Author: Andrew Packer

Personal finance

Lead-Lag Live: Millionaire Habits

Posted on by Andrew Packer

Investing isn’t about buying on Monday and selling on Friday. It’s about building lasting wealth. The ultra-wealthy have developed a number of strategies and habits that allow them to do so, even during a slow economy.

Understanding how to build wealth is important. But so is how to manage and how to enjoy it. These millionaire habits can be built at any income level. Making better decisions with your money is always a good habit to learn.

In today’s markets, it may also be the best investment to make now.

First, it’s crucial to understand what you want in life. Many fail to make any goals, which makes it impossible to budget and plan for those goals. It doesn’t help that many make career decisions in their teenage years, as they think about a college major and first job.

Many follow their passions, which tends to limit career opportunities. However, passions change. But those who follow their strengths can likely find a job matched to that strength more easily than following their passions.

Plus, passions usually show up in artistic endeavors, where there are a few big winners in the job market. But strengths can show up in analytical skills, which tend to result in many high-paying career opportunities.

Those who embrace their strengths can see a higher income, the first step towards developing a lifetime of wealth.

 

To listen to the full interview and learn the other millionaire habits, click here.

Stock market

The Big Picture: Tom Rampulla

Posted on by Andrew Packer

There are plenty of ways to invest. One of the easiest for retail investors is to buy an index fund. The return mimics the overall market. And these funds offer far lower fees than mutual funds.

This strategy works for a number of reasons. The biggest one is that most retail traders fail to earn a return anywhere near that of the market. That’s because they try to chase assets that have already risen in price. It’s a classic case of overpaying to get in.

The index fund industry was largely revolutionized by Vanguard, and its founder Jack Bogle. Index investing was slow to take off, as the lower fees made it a tougher sell from financial advisors.

But customers could see the benefits of lower fees, which lead to improved returns. That’s resulted in the entire industry cutting its fees, so that today some brokerages even offer free trading.

Vanguard’s strong and growing client base allows the firm to see how current trends can play out.

For instance, when investors panic out of stocks during a bear market, 30 percent of them never return back to investing in stocks. That leads to a tremendous loss of compounded growth over decades of potentially investing during much longer bull market periods.

 

To read the full interview, click here.

Stock market strategies

Elliott Wave Options: Earnings Reports Lift Markets… S&P Wave 4?

Posted on by Andrew Packer

There are many ways to look at markets and market trends. Elliott Waves are a technical strategy that identify a five-wave move that mark market trends. The latest market strength of the past few days thanks to earnings season could be a sign of a Wave 4.

If so, the current upside may have a few more days to play out. But it could also lead to a Wave 5. That’s a downside trend that would result in lower lows.

Earnings season has been beating expectations so far. Companies may have slowed in some respects. But unexpected growth points or better-than-expected results have resulted in some strong performance for reporting stocks.

That could result in stocks bouncing from their 200-day moving average to their 200-day moving average.

But if that play doesn’t follow through with a further rally, the downtrend in place should lead to further declines in stocks. For the S&P 500, that means a run to 3,800. A move higher could break the bear market.

Meanwhile, rising interest rates in the bond market could reverse slightly in the coming days. However, with the prospect of further interest rates hikes, bond yields may also spike higher. As that happens, bond prices will continue lower.

Overall, markets are playing out an oversold bounce. Conditions are ripe for a retest of the lows, with a strong chance of breaking lower.

 

To watch the full analysis, click here.

Stock market strategies

Game of Trades: We Haven’t Seen This Since the Dot-com Bust

Posted on by Andrew Packer

The S&P 500 index is testing its 200-day moving average for the first time since the Covid crash in early 2020. This test occurs every few years, with prior tests in 2018 and 2015. That’s amid what today’s investors view as part of a long bull market from 2009-2020.

Markets often bounce off of this key technical level. However, when they don’t, it can mean more months of pain ahead for investors while a bear market deepens.

A 200-day moving average can often be a turning point higher, particularly if the economy is still growing. But in a recession, like in 2008, it can be a sign of a further move lower.

The question is where we stand today. The economy has shrunk this year enough to be considered a recession by the official definition. However, factors like the labor market and consumer spending remain strong.

Another factor weighing on financial markets is the US dollar. The currency has been strong this year. That’s made other currencies relatively weaker. That’s good for other countries, particularly if they have strong exports. But it can weigh on earnings.

The dollar is looking overbought in the short-term, so it could weaken in the coming months. That could take some of the pressure off of global markets and lead to a bounce off of the stock market’s 200-day moving average.

 

To watch the full video, click here.

Economy

A Wealth of Common Sense: Why Isn’t Inflation Falling?

Posted on by Andrew Packer

Inflation continues to wreak havoc on the economy. While the year-over-year numbers have started to show a decline, inflation still remains near multi-decade highs over 8 percent.

That’s in spite of the Federal reserve raising interest rates at their fastest pace in the past 30 years. In theory, inflation should be falling. But a number of factors are at play that may keep inflation from falling – at least for the time being.

Inflation fears will also keep the market volatile in the months ahead. Markets are unlikely to bottom until investors are confident that the Federal Reserve is done raising interest rates. And the Fed is committed to raising rates to get inflation down.

Never mind the fastest rate hike cycle in decades. Or that mortgage rates have more than doubled since the start of the year. Rates are on track to move higher as long as inflation remains well over the Fed’s target of 2 percent.

There’s no silver bullet for the end of the market pain. And when the market does start to come off its bottom, investors won’t believe it at first. They’ll see another bear market rally, rather than the start of a new market.

For now, it looks like inflation will remain high as interest rates still aren’t high enough in real terms. And the job market remains strong, which keeps consumer spending wrong.

When those factors change, inflation will fall. And the market can then start to bottom out before the next move higher.

 

To listen to the full podcast, click here.

 

 

Cryptocurrencies

Bitcoin Magazine: Has Bitcoin’s Inflation Hedge Narrative Failed?

Posted on by Andrew Packer

Cryptocurrencies soared higher in early 2020 as stimulus checks started to hit bank accounts. One narrative was that more spending could lead to higher inflation. And that bitcoin and other cryptocurrencies could be a hedge against that inflation.

Fast forward two years and that inflation has certainly materialized! However, from last year’s peak, bitcoin is down 70 percent. Other cryptos have fared even worse. That suggests the narrative has failed.

However, some facts are in order. First, during the 2020 market selloff, bitcoin hit a low in the $3,000 range. Today, closer to $19,000, it’s still up six-fold from those lows. That’s a return well in excess of the inflation of the past few years.

In the meantime, credit markets are showing some recent strain. That suggests that even with high inflation, central bankers may need to pivot away from hiking interest rates soon.

While that could relieve some of the downside in financial markets, it could also lead to another move higher for cryptos. However, if that happens and inflation remains high, it could stay higher than desired for years to come.

So in the short term, those holding cryptos for an inflation hedge may be disappointed. But the medium and long term suggests that this new asset class could still serve as a reasonable inflation hedge. And that those who expect it to last higher for longer may want to buy into that hedge now.

To listen to the full panel discussion, click here.

Stock market strategies

Dividend Growth Investor: Three Dividend Growth Stocks Increasing Shareholder Dividends

Posted on by Andrew Packer

Although the economy is slowing and stocks are in a bear market, there are still opportunities for investors now. For those with a long-term outlook, dividend paying stocks can weather any market downturn.

Plus, buying such stocks in a bear market makes it easier to get great returns. That’s because these stocks will rebound in time. And many dividend paying stocks also have a history of paying higher dividends every year.

These dividend growers tend to reflect companies that have a strong business model and industry-leading position. They may be big players. Or they may have a niche that won’t make them a large company, but will ensure they have ample cash to reward shareholders.

These companies tend to fare well over time, although they may not zoom ahead during a bull market.

A number of such companies are increasing their dividend payouts now.

One such example is RPM International (RPM). They make specialty chemicals. The company just raised its quarterly dividend by 5 percent to $0.42 per share. The company has raised its dividend for 49 years in a row.

And while inflation has recently hit about 9 percent, the company’s five-year annualized dividend growth rate is 13.4 percent. While the starting yield is small at 1.7 percent, today’s buyers can see a payout growth well in excess of inflation.

 

To read the full blog and discover the other dividend growers now, click here.

Commodities

The Maverick of Wall Street: Oil Wars: OPEC+ Strikes Back!

Posted on by Andrew Packer

Oil is the most-watched commodity in the world. It’s the key to energy markets, even with the recent shift towards renewable energy sources. And like other commodities, it’s prone to big swings for a number of reasons.

First, oil prices spiked this year when Russia invaded Ukraine. Those prices moderated in time, as the global market worked around potential supply issues from the region. Then, prices dipped further following the news that US GDP shrank in the first half of the year.

Now, prices are set to rise again. The Biden White House has been dipping into the Strategic Petroleum Reserve, but is set to end those sales by November.

More importantly, OPEC+, the cartel of oil-producing countries and affiliates, have agreed to a production cut.

Rising oil prices could lead to a further pressure on inflation. That’s because energy prices are a key input for the production and transportation of any physical good.

That also means higher gas prices at the pump. The more consumers spend on gas, the less they have to spend on other parts of the economy.

Plus, some states have far higher gas prices than others thanks to the myriad of taxes that go into a gallon of gas. That could cause some parts of the country to slow down faster than others.

 

To watch the full video, click here.

 

Economy

Animal Spirits: A Tough Break

Posted on by Andrew Packer

Markets are in a tough spot. That’s because good news has become bad news. The strong job market sounds like a good thing. But it also means that the Federal Reserve is likely to continue raising interest rates. That’s why good jobs numbers have led to down days for the market in recent months.

The most recent data shows a slowdown in job openings. That hasn’t done anything to change the unemployment rate.

But it does show that the signs of a slowdown have finally appeared. That may not be enough to change monetary policy, however.

Overall, that suggests that the Fed is on track to send the economy into a recession to curb inflation.

That would be similar to the move that it made in the late 1970s, when inflation hit double-digit levels. It took a steep hike in interest rates and a recession to break inflation back then.

The high inflation and interest rates of the 1970s led to a lost decade for stocks, as well as a poorly-performing housing market. Assets took off as inflation came under control and interest rates could decline.

Today, inflation has likely been driven by pandemic stimulus, which has worked its way through the economy already.

That’s why many see inflation coming down in the year ahead. Additional government spending and factors such as supply chain issues could still keep some prices higher for longer.

 

To listen to the full podcast, click here.

Economy

The Financier: This Crash Will Be Much Worse Than Expected

Posted on by Andrew Packer

Inflation remains a top concern for the Federal Reserve. Their plan? Raise interest rates to slow the economy, and hence slow inflation. However, that plan also has the potential to throw millions out of work.

The problem? Jobs don’t cause inflation. So rising unemployment is no guarantee that it will solve the inflation problem. Inflation is caused by money printing. That exploded during the pandemic, and remains high today.

If anything, keeping more people employed helps fight inflation.

More workers increase the supply of goods and services on the economy. All else being equal, that should have a downward effect on price. Fewer workers means fewer goods and services, which would lead to a larger price increase.

Right now, markets are hyper-sensitive to how the Federal Reserve is reacting to economic data. That can create big swings in markets. But it’s also a sign that rising unemployment will be a sign for the Fed to declare victory and stop raising interest rates.

Typically, rising interest rates should lead to a change in consumer habits. Higher rates on saved capital in bank accounts or bonds should entice consumers to spend less and save more. However, the data shows that consumers are still borrowing as fast as ever.

With a slowing economy and record low savings rate, the economy could be in store for a larger drop ahead. Investors should look to build up cash now, to take advantage of post-crash bargains.

 

To listen to the full episode, click here.