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4 Lessons From Buffett That Every Investor Needs To Know

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By: Eric Winter of Street Authority

Behind each trade or investment, they are there... lurking, waiting to reveal themselves during a moment of weakness.

They are the four fears of investing.

I learned about these early into my trading career, and I've been a victim of each one over time. All drama aside, they affect every investor or trader who actively manages his or her own money.

In no particular order, the four fears are as follows:

1. Fear Of Loss
2. Fear Of Missing Out
3. Fear Of Letting A Profit Turn Into A Loss
4. Fear Of Being Wrong

Despite their prevalence, there are fortunately many methods to help conquer each of these fears. One of these tools comes from the long career and immortalized wisdom of the Oracle of Omaha himself.

While I can't be 100% sure what Warren Buffett would say in regard to each of these problems, we can use his bank of interview quotes and newsletter excerpts to infer what the billionaire would say about understanding and conquering each problem. Continue reading "4 Lessons From Buffett That Every Investor Needs To Know" →

Dividend Investors Rejoice: Falling Markets Mean Rising Yields

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By: David Sterman of Street Authority

In the early stages of the bull market, investors flocked to companies with steady and growing dividends. Yet, since the market began to think about an eventual rise in interest rates back in May 2013, this asset class has lost a bit of luster.

The concerns were quite logical: A steady rise in fixed-income yields naturally reduces the appeal of relatively riskier stocks.

But the emerging economic crisis in Europe changes everything. It's increasingly apparent that European economic troubles are here to stay for quite some time, which is likely to keep a lid on global interest rates. It's a bit of a goldilocks scenario for the U.S. economy, as low rates will help our economic recovery to expand without a rate rise headwind.

You would suspect that the pullback in interest rates would help provide support to dividend-paying stocks, but many of them haven't been able to escape the recent market rout. If you've been tracking divided payers but found their dividend yields to be too skimpy, you're in luck. The market slump pushed many 2% yielders into the 3% range, many 3% yielders into the 4% range, etc. In the context of falling fixed income yields, such dividend yields are now comparatively appealing again. Continue reading "Dividend Investors Rejoice: Falling Markets Mean Rising Yields" →

The Winners And Losers Of The Perfect Storm Hitting Oil Prices

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By: David Sterman of Street Authority

When it comes to commodities, you'll usually find a set of countervailing forces that keep prices at an equilibrium. Yet when it comes to oil, all of the factors behind price swings are heading in the same direction.  As oil prices head lower yet, investors will feel both pain and gain -- depending on the make-up of their portfolios.

A Perfect Storm

For much of the past year, a barrel of West Texas Intermediate Crude fetched around $100 a barrel on the spot market. Yet since late July, a series of factors have conspired to push prices lower:

-- A rally in the dollar, which tends to push all commodity prices lower.

-- A further slowing in the European, Japanese and Chinese economies, which crimps demand.

-- A surge in output in Libya to 800,000 barrels a day, up from 240,000 barrels a day in June amid civil war skirmishes near key oil installations.

-- An oil production surge in Russia, which is back at peak post-Soviet era levels.

-- A rapidly rising output in Kurdistan as new key oil installations come on line.

-- OPEC's recent inability to curtail production as much as the market had hoped, leading to talk that this cartel may be weakening as market share becomes more important than pricing discipline.

Of course, the elephant in the room is the United States, which is single-handedly disrupting the global supply and demand trends on a massive scale. U.S. oil production has already surged from five million barrels a day in 2008 to 8.5 million barrels a day in August 2014, according to the Energy Information Administration. The more we produce, the less oil we import. Analysts at Citigroup note that oil imports are now nine million barrels per day lower than they were in 2007. It’s important to note that some of the reduction is due to a drop in consumption as we now drive more fuel-efficient cars. Continue reading "The Winners And Losers Of The Perfect Storm Hitting Oil Prices" →

4 Variables That Could Affect Your Portfolio This Earnings Season

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By: David Sterman of Street Authority

Over the past few years, a predictable trend has dominated earnings season. Analysts lower their profit forecasts in the weeks and months ahead of quarterly results, and then companies manage to slightly exceed the lowered set of expectations. It's happening again.

According to FactSet Research, on an aggregate basis, analysts lowered Q3 profit forecast by 4.2%, slightly above the typical 2.7% downward revision of the prior 20 quarters. In theory, lowering the bar further should boost the chances that companies manage to exceed current consensus forecasts.

But the typical "cut and beat" game may not be the key theme this time around. As third quarter earnings season gets underway later this week (as Alcoa (NYSE: AA) weighs in on Wednesday, October 8), a range of cross-currents promise to make this one of the more unpredictable earnings seasons in quite some time. Both positive and negative factors are likely to keep analysts and investors on their toes. This is not time to take a casual approach to earnings season. After rising 6% in the first six months of 2013, the SP 500 rose less than 1% in the third quarter.

Here are four key themes you need to monitor to help get a sense if the SP 500 can resume its upward trajectory in the fourth quarter: Continue reading "4 Variables That Could Affect Your Portfolio This Earnings Season" →

Catalyst Check: Natural Resources Watchlist at Three Months

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The Gold Report: Joe, some of your picks from the Natural Resources Watch list have performed quite well. Do you want to give us some updates?

Joe Mazumdar: Junior mining sector equities in the gold space, as proxied for by the Market Vectors Junior Gold Miners ETF (GDXJ:NYSE.MKT), have outperformed gold since the June Cambridge House conference. The inter-period high for gold was $1,3351,340/ounce ($1,3351.340/oz), about a 7% return. Gold is down about 3% since the conference, on the back of a strong U.S. dollar.

The benchmark Market Vectors Junior Gold Miners ETF experienced an inter-period high of about $45/share, generating a 30%+ return since the conference. But it is currently flat again. On both metrics, the ETF has outperformed the gold price. Our selections averaged an inter-period high of 50%, which included under-performers (+1826%) and some significant outperformers (+70115%). Currently, the average return for our selection since the conference is a more modest 1415%. [NOTE: Figures cited were current 9/30/14.]

TGR: During that panel discussion, you called explorers a lottery ticket and Cayden Resources Inc. (CYD:TSX.V; CDKNF:OTCQX) was a lottery ticket that paid off. What was your other "lottery ticket" pick? Continue reading "Catalyst Check: Natural Resources Watchlist at Three Months" →