After throwing money at the market for over 10 years now, I know full well that some of the best trades or investments don’t involve timely execution or well-priced entries, but rather sitting on my hands and doing nothing at all. #-ad_banner-#With all the excitement and buzz surrounding Apple (Nasdaq: AAPL) and its 7-for-1 stock split last week, I thought best to let the market digest a full week of trading, commentary and analysis before even discussing if the stock is still a viable investment after its “change.” (At the time of the split announcement on April 23,… Read More

After throwing money at the market for over 10 years now, I know full well that some of the best trades or investments don’t involve timely execution or well-priced entries, but rather sitting on my hands and doing nothing at all. #-ad_banner-#With all the excitement and buzz surrounding Apple (Nasdaq: AAPL) and its 7-for-1 stock split last week, I thought best to let the market digest a full week of trading, commentary and analysis before even discussing if the stock is still a viable investment after its “change.” (At the time of the split announcement on April 23, my colleague David Sterman considered that same point.)  Save a few quick traders who darted in and out for a profit, investors who bought in on Monday likely ended the week down. Hindsight will say that the real trade would have been to buy AAPL at the time of the split announcement.  As most of us are without crystal balls, however, it’s time to make a case for AAPL going forward.  We’ve had the opportunity to filter out some noise and digest a week or so of post-split trading, so what can we expect from here on out? Let’s take… Read More

I have no doubt that the Dow Jones Industrial Average will break 20,000 within the next 36 months. #-ad_banner-#I don’t say this lightly. This prediction is based on solid evidence, historical precedent and personal experience. The fundamental and technical pictures of today’s stock market are screaming for prices to push above psychological resistance at 20,000. You might recall that in the days after the dot-com bust, the 10,000 level was a source of concern and trepidation among investors — but after breaking through that barrier in late 2003, the Dow pushed another 4,000 points higher over the next… Read More

I have no doubt that the Dow Jones Industrial Average will break 20,000 within the next 36 months. #-ad_banner-#I don’t say this lightly. This prediction is based on solid evidence, historical precedent and personal experience. The fundamental and technical pictures of today’s stock market are screaming for prices to push above psychological resistance at 20,000. You might recall that in the days after the dot-com bust, the 10,000 level was a source of concern and trepidation among investors — but after breaking through that barrier in late 2003, the Dow pushed another 4,000 points higher over the next few years. The second largest correction of all time (in percentage terms) started in October 2007. The Dow plunged over 50% from the highs to just below 7,000 in January 2009. In hindsight, this extreme correction had to happen. It was the result of an overheated economy fueled by lackadaisical lending policies for residential real estate. When this bubble finally burst, it took down the entire economy as investors lost faith in financial institutions and the market itself. Readers often laugh when told that things are different this time… but things really are different this time. The stock market has… Read More

Intel (Nasdaq: INTC) made headlines last week when it raised its outlook for second-quarter and fiscal-year sales and gross margins.  The surprising news sent shares of INTC surging 7% on Friday, and it had a ripple effect across the so-called “old tech” sector, including Microsoft (Nasdaq: MSFT) and Hewlett-Packard (NYSE: HPQ).  Friday’s momentum put the wind at the bulls’ backs for the medium term. After peaking in August 2000 and then violently reverting to the mean, INTC spent the next 13 years treading water. Demand for its chips waned over the years as… Read More

Intel (Nasdaq: INTC) made headlines last week when it raised its outlook for second-quarter and fiscal-year sales and gross margins.  The surprising news sent shares of INTC surging 7% on Friday, and it had a ripple effect across the so-called “old tech” sector, including Microsoft (Nasdaq: MSFT) and Hewlett-Packard (NYSE: HPQ).  Friday’s momentum put the wind at the bulls’ backs for the medium term. After peaking in August 2000 and then violently reverting to the mean, INTC spent the next 13 years treading water. Demand for its chips waned over the years as the PC and laptop market became more saturated and mobile computing solutions like smartphones and tablets became more popular. Yet PCs and laptops remain a large part of both the corporate and home computing landscape, and eventually these machines need to be upgraded, creating demand for chips from Intel, software from Microsoft, and hardware from the likes of Hewlett-Packard.  I have seen countless situations where market participants expect a new technology to quickly make any existing technology in the space obsolete. This leads to an overvaluation of the new technology stocks and overselling of the old technology stocks.  More often… Read More

It stands to reason that companies that have been around for 100 years or more might have a pretty good chance of being around for another 100 years. These companies make the best buy-and-forget type of stocks that long-term shareholders look for in terms of stability, profits and dividends.  #-ad_banner-#These are the types of companies Warren Buffett likes. However, it’s not often that Dan Loeb and Buffett like the same stock. That’s because Buffett tends to let management do their thing — and Loeb usually wants to shake things up.  Although both Buffett and Loeb are owners of… Read More

It stands to reason that companies that have been around for 100 years or more might have a pretty good chance of being around for another 100 years. These companies make the best buy-and-forget type of stocks that long-term shareholders look for in terms of stability, profits and dividends.  #-ad_banner-#These are the types of companies Warren Buffett likes. However, it’s not often that Dan Loeb and Buffett like the same stock. That’s because Buffett tends to let management do their thing — and Loeb usually wants to shake things up.  Although both Buffett and Loeb are owners of Dow Chemical (NYSE: DOW), they have different visions for the $62 billion company going forward. Loeb sees Dow Chemical as extremely undervalued and wants the company to restructure its operations. Founded in 1897, Dow Chemical is the largest chemical company in the U.S. by sales and the second-largest position in Loeb’s fund, Third Point Capital. Loeb’s Thesis Loeb is not happy with the job CEO Andrew Liveris is doing. Loeb specifically cites the acquisition of Rohm & Haas as being an ill-timed purchase and wants the company split in two. Loeb says the company’s integrated approach is costing shareholders… Read More

Most investors dream of picking that one stock that makes them a fortune.  #-ad_banner-#My guess is those who attempt this typically do so by trying to find the Next Big Thing. That is, they buy stock in a young business doing something that seems new and revolutionary like a novel disease treatment, more intelligent robots, or a unique alternative energy source. So who would have ever predicted one of best stocks of the past half decade or so would belong to a well-known, decades-old firm offering mundane services? When I profiled this stock in October 2012, it was already recovering… Read More

Most investors dream of picking that one stock that makes them a fortune.  #-ad_banner-#My guess is those who attempt this typically do so by trying to find the Next Big Thing. That is, they buy stock in a young business doing something that seems new and revolutionary like a novel disease treatment, more intelligent robots, or a unique alternative energy source. So who would have ever predicted one of best stocks of the past half decade or so would belong to a well-known, decades-old firm offering mundane services? When I profiled this stock in October 2012, it was already recovering strongly from the mauling it took during the financial crisis, having gained 4,370% to $17 a share from a low of $0.38 in late 2008. Now the stock is trading around $57 — 234% higher than when I first covered it and nearly 14,000% above its recession low. Anyone who put $5,000 into this stock back in late 2008 and held on would have close to $700,000 today. The company behind the stock, vehicle rental firm Avis Budget Group (NYSE: CAR), may not be into the Next Big Thing — or it just might be, as I’ll explain… Read More

Best Buy (NYSE: BBY) has been one of the toughest retailers to own over the past few years — but investors who bought BBY when there was “blood in the streets” are still up over 100%. #-ad_banner-#The key issue for Best Buy is that it’s quickly losing market share to Amazon.com (Nasdaq: AMZN). This is not unlike the majority of brick-and-mortar retailers in the U.S.  For instance, consider office-supply giant Staples (Nasdaq: SPLS), which, like Best Buy, is down about 25% this year. Staples’ problems have been twofold: The rise of e-commerce competition and the lingering… Read More

Best Buy (NYSE: BBY) has been one of the toughest retailers to own over the past few years — but investors who bought BBY when there was “blood in the streets” are still up over 100%. #-ad_banner-#The key issue for Best Buy is that it’s quickly losing market share to Amazon.com (Nasdaq: AMZN). This is not unlike the majority of brick-and-mortar retailers in the U.S.  For instance, consider office-supply giant Staples (Nasdaq: SPLS), which, like Best Buy, is down about 25% this year. Staples’ problems have been twofold: The rise of e-commerce competition and the lingering economic downturn have both weighed on its sales.  Staples missed fiscal first-quarter earnings expectations by 14%, which drove its stock down further. But after being beaten up for the past couple of years, Staples could be a turnaround story trading in deep value territory.  Shares of Best Buy went on a tear last year after the company announced a number of initiatives to transform it into an omni-channel (retail and online) leader. Trouble is, Best Buy has yet to live up to its turnaround promise and has continued to lack a strong e-commerce presence. As a result, Best Buy’s stock… Read More

They call it “Merger Monday” for a reason. #-ad_banner-#Bankers like to spend the weekend putting the finishing touches on the paperwork, launching blockbuster deals in time for the start of the trading week. As this week began, we were greeted to Medtronic’s (NYSE: MDT) planned $43 billion purchase of Covidien (NYSE: COV). Big Pharma and medical device firms are surely seeking big prey these days, in part due to tax efficiencies created by trans-national mergers. (Covidien’s Irish base is a plus for Medtronic.) To be sure, the deal-making in the tech sector is heating up as well: the volume of… Read More

They call it “Merger Monday” for a reason. #-ad_banner-#Bankers like to spend the weekend putting the finishing touches on the paperwork, launching blockbuster deals in time for the start of the trading week. As this week began, we were greeted to Medtronic’s (NYSE: MDT) planned $43 billion purchase of Covidien (NYSE: COV). Big Pharma and medical device firms are surely seeking big prey these days, in part due to tax efficiencies created by trans-national mergers. (Covidien’s Irish base is a plus for Medtronic.) To be sure, the deal-making in the tech sector is heating up as well: the volume of deal-making is bigger than in pharma/medtech, but the size of the deals are smaller. Just last week, we heard about chip maker On Semiconductor’s (Nasdaq: ONNN) buyout of Aptina Imaging and chip maker Analog Devices’ (Nasdaq: ADI) planned buyout of Hittite Microwave (Nasdaq: HITT). And at the start of this week, memory chip maker Sandisk (Nasdaq: SNDK) announced plans to acquire flash storage provider Fusion-io (NYSE: FIO).  A buyout offer for Fusion-io had been expected for quite a while. Two weeks ago, I predicted that Seagate (Nasdq: STX) was a likely buyer. Indeed, there is a chance that a bidding war for… Read More

In the summer of 2012, this stock looked like yesterday’s news.  In less than a year, shares had crumbled from a high above $100 to $17, as traders jumped ship in advance of the company’s key patent expiring. They feared the market would be flooded with single-serve coffee brands. Yet, two years later, Keurig Green Mountain (Nasdaq: GMCR) and its K-Cups continue to reign supreme. And shares of the undisputed king of the single-serve coffee market are back in the triple digits and trading near their all-time highs. The competition still lags far behind, having penetrated only 13%… Read More

In the summer of 2012, this stock looked like yesterday’s news.  In less than a year, shares had crumbled from a high above $100 to $17, as traders jumped ship in advance of the company’s key patent expiring. They feared the market would be flooded with single-serve coffee brands. Yet, two years later, Keurig Green Mountain (Nasdaq: GMCR) and its K-Cups continue to reign supreme. And shares of the undisputed king of the single-serve coffee market are back in the triple digits and trading near their all-time highs. The competition still lags far behind, having penetrated only 13% of U.S. households. Keurig controls the other 87%, with an estimated 16 million of its coffee machines in U.S. homes. The company continues to grow by strategically partnering with major brands like Starbucks (Nasdaq: SBUX) and Dunkin’ Brands (Nasdaq: DNKN) to license its K-Cup technology. In its most recent quarter, sales of K-Cups increased 13% year over year, helping boost revenue 10% to $1.1 billion. Keurig recently inked a potentially mammoth deal — a 10-year partnership with Coca-Cola (NYSE: KO). Together the companies will produce Coca-Cola products in single-serve pods for the new Keurig… Read More

Bill Ackman takes big, concentrated positions with his hedge fund Pershing Square Capital, and 2014 has been a winning year for him. According to HSBC, Pershing Square is the top-performing hedge fund this year, with a gain of 22.5%.  #-ad_banner-#Not bad for half a year’s work. Compare this to performance of his peers David Einhorn and Dan Loeb: Einhorn’s Greenlight Capital and Loeb’s Third Point hedge fund are up only 5.4% and 4% this year, respectively, compared with a 4.4% gain for the S&P 500 Index. Unlike Loeb and Einhorn, Ackman appears to be more of a dealmaker. He… Read More

Bill Ackman takes big, concentrated positions with his hedge fund Pershing Square Capital, and 2014 has been a winning year for him. According to HSBC, Pershing Square is the top-performing hedge fund this year, with a gain of 22.5%.  #-ad_banner-#Not bad for half a year’s work. Compare this to performance of his peers David Einhorn and Dan Loeb: Einhorn’s Greenlight Capital and Loeb’s Third Point hedge fund are up only 5.4% and 4% this year, respectively, compared with a 4.4% gain for the S&P 500 Index. Unlike Loeb and Einhorn, Ackman appears to be more of a dealmaker. He likes to get his hands dirty, providing not only money but also strategy. His most successful deal was Canadian Pacific Railway (NYSE: CP), where he launched a proxy contest and replaced the board and directors and the CEO. Ackman was instrumental in bringing former CEO Hunter Harrison out of retirement, and the results speak for themselves. He tripled his $1 billion investment in the company in under three years. In Ackman’s latest deal, he has teamed up with Martin Franklin, chairman of Jarden (NYSE: JAH), and billionaire Nicolas Berggruen in Platform Specialty Products (NYSE: PAH). Platform Specialty was formed after… Read More

Investing in specific markets or regions has always been about one thing: the trade-off for higher returns in emerging markets and lower risk in developed markets.  #-ad_banner-#Emerging markets like the BRIC nations — Brazil, Russia, India and China — have long promised high rates of economic growth and soaring stock values. Unfortunately, as any emerging-markets investor during the past couple of years can tell you, these markets are also likely to underperform spectacularly on fears of a debt bubble or geopolitical problems.  In contrast, developed markets like the United States and Europe offer relative peace of mind but… Read More

Investing in specific markets or regions has always been about one thing: the trade-off for higher returns in emerging markets and lower risk in developed markets.  #-ad_banner-#Emerging markets like the BRIC nations — Brazil, Russia, India and China — have long promised high rates of economic growth and soaring stock values. Unfortunately, as any emerging-markets investor during the past couple of years can tell you, these markets are also likely to underperform spectacularly on fears of a debt bubble or geopolitical problems.  In contrast, developed markets like the United States and Europe offer relative peace of mind but weaker returns over the long run. An investment in the iShares MSCI EAFE (NYSE: EFA), an exchange-traded fund invested in developed markets, over the past 10 years would have exposed you to just three-quarters the volatility of the iShares Emerging Markets Fund (NYSE: EEM) — but yielded a compound annualized return of just 7%.  However, there’s a way to combine the rapid growth of emerging markets and the safety of developed markets — and you can find it in one country.  This year marks the country’s 23rd consecutive year of economic growth. This country’s stable political backdrop and investor-friendly environment… Read More