Daily Gains Letter

Investment Strategy

An investment strategy is a protocol and methodology for allocating funds of a portfolio. This strategy is based on an investor’s risk profile. The more risk the investor is willing to take, the greater the potential returns, but also the higher risk of a loss in capital. There is a whole universe of investment strategies, from the least risky of buying treasury bills and government bonds with high credit ratings, to the more risky of buying stocks based on fundamental analysis, technical analysis or simply buying and holding for the long term. Some investors also look to stocks with dividends that return a yield over time, to mitigate some of the risks of the stock market.


Asset Allocation Key to Successful Investing: Guidelines for Investing as You Grow Older



Asset Allocation Key to Successful InvestingThe 460-point intraday swing in the DOW on Tuesday could be reflective of what to expect this year. While I was sitting at my trading desk, I was thinking how the volatile swings in the stock market would likely scare the average investor. Recently, my dad called and asked me what I thought about the state of the stock market. My immediate answer was that it really shouldn’t matter that much to him at this juncture in his life. Now, I’m not saying my dad shouldn’t worry, but he should be largely invested in lower-risk income-producing investment vehicles, such as the banks and utilities, along with higher-yielding bonds anyway. And that leads me to an im ... Read More



Three Investment Strategies for a Volatile 2015 Stock Market



Investment Strategies for a Volatile Stock MarketThe start to the New Year is probably not great if you are sensitive to stock market volatility. The past week was relatively what you can expect for this year—a weak and volatile stock market. (Fortunately, there are three investment strategies investors can consider to profit this year; you’ll find them below.) The DOW had three triple-digit losses, cumulating in a decline of 661 points that was partially offset by two triple-digit gains of 525 points last Wednesday and Thursday. When the markets opened this week on Monday morning, the DOW was down 150 points. If you don’t like stock market volatility, then the current trading action is not f ... Read More



Strong Jobs Market to Benefit Housing and Retail? How to Profit



Strong Jobs Market to Benefit Housing and RetailWe received great news last week after the reporting of strong jobs numbers in December that capped off a good year in which the country created more than 2.5 million jobs. In December, 252,000 new jobs were created, driving the unemployment rate down to a pre-recession low of 5.6%. The numbers for new jobs created in October and November were also revised higher. With gross domestic product (GDP) growth at an annualized five percent in the third quarter, there is optimism jobs will continue to be added at the current rate for this year. And as the jobs market improves, the positive action will translate into added confidence for workers and spending. In ... Read More



Healthcare Tops as 4Q14 Earnings Struggle



Healthcare Sector the Only Area of Attractive Growth Among Bleak 4Q14 EarningsIt’s that time again; another quarter has come to an end. The fourth-quarter earnings season numbers will officially start flooding in for the S&P 500 on Monday, with Alcoa Inc. (NYSE/AA) the first to report. However, the stock market is currently in a funk, beginning 2015 with weakening oil prices and continued concerns over the global economy. The problem: as the stock market searches for a reason to buy, several segments are suffering from the selling pressure. There is, however, one segment expected to look up heading into 1Q15 and that’s the healthcare sector. But more ... Read More



Put Options and Futures: Two Strategies to Profit as Oil Drops Below $50 a Barrel



Oil Prices Dip Dangerously Low Here’s How to ProfitThe energy sector was dismal in 2014 and it is looking like we could see more of the same for this year. If you are long on oil, you may want to read this, as oil prices could move lower and there are two strategies you can consider to profit from their drop: put options and futures. Currently, we have the excessive supply overriding the declining demand as the global economy struggles along. China just announced its gross domestic product (GDP) growth would fall to seven percent this year; however, I think the real figure is likely already below seven percent, as there’s some fudging of the numbers. The eurozone could dwindle into another rec ... Read More



China’s Rising: Best Investment Vehicle to Make Money From It



Chinas RisingWhile China is struggling with its gross domestic product (GDP) growth metrics, the country’s main stock market—the Shanghai Composite Index (SCI)—is easily outperforming the S&P 500 and NASDAQ. China may be stalling, but the Chinese economy is still growing at a rate of more than seven percent—far better than the rest of the G8 countries. Now, of course, that’s if you believe the GDP reading that is put forth by the Chinese government; as with most data coming from China, it is up for debate whether it is real or fictitious. But going forward on the premise that the GDP reading is accurate, you can understand that the potential for investment growth is significant. The SCI is up 37% this year, easily outperformi ... Read More



Gold Prices: Where They’re Headed and How to Profit



Gold PricesAs far as investment and trading opportunities go, gold is currently the stock market’s poor cousin. No one really craves the yellow ore at this time. The reality is that unless you are looking for jewelry, there’s really no reason to buy the metal right now. Back in September, when I last discussed the prospects for this precious metal, I wrote that “in the absence of further turmoil in Ukraine, gold prices could deteriorate to below $1,200, possibly even $1,180.” The precious metal did bounce to the $1,225 level recently on concerns surrounding ISIS and the economic situations in both Europe and China. Since then, it has also collapsed to below $1, ... Read More



How to Generate Premium Income in a Stalling Stock Market



Premium Income in a Stalling Stock MarketThe S&P 500 recently traded at a record-high, just before tensions in the Ukraine erupted and the global stock market declined as fear of an escalation and war intensified. While the charts continue to show the stock market wanting to move higher after excellent gains in February, I still sense the upside moves will be more difficult to come by compared to what we saw in 2013. Even at this point, the Dow Jones Industrial Average and the S&P 500 are still negative this year. If the stand-off between the Ukraine and Russia doesn’t escalate, I would expect the stock mar ... Read More



How to Prepare for the Stock Market Sell-Off I’ve Been Warning About



Stock MarketWell, that didn’t take long! Just a few weeks ago, I wrote an article stating that investors should begin to worry about the lofty level of the stock market. Since that time, the S&P 500 has dropped by more than five percent in less than two weeks. This market correction won’t be a surprise to my readers, as I have been suggesting investment strategies that can help prepare your portfolio for a large downswing in the market for some time now. When I wrote the article in late January, the S&P 500 was surging, even though the preliminary Thomson Reuters/University of Michigan index of consumer sentiment dropped month-over-mo ... Read More



Another Five Percent Down for the S&P 500, at Minimum?



S&P 500Though making money is important, that’s not the be-all and end-all behind smart investment strategies. Just think about the common phrase “a dollar saved is a dollar earned.” Success in trading and investing means you need to be aware of both the upside and downside risks, such as we are seeing now as the stock market moves lower. In general, investors should hold off on buying for now until we see some solid opportunities. Trading volume is rising on the down days, which confirms the selling pressure. As well, the Dow Jones Industrial Average has declined for five straight sessions, losing nearly four percent in that time. A look at the chart of the Read More



Three Ways to Prevent Irrationality from Entering Your Portfolio



Three Ways to Prevent IrrationalityThere’s always something investors are worried about. Recently, we heard about the U.S. government reaching the debt limit, shutting down, and inching close to defaulting on its debt. Investors reacted, and the key stock indices started to slide lower due to concern over what could happen. Now, with a deal being struck to extend the debt ceiling and budget deadlines, those worries are over, meaning U.S. creditors will get their interest payments and the government will go on operating as usual. Thi ... Read More



The Basic Principle Smart Investors Shouldn’t Forget



050913_DL_zulfiqarOver the Labor Day weekend, I met up with my old friend, Mr. Speculator. As always, we had a debate about portfolio management. We had a long conversation about what really is the right way to manage your investments—and, for that matter, if there is any. Should investors invest 40% of their portfolio in bonds and 60% in stocks? Should it be the opposite? Or is there another possible combination? He said, “Moe, I am a firm believer in going for the fences every time for now, but do you really think I will continue to have the same approach in the long run?” (Turns out, there’s actually a ratio ... Read More



How to Protect Your Portfolio from Fluctuations and Profit from Rising Oil Prices



Protect Your Portfolio from Fluctuations and Profit from Rising Oil PricesNot too long ago, the per-barrel price of oil was hovering close to $85.00. Now, a few months later, it trades above $107.00; this is an increase of roughly 25% in a fairly short period of time. One may ask why this matters, and what it means for the overall U.S. economy. At the most basic level, the price of oil has a very deep impact on consumer spending, which makes up 70% of the gross domestic product (GDP) of the U.S. economy. It impacts consumers in ... Read More