Author: Andrew Packer

Stock market strategies

Tastylive: 7 Minutes That May Change Your Earnings Trading

Posted on by Andrew Packer

Investors who turn to trading often start with strategies involving a company’s earnings report. Why? It’s a date known in advance that can lead to a big move in the share price. And it’s often a binary outcome. Shares either rise significantly or fall.

The question usually comes down to the extent of an earnings-related move. And for how long that move can last. Traders who put the statistics on their side can improve returns with this trading strategy.

For instance, from 2018-2024, earnings from the five largest companies by market cap tended to result in an upward movement 67% of the time.

The changes would often play out right after the earnings report. And the upward trend would usually last for up to five days. This continuation holds up for the second day, but can weaken going into a 4-5 day period.

More interestingly, while stocks did fall the other third of the time, there were nearly no instances of a sideways move.

So, traders looking to bet on earnings should pick a direction. And use a stop loss strategy to avoid a losing trade. And recognize that losing trades will occur.

Of course, over the longer-term, a company’s continued earnings growth will move prices higher. But grabbing some wins off of earnings season can help boost investment returns.

 

To see the full data on trading earnings reports, click here.

Cryptocurrencies

Bitcoin Magazine: Bitcoin Is Having Its Best Year Ever

Posted on by Andrew Packer

Year-to-date, bitcoin is up over 60%, adding to gains from 2023. That’s outperformed the stock market and even gold. More importantly, bitcoin is seeing increased acceptance in the investment world.

This year has seen the rise of bitcoin ETFs for trading, making it easier for everyday investors to own the asset, particularly in traditional retirement accounts. Investors have been flocking to the funds, which have seen the fastest inflows in history.

Meanwhile, pension funds and university endowments are also starting to allocate to bitcoin. And major Wall Street institutions are moving towards bitcoin. That’s a massive reversal to the prior view of bitcoin as a danger.

So far, these events are just now starting to push bitcoin higher. This week’s election also put bitcoin on the ballot, with bitcoin and crypto in general coming off a winner with the election of a pro-bitcoin president.

But more importantly, bitcoin’s performance in the weeks, months, and year after an election tend to be massive.

Historically, bitcoin rises over 20% in the first month after an election. And the gains can hit the triple-digit level over 12 months. Investors still have an opportunity to buy bitcoin below six figures. Or to buy into altcoins as bitcoin starts to take off once again.

While bitcoin’s returns may not be as massive as they have been in the past, it can still provide excellent returns going forward. Particularly for investors today.

 

To read the full analysis, click here.

 

Commodities

Kitco: The Countries Still Boosting Gold Reserves, and What They Have In Common

Posted on by Andrew Packer

Gold has been a strong asset this year. The metal has outperformed the S&P 500 index, beating out stocks in a strong year. Part of the move higher is simply due to supply and demand.

On the supply side, new gold discoveries have paled to some of the massive finds of yesteryear. And while technology can make it easier to extract more from an existing site, it doesn’t make up for changes in demand.

On the demand side, central banks have been massive buyers. That includes countries like Poland, the Czech Republic, and Turkey.

These countries are close to Russia, which has also been a strong buyer along with China. Central banks have been buyers of gold due to the perception that it’s a better holding than alternatives. Most alternatives are the currencies of other countries.

The massive inflation over the past few years has made these currencies less attractive. Even the U.S. dollar hasn’t escaped massive inflation. Gold provides diversification, hence the strong and ongoing central bank buys.

Meanwhile, individual investors still haven’t been part of the gold trend. When smaller investors start buying, not just gold, but gold mining stocks, could become winning trades.

Given the ongoing accumulation of gold by central banks, it may be wise for investors to follow suit by buying gold and gold mining stocks.

 

To watch the full presentation on gold buying trends, click here.

 

Income investing

Dividend Growth Investor: Living Off Dividends In Retirement Vs. Selling Stock

Posted on by Andrew Packer

Investors have several ways to grow their wealth. Growth can ensure that the value of investments grows far beyond inflation. But value stocks tend to hold up better during market downturns.

Both growth and value stocks can also become dividend stocks. And dividends offer investors a source of income. During working years, that can be reinvested for further gains. In retirement, dividend income can be moved towards living expenses.

There’s a good reason why. Dividend income can be more stable than stock market prices. And it can be more reliable, especially for investors with a basket of dividend growth stocks.

Share prices can remain volatile. And those who retire with growth stocks could see a big swing lower early in their retirement. That could radically reduce the available capital for living expenses.

With a high stream of dividend income, investors may not need to sell stocks in a given year. That’s good in a down market, as it means the position can have time to recover. In a bull market, dividend investors will likely see continued dividend increases in addition to capital gains.

Investors who retired near the market peak of 1999 with $1 million had two outcomes. Growth investors who sold off 4% each year ended up with $330,000 at the end of 2023. Investors with a dividend portfolio would have seen their position grow to $5.25 million.

 

To read the full analysis on the tradeoff between growth and dividends in retirement, click here.

Economy

A Wealth of Common Sense: 1999 Vs. 2024

Posted on by Andrew Packer

The stock market is up over 20% year-to-date. That’s well in excess of its average annual return closer to 10%. Adding in last year’s rally, the market is up nearly 30% over the past 12 months.

Plus, out of the 2,700 stocks in the Russell 3000, 101 of them are up 100% or more so far this year. Thirteen stocks are up more than 300%, beating the market average by more than tenfold.

However, a full 1,000 stocks in that index are down. That’s about 40% of the index. And 137 stocks have lost 50% of their value or more this year.

Overall, this points to the trend over the past few years of some big gains boosting returns. Many individual stocks continue to struggle. In the S&P 500 index, it’s even more concentrated, with just five stocks responsible for half the index’s gains.

This trend is similar to 1999, a strong year for the market, up 24%. Much like this year, a handful of stocks, dominated in the tech sector, have driven the returns. A full 13 stocks finished that year with 1,000% gains.

But more than 1,000 stocks in the Russell 3000 index were down that year. Of those, 182 lost 50% or more.

What that doesn’t suggest that we’re near a market peak anytime soon, it’s a warning sign. Investors who have had big winners this year may want to take some profits off the table now.

 

To read the full analysis, click here.

Commodities

Kitco News: Gold Maintains Historic Highs Amid Global Uncertainties

Posted on by Andrew Packer

Investors typically don’t think much of gold. The past few years saw some renewed interest as inflation soared. But as that inflation came down, investor interest went elsewhere.

However, gold’s price continues to trend higher. Signs point to increased central bank buying over the past few years. Given that central banks can diversify their holdings with foreign currencies, the choice of gold is clear. It’s a sign that inflation remains an issue, and any country could see inflation jump.

Plus, while markets have been rising this year, there’s been a backdrop of rising global tensions. From Israel and Iran, to Russia’s invasion of the Ukraine, global conflicts remain front and center.

Once we see individual investors push into gold, prices could push even higher. Gold’s steady trend higher this year has seen few dramatic price swings. That indicates demand remains strong. And globally, supply of new gold sources remains tight.

That’s a recipe for higher prices. As investor interest in gold increases, interest in the mining stocks should tick higher as well.

Investors can get started with the Van Eck Gold Miners ETF (GDX), which owns a basket of the major mining stocks.

When investment interest in gold soars, smaller mining companies will see a bigger percentage gain. Investors can take advantage of with the Van Eck Junior Gold Miners ETF (GDXJ).

 

To read the full review of why gold is likely to keep trending higher, click here.

Economy

The Compound: Here’s the Real Reason Treasury Yields Are Rising

Posted on by Andrew Packer

Since the Federal Reserve cut interest rates in September, an unusual thing has happened in markets. Bond yields have trended higher, not lower. The 10-year U.S. Treasury bond rose from 3.6% to over 4.2%, a massive one-month move.

30-year fixed rate mortgages rose back to 7%, after going for closer to 6.5%. Since the Federal Reserve is cutting rates, these rates should be going down, not up. This could be the result of several scenarios.

First, it’s possible that the move is simply the market gearing up for a bigger move lower. This kind of initial move in the opposite direction occurs often in the stock market.

Second, bond market vigilantes could be demanding higher rates to allow the government to borrow money from them. Given rising debt levels overall, and the $1 trillion in debt payments from the U.S. Treasury alone, that’s likely possible.

Third, many traders bet on a recession in 2022 and 2023. With signs of the economy remaining strong, this trade is being unwound, pushing yields higher for now as investors shift to still-rising stocks.

Fourth, investors may simply be betting on both economic growth and higher-than-desired inflation in 2025.

For now, investors looking to lock in high bond yields still have a window of opportunity. And cash continues to generate a relatively high yield.

 

To get the real reason why bond yields have ticked higher in the past month, click here.

Income investing

Dividend Growth Investor: 26 Dividend Growth Stocks Raising Dividends Last Week

Posted on by Andrew Packer

Traders often focus on the big moves a stock makes during earnings season. Investors can take a longer view. They can look at not just this quarter’s trends, but prior quarters. And look at how a company is spending the money coming in after paying all the bills.

For long-term investors, companies with reasonable prospects and strong cash flow often start to pay dividends. This balances future growth with rewarding present shareholders. Over time, growing earnings can still lead to growing dividends.

With earnings season underway, many companies are announcing dividend increases.

One such company raising its dividend now is Starbucks (SBUX).

The coffee chain has had a poorly-performing year, with same-store sales down. But they’re just raised their dividend by 7%, for a new annual payout of 2.5%. This is the 14th consecutive year that Starbucks has raised their payout.

 The dividend is well covered by earnings. And if the company’s plans to improve earnings unfold, they’ll have even more cash to offer shareholders as a reward over time.

Another company raising its payout now is The Hartford Financial Services Group (HIG). They just increased the annual dividend by 10.6%. This is also their 14th consecutive year of dividend increases.

Hartford’s current annual payout of 1.8% sounds low. But with double-digit increases in that dividend each year, they have ample room to keep increasing their cash payout to shareholders.

 

For the full list of companies raising their dividends now, click here.

Stock market strategies

Hamish Hodder: Warren Buffett’s Alarming Stock Market Prediction

Posted on by Andrew Packer

Stocks have delivered a fantastic year. The market has even bucked seasonal trends, trending higher in seasonally weak months. Year-to-date, the S&P 500 is up over 22%. That’s more than double its long-term average annual return.

However, with markets near all-time highs, it pays to take a closer look at valuations. Historically, the S&P 500 has traded between 15 and 20 times earnings. For the past 15 years, stocks have been on the higher end of that trend.

Today, the S&P 500 trades closer to 30 times earnings. That’s one of its most expensive valuations on record. While higher growth from AI could help bring that ratio down over time, it could be a sign of caution.

That may also be why value investor Warren Buffett has been raising cash. Buffett has reduced his stake in Bank of America (BAC), down under the 10% reporting threshold.

He also sits on a record level of cash. That cash is currently earning a relatively high rate of interest, over 4%, invested in short-term Treasuries.

Buffett has cited a potential change in tax rates as a reason to sell. Tax cuts passed by Donald Trump during his first term are on track to expire at the end of 2025.

However, with markets at all-time highs, investors looking bullish, and pricey valuations, Buffett could just be taking some cash off the table. Investors with some big tech wins may want to scale back as well.

 

To view the full reason for Buffett’s move to cash, click here.

Economy

Elliott Wave Options: Forecasting an Election Correction? Wave 5 Top?

Posted on by Andrew Packer

The stock market has bucked seasonal trends. While September and October are historically the two weakest months for stocks, stocks trended higher. And while the market’s volatility index has ticked higher to 20, it’s done so without a selloff.

This break from the historic norms isn’t unusual. Markets can often be unpredictable. And historic trends are never 100% certain. Traders need to be nimble for such trend breaks.

Going forward, however, markets may continue to buck the trend. That could mean a post-election pullback. Stocks typically rally after the uncertainty of an election period has passed.

Yet on a technical basis, markets are overbought. And markets took a breather after a six-week rally higher. With key earnings underway, there will be significant daily volatility. But it may not mean stocks continue to trend to new all-time highs for a few more weeks.

Using Elliott Wave theory, markets could be reaching a Wave 5 extension. That could push the S&P 500 to 6,000. But from there, investors may face a correction that lasts for a few weeks.

Even with a correction, markets remain on track for a strong year. Traders may want to take off leveraged positions before the election. And use any market pullback to buy back into the market.

 

To view the full video, click here.