touch on in a moment. Readers of my Maximum Profit premium newsletter know that this time last year, I was quite cautious regarding the market outlook. I cited a decline in corporate earnings, the trouble my system was having finding companies with exceptional cash flow growth and the sideways trading market as reasons for concern. This was the chart I showed my readers last May:   As you can see — by the shaded green line — earnings were in a decline and the market wasn’t sure what to do. And for the most part we dabbled in and out of a handful stocks, but mainly kept dry powder on hand for when… Read More

What goes up must come down. These words are true in many places, but especially in the stock market. High-flying stocks can quickly reverse, destroying portfolios and dreams on the way back down. The urge to keep holding huge gains for even more is strong in all investors. This urge is called greed and greed crushes profits. Controlling greed is vital for success in the stock market. The trick is knowing when to sell. Remember, no one has ever gone broke taking profits. Careful observation of internal and external factors affecting share price can provide an educated guess as to… Read More

What goes up must come down. These words are true in many places, but especially in the stock market. High-flying stocks can quickly reverse, destroying portfolios and dreams on the way back down. The urge to keep holding huge gains for even more is strong in all investors. This urge is called greed and greed crushes profits. Controlling greed is vital for success in the stock market. The trick is knowing when to sell. Remember, no one has ever gone broke taking profits. Careful observation of internal and external factors affecting share price can provide an educated guess as to when it is time to take profits. 2 Stocks You Need To Dump Now I have identified two ultra-popular, highly profitable stocks that need to be dumped now. Could these stocks continue to move higher? Sure, anything is possible in the stock market, but these two in particular show all the signs of being severely overvalued and ready to plunge. Risk-embracing experienced investors could short these monster gainers, but that’s not what this article is about. This article will lay out the case for why it is time to take profits in these two favorite companies. Believe it or… Read More

Even giants can fall in the stock market. History is full of companies once thought to be bulletproof that are now relegated to the dustbin of history. Even the great Warren Buffett is not immune to economic forces. Right now, Buffett’s third largest holding, the Coca-Cola (NYSE: KO) company is setting up for a sell-off. Despite its size, dividends, past performance, and investor interest, Coca-Cola stock is not beyond entering a downward period. And this could have wide-reaching implications. Not only is Coca-Cola a huge holding for the Oracle of Omaha, but it is also a major part… Read More

Even giants can fall in the stock market. History is full of companies once thought to be bulletproof that are now relegated to the dustbin of history. Even the great Warren Buffett is not immune to economic forces. Right now, Buffett’s third largest holding, the Coca-Cola (NYSE: KO) company is setting up for a sell-off. Despite its size, dividends, past performance, and investor interest, Coca-Cola stock is not beyond entering a downward period. And this could have wide-reaching implications. Not only is Coca-Cola a huge holding for the Oracle of Omaha, but it is also a major part of the majority of diversified stock portfolios and a Dow component. This means that many giant index funds and ETFs are heavily invested in the stock. But this is nothing to be afraid of. In fact, savvy investors can use the expected down period to profit handsomely on the short side. How Can I Profit From Coke’s Decline? The coolest thing about active trading is that money can always be made, whether the stock is going up or going down. Unlike the majority of buy-and-hold investors, the active investor does not care what direction the stock moves. The secret… Read More

Democrats, Republicans and independents woke up to some good news on Wednesday: The election is over. Of course, about half of country sees the outcome as bad news while the other half views it as good news. But most people are glad the campaign has ended.  From my perspective, at least the ads are done and now we can plan for the future without the uncertainty of an election looming over us. #-ad_banner-#Now that we know who will be in the White House next year, planning a strategy for the market might be fairly easy. The presidential cycle is a… Read More

Democrats, Republicans and independents woke up to some good news on Wednesday: The election is over. Of course, about half of country sees the outcome as bad news while the other half views it as good news. But most people are glad the campaign has ended.  From my perspective, at least the ads are done and now we can plan for the future without the uncertainty of an election looming over us. #-ad_banner-#Now that we know who will be in the White House next year, planning a strategy for the market might be fairly easy. The presidential cycle is a four-year pattern in the stock market that many analysts have identified.  There are variations of this pattern, with some analysts starting the cycle in January when the president assumes office while others believe it starts in November with the election. Despite these differences, there is a general consensus that the first two years of a president’s term are the most difficult for the market. Once in office, a new president must make a variety of tough decisions. There are almost always problems the previous president was unable to resolve. Then there are new problems that develop. The essence of the… Read More