Author: Andrew Packer

Stock market strategies

TastyLive: I May Have Found a Way to Stay Alive In This Market

Posted on by Andrew Packer

Daily market volatility remains high, with 1% swings both up and down likely in the weeks ahead. That’s thanks to a volatility index (VIX) of about 20 or higher. For trading this environment, a nimble mindset remains key, since stocks can swing at any time on nearly any news.

For traders, having a wider strategy for playing these swings is helpful too. Many strategies exist that can help put the current market volatility into investor’s favor.

For instance, the use of options with 45 days ‘til expiration (DTE) can offer a more consistent return. With so many investors focused on 0DTE, or zero-day options, being wrong in a given day is less painful.

A longer-dated strategy allows for an option to lose premium over time.

The use of option strangles can work well for this timeframe. However, strangles can be more expensive, in terms of requiring more capital than other trades.

Using other option tools like an iron condor can boost returns with less capital up front. However, the overall potential returns are also lower.

With the market’s bigger daily swings, investors don’t have to swing for the fences daily. Using longer-dated options can capture the increased volatility now. And tools like strangles and iron condors can be used to consistently bring in steady returns in unsteady markets.

 

To see the full analysis, click here.

Personal finance

Bigger Pockets: Housing Market Shift: Inventory Catapults Back

Posted on by Andrew Packer

The real estate market has largely been frozen for the past two years. High mortgage rates have kept first-time buyers off the market. The payments, combined with high home prices, were simply too much to bear.

Potential sellers, who likely locked in historically low rates in the pandemic era, were also unlikely to move. To do so would mean giving up a low payment for a higher one, and likely while paying more for a home.

Today, markets are starting to thaw. Mortgage rates haven’t dramatically declined, but are off their highs. And some sellers are coming onto the market, as seen by a rise in home inventory.

The market is likely shifting slightly in favor of buyers. They can potentially get a reasonable price today, and a reasonable interest rate. If rates decline, they can refinance. Today’s sellers are starting to move prices lower in most markets from recent highs.

With the edge towards the buyers, it’s likely that homeowners will see a slight dip in home equity.

In the meantime, home prices are likely to stay stable. However, homebuilding costs are likely to jump with increased tariffs on many key goods such as lumber. That could make existing homes a more attractive buy, and homeowner stocks could get squeezed by higher costs.

 

To listen to the full podcast on the changing real estate market, click here.

International Investing

Ben Felix: The Most Controversial Paper in Finance

Posted on by Andrew Packer

Investing includes the art of asset allocation. That means investors shouldn’t just look for a diversified portfolio of stocks. Rather, they should own a variety of assets, balancing volatile stocks with less volatile assets like bonds.

That level of asset allocation can get incredibly nuanced. That’s because today’s assets include gold, real estate, cryptocurrencies, and even cash as a holding. But some investors still consider a stock-heavy portfolio ideal for investors.

That’s thanks to the long-term track record of stocks compared to bonds over a long timeframe. That’s why one recent paper suggested that investors simply hold 100% of their wealth in globally diversified stocks.

Such an approach will carry considerable risks. That includes overall stock market volatility. If the recent selloff spooked everyday investors with a partial position in stocks, a 100% allocation requires more patience.

The other problem with a 100% allocation? It leaves investors with no cash to add to the market when stocks are down. Forget being able to ease off of stocks in a roaring bull market and buy back in during fear. Instead, it means going along for the whole ride.

While the rise of ETFs makes it easy to build a global stock portfolio, ignoring other asset classes means potentially increasing returns and lowering risk.

 

To see the full danger of being fully invested in stocks at all times, click here.

Commodities

Rebel Capitalist: Is Stagflation Back?

Posted on by Andrew Packer

Investors have seen the market take a hit in the past few weeks. Headline fears about tariffs have sparked concerns about rising inflation and the potential to slow the economy. That’s because tariffs increase the price of imported goods and reduces demand.

Those two factors could create stagflation, the condition of a slowing economy with high inflation. Last week’s PCE inflation, looking at core inflation data, looks sticky. It ticked up in March, with a 2.75% implied inflation rate.

That level may rise further depending on the impact of tariffs. The 25% proposed tariff on automobiles could raise car prices by an average of $6,000. That would make the average car price close to $50,000, a big chunk of change for the average American worker.

With new car prices jumping higher overnight on tariffs, used car prices will also soar. That will make transportation costs far higher, more than offsetting events like a decline in oil prices.

With rising prices and a slowing economy, the recent market selloff over tariff uncertainty looks reasonable. It’s a sign that the stock market may not be ready to break meaningfully higher anytime soon.

In a scenario of extreme stagflation like the 1970s, investors could have the double-whammy of high inflation and poor stock returns. That scenario led to a 70% real loss for stocks the last time it occurred. However, commodity prices boomed, offering investors some safety.

 

To see the full impact of stagflation and other economic dangers now, click here.

 

Economy

Joe Lonsdale: America’s $2 Trillion Problem No One Talks About

Posted on by Andrew Packer

Amid the recent stock market uncertainty, investors may be overlooking moves in the bond market. That would be unwise, as the bond market represents capital invested primarily for safety. Currently, bond yields have finally started to come down, despite first rising after the Federal Reserve cut interest rates.

With lower yields, investors find bonds less attractive compared to the prospective returns of “risk-on” assets such as stocks. Unless, of course, there’s a flight to safety.

However, the bond market itself may be an unsafe space for investors. Soaring yields over the past few years have caused the U.S. Treasury’s borrowing costs to soar. The interest on the federal debt topped $1 trillion last year, and is closing in on $2 trillion.

Meanwhile, foreign nations are either selling U.S. government bonds, or allowing current holdings to mature. And they’re holding their wealth in different assets instead. That’s leaving fewer big players to absorb U.S. debt.

Over the next five years, over $28 trillion of the $37 trillion of national debt will need to be rolled over. Much of it will be at a higher interest rate. That could lead to soaring debt costs, which could drag on the economy and cause America’s debt-to-GDP ratio to soar.

 

To see the full implications behind this problem, click here.

 

Cryptocurrencies

Bitcoin Magazine: Is Bitcoin Price Performance In 2025 Repeating 2017 Bull Cycle?

Posted on by Andrew Packer

Since its inception and pricing in dollars, bitcoin has exhibited a four-year cycle. It rises for three years, culminating in a massive blow-off top. Then, there’s a brutal bear market, where prices drop by 50% or more from their peak.

So far, 2024 saw new all-time highs, and was the second year of a bull cycle following the 2022 bear market. Most bitcoin followers expect a blow-off top in the latter half of 2025.

One sign that we could be in for such a move is a comparison for the cycle topping year of 2017. In that year, bitcoin prices soared from around $1,000 to a peak of over $17,000.

That cycle saw numerous sharp pullbacks along the way. Currently, there’s a strong correlation to 2025 relative to 2017. More importantly, many factors are lining up in favor of cryptocurrencies.

There’s increased regulatory clarity. There’s increased institutional interest and buying. And governments are creating Strategic Bitcoin Reserves (SBRs).

Another trend is that global liquidity is rising. There’s typically a two-month delay between increasing global liquidity and rising bitcoin prices. If that’s the case, then bitcoin is likely to start rising through the summer months.

As bitcoin starts to soar, other cryptocurrencies will likely take off as well. Investors can position themselves for a move higher by accumulating bitcoin now. That can include direct buys or through a variety of ETFs.

 

To see the full correlation between 2017 and 2025 for bitcoin, click here.

Income investing

Dividend Growth Investor: Eight Dividend Growth Stocks Raising Distributions Last Week

Posted on by Andrew Packer

Earnings season is in the rear-view mirror. But corporate boards of directors continue to approve policies such as dividend payments. Companies with growing cash flows can decide whether to fully reinvest in the business, make an acquisition, or pay shareholders.

Paying dividends demonstrates that a company is rewarding shareholders as the owners of a business. And that the company has stable cash flows. Companies that can consistently increase their dividends tend to be rewarded with higher share prices.

Recently, 27 companies have announced dividend increases. Of those companies, eight of them have consistently raised dividends annually for at least a decade.

That’s a strong sign of a mature business that can continue to reward shareholders from increased growth.

For instance, JPMorgan Bank (JPM) has existed in some form or another for over a century. The bank just raised its quarterly dividend payout by 12%, for the 15th consecutive year.

Yes, the current yield of 2.3% is only slightly higher than the dividend yield of the overall market. But a rapid increase in that payout could reward long-term investors.

Another recent dividend increase comes from wireless technology company Qualcomm (QCOM). Qualcomm raised its dividend by 4.7%, and currently pays a 2.3% yield. More importantly, Qualcomm just raised their payout for the 23rd consecutive year.

 

To see the full list of companies that have increased their payouts for at least 10 years, click here.

 

 

Economy

Reventure Consulting: Zillow Officially Cuts Forecast. 242 Cities Heading for Housing Deflation

Posted on by Andrew Packer

For the past two years, the housing market has been frozen. High mortgage rates have kept potential first-time buyers off the market. And it’s also kept existing homeowners from being willing to sell.

That’s starting to thaw. Mortgage rates have come down slightly. And more homeowners are willing to list their homes. However, there’s now a rising supply of homes, far in excess for demand at current rates.

The end result will likely mean a drop in home prices. That’s good news for potential buyers, as it increases affordability. However, existing homeowners will have to face lower prices. Since a home is often the largest source of wealth, that decline could prove uncomfortable.

It’s also a sign that the housing market’s thaw will still be a cool one for some time. However, it could still prove a profitable investment.

For instance, first-time homebuyers have several programs that can get them into a home with a low down payment. And some properties come with an assumable mortgage. That means buyers can assume the lower mortgage rates that existed a few years ago.

So while housing prices may finally see a notable drop, it could increase affordability. And first-time buyers may start to make up the biggest component of the real estate market once again.

 

To see the full breakdown on the real estate market, click here.

Economy

Junk Bond Investor: Relief Rally or Dead Cat Bounce?

Posted on by Andrew Packer

The recent market selloff has caused investors to flee the stock market and look for more safe-haven assets. That includes cash and gold. For the first two weeks of the stock selloff, the bond market traded calmly.

In the last week, however, bond yields started to diverge from each other. Specifically, high-yield and lower-credit saw a push higher. Those rising yields suggest investors started to look at bonds in terms of their safety of repayment.

What caused this move weeks after stocks started falling? The recent economic data suggests a sluggish economy. Inflation is starting to slow. And consumer spending is moderating. And unemployment is starting to tick higher, even before government layoffs show up in the statistics.

However, the slight change in dynamics in the bond market suggests caution. Investors in bonds are typically focused on the return of their capital. That’s in contrast to the stock market, where the focus is on big gains.

For now, yield spreads are still relatively normal. However, a further widening, irrespective of what the stock market does, could signal trouble.

Investors looking for the safety of the bond market should stick with higher-rated debt offerings. Potentially, investors could even look to lock in U.S. Treasuries ahead of further rate cuts this year.

 

To see the full changes underway in the bond market, click here.

Stock market

FX Evolution: Retail Panic = Wall Street Profit

Posted on by Andrew Packer

Financial markets don’t move in a straight line. But there are recurring patterns that investors can follow to get a sense of where markets are going.

One such strategy is to follow fund flows. That data is widely available. And investors can separate it out between institutional investors and retail investors. While both groups often move in sync, sometimes one group gets ahead of the other. In the recent market selloff, institutions were early sellers.

As retail investors started to trim position, institutions moved back in ahead of the market bounce higher. This could be seen more clearly with an increase in dark pool transactions.

These trades don’t show up on traditional exchange volume. But they suggest that someone expects a big move, but doesn’t want to tip off the market.

The end result? Smart money buys from retail investors as they sell, just in time for stock to rebound.

Markets are now back near the 200-day moving average, but below the 50-day moving average. This zone represents a classic “wall of worry.”

Stocks could still break lower from here, or retest the recent lows and move higher. On the plus side, stocks could also see a V-shaped recovery instead. Seasonality trends are now bullish for stocks into the summer. Starting in late summer, institutional investors will once again try to trap retail investors into losses.

 

To see the full technical analysis on the market now, click here.