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Freeport-McMoRan Director Bets on Copper, Oil, Gold

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Copper is a metal that can take a hammering. Copper stocks are, as well, with the commodity’s downturn.

Take Freeport-McMoRan (ticker: FCX), the world’s largest publicly traded copper producer. Over the last five years through Wednesday’s close, the stock is down 68%, adjusted for dividends.

Speaking of dividends, Freeport-McMoRan ended such payments in December. The company emphasized the bright side of the suspension: It would save about $240 million in cash per year “and further enhance Freeport-McMoRan’s liquidity during this period of weak market conditions.”

We were skeptical of the copper rally that seemed to materialize earlier this year, and the per-pound price remains almost as cheap as rotisserie chicken at about $2.25.

Using Stock Options to Generate Income

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Generating income is one of the biggest challenges facing investors. Interest rates have been unusually low since the crisis of 2008-2009 nearly brought down the financial system. The Federal Reserve may increase rates this December, but that will do little for anyone who earns a pittance of interest on their bank deposits or bonds.

Yet there is a way to enhance, and even create, an income stream for yourself: stock options.

Most people associate options with risky investments, but that misconception largely reflects the media attention given to speculators. Because options can be used to potentially make a lot of money while putting up only a small amount, some investors make wild-eyed trades because they have heard investment charlatans talk about triple-digit returns.

Don’t Cry for EBay’s $1.37 Billion Argentine Stock Sale

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No one can accuse eBay of holding on to things out of nostalgia.

Two days after shares of MercadoLibre (ticker: MELI), an Argentine online marketplace, traded to an all-time high, eBay (EBAY) announced it would sell most of its stake.

MercadoLibre subsequently announced that eBay would sell 7.1 million MercadoLibre shares to the public at $168 each, for a total of $1.19 billion. The underwriters also have an option to purchase up to 1,026,062 additional MercadoLibre shares from eBay. If that option is fully exercised, it would mean that eBay has sold all its holdings (for a total of $1.37 billion), down from an 18.4% stake before the sale.

Finding Tomorrow’s Star Growth Stocks Today

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Small-company investors typically limit their investible stock universe by market value. Brown Capital Management takes a different approach. The Baltimore-based small-company specialist defines “small” as businesses with revenues of $250 million or less. “It just makes more sense,” says Keith Lee, co-manager of the $3.1 billion Brown Capital Management Small Company fund (ticker: BCSIX).

Stocks Offering Investors Trump-Like Tax Shields

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This year’s presidential race will set records for crotch talk, crime accusations and apocalyptic warnings — records that hopefully won’t soon be broken. It also briefly put a spotlight on tax loss carryforwards, with reports that Donald Trump declared a loss of more than $900 million in 1995, and speculation that he used it to avoid personal taxes for many years afterward.

Stock investors can benefit from carryforwards, too, and not just the kind that involve offsetting portfolio winners with losers. Consider two pending deals on Wall Street. One will pair a movie studio and its accumulated losses with a cash-generating pay-television business. In the other, a telecom with plenty of cash flow and a massive dividend, but little growth, is buying another telecom whose gigantic tax losses will make those dividend payments more affordable.

Amazon’s 49,000% Gain: The Most ‘Super’ of ‘Superstocks’ Since 1926

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Finding the next Amazon.com, which first sold shares to the public 20 years ago this week, is hard. In fact, finding the last Amazon was hard, too. From 1926 through 2015, only 30 stocks accounted for one-third of the cumulative wealth generated by the entire U.S. stock market; Amazon was one.

That’s 30 out of a grand total of 25,782 companies that were publicly traded over that period.​

The search might not be completely futile, but many investors are going about it the wrong way. That’s because the average return of the stock market, and the return of the average stock in the market, are nothing alike. Even though the stock market generates positive average returns over time, more than half of all stocks lose money over their lives as public companies, and the number of stocks that make big money is astonishingly small.

No Surprise From Fed as Poll Shifts Roil Markets

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The Federal Reserve signaled an interest rate next month while the stock market shows signs of technical weakness along with crude oil and junk bonds. Sounds like 2015?

Except for one thing. There’s something happening Tuesday, what was it? Oh yeah, an election.

To the surprise of absolutely nobody, the Federal Open Market Committee voted to hold interest rates steady at the end of their two-day meeting Wednesday while deciding the case for a rate hike “has continued to strengthen.” Without putting a timetable on that—as the FOMC had ahead of its initial one-quarter percentage point increase last December—the federal funds futures market placed a 78% probability of a similar move next month, to a target range of 0.5%-0.75%.

The only slightly unexpected change was that there were only two dissents on the FOMC instead of the three at the previous meeting in late September. Esther George and Loretta Mester, presidents of the Kansas City and Cleveland regional banks, again called for an immediate rate hike while their counterpart in Boston, Eric Rosengren, withdrew his objection to standing pat this time.

More Reasons to Worry About the Stock Market

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Whether it‘s election jitters, the Federal Reserve, or just weak earnings, several key areas of the stock market — small stocks, railroads and home building — now show technical breakdowns. And not to be outdone, both ultrasafe Treasury bonds and ultrarisky junk bonds have also cracked.

It is hard to think that the broad stock market can move much more to the upside, barring a sudden Fed move or an election surprise, when these engines are shut down. I don’t think even Facebook (ticker: FB) can help, even if its earnings after the bell Wednesday continue to shine.

The Russell 2000 index of small-capitalization stocks broke down below a key short-term support level last week. The chart shows some sort of undefined topping pattern beginning in July. We could argue about what to call it, but it really doesn’t matter.

Netflix and Comcast Are Together At Last

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It’s not quite world peace, but Comcast and Netflix, long rivals in the battle over TV’s future, are finding common ground.

On Friday, the companies announced that Netflix’s streaming TV service would be available on Comcast’s X1 cable boxes across the country — starting next week. It’s a big moment for TV, given that Netflix has spent much of its life fighting the cable establishment.

AT&T Stock Yields 4.9%; Can Ring Up More Gains

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AT&T investors are getting the best of both worlds today. The stock’s 4.85% dividend yield is almost twice that of the 10-year Treasury and well above the 2% paid by the S&P 500. And with AT&T’s (ticker: T) stock trading at 13 times forward earnings, its valuation looks attractive.

AT&T also offers growth potential. Under a President Trump, the telecom giant should benefit from a kinder regulatory environment and lower taxes. The company should also profit from its continuing move into media, particularly its proposed $106 billion purchase of Time Warner (TWX), now awaiting regulatory approval.

Earlier today, Baird Equity Research analyst William Power upgraded AT&T stock to Outperform. This upgrade was especially notable given that Baird’s opinion of AT&T had been stuck at Neutral since 2012.

The upgrade lifted AT&T’s share price more than 2% to a recent $41.19. The stock, up 11% since the presidential election, could generate a double-digit total return in the next 12 months.

“After many years of avoiding the telcos due to competitive concerns, we are upgrading AT&T following a confluence of events that we believe significantly improve the company’s prospects over the coming years,” says Power.

In short, Ma Bell is becoming what Power calls “Ma Media,” meaning it’s no longer your parent’s telephone company.

Earlier this year, AT&T, like other telecom stocks, attracted income-hungry investors fleeing global market turmoil. Shares hit a multi-year high in July at $43.89 then fell as investors dumped pricey dividend stocks and Trump savaged the Time Warner acquisition after it was unveiled in October.

The post-election environment has been far kinder. The FCC is expected to be much more accommodative under Trump, especially regarding Net Neutrality rules. And with lower taxes, Baird’s Power anticipates “a business investment tailwind not seen in years.”

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