Investors’ Next Disappointment Will Come From Risk Mismanagement

Sunday, March 30, 2014
Investors’ Next Disappointment Will Come From Risk Mismanagement

Risk mismanagement is everywhere. Many investors (individual and professional), investment advisors and even Wall Street are guilty of overstating, underweighting or misunderstanding risk. As a result, portfolios are being designed to disappoint. Worse, we have finally reached the best of times for investing, only to have investors’ prospects mucked up by bad investment decisions.

So, what’s wrong? There are three basic mistakes being made…

This article is published on Forbes.com


Biotech Drop: Neither A Bubble-Burst Nor A Growth-Warning

Wednesday, March 26, 2014
Biotech Drop: Neither A Bubble-Burst Nor A Growth-Warning

As biotechnology stocks have fallen, visions of a bubble bursting have risen. After all, as The Wall Street Journal reminds us, “What goes up must come down….” Then there are those sky-high valuations and all those IPOs. Clearly, a disaster was waiting to happen, and now investors (again, per the WSJ) are “…learning the hard way” the lesson of messing around with fast-climbing stocks. Search for “biotech bubble,” and you can see the popularity of this viewpoint.

Not content with focusing on biotechnology, some pundits are attempting to spread the fear that the biotech drop is a precursor of worse to come to growth stocks everywhere. You know – the old slippery slope, domino theory logic.

This article is published on Forbes.com


Goldman’s Misunderstood Growth Message – It’s Bullish, Not Cautionary

Tuesday, March 18, 2014
Goldman’s Misunderstood Growth Message – It’s Bullish, Not Cautionary

Goldman Sachs’ “US Weekly Kickstart” (March 7) produced warnings that Goldman is now concerned about growth stock valuations (e.g., in the WSJ: “High-Flying Growth Stocks Could See Rough Landing, Goldman Says”). However, the information cited is actually bullish for growth stocks, as evidenced by Goldman’s advising stocks over bonds and, within stocks, growth stocks over value.

Here is the explanation…

This article is published on Forbes.com


Keurig Green Mountain: Time To Double Up

Tuesday, March 11, 2014
Keurig Green Mountain: Time To Double Up

The Keurig Green Mountain (nee, Green Mountain Coffee Roasters) + Coca-Cola fanfare has died down, last week’s annual meeting is past, and the next quarterly report is two months away. As a result, traders and other short-termers have moved on, letting the stock price drift down. Such cool-off periods can be beneficial, both for providing a good buying opportunity and for establishing a foundation for the next growth leg up. That looks to be the case for GMCR, meaning now is a good time to buy or double up.

This article is published on Forbes.com


The Risk Behind Buffett’s Advice

Saturday, March 8, 2014
The Risk Behind Buffett’s Advice

Warren Buffett’s investment advice echoes the long-term stock investors’ refrain: “Buy and hold.” Further, adopting academics’ (and Jack Bogle’s) beliefs, he advises holding an inexpensive S&P 500 index fund. That sounds easy. And, coming from the master, undoubtedly profitable. We only need to look at a long-term stock index chart to prove the wisdom and ease of following it. But wait…

About that long-term graph – it’s flawed. It lacks the two key adjustments needed to provide an accurate, historical picture. Without it, returns are overstated and risks, understated. Once done, the adjustments show a more complicated picture, one that raises doubts not only about Buffett’s advice, but also about any long-term strategy involving the stock market…

This article is published on Forbes.com

 

Crazy But True: Being Contrarian Means Being Bullish

Thursday, March 6, 2014
Crazy But True: Being Contrarian Means Being Bullish

What does it take to convert stock market trepidation to enthusiasm? Clearly, a half-decade upmarket doesn’t do the trick. This market’s theme song should be, “Sixteen Tons,” paraphrased:
You load a hundred percent and what do you get?
Five years older and still no respect
The evidence is in the “celebratory” headlines…

This article is published on Forbes.com


Homebuilders Up, But It’s Not Too Late To Buy

Thursday, February 27, 2014
Homebuilders Up, But It’s Not Too Late To Buy

New homebuyers apparently ignored the winter weather. The January sales report shows a large increase and pushed the homebuilder stock uptrend further ahead. However, we need to avoid placing too much emphasis on that one number, as discussed below. More importantly is the underlying upward trend and the potential for excellent growth in new home sales this year. These are the reasons that homebuilder stocks remain attractive.

First, let’s review the much discussed monthly sales numbers…

This article is published on Forbes.com

 

Divesting For Growth – Think Chevron And GE, Not Coke

Wednesday, February 19, 2014
Divesting For Growth – Think Chevron And GE, Not Coke

The Wall Street Journal today (2/19) noted that the Wall Street divestiture cycle is in full swing, spurred on by activist shareholders (“New Push to Throw Assets Overboard”).
Companies ranging from chemical giants to restaurant chains have come under fire from shareholders wanting to break them apart, arguing that businesses perform better when they aren’t part of a sprawling conglomerate.
But activism is only part of the story. More fundamentally is the push from Wall Street…

This article is published on Forbes.com


1929-Style Crash Coming? 4 Steps For Dealing With Doomsday Prophecies

Friday, February 14, 2014
1929-Style Crash Coming? 4 Steps For Dealing With Doomsday Prophecies

Here they go again. The self-anointed prophets of doom are trying to scare us as they make a name for themselves. Their egotistical aims are base, their analyses are false and their methods are despicable. Yet, their message of the disaster that will befall nonbelievers inevitably gains new disciples time and again.

Fear mongers know that it’s easier to frighten people than to entice them. Yelling, “Free money!” in a bank causes people to pause and say, “What’s the catch?” Yelling “Fire!” in a theater causes people to scream and panic. Likewise, yelling “1929 is here!” in the stock market ignites fear – plus (and this is the plan), it causes people to beat a path to the guru’s mountaintop, seeking to gain the wisdom that Wall Street and the notorious “They” are hiding from the world.

Here’s how to deal with such doomsday prophecies…

This article is published on Forbes.com


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