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Month: October 2017

Is It Time to Sell GM?

GM was the biggest corporation in the world back in its heyday. And then, decades later, it went into bankruptcy during the first days of the Great Recession. GM is back on its feet but what is its future? We asked is GM a good investment in an article 7 years ago. Despite expectations of an opening stock price for the GM IPO of $33 the stock opened at nearly $35.50. The question, “is GM a good investment,” seemed to be answered with a resounding, “yes.” The stock rose to nearly $36 within minutes until profit taking took the new General Motors stock down to below $35 by 10 am EST. The stock recovered to near $36 again before starting a steady decline throughout the day. So much for the first day after GM stock returned from the dead. For the long term investor the question is not such much the hoopla of first day IPO sales and day traders taking profits. The question had to do with making a profit and steadily increasing intrinsic stock value for GM investors. In the days of GM dominance this had to do with making an attractive and reliable car at a time when Detroit could expect to sell more cars each and every year. Now with electric cars, self-driving cars and fewer cars in future the question is who can make...

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How Do Events in Japan Help or Hurt Your Investments?

In the investing world it helps to pay attention to what is going on throughout the world. When Japan was the economic powerhouse of the 1980s they were buying up properties in the USA and their stock market threatened to eclipse that of the USA. Even after the economic collapse caused by hidden debt and subsequent deflation Japan´s currency has remained a safe haven and events in Japan still affect Asia, Europe and North America. How do events in Japan help or hurt your investments today? Reuters provides a small example after a victory of Prime Minister Abe´s ruling party in Japan. The Abe approach to the Japanese economy is to stimulate it with an inflationary policies. This is referred to as Abenomics and a victory for Abenomics lifts world stocks as well as the dollar. Japanese Prime Minister Shinzo Abe’s election victory lifted world stocks and the dollar on Monday, relegating concerns about Spain’s escalating political crisis to little more than a blip on the market radar. Abe’s emphatic win, which heralds a continuation of Japan’s hyper-easy monetary policy, kept risk-on bets in play after fresh optimism about tax cuts in the United States had pushed Wall Street to a new record on Friday. U.S. stock index futures pointed to a higher open for Wall Street, tracking gains for other major stock markets. The spillover from the Abe...

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Are There Any Sleepers You Should Invest In?

The stock market just keeps going up. In the depths of the Great Recession you could have bought Amazon.com for $37 a share and now it trades close to $1,000. Amazon.com also has a P/E ratio of 250. In fact the tech darlings that are still driving the rally are all overpriced by historic standards. Are there any bargains left? Are there any sleepers you should invest in? CNBC writes about 5 stocks that have gone nowhere in 2017 but are stocks that may be worth buying. In the midst of a raging bull market, some stocks in the S&P 500 have seen virtually no gains or losses this year. But some of them could be worth buying for a breakout, according to some market participants. Goldman Sachs, Quest Diagnostics, Mylan, Concho Resources and Fastenal have all been trading within 0.2 percent of where they began the year. Max Wolff, chief economist at Disruptive Technology Advisers, says two of them stick out to him the most. The first of these is big bank Goldman Sachs, which actually fell following its earnings report on Tuesday. The underlying theme for each of these stocks is the reemergence of inflation as an economic factor and revival of the global economy. Where Should You Invest? If you think that the US stock rally has nearly run its course you can search for overlooked...

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How Long Will the Economic Sweet Spot Last?

The stock market seems to be overpriced but every times earnings come in they are positive and stocks keep going up. So long as the economy keeps chugging along it supports earnings but how long will the economic sweet spot last? CNBC writes that the economy may soon lose its power to boost stocks. Then what? Closely followed strategist Jim Paulsen told CNBC on Monday he’s worried that economic data could stop supporting the stock market’s bull run. “The economy has been doing so good for so long now that even if it continues to do well, it won’t any longer be a surprise,” said Paulsen, chief investment strategist at Leuthold Group. “Economic surprises I think are going to get as high as they’re going to get,” Paulsen told “Squawk Box.” “We may see toward year end and the first quarter next year a pause in this market.” Paulson says there is a wall of worry about the market being overpriced. The economy does not really need to falter to take stocks down. It could simply stop providing surprises. And if something in the economy happens to concern investors there are probably a lot of them ready to pull the plug on their portfolios after making nice profits on the years-long run up. Where Is the Economy Going? How long will the current level of economic growth last? Is...

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Should You Be Investing in Defense Contractors?

Every day seems to bring more bad news about possible conflict on the Korean Peninsula. As the dictator of North Korea and the American President trade insults and threats should you be investing in defense contractors? CNBC writes that the specter of war has driven defense stocks up. On Oct. 1, President Donald Trump once again took to Twitter to attack Kim Jong-un, saying that negotiating with the North Korean chairman is a waste of time. While social media mudslinging may not be the best way to deal with a hostile leader, there’s at least one group who may not mind Trump’s Twitter threats: defense industry investors. Year-to-date, the S&P 500 Aerospace and Defense Industry subsector index is up 30 percent, compared to 12.9 percent for the S&P 500. Since July 3, when North Korea fired its first intercontinental ballistic missile and Trump said in a tweet, “Does this guy have anything better to do with his life?” the index has climbed by 14.3 percent. While most people likely don’t want to go to war with North Korea, the increasingly heated rhetoric is helping many defense-industry stocks reach record highs. In order for defense stocks to go up and stay up there needs to be an increase in defense spending, not just rocket launches, nuclear bomb testing and twitter threats. Should you be investing in defense contractors or has...

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