Fundamental analysts generally focus on a company’s financial statement. They use tools like the price-to-earnings (P/E) ratio and dividend yields to find value. Many investors like to buy when these indicators are low. There are studies showing that this approach works in the long term. However, most of those studies could never be implemented by individual investors.#-ad_banner-# When studying P/E ratios or other fundamental measures of value, researchers generally divide the market into… Read More

Fundamental analysts generally focus on a company’s financial statement. They use tools like the price-to-earnings (P/E) ratio and dividend yields to find value. Many investors like to buy when these indicators are low. There are studies showing that this approach works in the long term. However, most of those studies could never be implemented by individual investors.#-ad_banner-# When studying P/E ratios or other fundamental measures of value, researchers generally divide the market into 10 groups. Each stock is assigned to one of those groups. Researchers then measure the performance of the group and usually find that the group with the lowest P/E ratio or the lowest dividend yield provides the best returns. There are at least 6,500 stocks being traded on U.S. exchanges. To duplicate a value strategy that is likely to outperform the market, you might need to buy 650 stocks. You could just select the stocks with the lowest ratios in… Read More

In a paper titled “Value and Momentum Everywhere,” a team of researchers found that “value and momentum ubiquitously generate abnormal returns for individual stocks within several countries, across country equity indices, government bonds, currencies, and commodities.” This conclusion is so widely accepted that value and momentum are considered to be anomalies to the Efficient Market Hypothesis (EMH). Proponents of EMH believe markets efficiently price stocks using all available information. The strictest form… Read More

In a paper titled “Value and Momentum Everywhere,” a team of researchers found that “value and momentum ubiquitously generate abnormal returns for individual stocks within several countries, across country equity indices, government bonds, currencies, and commodities.” This conclusion is so widely accepted that value and momentum are considered to be anomalies to the Efficient Market Hypothesis (EMH). Proponents of EMH believe markets efficiently price stocks using all available information. The strictest form of the hypothesis says that no individual could beat the market because each stock is trading at exactly the right price at all times. #-ad_banner-# However, researchers have repeatedly demonstrated that investors can beat the market by applying value and momentum strategies. We believe that volatility can also be used to outperform a buy-and-hold strategy. Recently, we introduced the Income Trader Volatility (ITV) indicator and provided test results showing that… Read More

In a paper titled “Value and Momentum Everywhere,” a team of researchers found that “value and momentum ubiquitously generate abnormal returns for individual stocks within several countries, across country equity indices, government bonds, currencies, and commodities.” This conclusion is so widely accepted that value and momentum are considered to be anomalies to the Efficient Market Hypothesis (EMH). Proponents of EMH believe markets efficiently price stocks using all available information. The strictest form… Read More

In a paper titled “Value and Momentum Everywhere,” a team of researchers found that “value and momentum ubiquitously generate abnormal returns for individual stocks within several countries, across country equity indices, government bonds, currencies, and commodities.” This conclusion is so widely accepted that value and momentum are considered to be anomalies to the Efficient Market Hypothesis (EMH). Proponents of EMH believe markets efficiently price stocks using all available information. The strictest form of the hypothesis says that no individual could beat the market because each stock is trading at exactly the right price at all times. #-ad_banner-# However, researchers have repeatedly demonstrated that investors can beat the market by applying value and momentum strategies. We believe that volatility can also be used to outperform a buy-and-hold strategy. Recently, we introduced the Income Trader Volatility (ITV) indicator and provided test results showing that… Read More

Mutual funds are one of the great success stories in the history of financial services. In 1970, just 360 funds existed in the United States, with assets under management at $48 billion. By the end of 2011, there were more than 14,000 mutual funds — with assets of $13 trillion. Thanks to these funds, new classes of investors could access the market, and the financial services industry enjoyed huge gains. #-ad_banner-# But now, after decades of… Read More

Mutual funds are one of the great success stories in the history of financial services. In 1970, just 360 funds existed in the United States, with assets under management at $48 billion. By the end of 2011, there were more than 14,000 mutual funds — with assets of $13 trillion. Thanks to these funds, new classes of investors could access the market, and the financial services industry enjoyed huge gains. #-ad_banner-# But now, after decades of growth, the mutual fund industry is under attack. With bloated fee structures, insufficient transparency, ongoing conflicts of interest, and years of underperformance, the mutual fund industry is experiencing a tidal wave of capital outflows. Domestic equity funds lost $154 billion in assets in 2012 — the fifth consecutive year the industry has had a net outflow. What’s driving the shift away from mutual funds? Exchange-traded… Read More

Are you looking to buy a new car? Don’t pay cash.  A 48-month loan for a new car is currently just 2.58%, according to Bankrate.com. That’s below the historical rate of inflation (going back over the past half century). By the time your loan is paid off in four years, the inflation rate could exceed that 2.58% rate, meaning your real borrowing costs would actually be less than zero percent.#-ad_banner-# But don’t wait too long. Interest rates have begun… Read More

Are you looking to buy a new car? Don’t pay cash.  A 48-month loan for a new car is currently just 2.58%, according to Bankrate.com. That’s below the historical rate of inflation (going back over the past half century). By the time your loan is paid off in four years, the inflation rate could exceed that 2.58% rate, meaning your real borrowing costs would actually be less than zero percent.#-ad_banner-# But don’t wait too long. Interest rates have begun to rebound and are expected to rise gradually higher over the next few years. That auto loan rate will likely be closer to 5% in a few years.  In fact, this issue is probably being discussed in boardrooms at the top auto companies and just about any firm that relies on low-cost loans to spur demand. Corporate executives realize that consumer confidence and spending trends remain challenged, even with the aid of low interest rates. Read More

Every profession has its buzzwords to create the illusion that things are more complex than they really are. Everything from the Latin terms used by medical doctors to the chatter of gearheads talking about the latest car engine, simple concepts are often clothed in complicated-sounding terms.#-ad_banner-# Investing professionals are no different in their use of complicated nomenclature to describe simple things and ideas.  I know I was intimidated when I first heard the term statistical… Read More

Every profession has its buzzwords to create the illusion that things are more complex than they really are. Everything from the Latin terms used by medical doctors to the chatter of gearheads talking about the latest car engine, simple concepts are often clothed in complicated-sounding terms.#-ad_banner-# Investing professionals are no different in their use of complicated nomenclature to describe simple things and ideas.  I know I was intimidated when I first heard the term statistical arbitrage. To me, it sounded like I would need a math Ph.D. or at least an advanced understanding of statistical theory to figure out what it meant. Not being an advanced math person, I was fortunate to have had a trading mentor who patiently explained to me what statistical arbitrage is and how to use it profitably.  Ever since I was made aware of this unique and profitable trading technique, I have used it in a variety of market conditions to capture profits that would otherwise be unavailable. This method’s not for… Read More

Are you looking to buy a new car? Don’t pay cash.  A 48-month loan for a new car is currently just 2.58%, according to Bankrate.com. That’s below the historical rate of inflation (going back over the past half century). By the time your loan is paid off in four years, the inflation rate could exceed that 2.58% rate, meaning your real borrowing costs would actually be less than zero percent.#-ad_banner-# But don’t wait too long. Interest rates have begun… Read More

Are you looking to buy a new car? Don’t pay cash.  A 48-month loan for a new car is currently just 2.58%, according to Bankrate.com. That’s below the historical rate of inflation (going back over the past half century). By the time your loan is paid off in four years, the inflation rate could exceed that 2.58% rate, meaning your real borrowing costs would actually be less than zero percent.#-ad_banner-# But don’t wait too long. Interest rates have begun to rebound and are expected to rise gradually higher over the next few years. That auto loan rate will likely be closer to 5% in a few years.  In fact, this issue is probably being discussed in boardrooms at the top auto companies and just about any firm that relies on low-cost loans to spur demand. Corporate executives realize that consumer confidence and spending trends remain challenged, even with the aid of low interest rates. Read More

The S&P 500 is on fire. The index is on track for its ninth consecutive month of gains. And chances are any stock you’ve owned in that time has risen at a respectable pace as well. Yet one thought is gnawing at many investors: Is it time to think about locking in profits?  After all, we’re already past the point where stocks saw substantial pullbacks in recent years. And this… Read More

The S&P 500 is on fire. The index is on track for its ninth consecutive month of gains. And chances are any stock you’ve owned in that time has risen at a respectable pace as well. Yet one thought is gnawing at many investors: Is it time to think about locking in profits?  After all, we’re already past the point where stocks saw substantial pullbacks in recent years. And this year‘s surge is even more impressive than the surges we saw early in 2010, 2011 and 2012. S&P 500: A Surge, A Swoon And A Surge Again Yet even if one chooses to start selling stocks, it’s not always clear which candidates in your portfolio are ripe for jettisoning. Here are five guideposts I look for to spot potential sell candidates. 1. Portfolio Concentration If you aim to construct a portfolio with an equal weighting given to all stocks, you’ll notice that the weighting changes over time,… Read More

The S&P 500 is on fire. The index is on track for its ninth consecutive month of gains. And chances are any stock you’ve owned in that time has risen at a respectable pace as well. Yet one thought is gnawing at many investors: Is it time to think about locking in profits?  After all, we’re already past the point where stocks saw substantial pullbacks in recent years. And this… Read More

The S&P 500 is on fire. The index is on track for its ninth consecutive month of gains. And chances are any stock you’ve owned in that time has risen at a respectable pace as well. Yet one thought is gnawing at many investors: Is it time to think about locking in profits?  After all, we’re already past the point where stocks saw substantial pullbacks in recent years. And this year‘s surge is even more impressive than the surges we saw early in 2010, 2011 and 2012. S&P 500: A Surge, A Swoon And A Surge Again Yet even if one chooses to start selling stocks, it’s not always clear which candidates in your portfolio are ripe for jettisoning. Here are five guideposts I look for to spot potential sell candidates. 1. Portfolio Concentration If you aim to construct a portfolio with an equal weighting given to all stocks, you’ll notice that the weighting changes over time,… Read More

“Contrary to popular modern belief, it is still quite possible for the successful individual to make his million — and more.” J. Paul Getty wrote these words in 1960, in his book, “How to Be Rich.” It’s as true now as it was then… and Getty shows his readers that anyone with the right mentality can get rich by developing a handful of habits.#-ad_banner-# Getty was a very rich man — the richest man in the country in his day. Getty made his fortune by buying up oil businesses at bargain prices just after the… Read More

“Contrary to popular modern belief, it is still quite possible for the successful individual to make his million — and more.” J. Paul Getty wrote these words in 1960, in his book, “How to Be Rich.” It’s as true now as it was then… and Getty shows his readers that anyone with the right mentality can get rich by developing a handful of habits.#-ad_banner-# Getty was a very rich man — the richest man in the country in his day. Getty made his fortune by buying up oil businesses at bargain prices just after the Depression. A small portion of the book is devoted to telling this story. The rest of it presents his thesis: Anyone with the right mentality can get rich by developing a handful of habits. “How to Be Rich” is very easy to read. Written as a series of essays for Playboy magazine, it feels like a casual conversation with a very rich friend. “Although there are no sure-fire formulas for achieving success in business,” Getty says, “there are some fundamental rules to the game, which, if followed, tip the odds of success very much in the businessman’s favor.” Those… Read More