Author: Andrew Packer

Income investing

Dividend Guy: 5 Rules to Sell a Loser

Posted on by Andrew Packer

Not every investment is a winner. Even amid a massive bull market this year, many companies have failed to break higher. And investors are at an optimal time to sell a losing position. That’s because losses can be used to offset gains for tax purposes.

In the meantime, investors should bear in mind several reasons why it may make sense to sell a losing position. While there are always plenty of reasons to buy a stock, figuring out when to sell can be more difficult.

For instance, if a company’s fundamentals have changed for the worse, it may be time to sell. That could mean a company going from growing earnings to contracting earnings. Or the collapse of profit margins as a hot product is sold to nearly everyone who wants one.

Second, if your original thesis for investing in a company is no longer valid, it may be time to sell. Hoping for a turnaround isn’t an investment strategy. Remember, a company’s financial and operational health can change.

Third, for income investors, a dividend cut is a clear sign to sell. A stock will often fall in anticipation of a dividend cut. The follow-through indicates that a company starved for cash. And that it will take time to get back to a point where they can increase payouts again.

 

To hear the full list of reasons to sell a losing position, click here.

Cryptocurrencies

Bitcoin Magazine: Bitcoin’s Time Has Come With The U.S. Election Results

Posted on by Andrew Packer

Last week’s election a positive for bitcoin. That’s because Donald Trump came out in favor of American leadership in bitcoin. That includes respecting the right to mine bitcoin, and hold it privately in a digital wallet.

Those measures have been opposed by regulators over the past few years. More importantly, over 200 pro-cryptocurrency candidates won elections last week. That increases the chances that bitcoin will have favorable political conditions over the next two years.

These measures have already helped bitcoin break to new highs, with the cryptocurrency breaking $80,000 for the first time last week. From $80,000, bitcoin rallied to over $89,000 before pulling back.

But there could be more gains to come. Proposals are being made to turn bitcoin into a strategic reserve.

Currently, the United States owns a significant amount of bitcoin, largely through its seizure in the use of crime. By holding that bitcoin rather than selling it off, it could create a massive asset in the years ahead.

With investor interest on the rise again and with bitcoin making new all-time highs, bitcoin’s trend is higher. And if other nation-states start to accumulate bitcoin also, the asset could see significant returns in the years ahead. The time for individual investors to acquire a meaningful stake may be passing.

 

To read the full article, click here.

 

Stock market strategies

Lead-Lag Report: Cem Karsan on Options Market Volution and Navigating Economic Complexity

Posted on by Andrew Packer

The past few decades have seen an explosion of interest in options trading. And the past two years has seen the rise of daily options trading in a variety of market indices, including the S&P 500 and the Nasdaq.

The increased popularity of using options daily and for short-term market swings is clear. And we may now be at the point where movements in the options market can, in turn, now swing the much larger markets represented by these options.

The growth of options trading is extensive. Currently, $30 trillion in new investments will hit the market.

And now the options market can give investors a sense of how assets will perform. When the options market is heavily tilted towards the stock market going up, it’s likely that the market will rise. When investors are uncertain, bets will start to accumulate both long and short.

The increase in options trading, in short, gives a sense of what and asset’s value is now and will be into the future. And it can do so in a way that can be replicated by everyday traders.

Currently, markets are gearing up for their year-end tax loss sales and rebalancing. Investors may want to look at trends in the options market to determine an asset’s next move.

 

To watch the full interview, click here.

 

Stock market strategies

Tastylive: 30 Year Technical Trader Explains Why We Could Keep Going Up

Posted on by Andrew Packer

With markets breaking higher, the stage has been set for a year-end rally. However, the question is how far markets go before the current rally pauses. That’s where technical analysis can come into play.

Technical indicators can provide a sense of when markets get heavily overbought. And where potential pivot points in the market lie. Those levels indicate where stocks may find resistance and pause before trending higher.

One way of determining how high markets can go is to use a channel to look at an asset. A channel looks at a market’s trend. A line is drawn at market peaks, and another at market lows. The extension of both those lines can give investors a sense of the range that a stock or market index is likely to trade in.

Sometimes, there’s a big market jump, or a big drop. Those can cause the creation of a new channel.

Looking at the current market channel for the S&P 500 index, it’s likely that the market can see another 200 point move, or another 3% higher, over the coming weeks.

Within a broad market uptrend, over the shorter-term, stocks can fluctuate wildly. So while the market trend is up into 2025, there will be some daily swings lower along the way.

 

To see some of the major channels and technical trends for the next few months, click here.

Stock market strategies

FX Evolution: Warren Buffett Is Doing Something Strange…

Posted on by Andrew Packer

Markets have broken higher following a period of consolidation ahead of the U.S. election. This breakout has proven strong, and helped assets such as bitcoin rocket higher. That adds to significant gains since the start of 2024.

However, not all investors have gone along for the ride. One of the most-watched investors in the market, Warren Buffett, has taken the opposite approach. He’s been selling stocks and increasing his cash position as markets shoot higher.

On the surface, that could be a cause for concern. As a value investor, Buffett, through his holding company Berkshire Hathaway (BRK-B), may simply not see any good deals right now.

It’s typical of Buffett to raise cash when markets are trending higher, and he often sits on a cash position of at least 20%. Today’s cash position however, is much larger at nearly 30%.

It’s possible Buffett could be gearing up for a large acquisition. He has approval to buy 50% of Occidental Petroleum (OXY). Typically, once Buffett buys half of a company, we’ll want to buy the second half in time.

Another possibility was that Buffett was concerned over possible corporate tax rates. They were set to chance at the end of 2025 and shift higher. Given the election results, it’s likely that rates stay low into 2025 and beyond.

 

For the full analysis on Buffett’s cash position now, click here.

Stock market strategies

Tastylive: 7 Minutes That May Change Your Earnings Trading

Posted on by Andrew Packer

Investors who turn to trading often start with strategies involving a company’s earnings report. Why? It’s a date known in advance that can lead to a big move in the share price. And it’s often a binary outcome. Shares either rise significantly or fall.

The question usually comes down to the extent of an earnings-related move. And for how long that move can last. Traders who put the statistics on their side can improve returns with this trading strategy.

For instance, from 2018-2024, earnings from the five largest companies by market cap tended to result in an upward movement 67% of the time.

The changes would often play out right after the earnings report. And the upward trend would usually last for up to five days. This continuation holds up for the second day, but can weaken going into a 4-5 day period.

More interestingly, while stocks did fall the other third of the time, there were nearly no instances of a sideways move.

So, traders looking to bet on earnings should pick a direction. And use a stop loss strategy to avoid a losing trade. And recognize that losing trades will occur.

Of course, over the longer-term, a company’s continued earnings growth will move prices higher. But grabbing some wins off of earnings season can help boost investment returns.

 

To see the full data on trading earnings reports, click here.

Cryptocurrencies

Bitcoin Magazine: Bitcoin Is Having Its Best Year Ever

Posted on by Andrew Packer

Year-to-date, bitcoin is up over 60%, adding to gains from 2023. That’s outperformed the stock market and even gold. More importantly, bitcoin is seeing increased acceptance in the investment world.

This year has seen the rise of bitcoin ETFs for trading, making it easier for everyday investors to own the asset, particularly in traditional retirement accounts. Investors have been flocking to the funds, which have seen the fastest inflows in history.

Meanwhile, pension funds and university endowments are also starting to allocate to bitcoin. And major Wall Street institutions are moving towards bitcoin. That’s a massive reversal to the prior view of bitcoin as a danger.

So far, these events are just now starting to push bitcoin higher. This week’s election also put bitcoin on the ballot, with bitcoin and crypto in general coming off a winner with the election of a pro-bitcoin president.

But more importantly, bitcoin’s performance in the weeks, months, and year after an election tend to be massive.

Historically, bitcoin rises over 20% in the first month after an election. And the gains can hit the triple-digit level over 12 months. Investors still have an opportunity to buy bitcoin below six figures. Or to buy into altcoins as bitcoin starts to take off once again.

While bitcoin’s returns may not be as massive as they have been in the past, it can still provide excellent returns going forward. Particularly for investors today.

 

To read the full analysis, click here.

 

Commodities

Kitco: The Countries Still Boosting Gold Reserves, and What They Have In Common

Posted on by Andrew Packer

Gold has been a strong asset this year. The metal has outperformed the S&P 500 index, beating out stocks in a strong year. Part of the move higher is simply due to supply and demand.

On the supply side, new gold discoveries have paled to some of the massive finds of yesteryear. And while technology can make it easier to extract more from an existing site, it doesn’t make up for changes in demand.

On the demand side, central banks have been massive buyers. That includes countries like Poland, the Czech Republic, and Turkey.

These countries are close to Russia, which has also been a strong buyer along with China. Central banks have been buyers of gold due to the perception that it’s a better holding than alternatives. Most alternatives are the currencies of other countries.

The massive inflation over the past few years has made these currencies less attractive. Even the U.S. dollar hasn’t escaped massive inflation. Gold provides diversification, hence the strong and ongoing central bank buys.

Meanwhile, individual investors still haven’t been part of the gold trend. When smaller investors start buying, not just gold, but gold mining stocks, could become winning trades.

Given the ongoing accumulation of gold by central banks, it may be wise for investors to follow suit by buying gold and gold mining stocks.

 

To watch the full presentation on gold buying trends, click here.

 

Income investing

Dividend Growth Investor: Living Off Dividends In Retirement Vs. Selling Stock

Posted on by Andrew Packer

Investors have several ways to grow their wealth. Growth can ensure that the value of investments grows far beyond inflation. But value stocks tend to hold up better during market downturns.

Both growth and value stocks can also become dividend stocks. And dividends offer investors a source of income. During working years, that can be reinvested for further gains. In retirement, dividend income can be moved towards living expenses.

There’s a good reason why. Dividend income can be more stable than stock market prices. And it can be more reliable, especially for investors with a basket of dividend growth stocks.

Share prices can remain volatile. And those who retire with growth stocks could see a big swing lower early in their retirement. That could radically reduce the available capital for living expenses.

With a high stream of dividend income, investors may not need to sell stocks in a given year. That’s good in a down market, as it means the position can have time to recover. In a bull market, dividend investors will likely see continued dividend increases in addition to capital gains.

Investors who retired near the market peak of 1999 with $1 million had two outcomes. Growth investors who sold off 4% each year ended up with $330,000 at the end of 2023. Investors with a dividend portfolio would have seen their position grow to $5.25 million.

 

To read the full analysis on the tradeoff between growth and dividends in retirement, click here.

Economy

A Wealth of Common Sense: 1999 Vs. 2024

Posted on by Andrew Packer

The stock market is up over 20% year-to-date. That’s well in excess of its average annual return closer to 10%. Adding in last year’s rally, the market is up nearly 30% over the past 12 months.

Plus, out of the 2,700 stocks in the Russell 3000, 101 of them are up 100% or more so far this year. Thirteen stocks are up more than 300%, beating the market average by more than tenfold.

However, a full 1,000 stocks in that index are down. That’s about 40% of the index. And 137 stocks have lost 50% of their value or more this year.

Overall, this points to the trend over the past few years of some big gains boosting returns. Many individual stocks continue to struggle. In the S&P 500 index, it’s even more concentrated, with just five stocks responsible for half the index’s gains.

This trend is similar to 1999, a strong year for the market, up 24%. Much like this year, a handful of stocks, dominated in the tech sector, have driven the returns. A full 13 stocks finished that year with 1,000% gains.

But more than 1,000 stocks in the Russell 3000 index were down that year. Of those, 182 lost 50% or more.

What that doesn’t suggest that we’re near a market peak anytime soon, it’s a warning sign. Investors who have had big winners this year may want to take some profits off the table now.

 

To read the full analysis, click here.