Apple (Nasdaq: AAPL) has a monster of a problem. The maker of iPhones and iPads has over $147 billion of cash on its balance sheet. On paper, that looks like $147,000,000,000 — or more than the GDP of Ecuador. That doesn’t even count the money the company is raking in this quarter. It’s just the cash it has sitting in the bank right now. This might seem like a nice problem to have… After all, an ample cash reserve is important for independence and security. But having too much cash, especially at current record low interest rates, may be crippling… Read More

Apple (Nasdaq: AAPL) has a monster of a problem. The maker of iPhones and iPads has over $147 billion of cash on its balance sheet. On paper, that looks like $147,000,000,000 — or more than the GDP of Ecuador. That doesn’t even count the money the company is raking in this quarter. It’s just the cash it has sitting in the bank right now. This might seem like a nice problem to have… After all, an ample cash reserve is important for independence and security. But having too much cash, especially at current record low interest rates, may be crippling Apple’s ability to grow. #-ad_banner-#For the better part of the last decade, Apple was a model of innovation and financial performance. The company enjoyed a track record of introducing sleek, game-changing products and services including the iPod and iTunes. But it wasn’t always a smooth ride for Apple. In 1997, Apple was in deep financial trouble. The company brought back its visionary founder Steve Jobs. But Jobs alone couldn’t save Apple… he needed money. The only way Apple could save itself was to grovel before its arch rival Microsoft (NYSE: MSFT) and borrow $150 million. Apple never wanted to be… Read More

Common sense doesn’t always lead to profitable investing decisions. In fact, making an investment based on what feels good or appears to be common sense can often lead to losses. #-ad_banner-# This is because the stock market tends to attract the highest number of investors at exactly the wrong time. Professional investors understand this and generally buy a stock when the public is scared or simply not interested.     One of the hardest things for new investors to grasp is the basic rule of buying weakness and selling strength. Common sense and the feel-good method of investing is to buy… Read More

Common sense doesn’t always lead to profitable investing decisions. In fact, making an investment based on what feels good or appears to be common sense can often lead to losses. #-ad_banner-# This is because the stock market tends to attract the highest number of investors at exactly the wrong time. Professional investors understand this and generally buy a stock when the public is scared or simply not interested.     One of the hardest things for new investors to grasp is the basic rule of buying weakness and selling strength. Common sense and the feel-good method of investing is to buy a stock when it is going up. Professional investors buy stocks on pullbacks and sell into strength — the exact opposite of what the majority does. I’m not suggesting that buying strength or when a stock is climbing never works. Under certain circumstances, breakout trading or strength buying makes sense. However, most of the time, waiting for a pullback in an overall uptrend creates the optimal entry level.   The reason for this fact is big-money investors generally only buy bargains. They never want to pay top dollar for any asset. The professionals understand the difference between value and price. … Read More

Businesses are swimming in cash right now. As of the beginning of the third quarter, the 500 largest U.S. companies collectively held $1.27 trillion. That’s about 13.5% more than this time last year. If you converted all this money into $100 bills and stacked them up, the pile would stretch 800 miles high. #-ad_banner-#And if it was spent at the rate of $250 million a year, it would take 5,100 years to exhaust the supply… So where is this cash coming from? And more importantly, how can investors take advantage of this $1.3 trillion problem?  Let me explain… Borrowing accounts… Read More

Businesses are swimming in cash right now. As of the beginning of the third quarter, the 500 largest U.S. companies collectively held $1.27 trillion. That’s about 13.5% more than this time last year. If you converted all this money into $100 bills and stacked them up, the pile would stretch 800 miles high. #-ad_banner-#And if it was spent at the rate of $250 million a year, it would take 5,100 years to exhaust the supply… So where is this cash coming from? And more importantly, how can investors take advantage of this $1.3 trillion problem?  Let me explain… Borrowing accounts for some of the corporate cash hoard. But mostly, it’s that companies are simply generating cash faster than they are spending it, creating healthy amounts of free cash flow (FCF) — a company’s fuel for dividends and growth. I consider free cash flow the best measure of a company’s earnings power. The calculation is simple. You start with operating cash flows and then subtract any capital expenditures made for property, plants and equipment (PPE). The result is the true cash generated by the business after all the regular bills (salary, rent, etc.) have been paid and after any discretionary spending… Read More

Income investors have two equally important objectives when it comes to investing — obtaining high amounts of income and limiting risk. Many survivors of the 2008 bear market learned this the hard way. They found out that they must either balance the two, or face heavy losses. Case in point: Many investors jumped at abnormally high yields in financial stocks like Citigroup (NYSE: C) when its yield jumped above 10% shortly before the company eliminated its dividend. And investors looking for a bargain in General Electric (NYSE: GE) endured a dividend cut of almost 70%. #-ad_banner-#Remember, these are companies that… Read More

Income investors have two equally important objectives when it comes to investing — obtaining high amounts of income and limiting risk. Many survivors of the 2008 bear market learned this the hard way. They found out that they must either balance the two, or face heavy losses. Case in point: Many investors jumped at abnormally high yields in financial stocks like Citigroup (NYSE: C) when its yield jumped above 10% shortly before the company eliminated its dividend. And investors looking for a bargain in General Electric (NYSE: GE) endured a dividend cut of almost 70%. #-ad_banner-#Remember, these are companies that were once widely assumed to be among the safest in the world, yet they eliminated their dividend practically overnight.  To be fair, these were also extraordinary circumstances that happened during a financial crisis. But long-time income investors still follow a general rule of thumb — “The higher the yield, the riskier the stock.” Today, I’m making an exception to this rule. As I mentioned to you last week, there is a way to invest in stocks with great yields, but without all the added risk that comes from dividend cuts. Let me explain. As you’ve probably heard in the past,… Read More

The Federal Reserve is trapped and bluffing.#-ad_banner-# While the market worries about the Fed reducing the size of its monthly bond purchases, I predict the exact opposite will continue to happen for at least through next December after the midterm elections. The most powerful central bank in the world will actually increase spending. And because of that, two companies in one forgotten sector could see triple-digit gains in coming months, and they’re already sporting rare yields as high as 7.1%. I’ll share specific details on these investments in a moment. First, here’s why I think the Fed is… Read More

The Federal Reserve is trapped and bluffing.#-ad_banner-# While the market worries about the Fed reducing the size of its monthly bond purchases, I predict the exact opposite will continue to happen for at least through next December after the midterm elections. The most powerful central bank in the world will actually increase spending. And because of that, two companies in one forgotten sector could see triple-digit gains in coming months, and they’re already sporting rare yields as high as 7.1%. I’ll share specific details on these investments in a moment. First, here’s why I think the Fed is trapped and bluffing: As the Fed continues to threaten the market with its stated desire to taper, global economic growth projections continue to decline. Just last week, the Organization for Economic Cooperation and Development (OECD) downgraded its global growth projection for 2014 from 3.1% to 2.7%. It raises the question: If the Fed was unable to pull the trigger on a taper when the global economy was projected to grow 3.1%, how is it going to taper now that the global economy is showing signs of weakness? The answer is, it can’t. The Fed has to keep the money spigot… Read More

For developers of campus housing, the corks are going back on the champagne bottles.​ Shares of EdR (NYSE: EDR) (formerly known as Educational Realty Trust), Campus Crest Communities (NYSE: CCG) and American Campus Communities (NYSE: ACC) have fallen 15% to 40% this year, at a time when the S&P 500 Index has risen more than 20%.#-ad_banner-# What went wrong? Slowing college enrollment trends, sector overbuilding, and an escalation in transaction prices for new properties that has led to lower returns on investment. Investors are now questioning whether it’s smart to buy these stocks. And if… Read More

For developers of campus housing, the corks are going back on the champagne bottles.​ Shares of EdR (NYSE: EDR) (formerly known as Educational Realty Trust), Campus Crest Communities (NYSE: CCG) and American Campus Communities (NYSE: ACC) have fallen 15% to 40% this year, at a time when the S&P 500 Index has risen more than 20%.#-ad_banner-# What went wrong? Slowing college enrollment trends, sector overbuilding, and an escalation in transaction prices for new properties that has led to lower returns on investment. Investors are now questioning whether it’s smart to buy these stocks. And if so, which one stands out? To answer that question, we can look at a range of financial metrics. The Enrollment Reversal This had been something of a “no-brainer” asset class. Many colleges have chronic housing shortages and are increasingly look to private developers to help fill the gap. That trend remains in place.  But another factor, an expectation of ever-rising enrollment trends, isn’t panning out.  “While most industry estimates have enrollment growing by 1% through 2020, growth has been more flat and we expect a slight decrease through 2017 based on demographics. We note though that there is a… Read More

The 30-year Treasury is quite possibly the worst investment option out there right now… even your Uncle Dave’s coin and baseball card collection might offer better long-term returns. #-ad_banner-#Let’s forget for a moment about the Federal Reserve’s intention to taper quantitative easing, which has already begun to place upward pressure on interest rates (and thus downward pressure on bond prices). And let’s forget that the longer a bond’s duration, the greater its sensitivity to interest rate movements. So with every basis point uptick, nothing will feel the pain more acutely than the 30-year “long bond.” Let’s even forget… Read More

The 30-year Treasury is quite possibly the worst investment option out there right now… even your Uncle Dave’s coin and baseball card collection might offer better long-term returns. #-ad_banner-#Let’s forget for a moment about the Federal Reserve’s intention to taper quantitative easing, which has already begun to place upward pressure on interest rates (and thus downward pressure on bond prices). And let’s forget that the longer a bond’s duration, the greater its sensitivity to interest rate movements. So with every basis point uptick, nothing will feel the pain more acutely than the 30-year “long bond.” Let’s even forget that Uncle Sam’s credit rating has already been downgraded by at least one ratings agency. Even if interest rates don’t rise and Congress miraculously balances the budget — a best-case scenario — you’re still tying up your capital for the next three decades at a paltry rate of around 3.5%. But here’s the kicker: When your principal is finally repaid in the distant future, those dollars will have lost much of their purchasing power. Just ask anyone who bought one of these bonds back in 1983. Maybe they lent the government $30,000, enough money to buy three average new cars… Read More

Wall Street is famous for creating new products. Sometimes, these products prove to be disastrous, like derivatives on subprime mortgages were in 2008.#-ad_banner-#​ At other times, new products turn out to be beneficial to individual investors. Exchange-traded funds (ETFs) are an example of a Wall Street innovation that helped individual investors. Assets in ETFs topped $1.6 trillion in October, and individual investors have more than 1,250 funds to invest in. The vast number of ETFs serves two purposes. First, a large number of investment options provides individual investors with an opportunity to diversify their portfolio. Second, it provides… Read More

Wall Street is famous for creating new products. Sometimes, these products prove to be disastrous, like derivatives on subprime mortgages were in 2008.#-ad_banner-#​ At other times, new products turn out to be beneficial to individual investors. Exchange-traded funds (ETFs) are an example of a Wall Street innovation that helped individual investors. Assets in ETFs topped $1.6 trillion in October, and individual investors have more than 1,250 funds to invest in. The vast number of ETFs serves two purposes. First, a large number of investment options provides individual investors with an opportunity to diversify their portfolio. Second, it provides a way for fund sponsors to maximize their potential revenue by having products that appeal to almost all investors. This second purpose, generating fees, has led to some funds with objectives that are not suitable for most investors. Many leveraged funds fit into this category. On the other hand, the drive to generate fees has led firms to offer ETFs that provide individual investors with access to markets that are not available to them otherwise. Senior loans are an example of one investment that market individual investors cannot access without an ETF. Senior loans are generally made to companies with… Read More

There are many different approaches that an investor can use to succeed. The key is to find the approach that works for you.#-ad_banner-#​ Personally, I operate best when I think of a stock as a small ownership interest in a company and not a piece of paper to be traded on a frequent basis. My approach is to buy shares in a company I like at an attractive valuation and let management build wealth for me over the long term.  That said, if I had the ability to be a market timer, that is what I would do. Read More

There are many different approaches that an investor can use to succeed. The key is to find the approach that works for you.#-ad_banner-#​ Personally, I operate best when I think of a stock as a small ownership interest in a company and not a piece of paper to be traded on a frequent basis. My approach is to buy shares in a company I like at an attractive valuation and let management build wealth for me over the long term.  That said, if I had the ability to be a market timer, that is what I would do. It would be far less stressful (not to mention rewarding) if I could accurately time the low point for a stock and buy only then.  Ordinarily I’m very skeptical of my ability to pick the bottom for a stock — but today, I have a pretty good feeling about one. The company is Canadian light oil producer Lightstream Resources (OTC: LSTMF). I think this month could represent a long-term bottom for a company turning a corner. Lightstream has a market capitalization of over $1 billion and production exceeding 46,000 barrels of oil equivalent (BOE) a day. If you name a… Read More

It used to be a millionaire would have no trouble retiring. Just a few years ago, a five-year Treasury note paid 5%. That meant you could put a million bucks into Treasurys and earn $50,000 a year, risk-free. Today, that same million dollars earns much less — just $14,000 with the same investment. And it’s a similar story with other traditional places where millionaires put their money for safekeeping… #-ad_banner-#The average CD yields less than 1%, savings accounts earn next to nothing and even the S&P 500 pays a paltry 2% dividend yield. Fortunately, there’s a better way to earn… Read More

It used to be a millionaire would have no trouble retiring. Just a few years ago, a five-year Treasury note paid 5%. That meant you could put a million bucks into Treasurys and earn $50,000 a year, risk-free. Today, that same million dollars earns much less — just $14,000 with the same investment. And it’s a similar story with other traditional places where millionaires put their money for safekeeping… #-ad_banner-#The average CD yields less than 1%, savings accounts earn next to nothing and even the S&P 500 pays a paltry 2% dividend yield. Fortunately, there’s a better way to earn significantly more income. In fact, I’m using this strategy to earn the same income stream as a millionaire for just pennies on the dollar.  If you’re a regular reader of StreetAuthority Daily, you’ve likely heard about my Daily Paycheck strategy before. Simply put, my goal is to build a portfolio of dividend payers so that I can collect one dividend for every day of the year. In the past year, I’ve collected over $16,000 in dividends… and that’s with a portfolio with securities worth roughly $250,000. With 5-year Treasuries yielding 1.4%, I’m earning more from my portfolio than I would… Read More