Navigating the Energy Sector When Oil Prices Drop

Oil. Black gold. It’s the lifeblood of the global economy. As essential as sunlight is to plants, so too is the world dependent upon oil to function. Around 80% of the world’s total energy usage stems from fossil fuels like oil. As it stands today, without oil, the ability to power a city or transport goods becomes impossible. For investors, a product like oil has built in demand which helps to prop up prices making it the most heavily traded commodity in the market. Take a look at Exxon Mobile’s (XOM) chart over the past 10 years to get a […]

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Takeover Targets: What To Look For

Most people are familiar with the phrase, “There ain’t no such thing as a free lunch.” Basically it means you can’t get something from nothing. Investors may have a basis for refuting that adage though. Enter the corporate takeover. A takeover is when one company purchases, or takes over, another company, usually after extensive negotiations and financing. The acquiring company becomes responsible for the target company’s debt obligations, holdings, and assets. In many cases, this transaction results in a significant price appreciation for the company that’s being taken over making it one of the most sought after events an investor […]

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The REIT Resurgence

REITs (Real Estate Investment Trusts) have a reputation for being complicated, unwieldy asset classes. It’s underserved – they’re actually one of the simpler companies to invest in due to their business model. Let’s define what a REIT is to better understand how it works. It is a company that owns a portfolio of real estate properties and receives income in the form of rent and capital appreciation on the property. A simple model, but highly effective. Furthermore, REIT’s must pass on at least 90% of their profits to shareholders thanks to a specific tax structure that allows them to bypass […]

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George Soros is Betting Against the Market and Why Investors Should Take Notice

For institutional investors, keeping secrets for long is an impossible task. The Securities and Exchange Commission requires these entities to file a 13F, a quarterly filing required of investment managers of assets of $100 million or more, which contains information regarding the asset manager’s investment style and potentially even a list of equities owned. It’s a good gauge of what an investment company did in the last quarter. Taking a look back at prior quarters can paint a fairly accurate picture of what direction they’re assuming the market will take and how they’re positioning themselves to prepare – long, short, […]

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Target’s Problems May Signal the Beginning of a Paradigm Shift In the Retail Industry

The retail sector has lagged behind the averages this year. Just take a look at the SPDR S&P Retail ETF’s (XRT) performance – down almost 4.5% year-to-date. The S&P 500 Index however has risen 5.7% over the same time period. This data seems to contradict the growing feeling of economic recovery and it’s clear that the reasons for retail’s sluggishness are more than skin deep. According to the Fed’s Beige Book, a collection of anecdotal economic information, regional banks saw moderate to modest growth in their local economies. Consumer spending, while not necessarily robust, has certainly seen a boost from […]

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Best Companies To Invest In For ‘The Internet Of Things’

The Internet of Things. A somewhat nebulous and colorless title for a concept that could revolutionize the world in much the same way the internet originally did. The idea is that everyday objects will be interconnected and able to identify themselves to other devices. The best way of explaining IoT is with examples. Picture a power generator that’s able to let maintenance know when there’s a problem without first being inspected, or remote monitoring systems that enable home automation – imagine your appliances being connected via wi-fi enabling it to download updates and ensure smooth operations. Recent additions to the […]

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How Consumer Spending And Economic Growth Is Linked

Anyone who’s paid attention to Wall Street for more than a few hours knows that the media loves to speculate on what the latest economic reports mean for the markets. Everything from job numbers to housing starts to consumer spending is discussed and analyzed until opinions (often contradictory) are given as to what it means for the future. While some indicators are considered more meaningful than others, one finds itself among the most looked at figures and seems to spark the most contention: consumer spending. It’s not without good reason. Even freshman year economic majors know how important spending is […]

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Portfolio Hedging: Myths and Misconceptions

In the world of finance, hedging is often thought of as a bad word. Banking failures and hedge fund bankruptcies have cast it in a bad light and left a bad taste in the mouths of investors who have experienced such disasters first-hand. Despite the negative press, hedging is actually a risk-reduction strategy used to create a safety net for investments. Most people might not be aware of it, but hedging is a concept we use in our everyday lives. If you own an automobile, you probably have it insured to protect yourself from unforeseen losses. The same thing goes […]

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The Real Impact of Global Crises

Experienced investors understand how to allocate their money in a way that elicits the best opportunity for appreciation without taking on too much risk. Careful considerations regarding asset allocation, risk tolerance, due diligence, and stock selection are taken into account when designing a portfolio. Long term mindsets mean that sophisticated investors don’t panic during market corrections and they doggedly stick to their plans whether the business cycle is cresting or sinking to a trough. However, when the unexpected happens that sends ripples throughout the global marketplace, even the most steely-eyed investor can find themselves second guessing their entire portfolio and […]

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What We Can Learn From Margin Levels in the Stock Market

Investors with larger risk appetites often use leveraged strategies in their portfolio to amplify potential gains and take advantage of opportunities as soon as they present themselves. Borrowing funds at low interest rates and investing the money in investments that earn a higher rate of return  allows sophisticated traders to enhance long-term performance at an accelerated pace. Utilizing leverage to boost trading performance is commonly used in futures trading and executed by some of the biggest names on Wall Street. Hedge Fund guru Bruce Kovner famously charged $3,000 on his credit card to speculate on soybean futures. He watched as […]

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