As the Thanksgiving weekend wound to a close Sunday night, I happened to watch the “60 Minutes” interview with Jeff Bezos, the billionaire CEO of Amazon.com (Nasdaq: AMZN).#-ad_banner-#​ At the end of the interview Bezos unveiled a “surprise” for correspondent Charlie Rose and his TV viewers, revealing that Amazon is working on building flying drones that can deliver packages directly to customers. I thought that was maybe a bit far-fetched, but certainly interesting. However, the media grabbed onto the drone story and ran with it. All day Monday, every news channel I watched — financial and… Read More

As the Thanksgiving weekend wound to a close Sunday night, I happened to watch the “60 Minutes” interview with Jeff Bezos, the billionaire CEO of Amazon.com (Nasdaq: AMZN).#-ad_banner-#​ At the end of the interview Bezos unveiled a “surprise” for correspondent Charlie Rose and his TV viewers, revealing that Amazon is working on building flying drones that can deliver packages directly to customers. I thought that was maybe a bit far-fetched, but certainly interesting. However, the media grabbed onto the drone story and ran with it. All day Monday, every news channel I watched — financial and otherwise — was talking about Bezos, Amazon and drones. Bezos certainly knows how to create a buzz. What has yet to be seen is whether he can generate profits for Amazon shareholders. The Buzz Is Great — How About Some Profits? Amazon is a fantastic and innovative company. I don’t dispute that for a minute — I think that’s an inarguable fact. But another fact that I think investors should be aware of is that this company does not generate significant profits or free cash flow. It is a bit hard to believe considering that the company is well… Read More

Real estate is in my blood. My first job, when I was 8 years old, was working for my grandfather rehabbing single-family homes and small apartment buildings for his one-man investment company. I remember being paid a dollar an hour and thinking how rich I would be on payday.#-ad_banner-#​ What I didn’t understand at the time was that the work wasn’t about the trivial jobs I learned to hate. It was more about the start of a learning process. He was teaching me the value of hard work and the ability to find opportunities in the most distressed situations. The… Read More

Real estate is in my blood. My first job, when I was 8 years old, was working for my grandfather rehabbing single-family homes and small apartment buildings for his one-man investment company. I remember being paid a dollar an hour and thinking how rich I would be on payday.#-ad_banner-#​ What I didn’t understand at the time was that the work wasn’t about the trivial jobs I learned to hate. It was more about the start of a learning process. He was teaching me the value of hard work and the ability to find opportunities in the most distressed situations. The most important thing I learned is that there are dozens of creative ways to earn profits with real estate. From the 1960s until about 2007, real estate was truly the golden goose for many Americans, commonly believed to be a can’t-lose investment. Prices seemed to always be climbing higher, and even after short pullbacks, the uptrend resumed quickly.  Then, in 2007, the bottom fell out of the market. Many investors were forced into bankruptcy as their overleveraged properties plunged in value, and many homeowners lost their homes in the perfect storm of extended leverage meeting plummeting prices. This situation forced… Read More

My 62-year-old aunt called me in a panic a couple of months ago. “I’m worried about the market crashing because of the government shutdown.”#-ad_banner-#​ Sensing she was just looking for a little reassurance, I proceeded to tell her that I viewed any short-term weakness as a great chance to buy. I explained that not only is the trend still higher in the short run but that in the long run, stocks spend a lot more time going up than down. She conceded that made a lot of sense. But she still wanted to proceed with… Read More

My 62-year-old aunt called me in a panic a couple of months ago. “I’m worried about the market crashing because of the government shutdown.”#-ad_banner-#​ Sensing she was just looking for a little reassurance, I proceeded to tell her that I viewed any short-term weakness as a great chance to buy. I explained that not only is the trend still higher in the short run but that in the long run, stocks spend a lot more time going up than down. She conceded that made a lot of sense. But she still wanted to proceed with caution, adding that the only stock she wanted to buy was leading domestic drugstore company CVS Caremark (NYSE: CVS). Although she didn’t realize it, my aunt was making a big statement about blue chips. They make investors feel safe. They’re less volatile than smaller companies. And with the S&P 500 Index trading at an all-time high, blue chips are in demand from investors looking to curb equity risk. That’s why I want to share one of my favorite blue chips. Walgreen Co. (NYSE: WAG) is a virtual blueprint of what to look for in a great blue chip. So far,… Read More

This is a great time to be running a public company.#-ad_banner-#​ The surging stock market has created billions in wealth for the leading officers and directors, as previously granted stock options are now deep in the money. Of course, companies don’t like to publicize the fact that executives are reaping huge gains while leading the share count to bloat. Add all of their shares into the current base of stock, and investors would really be up in arms. That’s why many companies offset these lush stock options programs with share buybacks. As long as they are able to keep the… Read More

This is a great time to be running a public company.#-ad_banner-#​ The surging stock market has created billions in wealth for the leading officers and directors, as previously granted stock options are now deep in the money. Of course, companies don’t like to publicize the fact that executives are reaping huge gains while leading the share count to bloat. Add all of their shares into the current base of stock, and investors would really be up in arms. That’s why many companies offset these lush stock options programs with share buybacks. As long as they are able to keep the share count flat, investors are unlikely to grumble too loudly. But it also means that you should be skeptical when you hear about buyback announcements. Case in point: Regional bank KeyCorp (NYSE: KEY), which conducted a pair of buyback plans over the past two years totaling nearly $800 million. That equated to nearly 5% of shares outstanding. But in a study conducted by Deutsch Bank, KeyCorp actually shrank its share count by just 1%. In effect, most of that $800 million went toward enriching executives, not shareholders. That’s why it’s crucial to track companies to see if they are really… Read More

Newport, R.I., is the small seaside town where the titans of industry such as John Rockefeller, J.P. Morgan and Andrew Carnegie used their great wealth to build castlelike vacation homes during the Gilded Age of American capitalism. Although sometimes derided as robber barons, these industrial leaders helped build America into the bastion of free enterprise it is today.#-ad_banner-#​ Between 1860 and 1900, the U.S. economy expanded 400%, fueled by vastly improved technology, hands-off government policy and the growth of monopolies. Along with the industrial moguls, many regular investors who held shares in the monopolies also became wealthy. Just imagine being… Read More

Newport, R.I., is the small seaside town where the titans of industry such as John Rockefeller, J.P. Morgan and Andrew Carnegie used their great wealth to build castlelike vacation homes during the Gilded Age of American capitalism. Although sometimes derided as robber barons, these industrial leaders helped build America into the bastion of free enterprise it is today.#-ad_banner-#​ Between 1860 and 1900, the U.S. economy expanded 400%, fueled by vastly improved technology, hands-off government policy and the growth of monopolies. Along with the industrial moguls, many regular investors who held shares in the monopolies also became wealthy. Just imagine being a investor during the Gilded Age, knowing that you owned shares in a company that basically ruled its industry.   Most U.S.-based monopolies have long since been regulated out of existence in name of fair competition. However, there are a few near-monopolies that are still creating vast wealth for investors. These natural monopolies and duopolies were in the right place at the right time to gain significant market share. Although there is competition, some of these companies are so far advanced compared with their competition that it would take governmental intervention to knock them off their perches.   StreetAuthority co-founder… Read More

Just as every fisherman has stories about the big one that got away, every investor has “woulda, coulda, shoulda” tales of investments that would have been wildly profited wildly if they had only purchased. I myself have one such tale from the past year. It gnaws at my insides to think about the massive profits that I missed out on, even though I felt a strong conviction to buy. The good news is that it’s not too late to jump on board.#-ad_banner-# This stock was trading near $65 in 2007 before the financial crisis knocked it down below $5. The… Read More

Just as every fisherman has stories about the big one that got away, every investor has “woulda, coulda, shoulda” tales of investments that would have been wildly profited wildly if they had only purchased. I myself have one such tale from the past year. It gnaws at my insides to think about the massive profits that I missed out on, even though I felt a strong conviction to buy. The good news is that it’s not too late to jump on board.#-ad_banner-# This stock was trading near $65 in 2007 before the financial crisis knocked it down below $5. The price wallowed in the nowhere zone under $5 for several years before slipping into penny-stock territory below $1. Although this company was (and is) majority owned and controlled by the U.S. government, most investors had written it off as not viable. At one point, the stock price fell to less than a dime a share. The price collapse caused the company to be delisted from the New York Stock Exchange, relegating its shares to the over-the-counter market.  I considered buying shares in the $0.15 area, thinking that there was no place for this once-mighty quasi-government agency to go but up. Read More

What do Ray Kroc and Jack Welch have in common? Both of these men ran very different businesses, McDonalds (NYSE: MCD) and General Electric (NYSE: GE), respectively, yet they repeatedly hammered home the most important lesson for their management teams. “Market share is everything.”  It holds the key to great financial results, which can provide the capital for yet more growth. Or as Jack Welch once put it, if you aren’t going to dominate your niche, then don’t even bother. He was likely inspired by a 1… Read More

What do Ray Kroc and Jack Welch have in common? Both of these men ran very different businesses, McDonalds (NYSE: MCD) and General Electric (NYSE: GE), respectively, yet they repeatedly hammered home the most important lesson for their management teams. “Market share is everything.”  It holds the key to great financial results, which can provide the capital for yet more growth. Or as Jack Welch once put it, if you aren’t going to dominate your niche, then don’t even bother. He was likely inspired by a 1975 study in the Harvard Business Review that found that “as market share increases, a business is likely to have a higher profit margin, a declining purchases-to-sales ratio, a decline in marketing costs as a percentage of sales, higher quality, and higher-priced products.” Need proof? Simply look at the hamburger chains. According to QSR (quick-service restaurant) magazine, McDonald’s had as much domestic market share in 2010 as Burger King (NYSE: BKW), Wendy’s (Nasdaq: WEN), Sonic (Nasdaq: SONC), Jack in the Box (Nasdaq: JACK), and the next seven burger sellers — combined.  And look at what that meant… Read More

For investors looking to buy stock in a clothing retailer, it would normally be a no-brainer to consider stalwarts like Wal-Mart (NYSE: WMT), Target (NYSE: TGT), well-known dollar stores, or other discount merchandisers. But things aren’t normal, and they haven’t been for years. Since the economy just can’t seem to shift into a higher gear, I’d avoid Wal-Mart and the other types of clothing outlets I just mentioned. Their sales come mainly from middle- and lower-income consumers, the people who have suffered most in the years since the financial crisis and who… Read More

For investors looking to buy stock in a clothing retailer, it would normally be a no-brainer to consider stalwarts like Wal-Mart (NYSE: WMT), Target (NYSE: TGT), well-known dollar stores, or other discount merchandisers. But things aren’t normal, and they haven’t been for years. Since the economy just can’t seem to shift into a higher gear, I’d avoid Wal-Mart and the other types of clothing outlets I just mentioned. Their sales come mainly from middle- and lower-income consumers, the people who have suffered most in the years since the financial crisis and who continue to see their spending power dwindle. #-ad_banner-# Rising costs, stagnant or shrinking wages, and lousy or non-existent benefits are squeezing these groups hard, Wal-Mart and other discounters could well be facing years of erosion in revenue and earnings growth rates. At this point, for example, Wal-Mart’s sales are growing at only about 3% a year, from around $406 billion in 2009 to just over $473 billion now. That’s pretty anemic compared with 2004 through 2008, when sales rose at a healthy 7.9% clip. The way things are going, I wouldn’t be surprised if annual sales and profits at Wal-Mart… Read More

The life of a Wall Street analyst can be vexing.  Hedge fund managers will take your call only if you have a can’t-miss idea to put in front of them. The analysts push their investment committees to help their cause by designating certain stocks as a top pick, or in the case of Goldman Sachs, they get the stock added to the Conviction List. Yet here’s the trouble with this back-and-forth between analysts and fund managers: If a stock pick doesn’t work out, they must yank it from the list and admit defeat. As an example, Goldman Sachs… Read More

The life of a Wall Street analyst can be vexing.  Hedge fund managers will take your call only if you have a can’t-miss idea to put in front of them. The analysts push their investment committees to help their cause by designating certain stocks as a top pick, or in the case of Goldman Sachs, they get the stock added to the Conviction List. Yet here’s the trouble with this back-and-forth between analysts and fund managers: If a stock pick doesn’t work out, they must yank it from the list and admit defeat. As an example, Goldman Sachs just gave up on its Conviction List rating for The Fresh Market (NYSE: TFM), a smaller and less established rival to Whole Foods Market (NYSE: WFM). Since TFM was first added to Goldman’s coveted group of Conviction List stocks in February, it has fallen 15% while the S&P 500 Index has risen 20%. The one-year performance for TFM has been even weaker. #-ad_banner-#​Yet it’s the reasoning behind the rating change that should spook any investors that are bullish on Whole Foods. “TFM’s expansion into more competitive markets will weigh on results, and rising… Read More

Black Friday, Nov. 29, is less than a week away. The iconic day can be described as one of numbers: Millions of bargain hunters will spend hours upon hours waiting in lines to spend billions to walk away with the best deals. This year, U.S. Black Friday sales are expected to total about $13.6 billion, a 3.9% increase from last year, according to IbisWorld research. There’s one sure winner to emerge from this buying frenzy. And no, it’s not necessarily Wal-Mart (NYSE: WMT) or Target (NYSE: TGT). In my mind, it’s the credit card companies who really benefit. Read More

Black Friday, Nov. 29, is less than a week away. The iconic day can be described as one of numbers: Millions of bargain hunters will spend hours upon hours waiting in lines to spend billions to walk away with the best deals. This year, U.S. Black Friday sales are expected to total about $13.6 billion, a 3.9% increase from last year, according to IbisWorld research. There’s one sure winner to emerge from this buying frenzy. And no, it’s not necessarily Wal-Mart (NYSE: WMT) or Target (NYSE: TGT). In my mind, it’s the credit card companies who really benefit. In 2011, the National Retail Federation found Americans primarily use credit cards to fuel their Black Friday buying binges. In 2012, MasterCard (NYSE: MA) reported a 26.2% increase in retail transactions compared to the previous year tied to Black Friday purchases.#-ad_banner-# With tight budgets prevailing again this year, MA may receive another boost as consumers choose to hoard their cash and put purchases on their cards. But it’s not just Black Friday, or even U.S. retail sales, that is driving MA higher. Currently, over 1.9 billion people worldwide use a MasterCard, and the card is accepted at over 35.9 million… Read More