Will they or won’t they raise interest rates? It’s the question at the forefront of investors’ minds going into the next Federal Open Market Committee meeting. The board has considered hiking the federal funds rate for the past year, but hasn’t yet made a move. Many believe that the upcoming December meeting could be the one where we finally see a bump… I’m not here to predict whether or not the Fed will raise rates in December. I don’t know what their plan is… I’m not sure they do either. I do, however, want to give… Read More

Will they or won’t they raise interest rates? It’s the question at the forefront of investors’ minds going into the next Federal Open Market Committee meeting. The board has considered hiking the federal funds rate for the past year, but hasn’t yet made a move. Many believe that the upcoming December meeting could be the one where we finally see a bump… I’m not here to predict whether or not the Fed will raise rates in December. I don’t know what their plan is… I’m not sure they do either. I do, however, want to give you an idea of what may happen if the rates do rise.  It’s important to know what sectors could benefit from a possible rate hike — and which ones will suffer — if you want your portfolio to end the year in the black, and not in the red. Thanks to the folks at Bloomberg, I can run different economic scenarios and see the effects on a variety of financial instruments. So I looked at how a 25 basis point increase would impact the S&P 500. I was astonished to find that one of the best performing sectors is currently… Read More

All major U.S. indices closed higher again last week, logging the sixth straight week of overall strength. The rally was led by the beleaguered small-cap Russell 2000, which gained 3.3%.  This is a good overall sign because small-cap and technology stocks typically lead the broader market higher and lower. However, the Russell 2000 still has more work to do. It is the only major index still in negative territory for 2015. The two strongest sectors last week were financial services, up 3.7%, and financials, up 2.7%. The weakest sector was utilities, which lost 3.4%. #-ad_banner-# These sector-related gains… Read More

All major U.S. indices closed higher again last week, logging the sixth straight week of overall strength. The rally was led by the beleaguered small-cap Russell 2000, which gained 3.3%.  This is a good overall sign because small-cap and technology stocks typically lead the broader market higher and lower. However, the Russell 2000 still has more work to do. It is the only major index still in negative territory for 2015. The two strongest sectors last week were financial services, up 3.7%, and financials, up 2.7%. The weakest sector was utilities, which lost 3.4%. #-ad_banner-# These sector-related gains and losses were a direct result of last week’s big jump in long-term U.S. interest rates. The yield on the benchmark 10-year Treasury note rose by 18 basis points to finish the week at 2.34%. Rising long-term interest rates benefit lending institutions while attracting yield-seeking investor assets away from riskier utilities.   I’ll talk in more detail about the direction of long-term interest rates and the effect they could have on financial asset prices later in this report. Tech Stocks Front And Center Again This Week Three weeks ago, I pointed out a bullish chart pattern in the S&P 500… Read More

The market is about to get crazy. Over the next month, stocks both large and small are going to be volatile. They’ll bounce around 10%, 20%, even 35% or more in a single day. This “volatility season” was built into the financial system over 80 years ago by the U.S Securities and Exchange Commission (SEC), and there’s nothing you can do about it. It’s inevitable. It’s more commonly known as earnings season. Earnings are the true drivers of stocks, and I have good reason to believe a lot of companies are going to report lackluster results. For the next few… Read More

The market is about to get crazy. Over the next month, stocks both large and small are going to be volatile. They’ll bounce around 10%, 20%, even 35% or more in a single day. This “volatility season” was built into the financial system over 80 years ago by the U.S Securities and Exchange Commission (SEC), and there’s nothing you can do about it. It’s inevitable. It’s more commonly known as earnings season. Earnings are the true drivers of stocks, and I have good reason to believe a lot of companies are going to report lackluster results. For the next few weeks, we’re likely to see one-day stock moves of 5% to 15%-plus more frequently. This can result in quick losses or gains — depending on how you’re positioned. If you could accurately predict whether a company will beat or miss earnings estimates before its quarterly report, then you could profit from the post-report move. Over the years, I’ve developed a proprietary earnings algorithm that helps me do just that. With it, I have been able to predict — with good odds — whether a company’s earnings will beat or miss the consensus. For instance, in mid-October, my earnings algorithm predicted… Read More

With the elections around the corner, it only makes sense to bring up the enormous elephant in the room: politicians are rich… and intend to stay that way. Ben Carson left his campaign last month to spend time on a book tour. Trump came out with his own book recently. Of course, none of that’s new. Newt Gingrich did the same last election cycle.  And we know that the Clintons both made the vast majority of their wealth through book sales and speeches. The Obamas too. What might not be so apparent — but surely not shocking all the same… Read More

With the elections around the corner, it only makes sense to bring up the enormous elephant in the room: politicians are rich… and intend to stay that way. Ben Carson left his campaign last month to spend time on a book tour. Trump came out with his own book recently. Of course, none of that’s new. Newt Gingrich did the same last election cycle.  And we know that the Clintons both made the vast majority of their wealth through book sales and speeches. The Obamas too. What might not be so apparent — but surely not shocking all the same — is that the vast majority of politicians are also successful investors. According to the Office of Public Records of the Secretary of the Senate, 50% of federally-elected politicians are millionaires. Much of that was due to “successful investments and portfolio management.” I say that so tongue-in-cheek because of this other simple fact from the same watchdog group: members of the House of Representatives outperform regular investors by 6.8 percentage points. Think about what that means. In years when you make 10%, they make 16.8%. When you lose 5%, they still make 1.8%. You can’t tell me that they are… Read More

All major U.S. indices closed higher last week except the small-cap Russell 2000, which lost just 0.4%. This was the market’s fifth week of overall strength, and the modest advance nudged the S&P 500 back into positive territory for the year.  The tech-heavy Nasdaq 100 remains in the lead this year, up 9.7% through the end of October. Technology stocks, specifically the Nasdaq 100 and Composite indices, are critical to overall market performance this month. We will be taking a closer look at both of these in a moment. Read More

All major U.S. indices closed higher last week except the small-cap Russell 2000, which lost just 0.4%. This was the market’s fifth week of overall strength, and the modest advance nudged the S&P 500 back into positive territory for the year.  The tech-heavy Nasdaq 100 remains in the lead this year, up 9.7% through the end of October. Technology stocks, specifically the Nasdaq 100 and Composite indices, are critical to overall market performance this month. We will be taking a closer look at both of these in a moment. #-ad_banner-# From a sector standpoint, last week’s advance was led by health care and consumer discretionary, which gained 3% and 1.7%, respectively. Asbury Research’s own ETF-based metric shows the biggest sector-related investor inflows during the past week went into health care, fueling strength in the sector.  The two weakest sectors last week were utilities and consumer staples, which lost 1.9% and 1.7%, respectively. Technology At Critical Decision Point In last week’s Market Outlook, I pointed out the Nasdaq 100’s move above its 4,451 Sept. 17 high on Oct. 22 suggested “the index’s… Read More

With Halloween coming up this weekend, what better time to reflect on the stock market’s recent ups and downs? After all, the market headlines have been a little scary lately. If you don’t like big changes, you may feel a little spooked this fall. Check out this chart of the VIX Index, the commonly accepted measure of S&P 500 volatility. After a long period of relative tranquility, volatility jumped in August and took a while to calm down. There are many reasons for the volatility. Leading the list are signs of weakness in the U.S. economy, concerns about… Read More

With Halloween coming up this weekend, what better time to reflect on the stock market’s recent ups and downs? After all, the market headlines have been a little scary lately. If you don’t like big changes, you may feel a little spooked this fall. Check out this chart of the VIX Index, the commonly accepted measure of S&P 500 volatility. After a long period of relative tranquility, volatility jumped in August and took a while to calm down. There are many reasons for the volatility. Leading the list are signs of weakness in the U.S. economy, concerns about slowing growth rates for China’s economy, uncertainty about the Fed’s intentions regarding short-term interest rates and worse-than-expected earnings from some prominent companies. Despite these negatives, stocks have overcome their August-September swoon with an impressive rebound in October, as investors snatched up high-quality stocks. I’ve advised keeping cash out of the S&P 500 during periods of high volatility. In addition, the overall market’s valuation remains a little high relative to earnings, and all of the concerns listed above remain valid. Don’t Let Fear Blind You To The Real Opportunities In The Stock Market Now, I don’t want you to worry. Read More

Several years ago, an investment-manager friend told me about the thirty-second rule. It’s a powerful (yet remarkably simple) way to think about investment analysis — one that has stuck with me ever since that initial conversation. “When you look at any investment,” he said, “you should know if it works within thirty seconds or less.” At first I was skeptical. This sounded more like getting a psychic reading than a sound strategy for investing. But — as he went on to explain — there’s actually a lot to be said for first impressions, whether it’s for people or stocks. Here’s… Read More

Several years ago, an investment-manager friend told me about the thirty-second rule. It’s a powerful (yet remarkably simple) way to think about investment analysis — one that has stuck with me ever since that initial conversation. “When you look at any investment,” he said, “you should know if it works within thirty seconds or less.” At first I was skeptical. This sounded more like getting a psychic reading than a sound strategy for investing. But — as he went on to explain — there’s actually a lot to be said for first impressions, whether it’s for people or stocks. Here’s how his rule works. Basically, you divide potential investments into three groups. The first group consists of ideas that clearly don’t work. These have an obvious flaw. My friend estimated this amounts to about 5% of all the investment pitches out there. These are the ones we instantly reject. The next group of potential investments is the “in-betweens.” My friend theorized that most investments out there fall into this category. As the name suggests, these ideas are all plausible. To varying degrees, they have good points and weaker points. But none of them is so strong that it jumps out… Read More

It could be the most important meeting you haven’t heard about: in China this week, the Central Committee of the Communist Party is meeting to come up with a new Five-Year Plan for the world’s most populous nation — the 13th such blueprint since Chairman Mao started the practice in 1953. Much has changed since the 1950s. Thanks to its strategic shift toward a market-based economy over the past three decades, China’s GDP has grown more than 25-fold since 1990, and more than 10-fold in the past decade alone. China is now the world’s second-largest economy to the United States… Read More

It could be the most important meeting you haven’t heard about: in China this week, the Central Committee of the Communist Party is meeting to come up with a new Five-Year Plan for the world’s most populous nation — the 13th such blueprint since Chairman Mao started the practice in 1953. Much has changed since the 1950s. Thanks to its strategic shift toward a market-based economy over the past three decades, China’s GDP has grown more than 25-fold since 1990, and more than 10-fold in the past decade alone. China is now the world’s second-largest economy to the United States — and its future is increasingly important to ours. China’s economy has helped drive sales for thousands of publicly traded U.S. stocks, from exporters of specialized equipment such as General Electric to consumer-goods and restaurant companies like Coca-Cola, Procter & Gamble and Yum! Brands. Consider that China is a bigger market for Apple than Europe is; it’s no longer an emerging market — it’s the market that counts the most outside of our borders. And that’s why recent signs of pronounced slowdown in China’s rate of growth are so concerning. We’re not talking about a recession, or anything close to… Read More

What do you do when you find a stock that absolutely dominates its industry… pays steadily rising dividends year after year… and trades at a 43% discount to the S&P 500? You buy it and hold it forever. I’m not the only one who thinks so either. Many of America’s wealthiest and most well-connected investors will back me up on that. They would know… they’ve been stuffing billions of dollars into stocks like this for more than a decade now. Let me give you an example. According to Berkshire Hathaway’s most recent annual report, Warren Buffett’s company now owns more… Read More

What do you do when you find a stock that absolutely dominates its industry… pays steadily rising dividends year after year… and trades at a 43% discount to the S&P 500? You buy it and hold it forever. I’m not the only one who thinks so either. Many of America’s wealthiest and most well-connected investors will back me up on that. They would know… they’ve been stuffing billions of dollars into stocks like this for more than a decade now. Let me give you an example. According to Berkshire Hathaway’s most recent annual report, Warren Buffett’s company now owns more than 483 million shares of banking giant Wells Fargo (NYSE: WFC). The total stake is worth upwards of $10 billion. That’s a long way from his initial $290 million investment in the company back in 1990. And he’s not the only well-connected investor who loves Wells Fargo either. In fact, you may not be aware of it, but average American investors are actually able to see what stocks are owned by their Congressional representatives. Why is this important? Well, a recent study found that members of the House of Representatives beat the average stock market investor by 6.8% per year. Read More

#-ad_banner-#All major U.S. indices closed higher last week to log their fourth straight week of overall strength. The rally was led by the tech-heavy Nasdaq 100, which gained 4.2% and is now up an impressive 9.2% for the year, compared to the modest 0.8% year-to-date rise in the broader market S&P 500. Bringing up the rear last week was the small-cap Russell 2000, which, along with technology, typically leads U.S. market rallies, so I would ideally like to see some emerging strength in this index to help sustain a fourth-quarter advance. Most sectors of the S&P 500 also finished in… Read More

#-ad_banner-#All major U.S. indices closed higher last week to log their fourth straight week of overall strength. The rally was led by the tech-heavy Nasdaq 100, which gained 4.2% and is now up an impressive 9.2% for the year, compared to the modest 0.8% year-to-date rise in the broader market S&P 500. Bringing up the rear last week was the small-cap Russell 2000, which, along with technology, typically leads U.S. market rallies, so I would ideally like to see some emerging strength in this index to help sustain a fourth-quarter advance. Most sectors of the S&P 500 also finished in positive territory last week, led by — you guessed it — technology, which gained 4.4%. Moreover, the green highlights in the table below show that the biggest inflow of investor assets over the past week, according to Asbury Research’s own metric, was into technology. This should come as no surprise, as it is what actually drove the outperformance. The red highlights show that the biggest outflow of assets over the past one-week, one-month and three-month periods came from health care. This warns that the sector is vulnerable to more weakness after being a market leader for most of… Read More