Most investors are told that “diversification is the only free lunch.” But this line is often misunderstood to simply mean “the more stocks you hold, the better.” Ridiculous. Many believe this understanding of diversification is the key to achieving market-beating returns, but this simply isn’t the case… Nor is it advisable. Warren Buffett, arguably the most respected (and successful) investor in history, has been very clear about his views on diversification over the years. Here’s what he has to say about the matter: — “Wide diversification is only required when investors do not understand what they are doing” —… Read More

Most investors are told that “diversification is the only free lunch.” But this line is often misunderstood to simply mean “the more stocks you hold, the better.” Ridiculous. Many believe this understanding of diversification is the key to achieving market-beating returns, but this simply isn’t the case… Nor is it advisable. Warren Buffett, arguably the most respected (and successful) investor in history, has been very clear about his views on diversification over the years. Here’s what he has to say about the matter: — “Wide diversification is only required when investors do not understand what they are doing” — “We try to avoid buying a little of this or that when we are only lukewarm about the business or its price. When we are convinced as to attractiveness, we believe in buying worthwhile amounts.” –“If it’s your game, diversification doesn’t make sense. It’s crazy to put money into your 20th choice rather than your 1st choice. It’s the ‘LeBron James’ analogy. If you have LeBron James on your team, don’t take him out of the game just to make room for someone else.” So what gives? Here’s the dirty little secret that Wall Street is not telling you… Read More

In the final showdown of the film Wall Street, Bud Fox reminds his former mentor, Gordon Gekko to “…never get emotional.” As an investment professional, I remind myself that constantly. Recently, I started looking at Ford Motor Co. (NYSE: F), the world’s second largest auto manufacturer. As a historical figure, Henry Ford was truly a despicable character. From a total disregard for labor to openly financing racist propaganda, his actions remind me of the despicable captain of industry, Montgomery Burns, from The Simpsons. But he built a helluva business. Typically, I’m not crazy about car stocks. At times, they’re almost too… Read More

In the final showdown of the film Wall Street, Bud Fox reminds his former mentor, Gordon Gekko to “…never get emotional.” As an investment professional, I remind myself that constantly. Recently, I started looking at Ford Motor Co. (NYSE: F), the world’s second largest auto manufacturer. As a historical figure, Henry Ford was truly a despicable character. From a total disregard for labor to openly financing racist propaganda, his actions remind me of the despicable captain of industry, Montgomery Burns, from The Simpsons. But he built a helluva business. Typically, I’m not crazy about car stocks. At times, they’re almost too sensitive to the whims of the economy and the consumer, which is often too much so for my taste and investment philosophy. However, a confluence of conditions in the United States and around the world has made the stock relevant — not to mention it’s a bargain. Recently, my colleague David Sterman, outlined the bull case for Ford’s archrival General Motors Co. (NYSE: GM) in a side by side comparison of the two firms. I’ll examine that later. The Stars Align The car business, both domestic and global, could not be in a better position. The… Read More

Brace yourselves — the busiest retail season of the year is almost upon us.   Many economists have high hopes for consumer activity during the upcoming holidays and for good reason. Three big factors are making a good argument for increased spending in the fourth quarter: 1.    More jobs: September’s unemployment rate of 5.9% is just a few clicks off from what is considered full employment. The American work force has gained two million jobs this year. 2.    Higher confidence: Consumer confidence, which puts a number to how optimistic people feel about the overall state of the economy, is at its highest… Read More

Brace yourselves — the busiest retail season of the year is almost upon us.   Many economists have high hopes for consumer activity during the upcoming holidays and for good reason. Three big factors are making a good argument for increased spending in the fourth quarter: 1.    More jobs: September’s unemployment rate of 5.9% is just a few clicks off from what is considered full employment. The American work force has gained two million jobs this year. 2.    Higher confidence: Consumer confidence, which puts a number to how optimistic people feel about the overall state of the economy, is at its highest point in seven years. 3.    Lower gas prices: Oil prices have fallen to two-year lows, bringing gas prices down with them. Those savings mean income is free to move elsewhere (i.e. into retail).  Analysts expect even more drops to come soon too.   #-ad_banner-#Thinking that the perfect storm is brewing for consumer spending, I set out a few days ago to see if I could uncover a few beat-up apparel stocks that could benefit from a bounce this holiday season. I started with a few basic criteria, whittling down my universe to stocks that are trading near yearly… Read More

If you had any doubt about the market’s manic-depressive nature and the fact that rational investors can make out-sized gains, then October should have fully dismissed any remaining disbelief. By mid-September, the market had shrugged off late-summer jitters and jumped higher to a gain of nearly 9% on the year. The economic picture in the United States was looking great and even the shadow of rising rates next year could not keep stocks from new highs. #-ad_banner-#Then October hit and the S&P 500 plunged 7.4% from its high on relatively little new information. Sure the crisis in Ukraine was flaring… Read More

If you had any doubt about the market’s manic-depressive nature and the fact that rational investors can make out-sized gains, then October should have fully dismissed any remaining disbelief. By mid-September, the market had shrugged off late-summer jitters and jumped higher to a gain of nearly 9% on the year. The economic picture in the United States was looking great and even the shadow of rising rates next year could not keep stocks from new highs. #-ad_banner-#Then October hit and the S&P 500 plunged 7.4% from its high on relatively little new information. Sure the crisis in Ukraine was flaring and Ebola gave doomsayers something to talk about, but none of this was new or had a realistic probability of hitting earnings. Just as soon as the so-called “smart money” started to call for profit-taking and a larger correction, the market rebounded. The S&P 500 has jumped 8.5% since its October low and looks just as healthy as it ever did. Against the roller coaster ride of market prices in October, investors made an even bigger mistake in one company. This company has dominated one of the fastest growing themes for years and shares have surged more than sevenfold in… Read More

Everyone who invests money is aware of Warren Buffett — the richest and most successful equity investor the world has ever known. Unlike many billionaires who made their fortune with one really good idea, Buffett made his by repeatedly picking outperforming investments. Arguably, there is no better stock picker from whom to borrow ideas. #-ad_banner-#What might surprise many is just how concentrated Buffett’s massive portfolio still is. As of his most recent annual report Buffett’s company Berkshire Hathaway, Inc. (NYSE: BRK-A) had a $117 billion equity portfolio and a whopping $64 billion, or 54.7%, of that… Read More

Everyone who invests money is aware of Warren Buffett — the richest and most successful equity investor the world has ever known. Unlike many billionaires who made their fortune with one really good idea, Buffett made his by repeatedly picking outperforming investments. Arguably, there is no better stock picker from whom to borrow ideas. #-ad_banner-#What might surprise many is just how concentrated Buffett’s massive portfolio still is. As of his most recent annual report Buffett’s company Berkshire Hathaway, Inc. (NYSE: BRK-A) had a $117 billion equity portfolio and a whopping $64 billion, or 54.7%, of that was invested in just four companies. Buffett has always run with a very concentrated portfolio. The reason: he is laser-focused on not making mistakes. Buffett’s first rule of investing is don’t lose money.  His second rule is don’t forget rule #1. If an investment isn’t an absolute slam dunk, then Buffett doesn’t invest a penny. Three years ago, when Buffett invested the largest single sum of money in his career in one company, people paid attention. Buffett quietly accumulated a massive $11 billion position in International Business Machines Corp. (NYSE: IBM) starting in 2011. I say quietly because he received… Read More

The backdrop is Bangkok, Thailand — where I’m spending a week meeting with colleagues before heading on to Myanmar. #-ad_banner-#I happened to be strolling down Bangkok’s main artery, Sukhumvit Road, on my way to a meeting about 30 minutes from the Intercontinental Hotel, where I usually hang my hat. What I saw was frankly incredible. In 30 minutes of walking, I passed no fewer than six different Starbucks (Nasdaq: SBUX) locations. That’s about one store every two blocks. Below are some shots of this diverse array. Not only does Starbucks have a major presence here — the company… Read More

The backdrop is Bangkok, Thailand — where I’m spending a week meeting with colleagues before heading on to Myanmar. #-ad_banner-#I happened to be strolling down Bangkok’s main artery, Sukhumvit Road, on my way to a meeting about 30 minutes from the Intercontinental Hotel, where I usually hang my hat. What I saw was frankly incredible. In 30 minutes of walking, I passed no fewer than six different Starbucks (Nasdaq: SBUX) locations. That’s about one store every two blocks. Below are some shots of this diverse array. Not only does Starbucks have a major presence here — the company has made itself a mainstay of street life, all in a short period of time. This is just a taste of what’s been going on around the world for the company. Earlier this year, Starbucks hit a major milestone in its global growth, opening its 20,000th store worldwide. Today, the company operates in 64 countries. And consumers aren’t the only ones that have been happy with the company. Just look at the gains shareholders have enjoyed over the past five years… That’s a significant achievement. And it flies in the face of analysts, which questioned whether the giant… Read More

Now is not the time to be taking imprudent risks in the market. True, the S&P 500 has rebounded strongly from its mid-October lows. But the September peak at 2,019 may present formidable resistance. That’s about 25 points away, and the index has come very far very fast. In this tricky environment, I am looking for stocks that meet two important criteria:  1. Double-digit revenue and earnings growth projections; and 2. A rock-solid technical picture with no nearby resistance looming overhead. Strategic Hotels & Resorts (NYSE: BEE) fits the bill. The real estate investment trust (REIT) operates high-end hotels… Read More

Now is not the time to be taking imprudent risks in the market. True, the S&P 500 has rebounded strongly from its mid-October lows. But the September peak at 2,019 may present formidable resistance. That’s about 25 points away, and the index has come very far very fast. In this tricky environment, I am looking for stocks that meet two important criteria:  1. Double-digit revenue and earnings growth projections; and 2. A rock-solid technical picture with no nearby resistance looming overhead. Strategic Hotels & Resorts (NYSE: BEE) fits the bill. The real estate investment trust (REIT) operates high-end hotels like Fairmont, Marriott and Westin. #-ad_banner-#Industry trends are bullish. Business and leisure travel are growing, and hotel occupancy rates are in an uptrend. In August, the U.S. hotel industry’s occupancy rate climbed 3.8% year over year to 71.6%, according to Smith Travel Research. Year to date, the occupancy rate is at 66% — the highest in 17 years. PricewaterhouseCoopers (PwC) expects this trend to continue. Demand for hotel rooms is forecast to rise 4% for 2014, with available supply growing just 1%.  Increased demand coupled with low supply, should create a favorable environment. And higher occupancy rates will… Read More

When retailers have sales, the unknown names are often the ones that get discounted the most. It’s common to get a deal on names that no one’s ever heard of before, but when a brand name goes on sale, everyone takes notice. That discounted price won’t last long. The recent correction in the marketplace created some value opportunities across the board — brand names included. Normally, value investors look for relatively unknown or obscure names that analysts have glossed over or ignored entirely to find price disparities that they can take advantage of. But when certain conditions align, even big… Read More

When retailers have sales, the unknown names are often the ones that get discounted the most. It’s common to get a deal on names that no one’s ever heard of before, but when a brand name goes on sale, everyone takes notice. That discounted price won’t last long. The recent correction in the marketplace created some value opportunities across the board — brand names included. Normally, value investors look for relatively unknown or obscure names that analysts have glossed over or ignored entirely to find price disparities that they can take advantage of. But when certain conditions align, even big names can get discounted and make for an easy portfolio pick-up. Like the name brand retail sale, these high quality stocks won’t stay under-priced for long. Take a look at Magna International, Inc. (NYSE: MGA), a $20 billion automotive parts wholesaler that operates on a global scale. The company has been aggressively expanding with the acquisition of Techform Group Of Companies, as well as the opening of two new plants in India. The auto industry is set to grow for 2015. U.S. sales rose 9% in September compared to the same month last year, while IHS Automotive predicts total… Read More

At first glance, the market appears to have dodged a bullet. The Dow and the S&P 500 have rallied back to around 17,000 and 2,000, respectively, leading to the impression that the early October sell-off was just a head fake. But real damage was done. A number of individual stocks now remain far below their 52-week highs. For value investors, stocks that have been tarnished — and not the ones hitting 52-week highs — are a key area of focus. As a bit of confirmation that these stocks are oversold, these investors like to know that company insiders also think… Read More

At first glance, the market appears to have dodged a bullet. The Dow and the S&P 500 have rallied back to around 17,000 and 2,000, respectively, leading to the impression that the early October sell-off was just a head fake. But real damage was done. A number of individual stocks now remain far below their 52-week highs. For value investors, stocks that have been tarnished — and not the ones hitting 52-week highs — are a key area of focus. As a bit of confirmation that these stocks are oversold, these investors like to know that company insiders also think shares sport value. And there’s no better way to express that than with cold hard cash. Here are three stocks that now trade well below the 52-week high and have seen recent solid insider buying. (All data supplied by insiderinsights.com). PolyOne Corp. (NYSE: POL) This producer of polymers and other specialty plastics is surely feeling the impact of a challenging global market. Despite the addition of a range of new products in recent years, Q3 sales were roughly flat with year-ago results. Thankfully, a rapidly shrinking share count helped pave the way for a solid jump in per share… Read More

While volatility like we’ve had recently often creates great bargains, even the best do-it-yourself stock pickers can find it hard to take full advantage of buying opportunities before they slip away. So rather than try to navigate choppy waters entirely on your own, why not consider turning over a substantial portion of your portfolio to the pros? #-ad_banner-#​One top large-cap fund I especially like has a long, successful history of capitalizing on stock market fluctuations. And its lead managers, two noted value investors, were out looking for bargains during the latest bout of volatility. Read More

While volatility like we’ve had recently often creates great bargains, even the best do-it-yourself stock pickers can find it hard to take full advantage of buying opportunities before they slip away. So rather than try to navigate choppy waters entirely on your own, why not consider turning over a substantial portion of your portfolio to the pros? #-ad_banner-#​One top large-cap fund I especially like has a long, successful history of capitalizing on stock market fluctuations. And its lead managers, two noted value investors, were out looking for bargains during the latest bout of volatility. In a recent interview with CNBC a couple weeks ago, for example, co-manager Bill Nygren revealed some stocks he considered worthy values at the time. Among these were IT services provider Accenture Plc (NYSE: ACN), the Swiss commodities and mining firm Glencore Plc (OTC: GLNCY), the well-known appliance maker Whirlpool Corp. (NYSE: WHR) and Las Vegas Sands Corp. (NYSE: LVS), which is dominant in the resorts and casinos space. In each case, he and co-manager Kevin Grant invested in… Read More