Is the economy slowing? Last Thursday the Institute for Supply Management (ISM) reported that its manufacturing index dropped unexpectedly; on Friday, employment growth was lower than expected. The strong dollar, which hurts exports, was partly to blame. But some economists think these negative reports are but two of many factors that point toward economic recession: slowing growth in China and other emerging markets, the specter of rising interest rates, dim prospects for corporate earnings this fall, evidence that corporate profit margins are falling, and even the rising power of anti-spending Republicans in the U.S. House of Representatives. #-ad_banner-#Granted, some of… Read More

Is the economy slowing? Last Thursday the Institute for Supply Management (ISM) reported that its manufacturing index dropped unexpectedly; on Friday, employment growth was lower than expected. The strong dollar, which hurts exports, was partly to blame. But some economists think these negative reports are but two of many factors that point toward economic recession: slowing growth in China and other emerging markets, the specter of rising interest rates, dim prospects for corporate earnings this fall, evidence that corporate profit margins are falling, and even the rising power of anti-spending Republicans in the U.S. House of Representatives. #-ad_banner-#Granted, some of these factors are unlikely to impact the market at the same time — notably, if the economy slows, the Fed may delay its long-planned interest-rate increases. But perception matters, and if more signals flash “slowdown” in the coming weeks and months, it will have an impact on investor decisions. As legendary investor Benjamin Graham said, in the short run the stock market is a voting machine. And it pays to be prepared if the votes seem to be tilting away from growth. One way to cope with the risk of economic slowdown — or the perception thereof — is to… Read More

Are you aware of the Elsa and Anna phenomenon? The executives at Mattel, Inc. (Nasdaq: MAT) are. They’ve watched their once-popular Barbie doll lose appeal as young girls switch allegiances to the new dolls based on the popular children’s movie, “Frozen.” Barbie’s steady demise was one of the factors behind the January 2015 resignation of CEO Bryan Stockton. He took the reins of the company in November 2011, and though shares initially rose in the first few years of his tenure, they subsequently went into freefall.  After such a sharp drop, shares of Mattel are inarguably cheap. They… Read More

Are you aware of the Elsa and Anna phenomenon? The executives at Mattel, Inc. (Nasdaq: MAT) are. They’ve watched their once-popular Barbie doll lose appeal as young girls switch allegiances to the new dolls based on the popular children’s movie, “Frozen.” Barbie’s steady demise was one of the factors behind the January 2015 resignation of CEO Bryan Stockton. He took the reins of the company in November 2011, and though shares initially rose in the first few years of his tenure, they subsequently went into freefall.  After such a sharp drop, shares of Mattel are inarguably cheap. They sport a 7.6% dividend yield (more on that later), and trade for just 1.2 times trailing sales, compared to a 2.1 multiple for rival Hasbro (Nasdaq: HAS). Hasbro now has a greater market value than Mattel for the first time in more than 20 years.  Low valuations don’t make a stock inherently appealing, unless they are accompanied by a good turnaround plan. And that is just what new CEO Chris Sinclair has offered up to investors. Since becoming CEO of the company earlier this year (losing the “interim” tag in April), Sinclair has taken a close look at every aspect… Read More

Smoking and drinking are clearly bad for your health. Yet, the companies that make those products, known as “sin stocks,” have proven they can overcome any economic downturn, restrictive legislation and even mainstream criticism. So what’s that tell you about human nature? We like what’s bad for us. Take the huge tobacco tax hike that went into effect in 2009. The federal per-pack tax on cigarettes went from 39 cents to $1.01. And that’s just federal. In states like New York, additional excise taxes means that it now costs smokers around $11 for a pack of cigarettes. #-ad_banner-#​That’s… Read More

Smoking and drinking are clearly bad for your health. Yet, the companies that make those products, known as “sin stocks,” have proven they can overcome any economic downturn, restrictive legislation and even mainstream criticism. So what’s that tell you about human nature? We like what’s bad for us. Take the huge tobacco tax hike that went into effect in 2009. The federal per-pack tax on cigarettes went from 39 cents to $1.01. And that’s just federal. In states like New York, additional excise taxes means that it now costs smokers around $11 for a pack of cigarettes. #-ad_banner-#​That’s not even touching on the fact that you can’t smoke anywhere anymore. Most states have made it hard to smoke in public places. In many, you can’t even light up in a bar. Yet, people still smoke. That’s not to say tobacco companies aren’t hurting. In 2014, nine billion fewer cigarettes were sold in the United States than the prior year. Still, that’s only a 3.3% reduction in volume. And smokeless tobacco, including dip, actually increased in total volume. Of course, the United States is only a small portion of global smoking consumption. Today, approximately 1.3 billion people around the… Read More

The truth will make you sick. Technically it’s public knowledge, but I can tell you — it’s Congress’ dirty little secret. Congress is rich. Unbelievably rich. And until just recently, insider trading laws didn’t apply to Congress. I don’t know which is worse: The fact that insider trading was legal for some of our nation’s wealthiest politicians… or that Congress refused to do anything about it for decades. That was, the legislation languished until 60 Minutes — one of the most-respected investigative journalism programs on television — dedicated a segment to the issue. Among their findings: Nancy Pelosi (D-CA) and… Read More

The truth will make you sick. Technically it’s public knowledge, but I can tell you — it’s Congress’ dirty little secret. Congress is rich. Unbelievably rich. And until just recently, insider trading laws didn’t apply to Congress. I don’t know which is worse: The fact that insider trading was legal for some of our nation’s wealthiest politicians… or that Congress refused to do anything about it for decades. That was, the legislation languished until 60 Minutes — one of the most-respected investigative journalism programs on television — dedicated a segment to the issue. Among their findings: Nancy Pelosi (D-CA) and her husband have participated in multiple exclusive IPOs — including that of Visa. According to one report, Pelosi purchased 5,000 shares of Visa at the IPO price of $44. Just a couple of days later, when the stock was trading to the investing public, it traded at $64 per share.  John Boehner (R-OH) bought shares of healthcare companies days before the “public option” was pulled from the recent Obamacare legislation. The removal of the public option proved to be a boon for private health insurers, making a significant sum for the Congressman’s investments. The report from 60 Minutes led to… Read More

No matter if the day’s headlines are about the Federal Reserve, China, the Presidential debates — I don’t care what it is — chances are, 95% of the time it’s just market noise. It’s important for investors to spend the majority of their efforts looking for market opportunities. I’m not saying this “noise” should be completely ignored, but for most investors it means this should be filtered through a lens that’s focused simply on buying shares of fantastic companies at reasonable prices. #-ad_banner-#This has been on my mind recently during the volatility we’ve experienced during the past few weeks, and… Read More

No matter if the day’s headlines are about the Federal Reserve, China, the Presidential debates — I don’t care what it is — chances are, 95% of the time it’s just market noise. It’s important for investors to spend the majority of their efforts looking for market opportunities. I’m not saying this “noise” should be completely ignored, but for most investors it means this should be filtered through a lens that’s focused simply on buying shares of fantastic companies at reasonable prices. #-ad_banner-#This has been on my mind recently during the volatility we’ve experienced during the past few weeks, and it’s drawn my attention to a sector we don’t often talk about here at StreetAuthority.  On August 4, media entertainment giant Disney (NYSE: DIS) reported quarterly earnings. In its conference call, management said that cable subscriptions to its ESPN network would fall about 1% in 2016. For some reason, this seemed to shock investors, although this was not new news. The so-called “cord-cutting” movement — that is, consumers who choose to drop their cable services in favor of cheaper streaming alternatives like Netflix and Hulu — has been a known factor for some time. Nevertheless, shares of Disney took a dive,… Read More

Like many other Americans, I had my share of student loans, and was fortunate enough to consolidate them at a 2.75% rate back in 2003. So at first I didn’t understand why there was so much concern surrounding student loan debt today.  But after I saw the reality of today’s student loan debt — the building mountain of debt and the relatively high interest rates — I see the enormity of the problem.  #-ad_banner-#In fact, there are some fairly uncanny similarities between the student loan issue and the 2007/2008 housing bubble that sent our economy into the worst financial crisis… Read More

Like many other Americans, I had my share of student loans, and was fortunate enough to consolidate them at a 2.75% rate back in 2003. So at first I didn’t understand why there was so much concern surrounding student loan debt today.  But after I saw the reality of today’s student loan debt — the building mountain of debt and the relatively high interest rates — I see the enormity of the problem.  #-ad_banner-#In fact, there are some fairly uncanny similarities between the student loan issue and the 2007/2008 housing bubble that sent our economy into the worst financial crisis in recent memory.  Could student loans be the next crisis for the markets? Is there anywhere an investor could hide when it happens? The impact on the economy and investments may be profound. Let’s explore further.  Are Student Loans A Bubble? Student loan debt approached nearly $1.3 trillion in the second quarter this year, having grown at a compound annual rate of 11% since 2006. That total is double the amount of credit card loans held by commercial banks (see the chart, below). It costs an average of $26,828 for tuition at a four-year public university with the average… Read More

Investors are not a discriminating lot. We’ve seen full evidence of this during the past few weeks. When they panic and hit the sell button, all stocks seem to get placed on the chopping block, regardless of whether they have strong or weak balance sheets, ample or minimal exposure to the turmoil in China, low valuations or high valuations… That blunt, indiscriminate approach also applies to sectors and industries. Potentially bad news for a few companies can lead a whole group to be tossed into the dustbin. That appears to be the case among one of our favorite income investments… Read More

Investors are not a discriminating lot. We’ve seen full evidence of this during the past few weeks. When they panic and hit the sell button, all stocks seem to get placed on the chopping block, regardless of whether they have strong or weak balance sheets, ample or minimal exposure to the turmoil in China, low valuations or high valuations… That blunt, indiscriminate approach also applies to sectors and industries. Potentially bad news for a few companies can lead a whole group to be tossed into the dustbin. That appears to be the case among one of our favorite income investments here at StreetAuthority: the energy-focused master limited partnerships (MLPs). In today’s essay, I’m going to show you why the selling is overdone — and how smart investors can take advantage and buy some of the best income-generating assets the market has to offer at compelling low prices. Although dozens of MLPs offer up a range of risk profiles, all have plunged sharply in recent weeks and months. And a man named Greg Armstrong may be to blame. Armstrong is the CEO of Plains All America Pipeline L.P. (NYSE: PAA). Plains All America falls into the “infrastructure” MLP category. The partnership… Read More

It’s that time again — when nervous investors flee the market, and seasoned stock buyers look to make bigger profits. As I write this, the Dow Jones Industrial Average is nearly 900 points lower than it was at the beginning of August. That’s almost a 5% decline. The Nasdaq, meanwhile, has dropped more than 4%.  What a difference a month makes.  These moves were spurred by a global drop in stocks that saw markets like China, Hong Kong and Australia all fall significantly. The financial press is of course buzzing. Many observers are saying this is the start of a… Read More

It’s that time again — when nervous investors flee the market, and seasoned stock buyers look to make bigger profits. As I write this, the Dow Jones Industrial Average is nearly 900 points lower than it was at the beginning of August. That’s almost a 5% decline. The Nasdaq, meanwhile, has dropped more than 4%.  What a difference a month makes.  These moves were spurred by a global drop in stocks that saw markets like China, Hong Kong and Australia all fall significantly. The financial press is of course buzzing. Many observers are saying this is the start of a bear market, the beginning of the end for stocks, etc., etc. It’s times like these when it’s great to own a “Forever” stock. As I’ve discussed many times, the idea of Forever stocks is simple: as an investor, you want to buy great businesses that can be held for months, years, even decades, without worry. This theme is central to my premium newsletter, Top 10 Stocks. And it never ceases to amaze me that no matter how simple this idea sounds, so few investors actually follow it during good times, let alone periods of market volatility. Just consider the history… Read More

What a difference a year makes. The market for initial public offerings (IPOs) was on fire in 2014, as 275 companies took the plunge, the highest figure since 2000. Those firms raised a collective $85 billion, which was also the best showing since 2000. A hot IPO market typically leads to great gains for investors lucky enough to get shares at the offering price. Fast forward to 2015, and the IPO market has cooled off. Many companies such as Airbnb, Uber, or Spotify that may have contemplated going public this year, appear to be content to raise more money from… Read More

What a difference a year makes. The market for initial public offerings (IPOs) was on fire in 2014, as 275 companies took the plunge, the highest figure since 2000. Those firms raised a collective $85 billion, which was also the best showing since 2000. A hot IPO market typically leads to great gains for investors lucky enough to get shares at the offering price. Fast forward to 2015, and the IPO market has cooled off. Many companies such as Airbnb, Uber, or Spotify that may have contemplated going public this year, appear to be content to raise more money from private equity investors. For the companies that did decide to proceed with an IPO, results have ranged from tepid to lousy. Indeed many companies that became public this year are now selling below their offering price. Here’s a look at three of them that have suffered from bad timing, but should post solid rebounds as they put a few more quarters under their belt as a public company. 1.    TerraForm Global (Nasdaq: GLBL) This company acts as an electric utility in many fast-growing emerging markets as Brazil, India and China, and derives almost of all of its power from… Read More

Large swings in the Dow Jones Industrial Average and other major market averages always seem to increase the level of fear in business news headlines. Here are some good ones we’ve seen in the past few weeks: “Panic selling returns to fragile markets” “Investors urged to avoid panic moves as markets plunge” “Panic grips markets on ‘Bloody Monday’; global contagion keeps markets under pressure” “Chart shows the peak of US investor panic today” “European shares tumble as China panics investors” I don’t… Read More

Large swings in the Dow Jones Industrial Average and other major market averages always seem to increase the level of fear in business news headlines. Here are some good ones we’ve seen in the past few weeks: “Panic selling returns to fragile markets” “Investors urged to avoid panic moves as markets plunge” “Panic grips markets on ‘Bloody Monday’; global contagion keeps markets under pressure” “Chart shows the peak of US investor panic today” “European shares tumble as China panics investors” I don’t think these headlines truly reflect the attitude of most individual investors, though. Personally, I believe recent experience has taught many individual investors to take market pullbacks in stride. We’ve gone through two major bear markets in a little more than 15 years, and both times the markets have recovered. In the middle of the last major recession, Warren Buffett — one of the world’s greatest investors — wrote an op-ed for The New York Times explaining why he was still buying stocks. It wasn’t because he thought the market had bottomed. In fact, he clearly stated that… Read More