A company that is well-known and that has been established over a number of years is considered a blue-chip stock. They have been through the boom times and recessions, giving investors confidence that they will remain a viable entity despite the economic climate. Blue-chips are usually less volatile than other stocks, as they have a steadier stream of predictable income and usually have extensive ownership by institutions; which can hold shares for a longer period of time than individual investors. Blue-chips also tend to be the market leaders in their respective sectors.
In the first quarter, we witnessed a market shift back to higher-beta technology, growth, and small-cap stocks as investors searched for higher potential profits. Yet while this investment strategy makes sense, you also need to make sure your portfolio is diversified across numerous sectors and stocks with varying market caps, including dividend-paying stocks. Dividend stocks may not have the upward explosiveness of smaller technology stocks or the large-cap momentum stocks like FaceBook, Inc. (NASDAQ/FB), Twitter, Inc. (NYSE/TWTR), and Netflix, Inc. (NASDAQ/NFLX); but you know the large-cap blue-chip dividend stocks found on the Dow Jones Industrial Average and S&P 500 offer ... Read More
When many investors think of blue chip stocks, a common name that pops up is McDonalds Corporation (NYSE/MCD). A blue chip stock is traditionally a well-established company generating stable corporate earnings and usually paying out an attractive dividend yield. McDonald’s certainly hits the bull’s-eye on these blue chip metrics, which is especially attractive in today’s low-interest-rates world with its forward dividend yield of approximately 3.3%. The real question to ask is what is McDonald’s potential for corporate earnings growth over the next few years? There are two underlying f ... Read More
China is dealing with an aging population. By 2030, the number of Chinese citizens 65 years or older is estimated to come in at a whopping 240 million, or about 18% of the current population. (Source: “China Population 2014,” World Population Review web site, October 19, 2014.) The rapid growth in this elderly demographic will clearly present issues for China’s health administrators and will, in the process, place a heavy burden on the country’s healthcare system. Some estimate spending on the country’s healthcare sector will accelerate from about $357 billion in 2011 to a whopping $1.0 trillion by ... Read More
One of the key tenets to success in the stock market, as I have learned from more than 20 years of trading, is the need to make sure you have a system in place to actively monitor your outstanding positions. Any major changes to the underlying fundamentals are critical. Unless you invest in mutual funds or are happy with a buy-and-hold strategy, ignoring your positions is not prudent and will likely result in damage to your portfolio—and maybe even your quality of life. In early October, when the Russell 2000 and the NASDAQ were down 14% and 100%, respectively, the thing to do was not to rush to the exits and liquidate everything. Making rash ... Read More
Generally speaking, my go-to trading strategy involves looking for a contrarian investment opportunity, a stock that is out of favor with the stock market but may be deserving of a chance.
I mean, why always buy a stock when everyone else wants to? It’s akin to buying something that is priced higher because it’s popular, but the market demand is greater than the supply.
In contrarian investing, you wait for the supply to exceed d ... Read More