Author: Andrew Packer

Cryptocurrencies

QTR’s Fringe Finance: Why I Bitcoin

Posted on by Andrew Packer

After being the best-performing asset of 2023, bitcoin has taken a backseat so far in 2024. However, that could simply be the result of speculation ahead of ETF approval. A bitcoin ETF allows investors to profit from bitcoin without having to deal with it directly.

Now that 11 ETFs have been approved and are trading, demand for bitcoin may continue to rise. That suggests a higher price over time as billions of dollars gradually flow into bitcoin ETFs.

With demand rising, a supply shock is imminent. The bitcoin halving is set to occur in mid-April, just over two months away.

This will be the fourth time bitcoin has had a halving. This is the process where the reward for mining bitcoin is cut in half.

Bitcoin is the first form of digital scarcity yet created. It can’t be copied and pasted. There will ever only be 21 million bitcoin. And a few million have already been lost.

That’s in contrast to physical money, which can be printed up. Or the digital money in your bank account, which can be changed with a few keystrokes.

That points to a tremendous value in owning some bitcoin. It works as a piece of technology still in its early stage of adoption. And it acts as a way to store value over time better than inflation-prone currencies.

 

To read the full rationale behind owning bitcoin ahead of the next halving, click here.

 

Cryptocurrencies

ARK Invest: Big Ideas 2024 ITK with Cathie Wood

Posted on by Andrew Packer

Tech trends can take on a life of their own. That’s especially true if the trend has the power to make some big transformative changes to the economy.

For instance, the rollout of the internet in the 1990s helped unleash a massive productivity boom. It was felt among all sectors of the economy. And higher productivity helped boost the real economy and increase wages. Today, AI offers a similar promise.

Late 2022 saw the release of Chat GPT, a form of generative AI. While such AIs have been in development for years, the sudden wide access of this technology has been transformative.

Now, the global equity market value associated with disruptive innovation could soar from 16 percent of the market to 60 percent by 2030.

Plus, the costs of training new AIs could drop 75 percent by 2030. That’s thanks to improving AI software, as well as improved hardware better equipped for AI’s rollout.

The rise of AI is just one part of the increasing digitization of the economy.

Rising smart contracts and other applications using blockchain technology could soar in the coming years. Smart contracts could generate annual fees of over $450 billion in less than a decade.

Plus, investor interest in cryptocurrencies such as bitcoin is still in its early stages. That’s why the crypto may soar to $250,000 or more by the end of the decade.

 

To look at some of the big trends driving 2024 through the end of the decade, click here.

 

Income investing

Dividend Growth Investor: 25 Companies Rewarding Shareholders with Raises

Posted on by Andrew Packer

Dividend investing hasn’t gone out of style, even as tech stocks lead the market to new all-time highs. With tech giant Meta Platforms (META) now announcing its first dividend, tech investors have another way to benefit from a company’s growth.

And unlike earnings, a company can’t restate a dividend. Paying a dividend means a company has the cash flow to regularly send some of that cash on to shareholders. And over time, great companies raise their dividends.

With earnings season underway, a large number of companies have announced dividend increases.

That includes companies like Imperial Oil (IMO). The energy company jus increased its dividend by 20 percent. That’s a bigger increase than its 10-year average annualized return of 14.75 percent.

Plus, Imperial has been raising its dividend for 29 consecutive years. The current yield of 3.2 percent is above average, and a steadily rising dividend will mean a higher payout for long-term shareholders over time.

Another company increasing its payout now is United Parcel Service (UPS). The company increased its payout by 0.6 percent, reflecting some of the weakness in the logistics space right now.

But UPS is an industry leader, and has a 10 percent annualized growth rate over the last 10 years. Today’s buyers can geta 4.6 percent yield, and likely higher growth in time as the industry gets back to growth.

 

To view the full list of 25 stocks raising dividends right now, click here.

 

Economy

George Gammon: Did the Next Phase of the Banking Crisis Just Start?

Posted on by Andrew Packer

It’s been nearly one year since the economy saw the second, third, and fourth largest bank failures in history. When trouble reared its ugly head last March, regulators were quick to shut down these banks. And move their assets over to stronger banks.

What caused these banks to fail? It was mostly the high risk of a bank run due to duration risk. Many banks invested in long-term bonds. Those fell in value as interest rates rose. It left banks illiquid.

To avoid that trouble, the Federal Reserve created a lending facility. They would hold assets such as long-term bonds, and pay banks the full face value. There would be no risk of having to cash out a bond at a loss.

While that restored faith in the banking system, the lending program came with a one-year expiration date. The Fed announced in January that they would not renew it.

That could mean a renewal for the banking crisis. Investors are already seeing cracks, as indicated by the dividend cut at New York Community Bancorp (NYCB). The regional bank’s issues stemmed from its office loans, not its bond portfolio.

Other banks could see similar issues. The office space sector continues to lag the rest of the real estate market. And several property owners have either sold at steep losses or are looking to walk away.

For now, investors may want to scale out of bank stocks and look to buy later when regulators step in again.

 

To view the full analysis, click here.

Stock market

Elliott Wave Options: Bulls Don’t Care About Fed Delays … S&P 5,000 Target

Posted on by Andrew Packer

For the past few months, stocks have been in an uptrend. The narrative has been around the fact that the Federal Reserve stopped raising interest rates. In late 2023, the central bank even stopped hinting at further rate increases.

Since then, investors have turned to the idea of interest rate cuts. However, the Fed has still continued with its “higher for longer” mantra. However, investors haven’t cared.

That leaves stocks trending higher. And that trend has held up well. The economy has also held up well. Economic growth remains strong. Unemployment has ticked up, but is still historically low. Inflation is declining, particularly producer price inflation.

Overall, it’s a solid picture. However, it’s not weak enough for the Federal Reserve to think about cutting interest rates anytime soon.

Even the news of layoffs at big tech companies sounds similar to last year. And tech stocks did well last year, even as they cut staff overall.

For now, that suggests that stocks will trend higher, even with the S&P 500 index hitting 5,000. And investors are rethinking the idea of interest rate cuts as early as March. They now may not even happen in the first half of the year.

Typically, the Fed doesn’t get to choose when it cuts interest rates. Market conditions will tend to for the Fed’s hand one way or another. So investors should remain bullish, as long as interest rates can stay where they are.

 

To watch the full analysis, click here.

Commodities

Kitco News: Silver Equity Market Resembles That of Uranium in 2022

Posted on by Andrew Packer

Commodities have had mixed performance over the past few years. Some commodities such as uranium and coffee have soared, although for different reasons. Uranium demand has increased while supply hasn’t caught up. And coffee demand has remained strong while supplies have dropped on weaker weather.

Other markets have been a bit more mixed. But overall, valuations generally look low following the bout of inflation in recent years.

Today, reasonable valuations and interested institutional investors could bode well for commodity prices going forward.

For retail investors, one place that could fare well for investors this year is silver. That’s because the market is as overlooked as uranium was in 2022 before its big rally over the last year.

The next 18 months could see strong demand for the metal. Its value both as a precious metal and for use in technologies should see strong demand.

Gold may see further upside this year amid a number of market fears. And where gold goes, silver also tends to follow. And when it does, it tends to have a bigger percentage move higher.

In the meantime, silver companies may see some merger and acquisition activity. That’s because large established companies have strong balance sheets and increasing cash flows to buy smaller companies with the best opportunities.

 

To listen to the full interview, click here.

Stock market strategies

Tastylive: If You’re Losing Money with Fundamental Analysis, This is Why

Posted on by Andrew Packer

Investing involves trade-offs. The decision to buy one stock means not buying another. Or an asset class. So on some level, investors need financial and economic data to make that determination. That’s why fundamental analysis matters.

Fundamental analysis looks at data specific to an asset, such as the earnings of a stock or the par value of a bond. It can also include other factors such as an upcoming earnings report or a Fed meeting.

Investors tend to gravitate towards fundamental analysis, as it may point to reasons to buy or sell an asset. Traders may be more focused on other factors such as price and the trend in price.

More specifically, fundamental analysis can give investors an idea of what the market already sees and has priced into stocks. From there, they can either agree with the market’s assessment or not.

For traders, technical analysis can indicate price action and where it may make the most sense to enter or exit a trade.

Given the potential for a mismatch in the stock market between the price of a stock and its value, fundamental analysis plays a key role.

But investors should also employ technical analysis to reduce risk and avoid losses. That can help overall returns and improve an investor’s win rate.

 

To watch the full debate, click here.

 

Trading Strategies

The Financial Economics: Truth About Compounding

Posted on by Andrew Packer

Investing is a lifelong process. The process is based on compounding wealth. That simply means investing a dollar at the highest possible return for the longest amount of time. The longer someone can compound, and at as high a rate of return can result in the creation of massive amounts of wealth.

This strategy relies on patience for the right prices and market opportunities. As well as taking a disciplined approach for knowing when to let winners continue to rise and to cut losers short.

Those looking to get the best compound return need to look at three numbers.

The first is the starting amount. The higher the starting amount, the better the returns will be. In one’s early years, it will be necessary to start small. But regular contributions of capital can lead to higher returns.

Next is the length of time. With longer lifespans, starting investing early can make a massive difference compared to waiting until one has a significantly high salary to put large sums to work.

Finally, there’s the total returns. Buying the right assets at the right time and capturing big moves can make a huge difference. But it’s also possible to succeed with average investments over the long haul. It’s just important to avoid overpaying to get in.

By understanding the compounding process and the three numbers behind them, investors can better focus on earning better returns over time.

 

To watch the full video, click here.

 

Stock market

Praetorian Capital: The Blowoff

Posted on by Andrew Packer

Investing involves tradeoffs. And investors need to decide not only what to own, but how to allocate what they own. Index investors simply buy the market based on its weighting. This approach has worked well in the past year.

That’s because market indices are typically weighted by market cap. Bigger companies carry a bigger weight. With big-cap tech stocks leading the market higher, that’s led to great returns.

Investors who leaned heavily into the big-cap tech stocks have done even better. However, such gains can lead some investors to feel like they’re missing out.

That can mean a lot of money pouring in right at the top. And once all the buying demand stops, shares that have been soaring higher can drop quickly.

So far this year, big cap tech stocks have screamed higher. But investors who get in with a fear of missing out may end up being the last ones in.

It’s possible this could be the sign of a short-term “blowoff” top in the market. Such moves can lead to big pullbacks before a healthy rally can continue.

In short, investors who feel that they’ve missed out on today’s big growth stocks should just exercise patience instead. A better buying opportunity will come following a possible blowoff top.

And there are plenty of companies that aren’t making new all-time highs that offer better value and growth today.

 

To read the full analysis, click here.

Stock market strategies

FX Evolution: Is Everyone Missing THIS…

Posted on by Andrew Packer

Markets may be making a shift this week. Over the past 18 months, there have been six-month periods of strength in the markets. However, stocks have then been shaken up by the combination of big tech earnings and a Federal Reserve meeting.

With investors still looking at the potential for significant interest rate cuts this year, markets are still poised to head higher. However, other trends could be in play that impact markets negatively.

In February 2023 and July 2023, we had the combination of tech earnings and a Fed meeting in the same week. In both cases, stocks sold off heavily. They then made a multi-month rally to new highs.

This week’s data and mixed earnings increase the likelihood of a selloff over the next few weeks. The good news? With markets at overbought levels, a pullback would be healthy here. And it would clear the market to trend even higher.

Additional data, such as payrolls and inflation, could give markets a further reason for the boost of interest rate cuts in the months ahead.

With inflation slowing and with consumer debt rising, it’s possible that economic conditions could shift quickly. And central banks may end up lowering rates faster than they expect in the latter half of the year.

For now, conditions suggest some caution here in the weeks ahead, with the potential for a further rally in the spring.

 

To watch the full video, click here.