Author: Andrew Packer

Cryptocurrencies

Bitcoin Magazine: Fidelity Investments Director Shares Bitcoin’s Adoption and Valuation Models

Posted on by Andrew Packer

Valuing an asset is a key step to determine if it is worth investing in or not. Most assets are valued based on the cash flows they provide. That includes bonds and stocks, with an eye towards additional specific risks involved.

Other assets are more challenging to measure. Gold offers no cash flow for investors. Neither does bitcoin. Yet both are worth thousands of dollars. Figuring out how to value these assets can be key for future returns.

For bitcoin, looking at the adoption curve signals that it still has room to run. The number of bitcoin wallets continue to increase, although the rate of new wallet growth has slowed.

The rise of bitcoin ETFs also contributed to this trend. Now, investors can simply buy an ETF rather than obtain a bitcoin wallet.

Valuing bitcoin in the future requires looking at models such as increased adoption and money supply growth.

Since bitcoin is finite in nature, this combination works well as a monetary and tech trend. Most tech trends grow along an S-curve adoption model. Bitcoin is still in its earlier stages. On the monetary side, increased government spending, debt, or outright money creation should continue to benefit bitcoin’s price.

Looking at these trends overall, bitcoin may consolidate for a few months. Then, it should make a new cycle high in mid-2025.

 

To read the full methodology behind bitcoin’s future price rise, click here.

 

Commodities

Kitco: What I Told Investors at the 50th Anniversary New Orleans Investment Conference

Posted on by Andrew Packer

Elliott Wave theory uses technical analysis within the broader perspective of a five-part wave. Such waves can be seen within any number of markets, from the overall index to individual stocks, and even to commodities.

Under the Elliott Wave, there are five distinct patterns. Waves 1, 3, and 5 are uptrends, with the fifth wave being the strongest. Waves 2 and 4 are pullbacks that partially unwind the move higher in waves 1 and 3.

Right now, the gold market appears to be setting up for a fifth wave higher. If so, the metal could end up moving to over $3,000 per ounce in late 2025 or by 2026.

That move comes in-line with the fundamentals for gold. New supplies remain tight, even with China’s recent announcement of a massive discovery. Demand remains strong, particularly from central banks, including those of China and Russia.

With strong price momentum underway, the metals price may first consolidate in the first few months of 2025. That will create a pause in time that can help push the metal higher.

Once that’s done, the final wave 5 in a commodity tends to be a massive move higher. If this wave theory plays out, gold could have another outstanding year in 2025.

 

To read the full theory and how it plays out, click here.

Stock market

FX Evolution: Wall Street Insiders Sell At The Fastest Rate Since 2021…

Posted on by Andrew Packer

There are many ways to determine the market’s valuation. Investors can look at factors like the market’s price to its overall earnings. Today, with a read of 24 times earnings, markets are overvalued historically. But they’re also not quite at extremes that point to an immediate pullback.

Non-financial factors also suggest that much of the big move over the past two years is nearly over. And that includes insider activity.

Simply put, insider sales are at their highest level since 2021, the last time stocks peaked before a bear market.

Corporate insiders have many reasons to sell. They may want to take some profits off the table.

Or pay for a big expense like a home or child’s college tuition.

But when insider selling as a whole is on the rise, it’s a sign that markets may be overbought. Insider sales tend to occur early, however. That suggests that today’s investors may still have a few more strong months ahead before some increased volatility.

Combined with the rise of retail investors pouring into the market, it’s a sign that traders should get cautious.

We’re likely still on track for a year-end rally. But 2025 could see more volatility, with some sizeable drops along the way. The rise of insider selling is just one hint at that future outcome.

 

To view the full details on insider selling, click here.

 

Income investing

Elliott Wave Investor: Bonds Change Direction … Cut or No Cut?

Posted on by Andrew Packer

The past few months have seen a disconnect between the stock and bond markets. Stocks have trended higher, even as bond yields have trended higher. Typically, that’s the opposite of what happens. Falling bond yields help push stocks higher.

Now, bond yields are starting to tick down. That could be a sign that the bond market is ready to follow the rate cut trend started by the Federal Reserve.

The move also comes as the Federal Reserve looks ready to slow its pace of interest rate cuts. Markets still expect a quarter-point cut later this month. If that happens, rates will be down a full 1% from their cycle high.

From there, the Fed looks ready to slow down. Inflation remains well above their target rate. And concerns over tariffs and a trade war could mean further inflationary pressures in 2025.

For now, with bond yields declining, the market looks less stressed going into the end of 2024. But if rate cuts slow significantly, it could put pressure on the stock market next year.

Stocks may see a slight selloff in the first half of December. But it’s likely that they’ll follow a Santa Claus rally into the end of the year. After that, 2025 could see a market pullback in the 10% range.

 

To view the full analysis, click here.

Economy

Bravos Research: Please Don’t Be Dumb Money

Posted on by Andrew Packer

Over the past three months, investors have moved $150 billion into stock ETFs and mutual funds. That’s a rapid increase, and is the highest pace since late 2021.

It’s also a shift from money leaving equity funds in 2022 and even early 2023. Overall, it’s a sign that investors are increasingly bullish on the stock market. Particularly, retail investors are driving this shift in capital into stock ETFs and mutual funds.

However, that’s not necessarily a healthy sign for the economy. It could be a sign that retail investors are going all-in. If that’s the case, the timing isn’t the best. The market has been in rally mode for over two years now.

With the S&P 500 up over 26% in 2024, it’s an above-average year for stocks. But market earnings haven’t been growing as fast. Today’s investors are paying an average of 24 times earnings for stocks.

Typically, a reading of 20 times earnings is considered more than fairly valued.

While not yet as expensive as in late 2019, it’s possible that markets are more likely closer to the end of a rally than the start. And that some large pullbacks could be in store along the way.

That means that today’s investors shouldn’t be shifting more capital to stocks. Instead, they should be taking some profits and thinking just a bit more defensively.

 

To see the full analysis, click here.

Commodities

Kitco: Bitcoin Inflows Signal the End of U.S. Dollar Dominance, and this is Just the Beginning

Posted on by Andrew Packer

Gold and bitcoin have been top-performing assets for 2024. Gold prices topped out at $2,800 per ounce before pulling back in November. Bitcoin peaked in the spring, then pulled back over the summer, only to rally to new highs in November.

Bitcoin has now more than doubled in 2024 to the $100,000 range. Plus, with gold trending higher, these assets look primed to continue rallying.

For bitcoin, the move has been driven by several factors. First are the rise of bitcoin-related ETFs.

These funds make it easy for investors to own bitcoin in a retirement account. Plus, bitcoin’s halving in the spring should follow prior four-year cycles. If so, bitcoin prices should continue to rally into mid-to-late 2025.

After that, a crypto winter could set in. Investors may want to take some profits in bitcoin in the middle of next year.

Meanwhile, gold continues to see strong demand from central banks. And retail investors have yet to heavily shift to precious metals.

That trend could change in 2025. Continued inflation running above trend and geopolitical instability should both bode well for gold. That could also help gold mining companies break out of their funk and move higher.

Either way, both gold and bitcoin offer investors the prospect of strong returns in 2025.

 

To read the full article, click here.

 

Stock market strategies

The Intellectual Investor: Managing a Million: What Would I Do Differently?

Posted on by Andrew Packer

Warren Buffett has famously said that managing a large portfolio is a challenge. The billions of dollars he controls can only be invested in the largest asset classes around. That’s because it takes billions to move the needle on the returns of a big pile of money.

But if the money were smaller, say a $1 million portfolio, Buffett says he could do better. He even states that he could earn 50% a year.

For most investors, $1 million would be an improvement on their current portfolio size. And the returns are nowhere near 50%.

As long as investors follow a disciplined approach, they can likely earn excellent returns. However, a 50% annualized goal may be a stretch. Even when Warren Buffett was working with small amounts of capital, he rarely saw a 50% return in a year.

What Buffett did do was follow a value-based investment strategy and stuck to it. And he avoided overly diversifying, at times having as much as 30% of his portfolio in a single investment.

Investors looking for bigger returns should also look to only invest in their top 10 ideas instead of 20. However, the risks of any single stock imploding and hitting a portfolio substantially rise.

Overall, investors looking for high returns have to take on higher risk. For investors with smaller portfolios, that’s easier than larger players.

 

To read the full analysis, click here.

 

Stock market strategies

The Lead-Lag Report: Anthony Crudele on Futures Trading Evolution and Risk Management Tactics

Posted on by Andrew Packer

All trading requires strong discipline. That’s because several trades in a row can be losers. And if that happens, it can lead to needless stress.

As long as traders follow a plan and stick with it, they can build a system that can profit over time. Even if any individual trade doesn’t work out. In essence, good trading is treating the market as a marathon, not a sprint. Although any individual trade can often feel like one.

Options trading can add in an additional layer of complexity. The rise of daily options trading over the past two years makes it easy for any investor to day trade. However, the trades used within the context of an overall portfolio matters.

Investors can use options and futures to hedge against a long portfolio position. That’s similar to investors who sell covered call options against their existing stock position.

Both options and futures can allow investors to use high leverage. Instead of buying 100 shares of a stock outright, a futures or options contract can get that control. And at a fraction of the price.

Traders should consider the total value of their options holdings if they were stock positions. That ensures that they won’t overtrade on options.

But adding in such trades can help boost your overall portfolio returns and reduce your risk. So it may be worth including such options in your trading account.

 

To watch the full interview, click here.

Economy

The Compound: Something’s Going to Break, We Don’t Know What

Posted on by Andrew Packer

While the market has trended higher since the election, some sectors have fared better than others. Investors generally expect inflation to continue to run above the Federal Reserve’s target rate. That’s why assets like gold and bitcoin have been big winners.

And while economic data looks strong, there have been a few yellow flags for investors. And any one of those potential dangers could cause the market to tip over into a bear market in 2025.

For instance, the housing market has been out of whack for two years. Rising mortgage rates have kept homeowners from moving out of homes with a low rate. But home prices have continued to rise due to ongoing demand.

The end result? A high price to income ratio to buy a home. That’s resulted in homeownership slipping out of reach for middle class Americans. Today, only those with significant income and assets, and increasingly older Americans have joined the ranks of homeowners.

Meanwhile, 2025 will see Donald Trump return to the White House. Markets are likely unable to fully price in the impact of any changes on tariffs. That’s because changing tariffs can lead to retaliatory actions by foreign countries.

As new tariffs unfold, the economy could see a slip in both imports and exports. Slowing global trade could easily put some fear into the stock market.

 

To watch the full interview, click here.

Stock market strategies

Elliott Wave Investors: Elliott Wave Zig-Zag Signals Upside Move!

Posted on by Andrew Packer

November is historically a strong month for the stock market. 2024 has been no exception, with stocks looking to close the month near record highs going into Thanksgiving. But it’s also been a volatile month. Stocks pumped higher immediately following the election, only to give back half of those gains the next week.

What should investors look for amid these relatively big swings? A look at the overall move suggests that stocks are looking to continue to trend higher.

Some short-term fears, from Russia to inflation to Nvidia’s earnings, have given investors pause. But so far, the data indicates that markets will likely continue higher.

That’s also apparent from the technical analysis. The Elliott Wave pattern suggests that the market’s big push higher and the healthy pullback along the way are bullish. And given the big swings in November, December could end up being a much smoother and calmer month.

From a technical standpoint, the market’s move is a classic rally and pullback. And it looks similar to the third part of a five-part Elliott Wave. That means there’s still more upside ahead into the end of 2024.

However, investors will likely want to get a bit more cautious going into 2025. Uncertainties over taxes and regulations could also cause markets to take a more meaningful pause come January.

 

To view how the market looks from an Elliott Wave perspective, click here.