Investment Contrarians

Stock Market

Lombardi Publishing was originally established in 1986 as an investment newsletter publisher offering stock market analysis to its readers. Today, we publish 26 paid-for investment letters most of which provide stock market direction and individual stock picking analysis. Profit Confidential is our daily free e-letter that goes to all our Lombardi Financial customers and to any investor who wishes to opt-in in to receive it. Written by Lombardi Financial editors who have been offering stock market guidance for year to Lombardi customers, Profit Confidential provides a macro-picture on where the stock market is headed, what sectors are hot, what sectors to avoid. Our two most recent and popular calls were telling investors to bail from stocks in 2007 and telling investors to jump back into the stock market in March of 2009.


Did You Give Thanks this Weekend for the Fed’s Easy Money Policy?

By for Investment Contrarians | Aug 6, 2014

021213_IC_leongStock Market Crash August 2014.

Reflecting on this past Thanksgiving weekend, there was a lot to be thankful for, especially if you have been long in the stock market for the past four years. Now is a time for reflection.

The advance in the stock market has been stellar following the bottom in March 2009. The S&P 500 is up 171% since March 6, 2009 for a four-year annualized gain of about 38%.

In Japan, the Nikkei 225 is at a six-year high and over in Germany, the benchmark DAX is also at a record high.

However, the records in the stock markets are falling, not just in good old America, but worldwide. Of course, there are the exceptions, such as China, which I still consider to be undervalued and worth a look for investors searching for growth in foreign stock markets. In China, you can play almost anything due to the country’s insatiable appetite for goods and services. Some of the top areas for growth in China are the technology, health care, travel, and financial services sectors.

Yet while all of the stock market records are being set, I wonder if this is simply the new reality for stocks, or are we just setting ourselves up for a massive hangover when stocks fall? stock market crash 2014.

The Russell 2000, for instance, is a play on the economy. The idea is that small companies tend to fare better when the economy recovers, as these companies tend to be more flexible. The index is up over 35% this year and more than 40% year-to-date. That’s a great advance, but the … Read More


Landmark Ruling in Mexico a Boon for These U.S. Oil Stocks?

By for Investment Contrarians | Dec 11, 2013

U.S. Oil StocksIn 1938, Mexico nationalized its oil industry, taking over all aspects from production to final distribution. This ban on ownership by foreign companies continues today; however, changes are underway.

Under the leadership of Mexico’s new president, there is a growing desire and need for the knowledge and technical skills developed by foreign companies, many of which are U.S.-based, to stem the decline in oil production and revive the industry in that country.

I think this will be a tremendous investment opportunity for oil stocks going forward. Mexico still has a tremendous amount of energy commodities under the ground, but many need advanced technology to extract them. And U.S.-based oil stocks are among the leaders in the world when it comes to extraction technology.

By allowing foreign-based companies to help develop projects, oil stocks would profit from having access to new reserves, and Mexico would benefit from having billions of dollars in funding and access to those with top-notch technical skills.

There are several different types of oil stocks that would benefit from this investment opportunity. One company that I’ve liked for some time is Halliburton Company (NYSE/HAL), a global leader in the oilfield service industry.

While Mexico has not yet changed its legislation and we don’t know which companies will obtain these oil rights at this time, Halliburton has been extensively offering its services in Mexico for a number of years. I think it’s highly likely that Halliburton would benefit from more work as this investment opportunity opens up.

When investing in oil stocks, one has to consider the company’s current level of production, future reserves, and potential for growth … Read More


Oil Prices to Reach $80/Barrel?

By for Investment Contrarians | Dec 11, 2013

Oil PricesOil prices are heading higher on the chart with the cash West Texas Intermediate (WTI) crude rallying back toward the $100.00 level after threatening to test $90.00.

Steady economic signs in the United States, China, and Japan—the three largest economies in the world—along with some muted growth in the eurozone and Europe are adding some spark to the oil futures… But hold on; doesn’t the buying seem somewhat premature?

I’d say so, as I believe oil prices may have limited upside unless something dramatic surfaces in the Middle East that impacts OPEC oil.

The Organization of the Petroleum Exporting Countries (OPEC) has also come out and said it would maintain its current daily production quota and not cut supply in order to add support to oil prices.

I doubt we will see $130.00-per-barrel oil prices anytime soon—unless, of course, tensions escalate in the Middle East and a war breaks out across a wider region that would impact the flow of OPEC oil. The current nuclear agreement in Iran has also added some stability to the region.

And the futures market for oil supports my view, too. A look at the oil futures actually shows expectations for oil prices should decline back towards $92.00 by the end of 2014, drop below $90.00 in 2015, and continue downward to $80.00 by 2018. The December 2022 futures contract points to $78.00-per-barrel oil.

The chart of WTI oil below shows the downward channel and recent breakout, which I doubt will have much holding power as it nears the $100.00 level.

Light Crude Oil Chart

Chart courtesy of www.StockCharts.com

Now while the prospects over the next eight years don’t … Read More


Why What’s Happening in the Bond Market Now Is So Important to Stock Investors

By for Investment Contrarians | Dec 10, 2013

Stock InvestorsTaper or no taper? When? How much? These are the worries that are currently driving tensions in the stock market on a daily basis. As I wrote in a previous article, no one seems to care that corporate revenue growth is muted and consumers aren’t spending.

Last week, we saw jobs market data that helps support the Federal Reserve’s reasons to begin tapering its bond buying program.

The non-farm payrolls reported the generation of 203,000 new jobs—better than the consensus estimate of 180,000 for the month of November. This represented the second straight month that more than 200,000 jobs were created, and while the jobs market has a long way to go, this is positive news. Jobs numbers were revised upwards in September and October.

Now it may be true that the quality of jobs created could be improved upon, as much of the increase in the jobs market continues to be driven by the service sector and other lower-skilled jobs. However, the results do suggest some action may be taken by the Federal Reserve.

The unemployment rate fell to a five-year low of seven percent, much better than the consensus 7.2% and October’s 7.3%. The rate appears positive on the surface.

The Federal Reserve had said it wants to see the unemployment rate fall to around 6.5% before it considers raising interest rates, but with a seven percent rate, you have to wonder if the Federal Reserve is thinking hard about when to rein in its monthly bond buying and reduce the stock market’s dependency on cheap money.

Yet I don’t think the Federal Reserve will begin tapering until … Read More


Best Investment Strategies to Battle Coming Inflation

By for Investment Contrarians | Dec 9, 2013

Best and Worst Investment StrategiesThe S&P 500 may be entering bubble-like territory: that’s what I’ve been writing for the past few months.

Now, it appears as though I’m not the only one who’s worried about asset classes beginning to form bubbles from the excess money printing. 2013 Nobel Prize-winner Robert Shiller also recently stated that he is concerned that prices have risen far too quickly across many asset classes, from real estate to stocks.

As I’ve written several times over the past couple of months, investing in stocks at these elevated levels is quite risky. My belief is that much of the upward move in the S&P 500 has been primarily based on the liquidity (money printing) being pumped by the Federal Reserve.

Investing in stocks with this premise can only work for the very short-term trader who’s quick enough to get out when the tide begins to turn.

Because people are not investing in stocks based on actual fundamentals right now, one can’t expect the value in the S&P 500 to remain elevated once there’s a change in monetary policy, since much of the move has been artificially supported.

Let’s take a look at how the S&P 500 has been affected by monetary policy over the past few years, and how investing in stocks at the current level is becoming increasingly risky.

S&P Large Cap Index Chart

Chart courtesy of www.StockCharts.com

The first quantitative easing program by the Federal Reserve lasted from December 2008 until March 2010. This period is not shown on the chart above, as one could argue that the S&P 500 became extremely oversold and that investing in stocks for the long-term made sense at … Read More