The Dividend Puzzle: The Relationship Between Payout Rates and Growth
Posted on August 6, 2012 | Investing
In one of the most surprising research developments over the last four decades, Robert Arnott and Clifford Asness published an article in the January/February 2003 issue of the Financial Analysts Journal entitled “Surprise! Higher Dividends = Higher Earnings Growth.”
The controversial 2003 research by Arnott and Asness was further affirmed by Ping Zhou and William Ruland in the May/June 2006 issue of the Financial Analysts Journal.
You CAN Lose With Bonds
Posted on July 26, 2012 | Investing
Stocks are risky because stock prices go up and down all the time—sometimes wildly so—and if you have money invested in stocks, the value of your original investment can drop substantially.
Dividend Safety Signs and Warning Flags
Posted on July 19, 2012 | Investing
Many investors have sought shelter from the stock market storm in more mature dividend-paying companies, since the income from these firms provides at least some positive return in an otherwise bleak environment.
Clearly, dividend-seeking investors need to evaluate the dividend payments themselves, how steady they have been and how much you are paying for them.
Finding Growth Stock Winners: Focus on 8 Fundamental Factors
Posted on July 11, 2012 | Investing
In the classic musical “The Sound of Music,” the character of Sister Maria (played by Julie Andrews) tells us that we should start at the beginning because “that is a very fine place to start.”
In our search for profits investing in growth stocks, however, we do the opposite and start our search at the end. The plain fact is that at the end of the day, what makes for a great growth stock is the fundamentals of the company:
Can the company continually sell more of its products and services at higher and higher profits?
Can it continue to innovate and adapt to marketplace changes and maintain a leadership position?
Because of this tendency for the game to change, I have found that it is necessary to rank stocks on more than one fundamental variable. I have found that there are eight tried-and-true key fundamental factors that drive stellar stock price performance and have stood the test of time.
Top Charting Web Sites
Posted on July 2, 2012 | Investing
The FreeStockCharts site (formerly BestFreeCharts) is a relative newcomer to the online charting arena, but has already made quite an impression on us. From Worden Brothers, the maker of the popular TC2007 charting software, the site offers charting, scanning, and portfolio tracking on a free and fee-based basis. The site is unique in that it offers free streaming “real-time” charts of stocks, exchange-traded funds (ETFs), indexes, and forex (foreign exchange) without exchange fees. It does this by providing real-time data from the BATS (better alternative trading system) exchange.
Making Sense of Profits Using Profitability Ratios
Posted on June 11, 2012 | Investing
Long-term investors buy shares of a company with the expectation that the company will produce a growing future stream of cash or earnings.
The Basics: What Is the Over-the-Counter Market?
Posted on May 31, 2012 | Investing
“Over-the-counter,” or OTC, is a term loosely applied to securities that aren’t listed on an organized exchange—such as the New York, American, Midwest, Boston, Pacific or Philadelphia exchange. OTC securities are traded through at least two, but often numerous “market makers” who maintain bids and offers for the securities they trade. Securities that trade on a listed exchange are quoted by a solo “specialist” who is charged with maintaining orderly trading in a security.
Extreme Anxiety: Evaluating Current Market Levels
Posted on May 24, 2012 | Investing
Keeping an eye on the market over the last year may have given you a bad case of emotional whiplash, with its apparent moves from one extreme to the other. It is easy to get swept up in the euphoria of a bull market as market levels rise, and then succumb to the deep pessimism of a bear market as the bottom apparently drops out of the market. However, markets rarely stay at historical extremes; eventually, they move back toward normal levels, although the speed of this adjustment is far from certain. The big question is: What is a normal level?
Shareholder Letter Revelations: Can You Trust the Leadership?
Posted on May 22, 2012 | Investing
Judging a firm’s leaders is an important step in analyzing a stock for investment. But it’s a murky area that offers no solid statistics to review. And most investors don’t get the chance to actually meet a company’s CEO and other officers in order to get a feel for how the firm is run.
The one window into a CEO’s perspective and goals is the shareholder letter contained in the annual report. But upon reading one, you might find that you can’t understand what the CEO is trying to say. Often, shareholder letters are riddled with jargon and glossy prose that convey no information. Six of the most popular CEO letter clichés…
Is R-I-S-K Really a Four-Letter Word?
Posted on May 11, 2012 | Investing
It is to some—and it is certainly something that most people try to avoid. But in the investment world, risk is impossible to avoid. In fact, risk and long-term rewards are generally related.
Low-risk investments—high-quality bond funds and other fixed-income alternatives—produce more annual income and are more stable, but have no real growth potential.