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Wine, Steak, and the State of the U.S. Stock Market

Tue, 18 Jun 2013 13:50:58 -0400

I was recently out to dinner with a friend who manages tens of millions of dollars in private equity. While the Dow and the S&P 500 are still within two to three percent of their recent highs, my friend is not happy. In fact, he is kind of disappointed with the current trading action in...

Who Wins in an Artificially Monetized World?

Tue, 18 Jun 2013 13:25:58 -0400

If there is going to be genuine economic growth in mature economies, the leadership will have to come from the U.S. economy. The convulsions taking place in the Japanese capital markets are emblematic of the monetary exuberance that both captivates investor sentiment and distorts its reality. It’s a trader’s paradise with such volatility, based not...

Truth Behind 1Q 2013 Earnings and What’s Next for Stocks

Tue, 18 Jun 2013 12:50:56 -0400

This shouldn’t be a surprise to the readers of Profit Confidential. According to an analysis done last week by the Wall Street Journal, in the first quarter of 2013, corporate earnings growth of companies in the key stock indices like the S&P 500 wasn’t really due to companies doing better. Rather, “research tax breaks” are...

China: The New Breeding Grounds for Capitalism

Tue, 18 Jun 2013 11:50:53 -0400

China’s economy is slowing, but the rich in that country continue to get richer and are growing in number. I was reading the other day that Chinese investors are now some of the biggest purchasers of high-end real estate in the United States—Manhattan, in particular. It would not be a surprise to see a buyer...

Wanted: Market Seeking Catalyst in 2Q13 Earnings

Tue, 18 Jun 2013 11:25:47 -0400

This week marks the unofficial beginning of second-quarter earnings season as Oracle Corporation (ORCL) reports. Next week, it’s NIKE, Inc. (NKE). These two benchmark companies offer the first glimpse of business conditions for multinational corporations. What they report is material. Last quarter, NIKE surprised Wall Street with excellent relative growth in revenues and earnings, particularly...

One Simple Measure for Investing in a Volatile Market

Tue, 18 Jun 2013 09:50:24 -0400

Volatility has been edging higher since the end of 2012, but so far, the stock market has held up pretty well. Take a look at the chart below of the CBOE Volatility Index (VIX), also known as the “Fear Factor Index,” based on the S&P 500 Index. The VIX reading is holding around 16.8—well below...

Mortgage Rates on the Rise; Repeat of Lead-Up to 2008?

Tue, 18 Jun 2013 09:45:22 -0400

One reaction that should not surprise long-term investors is that the market will move far quicker and further than most people expect. Even before the Federal Reserve has made any statement regarding the timing of reducing its asset purchase program, investors have already begun selling their fixed-income investments, which is causing yields to rise. This...

Coast Isn’t Clear for America, Economic Growth Slowing

Mon, 17 Jun 2013 23:23:35 -0400

Over the past few months, it appears that the first-quarter economic growth spurt has begun to decelerate in America. This is troublesome, as stock market investors had anticipated that we would be seeing economic growth finally gain steam. Unfortunately, we don’t have the global economy on which to rely. Much of the world remains quite...

Global Rout in Markets Gathering Momentum?

Mon, 17 Jun 2013 19:10:00 -0400

So this is what it looks like when global investors take their eyes off the Federal Reserve’s quantitative easing policy and focus on the real economy instead! As I’ve been predicting, the global sell-off of stocks looks like it’s beginning in earnest. And you can pinpoint the exact moment investors and economists around the world...

Soaring Key Stock Indices Headed Downward; How May 22 Changed Everything

Mon, 17 Jun 2013 19:05:00 -0400

It turns out that May 22 was very critical for the key stock indices. But surprisingly enough, this wasn’t just the case for stock exchanges here in the U.S.—it was the same for the global economy, as well.Just take a look at the chart below: Chart courtesy of www.StockCharts.com At first, the chart above may...

American Eagle Outfitters Inc: Fundamental Stock Research Analysis

Mon, 17 Jun 2013 16:36:22 -0400

Before analyzing a company for investment, it’s important to have a perspective on how well the business has performed. Because at the end of the day, if you are an investor, you are buying the business. The FAST Graphs™ presented with this article will focus first on the business behind the stock. The orange line...

Abenomics: The Biggest Ponzi Scheme in History?

Mon, 17 Jun 2013 10:45:20 -0400

All of you know how I feel about the Japanese stock market and the economy in general. Yes, I was wrong in the past when I suggested traders and investors stay away from the Japanese stock market. The benchmark Nikkei 225 has been the top performer this year; in fact, at one point on May...

Action in Dow Jones Transports, Utilities Signaling Caution

Mon, 17 Jun 2013 07:50:21 -0400

The equity market and other capital markets are gyrating on the rise in 10-year Treasury yields. There’s been a lot of unusual movement in currencies as well. Speculation regarding what the Federal Reserve is going to do about quantitative easing and the lull between earnings seasons are definitely factors. There is always equity market uncertainty...

Small-Cap Stocks the Place to Be—If Economic Growth Is Real

Mon, 17 Jun 2013 07:25:20 -0400

Make no mistake about it. The wealth in America continues to rise as it is in other parts of the world. Fueling the creation of wealth has been the easy monetary policy, which has essentially pushed up the stock market to its record-highs. Now the economy is also on the mend; albeit, it has largely...

Finally Some Good News for the U.S. Economy?

Sun, 16 Jun 2013 20:50:26 -0400

Finally, some good economic news is coming to the U.S. economy… The U.S. Census Bureau has reported that retail and food services sales for the month of May, adjusted for seasonal effects, increased 0.6% from April and 4.3% from the same period a year ago.(Source: U.S. Census Bureau, June 13, 2013.) This is the first...

Failed Projections or Just Another Government Lie? You Judge

Sun, 16 Jun 2013 20:25:24 -0400

Boy, were they wrong! Not so long ago, the Congressional Budget Office (CBO) said it expected the U.S. government to register a budget deficit in the current fiscal year of $642 billion. But hold on a minute… The budget deficit so far (as of May 31, 2013) has already hit $626.3 billion, and we still...

Are Banks Growing with Vine? Not Yet

Fri, 14 Jun 2013 16:40:17 -0400

About six months ago, Twitter launched a new video application called Vine. For those unfamiliar with the app, it allows users to create 6-second video clips that loop continually. Vines are really just an evolution of animated GIFs that have sound and are fully integrated with Twitter for easy broadcast and sharing. Last month, we...

Searching For Value And Finding It In Today’s Market – Sector By Sector

Fri, 14 Jun 2013 15:05:53 -0400

Introduction “I think the market is overvalued now,” is a common refrain that I’m hearing from most of the individual investors I have recently been coming in contact with. Consequently, many of these same investors are also currently eschewing investing in common stocks because of that fear. Although I do not agree that the market...

Investor Beware: Higher Interest Rates Looming

Fri, 14 Jun 2013 13:25:16 -0400

The rate on a 30-year fixed mortgage has been creeping up higher and just broke the four-percent threshold. This is a telltale sign that higher financing rates are on the horizon. While there’s still hope that the Federal Reserve will hold off on reducing its bond buying at next week’s Federal Open Market Committee (FOMC)...

Investor Sentiment Eroding Globally; Is America Next?

Fri, 14 Jun 2013 12:50:54 -0400

With the S&P 500 close to its all-time highs, a common question is: will we see a pullback or a continuation in the bull market? This is obviously a very complicated question to answer, as investor sentiment in the S&P 500 can shift extremely quickly. In addition, there is obviously no quantifiable method to predicting...

Two Proven Short-Term Strategies for Long-Term Investors

Fri, 14 Jun 2013 11:50:15 -0400

Generally speaking, by keeping focus on the long term, investors can grow their portfolio with peace of mind. When doing this, they are not concerned about what happens to their portfolio on a daily basis; rather, they are looking for performance at the end of the year, when it’s less stressful. That said, while not...

Crash, Down Quarter, Major Correction—It’s All in the Cards

Fri, 14 Jun 2013 11:25:14 -0400

The appetite that institutional investors have had to bid the stock market is diminishing. Earnings estimates for the second quarter are actually being trimmed by corporations and Wall Street. It makes for a genuinely peculiar environment for the stock market—share prices at their highs on declining expectations for corporate earnings. The lesson is clear: it...

PVH Corp: Fundamental Stock Research Analysis

Thu, 13 Jun 2013 17:50:12 -0400

Precious Metals: Down for the Count?

Thu, 13 Jun 2013 13:50:52 -0400

The recent weakness in many precious metals has led some to believe the investment opportunity in that sector is over. However, I don’t believe that’s true—not all of the precious metals have the same fundamental drivers and thus have had varying levels of performance. While some precious metals, such as silver, have dropped over the...

Number of S&P 500 Companies Reporting Negative Guidance a Red Flag

Thu, 13 Jun 2013 13:25:38 -0400

Standard & Poor’s, the credit rating agency, believes the likelihood of the U.S. credit rating being downgraded in the near term is less than 33% (one in three) and it has decided to keep its credit rating on the U.S. economy at AA+, slightly lower than the best investment grade. (Source: Standards & Poor’s, June...

Germany to Pull Back on ECB’s “Whatever It Takes” Position?

Thu, 13 Jun 2013 12:45:36 -0400

I can’t stress this enough: troubles in the eurozone are far from over. First and most important, the strongest nations in the eurozone are experiencing an economic slowdown now too. As I have written before, France and Germany are seeing diminishing demand. Finland, one of the financially strongest nations in the eurozone, fell into a...

Fear Sneaking Back into the Stock Market

Thu, 13 Jun 2013 11:11:08 -0400

In just a matter of a few months, the S&P 500 is up more than 14%. To say the very least, these gains are nothing short of amazing—much better than what investors can get with the long-term U.S. bonds that currently yield less than 3.5%. Consider this: on average, in the first five months of...

Obamacare a Boon for Biotechs?

Thu, 13 Jun 2013 07:35:56 -0400

Much hype has been made over how much “Obamacare” is going to cost Americans. The Republicans and, dare I say, the majority of Americans believe it will significantly increase the cost of insurance for people who buy it on their own. The Democrats have been quick to dismiss any such silly notions. Slugging through the...

Capital Vision: Cultivating Your Success

Wed, 12 Jun 2013 20:05:57 -0400

Innovators are known for their idea channels. Novel ideas and collaboration give entrepreneurs the inspiration and guidance that groundbreaking work requires. As an investor, it’s easy to think that the market for ideas is solely the property of the innovator. But creating an easily flowing current of opportunities is just as essential for an investor...

Why Supply and Demand Doesn’t Matter for U.S. Oil

Wed, 12 Jun 2013 11:50:19 -0400

There is now pressure on oil prices. West Texas Intermediate (WTI) crude is getting awfully close to the $100.00-per-barrel level again. Futures traders are interpreting economic news, including last Friday’s employment report, as strength in the U.S economy. Resource stocks have generally been trending lower, particularly in precious metals. But this hasn’t been the case...

Why There May Be an Insatiable Appetite for Chinese IPOs

Wed, 12 Jun 2013 11:25:16 -0400

The Chinese are coming! Well, not really, but we did see the first Chinese initial public offering (IPO) of the year list on an U.S. exchange yesterday and only the third Chinese IPO since 2011. The pipeline has dried up from the 60 or so Chinese IPOs listing in the U.S. from 2008 to 2011....

Indian Government to Banks: Stop Telling People to Buy Gold

Wed, 12 Jun 2013 10:50:15 -0400

India, the biggest consumer of gold bullion, is witnessing over-the-top demand—to the point where the government is trying to curb demand. The Finance Minister of India said last week, “Banks have a role to play in dampening the enthusiasm for gold. I think the RBI [Reserve Bank of India] has advised banks that they should...

Japan Resorts to Buying ETFs and REITs to Prop Up Stock Market; Will Fed Eventually Do the Same?

Wed, 12 Jun 2013 09:50:12 -0400

The Japanese economy is a prime example of what happens when central bank–infused “economic growth” crumbles. Quantitative easing may have been needed in the U.S. economy when the financial system was on the verge of collapse, but artificially low interest rates and vast amounts of paper money printing could be creating major troubles for our...

Business Basics – Corporate Audits

Tue, 11 Jun 2013 23:30:13 -0400

Regular, thorough audits are a very important tool for running a compliant, successful corporation. These audits help uncover problems that might have otherwise gone unnoticed, stopping them from evolving into serious issues. Corporate audits are thus typically handled and paid for by the corporation being audited to help them spot those types of problems. But...

Is Obamacare Killing America’s Medical Innovation?

Tue, 11 Jun 2013 10:55:23 -0400

There are few things more unpopular in America right now than President Obama and “Obamacare,” or the Patient Protection and Affordable Care Act, as it’s known in the hallowed halls of Washington. According to a recent poll, 45%–49% of Americans disapprove of President Obama’s job performance; only 48%–45% approve. (Source: “American Voters 4-1 Want Special...

Three Ways to Profit from the Fall of Emerging Markets

Tue, 11 Jun 2013 09:55:33 -0400

The key stock indices have gained momentum to the upside since the beginning of the year. The most quoted indices like the S&P 500 and the Dow Jones Industrial Average are up more than 12% and are bucking the trend. Unfortunately, as this is happening, commodity prices, especially the industrial metal prices, are facing severe...

Unique Investment Opportunity Born in America

Tue, 11 Jun 2013 09:11:32 -0400

Something just occurred that has not happened since 1997: the U.S. produced more oil domestically than we imported. Just a few years ago, people would’ve viewed that statement as simply a fantasy. This is a perfect example of what happens when business owners see an investment opportunity that will help create corporate earnings. The escalating...

New Accounting Framework to Ease Burdens for Small Businesses

Mon, 10 Jun 2013 14:27:00 -0400

Two U.S. accounting organizations aim to give business owners streamlined options for financial reporting.

Retail Growth Healthy, but Best Gains Have Already Been Made

Mon, 10 Jun 2013 11:35:56 -0400

We all know that consumer spending and the performance of the retail sector dictates the direction of economic renewal in the U.S. It’s quite simple—if consumers spend, the economy and the retail sector will grow. Now, with home prices nationwide continuing to rise and the jobs creation picture showing signs of improvement (though it is...

How the Old Economy Can Pay More Than You Might Think

Mon, 10 Jun 2013 11:15:29 -0400

With all the financial engineering that’s been going on over the last several years, it’s great to actually find good businesses that are growing based on their own fundamentals. There’s always a continuing flow of earnings reports, and one company I’ve followed for years just beat the Street again. Earnings growth rates might not be...