Lombardi Publishing was established in 1986 as an investment newsletter providing stock market analysis to its readers. Today, we publish 26 paid-for investment letters, most of which provide stock market direction and individual stock picking analysis.
In 2001, Michael Lombardi started his famous daily economic newsletter Profit Confidential. Written by Lombardi Financial editors who have been offering stock market guidance for years to Lombardi customers, Profit Confidential provides a macro-picture on where the stock market is headed, what sectors are hot, and which sectors to avoid.
Over the years, Michael’s financial commentary and the accuracy of his economic predictions have garnered him global attention, and the confidence of over one million investors in more than 140 countries.
Michael Lombardi has been widely recognized as predicting five major economic events over the past 10 years.
1) In 2002, he famously told readers to get into gold
2) Told them to get out of the housing market in 2006
3) Predicted the recession of late 2007
4) Warned readers to get out of stocks in the fall of 2007
5) Advised readers to get back into stocks in March 2009
In 2002, Michael’s Profit Confidential famously advised readers to buy gold-related investments when gold bullion traded under $300.00 an ounce. “I’ve been pushing gold bullion and gold shares for over a year now. Back in January 2002, I personally started buying gold shares.” (As published in Profit Confidential, December 13, 2002.)
In 2006, Profit Confidential “begged” its readers to get out of the housing market years before it plunged. Michael started warnings abut the coming U.S. housing crisis right at the peak of the boom. On August 2, 2006 Michael Lombardi predicted, “I’m getting very worried about the state of the U.S. housing market and its ramifications on the economy. The U.S. could be headed for its first annual decline in home prices on record, adjusted for inflation. And, I really believe this could be a catastrophe for the U.S. economy.”
Michael was also one of the first to predict the U.S. economy would be in a recession by late 2007. On March 22, 2007, he warned, “Over the past few weeks, I’ve written about subprime lenders and how their demise will hurt the U.S. housing market, the economy, and the stock market. There’s no escaping the carnage headed our way because the housing market and subprime business are falling apart. The worst of our problems, because of the easy money made available to borrowers, which fuelled the housing boom that peaked in 2005, has yet to arrive.”
At the same time Michael wrote this, former Federal Reserve Chairman Alan Greenspan was quoted as saying, “The worst is over for the U.S. housing market, and there will be no economic spillover effects from the poor housing market.”
Michael Lombardi also warned his readers in advance of the crash in the stock market of 2008. On November 29, 2007, Michael Lombardi predicted, “The Dow Jones Industrial Average, the S&P 500, and the other major stock market indices finished yesterday with the best two-day showing since 2002. I’m looking at the market really of the past two days as a classic stock market bear trap. As the economy gets closer to contraction, 2008 will likely be a most challenging economic year for America.”
The Dow Jones peaked at 14,279 in October, 2007. A “sucker’s rally” developed in November 2007, which Michael quickly classified as a bear trap for his readers. One year later, the Dow Jones Industrial Average was at 8,726.
And, Profit Confidential turned bullish on stocks in March of 2009, and rode the bear market rally from a Dow Jones Industrial Average of 6,440 on March 9, 2009, to 12,876 on May 2, 2011, a gain of 99%.
But, Michael is not resting on his laurels from the past 10 years.
In 2013, Michael predicts the devaluation of the U.S. dollar that started in early 2009 will accelerate as the U.S. economy deteriorates, that gold prices will continue to rise, and that the euro is done. Michael also predicts that inflation will be a big, big problem for the U.S.; probably for the rest of the decade. Finally, Michael believes 2013 will be a poor year for stocks.
It’s not all doom and gloom, though. He also has ways investors can protect their holdings, and even make money off the weak economy.
Wall Street analysts are warming up to Johnson Controls, Inc. (JCI), and it’s understandable why. I’ve been bullish on this stock for some time now. The company has strong earnings visibility going into next year, and management recently bumped its quarterly dividend payment significantly higher.
Even though the stock is up about 50% over the last 12 months to a new record high, the company’s 16% dividend increase and new $3.65-billion share buyback program is exactly what institutional investors want. Earnings expectations for Johnson Controls are increasing across the board. (See “If You Don’t Want to Leave This Market, Stick with These Proven Winners.”)
One of the most prolific trends in the stock market over the last few years has been the strong performance of dividend-paying blue chips. Many brand-name, old economy companies have been trading like fast-growing technology stocks.
The marketplace has craved the relative safety, earnings stability, and dividends from corporations whose balance sheets were only getting stronger. It’s a trend that I think is far from over, and it’s why I’m a fan of existing winners. Johnson Controls’ two-year stock chart is featured below:
Chart courtesy of www.StockCharts.com
Any Wall Street enthusiasm for this company is based on a solid earnings outlook and the continued strong performance in automobile manufacturing.
Johnson Controls manufactures seats, doors, instrument panels, and all kinds of vehicle electronics. Management is thinking about selling its electronics business that’s related to the automotive market. This business segment is relatively small compared to the company’s manufacturing of seating components.
In its 2009 fiscal year, the company paid dividends of $0.52 per share; … Read More
The general consensus among stock advisors is that the key stock indices will continue to go higher. Each day, I hear about another “bear” throwing in the towel and turning bullish on key stock indices.
“Don’t fight the fed or the tape; just buy stocks, and you’ll do fine” has become the norm again. Sadly, this worries me a lot because the fundamentals that drive the key stock indices higher are becoming weaker with each passing day.
As an example, for the third quarter, the corporate earnings growth rate for the S&P 500 companies was only 2.9%. To some, this might sound great, but look at these three facts: 1) corporate earnings were up 2.9% in the third quarter, but the stock market is up about 13% from the beginning of the third quarter; 2) corporate earnings growth so far in 2013 is running at its slowest pace since 2009; and 3) only 52% of the S&P 500 companies were able to beat revenue estimates for the third quarter. (Source: FactSet, December 6, 2013.) This suggests corporate earnings aren’t really coming from companies selling more, but rather from stock buyback programs and cost-cutting.
Troubles for corporate earnings don’t just end there. Corporate earnings are expected to be weaker in the fourth quarter. So far, of the 103 companies in the S&P 500 that have issued corporate earnings guidance, 89% of them have issued negative guidance!
And aside from corporate earnings, there is another problem brewing for key stock indices…
The chart below shows the dollar amount of stocks owned by households and nonprofit organizations. At the end of the third … Read More
There are approximately 118 component companies in this index, which makes its performance that much more impressive. Its return has been broad-based and substantial, and it’s likely to have continued momentum until monetary policy changes.
Biotechnology stocks are 100% risk-capital securities. But because there’s so much money in pharmaceuticals, it’s an equity market sector that’s worthy of some effort if you’re a speculator.
There are two unique features to biotechnology stocks that are not necessarily as prevalent in the rest of the equity market: 1) they have a tendency to trade on their own corporate developments, with less correlation to the action in the broader market; and 2) because so many biotechnology stocks are not going concerns, meaning that they are not established businesses but development companies that have little prospect of immediate profitability, extreme price volatility is a certainty.
Over the years, I’ve considered a number of biotechnology stocks in this column. There are several standouts in this market that continue to provide excellent returns to stockholders.
One large-cap company that continues to distinguish itself is Biogen Idec Inc. (BIIB). This company developed a treatment for multiple sclerosis (MS), and while it is nowhere near a cure, the drug is helping treat patients with MS.
We first considered this stock near the end of April at $219.00 a share. The position consolidated for a while, then took off once again. Last month, when we looked at it, the stock was … Read More
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