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Investment Research Since 1978

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Preferred Stock vs. Common Stock: What You Need to Know

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What is the difference between preferred stock and common stock? Does preferred mean that preferred stock is better than common stock? We explain some of the differences between preferred stock and common stock below. While most investors are familiar with common stock, many are not familiar with preferred stock and how preferred stock differs from common stock. Preferreds have been around for many years though. Preferred stock got its start with the railroads in the 1800s. Preferred stocks aren’t as popular or issued by as many firms as they once were, but the size of the preferred … [Read more...]

When Dividends Pay You to be Patient

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When stocks move sideways, make sure you’re being paid to invest. Because the stock market has a history of doing just that. From 1929-1954: From 1965-1981: Over the last year: Originally posted on Your Survival Guy.  … [Read more...]

Stocks Cap Their Best First Three Quarters in 22 Years

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Despite the ongoing trade war and skirmishes in the Middle East, stocks posted their best three first three quarters since 1997. Gunjan Banerji writes in The Wall Street Journal: The S&P 500 is now sitting just 1.6% below July 26’s all-time high, but it has also risen a mere 2.2% from a year ago after a brutal selloff last fall—encapsulating the sideways trading pattern that has gripped markets since the beginning of 2018. The quarter ended on a relatively quiet note. The S&P 500 ticked up 0.5% to 2976.74 Monday, paced by Apple, which closed at its highest level this … [Read more...]

How Much More Are Stocks Really Worth when Rates Are Low?

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Gary Shilling warns against overpaying for stocks simply because rates are low. In piece for Bloomberg, he explains that investors "tend to be overly enthusiastic at business cycle peaks when corporate cash is plentiful and purchase their shares at high prices." He writes: U.S. stocks are expensive by historical standards, and the bulls try to justify current valuations by pointing to extremely low levels of interest rates. There are a number of reasons why that’s no reason to pay sky-high prices relative to profits. With companies preparing to start reporting results for the third … [Read more...]

Activists Turn Up the Heat on AT&T

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Activist investor Elliott Management has amassed a $3.2 billion stake in AT&T and is advocating for the sale of underperforming assets. The investors claim that AT&T is more valuable than its recent share price would suggest and that it should be run more like Verizon. Connor Smith reports at Barron's: AT&T shares shot up after Elliott Management revealed a $3.2 billion stake in the company, as well as a plan the activist investor says could bring a 65% gain in the stock by the end of 2021. Elliott Management’s Jesse Cohn and Marc Steinberg wrote in a letter to AT&T’s … [Read more...]

Take it from the Forty-Niners, There’s a Better Way to Play Marijuana Stocks

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In 1848, there were around 1,000 non-native people living in California. By the end of 1849's Gold Rush, there were over 100,000 living in the territory. By 1852, those settlers had found $2 billion worth of gold in the area. Despite the fortunes made by gold, most of the forty-niners weren't successful. The Sacramento Bee reports that "one in every five miners who came to California in 1849 was dead within six months." Legend has it that the people who really made money during the Gold Rush weren't the many prospectors who spent their time panning and digging for gold, but those who sold them … [Read more...]

Automation is Making Markets more Volatile

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Analysts say using computers to automate the selling of stocks in volatile markets is making them even more volatile reports Richard Henderson in the Financial Times. He writes: So-called “volatility-targeting” funds that manage about $400bn in assets have bought up stocks this year as markets have calmed since markets’ dramatic end to 2018. But the renewed turmoil means they were pegged to sell $50bn by the end of Wednesday, according to Wells Fargo estimates. “When volatility jumps, systematic funds rebalance portfolios away from risky assets like equities,” said Pravit Chintawongvanich, … [Read more...]

Who’s Really Moving the Market?

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After a recent spate of losses in stock markets, a wave of buying began, but it wasn't retail investors stepping in to take advantage of lower prices. Instead, the publicly traded companies themselves were propping up markets by buying back shares. Bloomberg's Lu Wang reports: As the S&P 500 slumped 6% over six days through Monday, companies boosted share buybacks to almost $10 billion a day from $3 billion previously, the firm [JPMorgan Chase & Co.] estimates. With stocks sinking and bonds rallying, the big gap in performance spurred a rotation to equities among funds that need to go … [Read more...]

Time to Get Defensive?

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The Wall Street Journal's Corrie Driebusch reports a move toward consumer companies in stock markets. Driebusch calls the move "a sign that investors are hedging their bets by picking up shares of firms they believe will provide returns in a struggling economy." You'll notice on my chart below during this century, consumer staples have beaten tech stocks and the S&P 500 index. Now it seems, investors are buying consumer staples in a bid for defense against a potential economic recession. Driebusch writes: One of the hottest stock-trading strategies lately is buying shares of … [Read more...]