It finally happened. The big event has come and gone, leaving a trail of clues for us. Now, it’s up to us to take those clues and turn them into cash. It’s not the recent lunar eclipse I am referring to, although I watched it and it was cool. I am talking about oil finally closing at more than $100 a barrel. One trade at the end of 2007 took oil above $100, but it didn’t close there. Oil fell…
From one end of the world to the other, governments are drawing a blueprint. They’re doing exactly what you would expect given the recent fall in global equities. If the past is any indication, they’re going to make matters worse. That means the best way to make a bundle over the next 12 months might be to short-sell stocks-in other words, to bet against the market. The current problems began in August when the subprime problem erupted onto the national…
Let’s play a game. I am going to write the name of a company, and I want you to say what immediately comes to your mind. I am not looking for your feelings about the stock price, but rather what you think about the company itself. As an example, let’s look at Wal-Mart. The stock has been a dog for 10 years and probably will keep dogging it for years to come. But the company is amazing in its ability…
We all know that the hip bone is connected to, well, you know how it goes. But a lot of people seem to be missing the point that the same principles controlling that biology are an active force in the markets and economy. All the brilliant economists out there are telling us what we already plainly know-finance and consumer-related sectors are weak. There isn’t enough talk about the next connection, though, or how a cancer spreads from one body part…
While the seasons are a lot more predictable than the stock market, the market does go through climatic changes that investors should adjust to. In late September, after the market had been rallying for about six weeks off the August low, I mentioned it would be a good idea to reduce equity to around 40 -cent to 50 percent. In the middle of November, I wrote that it might be smart to reduce that level even more. If you’re still…
After suffering through one of the worst Novembers in the modern era, stock investors should probably take a minute and ask themselves what they should do next. For now, one action to avoid at all costs is listening to anything a government official has to say. For that matter, throw in CEOs or any other corporate leader from a publicly traded company. The things they say can get you in a lot of trouble. Three weeks ago, right in the…
The biggest stories of 2007 have been oil’s relentless rise and China’s growing presence on the world stage. These two are obviously related, as energy needs in China help push oil prices higher. But things move in cycles, and as the world economies slow down and U.S. stocks move into a bear market, there is another way to play these two stories that should continue to dominate our lives the next five years. The next several years could be characterized…
Power is typically understood by those who wield it and those who operate under it. If I took a survey that asked who the most powerful person in the world is today, there would be two or three common answers. But there is a person who is just as powerful, and perhaps more so, than the few names that immediately come to mind. I am talking about Rex Tillerson, chairman and CEO of Exxon Mobil. Up until Nov. 5 (more…
The mighty U.S. dollar. There was a time when it really could take you places. When my wife, Sarah, and I went to Rome nine years ago, we felt as if we were stealing clothes from the Italian vendors. We went back a few months ago; the pain was reversed. Our currency is under attack, which is affecting all our lives. Twenty years ago, the United States did a majority of its international trade with a few large European countries…
If you look at stock market returns over a 100-year-plus time frame, the highestreturning industries have been pharmaceuticals and cosmetics. Dropping the time frame down to the last 25 years shows a different picture, with technology taking the top spot. But with more than a century of momentum, drug companies can still attract interest. Using a quantitative screen that I run every week, I noticed that biotechnology stocks have been picking up steam lately. This surprised me because the big…
Experts are doing their best to convince us everything is right with the world again. A few hundred billion dollars in liquidity here, a few cuts in the discount and fed rates there, and we’re back in Shangri La, right? My question to all of the experts then is this: Why isn’t it working? On the surface, things seem like they are getting back in shape. The Dow Jones and S&P 500 are within 1 or 2 percent of new…
Say the name Warren Buffett around investors, and they get a little star-struck. For more than 40 years, his publicly traded company, Berkshire Hathaway, has torn up the performance rankings. His value-oriented, patient method is probably one of the most copied strategies in the world. The media rightfully put a lot of light on his actions, and his latest step has my attention. When Buffett took the controls at Berkshire Hathaway in the 1960s, it was a textile firm. Today,…
Heroes are for sporting events and battlefields, not investing. With some of the damage repaired from the early August rout, it is a good time to raise a little cash and wait a few weeks. There certainly will be no shortage of things to watch while you wait. It is easy to make either the bull or bear case right now. The technical damage suffered by the market leading up to the July high was more short-term in nature, not…
Subprime. Liquidity injection. Volatility spikes. The equity markets have woken up from a long slumber, and the fallout has both short- and longterm consequences. Everyone loves a good mystery, which is why recent stock market events have been attracting so much attention. However, I did my best impression of Sherlock Holmes and believe I have solved the case. Here is how it went down. Two large hedge funds run by Bear Stearns invested heavily in the subprime mortgage market. Delinquencies…
The last full week of July turned out to be exciting for the stock market. Not long after the Dow Jones industrial average topped 14,000, a solid correction came flying in. The speed and power of the pullback deserve some respect, but so does the tenet of perspective. If it wasn’t already, it now is probably apparent why I have been harping all year that you should concentrate investments in energy, industrials, materials and select technology. The market suffered through…
The S&P 500 on June 1 set a rally high of 1,540. Now, it sits at 1,507. That’s the longest stretch of no forward progress since last summer. So, does that mean anything? There is no shortage of professionals telling us the next bear market is upon us. And with more than a few industries not participating for a while, it might seem the bears have a valid point. Before you pull out the lifeboats, though, there are a few…
You people must drink coffee. And a lot of it. That’s the only reason I can find that Starbucks would open another store within a few hundred yards of two existing locations. And I am not talking about Manhattan, where 12 million people walk around on any given business day. This is happening in downtown Indianapolis, where midweek foot traffic might reach a few hundred thousand. Here is what I wrote about Starbucks in mid-February: “The near-term risk in Starbucks…
Al Qaeda is threatening Iran-saying that if the country does not stop supporting Shiites in Iraq within two months, it will suffer terrorist attacks. In addition, Al Qaeda has called for a jihad against Shiite Muslims across the world. With the blessing of the U.S. government, the Shiites are in charge of Iraq now. Iraqi Shiites are receiving arms and support from Iran, a nation the United States has long called evil. We dislike Iran and are at war with…
The seed of the next bear market might have just been planted, and what better place than right here in the Crossroads of America. A seed is a tiny and innocent thing. But one tiny seed from a destructive weed can ruin an entire garden. A little background for those who don’t live in Indianapolis (or for those who do but don’t follow local politics): For years, there has been a gaping hole in the promised retirement benefits for retired…
My son wants a portable PlayStation. Or a GameBoy. Or anything he can fit in his hand and play video games on and be like all the other kids in the hood. And if he goes all summer with great behavior and a good attitude, he probably will get one. The other night during dinner, my wife asked if Apple makes a video game player. No, I answered, but I have to believe Steve Jobs is working on it, and…
