The most fundamental tenet of investing is that risk and reward go hand in hand. The greater the potential reward, the greater the risk. The lower the risk, the lower the reward you can expect.

“You’ve got to try the crab cakes,” I told Steve McDonald. “I live in Baltimore. Why the hell would I come to Florida for crab cakes?”  We had just concluded a full day of meetings for the Investor’s Daily Edge quarterly editors’ conference and were taking our seats around the table at Dada, one of the finer establishments in Delray Beach.

The mutual fund industry has done their best to convince investors that the long-term return of the stock market is just over 12%. That is their justification for “buy and hold.” But you can throw that number out the window.
The annualized return of the S&P 500 from 1929 through 2008 is actually 8.9%. And for most active investors the return would be significantly less.

Chinese business and social culture are generally very subdued and conservative… and above all, respectful. But students at Peking University in Beijing just couldn’t help themselves this week.

Many investors believe that if you want to achieve big returns, you have to take big risks. They believe that safe, boring companies yield nothing but boring results. These investors are wrong. And it has cost them a fortune.  It might sound counterintuitive, but if you want to achieve big gains (I’m talking about 1,000% to 5,000% or more), your best bet is to play it safe.

The United States Bureau of Labor Statistics has an “inflation calculator” on their website. It allows you to enter an amount of money and a previous year and then tells you how much money you would need to have today to match the same buying power.

We are in the midst of the worst economy in decades. Corporate earnings are falling. Unemployment is rising. And there looks to be no relief in sight. While the stock market is due for a bounce (probably a big one), there is no doubt that the general trend is still down.

Obama’s stimulus plan will only end up making a sick patient even sicker, says Jon Herring. But that won’t stop it happening. Jon says infrastructure firms stand to benefit in the short run. But the real long-term winners will be companies that benefit from rising inflation.

Stocks are whipsawing again today as Mr. Market digests a coordinated worldwide rate cut. After opening 200 points down, the Dow zoomed to a net gain of 150 points before sliding back into negative territory.

These violent swings can be devastating for the short-term investor. But Jon Herring says market volatility is handing long-term investors a once-in-a-generation chance to buy world-dominating companies at bargain prices.

Jon recommends seven stocks that are price leaders or have pricing power.