big-cap stocks
Small-Caps with the Biggest Dividends
By George Leong for Daily Gains Letter | Feb 13, 2014
At the beginning of January, I was optimistic that 2014 would deliver some good results to the stock market. I suggested that small-cap stocks would also continue to return profits to investors after a wonderful 2013 as the economy continued to show progress.
But after a disastrous January, in which the small-cap Russell 2000 attracted the most selling and was down more than nine percent from its 2013 record-high, concerns surfaced.
At this stage last year, small-cap stocks were blossoming with the Russell 2000 up more than eight percent by February.
Now there are concerns that small-cap stocks will face a rough ride this year. My view is that I would be inclined to buy this group on market weakness, as I still sense some of the top gains are yet to emerge from small-cap stocks; albeit, you need to be more selective when investing than you may have been in 2013.
In my view, continued economic renewal will drive small-cap stocks higher, as these companies tend to be able to react quicker to a changing economy.
We are already seeing some downside buying in small-cap stocks, as the Russell 2000 has narrowed its loss to one percent in February and is hoping for a return to positive territory.
The thing to remember is that while small-cap stocks tend to decline at a faster rate than the broader market, they also tend to rise faster when the market rallies.
The chart of the Russell 2000 below shows the downside break below the upward trendline that has been in place for some time. We saw some support and a subsequent rally. … Read More
As Apple Moves into China, Market Underestimates the Icon’s Next Potential Growth
By Sasha Cekerevac for Daily Gains Letter | Jan 17, 2014
When it comes to big-cap stocks, very few are larger than Apple Inc. (NASDAQ/AAPL).
But there’s one question many investors may be asking: is there an investment opportunity in Apple’s stock at current levels? I believe there may be, even after a strong move up since hitting a 52-week low in April at $385.10.
You have to be careful when looking at big-cap stocks and whether or not there is a strong investment opportunity going forward. Just because a stock has moved up over the past year, that doesn’t mean it’s necessarily overvalued.
There is one key question that you must ask yourself as an investor: can the big-cap stocks you’re considering continue growing their corporate earnings?
At the end of the day, an investment opportunity will only pay off if corporate earnings are generated in the future. I believe that Apple is still a great value at current valuations because the company will continue to drive corporate earnings higher.
Naturally, as with all big-cap stocks, the law of large numbers comes into play. Obviously, a company that is small can grow at a much faster rate than big-cap stocks such as Apple, which has a market cap of just over $500 billion.
However, don’t discount the ability of Apple to utilize its skills at innovation and marketing in generating corporate earnings. Apple, too, sees an investment opportunity in diversifying its customer base and introducing new products.
The big news recently has been the move by Apple into China.
Apple has signed a deal with China Mobile Limited (NYSE/CHL), which has approximately 760 million subscribers. Following the announcement of the … Read More
How to Build a Successful Investment Strategy for the New Year
By George Leong for Daily Gains Letter | Dec 23, 2013
Another year is soon to draw to an end. In my final commentary prior to the holiday break, I’m going to talk about something that is often not considered by investors when formulating their investment strategy.
But first, let me talk about my dad. He’s in his early 80s and is the most risk-averse investor I have met. He will invest in bonds, regardless of how they are doing. In high-yielding or low-yielding periods (which we are currently in), he will invest in the safety of bonds and squeeze out any last drop of interest. Yet while his investment strategy has always been status quo, this is not the way it should be. Let me explain.
Your asset portfolio should combine the right blend of equities and bonds as an investment strategy. But you need to be careful in your allocation. Too much in equities, and you’re vulnerable to downside risk; albeit, stacking your capital in stocks over the past four years would’ve paid off. Concurrently, if you’re like my dad and hold too much in bonds, then you miss out on some strong gains.
What you need to do for a well-planned investment strategy is consider the key variables, such as asset allocation, diversification, and small-cap stocks, to add potential return.
In my view, you need to be aware of exactly how much you have slotted in equities and bonds. This is also known as asset allocation, which is key to any prudent investment strategy.
By asset allocation, I am referring to how your investable assets are divided up amongst the three major asset classes: cash, bonds, and equities…. Read More
