Individual investors often point to the long-term success of Warren Buffett as proof that value investing works. They are correct, and Buffett is just one example of the many long-term investors who have found success with value investing.  However, although value investing can work, many investors fail to succeed with this strategy.#-ad_banner-# I think the reason value investing is so difficult to implement is because it is challenging to define exactly what “value” means. Some investors use the price-to-earnings (P/E) ratio and buy when the P/E ratio is low. Others search for stocks with low price-to-sales (P/S) ratio in… Read More

Individual investors often point to the long-term success of Warren Buffett as proof that value investing works. They are correct, and Buffett is just one example of the many long-term investors who have found success with value investing.  However, although value investing can work, many investors fail to succeed with this strategy.#-ad_banner-# I think the reason value investing is so difficult to implement is because it is challenging to define exactly what “value” means. Some investors use the price-to-earnings (P/E) ratio and buy when the P/E ratio is low. Others search for stocks with low price-to-sales (P/S) ratio in their hunt for value. In addition to these two tools, there are dozens of other ways to measure value. In the right hands, and with enough time, any disciplined approach to value investing should work in the long term. Another well-known investing strategy is buy-and-hold, or index, investing, which is an admission on the part of the individual that they cannot beat the market and are willing to accept all of the losses in a bear market with no chance of outperforming in a bull market. Momentum, or relative strength (RS), investing is a less widely… Read More

Although almost any market action can be explained away — in hindsight — some trends will remain a deep mystery.#-ad_banner-#​ Major biotech stocks rallied sharply throughout 2013, as I noted in this column, but smaller biotechs inexplicably sold off sharply after Labor Day. My view: In the absence of any clear explanation of why smaller biotechs should suddenly fall deeply out of favor, lower stock prices should lead investors to give these stocks a fresh look. Indeed, that scenario played out as expected. Since my mid-November profile of Regulus Therapeutics (Nasdaq: RGLSD), Threshold Phama (Nasdaq: THLD) and Synergy… Read More

Although almost any market action can be explained away — in hindsight — some trends will remain a deep mystery.#-ad_banner-#​ Major biotech stocks rallied sharply throughout 2013, as I noted in this column, but smaller biotechs inexplicably sold off sharply after Labor Day. My view: In the absence of any clear explanation of why smaller biotechs should suddenly fall deeply out of favor, lower stock prices should lead investors to give these stocks a fresh look. Indeed, that scenario played out as expected. Since my mid-November profile of Regulus Therapeutics (Nasdaq: RGLSD), Threshold Phama (Nasdaq: THLD) and Synergy Pharma (Nasdaq: SGYP), these three stocks have rebounded, 24%, 12% and 31% respectively. That’s an impressive six-week rally, and likely signals that this out-of-favor sector is rotating back into favor. I think these three stocks remain undervalued and will be tracking them in the year ahead. With that in mind, here are three other biotechs that have massive potential upside, according to the Wall Street analysts who follow them. 1. Esperion Therapeutics (Nasdaq: ESPR )​ This firm is developing a new drug, ETC-1002, that has shown great promise in treating people with high cholesterol for whom statins have not been helpful or have had problematic… Read More

If you’ve been in the market this year, you are likely pretty happy with your results. Indeed, the bias this year has been all about the bulls, and until we see the price action reflect otherwise, the big winners are likely to keep on giving in 2014. #-ad_banner-# For traders like me who love to ride strong momentum stocks during bull markets, I think the best place to put new capital to work is in those big winners trading at or near new highs. One tech stock that fits this description perfectly is Micron Technology (NASDAQ: MU). The company is… Read More

If you’ve been in the market this year, you are likely pretty happy with your results. Indeed, the bias this year has been all about the bulls, and until we see the price action reflect otherwise, the big winners are likely to keep on giving in 2014. #-ad_banner-# For traders like me who love to ride strong momentum stocks during bull markets, I think the best place to put new capital to work is in those big winners trading at or near new highs. One tech stock that fits this description perfectly is Micron Technology (NASDAQ: MU). The company is one of the largest makers of computing memory chips in the world, but you don’t have to have a very long memory to know that the stock has been a trader’s dream of late. Year to date, MU has delivered a gain of nearly 245%, an incredible run for a large-cap tech stock that’s been around for some time. And though shares are more than 50% above their long-term, 200-day moving average, there have been scant episodes this year where traders got scared and sold the stock off because it was perceived as being overbought. From a fundamental… Read More

As the fourth quarter comes to an end, company insiders are about to go into a quiet period. Many companies adhere to a strict no-trading policy between the end of the quarter and the eventual release of quarterly earnings. As a result, a wide range of insiders have been scrambling to make their purchases in recent weeks. Here’s a close look at some of the more notable buying activity. (All insider information supplied by InsiderInsights.com.) 1. Occidental Petroleum (NYSE: OXY ) A pair of insiders acquired a combined 7,000 shares in December of this energy driller at an average price… Read More

As the fourth quarter comes to an end, company insiders are about to go into a quiet period. Many companies adhere to a strict no-trading policy between the end of the quarter and the eventual release of quarterly earnings. As a result, a wide range of insiders have been scrambling to make their purchases in recent weeks. Here’s a close look at some of the more notable buying activity. (All insider information supplied by InsiderInsights.com.) 1. Occidental Petroleum (NYSE: OXY ) A pair of insiders acquired a combined 7,000 shares in December of this energy driller at an average price of $92 a share. The purchases came after Occidental posted third-quarter results a month earlier that were solidly ahead of forecasts. But insiders aren’t buying on the prospects for further profit momentum, but instead for Occidental’s planned financial engineering.#-ad_banner-# Occidental has identified a range of assets it intends to sell, and much of the proceeds will go toward a share buyback. Merrill Lynch, which rates shares a “buy” with a $130 price target, thinks Occidental can buy back $12-$15 billion in stock over the next few years, which would reduce the share count by 15%-20%. Formal asset sales are expected… Read More

Advertising is everywhere you look (or listen): It’s in your car, your home, and in every storefront you pass as you stroll around the block.#-ad_banner-# The industry has so much power that it affects nearly everything you see, hear and do. The sector is so potent that it drives demand, which is one of the two primary forces of every market-based economic system. As you can imagine, there are huge profits to be made by investing in this industry. Revenues are expected to reach $178 billion in the United States alone during 2013. However, many investors don’t usually even think… Read More

Advertising is everywhere you look (or listen): It’s in your car, your home, and in every storefront you pass as you stroll around the block.#-ad_banner-# The industry has so much power that it affects nearly everything you see, hear and do. The sector is so potent that it drives demand, which is one of the two primary forces of every market-based economic system. As you can imagine, there are huge profits to be made by investing in this industry. Revenues are expected to reach $178 billion in the United States alone during 2013. However, many investors don’t usually even think about this business when choosing investments. This is because it’s so intertwined with our lives that the majority don’t even give it a second thought. Just how does this sector drive economic demand? One of the first concepts taught in economics is supply and demand. These are the underlying forces that make commerce, and even entire economies, function. Understanding this practical implication of supply and demand is one of the keys to successful investing, and even operating a profitable business. And advertising is oftentimes not merely the grease on the economic wheel — it can be the wheel itself. Demand,… Read More

Investors rarely have the chance to use “highflier” and “utility stock” in the same sentence, but that description fits a utility stock I first recommended nearly three years ago to a tee. #-ad_banner-#Since then, shares have climbed an impressive 67%. During the past three years, they’ve delivered an average annual return of 22.1%, besting the S&P 500’s three-year return of 15.2% by nearly seven full percentage points. I can almost hear you asking yourself, “What utility stock could possibly perform anywhere near that well? There certainly aren’t any domestic utilities that can do it.” And you’d probably be… Read More

Investors rarely have the chance to use “highflier” and “utility stock” in the same sentence, but that description fits a utility stock I first recommended nearly three years ago to a tee. #-ad_banner-#Since then, shares have climbed an impressive 67%. During the past three years, they’ve delivered an average annual return of 22.1%, besting the S&P 500’s three-year return of 15.2% by nearly seven full percentage points. I can almost hear you asking yourself, “What utility stock could possibly perform anywhere near that well? There certainly aren’t any domestic utilities that can do it.” And you’d probably be right. To identify this high-flying utility, I had to look to emerging markets where economies and energy use are typically growing much faster than in the United States. The company I found was a leading independent coal-fired energy producer located in China. Because the firm was cranking up output to keep pace with China’s economic expansion, sported a 4.7% dividend yield, and had a stock with below-average volatility, I thought every investor should know about it. I’m referring to Huaneng Power International (NYSE: HNP), which owns and operates approximately 175 primarily coal-fired power plants in 19 Chinese provinces and Singapore. Read More

The holiday season can bring cheer to retailers that count on it to deliver a large portion of yearly sales. It’s been a good year for the sector so far, with the SPDR S&P Retail ETF (NYSE: XRT) outperforming the broader market with a 40%-plus year-to-date gain. But not all retailers have shared in the prosperity. Abercrombie & Fitch (NYSE: ANF), which was once a leader in the fickle world of fashion, is off 28% in the past 52 weeks. Even more striking is its underperformance in the past five years, which can be seen in the chart below. Read More

The holiday season can bring cheer to retailers that count on it to deliver a large portion of yearly sales. It’s been a good year for the sector so far, with the SPDR S&P Retail ETF (NYSE: XRT) outperforming the broader market with a 40%-plus year-to-date gain. But not all retailers have shared in the prosperity. Abercrombie & Fitch (NYSE: ANF), which was once a leader in the fickle world of fashion, is off 28% in the past 52 weeks. Even more striking is its underperformance in the past five years, which can be seen in the chart below. ANF has largely traded in a range between $54 and $34 with solid support just below at $30. Bullish divergence, i.e., new lows in price without new highs in volatility, may be a sign that a bottom is forming. The first recovery objective is the $44 midpoint of the two-year trading range. A break above $54 projects a $20 move and a secondary target of $74. #-ad_banner-#The $44 target is about 32% higher than recent prices, but traders who use a capital-preserving, stock substitution strategy could see a 146% return on a move to that level. One… Read More

Short sellers are wrapping up another tough year, as a liquidity-fueled rally has helped to levitate even the most dubious business models.#-ad_banner-#​ Some short sellers have even thrown in the towel, noting that John Maynard Keynes’ maxim that “the market can stay irrational longer than you can stay solvent.” But signs are emerging that this losing approach to the market may finally be gaining traction. In recent weeks, a range of heavily-shorted stocks have indeed begun to move lower, which may be a sign that short selling will again be a useful component… Read More

Short sellers are wrapping up another tough year, as a liquidity-fueled rally has helped to levitate even the most dubious business models.#-ad_banner-#​ Some short sellers have even thrown in the towel, noting that John Maynard Keynes’ maxim that “the market can stay irrational longer than you can stay solvent.” But signs are emerging that this losing approach to the market may finally be gaining traction. In recent weeks, a range of heavily-shorted stocks have indeed begun to move lower, which may be a sign that short selling will again be a useful component of your broader portfolio strategy in 2014. If you are looking at potential short sale candidates, here are four that are in the targets of short sellers right now. 1. Bank of America (NYSE: BAC )​ Shares of this banking giant have rebounded more than 200% over the past two years. Joining its major banking peers, Bank of America finally trades back up above book value, taking away one of the lone pillars of value. That argues for muted upside in the year ahead. Yet it’s the downside risk that is coming into focus as well. In… Read More

Brazilian stocks are the cheapest they’ve been in nearly 10 years. The last time they were this cheap, the Bovespa Stock Index (Brazil’s version of the S&P 500) soared over 100% in less than twelve months. Unfortunately, I bet many of you wouldn’t think twice about investing in a country like Brazil. Most people simply dismiss the fifth-largest nation in the world as just another “ultra-risky” growth play. #-ad_banner-#To those investors, all I have to say is you’re making a big mistake. Here’s why… Prior to the financial crisis, Brazil was the darling of Wall Street. Not only was the… Read More

Brazilian stocks are the cheapest they’ve been in nearly 10 years. The last time they were this cheap, the Bovespa Stock Index (Brazil’s version of the S&P 500) soared over 100% in less than twelve months. Unfortunately, I bet many of you wouldn’t think twice about investing in a country like Brazil. Most people simply dismiss the fifth-largest nation in the world as just another “ultra-risky” growth play. #-ad_banner-#To those investors, all I have to say is you’re making a big mistake. Here’s why… Prior to the financial crisis, Brazil was the darling of Wall Street. Not only was the country seeing rapid economic growth, but commodities — Brazil’s primary export — were also in high demand. Those tailwinds drove the Bovespa from less than 8,623 points in 2002 to 72,592 by 2008 — a 741% gain in just under six years. Flash-forward to today and Brazil couldn’t be more hated. While the S&P 500 is up nearly 25% since January, Brazilian stocks have fallen 20% — posting one of the worst performances among global stock markets year to date. Why are investors down on Brazil? For one, lately the country has been riddled… Read More

The average Internet user’s attention span is shorter than that of a goldfish.#-ad_banner-#​ It’s been estimated that Internet users have an attention span of eight seconds — one second less than a goldfish’s attention span. That makes speed in transmitting content across the Internet to desktops, tablets and smartphones more important than ever. That’s one of the biggest reasons researchers and scientists are racing toward the commercialization of a super-material with the ability to transmit data across the Internet 100 times faster than fiber optic cable. But that’s not its only extraordinary characteristic. This little-known substance is also… Read More

The average Internet user’s attention span is shorter than that of a goldfish.#-ad_banner-#​ It’s been estimated that Internet users have an attention span of eight seconds — one second less than a goldfish’s attention span. That makes speed in transmitting content across the Internet to desktops, tablets and smartphones more important than ever. That’s one of the biggest reasons researchers and scientists are racing toward the commercialization of a super-material with the ability to transmit data across the Internet 100 times faster than fiber optic cable. But that’s not its only extraordinary characteristic. This little-known substance is also 200 times stronger and six times lighter than steel, and close to being transparent. Those are just a few reasons why it is quickly gaining a reputation as a “miracle substance” with the potential to revolutionize multiple industries. I predict that within five years, this crystalline form of carbon — a one-atom-thick layer of graphite — will be on its way to being the vital building block in modern technology. And it could make early investors rich in the process. What exactly is this miracle substance? Graphene. And it’s not just the Internet it has the potential to revolutionize. Its… Read More