You can learn a lot about the nature of a stock market rally simply by observing which stocks are leading the market. Below I present to you the list of the 10 best performing S&P 500 stocks since the Federal Reserve officially announced the third round of its quantitative easing program in September of 2012. It is true that the last leg of this bull market started earlier, but since QE3 officially started, the gains have been relentless and the corrections shallow. COMPANY SYMBOL RETURN SINCE 9/13/12 NETFLIX INC NFLX 628.8 MICRON … [Read more...]
Piping Hot Growth
Four Percent! Can you believe it? The first estimate of second quarter GDP growth was released this week and it came in at a piping hot 4%. That is the third highest quarterly growth rate since the recovery began and only the seventh time in the last 56 quarters that growth has been so high. But before you start celebrating, I should note that the 4% growth rate comes with an asterisks. Much of the growth in the second quarter was simply catch up from an especially weak first quarter. After revisions, the Bureau of Economic Analysis said GDP in the first quarter contracted at an annual … [Read more...]
The Only Stocks We Buy
You read last week about putting margin of safety to work in your portfolio. I told you about three strategies we use to pick stocks with the margin of safety in mind. The first and most important is that the only stocks we buy pay dividends. Below you’ll read an excerpt explaining the benefits of dividend investing from our free special report, Collecting Rare and Hard to Find Dividends. I’ll detail the other strategies in the weeks ahead. Reduce Risk with Dividend Stocks What’s more, dividends help reduce portfolio volatility. Figure 3 shows that high-yielding stocks have been less … [Read more...]
The Shocking Truth Behind Falling Treasury Yields
There is an odd dynamic in the bond market that Wall Street can’t seem to figure out. Long-term Treasury yields are falling despite an economy that is showing signs of life. It is an apparent conundrum to many. Some analysts are attributing the move down in yields to the recognition by investors that there is a new lower speed limit for the U.S. economy. Others claim that yields are falling because pensions, endowments, and insurance companies are now flush. These investors are believed to be cashing in their equity chips and investing the proceeds in bonds. Still others believe that low … [Read more...]
The Investment Idea that made Warren Buffett Billions
Last week E.J. posted part I in his series on Benjamin Graham’s The Intelligent Investor. You may have heard this from us before, but it is worth repeating for the benefit of those who have not. The Intelligent Investor truly is the best investment book ever written. It is a timeless classic that remains as relevant today as it was when it was first published over six decades ago. Not a single investment book comes close to providing the fundamental insights that Graham so masterfully delivers in The Intelligent Investor. If you don’t yet have a copy, order one today. It will be the best … [Read more...]
Who’s the Sucker?
This story doesn't have a happy ending. You see this often in the late stages of a bull market. After missing the bulk of the rally in the stock market from the prior bear market lows, the general investing public gets greedy. Those investors who couldn't find a thing to like about the investment climate become the biggest cheerleaders for a permanent prosperity. The regret of missing most of the bull market gains pushes many to make up for lost time by getting too aggressive. Stocks with questionable business prospects that most wouldn't touch during the prior bear market become the most … [Read more...]
Losing Your Livelihood
This is an excerpt from Young Research’s Global Investment Strategy, where we help investors compound wealth with investment strategies that span the global investment landscape. We cover the global stock and bond markets as well as currencies and commodities. Young Research's Global Investment Strategy is designed for the investor who does not want his investment success bound by the opportunities of a single market. How would you react if your life savings, the source of your livelihood in retirement, was cut in half? Would you have the nerve to ride out the storm in hopes of making your … [Read more...]
The Global Imperative
Check out this chart on oil demand. The black line shows oil consumption of major developed markets. This is basically the U.S., Japan, and developed Europe. The grey line is oil consumption of the rest of the world, which is dominated by emerging markets. Up until about 15 years ago, if you were interested in the oil market, you focused on demand in the world’s largest economies. But in recent years, developed market demand has become a marginal influence on prices. The most important driver of global oil markets today is demand from the rest of the world. The U.S., Japan, and … [Read more...]
Catalyst for a New High
The S&P 500 closed at yet another new high yesterday. The market was flat until about 2:00 pm. What was the catalyst that drove prices higher after 2:00? The nation’s esteemed and astute Federal Open Market Committee announced the results of their latest policy meeting. Despite building evidence that inflation is accelerating and that the labor market is tightening, Yellen & Co., said inflation is still too low. They also told us that even though the unemployment rate has come down faster than the Fed expected, the labor market is actually worse than the headline unemployment rate … [Read more...]
Birth of a Crisis
In the aftermath of the last financial crisis, the Federal Reserve somehow managed to come away with its reputation mostly intact. Big commercial and investment banks took most of the blame for the mayhem. And rightly so. But the impetus for the crisis was born of a prolonged period of Fed engineered ultra-low interest rates. Bernanke & Co., held rates far below normalized levels in an attempt to ward off the deflation Bogeyman (just as Yellen & Co., are doing today). Investors responded by reaching for return. There was an insatiable demand for yield. With rates so low, every basis … [Read more...]
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