An investment strategy is a protocol and methodology for allocating funds of a portfolio. This strategy is based on an investor’s risk profile. The more risk the investor is willing to take, the greater the potential returns, but also the higher risk of a loss in capital. There is a whole universe of investment strategies, from the least risky of buying treasury bills and government bonds with high credit ratings, to the more risky of buying stocks based on fundamental analysis, technical analysis or simply buying and holding for the long term. Some investors also look to stocks with dividends that return a yield over time, to mitigate some of the risks of the stock market.
Johnson & Johnson (JNJ), which is one of my favorite long-term stocks for income and dividend-reinvesting investors, just dropped below the $100.00-per-share level and is becoming more attractive each day.
This stock has been doing extremely well over the last few years and should continue to do so. The position has been a worthy buy when it’s down and according to its recent trading history, it typically isn’t down for long.
If you’re a shareholder in this company or are considering a long-term position, you’ll want to take a look at the company’s recently filed Securities and Exchange Commission (SEC) Form 10-Q, which was submitted August 1.
This quarterly SEC filing reveals much more information over and above a company’s regular earnings press release. It gives a much better snapshot of a company’s financial position, where the sales are, which divisions are the most profitable, and where the company sees its operations in the near future.
In Johnson & Johnson’s recently filed Form 10-Q, the company’s overall profitability, that is its net earnings as a percentage of total sales, leapt higher from 20.7% to 24.1% in the first half of this year compared to last.
This is a huge accomplishment for a company this large and a major reason why stockholders should feel so confident about increasing dividends in the future, along with more share buybacks.
The company’s average common shares outstanding in the first half of 2014 dropped by approximately 3.3 million shares on a diluted basis compared to the same period last year.
Johnson & Johnson’s two-year stock chart is featured below.
Chart courtesy of www.StockCharts.com
Johnson & … Read More
There’s one long-term investing adage that has shown a great amount of success over the years: buy when everyone is fearful and sell when optimism is over the top. This theory worked extremely well when key stock indices fell to their lowest levels. It worked in 1987, in 2000, and then in 2009—three of the greatest times to buy stocks in history.
With this in mind, take a look at the long-term chart of the Chicago Board Options Exchange (CBOE) Volatility Index (VIX) below. This index is often referred to as the “fear index” for key stock indices, since it is a gauge/measure of how fearful investors are about the stock market declining. The higher the index goes, the more fear in the market; the lower the index goes, the more optimism in the market.
Chart courtesy of www.StockCharts.com
The VIX clearly shows investor concern about key stock indices declining, sitting close to the same point it was at back in 2007—just a few months before stocks started to collapse.
Aside from the VIX flashing red…there are two other key stock market indicators in the trouble zone.
According to the CNBC Market Insider Activity, insiders of companies on the key stock indices continue to sell billions of dollars worth of stock monthly. The sell-to-buy ratio—that is how many shares they sold compared to how many they bought—was 10 to 1 in May, meaning they sold 10 shares for every one share bought. (Source: CNBC Market Insider Activity, last accessed May 27, 2014.) Corporate insiders have been selling their shares at an accelerated pace for some time now.
And corporate earnings … Read More
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