This Energy Trade Could Post Triple-Digit Gains

Investors often try to figure out themes in the financial markets once a new trading year hits.  2017 was all about low volatility, cryptocurrencies, and tax reform.  With tax reform out of the way, we still have low volatility and cryptocurrencies/blockchain tech on the board.  What else could be in store?

Obviously, the jury’s still out on what the new trends will be this year – if there are any new ones.  So far, conditions have been a lot like 2017.  However, I believe we’re going to start hearing and seeing more about inflation.

You see, the economy is already doing well.  Add in tax cuts for individuals and businesses, and there’s going to be even more money floating around.  That extra money could easily make its way into the consumer/business spending ledger.  If enough money is spent on goods and services, we could finally see a ramp up in inflation.

Investors are already showing some concern about inflation, with the move into gold this year.  So far, the price of gold is up about 8% since-mid December.  It’s the first time since last September that gold is closing in on $1,350 per ounce.  Keep in mind, gold is a very common hedge against inflation.

Here’s the thing…

Besides gold, most commodities generally serve as a good inflation hedge.  Commodity prices tend to go up as the price of the dollar goes down (a recipe for inflation).  Many investors look to precious metals in these scenarios, but energy is also a big beneficiary of inflation hedging.

Crude oil is already up close to 7% just this year (all two weeks of it).  Natural gas is up close to 9%.  What’s more, energy stocks are following suit.  The Energy Select Sector SPDR ETF(NYSE: XLE) is up over 7% year-to-date.

At least one very well-funded trader believes XLE and energy stocks are going to continue their run higher. With XLE trading around $76.50, the trader purchased 27,000 March 77 calls for $1.67.   That means the trader will start generating profits above $78.67 at expiration.

This is obviously an extremely bullish trade.  The trader is betting $4.5 million that XLE is going to keep going higher.  Every $1 XLE rises above the breakeven point will result in $2.7 million in profits.

Now, this is a nice, easy way to make a bullish bet on XLE.  However, if you want to save some money, you could also do this trade as a call spread.  Using a call spread (selling a higher call against your long call in the same expiration) would substantially reduce costs, but also cap your gains.

For example, at the time this trade was executed, you could have sold the 81 calls for about $0.50.  The total cost of the trade would have been reduced to around $1.15.  To find max gain potential you just find the width between the long and short strikes ($3) and subtract the price paid ($1.15) and you get $1.85.  That’s potential gains of 160%.  A call spread like this is an easy way to lower your risk without sacrificing too much in potential upside.

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Source: Investors Alley 

3 High Yield REITs for Retirement

Share values of real estate investment trust (REIT) companies have been dropping since the Fed announced its last Fed Funds Target Rate increase on December 13. The Fed started raising interest rates in quarter percent increments in December 2015. Each of the four rate increase announcements has been accompanied by a pull back in REIT values. These declines have been short-lived and can be viewed as buying opportunities.

2017 was an interesting year for the REIT sector. While most of the S&P market sectors had stellar returns for the year, REITs as a group returned just a positive 5.1%. In contrast, the S&P 500 gained 21.8%. With average REIT yields near 4%, the 5% total return gives the impression that REIT values did not do much in 2017. This chart of the SPDR Dow Jones REIT ETF (NYSE: RWR) shows that while the values at the start and end of the year were close to the same, there was a lot of share value action during the year.

In total, there were nine significant swings of REIT values over the run of 2017. This chart shows that to make money with REITs when the Fed is increasing rates, investors would be best served by accumulating shares during the dips. The price swings show that results for individual investors last year could range from a significantly negative total return up to close to double-digit positive total returns. Buying at lower share prices also results in an increased dividend yield, which would further boost an investor’s total returns. The REIT sector last peaked in mid-December just after the last Fed rate increase. Since then REIT values are down by 6.5%. This is the time to pick up some high-quality REITs and watch the share values for signs that prices have bottomed for this cycle. It’s not possible to pick and exact bottom, but the good news is that some very high-quality REITs are now sporting very attractive yields.

In an environment where the Fed is raising rates, the REITs to own are the ones that can and will grow their dividends at a faster rate than the interest rate increases. Here are three to consider:

Ventas, Inc. (NYSE: VTR) is one of the largest REITs operating in the healthcare sector. This REIT sector has been hard hit on the fears associated with having the Federal government as a major source of healthcare services payments.

VTR is down 23% from its 52-week high, and the shares yield 5.75%. This is a full percent above the four-year average yield for Ventas. This company should grow its dividend by 4% to 5% per year.

I’ve been in and out of VTR in my Dividend Hunter service several times for both the dividend payments as well as the share price swings bagging some nice gains each time.

MGM Growth Properties LLC (NYSE: MGP) owns casino properties that are master leased to MGM Resorts International (NYSE: MGM). MGP has increased its dividend three times since it was spun-off by MGM in spring 2016.

MGP currently accounts for 24% of total rooms and 35% of private (non-municipal) convention space on the Las Vegas Strip.

I forecast continued 6% to 8% annual dividend growth.

The MGP share price is now 10% below the 2017 high on speculation that parent company MGM may incur huge liabilities from the tragic Mandalay Bay incident last year. The shares yield 5.9%.

EPR Properties (NYSE: EPR) is now trading at 22% below its peak value. EPR functions as a triple-net lease (NNN) REIT. With this model, the tenants that lease the properties owned by EPR are responsible for all the operating costs like taxes, utilities and maintenance. EPR’s job is to collect the rent checks.

This REIT owns multiplex movie theaters, golf and ski entertainment facilities and private/charter school properties. EPR has been in growth mode over the past year: it now holds more properties in six of the 10 categories it owns, one is completely new, two have the same number of properties, and only one so saw the number shrink by two properties.

EPR is a steady 7% per year dividend growth and pays monthly dividends. The shares currently yield 6.8%.

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Source: Investors Alley 

Buy These 3 REITs for High Yield and Tax Breaks

Before the passage of the Tax Cuts and Jobs Act qualified dividends paid by corporations had a perceived tax advantage over fully taxable dividends paid by pass-through businesses like real estate investment trusts (REITs). The new tax law levels the tax playing field for REIT dividends, putting the advantage for investors even more in the camp of the higher yield real estate investment trusts.

Under the old tax rules, REIT investors paid their marginal tax rate on dividends from their REIT shares. For the highest income investors this meant a 39.6% top marginal tax bracket and the 3.8% Medicare surtax. In contrast, qualified dividends paid by regular corporations were subject to a maximum 20% income tax, plus the Medicare surtax. At a glance, REIT investors in the top tax bracket were paying almost twice the tax rate on REIT dividends. What many investors fail to consider is that the net income a corporation generates to pay dividends was taxed at the 35% corporate tax rate, and whatever was left was the money the company had to pay dividends. REITs are pass-through entities for tax purposes, so do not pay corporate income taxes if 90% of net income is passed through to investors as dividends.

Under the new law, the top tax rate for qualified dividends remains at 20%. Corporations did get a tax rate reduction, dropping from 35% down to 21%. I hope that companies take some of those income tax savings and pass them along to investors as higher dividends. It’s too early to tell if that will happen but knowing corporate management teams, I’m not holding my breath.

REIT investors first get new, lower tax brackets. The highest rate has been reduced to 37% from 39.6%. The threshold for the highest bracket has also increased from about $450,000 of income for a married couple to $600,000. Investors in lower tax brackets will also see lower marginal tax rates. In addition –and this is the big news for investors—REIT income gets a 20% deduction before the marginal tax rate is applied. This means a top tax bracket investor has a net 29.6% tax rate on REIT dividends. Married filing joint investors can have income up to $315,000 per year —the top of the 24% tax bracket—and end up with a net REIT dividend tax rate below 20%. Sweet!

If you are new or not highly informed about REITs, it is important to understand that this is not a monolith economic sector. The REIT subsectors cover almost all the different business sectors of the U.S. economy. You can find REITs that focus on properties in sectors such as telecommunications, high-tech data, housing, finance, e-commerce, finance and healthcare, to name a few. You can build a diversified REIT portfolio that will pay a very attractive dividend yield and provide economic diversification. To get you started, here are three REITs from very separate sectors.

Starwood Property Trust, Inc. (NYSE: STWD) is a finance REIT, originates and holds a portfolio of commercial mortgage loans.

This is a stock you buy for the high dividend yield, but do not look for a lot of dividend growth.

STWD is one of the largest finance REITs, and from my research, the most conservatively managed, especially regarding protecting the quarterly dividend. This stock currently yields 9.1%.

Digital Realty Trust, Inc. (NYSE: DLR) develops owns and operates data center properties. Data storage and management is a huge growth business and many companies prefer to lease space from a data center developer like Digital Realty to house their services and provide the necessary Internet and direct communication links.

Investors in DLR can look forward to double digit annual dividend growth for years, if not decades to come. Thus, unlike with STWD above where you’re holding it of the high yield with DLR you’re holding it for the high dividend growth. The shares currently yield 3.5%.

Related: 3 High Growth REITs for Profits in an Amazon World

Gramercy Property Trust (NYSE: GPT) is in the process of shifting from a mix of office and industrial properties to focus on the industrial side of their portfolio. Good move! The industrial REIT sector provides necessary support to e-commerce sales, with warehouses and fulfillment centers… sector that grow even if the rest of the country is getting “Amazoned.” For the same amount of sales, the warehouse needs of online retailing are triple the amount of space required by traditional brick and mortar retailers. Industrial real estate profits will grow right along with the growth in e-commerce retail sales. GPT current yields 5.6%.

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Source: Investors Alley 

Cryptocurrency News: Why Bitcoin, Ethereum, Ripple Are Plunging Today

Bitcoin, ethereum, ripple and other virtual currencies are falling today on a new bit of cryptocurrency news.

Cryptocurrency News: Why Bitcoin, Ethereum, Ripple Are Plunging Today

Source: Shutterstock

Recent reports claim that China is preparing to crackdown on on bitcoin and its various rivals. China’s central bank has specifically called for a ban on individuals and businesses getting involved with virtual currencies and offering services for them. This cryptocurrency news is likely behind the sudden fall in value for bitcoin, ethereum and ripple.

Following the release of this cryptocurrency news, bitcoin’s value dropped to roughly $11,000. This had the virtual currency losing roughly 18% of its value and its a far cry from the almost $20,000 it was trading for back in December.

Ethereum, the virtual currency with the second-highest value, also saw its value drop as much as 23% following the release of the cryptocurrency news. Ripple also lost as much as a third of its value on concerns about a crackdown, reports Reuters.

Governments preparing to crackdown on virtual currencies have been in the news quite a bit recently. This includes a recent report that South Korea was considering a full ban on bitcoin and its rivals. However, the government walked that statement back and said it may only look to regulate cryptocurrency.

The U.S. government has also been warnings investors about the dangers of bitcoins and its rivals. The SEC has been warning investors about the lack in insurance for virtual currencies and the highly-volatile market. The SEC also notes it can ban the trading of companies that appear to be Initial Coin Offerings scams.

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Source: Investors Place

This Controversial Industry Is Here to Stay

It’s hard to tell when a stock is at the end of a strong run, or if the broader market is running out of steam.

But one thing to look for is how stocks react to bad news.

The more sensitive the stocks are to the bad news, the closer we are to the end of a recent rally and possibly going into a bear market.

On the other hand, if negative news has little effect, then the stocks still have room to run higher.

One particular group of stocks went through this just the other week.

There was an announcement that had the potential to put companies out of business, yet, despite an initial negative reaction in the stocks, shares have rebounded and held steady.

This is one industry that I honestly haven’t followed that much yet, as it is somewhat out of my wheelhouse. But the way the group as a whole reacted to the news recently has convinced me it is here to stay, and if you don’t have exposure to it yet — now is the time.

Marijuana Stocks: A Movement

The industry is marijuana stocks.

And I know, a lot of people have avoided these stocks because, well, let’s face it — it’s a drug that is illegal in most states.

That’s the same reason I haven’t followed it much. I’m not really a fan of the movement.

But after I saw how marijuana stocks reacted, it has me convinced the movement is here to stay, and apparently, more people in general are jumping on the bandwagon.

Now that the majority of people seem to be in favor of legalizing marijuana, aka cannabis, the movement may be here to stay.

That’s why a recent announcement that shook the industry was so important — I wanted to see how the stocks reacted.

U.S. Attorney General Jeff Sessions announced plans to roll back federal policies that paved the way for states to legalize marijuana — the policies that have allowed marijuana stocks to flourish and raised expectations for recreational marijuana to be allowed in more states.

This is when publicly traded marijuana stocks tanked on the news. Some were down more than 30% because, like I mentioned, a ruling like this is potentially sending many of these stocks into bankruptcy.

I was watching it as the news developed, and I bought my first marijuana stock on the dip. The buzz around the office was that the movement wasn’t going to end — and many investors feel the same way.

If you haven’t dipped your toes into this speculative trade yet, there’s still time. I have two stocks for you today that will reap the benefits as the movement stays intact.

Speculating on Marijuana

I’ll precede these two stock picks as speculative plays. Speculative because, indeed, a change in jurisdiction in the U.S. could put many marijuana-related companies out of business, and the two below would not be immune to such a change.

Plus, they each depend on further advancements in the recreational marijuana movement, which may or may not happen. So invest with caution, but it is an industry that needs to be on everyone’s radar at this point.

The first is the largest U.S.-traded pure marijuana stock — Canopy Growth Corp. (OTC: TWMJF).

Yes, both of the stocks I mention today trade on the pink sheets, or over the counter. These are stocks that typically have low volume and are risky bets. But with marijuana stocks, it’s where they are all listed and still have plenty of volume.

Canopy Growth is actually a Canadian stock that’s listed in the U.S. on the pink sheets but has an average daily volume of more than 1 million shares. The company has the highest individual market share in Canada’s medical marijuana market and will be poised to benefit a lot if Canada approves recreational marijuana use, which is expected to be passed in the coming months.

The other is Cannabis Science Inc. (OTC: CBIS). This company sells marijuana-based pharmaceutical and recreational products. It is opening two licensed dispensaries in Los Angeles this month and plans to open one more this quarter.

If you want exposure to a possible booming U.S. recreational market, this is the stock to own. It is traded on the pink sheets, but it has an average daily volume of nearly 30 million shares, so there is plenty of liquidity. However, it is a “penny stock,” trading at just $0.10 at last glance.

Again, these are speculative trades in an industry that is not quite established yet. But considering the way these stocks have held up despite major negative news, they’re stocks you should have on your radar.

Regards,

Chad Shoop, CMT

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3 Winning Tech Stocks from the Consumer Electronics Show

It’s always interesting to see what technologies are highlighted at the annual Consumer Electronics Show (CES) in Las Vegas. I use it, and so should you, as an insight into the next possible investable technology trends. After all, the U.S. consumer electronics industry’s revenues in 2018 are expected to come in at about $351 billion in 2018.

Some of the technologies on display at this year’s show were augmented and virtual reality devices, robots, and artificial intelligence (AI). But the real focus of this year’s show were the automobile and the automotive parts companies and the seemingly inexorable move toward autonomous vehicles.

More on that a bit later… first, I want to fill you in on some of the other highlights of this year’s CES.

Will VR Ever Become Mainstream?

Two companies were front and center when it came to virtual reality (VR) at CES – Facebook (Nasdaq: FB) and Alphabet (Nasdaq: GOOG). Both are still trying to persuade consumers to buy VR headsets. But with little success… the segment is expected to generate only $1.2 billion in U.S. sales in 2018.

Facebook’s Oculus Go sells for $199, while VR headsets based on Google’s Daydream VR platform, such as a device from Lenovo, sells for almost double that amount.

I think neither company will make a success of their VR efforts. To me the best in the sector is Sony (NYSE: SNE) with its high-end Playstation VR headset. It has sold over two million units of this headset in 2017, which is impressive since it only launched in October. Gaming may be the only market where VR truly becomes mainstream.

Alexa, Make Me Money

Now, let me tell you about an interesting note at the start of the conference that came from the show organizers. They said that sales of the item that has brought the consumer electronics industry the type of growth it has not seen in years – smart speakers – will peak as soon as next year. They pointed to the ‘hockey stick’ growth in sales that hasn’t been seen in eight years, since tablet computers became a mainstream product.

The leaders in the smart speaker space are, of course, Amazon.com (Nasdaq: AMZN) and Google. U.S. sales of these speakers soared 279% in 2017 over the prior year to 27 million units. Sales are forecast to rise another 60% in 2018.

I believe there is one true leader in this space, with Amazon’s Alexa being almost everywhere.

This gives you just another reason as to why Amazon is a must-own stock. At CES, vendors showed off Alexa-powered headphones, smoke alarms, cookers, showers, light switches and even mirrors (for an extra $350).

And even you leave your home and hop into your car, you may find Alexa. Amazon announced an agreement with Toyota to add Alexa to some Toyota and Lexus vehicles. Toyota thus joined a long list of auto companies – FiatChrysler, Nissan, Daimler, BMW, Hyundai, and Ford – that are either letting Alexa into their vehicles or integrating the voice service into the connectivity systems that link customers’ cars and mobile phones.

Since we’re talking about cars, let’s move on to the highlight of the 2018 CES – the automobile of the future.

Nvidia and the Automobiles of the Future

Let me start by talking about a company that was unavoidable at this year’s CES – Nvidia (Nasdaq: NVDA). Their graphics processing units (GPUs) are at the core of many machine learning and artificial intelligence solutions, including for automobiles.

Nvidia’s stock soared after it announced that it would be partnering with Volkswagen to build an intelligent (AI) co-pilot system. The system that will gather data from both in and outside the car and will use some gesture and natural language voice controls and finally combine all that with what the AI has learned about the driver. And voila – you have a helpful AI assistant. It is expected this type of system may be available as soon as 2022.

Related: 5 Growth Stocks to Ride the Semiconductor Supercycle

In a similar vein, Uber also announced that it will power its self-driving cars and trucks by using Nvidia’s AI technology.

Nvidia also said that as part of its DRIVE Pegasus (PX) AI platform, the Xavier processors would be delivered to customers beginning in the first quarter of this year. Xavier is the culmination of a $2 billion investment to expand processing power and capabilities to the autonomous vehicle marketplace.

Auto Parts Companies Nirvana

The other companies I am focused on when it comes to the future of the automobile are the auto parts firms. At whatever auto or technology show they attend across the world, they are like kids in a candy shop. And for good reason…

Currently, the vehicle manufacturers still largely control design, and nearly every other important aspect of vehicle production. But that is slipping away from them as the wave of the future is more electrical systems and electronics and not mechanical systems.

Estimates are that 50% to 70% of the value of a car in the future will lie in those electronic components, which the automakers purchase from other companies. Some of these companies, ironically enough, were spunoff by U.S. automakers years ago because Wall Street told them they were low-margin, no-growth businesses.

There are a number of very good auto parts stocks for you to choose from. Here is just one example:

A company to consider is Visteon (NYSE: VC), which designs and manufactures electronics products for automakers. Visteon provides everything from standard gauges to high resolution, reconfigurable digital 2D and 3D displays to infotainment and audio systems.

At CES, Visteon introduced its DriveCore autonomous driving platform, which is the first solution that allows automakers to build such solutions in an open collaboration model. It also unveiled its all-digital cockpit of the future with reconfigurable instrument clusters and advanced display technology along with driver monitoring, ADAS integration and other features.

I also like the fact that the company has considerable global exposure. It is enjoying strong sales in China, which is Visteon’s highest profit region. These trends together should keep the stock motoring ahead, adding to the 52% gain over the past year.

Yet, Visteon is not my top recommendation in the sector. I just revealed that company in the January issue of Growth Stock Advisor. At CES, this company showed off a fleet of driverless BMW cars that had no problem navigating the busy streets of Las Vegas. The cars dealt with traffic lights, slower and faster cars nearby, lane changes, right and left turns, jaywalking pedestrians, and faded lane markings. Only once did the driver take over, and that was to steer around pylons in the middle of the road.

As the 2018 CES brought to the fore, some of the most exciting technologies are centering on the future of the automobile. Stay tuned for even more excitement to come from this sector adding capital gains to your portfolio.

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Source: Investors Alley 

This Surprise Stock Could Make You Big Bucks

It’s no secret that options are often the investment vehicle of choice for “smart money” traders.  Big funds and trading firms regularly use options to establish their biggest positions – sometimes in conjunction with stock holdings, other times just using options.  It’s especially true for the most heavily traded ETFs and stocks.

Less often, you’ll see big money trades occur in low-activity options chains.  Stocks that don’t have very active options chains tend to have wider bid/ask spreads and aren’t nearly as liquid as the active options products.

If you scan the biggest options trades from any given day, you’ll see a lot of familiar names.  There will be the heaviest traded index ETFs and volatility ETFs.  There are also usually some of the big tech names near the top.  It’s relatively rare to see a name on the list that’s unrecognizable by most investors.

However, that’s exactly what happened to me just the other day.  I came across a ticker that I’m not sure I’ve ever seen on an options screener before.  The name of the company is Blackhawk Network Holdings (NASDAQ: HAWK) and the company provides prepaid products and payments services such as prepaid gift and telecom cards.

I admit, I had to look up HAWK to see what the company does.  Moreover, it trades all of 300 option contracts a day on average.  In other words, when there’s a big options trade, it’s easy to notice.

So here’s the deal…

Someone made a massive trade in HAWK – and I mean massive, especially when compared to average volume.  This trader bought 10,000 February 35 calls while selling 20,000 40 calls in the same expiration.  This type of trade is called a ratio spread and it helps reduce the cost of the trade.

In this case, the trader paid around $0.50 total.  That makes the breakeven point $35.50 at expiration in February, with max gain at $40.  Even with the double-short call at the 40 strike, the trader still dropped about $500,000 on the trade.  But, max gain is in the neighborhood of $4.5 million.

At the time of the trade, the stock was sitting at $34.  After the trade hit the wire, HAWK shot up 7% on the day.  It’s almost certainly due to the trade, which is a lot of money to spend in such a low volume options name.  It’s also obviously a very bullish trade on the stock.

There’s nothing wrong with replicating a trade like this in your own portfolio, as someone with a ton of capital clearly believes the stock is going up.  However, you probably want to avoid doing a ratio spread since it opens up your risk considerably to the upside.

Instead, I’d recommend paying a bit more and doing a simple call spread.  The 35-40 February call spread costs about $1.75 with the stock at $35.65.  That’s not too steep a price to pay since the spread is already in the money.  You can still make $3.25 on the trade, which is definitely a reasonable haul in this situation.

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Source: Investors Alley

Crypto Forecast: From $731 Billion to $10 Trillion

A broker from a big bank just did something I’d never do…

He put a number on the potential value of the blockchain market.

If you think, as I do, that blockchain technology will expand from dozens of uses to hundreds and then thousands, how can you calculate a precise market value for that?

It’s like Thomas Edison trying to predict in the late 1800s how much the electricity market would be worth a few decades into the 20th century.

Did he realize at the time that almost everything, not just lights, that we make and use would be electrified?

Probably not. How could he?

(Perhaps the one thing he thought would be electrified – vehicles – didn’t catch on until more than 100 years later!)

I believe at some point in the future (10 years? 20 years?), most of the services we’ll be using on a daily basis will be enabled by the blockchain.

Again, how can you put a price on such a ubiquitous technology?

Is it in the tens of billions? Hundreds of billions? More?

A Report From Deep Inside Wall Street

That’s the best thing about the report this broker put together.

It does not come from crypto investors talking their own book… initial coin offering companies hyping their future growth… or blockchain evangelists espousing best-case scenarios as a given.

Mitch Steves, the author of this report, is a traditional Wall Street equity analyst. He works for the RBC Capital Markets subsidiary.

His only connection to blockchain and crypto?

Among the companies in his bailiwick is NVIDIA. It makes graphics processing units for mining cryptocurrencies.

By the way, he says the $4 billion-plus market for mining cryptocurrency is here to stay.

Steves says that blockchain technology is misunderstood – that store of value and payment use cases are the most commonly cited but “the least interesting.”

The single most “positive technology” breakthrough is the one staring us in the face: The blockchain, the underlying technology, HAS NEVER BEEN HACKED.

(And, in my opinion, WILL NEVER be hacked.)

This is no small thing. Steves compares Box, a content management platform, to Filecoin, a decentralized blockchain equivalent, to highlight the differences…

With Box, your data is owned and controlled by a third party that has access to your information (a photo loaded can be retrieved by anyone with access to Box servers – employees). With Filecoin, your storage is distributed and decentralized, making the holders unable to retrieve your photo (they would need to hack every computer on the decentralized network – blockchain). Your information is now secure, and without your private keys, it cannot be accessed.

This is an early case of how a globally decentralized network of computers can work using the blockchain. Steves calls this network of computers the “World Computer.”

He says that same concept can be applied to a “wide variety of decentralized applications (aka ‘dapps’).”

I completely agree.

Rose-Colored Glasses?

What Steves is saying is reasonable and, frankly speaking, not entirely novel. People who aren’t playing close attention may be confusing hacks of exchanges and individual wallets (which has happened) with hacks of the blockchain itself (which has never happened).

But insiders have well understood the security benefits of putting data, transactions, assets, documents and sensitive information on the blockchain… and how the blockchain makes it fast, easy and secure to track these things.

But it’s nice hearing this confirmed by a big bank with no vested interest in the crypto or blockchain markets.

And because Steves hails from outside the crypto community, he openly acknowledges the “many risks to crypto.” No rose-colored glasses for him.

Among the risks, he lists the possibility of an attack if a single entity were to garner more than 50% of the computing power (which, I should add, would be pretty near impossible).

Other risks mentioned? Coordinated attacks to manipulate prices… and the potential for smartphone wallet hacking.

The Worth of the Market Crypto Will Address?

How he arrives at this big round number turns out to be the most disappointing part of his 36-page report.

He basically took a third of the roughly $30 trillion in assets held in offshore funds and gold. Just a rough stab, in other words.

But perhaps that’s as it should be. At this early stage, trying to do anything more would be a reach.

We simply don’t know how big this number will be. Anybody who says differently is lying to themselves or everybody else.

However, I believe it will be a big number. Blockchain technology is driving a surge of innovation in the development of new protocols and blockchains.

There’s a long way to go. And nothing is a given at this point. But decentralized computer technology has the potential to reinvent huge swaths of the global economy.

With that kind of upside, even a modest investment could yield quite a large return. We can help you identify the best blockchain technologies raising money.

Just click here if you’re interested.

Good investing,

Andy Gordon
Co-Founder, Early Investing

Source: Early Investing

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Buy These 3 Stocks to Soar Thanks to China’s Hunger for Clean Skies

One of the main messages I give you in my articles is that you have to pay attention to global events to find the best investment opportunities before Wall Street does.

Another great example of that occurred in March at China’s annual parliamentary meeting. The one main takeaway from that meeting could be summed up by one sentence that was repeated again and again at the meeting – “We will make our skies blue again.”

The Chinese are (finally) very serious about curbing the rampant pollution in their country. This has boosted industrial metals prices globally as China curbs output of aluminum and steel in the country.

And China has cut back on the use of coal for both power and heating purposes. As a substitute for coal, the Chinese government is placing a major emphasis on natural gas.

Therein lies the opportunity…

China’s LNG Imports

While China does produce some of its own natural gas and imports more gas from Russia via pipelines, the all-of-a-sudden big increase in natural gas demand has had almost immediate effects.

In early December, that demand pushed LNG (liquified natural gas) prices in Asia to a three-year high, 20% higher than a year ago – and up 80% from the 2017 low – at above $10 per million BTU. According to energy consultants Wood Mackenzie, import volumes of LNG were 48% higher in the first ten months of 2017. This follows a 25% jump the year before.

A cold winter in northern China raised demand even more and made authorities desperate to meet the need. In December, Chinese oil company CNOOC (NYSE: CEO) was forced to hire over 100 LNG-carrying trucks to bring LNG over 1,300 miles from the south of China, where the LNG import facilities are, to the northern parts of the country where the cold of winter was biting hard.

And while prices have fallen somewhat since with a January thaw, this trend toward higher LNG demand from China is a feature of the energy market that will be with us for many years.

In an interesting side note for natural gas, there is talk in the market that energy kingpin Saudi Arabia may (in the relatively near future) have to import natural gas in the form of LNG in order to meet domestic needs. Demand there has risen by 50% over the past decade while proven Saudi gas reserves have only risen by 20%.

To that end, it is believed Saudi Arabia is interested in funding LNG projects around the world. Are President Trump and U.S. gas producers listening? I hope they are.

US LNG Exporters

Especially since U.S. capacity to process LNG is set to grow nearly seven-fold by 2019 as five export terminals open.

Primary among U.S. LNG exporters is Cheniere Energy (NYSE: LNG), which is the owner of the first LNG export terminal in the U.S. that has been operating since early 2016. It is exporting at its Sabine Pass facility with three trains and a capacity of about two billion cubic feet of gas per day. Its total capacity is expected to be about five billion cubic feet per day once all five trains are completed (the fourth train was recently completed). An LNG train is a liquified natural gas plant’s liquefaction and purification facility.

Chiniere’s first mover advantage is evident. In November, it signed an $11 billion memorandum of understanding for long-term LNG sales with China National Petroleum Corporation. CNPC is the parent of PetroChina (NYSE: PTR).

However, competition for Cheniere is underway here in the U.S. There are five other facilities, in addition to Cheniere’s, that will add roughly 7.5 billion cubic feet of LNG export capacity in 2018 and 2019. Here is the list of these facilities for you:

Cove Point, Maryland terminal just started operating in December and is owned by Dominion Energy (NYSE: D). It used to be an import terminal that was retooled as an export terminal with a capacity of 0.82 billion cubic feet per day.

 

Cameron LNG, Louisiana is owned by Sempra Energy (NYSE: SRE) and is scheduled to begin operation in 2018. It has three trains currently under construction with the first train expected to begin operation in early 2018, and the second and third trains are expected to start up during the second half of 2018. The three trains will have a capacity of 2.1 billion cubic feet per day.

Sempra Energy is also in the permitting stage of constructing an expansion to the facility, which would add a fourth and fifth train. Project completion for the expansion is expected sometime in 2019.

Elba Island, Georgia is a relatively small-scale facility owned by Kinder Morgan (NYSE: KMI) with a capacity of 0.35 billion cubic feet per day. It was originally constructed as a regasification plant for imports of LNG and it is being retooled as an export facility. The project will use ten small scale liquefaction units, constructed in two phases. The first phase will begin service in mid-2018, while the second will come online in early 2019.

Freeport LNG, Texas has three trains currently under construction. It will begin operation between the end of 2018 and the third quarter of 2019, with a combined capacity of 2.14 billion cubic feet per day. A fourth train is under development.

Corpus Christi, Texas is currently under construction on 1,000 acres controlled by Cheniere Energy. It is being designed for five trains and construction on the first and second trains began in May 2015 and is now about 70% complete. The first train is expected to begin operating in the first half of 2019 with the first three trains having a combined capacity of 2.14 billion cubic feet per day.

While I do like Cheniere Energy, there are lots of LNG projects coming online in China’s neighborhood – namely Australia. So instead of focusing on just LNG exporters, I am also looking at the carriers of all that LNG to China – the LNG shipping companies.

LNG Shipping Companies

These companies are in the sweet spot between rising Chinese demand for LNG and limited supplies of ships. Transporting LNG requires specialized tankers and the market for these tankers has completely flipped. From a glut a few years ago, there is now a shortage of these specialized tankers.

This shortage has led to a doubling of LNG tanker rates since April 2016. And there is definitely room for further increases. Prices could double again and still not reach the highs set five years ago.

The LNG carrier shortage will not be alleviated quickly either since it takes about 30 months to build such a vessel. Between 2012 and 2014, there were orders for 66 LNG carriers. But with that aforementioned glut, orders dropped to only eight in 2017.

This will obviously benefit the companies that currently own LNG tankers. But be careful here – many of them are heavily loaded with debt. Here are two companies though I am looking at:

Golar LNG (Nasdaq: GLNG) – its stock is up nearly 20% over the past year. The company is one of the world’s largest independent owners and operators of marine-based LNG midstream infrastructure and is involved in the liquefaction, transportation and regasification of natural gas.

Related: A Top 10% Yield Stock to Own for Growth and Income

In others words, Golar is no mere LNG shipper, although it has 16 LNG shipping vessels. It is also focused on other aspects of the LNG pipeline including floating LNG liquefaction (FLNG) and floating storage and regasification units (FSRUs). It is the first company to convert ships into FSRUs and FLNGVs (floating liquefied natural gas vessel). This sets it apart from most of its competitors.

If you are looking at more of a pure-play LNG shipper, there is Gaslog Ltd. (NYSE: GLOG), whose stock is up nearly 30% over the last year, with most that gain occurring in the last three months.

Its fleet consists of 22 LNG ships on the water with another five ships on order being built. And like Golar, it is also becoming involved with FSRUs.

However, I like Gaslog because it is one of those carriers, along with Teekay LNG Partners L.P. (NYSE: TGP), that is greatly benefiting from the diversion of more and more LNG tankers to China. The daily rate of a 160,000 cubic meter LNG tanker soared to $80,000 in December from the 2017 low of $30,000 in April, according to ship broker Clarkson.

The third quarter of 2017 for Gaslog already saw record revenue and EBITDA. And thanks to Chinese demand, this should continue for the foreseeable future.

If you are looking more for income than capital gains, but still want to participate in the China LNG story, consider limited partnerships from the shipping firms.

Gaslog has a limited partnership worth a look, Gaslog Partners LP (NYSE: GLOP), which is up 5.77% over the past three months with a current yield of 8.36%.  And there is also the aforementioned Teekay LNG. It has risen nearly 13% over the past three months and has a 2.71% yield. Teekay will be receiving 11 new LNG vessels by the end of 2018.

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4 Bitcoin Alternatives That You Need for 2018

Bitcoin Alternatives: NEM

Source: Shutterstock

I first featured NEM as a cryptocurrency idea for our InvestorPlace readers last October. With a then-price of less than 21 cents, NEM was one of the cheapest major altcoins available. Given that my article was one of the most heavily visited on the topic, I sincerely hope my readers acted on my suggestion. Today, the NEM price is a dime under $2.

If you’re doing the calculations, NEM jumped approximately 800% in two-and-a-half months. You will not find such performance buying and holding equities in the pedestrian stock markets. My absolutely best stock ideaBitcoin Investment Trust (OTCMKTS:GBTC), gained only 447% in half-a-year’s time. In contrast, you can take smaller-sized risks with altcoins, and make more money than you would in the traditional markets.

Of course, most people might get discouraged about the 800% move, thinking that the best is behind us. Consider, though, the remarkable case of ripple. Like NEM, ripple is a heavily diluted token, with nearly 39 billion coins in circulation. That hasn’t stopped ripple jumping from 19 cents to nearly $4 in the past three months.

More importantly, NEM arguably has a better blockchain. While ripple is exclusively focused on streamlining bank transactions, the NEM blockchain is open to multiple applications. Furthermore, businesses are attracted to NEM because its blockchain is scalable to increasing demand.

Given the success of similar altcoins, you’d be crazy not to try your hand at NEM!

Bitcoin Alternatives: Ethereum

Source: Shutterstock

Prior to the aforementioned ripple coin’s rally, ethereum used to be the number-two cryptocurrency by market capitalization. Despite ripple’s shocking price explosion, ethereum still commands tremendous respect. Coinbase, the world’s most popular cryptocurrency exchange, offers ethereum on its trading platform, not ripple. But it might surprise some newcomers that ethereum isn’t the original coin that bears its name.

That honor belongs to ethereum classic. The entire story of how ethereum and ethereum classic were born is beyond the scope of this article. But a long story short, in the run-up to creating a fully-fledged market for the original ethereum, a hacker exploited a loophole in the system, draining out ether tokens. The crypto community panicked as ethereum backers debated on a solution.

A consensus of supporters decided to create a hardfork of the ethereum blockchain. However, a significant amount of dissenters existed. They objected to the hardfork on the basis that it violated the immutable principle of a blockchain application. Rather than follow the new blockchain pathway, the dissenters remained on the original. Thus, ethereum classic came to existence.

The hardforked ethereum is what most investors today get excited about, and for good reason. Its price will very likely hit and exceed $1,000. However, ethereum classic is the better deal. At under $33, if the original could duplicate half of the offshoot version’s success, it would be a phenomenal investment.

Bitcoin Alternatives: Steem

Source: Shutterstock

The biggest hesitation that investors have against altcoins is that they must spend real money to acquire virtual currencies. We often hear criticisms that bitcoin is simply vapor that is destined to vanish, eliminating billions of actual dollars. But what if there was a way to acquire cryptocurrencies for free? Steem is the answer to this seemingly rhetorical question.

The steem coin is the underlying cryptocurrency of Steemit, a blockchain-powered social media platform. Unlike Facebook Inc (NASDAQ:FB) or Twitter Inc (NYSE:TWTR), regular folks can earn money through posting original content. Before you dismiss Steemit as a too-good-to-be-true fairy tale, take a look at the network’s top earners. With just one post, you can make hundreds of dollars, even thousands.

Better yet, you can transfer the steem coins you earn to a third-party exchange like Bittrex. Using my Bittrex beginner’s guide, you can easily sell your steem coins for bitcoin. From there, you have access to hundreds of altcoins. Using the Steemit network is undoubtedly the least riskiest way of building a cryptocurrency portfolio.

However, there is a catch: it’s very difficult to build a profitable steem account through blogging alone. In order to “juice up” your profitability potential, you can purchase “steem power” coins. This of course is a capital risk.

But with most major altcoins flying through the roof, getting involved with steem today could pay huge dividends later.

Bitcoin Alternatives: Stellar

Source: Shutterstock

It’s hard to imagine any asset priced below a dollar as having a solid profitability potential. Hardened market investors understand that penny stocks are usually only attractive because of their unit price. However, with youth comes blissful ignorance. While older investors avoid cheap investments like the plague, Millennial cryptocurrency investors run to them like flies on stink.

When it comes to the digital markets, though, it pays to listen to youth. This is particularly the case for stellar. A little more than a week ago, stellar traded hands at 22 cents. At time of writing, the digital token came within striking distance of a buck. That’s serious performance given the ridiculously short time frame.

More importantly, I think stellar has additional room to run. Unlike the scalability-challenged bitcoin, the stellar blockchain closes transactions within seconds, not hours or days. As the blockchain concept becomes an everyday reality, transaction speed will be critical.

Furthermore, stellar extends the lightning-quick transactions to fiat currencies. For example, users can swiftly convert dollars to euros, rather than relying on cumbersome and expensive banking institutions. Recognizing the potential, International Business Machines Corp. (NYSE:IBM) uses the stellar blockchain to develop a payments system with large banks.

With so much opportunity, and an accessible price point, stellar is one of the best altcoins to buy in 2018!

Can a $10 Bill Really Fund Your Retirement? The digital currency markets are delivering profits unlike anything we’ve ever seen. ​23 recently doubled in a single week. And some like DubaiCoin have jumped as much as 8,200X in value in 18 months. It’ unprecedented... but you won’t receive any of the rewards unless you put a little money in the game. Find out how $10 could make you rich HERE. ​