His portfolio is built on the largest companies in America. Giants like Apple, Deere, and Walmart dominate his holdings. Thanks to his long-term oriented, value-seeking investment method, Warren Buffett’s wealth has catapulted from a mere $6,000 when he was 15 years old to an astounding $73 billion-plus today.  While Buffett’s concentration is on the largest of the large-caps, he has a love for the potential of small-caps, defined as companies with market capitalizations between$300 million to $2 billion.  A little while ago he told Fortune Magazine, “It’s one thing to own stock in a Coca-Cola or… Read More

His portfolio is built on the largest companies in America. Giants like Apple, Deere, and Walmart dominate his holdings. Thanks to his long-term oriented, value-seeking investment method, Warren Buffett’s wealth has catapulted from a mere $6,000 when he was 15 years old to an astounding $73 billion-plus today.  While Buffett’s concentration is on the largest of the large-caps, he has a love for the potential of small-caps, defined as companies with market capitalizations between$300 million to $2 billion.  A little while ago he told Fortune Magazine, “It’s one thing to own stock in a Coca-Cola or something, but when you are actually in the business of making determinations about opening stores and pricing decisions, you learn from it. We have made a lot more money out of See’s than shows from the earnings of See’s, just by the fact that it has educated me.”  How Buffett Picks His Winners It’s safe to say Warren’s consultation fee is among the most expensive of all time. People routinely spend a million plus dollars just to have an informal lunch with the guru. Astoundingly, the latest bid posted at $2.7 million for an hour… Read More

For anyone with more than a decade in the markets, the “value premium” is almost a sacred rule. The idea that stocks with lower valuation premiums would beat their more expensive “growth” peers is almost a given. Nobel laureates Eugene Fama and Kenneth French first identified the value premium in 1992, comparing returns on high book-to-market value stocks against low book-to-market stocks. It’s one of the three factors in their asset pricing model built to explain excess returns in a portfolio. Since the financial crisis, the outperformance of value stocks has been called into question, with… Read More

For anyone with more than a decade in the markets, the “value premium” is almost a sacred rule. The idea that stocks with lower valuation premiums would beat their more expensive “growth” peers is almost a given. Nobel laureates Eugene Fama and Kenneth French first identified the value premium in 1992, comparing returns on high book-to-market value stocks against low book-to-market stocks. It’s one of the three factors in their asset pricing model built to explain excess returns in a portfolio. Since the financial crisis, the outperformance of value stocks has been called into question, with growth stocks easily besting their value peers. The shift has turned the traditional investing theme on its head, and even one guru of value investing has questioned the future of cheap stocks. But economic realities are catching up to growth investing and value stocks may be ready to retake their dominance.  Two economic scenarios await investors over the next several years — and neither is good for growth stocks. When one of these futures begins to take shape, value names may prove to be the only path to profits. The Death Of Value Investing Has Been Greatly Exaggerated The… Read More

Canada is emerging as an early global leader in the high-growth cannabis industry.  Medical cannabis has been legal in the country of 30 million since 2001. Then, in 2014, Canada implemented sweeping regulatory changes that set the stage for its young cannabis industry to prosper. Since then, the industry has been booming. Sales topped $1 billion in 2016. Today, Canada’s high-growth cannabis industry is about to get another huge boost. Canada just announced plans to legalize recreational cannabis by July of 2018. That would make Canada the first developed country in the world to legalize both medical and recreational cannabis. Read More

Canada is emerging as an early global leader in the high-growth cannabis industry.  Medical cannabis has been legal in the country of 30 million since 2001. Then, in 2014, Canada implemented sweeping regulatory changes that set the stage for its young cannabis industry to prosper. Since then, the industry has been booming. Sales topped $1 billion in 2016. Today, Canada’s high-growth cannabis industry is about to get another huge boost. Canada just announced plans to legalize recreational cannabis by July of 2018. That would make Canada the first developed country in the world to legalize both medical and recreational cannabis. It’s also set to unleash a multibillion dollar industry. Cannabis sales are expected to be between $5 and $7 billion in the first 12 months after legalization. That would be between a 400 percent and 600 percent increase from 2016. According to consulting firm Deloitte, this could generate up to $23 billion in economic activity. That would be more than beer and wine combined. If you want to learn how you can potentially profit from this cannabis revolution, let me tell you about Canada’s legal monopolies — an exclusive group of companies that have been issued a commercial license to… Read More

On January 1, 2018, a new law goes into effect that has the potential to wipe out a large portion of the 6,000 medical testing labs in the United States. And as smaller labs give up the ghost, large, publicly traded lab-testing companies will take much of the business of those smaller labs. That’s because changes to Section 216 of the Protecting Access to Medicare Act of 2014 (PAMA) will result in the single most disruptive event to hit the clinical laboratory industry in the past quarter-century. Medicare currently pays roughly $7 billion a year to laboratories performing more than… Read More

On January 1, 2018, a new law goes into effect that has the potential to wipe out a large portion of the 6,000 medical testing labs in the United States. And as smaller labs give up the ghost, large, publicly traded lab-testing companies will take much of the business of those smaller labs. That’s because changes to Section 216 of the Protecting Access to Medicare Act of 2014 (PAMA) will result in the single most disruptive event to hit the clinical laboratory industry in the past quarter-century. Medicare currently pays roughly $7 billion a year to laboratories performing more than 1,300 different lab tests. And the majority of those tests haven’t seen updated fee schedules since the last major change in 1984.  #-ad_banner-#But that’s about to change.  The PAMA update will cut the testing fees payable under Medicare’s Clinical Laboratory Fee Schedule (CLFS) by more than $5.4 billion over the next decade. This will significantly reduce the revenues of most of the small independent labs.  And since 40%-60% of lab-testing volumes at small labs are exclusively Medicare patients, these labs will struggle to stay in business with the lower fee schedules. That’s because they have fewer customers and relatively high… Read More

Investing for income has never been harder. The Federal Reserve continues to indicate further interest rate increases are on the horizon. This makes bond buying dangerous for those seeking capital preservation in the face of rising rates. This danger shows in the graph below, which indicates a strong probability of another rate hike at the Fed’s next meeting in June.   What makes this chart so interesting is that recent economic data doesn’t support the Fed’s conclusions. In the past several weeks, we’ve seen weakness in consumer spending, including negative consumer spending revisions, and falling prices. Read More

Investing for income has never been harder. The Federal Reserve continues to indicate further interest rate increases are on the horizon. This makes bond buying dangerous for those seeking capital preservation in the face of rising rates. This danger shows in the graph below, which indicates a strong probability of another rate hike at the Fed’s next meeting in June.   What makes this chart so interesting is that recent economic data doesn’t support the Fed’s conclusions. In the past several weeks, we’ve seen weakness in consumer spending, including negative consumer spending revisions, and falling prices. It goes without saying that falling prices aren’t a harbinger of a strong economy or strengthening GDP. These are on top of abysmal auto numbers that show steep declines in sales and an exceptionally high 70-day supply.  Even so, higher rates aren’t exactly leading income investors to the Promised Land. While June might see another rate increase, it will only be the fourth such increase since 2006 — leaving rates in the 100-125 basis point range. The difference to income investors is negligible. So what is an income investor to do? Well, there are safe places for income investors to… Read More

Legal cannabis is the fastest growing industry in North America. In 2016, cannabis sales in the United States increased 30% from 2015 to reach $6.7 billion. And looking forward — with more states, Canada and countries across the globe moving toward legalization — this already impressive pace of growth is actually set to accelerate. Canada’s recent decision to legalize recreational cannabis by next summer is expected to create a $23 billion industry that could be bigger than beer and wine. Cannabis industry research firm Arcview is predicting (PDF) that cannabis sales in the United States will… Read More

Legal cannabis is the fastest growing industry in North America. In 2016, cannabis sales in the United States increased 30% from 2015 to reach $6.7 billion. And looking forward — with more states, Canada and countries across the globe moving toward legalization — this already impressive pace of growth is actually set to accelerate. Canada’s recent decision to legalize recreational cannabis by next summer is expected to create a $23 billion industry that could be bigger than beer and wine. Cannabis industry research firm Arcview is predicting (PDF) that cannabis sales in the United States will increase more than 200% to $22 billion by 2020. Take a look below. This incredible opportunity hasn’t gone unnoticed. Investors are clamoring for marijuana stocks. Cannabis stocks in North America have been among the most heavily traded securities this year. However, while I do see great opportunity, investing in cannabis stocks also creates new challenges. At the top, there are more than 300 cannabis stocks to choose from. It’s difficult to separate winners from losers.  From there, buying, selling, and owning cannabis stocks is a lot different than investing in blue-chips such as Apple, Alphabet and Amazon. But… Read More

Biotechnology is among the most exciting and lucrative sectors for investors. Perhaps the only market that provides greater volatility and profit potential is the derivatives market.  With prices driven at a breakneck pace by research and FDA approvals, today’s golden company can be tomorrow’s stock market disaster. But the opposite has also proven to be true.  Sometimes the forgotten dogs of the biotech world can quickly morph into great long-term investments.  I have identified 3 biotech companies that have fallen on hard times, but have recently experienced a rash of buying by large stock market players. Make no mistake, these… Read More

Biotechnology is among the most exciting and lucrative sectors for investors. Perhaps the only market that provides greater volatility and profit potential is the derivatives market.  With prices driven at a breakneck pace by research and FDA approvals, today’s golden company can be tomorrow’s stock market disaster. But the opposite has also proven to be true.  Sometimes the forgotten dogs of the biotech world can quickly morph into great long-term investments.  I have identified 3 biotech companies that have fallen on hard times, but have recently experienced a rash of buying by large stock market players. Make no mistake, these stocks are very risky, but they have tremendous upside potential, and clearly I am not the only one who thinks so. What Caused The 2016 Biotech Bear Market? If you own biotech stocks, you know that 2016 was a difficult year for the segment. Riding high from averaging 34% annual returns from 2012 to 2015, the biotechnology index gave up 16% in 2016. And the 16% loss included a substantial recovery from the devastating plunge of 28% in January 2016.  #-ad_banner-#The primary cause of the 2016 biotech bear market was shifting investor sentiment. Fear of new regulations that could… Read More

Monthly gains of nearly 70%, 100%, and even nearing 200% occur on a regular basis in this market segment. I’m not talking about options, futures, or risky foreign stocks of any kind. The gains are homegrown right here in the United States and can be had for under $5 per share. These stocks, which typically represent new, growing companies, are in the small-cap sector. And I’ve found three stocks under $5 that are set up to be great buy opportunities. How Small-Caps Produce Outsized Gains The definition of a small-cap stock is not set in stone — it depends… Read More

Monthly gains of nearly 70%, 100%, and even nearing 200% occur on a regular basis in this market segment. I’m not talking about options, futures, or risky foreign stocks of any kind. The gains are homegrown right here in the United States and can be had for under $5 per share. These stocks, which typically represent new, growing companies, are in the small-cap sector. And I’ve found three stocks under $5 that are set up to be great buy opportunities. How Small-Caps Produce Outsized Gains The definition of a small-cap stock is not set in stone — it depends who you ask. But according to the most commonly accepted definition, small-caps are any public company with a market capitalization of $500 million to $2.5 billion.  I know this sounds like big money, but in the world of public enterprises, it is indeed minuscule. To put things in perspective, microcaps are any stocks with a sub-$500 million valuation, and midcaps are widely considered to have a capitalization greater than $2.5 billion but less than $10 billion. Anything over $10 billion places the firm in the large-cap space.  Over time, the small-cap sector outperforms the overall stock market. However, this tried… Read More

The run in the S&P 500 since the election, accounting for more than 13% of the market’s 14.7% increase over the last year, has pushed stocks to rare valuations. Stocks in the broad-market index are now trading at an average of 17.5 times analysts’ expectations for earnings over the next year, a premium of 25% on the 10-year average price-to-expected earnings. The optimism is in contrast to the fact that earnings forecasts are starting to come down, with analysts now expecting growth of just 9% when first-quarter numbers start coming out. This is considerably lower than the 12% earnings growth… Read More

The run in the S&P 500 since the election, accounting for more than 13% of the market’s 14.7% increase over the last year, has pushed stocks to rare valuations. Stocks in the broad-market index are now trading at an average of 17.5 times analysts’ expectations for earnings over the next year, a premium of 25% on the 10-year average price-to-expected earnings. The optimism is in contrast to the fact that earnings forecasts are starting to come down, with analysts now expecting growth of just 9% when first-quarter numbers start coming out. This is considerably lower than the 12% earnings growth expected when the quarter started in January. One sector in particular has boomed with last year’s stimulus in China and hopes for stimulus this year in the world’s largest economy. Bull markets don’t die of old age, and this one could be ready to move higher if Washington comes through with tax reform and fiscal stimulus. I’ve found three value plays in a sector that stands to benefit directly from this upside. These three names will allow investors to participate in potential growth and should provide protection from downside risks. Can Materials Build Off Recent Gains? Morningstar calls recent… Read More

It’s 1720 in England. A hard-working printer is busy at work. But he’s not happy… #-ad_banner-#All around him are ordinary people starting businesses and making great sums of money by selling their stock. What bothered him was that the businesses didn’t seem legitimate on the surface. For instance, one company’s prospectus promised, “to bring up hellfire for heating.” Another business advertised the ability, “to squeeze oil out of radishes.” Unbelievably, these business owners sold out all their stock in a matter of days. So he asked himself how rational people could… Read More

It’s 1720 in England. A hard-working printer is busy at work. But he’s not happy… #-ad_banner-#All around him are ordinary people starting businesses and making great sums of money by selling their stock. What bothered him was that the businesses didn’t seem legitimate on the surface. For instance, one company’s prospectus promised, “to bring up hellfire for heating.” Another business advertised the ability, “to squeeze oil out of radishes.” Unbelievably, these business owners sold out all their stock in a matter of days. So he asked himself how rational people could buy into such stupid business concepts. But then he made a decision. Instead of trying to understand the rationale behind such silliness, he decided to join the club. He printed a prospectus describing a business “for carrying out an undertaking of great advantage, but nobody to know what it is.” When he opened for business the next morning, long lines of people were waiting to buy his stock. The printer took every penny offered for the stock, and immediately boarded a boat for France. He disappeared forever. Now, the efficient market… Read More