They’re popping the champagne corks in Denver, Colorado, where fund management firm Janus Capital Group, Inc. resides. Shares of Janus surged more than 43% on today, inflating the company’s market value by nearly $1 billion. Investors figure the sudden and unexpected hiring of legendary bond fund manager Bill Gross will generate massive amounts of new business for Janus. Yet, it may be time to put the cork into the champagne bottle. The road ahead for Bill Gross — and the bond market — is likely to be much more challenging. #-ad_banner-#Make no mistake, Bill Gross is one of the brightest… Read More

They’re popping the champagne corks in Denver, Colorado, where fund management firm Janus Capital Group, Inc. resides. Shares of Janus surged more than 43% on today, inflating the company’s market value by nearly $1 billion. Investors figure the sudden and unexpected hiring of legendary bond fund manager Bill Gross will generate massive amounts of new business for Janus. Yet, it may be time to put the cork into the champagne bottle. The road ahead for Bill Gross — and the bond market — is likely to be much more challenging. #-ad_banner-#Make no mistake, Bill Gross is one of the brightest minds in the bond business. His wise prognostications helped draw $270 billion into his firm’s Pimco Total Return Fund (Nasdaq: PTTRX). And Janus executives hope he will have a similar magic touch at his new firm.  Even before his arrival, Janus rebounded from its tarnished dot-com legacy and now manages more than $30 billion in bond assets.  According to various media reports, Gross will oversee Janus’ Global Unconstrained Bond Fund (Nasdaq: JUCAX) — which was launched in May 2014 — and he will also help further develop the firm’s fixed-income investment strategies. An unexpectedly long rally When I started… Read More

If you haven’t noticed, consumers are spending a lot. In fact, they’re spending at a record rate. In Q2 2014 alone, domestic consumer spending exceeded a whopping $10.9 trillion — an all-time high, according to a report by the U.S. Bureau of Economic Analysis. And the U.S. consumer confidence rating is up to 84.6 — just off from last year’s record high of 85.10. Where is all of that money being spent? Everywhere, it seems. A recent Gallup poll shows that while over  50% of… Read More

If you haven’t noticed, consumers are spending a lot. In fact, they’re spending at a record rate. In Q2 2014 alone, domestic consumer spending exceeded a whopping $10.9 trillion — an all-time high, according to a report by the U.S. Bureau of Economic Analysis. And the U.S. consumer confidence rating is up to 84.6 — just off from last year’s record high of 85.10. Where is all of that money being spent? Everywhere, it seems. A recent Gallup poll shows that while over  50% of consumers are spending more money on necessities like gas and groceries, over 25% are still spending more on discretionary purchases, like new clothing, vacations and dining out. Naturally, companies are clamoring to get their share of this record-setting spending spree. But with such a diverse variety of consumer habits and desires, it can be difficult to pinpoint which retailer, manufacturer or restaurant will come out on top. So, it seems, the obvious winners will be the companies that make the consumer spending possible — the firms that supply the two credit cards on average that U.S. Read More

Despite ongoing worry about the risk of a big correction, the market is having quite a good year. The S&P 500 is up about 10%, and the financial media is packed with reports about high-profile takeovers, major initial public offerings and soaring tech and biotech stocks. So investors may be shocked to hear which sector is leading the pack in 2014 — and by a sizeable margin. In fact, the sector is up around 15% year-to-date, placing it more than 4% ahead of the highly-publicized tech sector and even a tad out in front of the red-hot biotech… Read More

Despite ongoing worry about the risk of a big correction, the market is having quite a good year. The S&P 500 is up about 10%, and the financial media is packed with reports about high-profile takeovers, major initial public offerings and soaring tech and biotech stocks. So investors may be shocked to hear which sector is leading the pack in 2014 — and by a sizeable margin. In fact, the sector is up around 15% year-to-date, placing it more than 4% ahead of the highly-publicized tech sector and even a tad out in front of the red-hot biotech industry. Some other sectors aren’t even in the same ballpark as utilities. This outperformance is a surprise, considering the negative sentiment toward utilities at the start of the year. At that point, many analysts expected the sector to underperform because of a greater risk appetite among equity investors and gradually rising interest rates, which analysts surmised might begin pushing more conservative income-oriented investors back toward bonds. However, utilities have retained their appeal in 2014 because in many cases their yields still well-exceeded those of government bonds and high-quality corporate debt. What’s more, many equity investors sought refuge… Read More

Around the office, we call them “secret wealth investments.” That’s because they’ve been almost exclusively used by the wealthiest investors and institutions for decades now. #-ad_banner-#Yale has used them to generate average returns of 30% every year for their endowment funds since 1973. High net-worth individuals have used them to beat S&P 500 investor returns by an average of 7 percentage points every year for the past decade. And because federal law has stipulated that only millionaires with annual incomes above $200,000 per year can invest in them,… Read More

Around the office, we call them “secret wealth investments.” That’s because they’ve been almost exclusively used by the wealthiest investors and institutions for decades now. #-ad_banner-#Yale has used them to generate average returns of 30% every year for their endowment funds since 1973. High net-worth individuals have used them to beat S&P 500 investor returns by an average of 7 percentage points every year for the past decade. And because federal law has stipulated that only millionaires with annual incomes above $200,000 per year can invest in them, about 94% of investors have been blocked out of this private-market investment. That is, until we found a backdoor way for all investors to invest in them… If you’ve been reading StreetAuthority for the past couple of weeks, you know some my colleagues and I are big fans of these ultra high-yield investments. Some of these “secret wealth investments” I’m referring to are known as private equity firms. And over the last decade, they’ve slowly become open to individual investors. Today, roughly a dozen of these firms sell shares on the… Read More

October 4, 2011 wasn’t a particularly momentous day. In Waxahachie, Texas, a chemical plant was still smoldering from a fire the day before. In New York, “Occupy Wall Street” demonstrators had completed a march dressed as corporate zombies. #-ad_banner-#But the day did mark a major inflection point for the markets, when the S&P 500 closed at 1,123. And stocks have been rising ever since. Yesterday, the benchmark index touched of 2,011. That’s a powerful increase of 79.1%. There have been more impressive runs. But the truly remarkable aspect of this advance is that it has been virtually uninterrupted. October will… Read More

October 4, 2011 wasn’t a particularly momentous day. In Waxahachie, Texas, a chemical plant was still smoldering from a fire the day before. In New York, “Occupy Wall Street” demonstrators had completed a march dressed as corporate zombies. #-ad_banner-#But the day did mark a major inflection point for the markets, when the S&P 500 closed at 1,123. And stocks have been rising ever since. Yesterday, the benchmark index touched of 2,011. That’s a powerful increase of 79.1%. There have been more impressive runs. But the truly remarkable aspect of this advance is that it has been virtually uninterrupted. October will be the three-year anniversary of the last market trough. And during this stretch, we haven’t had a single correction (defined as a pullback of at least 10%) — not one in the past 36 months. But that could be changing… All bull markets are punctuated by the occasional pullback. It’s not a matter of if, but when. According to Forbes, there have been 16 bull markets since the Great Depression. In that 80-year span, only 3 of those lasted longer than five years — all were so-called “super-bulls.” Our current bull market last experienced a correction in October 2011, but… Read More

Investing in 2014 requires a considerable amount of faith — the faith that future profit growth will be sufficiently strong to offset currently robust valuations. #-ad_banner-#As I noted in a recent look at Warren Buffett’s next move, “Virtually every type of company that Buffett would seem likely to acquire has seen its value rise sharply in recent years, thanks to the extended bull market.” A rising tide has certainly lifted all boats, as most companies in the S&P 500 have at least doubled in value since early 2009. Many of these companies are up 200%, and even 300%, from their… Read More

Investing in 2014 requires a considerable amount of faith — the faith that future profit growth will be sufficiently strong to offset currently robust valuations. #-ad_banner-#As I noted in a recent look at Warren Buffett’s next move, “Virtually every type of company that Buffett would seem likely to acquire has seen its value rise sharply in recent years, thanks to the extended bull market.” A rising tide has certainly lifted all boats, as most companies in the S&P 500 have at least doubled in value since early 2009. Many of these companies are up 200%, and even 300%, from their lows. The problem with such an indiscriminate upward move is that tends to elevate shares of companies that are actually in the midst of slowing profit growth.  I looked at all of the companies in the S&P 500 that are expected to see earnings per share (EPS) growth begin to slow in 2015 and fall below 10% in 2016. From there I narrowed the list down to those stocks trading for more than 20 times projected 2015 profits. This equates to a robust price-to-earnings (P/E) ratio and anemic profit growth —  which are not the ingredients for share price gains. Read More

The equity markets are moving away from risk, and ever since traders turned their attention from the election to more significant unknowns, the de-risk trade has been in full effect. This is true of the equity markets at large, but it’s especially true of many stalwart “safe” high-yield sectors such as utilities.  But why have high-yield funds suffered the wrath of sellers?#-ad_banner-# Well, now that President Barack Obama has won a second term, there is very real fear that taxes on the wealthy, and particularly taxes on… Read More

The equity markets are moving away from risk, and ever since traders turned their attention from the election to more significant unknowns, the de-risk trade has been in full effect. This is true of the equity markets at large, but it’s especially true of many stalwart “safe” high-yield sectors such as utilities.  But why have high-yield funds suffered the wrath of sellers?#-ad_banner-# Well, now that President Barack Obama has won a second term, there is very real fear that taxes on the wealthy, and particularly taxes on dividend income, will go up. The so-called “fiscal cliff” negotiations have yet to begin, but the president already has said that a deal must include an increase on the wealthiest 2% of Americans. If you take out your “politico-speak” translator, what this really means is the likelihood of a jump in tax rates, including a big increase in the dividend tax rate from the current 15% to nearly 40%. The likelihood of such a tax surge is in part the driving force behind many a high-yield fund sell-off during the… Read More

Time is running out. Congress has 42 days to decide what they’re going to do about the “Bush Era” Tax cuts. If they don’t act by December 31st, income taxes will rise across the board. Long-term capital gains could also increase. If the tax cuts aren’t renewed, capital gains rates could go up to as much as 20%. And for people in the top income (single filers making over $200,000 and $250,000 for join filers), you could also pay an extra 3.8% Medicare tax… Read More

Time is running out. Congress has 42 days to decide what they’re going to do about the “Bush Era” Tax cuts. If they don’t act by December 31st, income taxes will rise across the board. Long-term capital gains could also increase. If the tax cuts aren’t renewed, capital gains rates could go up to as much as 20%. And for people in the top income (single filers making over $200,000 and $250,000 for join filers), you could also pay an extra 3.8% Medicare tax on all investment income. In other words, the top tax rates could be as high 43.4% for dividends and 23.8% for capital gains.#-ad_banner-# In recent issues of Dividend Opportunities, I’ve told you how you can escape the tax hikes by investing in tax-exempt municipal bonds. #-ad_banner-# However you play it though, the tax hikes will affect some of our favorite dividend-paying companies. Right now, dividends and capital gains are both taxed at the same 15% rate. That could change. In the face of… Read More

I have a simple question for you… If you could buy 5% of a company and have it turn into 10% of the business — without investing another dime — would you do it? It’s obviously a rhetorical question. Who wouldn’t want their stake in a company to double in size? Well, it so happens that you can do this. And you don’t have to reinvest dividends or pay taxes on any capital gains. Let me explain… Certain companies will periodically “give away” a portion… Read More

I have a simple question for you… If you could buy 5% of a company and have it turn into 10% of the business — without investing another dime — would you do it? It’s obviously a rhetorical question. Who wouldn’t want their stake in a company to double in size? Well, it so happens that you can do this. And you don’t have to reinvest dividends or pay taxes on any capital gains. Let me explain… Certain companies will periodically “give away” a portion of company ownership, free of charge, to their existing shareholders. They’ll even spend billions of dollars of their own money to do it. Coca-Cola (NYSE: KO) has been known to do this. The company is on track to “give away” $2.5 billion worth of ownership by the end of 2012, but recently said it would begin “giving away” $18.9 billion more as early as next year. Starbucks (Nasdaq: SBUX) also likes to have these “giveaways.” During the past 11 years, the company has “given away” $5.1 billion worth of ownership. But it’s not just these two. Every year, companies the… Read More

Income investors got an early holiday gift in October, when Kraft was split into two: A high-growth international snack-food business — Mondelez International (Nasdaq: MDLZ) — and Kraft Foods Group (Nasdaq: KRFT), a North American packaged-food business that’s more focused on paying nice dividends to shareholders.#-ad_banner-# The deal was structured as a tax-free spinoff, with Mondelez shareholders receiving one Kraft share for every three Mondelez shares held. At the time of the spinoff, Kraft was North America’s fourth-largest packaged-food company, with reported revenue… Read More

Income investors got an early holiday gift in October, when Kraft was split into two: A high-growth international snack-food business — Mondelez International (Nasdaq: MDLZ) — and Kraft Foods Group (Nasdaq: KRFT), a North American packaged-food business that’s more focused on paying nice dividends to shareholders.#-ad_banner-# The deal was structured as a tax-free spinoff, with Mondelez shareholders receiving one Kraft share for every three Mondelez shares held. At the time of the spinoff, Kraft was North America’s fourth-largest packaged-food company, with reported revenue of $19 billion in 2011. As two separate entities, Mondelez now owns the Oreo, Cadbury and Nabisco snack food brands, while Kraft hung on to its familiar household U.S. brands — Oscar Mayer, Miracle Whip and Velveeta. The deal was intended to unlock shareholder value, and now the “new” Kraft is a far more enticing income investment than the “old” Kraft. For starters, the $27.4 billion company was launched from a position of strength, with three-quarters of its revenue earned from product categories where Kraft is either the… Read More