Notable & Quotable – The Economist, The Wall Street Journal “Investment in gold ETFs and similar products reached a record high in 2008, of 321 tonnes—and then almost doubled, to 617 tonnes, last year. The stock of gold held by such funds more than doubled to 1,839 tonnes in the two years to the end of 2009…The 229 tonnes of gold sold in the form of official coins last year was the most since 1986, thanks to demand from retail investors in America and Europe…In Abu Dhabi those seized by an urge to buy bullion can now head to the lobby of the Emirates Palace hotel, where the Gold-to-Go … [Read more...]
Archives for July 2010
A Simple Strategy for Stock Market Success
For over four decades I have used a simple strategy to successfully invest in the stock market. I invest exclusively in dividend paying stocks. I especially favor those with high yields, a strong balance sheet, and a history of annual dividend hikes. This strategy is simple, but it works. Historically, high dividend payers have outperformed non-dividend payers. In the chart below I show the growth of $1 in non-dividend paying stocks to the growth of $1 in the highest yielding quintile (top 20%) of U.S. stocks. The difference in performance is profound. $1 invested in non-dividend payers in … [Read more...]
Avoid Australian Equities?
The correlation between Australian stocks and Chinese stocks is near a record high. If you are bearish on China, you probably want to avoid Australian equities. … [Read more...]
Stop Losing Money in ETFs
You may be thinking about using fixed-income ETFs to fill out your portfolio. Don’t. I continue to avoid fixed-income ETFs, as should you. The low liquidity of many bonds creates wide discount/premium gaps between the price and the net asset value (NAV) of the funds. If you buy the fund at a premium, you’re whacking yourself with a notional loss right out of the gate. For quick proof, take a look at my chart of the iShares iBoxx $ Investment Grade Corporate Bond Fund (LQD). The top part of the chart shows the price and net asset value (NAV) of the fund. If you buy the fund when the price is … [Read more...]
The Lifeblood of the U.S. Economy
The small business sector accounts for half of private-sector GDP and two-thirds of new job creation. You aren’t likely to see the current stimulus- and inventory-restocking-led recovery turn into a self-sustaining recovery without a strong small business sector. What is the current state of small business, and what does it mean for economic growth? The best source of data on small business is the National Federation of Independent Business (NFIB). With 500,000 members, the NFIB is the nation’s leading small business organization. Each month, the NFIB sends thousands of NFIB members a … [Read more...]
Record Low for Car Purchase Plans
If consumers follow through with their purchase plans for major appliances, new homes, and new cars, economic growth is likely to slow significantly over coming quarters. Plans to buy a new car are at record lows and plans to buy a new home are bordering on record lows. … [Read more...]
Earn Safe Profits from Takeover Candidates
There are two strategies that can be used to profit from takeover candidates. Most investors are familiar with the strategy of investing in speculative takeover candidates. Buying takeover candidates just prior to a merger announcement can be highly rewarding. Returns of 30–50% in a matter of weeks are possible, but there is also significant risk. If not done with discipline, investing in prospective takeover candidates can be a perilous strategy. To safely profit from takeover candidates, you want to buy companies that are the target of a publicly announced merger. This is called merger … [Read more...]
90 Million Emotions Wreak Havoc
With the market in a correction and off 10% this quarter, emotions are running high. I want you to take a minute this weekend and get your bearings. Clear your head of the emotions that hinder sound analysis and get yourself on the road to the investment success you deserve. A lesson worth remembering is that, without fail, investors tend to miss out on the market’s biggest gains, getting sucked in when the big money has already been made, and suffering from its biggest losses. I know this from studying money flows, and in part thanks to the 2010 edition of the Investment Company … [Read more...]
Donuts and Coffee to Measure the Economy
Using Starbucks, Dunkin’ Donuts to Track Economy – Phil Izzo, The Wall Street Journal The most recent leading indicators are pointing down, indicating more economic weakness in the months ahead. Be your own economist by going to your local Dunkin' Donuts or Starbucks to track activity. You may be surprised how closely both track the economy. – E.J. Smith … [Read more...]