Author: Andrew Packer

Stock market

A Wealth of Common Sense: No, the Stock Market Is Not Rigged Against the Little Guy

Posted on by Andrew Packer

The recent resurgence of “meme” stocks, and their quick drop back down, seems to indicate something is awry in financial markets. Video game retailer GameStop (GME) soared over 100% in just a few days on no real news, then came back down again.

Some see that as signs of retail investors run amuck. Others may see it as signs of manipulation by sophisticated funds and traders to extract money from retail investors. Where do things stand?

Chances are, markets aren’t rigged against the little guy. But the little guy is at a significant information disadvantage.

Full-time traders and analysts have a network and capital to tie into when looking for investment opportunities.

Historically, investors who simply stay the course will come out ahead over time.

Investors who hold onto a broad index of stocks for a seven-year period have seen gains 100% of the time. For one year, it’s just 79%. And on the daily level, it’s just 54% of the time.

Investors who feel burned may simply be suffering from the challenge of trying to outsmart the market.

If anything, since sophisticated traders need to make profits daily, retail investors may have an advantage. By thinking long-term, they have a higher likelihood of better profits.

 

To view the full story, click here.

Personal finance

DataDrivenInvestor: Use These 5 Simple Ways to Build Generational Wealth

Posted on by Andrew Packer

There are many roads to successfully investing. There are just as many dead-ends. It’s important for investors to find an approach that works for them.

Some may enjoy swinging for the fences on a trade. Others may prefer slow-and-steady wealth. For those looking to grow generational wealth, the strategies may not need to change too much. But the focus needs to move towards the long-term. Thinking generationally can create an improved investment approach.

First, for most investors, investing comes down to stock ownership. That’s simply a fractional ownership stake in a business.

From there, it may make sense for those thinking generationally to start or acquire a business outright.

That’s because owning 100% of a business can lead to more control. That includes board member positions, the payment of dividends, and other tools for wealth.

Another strategy is to invest in real estate. The up-front costs are expensive. And taking out a mortgage can mean a property has debt against it for a long time.

But over time, the debt is paid off. And the property is likely worth significantly more.

Minimizing the impact of taxes and inheritance can also play a key role in building generational wealth. Taking advantage of tax-deferred investment tools can significantly increase wealth over a generation and beyond.

 

To view the full list of ways to build generational wealth, click here.

Commodities

Kitco News: 4 Major Catalysts That Will Push Gold Above $3,000

Posted on by Andrew Packer

Gold prices continue to trend higher, with the metal moving over $2,400 in the past few days. Gold is now up over $600 per ounce in the past few months.

The trend looks likely to continue, which should push the metal as high as $3,000 per ounce. Several factors are at play that bode well for higher gold prices, and investors still have an opportunity to profit from this move in the metal.

The first major catalyst behind gold’s move is soaring debt and debt costs. The U.S. government has managed to grow its deficit by nearly $1 trillion every 100 days. That’s thanks to having the largest peacetime deficits in history.

Meanwhile, that debt comes with a higher interest rate cost than in previous years. Rather than issuing debt near 0%, it’s at 5% or more.

Consumers have also added to their debt levels. Since the pandemic, consumer debt has grown by $3.4 trillion.

Next, gold demand remains strong. Overall global demand rose 3% year-over-year, to 1,238 tons in the first quarter of 2024. That’s the strongest first-quarter performance since 2016.

Central banks remain big net buyers of gold. But coin and bar demand is also up 3%, indicating retail investors remain interested in the metal. Buying gold allows banks and individuals to get out of any currency, even the dollar.

 

To view the other two catalysts pushing gold to $3,000 per ounce, click here.

 

Stock market

Trader’s Insight: Why Did VIX Close at Long-Term Lows Last Week?

Posted on by Andrew Packer

For years, traders have used the market volatility index, or VIX, as a tool for measuring the jumpiness of markets. When markets are calm, and generally trending higher, the VIX declines and stays low.

When markets start seeing bigger daily swings, the VIX tends to rise. The end result is a chart that looks much like an EKG. And investors have tried to trade this trend for some fast profits.

Last week, markets hit new all-time highs. And the VIX closed at its lowest level since November 2019. That means markets aren’t just calm, but complacent. That’s because the VIX exploded higher just a few months later as the Covid crash started.

To some extent, the move in the VIX, reflects supply and demand. Traders don’t expect much market volatility in the next 30 days. That leads to a low VIX.

And the options market is betting that markets will also trade calmly. Investors can likely expect a pretty slow few weeks ahead in the market. That may include a few down days.

For the most part, that reflects stocks calming down as earnings season ends. And it reflects the recent inflation data, suggesting that while high, it may be starting to crack lower.

Investors may want to reassess market conditions later in the summer, especially as September and October tend to be the market’s most volatile months on record.

 

To read the full insight, click here.

Economy

FX Evolution: Wall Street’s Biggest Bear Just Gave Up

Posted on by Andrew Packer

Markets move in cycles. From their lows, investors start off skeptical. Many miss out on the early part of a rally. As the rally continues, more and more join in.

Finally, when markets get incredibly bullish, even those who were the biggest bears all the way through the rally give up on their view. Typically, when the last bearish investor is in, the markets are more prone to decline rather than rally substantially further.

This week marked one of the last bearish market analysts, Mike Wilson at Morgan Stanley (MS), throw in the towel. Wilson no longer sees a big market decline, although small pullbacks remain likely.

His previous forecast called for a 15% decline in stocks by year-end. His new target for 5,400 on the S&P 500, is right near current levels.

While that upgrade isn’t the most bullish out there, it is a sign that bearish analysts don’t see any immediate downside to markets.

That overlooks some of the wild swings in the past few months. Those were caused for a variety of reasons. That includes geopolitical events to inflation remaining sticky, and some company earnings.

With investors focused on a bullish outcome for stocks, it may be a good time to take some profits. That’s especially the case with growth stocks that have crushed the market recently.

 

To view the full analysis, click here.

Stock market

Rebel Capitalist: You Won’t Believe This … Meme Stocks Are Back

Posted on by Andrew Packer

It’s been three years since retail investors pushed the price of video game retailer GameStop (GME) higher. Hedge funds had shorted more than 100% of shares, leaving the stock vulnerable to a short squeeze.

The squeeze took the stock from around $5 to a peak over $250 before settling down. Part of stopping the squeeze included brokerages turning off the buy option for retail buyers. This week, shares have surged higher, then collapsed, once again.

The move started in the prior week. However, massive jumps higher on Monday and Tuesday sent shares to multi-year highs. Later in the week, shares gave back most of their gains.

And, yes, shares were somewhat heavily shorted compared to the average stock. But it was far lower than last time at 24%.

As GameStop surged higher, other “meme stocks” from the 2021 era also joined in.

The move could be a sign that markets are getting overly bullish. Typically, late market cycles see a number of stocks soar higher on little fundamental news.

However, it could also be a sign that investors are keeping an eye out for stocks that are heavily shorted. These stocks tend to perform well in a bull market.

That’s because as shares go up, the pressure rises on hedge funds to close their short position. That creates more buying pressure.

 

To get the latest on what’s going on with the meme stock mania, click here.

Commodities

DollarCollapse: Gold Family Heirlooms: The ATM Americans Never Thought They Had

Posted on by Andrew Packer

Gold prices continue to remain near their all-time highs. After setting new highs in most other currencies last year, gold closed in on $2,400 per ounce before pulling back.

The fundamentals are in place for a continued gold rally. Inflation remains stubbornly high. Central banks continue to be large buyers. They’re looking to diversify their holdings and reduce exposure to the U.S. dollar. Smaller buyers around the world also continue to buy gold on a regular basis.

Amid that background, there are some signs that the all-time highs are bringing out sellers, too. There’s been a rising demand to bring in old family heirlooms for the value of their gold content.

Pawn shops are seeing an increase in first-time sales of gold-related products.

That could be a sign that gold prices may be at a near-term peak. But it may be a sign of something else.

Consumer trends indicate that the pandemic-era savings boom is over. Consumers have burned through that excess savings. And credit card debt has soared higher.

So it’s possible that consumers are treating family heirlooms as another source of short-term income now.

The bigger trends pushing gold prices higher are outside of this consumer trend. So it’s likely that gold will keep trending higher. And with it, gold mining stocks may be a winner here. But it could also be a sign that consumer-related stocks may stumble.

 

To read the full analysis, click here.

Income investing

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

Posted on by Andrew Packer

Stocks are trending back to all-time highs. Investors remain somewhat bullish, but even small market pullbacks can lead to a jump in fear. That’s why employing multiple investment strategies can prove beneficial for investors.

One strategy is to buy and hold companies with a history of growing their dividends. Dividends are cash payouts that go to shareholders. And studies show that dividend stocks can provide excellent returns over time. Even in a jittery market, many companies still increase their payouts.

For instance, consider the freight and logistics company Expeditors International of Washington (EXPD).

They just raised their dividend payout for the 29th consecutive year. And the payout increased by 5.8%, well above today’s level of inflation.

While the current yield is low at 1.2%, today’s buyers can get an increasing cash payout each year. And as that payout increases, it’s likely that earnings and the share price are trending higher too.

Another dividend growth company is ManpowerGroup (MAN). The staffing and employment services company raised its dividend by 4.8%. And it’s the 13th straight year of increased cash to investors.

At current prices, Manpower pays a 4% dividend. That’s far higher than the average stock. With continued dividend growth, could mean a far bigger payout well into the future.

 

To view the full list of companies that recently raised their dividends, click here.

 

Economy

Heresy Financial: How the US Will Inflate its Debt Away (and you can too)

Posted on by Andrew Packer

With interest rates at their highest level in 15 years, those who are undertaking new debt today are paying a hefty price. However, inflation also remains above average.

In real terms, high inflation can reduce a debt burden. That’s because investors are paying back borrowed money that has a lower value compared to when they bought it. However, this trend may see more popularity in the years ahead.

That’s because debt levels are soaring, particularly government debt. The U.S. Treasury will pay out more than $1 trillion in debt for the first time in history this year. Low-yield debt from the past few years is now rolling over at a much higher rate.

Plus, ongoing deficit spending poses a challenge. The U.S. is closing in on reaching a high level of debt compared to its GDP. When debt levels become too high, the incentive rises to print money instead.

That could mean the U.S. may move towards measures designed to inflate away the debt. That would mean higher inflation, which weighs on assets such as stocks.

However, you could also benefit from this trend, as debts such as a mortgage become cheaper in real terms. And inflation would increase the value of assets bought with borrowed money, such as a home.

 

To understand how debt could be inflated away and how to profit, click here.

Economy

Game of Trades: This is the Single Biggest Threat Today

Posted on by Andrew Packer

While most investors may focus their investment ideas on the stock market, financial markets are driven by something more fundamental.

That something is the U.S. dollar. America’s currency is a powerful financial tool that has been at the centerpiece of the global economy for over 70 years. However, a number of trends have formed that are weakening that position. It may not end soon, but it does point to a more challenging future for investors.

Historically, the dollar has had some of the lowest inflation among the world’s currencies. That’s made it an excellent reserve asset. The dollar has also been key for settling international trade. Even between two countries without that trade passing through the United States.

However, rising inflation and soaring budget deficits mean that the dollar is no longer the attractive venture that it once was.

The overall purchasing power of the dollar has slid by 20% alone in the past few years. That’s thanks to the money printing from the pandemic and beyond. A further decline could have major consequences, as other countries look for alternatives to their dollar holdings.

If the dollar becomes less popular in international trade, it will be more difficult for the United States to print money without feeling the full brunt of the inflation that comes with that.

That could mean higher inflation overall, which tends to bode poorly for stocks but stronger for commodity markets.

 

To view the full details on the threat today, click here.