Alan GulaAlan Gula

, Chief Income Analyst


Why Popular Investments Are Usually Wrong

Oscar Wilde, the 19th century poet and playwright, once said: “Everything popular is wrong.” The Irish wordsmith wasn’t referring to the financial markets, but he may as well have been. That’s because investors should be very wary of the popular stocks, sectors, and exchange-traded funds (ETFs) du jour. While it’s true that momentum can persist, more often...

Should We Fear a Momentum Crash?

Imagine if you could simply buy the stocks that have performed the best over the past several months and outperform the S&P 500 going forward. It seems too good (and simple) to be true. However, momentum strategies have undeniably outperformed over time. Stocks seemingly have mass and display inertia – like physical bodies. To paraphrase...

Closed-End Fund Craziness

Last week, Barack Obama became the first U.S. president to visit Cuba in nearly nine decades. As you may recall, President Obama announced that the United States would re-establish diplomatic relations with Cuba in December of 2014. Of course, investors immediately began searching for ways to profit from the re-opening of trade and travel with...

Oil Giant to Lose AAA Credit Rating

Standard & Poor’s rates the creditworthiness of roughly 1,300 publicly traded, U.S.-domiciled companies. And only three of these companies are rated “AAA” – the highest tier. The first two probably won’t come as a surprise. Microsoft Corp. (MSFT) and Johnson & Johnson (JNJ) have enormous streams of stable cash flows. And both of these companies...

Don’t Be Fooled by the Short Squeeze

On November 18, 2015, KaloBios Pharmaceuticals Inc. (KBIOQ) announced that Martin Shkreli and a consortium of investors had acquired more than 50% of its outstanding shares. The stock, which had closed at $2.07 that day, traded above $10 the day after the announcement. The next day, shares rose above $23 and closed at $18.45. The...

Real Yields on T-Notes Still Attractive

Last month, Japan’s 10-year government bonds traded with a negative yield for the first time in history. Germany’s 10-year bonds are yielding 0.24%. And you thought we had it bad? By comparison, the 1.89% rate on 10-year U.S. Treasuries offers a smorgasbord of yield. However, in order to make a fair comparison, we have to...

New Trend-Following Fund Limits Your Downside

Paul Tudor Jones (PTJ), a legendary trader and hedge fund manager, essentially predicted the stock market crash of 1987. In a PBS documentary, PTJ asserted, “There will be some type of a decline, without a question, in the next 10 to 20 months… it will be earth shaking… it will create headlines that will dwarf...

Financial Sector Sickness

The S&P 500 was last near its all-time highs in mid-July 2015. Since then, what do you think has been the worst-performing sector of the U.S. stock market? You may have guessed the energy sector, which has continued to be pummeled due to the collapse in the price of crude oil. However, the financials have...

Negative (Interest Rate) Reinforcement

The message coming from central bankers is clear: The beatings will continue until morale improves. If the global equity markets don’t perform well, negative interest rate coercion will be meted out. Last week, Sweden’s central bank, the Riksbank, cut its key interest rate from -0.35% to -0.5%. Two weeks ago, the Bank of Japan “unexpectedly”...

Stock Market Valuation in Perspective

In 2015, the stock market’s valuation was widely downplayed. But why would market watchers do such a thing with the U.S. stock market trading at its richest valuation in more than a decade? Well, in order to recommend an overweight position in U.S. equities or an underweight position in fixed income, pundits almost had to...