Author: Andrew Packer

Cryptocurrencies

What Bitcoin Did: Can Bitcoin Become Legal Tender in America?

Posted on by Andrew Packer

Despite its small size overall, the cryptocurrency space attracts a lot of attention. And it’s attracting talent, including legal talent, while a legal framework is being built out.

It’s been a hectic few months for the space. Forced liquidations and an end to a number of crypto staking platforms are making the case for some minimal regulatory framework. While that would apply to cryptos as a whole, Bitcoin’s unique structure also makes it the potential to become a form of legal tender.

Currently, Bitcoin acts as a private digital currency. It’s not controlled by any government. That would seem to make it a commodity, rather than a true currency. However, many use it for transactions freely today, and in an increasing number of transactions.

To make something legal tender, governments would have to declare it so. And it would have to be accepted widely. No crypto, not even Bitcoin, is close to that level of interest today.

While El Salvador made Bitcoin legal tender last year, the US dollar is still the most widely used asset there. And the hassle of building out the infrastructure in that small economy could multiply if added to a more complex one.

 

To listen to the full podcast looking at how legal tender works, click here.

Stock market strategies

Dividend Freedom: 5 Dividend Stocks I Just Purchased

Posted on by Andrew Packer

A bear market is a time to build. After years of growth stocks leading markets, move value-oriented stocks look appealing now. Plus, dividend-paying stocks will regularly put cash into your trading account.

Investors can reinvest the cash in the same shares, or use that money to diversify. In time, that cash can even pay for a retirement. And, without having to sell shares!

With many stocks being hit heavily right now, dividend yields for many companies look fairly attractive. Best of all, while the stock market may remain volatile, dividend stocks tend to be less so.

For investors, the selloff and fear in the markets has hit financial stocks fairly hard. That’s made T. Rowe Price Group (TROW) a nicely valued name. Shares now trade for under 10 times earnings. And the drop in share price form the peak has pushed the dividend yield up to 4.1 percent.

With fears of a recession come fears of a cutback in consumer spending. That’s led to a big drop in Target Corporation (TGT). That company should fare well for investors over time. Shares now yield just over 2.7 percent, and will likely rebound with the economy.

Many traders are zeroing in on individual stocks for dividend payouts right now. However, a number of dividend-themed funds remain well-priced for investors today.

To see to the full video and recommendations, click here.

Commodities

Wall Street Silver: Did A Billionaire Buy $50 Million In Silver Eagles?

Posted on by Andrew Packer

As inflation rages on, investors are looking for ways to protect their wealth. Historically, precious metals have been a key part of that. Gold is typically most valued for its durability and portability.

Silver is often seen as an add-on to that theme. It has the added advantage of being valued at a level that makes sense for smaller transactions. While metals prices haven’t moved higher with inflation recently, there are some signs of strong demand for physical metals.

One recent story making the rounds is that a billionaire out of Texas has put in a buy order for $50 million in precious metals. Interestingly, rather than paying for low-premium 1,000- or 100-ounce bars, the buy has mostly been for American Eagle coins.

These one-ounce coins typically carry a high premium over the spot price of silver. Typically, they trade at a premium to one-ounce coins made by the mints of other countries.

Meanwhile, the buy has been so large that it could only cover 900,000 American Eagle coins. Deliveries are going out into August. And the lack of a clear delivery schedule from the US Mint is pushing premiums for Eagles even higher. The rest of the purchase price is going toward “junk” silver coins and pre-1933 US gold.

Investors looking to buy silver right now may want to look at larger weight denominations. That’s because the huge demand for one-ounce coins right now makes them somewhat overpriced.

To hear the full story of this billionaire bullion buy, click here.

Economy

The Big Picture: The Great Resignation Is Long Over

Posted on by Andrew Packer

One of the few positives to come out of the economy over the past few years has been in the labor market. A high number of job openings relative to workers has led to a shortage. That’s helped to push up wages.

It’s also allowed workers to increase their pay by changing jobs. The rapid voluntary change of jobs in the past few years has been dubbed the Great Resignation. Now, however, the trend is looking well over.

In fact, the data suggested that trend peaked over a year ago. Now, we’re starting to see a more normalized job market. Openings are declining. Workers aren’t voluntarily quitting as rapidly as last year.

This move has helped reduce the lag between wages and wealth that’s been growing from the late 1960s. The result is a rising level of consumer debt. Ever-lower interest rates have helped finance the appearance of wealth too.

Now, with inflation raging, interest rates are going higher to slow the economy. A slowing economy typically comes down to higher unemployment. In short, some of the recent job gains from the Great Resignation will likely get wiped out.

With this trend on the cusp of reversing, everyone across the economic spectrum may be in for a rude awakening. Higher unemployment means lower asset classes in everything from homes to cars, which can have further effects on the economy.

To read the full blog, click here.

Economy

Lead-Lag Live: What If the Bear Market Is Over

Posted on by Andrew Packer

Bear markets can be tricky. Some last for up to 18 months. Some last for just a few months. Some meet the technical definition of just a 20 percent drop from a prior high. Others drop further than that.

For investors, psychology matters as well. By the time traders are convinced that a bear market has set in, it may be over. That could lead to losses as traders remain bearish while stocks start heading higher.

Markets hit a low in June. And high-tech parts of the market hit the hardest have somewhat flattened out as well. There’s a potential sign that the recent market pain may be over.

That’s also apparent with private equity. Deals are still being made. However, valuations for those deals have come down substantially compared to the past two years.

There may be some more downside, particularly in private markets. For publicly-traded stocks, that also suggests some more potential pain in the coming months.

That’s particularly true for companies that may still face some stress amid rising interest rates and a slowing economy. Many companies that went recently-public have no history or record of faring well in a tough market environment.

Fortunately, investors who look for recession-resistant ideas can still fare well. And by taking a longer-term approach now, investors can find stocks to outperform the market.

Consumers still remain relatively strong spenders, and that will translate into higher real spending as inflation declines.

To listen to the full interview, click here.

Cryptocurrencies

Simply Bitcoin: Why Does the United Nations Want Bitcoin Banned?

Posted on by Andrew Packer

Cryptocurrencies have existed for less than 15 years. In that time, they’ve managed to generate thousands of projects in the form of coins and tokens. And at its peak, the space was valued with a market cap of nearly $3 trillion.

While the recent selloff has been the headline news, a number of powerful interests have come out against cryptos. The disdain is particularly strong for Bitcoin, the original cryptocurrency and the largest crypto in the space.

Recently the United Nations came out against cryptocurrency projects. The organization cited the lack of regulation in the space. The UN suggest that countries disincentivize the use of crypto adoption with taxes and regulations.

This comes off of moves made at the country level, such as China’s ban on crypto mining last year.

However, cryptocurrencies were created in part due to the failings of fiat currencies managed by governments.

Currently, inflation is running rampant around the world. The United States and developed nations are in crisis mode over high-single-digit inflation.

Yet a number of countries are even seeing triple-digit inflation. While crypto prices haven’t been strong recently, over the past few years, they’ve provided a way to preserve purchasing power.

However, cryptocurrencies don’t offer the same potential governmental controls. Instead they offer the potential for economic and financial freedom, which makes government planning significantly more difficult.

To listen to the full interview, click here.

Personal finance

Bigger Pockets Money: The “Deathbed Toolkit” That Makes Building Wealth Much More Enjoyable

Posted on by Andrew Packer

A bear market is a time to build. It’s a time to get out of past speculations that haven’t worked. And to start building a stronger financial foundation that can stand the tests of time going forward.

For many, fear remains a problem. That could be the fear of not knowing what to do. Or how to get started. Or how to stick with a plan when it appears that it’s not working in the short term.

Those who are living the last few months of their life will often look back and reflect on what they’ve done. And what they wish they could have done. Upon reflection, it’s clear to many that there are things they should have done.

One of the biggest issues people face with getting their finances in order is the “once I have” syndrome. It’s the idea that no progress should be made towards a goal until after another certain goal is met.

If you’ve ever thought about what you’d do “once you have” one million dollars, it may be time to think about how to accomplish that goal. Or at least work towards it today.

It’s also clear that you can find a path in life that rewards you financially that you love. It may mean giving up the certainty or bigger paycheck of work you don’t enjoy.

It may be a struggle. But the rewards aren’t just material. Taking appropriate risks, and making upfront sacrifices can avoid the feeling of a life wasted – financially or otherwise.

To listen to the full podcast, click here.

Stock market strategies

Meet Kevin: The Netflix Warning to the Entire Stock Market

Posted on by Andrew Packer

One of the best performing stocks over the past decade has been Netflix (NFLX). But year-to-date, it’s been one of the worst performers. The company led stocks higher in the 2010s. Now, its business model is now showing the pain in the economy now.

The company’s latest results show that it’s continuing to bleed subscribers. While the loss was less than what investors expected, it still points to trouble. Specifically, it means diminished cash flows for the streaming giant going forward.

In its most recent quarter, the company lost 970,000 subscribers. However, the company was expected to lose a full 2 million paid subscribers. That led to a bounce in shares.

Going forward, the company appears to be showing declining earnings thanks to fewer subscribers. That’s a sign that the economy is slowing. And will likely continue to slow. Even if the company can grow its earnings and revenues, it will do so at a much slower rate than in the past.

Ideally, a company will grow its earnings at a minimum of the rate of its price-to-earnings ratio. This is known as the price-to-earnings-growth, or PEG, ratio.

That implies that a company trading at 20 times earnings will see its earnings grow 20 percent in the next year if it has a PEG of 1. Right now, most big tech companies have a PEG in the 1.2-1.3 level.

The Netflix slowdown indicates that stocks may still be overvalued here, particularly  “growth stocks” that are no longer growing.

To view the full video analyzing Netflix and its importance in the economy, click here.

 

Economy

A Wealth of Common Sense: Animal Spirits: Extreme Cost Cutting

Posted on by Andrew Packer

A recession can be a self-fulfilling prophecy. As the economy appears to slow, individuals will cut back their discretionary spending. As that happens, the economy does slow. And that entices others to cut back further.

Ideally, policymakers will want to act in a way to prevent that from occurring. At least, when they’re not trying to slow the economy to bring inflation down. So far, early signs are that inflation remains troublingly high.

However, looking at some of the worst performing stocks of the past few months, consumers are making some cost-cutting moves.

Casinos and cruise line stocks have been incredibly poor performers. And streaming services, which saw viewers bounce during the pandemic, are now seeing a decline in paying customers.

These cutbacks are also occurring at a time when energy and agricultural commodities have started to pull back. These assets surged at the start of the year when Russia invaded Ukraine.

A rapid decline in inflation is potentially possible. And with that, we could even move from a high-inflation market to a deflationary market. The past few months have certainly felt like a deflation in asset prices like the stock market. Housing is just beginning to slow.

With bank earnings coming in this week, investors are just now starting to see a collapse in stock earnings. While the market has had some strong-performing days, corporations are hinting at more trouble yet for the economy.

To listen to the full podcast outlining these issues ahead, click here.

Economy

Kitco News: “Red Hot” Housing Market Could Explode

Posted on by Andrew Packer

Most of the time, everyday investors don’t see a big change to their lives when the Federal Reserve changes interest rates. However, when big moves are made in a short period of time, all asset classes can be impacted.

That puts the housing market at risk. Already, rising interest rates have led to mortgage rates roughly doubling compared to a year ago. That leads to a big concern, as housing tends to be the largest source of wealth for everyday Americans.

After a slow recovery from the housing bubble bursting in late 2008, the past few years have been great for housing. And the past two years have even been red hot, according to presidential advisor Steve Moore.

This time around, we may not be in a bubble. That’s good news, as such a bubble bursting could impact the entire economy. There’s a higher cost for new homebuyers. But existing homebuyers are sitting on a large pile of home equity right now.

With the runup in housing values, we’re likely at the start of a slowdown in home sales. That may also lead to lower prices. Add to that the recent losses in the stock market, and there may be some more pain ahead in the housing market.

To listen to the full interview with economic advisor Steve Moore, click here.