Go ahead and Google it. In what has to be the shortest amount of time in history, a brand name has become the generic. Kleenex has nothing on this company. Google Inc. is an amazingly successful Internet firm in a time when few other Internet companies are making a lot of headway. The stock is trading for $271 a share today; it went to market last August at $100. The product line has expanded beyond the most wicked search engine…
For many retail investors, mutual funds have become a necessary evil. But the last five years of crazy market performance has exposed a lot of average talent among fund managers, along with a great reduction in enthusiasm on the part of investors. People seem to stick with mutual funds because they do not know alternatives exist. If they only knew what went on behind the scenes. For instance, the buyer of a no-load mutual fund may think because he isn’t…
I don’t like that we allow our government to have so much control over our fortunes, but it is the reality we live in. Most Americans would benefit from a long-term, generally rising stock market, so with that in mind, I am going to propose an idea that can contribute greatly to a steadily rising American market. This proposal comes from a notion the 200-year track record of generally rising stock prices in this country is in danger. We have…
A lot of investors are doing some deep thinking right now. People lost money in the first quarter. Now the second quarter is shaping up to be more of the same. For the most part, on a broad portfolio basis, many people are only now getting back to even with five years ago. But just as things start to pop above water, the losses begin to pile up again. The portfolio devastation most Americans suffered in the last bear market…
Citigroup reported another great quarter last week and, once again, not much is happening with the stock. It is starting to get a little routine. The story inside the company seems to get a little brighter every few months, but the stock has been trading sideways for two years. It is getting a little more popular these days to turn away from financial stocks because of rising interest rates. (Although the only rates that are moving higher are those controlled…
In July, I wrote about a few stocks that might help an investor take advantage of the rising oil prices. Up to the April 4 close, here are the results of those three stocks: Veritas, up 33 percent; XTO Energy, up 56 percent; San Juan Trust, up 60 percent. The energy industry needs another look right now. High oil prices are a hot topic everywhere, and the low-hanging fruit of returns has been picked. I don’t want to make a…
There wasn’t enough space last week to complete the discussion of the long-base theme. These are stocks that have been trading in tight ranges for many years and can offer tremendous returns to investors. Last week, I brought up Honda and Franklin Resources. Here are a few more that have been moving sideways for years: Energy company Smith International Inc. traded as high as $44 a share at the end of 1997, then pulled into a tight sixyear trading range….
The longer the base, the higher in space. For any technical analysis geeks out there (like me), this phrase brings visions of money raining from the skies. Stocks that have moved sideways for years or have been stuck in trading ranges can, under the right conditions, unlock massive wealth. The trick is to find these gems. Extremely long-term trading ranges exist because investors typically forget about the stock. The owners are frustrated but don’t want to sell, so they figuratively…
The market’s been taking a bit of a beating lately. On March 4, the Dow Jones industrial average and the Standard & Poor’s 500 index closed at 3-1/2-year highs. Apparently that was enough to bring out sellers, because the major averages suffered pullbacks of 2 percent to 3 percent the next week. Each time the market falls, I get the feeling there are more than a few people ready and willing to call the start of the next bear market….
Japan has been a stock market dog for 15 years. The Japanese economy is the world’s second-largest and its resurgence after World War II is amazing, but the country has been a trap for investors. That picture might be changing. Let’s go over some history first before we talk about why Japanese stock makes sense today. By the early 1970s, Japan had lifted itself out of the war’s destruction. Then the manufacturing companies there got a miracle: the first oil…
With energy stocks all the rage today, I did a little research into the history of the industry and its impact on investors. Oil is in uncharted territory price wise. OPEC refuses to increase production. China is soaking the stuff up like a sponge, and Americans want some relief from high gas prices. Oil has been used for thousands of years as fuel for lamps and as a lubricant. Until the mid-1800s, most of the world’s oil came from whales….
Two weeks ago, I was talking to one of my analysts and he brought up a couple of stocks he thought could be really interesting over the next 12 months. Remember, I am a technician and not a fundamental analyst, and the analysts I trust are all technical guys. He said these two stocks showed solid bottoming formations on their charts in the fall, which could lead to solid gains in the next year. When he mentioned the names, I…
One trillion dollars. The only time you hear a number that big is when government spending is the subject. What if an American company were to hit $1 trillion in annual sales? How about an American company with a $1 trillion market value? Are these numbers possible? The largest company in the world by revenue is Wal-Mart, which did $285 billion in sales this year. A very big number. The biggest company in the world by valuation is General Electric,…
One pleasant thing about the stock market is that dominant trends do not change quickly. A strong, healthy bull market does not turn into a nasty, hungry bear overnight. There is a process and an evolution that a full market cycle goes through, and the transition phases of these cycles typically last three to nine months. Investors who become aware that they are in the early to middle stage of one of these transition periods will have ample time to…
On Jan. 28, Procter and Gamble agreed to pay $52 billion to acquire Gillette. Days later, SBC Communications Corp. bought AT&T for $16 billion. The track record of merger-and-acquisition activity on Wall Street leaves a lot to be desired. Most of the mergers involving large operations fail to generate anywhere near the returns management promises. But as soon as I heard about the P&G deal, I thought a lot of things make sense here. First of all, neither one of…
So Ebay Inc. got clocked last week. The stock dropped 20 percent in one day after reporting earnings that missed the consensus estimate. Money managers all over were shaking their heads after getting so used to the company’s easily beating estimates, then raising the bar for the next quarter. Ebay’s story is amazing and I am impressed by the management of the company and the still-dominating stock price. Ebay is one of the most recognized brands around and the company…
Oil. It’s not behaving well lately. There was the preelection run-up to near $56 a barrel; then it seemed like prices would settle down for a few months at least. We had a little bit of warm weather to spur some selling, then, boom! The temperature dipped and, as if cold weather in January were a surprise, oil headed back near $50. I noted last month that it would probably be stuck in a trading range of $40 to $55,…
The first week of the new year was pretty lousy. All the major indexes are now in the hole for the year, with some industries down 5 percent or more. So is that it for 2005? Should we just pack up and come back again in 12 months? The media is jampacked with stories about how the first week’s performance determines the rest of the month’s outcome, which determines the rest of the year. And most experts had high hopes…
A client’s question recently struck me as a great thing to think about in the new year. The client wondered who would be the next Warren Buffett or Sandy Weill. The stock market exists to provide capital for industry, and in turn industry has to provide an acceptable rate of return on that capital. On a historical basis, we can easily measure the rate of return for any public company and anyone running a public company. Hence the question of…
As a technical analyst I am fascinated by history. I was a history major in college, so my interest here predates my addiction to financial markets. The predictive ability of technical analysis depends on people acting in ways similar to what they did in the past. Which means technicians spend a lot of time studying the past. Long before fundamental analysis became the standard by which investors attempt to figure out future prices, technical analysis was being used to give…
