About Stocks: Picking Stocks with Competitive Advantage
 | from Ken Little
Summer is usually a choppy season for the market, but this year looks to be especially rocky. With record oil prices, a credit crisis that won't find a bottom and a presidential nomination process that may never end, uncertainty is blooming. The market hates uncertainty. None of the big problems (and I didn't list them all) will be resolved over the summer. What's an investor to do? Pay attention, but don't be chased into selling at the bottom of the market. Insiders (corporate executives) are beginning to buy their own stock, which often precedes a rebound. Not a perfect sign, but hopeful.
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In the Spotlight |
Picking Stocks with Competitive Advantage
Picking great stocks is really about picking great companies if you are investing for the long term. The question every long-term investor struggles with is how do you know a company is going to be a good long-term investment?
| | What are Traits of a Great Stock?
Are we at the bottom yet? No one knows for sure. But if you believe in the ultimate strength of the U.S. economy, now would be a good time to look for bargains. It will be the sector leaders that benefit from the initial upturn. Buying great companies at a good price is always a good strategy. Look for industry leaders that have superior market position as well as solid financial fundamentals. Here are three important characteristics you should consider when looking for great stocks.
| Time Running Out on CEO Compensation Excesses?
With the stock market in the can, the economy in sad shape, and people losing homes and jobs at an alarming rate, it is disturbing to read another report about CEO over-compensation. The New York Times reported recently on the growing problem of what many call excessive compensation for CEOs of the top companies. The argument has been that it is very competitive and companies must pay top dollar to hire and retain talented leaders. However, as the Times pointed out, the CEOs of 10 financial services companies pocketed $320 million in compensation last year while their banks reported mortgage-related losses of $55 billion. I could lose $55 billion for a lot less than $320 million in compensation (I'd do it for $32 million). When will stockholders realize that the lap-dog board of directors and their CEO buddies are taking them for an expensive ride?
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