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Archive for the ‘Value Investing’ Category


Soft Underbelly of Bull Market Is Too Much Debt

According to Warren Buffett the first rule of successful investing in not to lose money and the second rule is not to forget the first rule. With this sage advice in mind, what are the risks in today’s aging stock rally, both in the USA and abroad? Our considered opinion is that the soft underbelly of the bull market is too much debt. This debt excess includes that held by consumers, governments, and businesses.
Business Debt and Margin of Safety
When Steve Jobs came back to Apple he reinvigorated the company and generated lots of profits. He also built up a huge […]

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Where Should You Invest Your Tax Refund?

Are you getting money back on your taxes this year? If so, are you taking a trip, going on a shopping spree, or hopefully putting something away for retirement or a rainy day? If you are taking the latter course where should you invest your tax refund? Investing excess cash such as a tax refund should be routine for every investor. This money will stay put until you are no longer working or when you really need it. Here is where you need to apply the principles of value investing. Intrinsic value is the valuation that successful long term investors […]

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How Are Volatility and Risk Related in an Investment?

The stock market is very volatile this year. In fact, we have not seen this much volatility since the days running up to the financial crisis that ushered in the Great Recession. Investors and traders seem to be of two minds. First, many are worried and are getting out of investments that have been very profitable over the last few years. Second, many see the market correction as an opportunity to buy and gain profits, at least in the short term. Who is right and how should you proceed in the face of increasing volatility? In this regard, how are […]

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Volatility Makes Closed End Funds Cheaper

Successful long term investors make money because they do two things. They pick investments that are likely to provide a healthy return and they wait to buy until that investment is selling at a discount to its long term value. This is the concept of intrinsic value that we have so often discussed. An investment that may be attractive today is a closed end fund because the volatile market is making many closed end funds cheaper.
What Is a Closed End Fund?
Investopedia explains closed end funds.
A closed-end fund is organized as a publicly traded investment company by the Securities and Exchange […]

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How Far Will High Tech Fall?

Our concern about high tech stocks has been that they seem overvalued as the bull market ages. The market seems to have taken notice of this concern as the FANG stocks corrected and have not recovered their losses. And now a Facebook data breach has scared the market. US News reports that Facebook and other tech stocks are falling.
A sharp loss for Facebook is dragging technology companies lower Monday as U.S. stock indexes skid. The social media company is facing new criticism related to privacy issues following reports a data mining firm working for the Trump campaign improperly obtained and […]

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What Can You Invest in and Not Get Hurt by a Trade War?

Of late we have written about switching investment focus from growth to value as we have been ruminating about the possibility of a stock market crash, economic recession, and collapse of the real estate market, all caused by a trade war. Materials stocks have been hurt by Trump’s announcement of tariffs on steel and aluminum. The bull market has been historic and is likely to cool off if we are lucky and collapse if we are not. How can you invest and not get hurt by a trade war? Our sister site, Profitable Trading Tips, provided a few ideas in […]

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Large, Medium, or Small Cap Investments

This has been a historic stock market rally. And, all bull markets correct or crash in the end. With this bit of truth in mind we have been writing about how to deal with your investments before there are substantial corrections or even crashes of the stock and real estate markets. A good choice is to switch your investment focus from growth to value.
The unique financial conditions of the last several years have been ideal for high tech growth stocks, the FANG group especially. But, now that conditions are changing, growth stocks are overpriced and at risk for a major […]

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Learn How to Invest Your Money When Markets Are Uncertain

The financial meltdown of 2008 was devastating for the majority of home owners and investors. How is it that when the real estate and stock markets were overbought and became volatile in 2007 and 2008 that investors did not take their profits and find safe investments or simply hold cash? At the start of 2009 Business Insider wrote that America lost $10.2 Trillion in 2008.
U.S. homeowners lost a cumulative $3.3 trillion in home equity during 2008, according to a report from Zillow. (MortgageWire.)
One in six homeowners is now underwater on their mortgage.
The stock market erased $6.9 trillion in shareholder wealth […]

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Switch Your Investment Focus from Growth to Value

Unless the stock market stages an unexpected late rally, the month of February 2018 will be the first February since the 2008 market crash where stocks have gone down instead of up. Inflation is gaining momentum and interest rates are about to go up from years of historic lows. The unique financial conditions of the last several years have been ideal for high tech growth stocks, the FANG group especially. But, now that conditions are changing, growth stocks are overpriced and at risk for a major correction. The better choice for many investors is to move into value stocks and […]

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How a Stronger Dollar Creates Winners and Losers

A strengthening US economy and the prospect of more interest rate hikes by the Federal Reserve have helped the US dollar stop its recent slide. But how does a stronger dollar affect the economy and the stock market? Today we look at how a stronger dollar creates winners and losers. CNBC writes that stocks could take a hit as the dollar strengthens.
The U.S. dollar is beginning to enjoy a bullish turnaround after declining for much of this year, and some strategists are watching for how its recent gains will impact equity markets domestically and abroad.
Should this bounce continue, domestic markets […]

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