Don't Fall For Their Bull
When asked about the stock market, the professional money managers on TV repeat the same old mantra: "Stay fully invested. When the market goes bear, buy more. When the market goes bull, rebalance your portfolio at year-end."
This concept is simply BS. Not just because if you followed it you would have zero investment gains since 1998. And not because those money managers or stock brokers don't get paid on your cash balances -- those fees or spreads go to the house.
It's bull because it does not adequately reflect the risk of owning stocks versus owning cash, bonds or short exchange-traded funds (ETFs) during periods of contracting economic growth.
Stocks are valued on an estimate of future earnings times a multiple of those earnings.
Cyclical stocks get a lower multiple because their earnings are cyclical. Secular growth stocks get a higher multiple because their future earnings are growth at a multiple to overall GDP growth.
Jon Lewis
AIR Ready to Take Off After Earnings
Aerospace supplier and service provider AAR Corp. (AIR) looks poised for a major move higher after it announces earnings.
Should You Shop for Calls or Puts on Whole Foods?
Whole Foods Markets Inc. (WFMI) has a habit of making big moves after reporting earnings, and traders who take the right side of this bet could be handsomely rewarded.
Take a Gamble on This Earnings Play
Casinos have been a hot item lately, and gaming supply company Shuffle Master (SHFL) could pack a strong earnings punch next week.
Next week should be a slow trading week, which means that stock prices could be more volatile than usual, especially if a company surprises or disappoints with earnings -- I have one of each for you.
Buy Calls on This Earnings Loser
This stock missed earnings estimates in three of the past four quarters, yet made double-digit gains in the weeks following. And it's about to announce earnings again.
