Twenty-four billion dollars. That’s how much the political theater in Washington cost the American public according to Standard and Poor’s. The agency expects the loss will shave about 1% off fourth quarter GDP growth. But alas, investors can breathe a sigh of relief as it’s now apparent the U.S. won’t be defaulting on its Treasury payments — at least not yet. According to estimates by the Congressional Budget Office, the bill that raised the debt ceiling and reopened the government should keep the U.S. funded for at least another four months. While the short-term resolution is akin to the proverbial… Read More

Twenty-four billion dollars. That’s how much the political theater in Washington cost the American public according to Standard and Poor’s. The agency expects the loss will shave about 1% off fourth quarter GDP growth. But alas, investors can breathe a sigh of relief as it’s now apparent the U.S. won’t be defaulting on its Treasury payments — at least not yet. According to estimates by the Congressional Budget Office, the bill that raised the debt ceiling and reopened the government should keep the U.S. funded for at least another four months. While the short-term resolution is akin to the proverbial “kicking the can down the road” (setting us up for the same debate come February), the markets have nonetheless rejoiced on the news… #-ad_banner-#In the weeks that followed the debt agreement, the S&P touched a record level of 1,766… gold rallied 7% to $1,350 per ounce and the yield on the 10-year treasury fell to 2.5%. As the euphoria from the announcement wears off, the market is turning its attention to what will likely be the biggest financial event over the next few weeks… earnings season. In case you didn’t know, third quarter earning season is alive and well… And… Read More

Like stars in the sky, the sheer number of differing opinions and interpretations of the same financial data is simply mind-boggling. It is said that if you ask three analysts their opinion on the market, you’ll get five different answers. I can’t think of another field of human endeavor that garners so many different ideas from the same data. Even weather forecasting isn’t as open to interpretation as the financial markets. However, this uncertainty is how the market exists. If everyone had the same opinion, there would be no one to buy the selling or sell into the buying. Read More

Like stars in the sky, the sheer number of differing opinions and interpretations of the same financial data is simply mind-boggling. It is said that if you ask three analysts their opinion on the market, you’ll get five different answers. I can’t think of another field of human endeavor that garners so many different ideas from the same data. Even weather forecasting isn’t as open to interpretation as the financial markets. However, this uncertainty is how the market exists. If everyone had the same opinion, there would be no one to buy the selling or sell into the buying.#-ad_banner-#​ The number and range of differing opinions is why I pay particular attention when two ultra-successful investors agree on the same premise. The famed commodity investor Jim Rogers and Fidelity Investments’ best-known mutual fund manager, Peter Lynch, emphasize investing in what you know. The thinking behind this advice is that if you are familiar with a particular business, service or product, not only are you an expert of sorts, but many others are also likely interested in the same things, which helps create a bullish environment. I took this advice to heart when I realized that a… Read More

Warren Buffett loves to invest in stable businesses with few competitors.  One of his recent favorites is DaVita HealthCare (NYSE: DVA), which operates a network of dialysis treatment centers in the United States catering to patients that have diabetes-induced kidney failure. Buffett’s Berkshire Hathaway (NYSE: BRK-B) has been a steady buyer for several years and now owns nearly 30 million shares, equating to a $1.8 billion stake. But DaVita has a big problem on its hands. Dialysis is expensive, and the two biggest payees for this procedure, Medicare and Medicaid, have been pushing DaVita and its rival Fresenius… Read More

Warren Buffett loves to invest in stable businesses with few competitors.  One of his recent favorites is DaVita HealthCare (NYSE: DVA), which operates a network of dialysis treatment centers in the United States catering to patients that have diabetes-induced kidney failure. Buffett’s Berkshire Hathaway (NYSE: BRK-B) has been a steady buyer for several years and now owns nearly 30 million shares, equating to a $1.8 billion stake. But DaVita has a big problem on its hands. Dialysis is expensive, and the two biggest payees for this procedure, Medicare and Medicaid, have been pushing DaVita and its rival Fresenius Medical Care (NYSE: FMS) to swallow painful reimbursement cuts. It’s not just the administration of dialysis that is costly. Many patients end up with side effects related to iron deficiency and red blood cell production, which costs billions more to remedy. And these costly treatments don’t even yield the desired medical outcomes.#-ad_banner-# Thankfully, one of the biggest providers of the drugs and chemicals used in dialysis has a solution to the problem. Little-known Rockwell Medical (Nasdaq: RMTI) has been testing an iron supplement that goes right into bone marrow. Patients on dialysis stop producing erythropoietin, a key ingredient in the… Read More

Outside of the revitalized energy patch, no corner of the U.S. economy is hotter than Silicon Valley.​ Google (Nasdaq: GOOG), the region’s bellwhether, has tacked on a 50% gain over the past 12 months, adding more than $100 billion its market value. #-ad_banner-# And moving far down the tech food chain, the hottest young tech companies are also creating great wealth for their employees and shareholders: Recent IPOs RocketFuel (Nasdaq: FUEL) and FireEye (Nasdaq: FEYE) have more than doubled since their IPOs last month. These companies are boosting sales at a really fast pace, but they’ve… Read More

Outside of the revitalized energy patch, no corner of the U.S. economy is hotter than Silicon Valley.​ Google (Nasdaq: GOOG), the region’s bellwhether, has tacked on a 50% gain over the past 12 months, adding more than $100 billion its market value. #-ad_banner-# And moving far down the tech food chain, the hottest young tech companies are also creating great wealth for their employees and shareholders: Recent IPOs RocketFuel (Nasdaq: FUEL) and FireEye (Nasdaq: FEYE) have more than doubled since their IPOs last month. These companies are boosting sales at a really fast pace, but they’ve also quickly become richly valued. For instance, FireEye is valued at $4.7 billion but is expected to have just $230 million in sales in 2014. On the other end of the tech investing spectrum are some deep value plays. But in cases like IBM (NYSE: IBM), growth will be so limited that they are really more like value traps. Simply put, in the world of tech, you can have growth or value, but not both.  But a few companies stand out for a reasonable measure of both growth and value. Each company is in the midst of… Read More

Allow me to let you in on a closely guarded secret among professional money managers. While they all talk a big game and make it appear that by investing with them you are close to being guaranteed market-beating returns, the truth of the matter is far different.#-ad_banner-# In fact, in the aggregate, the majority even fail to beat the market. Add in the fees, costs and expenses of investing with the professionals, and it seems like a losing proposition. I know this sounds sacrilegious, but the numbers speak for themselves. According to the finance blog Zero Hedge, nearly 90% of… Read More

Allow me to let you in on a closely guarded secret among professional money managers. While they all talk a big game and make it appear that by investing with them you are close to being guaranteed market-beating returns, the truth of the matter is far different.#-ad_banner-# In fact, in the aggregate, the majority even fail to beat the market. Add in the fees, costs and expenses of investing with the professionals, and it seems like a losing proposition. I know this sounds sacrilegious, but the numbers speak for themselves. According to the finance blog Zero Hedge, nearly 90% of all hedge funds, 65% of large-cap core funds, 80% of large-cap value funds and 65% of small-cap mutual funds underperformed the market in 2012.  These facts raise the question: Why do investors continue to pour money into professionally managed funds when the majority fail to deliver even market-beating returns?  Well, the answer is that a few funds deliver outsize returns year after year. This outperformance by the minority keeps the attraction high for the professional money management business. Investors scramble to find the next hot manager and funds on an ongoing basis, which keeps the cash flowing into the pockets… Read More

Goldilocks is famous for being very particular about her porridge. It couldn’t be too hot or too cold. It had to be just right. #-ad_banner-# That reminds me of mid-cap stocks: Not too big, but not too small — just the right mix of growth and stability. Unlike small caps, mid-caps are multi-billion-dollar companies and sometimes even market leaders. That provides these companies with a nice touch of stability that small caps with values dipping below $1 billion usually don’t offer. But unlike global mega-caps such as Exxon Mobil (NYSE: XOM) and Microsoft (Nasdaq: MSFT) worth hundreds of billions and… Read More

Goldilocks is famous for being very particular about her porridge. It couldn’t be too hot or too cold. It had to be just right. #-ad_banner-# That reminds me of mid-cap stocks: Not too big, but not too small — just the right mix of growth and stability. Unlike small caps, mid-caps are multi-billion-dollar companies and sometimes even market leaders. That provides these companies with a nice touch of stability that small caps with values dipping below $1 billion usually don’t offer. But unlike global mega-caps such as Exxon Mobil (NYSE: XOM) and Microsoft (Nasdaq: MSFT) worth hundreds of billions and long past peak growth, mid-caps valued between $2 billion and $10 billion still have the ability to grow many times over in the long run. These unique qualities have made mid-caps popular with investors looking for a balance between growth and stability. They have also produced market-crushing gains. In the past 12 years, the iShares Core S&P Mid-Cap ETF (NYSE: IJH) is up 223% against the S&P 500 Index’s 62% return. Take a look at the big gain below. But if you missed out on those gains, don’t worry. The third-quarter earnings season has revealed a… Read More

I love taking road trips. My friends think I’m crazy to prefer driving over flying, but I truly do. I like exploring little-known attractions and towns off the beaten path.  One of my favorite things about taking road trips is the wide variety of fast-food choices across… Read More

I don’t care what the bearish pundits are saying about the U.S. economy. While I don’t hesitate to turn bearish if the data bolster that view, I have learned to tune out the unsupported fear-mongering, political posturing and cherry picked-data of the prophets of doom.#-ad_banner-#​ Not only are these agenda-driven observers wrong most of the time, they rarely change their bearish tune. This means that when we actually enter a bear market, the bearish prognosticators claim victory. However, just like a stuck clock that’s right twice a day, the reality of their consistent errors is usually apparent. Clearly,… Read More

I don’t care what the bearish pundits are saying about the U.S. economy. While I don’t hesitate to turn bearish if the data bolster that view, I have learned to tune out the unsupported fear-mongering, political posturing and cherry picked-data of the prophets of doom.#-ad_banner-#​ Not only are these agenda-driven observers wrong most of the time, they rarely change their bearish tune. This means that when we actually enter a bear market, the bearish prognosticators claim victory. However, just like a stuck clock that’s right twice a day, the reality of their consistent errors is usually apparent. Clearly, the current super-bull market is one of global impact. I think the auto sector is undoubtedly supportive of my current ultra-bullish stance. Global auto sales have soared this year on the strength of the continued U.S. economic recovery. Virtually all the major automakers surpassed analysts’ earnings estimates in the second quarter, and 70% came out ahead of revenue estimates. Earnings climbed just over 14% and revenues pushed ahead by nearly 5% year over year. In the United States, auto sales hit a five-year high last year, rising 13% to 14.5 million vehicles. In August of this year, auto sales jumped… Read More

When you think of stalwart mega-cap industrial stocks, Caterpillar (NYSE: CAT) certainly is one that comes to mind. The earth-moving equipment blue chip, Dow component, and long-time bellwether for the global economy, has been a big winner for investors and traders over the years, and for good reason. During the past decade, there’s been a huge infrastructure buildup in the emerging markets of Asia, especially China, and Russia, India and Brazil. The massive demand for heavy-duty construction equipment has made the iconic brand a mainstay on big building projects in nearly every corner of the… Read More

When you think of stalwart mega-cap industrial stocks, Caterpillar (NYSE: CAT) certainly is one that comes to mind. The earth-moving equipment blue chip, Dow component, and long-time bellwether for the global economy, has been a big winner for investors and traders over the years, and for good reason. During the past decade, there’s been a huge infrastructure buildup in the emerging markets of Asia, especially China, and Russia, India and Brazil. The massive demand for heavy-duty construction equipment has made the iconic brand a mainstay on big building projects in nearly every corner of the globe. Recently, however, demand for Caterpillar’s products has waned, and that’s caused a marked slowdown in the company’s earnings growth, as well as a significant decline in CAT shares. On the earnings front, the company recently released results for the third quarter, and they were anything but impressive. Third-quarter earnings sank 44% year over year, missing consensus estimates by a wide margin. The company reported earnings per share (EPS) of $1.45, down from $2.54 in the same quarter last year. Revenue disappointed as well, coming in at $13.4 billion, down from $16.5 billion in the same quarter a year ago. Read More

I couldn’t believe my good fortune. It was my first day investing with real money at a proprietary trading firm. I had just completed an intensive training course and spent weeks on a stock market simulator with pretend money.#-ad_banner-# A quick primer: Proprietary trading companies hire traders to trade the firm’s money for a split of the profits. Some require traders to post a risk deposit to cover any potential losses. Others don’t require a deposit, but traders take less of the profit because the firm assumes more risk. My first trade was on a small $7 stock that showed… Read More

I couldn’t believe my good fortune. It was my first day investing with real money at a proprietary trading firm. I had just completed an intensive training course and spent weeks on a stock market simulator with pretend money.#-ad_banner-# A quick primer: Proprietary trading companies hire traders to trade the firm’s money for a split of the profits. Some require traders to post a risk deposit to cover any potential losses. Others don’t require a deposit, but traders take less of the profit because the firm assumes more risk. My first trade was on a small $7 stock that showed all the signs of one about to explode on the upside. I purchased the maximum number of shares that the firm permitted and set my stop loss — and to my amazement, the price took off to the upside. By the end of the trading day, I had banked a $2,500 profit after splitting with the firm. Not bad for the first day on the job, I thought. My phone rang — it was the managing director of the firm requesting my immediate presence in his office. I hadn’t met him, but I thought that surely he wanted to congratulate… Read More