You may think stocks are still attractively priced after the recent rebound — but that doesn’t matter. Instead, it’s more important what your peers think and do. Because if you’re buying while they’re selling, you’ll lose. And right now, many of your peers have a solid excuse for selling: year-end profits. The S&P 500 has risen nearly +15% since early September, and many individual stocks are up +40% or even +50% from the summer swoon. With a hike in the capital gains tax expected next year, many investors will look to secure profits now instead of later. Read More

You may think stocks are still attractively priced after the recent rebound — but that doesn’t matter. Instead, it’s more important what your peers think and do. Because if you’re buying while they’re selling, you’ll lose. And right now, many of your peers have a solid excuse for selling: year-end profits. The S&P 500 has risen nearly +15% since early September, and many individual stocks are up +40% or even +50% from the summer swoon. With a hike in the capital gains tax expected next year, many investors will look to secure profits now instead of later. As my colleague Ryan Fuhrmann noted back in September, the capital gains tax rate will rise from 15% to 20% in 2011. Investors can avoid capital gains by generating offsetting capital losses, but after the market’s massive 20-month surge, there are fewer losers to be culled from investors’ portfolios. #-ad_banner-#If investors start to tiptoe toward the exits, it could quickly morph into a larger move. Just like we’re seeing in the current rally where success begets success, failure also begets failure. The market seems to be locked into mini-cycles characterized by broadening rallies (March… Read More

A surging stock market has brought a smile to the face of investment bankers. They’ve suddenly found a much more receptive environment for new initial public offerings (IPOs), with 16 deals of at least $100 million being pulled off in October — the best month for IPOs this year. And… Read More

All eyes will be on Ben Bernanke this Wednesday as the Federal Reserve finally spells out the details of its much-anticipated second round of Quantitative Easing, known as “QE2.” [For more on QE2 and how it works, read this InvestingAnswers.com article] The Fed‘s efforts to stimulate the economy through bond buybacks have led investors to already open the champagne. As I noted recently, the S&P 500 has already appreciated by more than $1 trillion simply in anticipation of any presumed benefits. But in recent days, economists… Read More

All eyes will be on Ben Bernanke this Wednesday as the Federal Reserve finally spells out the details of its much-anticipated second round of Quantitative Easing, known as “QE2.” [For more on QE2 and how it works, read this InvestingAnswers.com article] The Fed‘s efforts to stimulate the economy through bond buybacks have led investors to already open the champagne. As I noted recently, the S&P 500 has already appreciated by more than $1 trillion simply in anticipation of any presumed benefits. But in recent days, economists are beginning to doubt whether Mr. Bernanke is going to bring out the large cannons, or simply a set of pea-shooters. More specifically, will QE2 be large enough to get the economy going, buying back up to $1 trillion in bonds, or will the Fed believe that a few hundred billion dollars will be sufficient? #-ad_banner-#A pair of fresh economic data points point to the latter. Last week, we saw a moderate drop in weekly jobless claims that makes it clear that unemployment is at least not getting worse at this point. And then on Monday… Read More

Investors hear a lot of talk about index funds and diversifying risk. And on its face, diversification seems like a reasonable strategy for long-term investing. I disagree. As a matter of… Read More

After a furious two-month rally that has pushed the major indices to yearly highs, it seems to be an appropriate time to look at stocks that have been receiving perhaps too much investor affection. When the market takes a breather, these are often the first stocks to be dumped by momentum investors. So, I ran a screen for stocks that have risen at least +40% in the last three months and sport projected 2011 price-to-earnings (P/E) multiples above 40. There are surely some high-growth names here, but there are also… Read More

After a furious two-month rally that has pushed the major indices to yearly highs, it seems to be an appropriate time to look at stocks that have been receiving perhaps too much investor affection. When the market takes a breather, these are often the first stocks to be dumped by momentum investors. So, I ran a screen for stocks that have risen at least +40% in the last three months and sport projected 2011 price-to-earnings (P/E) multiples above 40. There are surely some high-growth names here, but there are also low-growth stocks that, at least at first glance, don’t merit such a strong move. The logical rebounders Some of these stocks are here simply because they were likely too undervalued earlier in the summer. Back in July, I suggested that Amazon.com (Nasdaq: AMZN), trading at $120, was due for a rally and predicted that “as investors start to once again embrace the company’s robust long-term outlook, shares should eventually power past the $150 mark seen earlier this spring.” With shares now at $170, it’s hard to… Read More

As cliche as the term “stocks on sale” has become, there’s still something exciting about grabbing a great stock for less than five bucks a share. They just seem well equipped to dole out bigger rewards — in terms of percentage gains — than their higher-priced counterparts. Read More

Four years ago this week, the Dow Jones Industrial Average hit an important milestone: 12,000. A year later, in October 2007, the venerable index moved past 14,000. But by October 2008, headlines blared “Dow 8,000” before eventually bottoming at 7,200 in March of 2009. A furious rebound has the Dow back on the rise, surging +54% in the past 19 months to a recent 11,100. A continued march back to 12,000 is no sure thing, as serious headwinds remain, leading some to expect we’ll see “Dow 10,000” before “Dow 12,000.”… Read More

Four years ago this week, the Dow Jones Industrial Average hit an important milestone: 12,000. A year later, in October 2007, the venerable index moved past 14,000. But by October 2008, headlines blared “Dow 8,000” before eventually bottoming at 7,200 in March of 2009. A furious rebound has the Dow back on the rise, surging +54% in the past 19 months to a recent 11,100. A continued march back to 12,000 is no sure thing, as serious headwinds remain, leading some to expect we’ll see “Dow 10,000” before “Dow 12,000.” One thing’s for sure: recent history tells us that the Dow is unlikely to stay put where it is right now. Volatility is the name of the game these days, so let’s look at three positive and three negative catalysts that could push or pull the Dow to the next milestone. Any of these factors may play out over the next six months. The positive catalysts: 1. Sustained profit growth. Earnings season is off to a robust start. Thus far, more than 80%… Read More

Deflation has become a central  concern these days. The Federal Reserve sweats the notion of falling prices across the economy, as it tends shrink asset values even as debts against those assets remain constant. And companies hate deflation, because it usually… Read More

There are a lot of folks that visit Washington, D.C. in April to see the famous cherry blossoms. The same goes for touring New England when the leaves start to change in the fall. But one season that seems ignored despite being every bit as beautiful —… Read More

You’ve likely been wondering what’s going on with the market. The S&P 500 is up about +12% since the start of September, yet unemployment is still high, the U.S. deficit is still enormous and the overall economic picture is still hazy. What’s behind it all? I think most of the answer lies in QE2. No, not the Queen Elizabeth 2 ocean liner. QE2 is what the business media is calling the pending second wave of quantitative easing by the U.S. Federal Reserve. To stimulate the… Read More

You’ve likely been wondering what’s going on with the market. The S&P 500 is up about +12% since the start of September, yet unemployment is still high, the U.S. deficit is still enormous and the overall economic picture is still hazy. What’s behind it all? I think most of the answer lies in QE2. No, not the Queen Elizabeth 2 ocean liner. QE2 is what the business media is calling the pending second wave of quantitative easing by the U.S. Federal Reserve. To stimulate the economy, the U.S. Federal Reserve has set short-term interest rates at all-time lows. But the economy is still sluggish and unemployment remains stubbornly high. To further stimulate the economy, the Fed has stated that it is likely to try a little-used tool called quantitative easing. Quantitative easing is used to hold or push down long-term interest rates. To do this, the central bank buys long-term Treasury bonds, keeping their prices higher — and yields lower. The hope is that by… Read More