This Day On The Street
Continue to site
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here

Sound Bites Those Who Heed Them

This example reinforces the idea that thorough fundamental research should be part of every investment decision. Worried about the economy? Do some research before you avoid cheap cyclicals. Think energy prices are heading down? Before you short Exxon Mobil (XOM), know what oil price is embedded currently in the stock. Think bond prices have to collapse? Understand the supply/demand dynamics for long-term treasuries before you trade the iShares Lehman 20-Year-Plus Treasury Bond Fund (TLT).

Real wealth creation results from long-term investing, not sound-bite daytrading. And investment requires analysis, patience and conviction. Fundamental research is frequently complex and nuanced. Things are not always what they seem. At times they are, but fundamental events, both good and bad, could be already priced into a stock. Of course, at other times, fundamental conditions will change and so must your investment decisions.

Earning superior investment returns is not easy (unless, of course, you are flipping houses these days). The stock market is a complex beast. Shares represent ownership in a corporation, not ticker symbols in a financial video game. Businesses and industries are dynamic entities operating in a fluid economic and political environment. Investing should be challenging because its subject matter is. Successfully done, however, it is financially rewarding and a ton of fun!

So find a sound investment discipline that works for you and stick to it. I like to purchase undervalued stocks. Others prefer to buy great growth companies. There is more than one way to skin a cat but you always -- and I mean always -- must heed valuations. The easiest way to get skinned yourself is to flail around chasing sound bite after sound bite. If at the bottom of the next recession, you buy an expensive food stock because "you gotta eat," then my investor friend, you deserve to be lunch.

Eating What You Kill

As for some of my current favorite dishes, St. Paul Travelers (STA) appears quite appealing. This large-cap value stock trades for 8 times profit and yields abut 2.5%. The major integration issues from the merger appear to be behind the company and I expect premium growth to resume in the second half. Ignore the "insurance cycle is peaking" sound bite for this very cheap, high-quality insurance franchise.
2 of 3

Check Out Our Best Services for Investors

Action Alerts PLUS

Portfolio Manager Jim Cramer and Director of Research Jack Mohr reveal their investment tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
Quant Ratings

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
Stocks Under $10

David Peltier uncovers low dollar stocks with serious upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
14-Days Free
Only $9.95
14-Days Free
Dividend Stock Advisor

David Peltier identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Updates with exact steps to take - BUY, HOLD, SELL
Trifecta Stocks

Every recommendation goes through 3 layers of intense scrutiny—quantitative, fundamental and technical analysis—to maximize profit potential and minimize risk.

Product Features:
  • Model Portfolio
  • Intra Day Trade alerts
  • Access to Quant Ratings
Real Money

More than 30 investing pros with skin in the game give you actionable insight and investment ideas.

Product Features:
  • Access to Jim Cramer's daily blog
  • Intraday commentary and news
  • Real-time trading forums
Only $49.95
14-Days Free
14-Days Free
FB $118.06 0.00%
GOOG $695.70 0.00%
TSLA $222.56 0.00%
YHOO $36.00 0.00%
AAPL $94.19 0.00%


Chart of I:DJI
DOW 17,651.26 -99.65 -0.56%
S&P 500 2,051.12 -12.25 -0.59%
NASDAQ 4,725.6390 -37.5850 -0.79%

Free Reports

Top Rated Stocks Top Rated Funds Top Rated ETFs