Daily Gains Letter

buying opportunities

Two Ways to Profit from the Fed’s Loose Lips

By for Daily Gains Letter | Aug 9, 2013


Are investors getting too predictable? When it comes to anything the Federal Reserve says, utters, or even hints at, it certainly seems so. And for astute investors, that’s not such a bad thing.

With the Federal Reserve’s stock market–fuelling $85.0-billion-per-month quantitative easing policy on the line, investors are starting to get nervous.

During the first five months of the year, the S&P 500 climbed a solid 17%; in fact, the S&P hit an all-time intra-day high of 1,687.18 on May 22. Sensing the markets were responding favorably to its divine intervention, the Federal Reserve hinted that same day it might scale back its quantitative easing policy.

Fear that the American economy would have to stand on its own sent the markets reeling and made quick work of the bull market. Over the next four weeks, the S&P 500 lost 6.5% of its value and erased the gains of the previous three months.

Realizing market returns weren’t quite in sync with the American economy, the Federal Reserve qualified its previous statements, saying it might not, in fact, taper off its quantitative easing—and even if it did, that wouldn’t necessarily lead to higher interest rates. Investors cheered, and in July, the S&P 500 rebounded, climbing 6.2%.

On August 2, market exuberance saw the S&P 500 once again hit a new intra-day high (1,709.67). But it was to be short lived: stocks started a multi-day slide on Tuesday, August 6, after a pair of Federal Reserve officials hinted the central bank’s bond-buying program might end sooner than expected.

On Monday, Dennis Lockhart, president of the Federal Reserve Bank of Atlanta, said that a … Read More

How to Profit from America’s Preference for Alcohol

By for Daily Gains Letter | Aug 8, 2013

America’s Preference for AlcoholSome investment strategies have a short buying opportunity, while others are seasonal, cultural, or even considered recession-proof. On the other hand, some investors avoid certain buying opportunities because they disagree with them ethically.

Love it or hate it, from an investing standpoint, alcohol represents a strong buying opportunity for growth- and income-starved investors. But because of American’s changing tastes, some alcoholic beverage companies have better long-term growth potential than others—and this could present investors with a great buying opportunity.

Beer, the thirst-quenching powerhouse of the 1990s, is losing its grip on America’s youngest drinkers to wine. In 1992, almost half (47%) of all Americans said they prefer to drink beer, while only 27% said wine and 21% drank liquor. (Source: Jones, J.M., “U.S. Drinkers Divide Between Beer and Wine as Favorite,” Gallup.com, August 1, 2013.)

A lot can happen in two decades. Beer’s lead over wine has slipped dramatically, and the two are running neck and neck for supremacy; beer is now the alcoholic beverage of choice for just 36% of American drinkers, while wine has soared to 35% (liquor is up slightly at 23%).

America’s Preference for Alcohol

What’s behind the radical change in taste? In the 1990s, 71% of adults under 30 years of age said they drank beer most often; today, just 41% say they do. Interestingly, both whites and nonwhites have also turned their backs on beer, which is down nine points to 38% and 19 points to 34%, respectively. The two fastest-growing segments have instead developed a taste for wine and liquor.

That doesn’t mean Americans have completely turned their backs on beer—just certain kinds. Beer took a hit … Read More