My grandma worked as a secretary for much of her life. Without my grandpa’s knowledge, she squirreled away part of her monthly earnings into the stock market. #-ad_banner-#Like many investors of her era, she only cared about two kinds of stocks: electric utilities and telephone companies. Indeed, it was the perennial promise of ever-higher dividend payments that led my grandma to call AT&T (NYSE: T) her “no brainer” stock. But if she were alive today, I would encourage her to sell off her shares in AT&T — because the day is approaching when Ma Bell’s dividend stops growing and starts… Read More

My grandma worked as a secretary for much of her life. Without my grandpa’s knowledge, she squirreled away part of her monthly earnings into the stock market. #-ad_banner-#Like many investors of her era, she only cared about two kinds of stocks: electric utilities and telephone companies. Indeed, it was the perennial promise of ever-higher dividend payments that led my grandma to call AT&T (NYSE: T) her “no brainer” stock. But if she were alive today, I would encourage her to sell off her shares in AT&T — because the day is approaching when Ma Bell’s dividend stops growing and starts shrinking. A range of pressures are starting to hurt this once-venerable business, and the pressures are likely to deepen in coming years. The Vultures Are Circling Back in September, I noted that 106.5 million shares had been held by short sellers. Just-released short sales data shows that figure has surged 20 million in the first two weeks of February to a stunning 171 million. We’re now talking about the most heavily shorted stock on the New York Stock Exchange, by a significant margin. Six months ago, I suggested that the barriers to entry in the wireless telecom space were… Read More

As I write this I’m sailing across the sky, 35,000 feet in the air in a Boeing (NYSE: BA) 777, heading home from a great vacation in Grand Cayman. It’s one of the most beautiful islands in the Caribbean. White sandy beaches and great snorkeling and diving. I also like vacationing in Grand Cayman because of its stable currency. The Cayman dollar is pegged to the U.S. dollar. That fixed-exchange rate shelters the Cayman dollar from unpredictable price swings that could negatively affect its economy. It also makes it easy for me to forecast my expenses for the week. But… Read More

As I write this I’m sailing across the sky, 35,000 feet in the air in a Boeing (NYSE: BA) 777, heading home from a great vacation in Grand Cayman. It’s one of the most beautiful islands in the Caribbean. White sandy beaches and great snorkeling and diving. I also like vacationing in Grand Cayman because of its stable currency. The Cayman dollar is pegged to the U.S. dollar. That fixed-exchange rate shelters the Cayman dollar from unpredictable price swings that could negatively affect its economy. It also makes it easy for me to forecast my expenses for the week. But that kind of currency stability is an anomaly in many emerging markets right now. For countries with floating rate currencies, inflation has been wreaking havoc. In India, onion prices recently jumped 300%. In Brazil, the CPI (consumer price index) topped the highest estimates in 2013. In Turkey, key lending rates were raised from 7.75% to 12% to defend the value of the lira. In Argentina, inflation recently spiked to 25%.  Naturally, investors want to know if these signals are transitory or the beginning of a larger issue. Opinions on the Street are mixed. Here’s what I think… In the short… Read More

For the past few months, I’ve been telling readers of my High-Yield Investing newsletter about the secrets of America’s privileged. You see, wealthy folks in the U.S. invest differently than most of us. And I believe it’s worth examining their investing habits and taking a cue from their practices. After all, America’s privileged have their wealth for a reason… It’s one thing to accumulate wealth, but they’re also incredibly successful at preserving and growing it for years on end. #-ad_banner-#I personally know about the perpetual income of America’s privileged because it’s also been in my family now for three generations. Read More

For the past few months, I’ve been telling readers of my High-Yield Investing newsletter about the secrets of America’s privileged. You see, wealthy folks in the U.S. invest differently than most of us. And I believe it’s worth examining their investing habits and taking a cue from their practices. After all, America’s privileged have their wealth for a reason… It’s one thing to accumulate wealth, but they’re also incredibly successful at preserving and growing it for years on end. #-ad_banner-#I personally know about the perpetual income of America’s privileged because it’s also been in my family now for three generations. Ever since I can remember, money was never a source of worry in our family. I don’t recall hard times while growing up. I know there were recessions… and I had friends whose fathers had been laid off. But somehow, we were isolated from the same hardships. You see, my grandfather came upon the perpetual income of America’s privileged 30 years ago and it has changed the way our family has lived ever since… Now, don’t get me wrong. I’m not claiming I come from a family of America’s privileged. We’re ordinary folks. The kind you meet every day. Both… Read More

Although Feb. 14 is better known as Valentine’s Day, it’s also a date of particular significance for investment managers. #-ad_banner-#For investment managers overseeing a fund with assets under management north of $100 million, Feb. 14 is the deadline to file a Form 13F with the SEC. The 13F outlines certain types of a fund’s assets, predominantly long exchange-traded positions, certain debt positions, and some equity options. Taken as a snapshot at the end of each quarter, these disclosures can give individual investors valuable insight into the minds of the investing elite. Although typically filed 45 days after the end of… Read More

Although Feb. 14 is better known as Valentine’s Day, it’s also a date of particular significance for investment managers. #-ad_banner-#For investment managers overseeing a fund with assets under management north of $100 million, Feb. 14 is the deadline to file a Form 13F with the SEC. The 13F outlines certain types of a fund’s assets, predominantly long exchange-traded positions, certain debt positions, and some equity options. Taken as a snapshot at the end of each quarter, these disclosures can give individual investors valuable insight into the minds of the investing elite. Although typically filed 45 days after the end of a quarter, some funds release their documents early. Bridgewater Associates recently did so for last year’s fourth quarter. Founded by legendary billionaire Ray Dalio in 1975, Bridgewater now commands roughly $150 billion in capital, a staggering amount that makes it the largest hedge fund in the world. Dalio’s own net worth has crept up to nearly $13 billion, according to Forbes. I’ve dug into Bridgewater’s 13F with two criteria in mind: Find stocks paying yields higher than 3%, and see which of the bunch were added to by the fund between the third and fourth quarters… Read More

Investors are getting scared again. On February 3, the S&P 500 fell 2.1% — its largest one-day drop since June. The pullback sent the CBOE Volatility Index (VIX) — a gauge used to judge fear in the marketplace — to 21.4, its highest level in 18 months. Defensive assets have also been rallying. Treasury bonds and gold bullion are both up more than 4.5% since the beginning of the year. People are likely returning to these “safe haven” assets as they brace for more turbulence in the equity markets. So should you follow their lead? After all, the S&P 500… Read More

Investors are getting scared again. On February 3, the S&P 500 fell 2.1% — its largest one-day drop since June. The pullback sent the CBOE Volatility Index (VIX) — a gauge used to judge fear in the marketplace — to 21.4, its highest level in 18 months. Defensive assets have also been rallying. Treasury bonds and gold bullion are both up more than 4.5% since the beginning of the year. People are likely returning to these “safe haven” assets as they brace for more turbulence in the equity markets. So should you follow their lead? After all, the S&P 500 gained 32% (including dividends) last year — its third-best annual performance in two decades. After such a mind-blowing year, surely the pullback is the start of a much bigger correction… right? Not necessarily. #-ad_banner-#While 2014 may have started as a lackluster year, it’s still way too early to give up on stocks. Here’s why… For starters, even with the Federal Reserve starting to “taper,” the low-interest rate environment that’s been fueling the recent bull market is unlikely to change anytime soon. Based on the Fed’s Open Market Committee meeting last week, the U.S. central bank plans to keep interest rates… Read More

Most people think investing success is a matter of finding good stocks and buying them when the odds favor a rise in the price. They buy a blue-chip stock like Procter & Gamble, Amazon, Philip Morris or MasterCard — monitor their position closely, collect any dividends that may come in… and hope things work out.  True success, however, also involves knowing when to sell and how to use all the investment tools at your disposal to reach your goals.  While most investors have studied different methods of analyzing what stocks to buy and when, few have considered all of the… Read More

Most people think investing success is a matter of finding good stocks and buying them when the odds favor a rise in the price. They buy a blue-chip stock like Procter & Gamble, Amazon, Philip Morris or MasterCard — monitor their position closely, collect any dividends that may come in… and hope things work out.  True success, however, also involves knowing when to sell and how to use all the investment tools at your disposal to reach your goals.  While most investors have studied different methods of analyzing what stocks to buy and when, few have considered all of the possible trading tools at their disposal. #-ad_banner-#As for me, I’m not interested in simply buying good stocks, waiting for dividend checks to come in, and hoping for the best.  Instead, I’m interested in earning income. Now. That may sound a little greedy, but I assure you it’s not. In fact, some of the world’s best money managers and hedge funds have the same goal. One way we can achieve this is with options… Most individual traders would probably say that options are among the riskiest investments anyone could make. They’re partially right — trading options the way most individuals do… Read More

With medicine being the huge industry it is, pharma companies bring in billions of dollars with blockbuster drugs — and they are great at using this cash to reward shareholders. #-ad_banner-#When deciding which Big Pharma company to invest in, there might be no better choice than the company that bills itself as the world’s largest research-based pharmaceutical company — the same company that brought us Lipitor, Celebrex and Viagra. Since 2004, Pfizer (NYSE: PFE) has paid out the most cash to shareholders (as a percentage of enterprise value) of any of the major drugmakers. Pfizer’s cash payout clocks in at… Read More

With medicine being the huge industry it is, pharma companies bring in billions of dollars with blockbuster drugs — and they are great at using this cash to reward shareholders. #-ad_banner-#When deciding which Big Pharma company to invest in, there might be no better choice than the company that bills itself as the world’s largest research-based pharmaceutical company — the same company that brought us Lipitor, Celebrex and Viagra. Since 2004, Pfizer (NYSE: PFE) has paid out the most cash to shareholders (as a percentage of enterprise value) of any of the major drugmakers. Pfizer’s cash payout clocks in at 61%, compared with GlaxoSmithKline (NYSE: GSK) at 46%, Merck (NYSE: MRK) at 39%, Eli Lilly (NYSE: LLY) at 36% and Johnson & Johnson (NYSE: JNJ) at 32%. There’s nothing to suggest this trend won’t continue into the future. Pfizer has been getting more focused on the higher-growth drug business. Back in 2012, Pfizer divested its nutrition business, selling it to Nestle (OTC: NSERGY), and in mid-2013 it spun off its animal health business. As a result, it’s turning its attention to the higher growth drug areas. These include oncology, cardiology, neuroscience and immunology. The oncology segment was Pfizer’s fastest-growing segment… Read More

A long time ago, in a financial world very unlike today’s, investors could earn decent returns with just a savings account and certificates of deposit issued by the local bank. #-ad_banner-#Many of you likely remember these days — and you likely remember that the downside of these generous but low-risk yields was double-figure mortgage rates and spiking inflation. In contrast, today’s easy-money policies and near-zero interest rates have made things much easier for borrowers. However, the flip side is that decent yields have all but vanished from the risk-free landscape, forcing investors to look to unusual and often high-risk instruments. Read More

A long time ago, in a financial world very unlike today’s, investors could earn decent returns with just a savings account and certificates of deposit issued by the local bank. #-ad_banner-#Many of you likely remember these days — and you likely remember that the downside of these generous but low-risk yields was double-figure mortgage rates and spiking inflation. In contrast, today’s easy-money policies and near-zero interest rates have made things much easier for borrowers. However, the flip side is that decent yields have all but vanished from the risk-free landscape, forcing investors to look to unusual and often high-risk instruments. One such instrument has been known to provide yields in excess of 50% — yet owns no assets, has no employees and doesn’t pay any federal income taxes. In fact, yields on these investments are tax-advantaged and may offer unique tax credits.  Called royalty trusts, these instruments are corporate entities that focus on natural resources such as oil, gas or mining. They own the rights to royalties on the production and sale of natural resources rather than the resources or infrastructure. The trusts have no physical operations and no management or employees. Royalty trusts are financing vehicles that trade like… Read More

Over the past few years, I’ve been conducting quarterly reviews of companies that are aggressive repurchasers of their own stock. #-ad_banner-#I’ve tended to focus on companies that announced a share repurchase plan that represents at least 5% of shares outstanding. Anything smaller may not have much of an impact on earnings per share (EPS). Yet in recent months, we here at StreetAuthority have broadened our measure of corporate generosity to focus not just on buybacks but also dividends and debt reductions. These three pillars combine to form what we call our Total Yield strategy, and we’re always on the prowl… Read More

Over the past few years, I’ve been conducting quarterly reviews of companies that are aggressive repurchasers of their own stock. #-ad_banner-#I’ve tended to focus on companies that announced a share repurchase plan that represents at least 5% of shares outstanding. Anything smaller may not have much of an impact on earnings per share (EPS). Yet in recent months, we here at StreetAuthority have broadened our measure of corporate generosity to focus not just on buybacks but also dividends and debt reductions. These three pillars combine to form what we call our Total Yield strategy, and we’re always on the prowl for companies that can deliver a total yield in excess of 10%. Below you’ll find a group of companies that meet the criteria, based on share buyback announcements during the current earnings season. A few notes about this table. First, not all of these buybacks will be completed over the next 12 months, so the total yield analysis may cover a multi-year period. Second, only some of these companies are also reducing debt. In those instances, the total yield is even higher than the figures you see above.  Also, many of these companies are buying… Read More

The United States has a big problem. It may seem like a nice problem to have, but it’s a serious problem nonetheless. Our country simply has too much natural gas on its hands. #-ad_banner-#Thanks to the shale gas revolution, tapping into productive new seams has become quite easy for the hundreds of public and private gas producers around the country. But as I remind readers of my newsletter, Scarcity & Real Wealth, just as scarcity creates wealth, abundance creates the opposite effect. Many firms are curtailing their natural gas production plans because prices are just too low, mothballing previously active… Read More

The United States has a big problem. It may seem like a nice problem to have, but it’s a serious problem nonetheless. Our country simply has too much natural gas on its hands. #-ad_banner-#Thanks to the shale gas revolution, tapping into productive new seams has become quite easy for the hundreds of public and private gas producers around the country. But as I remind readers of my newsletter, Scarcity & Real Wealth, just as scarcity creates wealth, abundance creates the opposite effect. Many firms are curtailing their natural gas production plans because prices are just too low, mothballing previously active drilling platforms. Of course, the greatest panacea to flagging prices is higher demand. Industry players are now drawing up plans to utilize natural gas in new ways. In addition to its already-strong presence in the power generation industry, natural gas is also becoming a key player in our nation’s export picture, and can even be found in more trucks that have been retro-fitted to use natural gas a fuel. Yet there’s another potentially huge source of demand that is just now coming into focus. It’s called gas-to-liquids (GTL), and by some estimates could generate so much demand for natural gas… Read More