If you think about a powerful creature plowing through the streets of Tokyo, then you probably think of Godzilla. However, I suspect there’s about to be another type of powerful animal running through one of the world’s greatest cities — and that’s a raging bull. I’ve been watching Japan’s economy closely for the past two decades for a number of reasons, but the main one is to see the effects of deflation on a country. Recent… Read More

If you think about a powerful creature plowing through the streets of Tokyo, then you probably think of Godzilla. However, I suspect there’s about to be another type of powerful animal running through one of the world’s greatest cities — and that’s a raging bull. I’ve been watching Japan’s economy closely for the past two decades for a number of reasons, but the main one is to see the effects of deflation on a country. Recent developments, however, have drawn me into a new thesis for the third-largest economy in the world — and the equities pegged to its fate.#-ad_banner-# On Sunday, Dec. 16, the Japanese people elected Shinzo Abe as the new Prime Minister. Part of Abe’s economic policy, which he has openly lobbied for during the past several weeks, is to have the Bank of Japan (BOJ) increase its inflation target to 2% or 3% from its current 1%. Given the inflation targets here at home,… Read More

During the past decade, dozens of Chinese companies began trading on U.S. stock exchanges, and more than a few were complete frauds, causing investors to lose 100% of their money. You can blame it on the auditors. The accountants who were tasked with digging deeply into these companies’ books never made much of an effort. They willingly signed off on the veracity of financial statements, even though many numbers were a work of fiction. #-ad_banner-#As a result, many U.S. investors concluded it’s wise to… Read More

During the past decade, dozens of Chinese companies began trading on U.S. stock exchanges, and more than a few were complete frauds, causing investors to lose 100% of their money. You can blame it on the auditors. The accountants who were tasked with digging deeply into these companies’ books never made much of an effort. They willingly signed off on the veracity of financial statements, even though many numbers were a work of fiction. #-ad_banner-#As a result, many U.S. investors concluded it’s wise to steer clear of Chinese companies altogether these days. And that’s a shame, because China, warts and all, has the most fertile economic climate in the world. Its economy has been growing at a fast rate for more than a decade and, by some accounts, will overtake the U.S. economy within a few decades. Swinging for the fences Investors’ troubles resulted when they erroneously equated high growth with small company size. The notion of a fast-growing economy immediately leads investors to think about finding… Read More

Mexico and Brazil had a big problem several decades ago. They had a small but very wealthy elite class and a massive underclass. The middle class in these countries was relatively small, leading to low levels of domestic consumption. Since then, a set of far-sighted government policies has helped to create thriving middle classes in these countries, and it’s no coincidence that their stock markets have surged: Brazil’s BOVESPA market index has surged 500% in the past decade, while Mexico’s stock market has risen… Read More

Mexico and Brazil had a big problem several decades ago. They had a small but very wealthy elite class and a massive underclass. The middle class in these countries was relatively small, leading to low levels of domestic consumption. Since then, a set of far-sighted government policies has helped to create thriving middle classes in these countries, and it’s no coincidence that their stock markets have surged: Brazil’s BOVESPA market index has surged 500% in the past decade, while Mexico’s stock market has risen a heady 600%. As a result, in both countries, exciting and rewarding investments await the investor. Economists can even quantify the middle-class gains in these countries using a little-known ratio called the Gini coefficient. Developed by an Italian mathematician a century ago, it’s a formula that assigns a value of zero to a society where the wealth is spread amongst all citizens. Very complex math that goes into determining wealth distribution — suffice it to say it’s far more complex than simply measuring the wealth of the top and bottom of… Read More

Smart investors are always keeping their eyes toward other frontiers, turning over stones to find value where others may least expect it. For many, that means unearthing lesser-known opportunities outside of the developed world and looking to the emerging markets of Europe, Africa, Latin America and Asia.   #-ad_banner-#As a fan of international investing, I’ve spent considerable time digging through BRICs (Brazil, Russia, India and China), MINTs (Mexico, Indonesia, Nigeria and Turkey) and everything in between.  Through all of that research, I discovered one country that not only lacks the coverage it deserves… but presents a potentially lucrative opportunity.  For years, South… Read More

Smart investors are always keeping their eyes toward other frontiers, turning over stones to find value where others may least expect it. For many, that means unearthing lesser-known opportunities outside of the developed world and looking to the emerging markets of Europe, Africa, Latin America and Asia.   #-ad_banner-#As a fan of international investing, I’ve spent considerable time digging through BRICs (Brazil, Russia, India and China), MINTs (Mexico, Indonesia, Nigeria and Turkey) and everything in between.  Through all of that research, I discovered one country that not only lacks the coverage it deserves… but presents a potentially lucrative opportunity.  For years, South Korea has been caught in the shadow of some of its more recognized neighbors like China, Indonesia and Vietnam. And there’s a good explanation: the country’s high degree of economic advancement may have tipped the scales and pushed it out of emerging market territory and into the company of more developed nations. What makes South Korea an attractive investment in my book?   •    Impressive economic advancement – The small country is the seventh-largest exporter in the world and the fourth-largest economy in Asia.   •    High concentration of global tech leaders – Household names like LG, Samsung, Kia… Read More

All major U.S. indices closed higher for the third consecutive week, led by the Dow Jones Industrial Average, which was up 2%. Year to date, by far the strongest major index has been the tech-heavy Nasdaq 100 (NDX), which is up 12.8%. This leadership by technology has been a key catalyst in the 2014 broad market advance, helping the S&P 500 post a 7.6% gain despite a weak small cap sector. This strength in tech must continue to keep the broader market headed higher. #-ad_banner-#​From a sector standpoint, last week’s advance was led by financials, industrials and consumer… Read More

All major U.S. indices closed higher for the third consecutive week, led by the Dow Jones Industrial Average, which was up 2%. Year to date, by far the strongest major index has been the tech-heavy Nasdaq 100 (NDX), which is up 12.8%. This leadership by technology has been a key catalyst in the 2014 broad market advance, helping the S&P 500 post a 7.6% gain despite a weak small cap sector. This strength in tech must continue to keep the broader market headed higher. #-ad_banner-#​From a sector standpoint, last week’s advance was led by financials, industrials and consumer discretionary, but all sectors of the S&P 500 ended in positive territory. Key Indices Held Major Support Levels in August Many key indices, including the S&P 500, Dow Jones Industrial Average and PHLX Semiconductor Index, have rebounded nicely from major support levels that were tested during the first week of August, and finished last week at or near their 2014 highs. The SPDR Dow Jones Industrial Average (NYSE: DIA), which I first mentioned as a potential buying opportunity in the May 12 Market Outlook, closed out last week 3.7% above its Aug. Read More

Over the past two years, investors have come to think of U.S. and Europe in a similar light. Each area represents 25% of global GDP, each is getting a major dose of stimulus from central bankers to kick their economies into gear, and the major stock markets in the U.S. and Europe have all moved in lock-step. Indeed the Vanguard FTSE European ETF (NYSE: VGK) has shown a remarkable correlation with the S&P 500.  But that correlation is breaking down. In recent months, European stocks have begun to slump and further downside may lie ahead. Use this… Read More

Over the past two years, investors have come to think of U.S. and Europe in a similar light. Each area represents 25% of global GDP, each is getting a major dose of stimulus from central bankers to kick their economies into gear, and the major stock markets in the U.S. and Europe have all moved in lock-step. Indeed the Vanguard FTSE European ETF (NYSE: VGK) has shown a remarkable correlation with the S&P 500.  But that correlation is breaking down. In recent months, European stocks have begun to slump and further downside may lie ahead. Use this opportunity to take a deep look at your European exposure—before it’s too late. Unless you own shares of a major European company, or a Europe-focused mutual find or ETF, you may not think you have much exposure to Europe. But think again. Many companies in the S&P 500 derive a decent chunk of sales and profits from their European operations. And for some companies, the exposure is considerable.   You’ll find a high level of European exposure in four sectors in particular: technology, industrials, consumer staples and materials producers. … Read More

You may have noticed a consistent theme here at StreetAuthority in recent months: We love emerging markets.  My colleague Austin Hatley recently noted the strong gains investors are reaping this year with this asset class, and I weighed in on how well emerging market stocks have done over many decades. Yet here’s a curious disconnect: Emerging markets represent 33% of all global trading activity, yet few investors have nearly that much invested in emerging-market stocks (and bonds). That figure doesn’t likely exceed 5% or 10% for most of you. But these markets have such great long-term economic growth prospects —… Read More

You may have noticed a consistent theme here at StreetAuthority in recent months: We love emerging markets.  My colleague Austin Hatley recently noted the strong gains investors are reaping this year with this asset class, and I weighed in on how well emerging market stocks have done over many decades. Yet here’s a curious disconnect: Emerging markets represent 33% of all global trading activity, yet few investors have nearly that much invested in emerging-market stocks (and bonds). That figure doesn’t likely exceed 5% or 10% for most of you. But these markets have such great long-term economic growth prospects — relative to the U.S. and Europe — that you can’t afford to ignore them anymore. To be sure, it pays to have a little expertise when navigating distant markets. Back in April, for example, I recommended a pair of excellent mutual funds. Trouble is, they carry expense ratios of 1.50% and 1.51%, respectively. That’s like paying a 1.5% annual tax every year, just for the privilege of owning them. Of course, investors can save money by investing through exchange-traded funds (ETFs), many of which carry expense ratios in the 0.40% to 0.90% range. But you can do even better than… Read More

The European financial crisis really took a toll on European stocks. The debt crisis that came from Portugal, Italy, Ireland and Spain caused investors to pull money out of European equities and banks, throwing nearly the entire Continent into a recession. #-ad_banner-#In the flight to safety, investors ended up investing a large portion of their portfolios in U.S. bonds and equities. The U.S. was pretty much the only game in town. But, now as U.S. markets make new highs, investors are starting to grow cautious with U.S. equities — and looking elsewhere.  Europe is back on investors’ radars. Read More

The European financial crisis really took a toll on European stocks. The debt crisis that came from Portugal, Italy, Ireland and Spain caused investors to pull money out of European equities and banks, throwing nearly the entire Continent into a recession. #-ad_banner-#In the flight to safety, investors ended up investing a large portion of their portfolios in U.S. bonds and equities. The U.S. was pretty much the only game in town. But, now as U.S. markets make new highs, investors are starting to grow cautious with U.S. equities — and looking elsewhere.  Europe is back on investors’ radars. All major European countries are now out of recession. A major contributor to this is the continent’s manufacturing sector, which has been driving growth in the region. Many of these European manufacturers are still in deep value territory and cheaper than their peers across the pond. One investor who has noticed this is billionaire Daniel Loeb, who runs the hedge fund Third Point. His latest pick is Koninklijke DSM (OTC: RDSMY), better known as Royal DSM. Like many European companies, Royal DSM has been around for a long time. It was founded in 1903. But over the past three years,… Read More

Summer TV is pretty boring, with the exception of the Discovery Channel’s (Nasdaq: DISCA) Shark Week. Choosing between stale reruns or weak summer pilots that didn’t make the cut, it’s no wonder everyone goes on vacation. #-ad_banner-#Recently, hedge fund manager Bill Ackman ‘s seemingly quixotic charge on Herbalife (NYSE: HLF) and the noisy response from the likes of Carl Icahn  and other pundits sounds and feels like a rerun.  So while the hedge fund guys make noise and the market stumbles around trying to digest the events in Israel and Ukraine, investors… Read More

Summer TV is pretty boring, with the exception of the Discovery Channel’s (Nasdaq: DISCA) Shark Week. Choosing between stale reruns or weak summer pilots that didn’t make the cut, it’s no wonder everyone goes on vacation. #-ad_banner-#Recently, hedge fund manager Bill Ackman ‘s seemingly quixotic charge on Herbalife (NYSE: HLF) and the noisy response from the likes of Carl Icahn  and other pundits sounds and feels like a rerun.  So while the hedge fund guys make noise and the market stumbles around trying to digest the events in Israel and Ukraine, investors are probably wise to tune out the noise and focus on finding reasonably priced stocks with strong global franchises and growth strategies.  I’ve found three well-known stocks that fit these criteria perfectly. 1. Vodafone Group (NYSE: VOD ) Flush with cash after selling its giant stake in Verizon (NYSE: VZ), Vodafone continues to be one of my favorite plays in both the telco and frontier market spaces.  Its strongest franchises are in Germany, Italy, Spain, the U.K. and India, where it holds one of the top two positions in each market. The company’s strategy is focused on increasing its share in its… Read More

Lost in all of the global action around Israel and Gaza, Russia and Ukraine and the slow-burning Iraqi civil war, investors have already forgotten about Banco Espirito Santo. This Portuguese bank spooked global markets a week ago on concerns that it may be heading for default. Indeed, the bank did in fact declare bankruptcy this past weekend. For investors taking note of a seemingly endless bull market, that may have been a warning shot. After all, U.S. stocks stumbled on several occasions in the early years after the Great Recession of 2008, every time Europe began to wobble. Judging by… Read More

Lost in all of the global action around Israel and Gaza, Russia and Ukraine and the slow-burning Iraqi civil war, investors have already forgotten about Banco Espirito Santo. This Portuguese bank spooked global markets a week ago on concerns that it may be heading for default. Indeed, the bank did in fact declare bankruptcy this past weekend. For investors taking note of a seemingly endless bull market, that may have been a warning shot. After all, U.S. stocks stumbled on several occasions in the early years after the Great Recession of 2008, every time Europe began to wobble. Judging by recent economic data, Europe may again start to dominate the headlines, and U.S. investors need to start paying close attention again. For that matter, if your portfolio has direct exposure to Europe, it may be time to trim your positions. European stocks have been marching ever higher, but it is increasingly apparent that it was too soon for celebration. #-ad_banner-#​Debt And Growth: An Unmatched Pair The entire basis for the rally in European stocks has been predicated on an expectation that a resumption of economic growth would help to bring massive debt burdens into check. Read More