• 09 Apr
    Sunday Edition: How Bad IS the Worst-Case Scenario?

    Sunday Edition: How Bad IS the Worst-Case Scenario?

    If there is any single issue that generates more uncertainty, anxiety, and questions than any other about the Rebel Income system, I think it may be the perceived downside that comes with a stock assignment. Some of that uncertainty is a good thing, because it is true that selling put options (considered a naked transaction by brokers) without an understanding of the potential consequences leaves you more exposed to risk. However, I also believe that most of the fear that people tend to have about put selling is misinformed. More →

  • 07 Apr
    Emerging Markets Are Still A Buy Even At Two-Year Highs

    Emerging Markets Are Still A Buy Even At Two-Year Highs

    • The International Monetary Fund revised economic growth projections for emerging markets and developing economies up to 4.5% for 2017 and 4.8% for 2018.
    • Not all emerging markets are cheap, therefore the best strategy is to invest in individual stocks.
    • Buying companies in growing economies at low price earnings ratios is what will make the difference for your portfolio in the next 10 years.

    Introduction

    Over the last year, you’ve probably read some of my articles where I’ve said that emerging markets are the best investment class as the demographics are better and stocks are much cheaper in relation to what the S&P 500 offers. As markets can’t overlook such positive characteristics for very long, emerging markets are up more than 18% in the last 12 months. More →

  • 06 Apr
    Read This Before Investing In The Next “Cool” Company

    Read This Before Investing In The Next “Cool” Company

    • The investment thesis behind investing in cool businesses is based on stellar growth. As no business can grow forever, sentiment often changes and stock prices plunge.
    • We’ll discuss, Tesla, Nike, Lululemon, Whole Foods, Under Armour, GoPro, Fitbit, and Microsoft to find the best way to invest in such businesses, because many of them are great businesses.
    • In the end, it all boils down to earnings. If you’re a long-term investor, focus on the business and its long-term health.

    Introduction

    I’m a value investor and as one, I always try to invest with a margin of safety. However, sometimes I get carried away and invest in companies that don’t really meet my investing criteria.

    The last investing mistake I made—where I invested in something because it was a cool brand, my wife loved shopping there, and it was growing fast—that perfectly relates to the topic of this article, was Whole Foods Market (NASDAQ: WFM). More →

  • 05 Apr
    Healthcare Is The Only Sector Where Investing Now Isn’t That Bad Of An Idea

    Healthcare Is The Only Sector Where Investing Now Isn’t That Bad Of An Idea

    • Fundamentals and the long-term demographic trend show that the healthcare sector is undervalued.
    • As it’s a recession-proof sector, largely diversified investors should be overweight healthcare and seize the current halt in price growth.
    • We’ll discuss the top ten healthcare stocks and show that there is something for everybody to invest in: dividends, stability, low valuation, high valuation, growth, takeovers, etc.

    Introduction

    Yesterday’s article focused on how baby boomers will put downward pressure on stocks in the next 15 years. Today we’ll discuss a way to make money on the same trend. More →

  • 04 Apr
    Why The Baby Boomers Could Crash The Market

    Why The Baby Boomers Could Crash The Market

    • The first baby boomers retired in 2012, but there hasn’t been a significant impact on markets yet.
    • However, in the next two decades the trend isn’t that positive and a Federal Bank of San Francisco model shows the S&P 500 will be at 900 points in 2025.
    • Many factors might mitigate boomers retiring risks, including the timing of their retirement and cashing out, foreign investments, and immigration.

    Introduction

    In the 2000s, a strong bearish argument against stocks was that from 2012 onward, baby boomers will start retiring, increasing fund retrievals and pushing stocks down. The argument has faded in the last few years as the current bull market is beating all expectations, but it’s still a good idea to see how baby boomers retiring might influence future market trends. More →

  • 03 Apr
    Margin? Now? Really?

    Margin? Now? Really?

    • Margin levels are at record highs. History shows that this indicates high levels of greed and an inevitable bear market ahead.
    • It’s funny how when stocks are expensive, margin levels are high while when stocks are cheap, margin levels are minimal.
    • Leveraged investing should be only used when the earnings yield is above the interest rate. In such a situation, a personal bank loan is much better than investing on margin. If you can’t take a personal loan from your bank, forget investing on leverage as it pays more to pay off your credit card debt.

    Margin Levels Are At Record Highs

    It always baffles me when I see the level of greed in the investing community when the market is at all-time highs.

    A very small minority approaches investing from a risk reward perspective, and the rest approach it like a casino where they think they can beat the house. Further, a long bull market makes everyone think they’re so smart, while greed pushes them to bet more and more as losing seems impossible. More →

  • 02 Apr
    Sunday Edition: Should You Use Stop Losses?

    Sunday Edition: Should You Use Stop Losses?

    Occasionally I get emails from subscribers about my approach to stop losses on the stocks I hold in my portfolio. If you’ve subscribed to my Rebel Income, I expect that you’ve noticed I never write about stop losses on stocks I am assigned from my put selling trades. This isn’t a simple case of omission, but instead a deliberate piece of the income generation system I use. I don’t use stop losses on any stock I am assigned on purpose. More →

  • 31 Mar
    Don’t Give Up On Stock Picking. Do It The Right Way.

    Don’t Give Up On Stock Picking. Do It The Right Way.

    • Passively managed funds are extremely dangerous as their positive performance is self-reinforcing due to the huge positive net inflows.
    • But don’t jump to actively managed funds as, on aggregate, they will always underperform the market in the long term because they are the market.
    • The only solution is to invest like a business owner. You can do this by investing yourself or by finding an active manager who has the same principles.

    Introduction

    A recent Wall Street Journal article described how BlackRock (NYSE: BLK) is switching to robots from using humans to improve its stock picking for its actively managed funds. BLK’s reasoning is that its stock picking unit lagged in performance and has had many withdrawals that cut assets under management to $275 billion from $317 billion in the last three years despite the S&P 500 surging 27% in the same period. The hope is that robots will perform better at lower cost. More →

  • 30 Mar
    Looking For Dividend Yielders Abroad

    Looking For Dividend Yielders Abroad

    • The 1.92% dividend yield offered by the S&P 500 is ranked 32nd out of 39 countries.
    • It isn’t difficult to find blue chip companies globally that have dividend yields north of 4%.
    • Currency fluctuations should be a benefit if you respond in a smart way.

    Introduction

    Yesterday we discussed how high dividend yielders can easily turn into a trap because the dividends are unsustainable and depend on uncontrollable variables like commodity prices or interest rates.

    A global look will show us that there are good companies around the world that offer higher dividend yields for the same risk. These companies are found in countries with better demographics and higher economic growth, which should strengthen their local currencies and increase future dollar dividends. More →

  • 29 Mar
    Are High Dividend Yields Worth It?

    Are High Dividend Yields Worth It?

    • High dividend yielders are worth it if you know what you’re doing, i.e. you know the sector in detail and understand the macro environment. However in most cases, high yielders are traps with a high risk of permanent capital loss.
    • Less risk can be obtained by investing in dividend aristocrats. Most are fairly priced or overpriced, but some still pay nice dividends. The complete list is provided.
    • As always, I would look abroad for yield. The dollar is currently strong which makes such investments cheap. A currency reversal will give you higher yields in the future.

    Introduction

    Dividend investors have really enjoyed the last three decades as interest rates have been declining. Lower interest rates make stocks that pay stable dividends more attractive while also enabling management to use more leverage to increase those dividends.

    You can read more about what to expect from the dividend world here. However, low interest rates also push the price of stable dividend yielders into the sky making new investments less attractive. More →

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