What’s the first rule of successful real estate investing? Of course, you just said to yourself, “location, location, location.” Well, when it comes successful equity trading, the first rule that should come to your mind is “price, price, price.” More specifically, it is the share price performance of a stock or ETF relative to other stocks and ETFs traded in the market that is the most important metric to put in your favor.  If a security you are looking to buy has a proven track record of outperforming others in the broad market, or within its specific industry group, then… Read More

What’s the first rule of successful real estate investing? Of course, you just said to yourself, “location, location, location.” Well, when it comes successful equity trading, the first rule that should come to your mind is “price, price, price.” More specifically, it is the share price performance of a stock or ETF relative to other stocks and ETFs traded in the market that is the most important metric to put in your favor.  If a security you are looking to buy has a proven track record of outperforming others in the broad market, or within its specific industry group, then that tells you others on Wall Street think there is something special about it that makes it worth buying. #-ad_banner-#This “something special” could be a variety of things, including a proven track record of strong revenue and earnings growth, e.g., Walt Disney (NYSE: DIS); a breakout product or game-changing service, e.g., Netflix (NASDAQ: NFLX); a high-demand personal technology product, e.g., Apple (NASDAQ: AAPL); or a brilliant CEO, e.g., Elon Musk of Tesla Motors (NASDAQ: TSLA).  Whatever the reason, or combination of reasons, the price performance relative to the… Read More

What do Wonder Bread, Avis Rent-A-Car, Sheraton Hotels and Hartford Insurance Group have in common? They were all held under the corporate umbrella of telecom firm ITT in the 1970’s. ITT was one of many companies that became convinced that operating a wide range of companies in a vast number of industries is the quickest way to wealth-building. Yet ITT and others eventually buckled under the weight of their unwieldy operations and many large companies subsequently began to “de-conglomerate.” #-ad_banner-#Now, Carl Icahn is taking the de-conglomeration theme one step further: He’s imploring companies to spin off key divisions as a… Read More

What do Wonder Bread, Avis Rent-A-Car, Sheraton Hotels and Hartford Insurance Group have in common? They were all held under the corporate umbrella of telecom firm ITT in the 1970’s. ITT was one of many companies that became convinced that operating a wide range of companies in a vast number of industries is the quickest way to wealth-building. Yet ITT and others eventually buckled under the weight of their unwieldy operations and many large companies subsequently began to “de-conglomerate.” #-ad_banner-#Now, Carl Icahn is taking the de-conglomeration theme one step further: He’s imploring companies to spin off key divisions as a way to boost shares. He rattled eBay, Inc.’s (Nasdaq: EBAY) cage for nearly nine months, pushing the e-commerce company to spin-off its PayPal division. When eBay relented on September 30, announcing such a plan, its shares rose nearly 8%. Other activist investors are getting their case heard. Ralph Whitworth, who has publicly pushed Hewlett-Packard (NYSE: HPQ) to spin off its printer business, applauded the company when such a plan was announced earlier this month. “Shareholders will now be able to invest in the respective asset groups without the fear of cross-subsidies and inefficiencies that invariably plague large business conglomerates,” he… Read More

Shares of car rental company Hertz Global Holdings (NYSE: HTZ) have plummeted nearly 40% since mid-August, erasing a nine-month rally in less than two months’ time. The selling began in force after the company withdrew its full-year financial guidance, blaming a shortage of cars due to recalls and costs associated with an accounting error. Analysts have since lowered their earnings estimates, and the losses have been… Read More

Shares of car rental company Hertz Global Holdings (NYSE: HTZ) have plummeted nearly 40% since mid-August, erasing a nine-month rally in less than two months’ time. The selling began in force after the company withdrew its full-year financial guidance, blaming a shortage of cars due to recalls and costs associated with an accounting error. Analysts have since lowered their earnings estimates, and the losses have been exacerbated by broad market weakness. But for traders, now is the time to look for seller exhaustion, as they could make quick gains by hopping on a bullish reversal. #-ad_banner-#​Activist investor Carl Icahn is Hertz’s largest shareholder, with an 8.5% stake in the company. That alone could be a reason to be interested in playing the long side, particularly at these depressed… Read More

Nobody buys stock to lose money, but it happens. It might go something like this: You hear about what sounds like a game-changing company, and of course you’re skeptical. So-called game changers are a dime a dozen these days. Still, this particular company looks like a standout, so you do all your due diligence — and, indeed, the firm seems all it’s cracked up to be, with a unique product line that’s gaining popularity, a strong balance sheet and impressive top- and bottom-line growth. Its stock is up a lot, but all signs indicate plenty more… Read More

Nobody buys stock to lose money, but it happens. It might go something like this: You hear about what sounds like a game-changing company, and of course you’re skeptical. So-called game changers are a dime a dozen these days. Still, this particular company looks like a standout, so you do all your due diligence — and, indeed, the firm seems all it’s cracked up to be, with a unique product line that’s gaining popularity, a strong balance sheet and impressive top- and bottom-line growth. Its stock is up a lot, but all signs indicate plenty more upside to come. So you look for a good entry point and establish a position. Maybe you even buy more of the stock than usual because the future of the company is just that bright. Management and analysts see it disrupting an established industry and grabbing huge market share from the old guard. But a few years later, none of that has come to pass. It so happens the firm hit saturation a lot quicker than anticipated, so now sales and profits are falling, margins are shrinking and the stock is taking a beating. Read More

There’s a lot of angst in the market right now, and considering the Dow has spent the past 14 trading days making triple-digit intraday price swings, it’s no surprise that traders are nervous. #-ad_banner-#Since early September, there’s been a big correction in many formerly high-flying market leaders. Domestically, the small-cap segment of the market has come down sharply, with the Russell 2000 sinking 9%. In late September, I wrote about two inverse ETFs that can be used to take advantage of the breakdown in the small-cap segment. Today, I’m recommending you take a different tactic when… Read More

There’s a lot of angst in the market right now, and considering the Dow has spent the past 14 trading days making triple-digit intraday price swings, it’s no surprise that traders are nervous. #-ad_banner-#Since early September, there’s been a big correction in many formerly high-flying market leaders. Domestically, the small-cap segment of the market has come down sharply, with the Russell 2000 sinking 9%. In late September, I wrote about two inverse ETFs that can be used to take advantage of the breakdown in the small-cap segment. Today, I’m recommending you take a different tactic when it comes to profiting from another beaten-down sector. That sector is emerging markets, and buying the latest dip could net you 15% profits in the next few months. Like small caps, stocks pegged to the formerly high-flying emerging markets segment have come under heavy selling pressure since early September.  A look at the chart of the benchmark ETF in the space, the iShares MSCI Emerging Markets (NYSE: EEM), shows the huge run from the February low through the September high.  The seven-month surge of nearly 24% was shattered in September, as traders ran for the exits. That selling… Read More

If you are like most Americans, you have the majority of your stock holdings in U.S.-based companies. It’s called “home-country bias,” and it can be a huge mistake. Think about it… The company you work for is likely based in the United States. If you own a home, then you have exposure to the U.S. real estate market. In other words, your entire financial livelihood is based entirely in the United States. It’s not hard to see why this could be a problem. Your income and the value of your home are completely tied… Read More

If you are like most Americans, you have the majority of your stock holdings in U.S.-based companies. It’s called “home-country bias,” and it can be a huge mistake. Think about it… The company you work for is likely based in the United States. If you own a home, then you have exposure to the U.S. real estate market. In other words, your entire financial livelihood is based entirely in the United States. It’s not hard to see why this could be a problem. Your income and the value of your home are completely tied to the United States, so why choose to do the same with your portfolio? Not only is this risky, but it can be extremely limiting when it comes to your portfolio’s performance — especially for retirement accounts and long-term holdings. According to research from Credit Suisse and the London Business School, since 1964, U.S. equities have produced an average annual return of 5.8%. That’s okay, but not as good as the UK market, which posted an average annual return of 6%. The U.S. also lagged far behind South Africa’s 8.2% annual return and Sweden’s… Read More

In case we had forgotten it is the banks’ job to make money, they are hiking ATM and checking account fees to record levels to generate additional revenue. In fact, if you use an out-of-network ATM, your average fee will be $4.35 per transaction, a 5% increase over the past year, according to a new survey by Bankrate.com. #-ad_banner-#More fees, along with greater loan demand, strength in investment banking and cost-cutting, are expected to result in higher third-quarter profits at the nation’s largest banks. The top six are anticipated to show combined net income of $16.2 billion for the quarter,… Read More

In case we had forgotten it is the banks’ job to make money, they are hiking ATM and checking account fees to record levels to generate additional revenue. In fact, if you use an out-of-network ATM, your average fee will be $4.35 per transaction, a 5% increase over the past year, according to a new survey by Bankrate.com. #-ad_banner-#More fees, along with greater loan demand, strength in investment banking and cost-cutting, are expected to result in higher third-quarter profits at the nation’s largest banks. The top six are anticipated to show combined net income of $16.2 billion for the quarter, according to analysts tracked by Thomson Reuters, a 21% increase over Q3 2013. Most banks are still trading well below their pre-financial-crisis levels, while the economy continues to strengthen. A good way to take advantage of this is with the Financial Select Sector SPDR ETF (NYSE: XLF). While the broader stock market has regained all of its losses and made new high after new high this year, XLF has only achieved a halfway retracement from its 2007 highs to its 2009 lows. That leaves plenty of room for continued upside. XLF broke out of its four-year trading range in early… Read More

It’s hard to see how an all-American company that’s been in business for nearly a century could have fallen so far. I’m not talking about J.C. Penny, Best Buy or any of those big box stores that have been struggling recently. #-ad_banner-#I’m talking about a company that started in Brooklyn as a single-store operation in 1921 by two brothers that made a business out of selling amateur, ham radio parts. Over the next nine decades, the company would expand into more electronics, but would face bouts of bankruptcy scares, massive layoffs and thousands of store closings… Read More

It’s hard to see how an all-American company that’s been in business for nearly a century could have fallen so far. I’m not talking about J.C. Penny, Best Buy or any of those big box stores that have been struggling recently. #-ad_banner-#I’m talking about a company that started in Brooklyn as a single-store operation in 1921 by two brothers that made a business out of selling amateur, ham radio parts. Over the next nine decades, the company would expand into more electronics, but would face bouts of bankruptcy scares, massive layoffs and thousands of store closings all along the way. Despite its struggles, the niche electronic firm managed to open 5,200 locations in the United States over its 93 year history. But as of recently, it appears its luck may be about to run out. In case you haven’t guessed by now, I’m referring to RadioShack (NYSE: RSH). The company announced earlier this month that RadioShack may soon need to file for bankruptcy protection after filing its 10th quarterly loss in a row. Management said same-store sales dropped… Read More

Five years into a remarkable industry rebound, auto makers — and their parts suppliers — now generate record profit margins that would have been unthinkable a half decade ago. The streamlining of almost every player has led to robust levels of the most important metric you should track: Free cash flow (FCF). One benefit of such financial strength: stock buybacks have been a major ongoing theme for auto parts suppliers. #-ad_banner-#Of course, the FCF and other financial metrics grow much larger when you are talking about the industry’s top dogs: Ford Motor Co. (NYSE: F) and… Read More

Five years into a remarkable industry rebound, auto makers — and their parts suppliers — now generate record profit margins that would have been unthinkable a half decade ago. The streamlining of almost every player has led to robust levels of the most important metric you should track: Free cash flow (FCF). One benefit of such financial strength: stock buybacks have been a major ongoing theme for auto parts suppliers. #-ad_banner-#Of course, the FCF and other financial metrics grow much larger when you are talking about the industry’s top dogs: Ford Motor Co. (NYSE: F) and General Motors Co. (NYSE: GM). Both firms look far healthier — from a financial perspective — than they did a decade ago. (Earlier this week, Ford preannounced a challenging period ahead but largely reiterated long-term financial targets.) These companies share so many common traits that it’s easy to compare them on an apples-to-apples basis to see which company’s stock holds greater appeal. Roughly three years ago, I gave Ford the edge — their valuations were comparable, but Ford’s management was much stronger. When I looked at these two stocks again in 2013, I noted that Ford still had the edge. Read More

Bigger isn’t necessarily better, but over the past six months, the bigger the market capitalization, the better the investment results. For example, during that time, large-cap stocks in the broader S&P 500 index have scored a 7.4% gain. By comparison, small-cap stocks comprising the benchmark Russell 2000 index are actually down 4.2% since late March. #-ad_banner-#In Monday trade, the declines in the small-cap segment of the market got rather ugly, and the Russell 2000 sank 1.4% for its biggest one-day loss in seven weeks. The divergence between the large-cap and small-cap segments of the markets is a worrisome development for… Read More

Bigger isn’t necessarily better, but over the past six months, the bigger the market capitalization, the better the investment results. For example, during that time, large-cap stocks in the broader S&P 500 index have scored a 7.4% gain. By comparison, small-cap stocks comprising the benchmark Russell 2000 index are actually down 4.2% since late March. #-ad_banner-#In Monday trade, the declines in the small-cap segment of the market got rather ugly, and the Russell 2000 sank 1.4% for its biggest one-day loss in seven weeks. The divergence between the large-cap and small-cap segments of the markets is a worrisome development for a continuation of the bull market, as it signals a clear breakdown in market breadth. Moreover, the slumping small-cap segment usually is a precursor to a wider sell-off. Interestingly, during the beginning of a bull market, small-cap stocks tend to lead the charge higher. This is because the smart money is generally more willing to take a chance on smaller, less-proven and more speculative small caps at the onset of a bull. Unfortunately, the reverse effect is also true, and that means that toward the end of a bull market, the smart money tends to flow to bigger, battle-tested and… Read More