Why You Shouldn’t Overhaul Your Portfolio Right Now

By Friday, August 15, 2014

Stocks Rolling Over Signal TroubleBiotechnology stocks and the Russell 2000 began rolling over at the beginning of July, followed by transportation stocks at the end of the month.

It’s definitely a signal that the stock market is tired, but after such a strong breakout performance in 2013, the market still hasn’t experienced a material price correction in quite some time.

Second-quarter earnings came in mostly as expected and many blue-chip stocks sold off on … Read More

A Hot Sector of the Market I Feel Will Soon Be a Buy Again

By Thursday, June 26, 2014

Why Action in 3D-Printing Stocks Is Healthy for This MarketEverything in the stock market experiences its own cycle of enthusiasm among investors. And this is especially well illustrated among speculative issues.

There was a time only a few years ago when some of the hottest speculative stocks were in solar energy. Now this small equity universe is still trying to rebuild itself.

And in more recent history, 3D-printing companies experienced incredible capital gains, only to experience incredible capital losses … Read More

Biotechs, Small-Caps, and IPOs: Making Sense of This Peculiar Stock Market

By Tuesday, May 27, 2014

This Year's Peculiar Market Short Exuberance RiskThe spot price of oil has been eerily steady for quite some time; this is quite unusual for the world’s most traded commodity.

It’s been a peculiar year in capital markets, and there’s definitely an uncertainty in sentiment, especially in the equity market with no real trend for investors to latch onto. It makes me think that equity investors should be proactive now and take a hard look at their … Read More

This Stock Poised to Impress Long-Term Investors

By Monday, May 19, 2014

Nike Company Poised for a Very Good QuarterIf there’s been a rotation into safer, more reasonably priced stocks, the trend can also reverse itself when the market is ready.

Biotechnology stocks, initial public offerings (IPOs), and hyper-priced technology issues were ripe for a sell-off after such tremendous capital gains. A rotation isn’t a breakdown in the longer-term stock market trend; it’s just a trade, and big investors wanted to book some profits.

Now some very good companies … Read More

The Only Place to Put New Money in Today’s Economy

By Tuesday, May 13, 2014

Invest New Money During a Stock Market's HighA lot of stocks are rolling over, breaking their 50- and 200-day simple moving averages (MAs). This is a tired market that could very well consolidate or correct right into the fourth quarter.

And the economic data has been softer, as well. Throw in geopolitical tensions with Russia and we have the makings of a material price retrenchment.

There’s still resilience, however, in some of the most important stock market … Read More

Getting the Most for Your Risk-Adjusted Buck

By Monday, May 12, 2014

Get the Most of Your Investment Capital in a Crumbling MarketTwo years ago, when the former Kraft Foods Inc. broke itself up, spinning off its global food and beverage business (now Kraft Foods Group, Inc. [KRFT]), the company renamed itself Mondelez International, Inc. (MDLZ). Now, the company is mostly a global snacks business. The new Kraft Foods Group has done pretty well on the stock market since listing in September 2012; the position currently has an attractive dividend yield of … Read More

Top Stocks for the Coming Correction

By Thursday, May 8, 2014

The stock market is getting soft quickly, but it’s to be expected. Even days when the main indices open positive, action turns down regularly; it’s a sign of things to come.  I wouldn’t be surprised if stocks stay soft until the fourth quarter. In an environment of mixed economic data and modest corporate earnings, that’s just something for which investors should be prepared.  Plenty of companies reported a solid first quarter and reiterated their outlooks for the year. But current action isn’t about corporate earnings or monetary policy. Stocks are in need of a break. A prolonged consolidation, if not a full-blown correction, is perfectly normal in the context of a secular bull market.  Leadership in technology stocks is breaking as evidenced by the performance of the NASDAQ Composite. It’s also evident in the Russell 2000 index of smaller-cap companies and the NASDAQ Biotechnology index.  For stocks to really rollover, the Dow Jones Transportation Average will have to retreat as well; so far, it’s still holding up due to the strong price action in airlines and most railway companies.  But while transportation stocks have consistently been at the forefront of market leadership, the whole group is due for a break as well.  I still see the best opportunities with large-caps and dividend paying stocks, especially, even though there’s not a lot of buying at this particular point in time. And this takes into consideration investment risk as well. Portfolio risk becomes much more important when stocks stop performing, and this is what I expect to happen over the next several months. (See “How Past Investment Trends Predicted This Stock Market Action.”)  Given current information, with a meaningful price retrenchment in the main stock market indices, it should be a buying opportunity.  Corporate balance sheets are mostly in excellent condition and the cost of capital remains low. Companies are still reticent to make major new investments, so the prospects for rising dividends going into 2015 are very good.  Since the beginning of this year, speculative fervor has come out of the biotechnology stocks and initial public offering (IPOs), which is a classic signal that the market is gearing up for a change in trend.  But it’s all normal in what was an exceptional year for stocks in 2013. The system, in a sense, is still trying to balance itself out after those exceptional capital gains.  Near-term, price consolidation in the main market indices is a good time to re-evaluate portfolios and to make lists of those stocks you might like to own if they were better priced.  Some of the stocks I like that would be worthy of consideration if there is an upcoming price consolidation/correction include: Johnson & Johnson (JNJ), 3M Company (MMM), Union Pacific Corporation (UNP), PepsiCo, Inc. (PEP), The Walt Disney Company (DIS), NIKE, Inc. (NKE), Kinder Morgan Energy Partners, L.P. (KMP), and Colgate-Palmolive Company (CL).  The investment theme remains blue chip, with economies of scale to boost earnings and excess cash to boost dividends.  Anything can happen in a stock market still under the influence of pronounced monetary stimulus. Potential near-term shocks to the system include geopolitical events, more currency troubles in Latin America, and/or another surprise in the banking system.  Corporate results and their outlooks are holding up. But a tired market for stocks is just that—tired. The prospects for capital gains near-term are diminishing significantly.The stock market is getting soft quickly, but it’s to be expected. Even days when the main indices open positive, action turns down regularly; it’s a sign of things to come.

I wouldn’t be surprised if stocks stay soft until the fourth quarter. In an environment of mixed economic data and modest corporate earnings, that’s just something for which investors should be prepared.

Plenty of companies reported a solid first … Read More

Market Dynamics Changing; Where’s the Upside for Investors?

By Tuesday, April 22, 2014

Why Beating the Street Isn’t as Good as Real ValueBeing financial reporting season, it’s important to discern between results that beat Wall Street consensus and real economic growth.

Abbott Laboratories (ABT) just announced better-than-expected first-quarter earnings, but they weren’t better than the comparable quarter of 2013. Operating earnings, earnings from continuing operations, and diluted earnings per share were all down significantly compared to the first quarter of 2013.

So, the illusion can definitely become real in hot markets. Investors … Read More

Chinese Stocks Promise Higher Potential Gains?

By Monday, March 24, 2014

Three Keys to Profiting from China-Based StocksIf you think Chinese stocks are too speculative to consider and buy, then you need to read what I’m going to say over the next few paragraphs.

Yes, it’s true that China-based companies have subjected U.S. capital markets to erroneous results and reporting in the past and that it is likely continuing to some degree, but that does not mean you should bypass Chinese stocks. You just need to be … Read More

What the “Microsoft Indicator” Says Now

By Friday, March 7, 2014

Microsoft the Best Market Indicator at This TimeEarnings estimates for Microsoft Corporation (MSFT) are going up and the stock, which recently accelerated, finally looks like it has broken out of a 13-year consolidation.

Microsoft has been an income play for quite a while. Currently yielding three percent, the company’s forward price-to-earnings ratio is around 12.5 and is not dissimilar from many other blue chips.

Then there’s Intel Corporation (INTC). This company has been struggling for capital gains, … Read More