The Fed Is Set to Trigger a Recession in December

The Federal Reserve’s job is easy to understand in some ways.

It cuts interest rates when the economy slows. Making money cheaper should lead to economic growth.

Then, when the Fed feels the economy is growing too fast, it raises rates. It keeps raising rates until it starts the next recession. And then the Fed starts over again.

The details are a little more complex than that. But this is what the Fed does.

In its defense, the Fed tries to stop raising rates before it starts a recession. But that’s hard to do, and it usually isn’t successful.

This pattern explains why investors watch interest rates so closely. And history tells us rate watchers are about to get big news. The Fed is weeks away from triggering the next recession.

The Fed Funds Forecast

Market watchers have a variety of techniques to forecast recessions. The most popular is to watch for an inverted yield curve. The chart below shows normal and inverted yield curves.

The Fed tries to stop raising rates before it starts a recession. But that’s hard to do ... and it usually isn’t successful.

(Source: U.S. Treasury)

The yield curve shows the interest rate at different times. For example, right now the yield curve tells us a short-term interest rate known as the fed funds rate is about 1.15%, while the interest rate on 10-year Treasury’s about 2.3%.

This is normal, with long-term rates higher than short-term rates. But before a recession, we usually see short-term rates move above long-term rates. That’s called an inverted yield curve because rates are upside down.

This indicator predicted seven of the nine recessions since 1955, a 78% success rate. There were two false positives, a time when the yield curve inverted and no recession followed.

The inverted yield curve is a pretty good indicator. But economists at Wells Fargo developed a better indicator. Their tool identified all nine recessions but gave a total of 13 signals.

Three of the four false positive signals came right before market sell-offs. On average, the S&P 500 fell 11% within a year of the signal.

With this track record, this is an important indicator to watch. And we won’t have to watch for long. It’s expected to give its next signal at about 2 p.m. EST on December 13.

That’s when the Fed will announce if it decided to raise short-term interest rates at its two-day meeting. Right now, there’s a 93% probability of a rate hike, according to traders in fed funds futures.

That rate increase will activate Wells Fargo’s recession indicator.

On the Distant Horizon

The indicator says to expect a recession when the fed funds rate exceeds the previous low of the 10-year Treasury. The next chart summarizes the indictor.

The Fed tries to stop raising rates before it starts a recession. But that’s hard to do ... and it usually isn’t successful.

The expected increase in interest rates will push the fed funds rate to about 1.38%. This is above the previous low of the 10-year Treasury, which was 1.34%.

The recession indicator isn’t a pinpoint timing tool. Recessions followed signals by six to 34 months in the past, with an average lead time of 17 months.

We should expect the next recession to occur in late 2018 or early 2019. This has important implications for investors.

Stock prices fall during a recession. They usually start falling before the recession, an average of six to 12 months before the recession.

Next year, we could see the start of the bear market. That’s the bad news.

But there’s lots of good news.

The stock market usually soars higher before the bear market begins. The S&P 500 gained an average of 22% in the year before the previous three recession peaks.

With a recession on the distant horizon, investors should be buying stocks in preparation for the rally that precedes the crash.

Regards,

Michael Carr, CMT
Editor, Peak Velocity Trader

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Source: Banyan Hill 

This Stock Could Soar up to 10% After Announcement

Analysts give Amazon.com Inc. (Nasdaq: AMZN) a lot of credit these days.

The company can single-handedly alter a business environment overnight … or at least that’s what analysts would lead you to believe.

Amazon’s latest market-moving announcement was that it was close to deciding on entering the online pharmaceutical drug marketplace.

Let me repeat that.

Amazon is “close to deciding.” It hasn’t even decided yet.

But that didn’t stop stocks like CVS Health Corp. (NYSE: CVS) from dropping over 7% in the days following the news. It’s as if analysts think whatever Amazon touches is automatically changed forever.

That’s simply not the case.

The reality is that Amazon is not afraid to fail. That’s what has made the company the giant it is today.

But it’s also given Amazon a long track record of failures when it comes to entering a new market.

As I’ll show you in a second, there are many failures as examples.

But it’s this history of failure for the company that causes me to see these attempts to enter new markets as an opportunity to buy the same stocks that were sold off on the announcement, despite what analysts say.

Let me explain…

Epic Fail

I’ll start with a list of Amazon’s failures over the years since these don’t seem to come up often when an analyst is praising the company.

The Fire Phone is probably the biggest.

Expected to compete with the iPhone and Samsung phones, and met with much praise right out of the gate from Amazon users, it ended up being a big flop. At one point, Amazon couldn’t even give the phone away for $0.99. Amazon wrote off $170 million for its failed attempt into the smartphone market.

It launched Destinations in 2015 to be a marketplace for hotel deals. This failed in just six months.

Amazon Local was launched in 2011 to take on Groupon and LivingSocial. That was deemed a failure in 2015.

Amazon Wallet was a mobile wallet to compete with Apple Pay and Samsung Pay. After just six months of being on the market, it was shut down and considered a failure.

Amazon Local Register was set to compete with Square Reader, an attachment on your mobile device to accept credit cards. In 2016, this product was shuttered and called a failure as well.

And these are just a few of its failed forays into new markets.

Some other failed attempts are Music Importer, TestDrive, WebPay, Endless.com, Askville and Kozmo.com. This list doesn’t include failed ideas that never made it to the market, or ideas that are currently on the market but have failed miserably at living up to analysts’ expectations.

For example, Amazon entered the food delivery space in 2015, attempting to make companies like GrubHub Inc. (NYSE: GRUB) irrelevant. But GrubHub still controls about half of that market thanks to a recent acquisition, compared to Amazon’s 11% market share.

And then there’s handmade goods.

Amazon entered this market in 2015 with Handmade at Amazon, and analysts were positive it would be the end for Etsy Inc. (Nasdaq: ETSY). But Etsy, the first to make homemade goods widely marketable and which Amazon was chasing, continues to thrive, with expected sales growth of more than 15% each year for the next three years.

To Amazon’s credit, it has gotten some things right — like selling books, an online marketplace and the cloud.

But the list of things it has gotten wrong is much longer.

That’s the reason why when Amazon wants to enter a new market, it doesn’t faze me.

A Lot of Red Tape for Amazon

And that brings me to your opportunity today.

With Amazon’s mention of the pharmaceutical drug space, CVS plunged on the news.

Look: Even if Amazon does make that move into the pharmaceutical drug market, it doesn’t mean everyone suddenly stops going to CVS.

CVS is the largest, and most diversified, pharmacy chain in the U.S. With 9,700 pharmacies across the country, it also has over 1,000 MinuteClinics to quickly get patients looked at for minor issues without having to go out of your way to go to a doctor’s office — which I think we can agree everyone hates doing.

Besides being able to get checked for an illness at the pharmacy, you can get your prescriptions filled almost right away.

CVS also has a mail-order segment, which is what Amazon wants to compete with, and a long-term care focus, among other specialty needs.

I know Amazon is all about online sales. But there is a lot of red tape, which I’m sure is what Amazon is looking at, about dropping pain meds on someone’s doorstep — most regulators don’t want pills ending up in just anyone’s hands.

So, there is a wall of red tape around that process, and CVS and others are working on breaking through that as well. So Amazon won’t be alone there.

That’s why I still like owning CVS even if Amazon enters the market. Because as Etsy, GrubHub and Amazon’s countless other failures have proven, not everything Amazon touches is disrupted.

And at this point, Amazon still may avoid this market altogether, and that announcement could send CVS popping 10% higher practically overnight.

Regards,

Chad Shoop, CMT
Editor, Automatic Profits Alert

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Source: Banyan Hill 

Which Gets You Richer: Starting a Company or Investing in One?

A couple years ago, I bumped into John Dessauer, editor of John Dessauer’s Outlook, at the exhibit hall of The MoneyShow in Orlando.

He spied The Oxford Club logo on my lapel.

“I know Bill Bonner,” he said, referring to the Founder and President of Agora Publishing, the parent company of The Oxford Club. “I worked for him when he was broke.”

I smiled and nodded. “He’s not broke now.”

More than 30 years ago, Bill Bonner founded a tiny company that has become the world’s largest publisher of health, travel and investment letters, becoming a near-billionaire in the process.

He once told me that the company survived the early years only because he “was a pretty good copywriter… and a pretty good plumber.”

I’m not sure how he did it. Bill claims he doesn’t know either.

Yes, he understands the industry, devoted his life to it and hired some smart people who hired a lot of other smart people. But, in my experience, Agora is truly a one-off.

Newbies find the freewheeling, largely unstructured, internally competitive, risk-prone nature of the company either totally invigorating or completely petrifying. Employees are encouraged to be creative, ambitious and entrepreneurial and are given plenty of freedom and incentives – or enough rope to hang themselves, depending on how you look at it.

When Bill gives advice – which he rarely does, even when it is solicited – it generally pays to listen.

“More Than Just the Annual Profits”

Yet I’ve found myself in disagreement with him lately. In his first Daily Reckoning column of 2015, he argued that the best way to generate and preserve wealth is not by investing in the stock market, but by starting your own business.

According to Bill…

Owning and controlling a business is a much better way to make money [than owning stocks].As a general rule, the closer you are to the source of earnings, the more you are likely to get. When you control a business, you make sure you get your share of the profits. When someone else controls the business, he often makes sure you don’t.

Owning your own business brings you more than just the annual profits. You also can get employment, use of company cars and real estate, and a business credit card to cover some of your expenses. You get invited to the company holiday party, too.

And if you pay attention, you understand how the business works and what it is worth.

This is different from the passive owner of a few publicly traded shares.

Indeed, it is. And yet…

Do You Have What It Takes?

According to the U.S. Bureau of Labor Statistics, the majority of new businesses fail within the first four years. That’s a daunting consideration for anyone contemplating a new enterprise.

You may not have enough money to start a business – or access to enough capital to keep it going.

Consider the time involved, commonly known as “the burden of retail.” As a new business owner, you will be the first to arrive, the last to leave and the last to get paid.

Do you have the expertise? Do you know your market? Will you be able to balance the competing demands of customers, suppliers, employees and creditors?

Do you have a knack for hiring good people? That can be a tricky business.

In my experience as a manager, I’ve found that roughly 20% of employees do more than what they’re asked, take whatever actions are needed to get a job done, learn the skills they need to help the business and their career, and are the foundation of everything you do. (Your biggest problem will be challenging and retaining them.)

Seventy-five percent of employees do no more or less than what’s required and are in the parking lot by 5:01. (That’s fine, incidentally. They work to live and find fulfillment elsewhere.)

The other 5% tend to be gadabouts, shirkers, malingerers or troublemakers and need to be shown the door as quickly as possible.

This is tiring. At least it was for me.

Even if your business is a roaring success, that may change. A family in my hometown owned a profitable furniture store for generations. Within a matter of months, it went bust.

I used to know a lot of wealthy homebuilders. Today I know none.

There are quality of life issues, too. When you run a business, it is never far from your mind. You spend a lot of time with bookkeepers, lawyers, tax consultants, disgruntled employees and dissatisfied customers. Is this how you want to spend your day?

That’s why I prefer another type of business ownership: stocks, the best-performing asset of the last 200 years.

A Whole Lot Simpler

Even if you lack the time, investment capital or experience necessary to found and run a successful business, with even a modest amount of money you can accumulate a stake in many of the world’s greatest businesses.

And it’s easy. A click of the mouse, a $5 commission, and you’re in. Another click – another $5 – and you’re out. (Compare that to your typical real estate closing.)

Owning a piece of a company is a whole lot simpler than running one. You don’t have to take out loans, sign personal guarantees, hire or fire employees, grapple with an avalanche of federal mandates and regulations, pay lawyers and accountants, or even show up for work. How great is that?

Some Americans today obsess over the issue of fairness. But the stock market shines here, too. If I own shares of Microsoft, for example, my gain over the next year will be exactly the same as the world’s richest man. Sure, Bill Gates may own a few more shares than I do, but our percentage returns will be the same.

Monitoring your portfolio has never been simpler either. You used to have to dig the price of your stocks out of the business section of the paper. (When was the last time you did that?) Or you could call your broker, get placed on hold for a few minutes, and eventually get a quote that – by the time you received it – was no longer current.

Today you don’t think twice about getting a real-time quote, placing a trade with a click and getting a near instantaneous confirmation.

Costs used to be exponentially higher, too. Brokers routinely sold mutual funds with front-end loads as high as 8.5%. (That’s not a misprint.)

Prior to May 1, 1975, brokerage commissions were steep – and fixed by law. Deregulation – and the debut of Charles Schwab – changed that. The internet steamrolled costs further still.

Spreads are far thinner today, too. When I started in the brokerage business 30 years ago, a large stock might have an eighth of a point spread – and a small one, a quarter of a point. Tack on a 2% or 3% commission, and you were down 5% by the time you got your trade confirmation.

Today – thanks in part to wrongly detested, high-frequency traders – liquidity is greater than ever and bid-ask spreads are often a penny.

The Easiest Way to Build a Fortune

Your investment choices have never been greater. Information has never been more widely available. Monitoring your portfolio has never been simpler. Spreads have never been thinner. Commissions have never been lower. Executions have never been swifter.

Owning a diversified portfolio of stocks is far less risky than tying up your money – and your life – in a single company.

Moreover, the same factors that could undermine a publicly traded company – debt, competition, inflation, a weak economy, etc. – can just as easily hurt a privately held one.

True, private business owners don’t see a share price that suddenly belly-flops from time to time. But every business is fluctuating in value each day, whether you see it or not.

Owning a diversified portfolio of high-quality stocks means you will definitely experience neck-snapping volatility from time to time. That’s the price of admission.

But if you have the patience and the temperament, it is the safest, easiest and most liquid way to build a fortune.

Bill’s suggestion? That’s the second-best way.

Good investing,

Alex

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Source: Investment U

Buy Einstein’s 23% Yield Dividend Stock Before it Takes Off

“Compound interest is the eighth wonder of the world. He who understands it, earns it … he who doesn’t … pays it.”

Albert Einstein

I wonder what Einstein would have said in a world where bank savings products pay less than 1%, the five-year Treasury bond yields 1.9% and the S&P 500 dividend yield also sits at 1.95%? These historically low investment yields take away the power of compound investment growth through the reinvestment of interest or dividend earnings. To benefit from the eighth wonder of the world, you need to find high yield investments that pay sustainable, well above average dividend yields.

The InfraCap MLP ETF (NYSE: AMZA) sports a hard to believe 23% dividend yield. There is a range of reasons why that yield is so high, but at this point the quarterly dividends are sustainable at the current or close to the current level. If that is the case, AMZA is an investment that you can use to compound income and share count growth by over 5% every quarter.

For example, if 500 shares of AMZA were purchased in March 2015 (just before the energy sector crash) and you reinvested dividends every quarter here is where you would sit today. Your quarterly dividend earnings would have grown by 57%, from $255 to $400. Shares owned would be up 62% to 813. However, AMZA is an MLP focused ETF, and the MLPs crashed right along with the energy sector in 2015 as crude oil dropped from around $100 to less than $30 per barrel in 2016 before rebounding to where it’s been lately hovering around $50. AMZA shares are valued at about half if what they were early in 2015.

But with a disciplined dividend investment strategy that share price drop is not necessarily a bad thing. In March 2013, when AMZA was $21 per share, the dividends from 500 shares purchased 12 additional shares each quarter. Now in the 2017 third quarter, the dividends on the 813 total shares own would buy 45 shares. Reinvesting as the share price has fallen has increased your share purchasing power by 275%. I know it feels like a twisted way of thinking to be benefitting by 275% from a share price that has dropped by about 50%.

The underlying MLP fundamentals make this strategy work. While stock market values have gone into a bear market, MLPs for the most part have been able to sustain and in many cases, grow distributions paid to investor. As a result, AMZA is earning the same cash income per share from its portfolio at $10 per share that it was at $21 per share. You’re just now able to buy it on sale.

The fund managers also sell call options to boost portfolio income. Call option income potential is generally better when volatility is high, as it has been for MLP values. The energy infrastructure sector did need to adjust for a lower crude oil price world and they have done so. I forecast that MLP distribution growth will start to accelerate, which will bring up individual MLP values and the AMZA share price. That process may take time, but remember that the plan is to reinvest the 5% dividend earned each quarter, so a slow recovery is not a problem.

If you want to build an income stream growing at 5% per quarter, 20% per year, buy AMZA shares and reinvest your dividends every quarter.

The Monthly Dividend Paycheck Calendar is set up to make sure you receive a minimum of 6 paychecks every month and in some months up to 14 paychecks from reliable high-yield stocks built to last a lifetime.

This unique tool will set you up to receive a more predictable dividend stock income stream that you can count on every month instead of just once a quarter like most other investors. Joining my calendar by Thursday, October 19th will give you the opportunity to claim an extra $1,820 in dividend payouts by October 27th.

The Calendar tells you when you need to own the stock, when to expect your next payout, and how much you can make from these low-risk, buy and hold stocks paying upwards of 12%, 13%, even 18%. I’ve done all the research and hard work, you just have to pick the stocks and how much you want to get paid.

Get up to 14 dividend paychecks per month from safe, reliable stocks with The Monthly Dividend Paycheck Calendar, an easy-to-use system that shows you which dividend stocks to pick, when to buy them, when you get paid your dividends, and how much.  All you have to do is buy the stocks you like and tell them where to send your dividend payments. For more information Click Here.


Source: Investors Alley 

This Technology Could Lead to the Downfall of Amazon

As part of being somewhat of a contrarian investor, I like to look for possible investments in areas where the Wall Street hype machine went crazy, but then the ‘hot air balloon’ was punctured.

One such area in technology has to be 3D printing, which is also known as additive manufacturing. Valuations in this sector soared into the stratosphere in 2013 as Wall Street pitched the story that there would be a 3D printer in every home and on every desk. But then reality set in and valuations collapsed in 2015.

The very same Wall Street touts are now saying this nascent industry is dead. And guess what? They’re wrong again! The long-term growth story for the 3D printing is alive and well as the industry shifts its priorities to focus more squarely on industrial applications.

3D Growth Story

Revenues in 2016 for additive manufacturing rose to $6.1 billion, a gain of 17.4%. About 60% of that figure was linked to production applications, up from about 50% the year before. The two industries leading the way were healthcare and aerospace. Research firm Gartner goes as far as saying that 3D printing of hearing aids and dental devices have become mainstream.

That $6.1 billion number is forecast to approach $40 billion by 2020. That seems reasonable. As I stated before, the industry is nascent and has barely penetrated one percent or so of the $500 billion total addressable market.

Related: 3 Stocks on Apple’s ‘Hit List” to Buy Next

Longer range forecasts show the possibilities for additive manufacturing. According to research from ING Group, atcurrent growth rateshalf of all manufactured goods will be 3D printed in 40 years. Using more aggressive assumptions, says ING, would move that date up to 2040.

This will have vast economic implications. ING says if its scenario comes to pass, one-quarter of world trade will be eliminated. That will put a smile on the face of certain politicians around the globe.

The ING research report also made quite clear the industries it sees as being most affected: “Automotive, industrial machinery and consumer products are the industries that will take the lead in suppressing cross border trade. These industries are top investors in 3D printers and are large players in world trade.”

Not Hype This Time

More Wall Street-type hype? I don’t think so this time. I’m seeing too many industrial applications already. Let me tell you about just a few.

One company that is a believer in additive manufacturing is General Electric (NYSE: GE). In 2016, it introduced additively manufactured metal parts into an aircraft engine – the inside of fuel nozzles. The company says one-third of its new turboprop engine will also be produced using 3D printing, with 12 major 3D-printed parts for the engine section instead of 855 parts. Needless to say, that is a great way to gain control of your supply chain.

One company in the consumer sector that is moving toward additive manufacturing is German athletic shoe and sportswear maker, Adidas AG (OTC: ADDYY). Earlier this year, it said it would produce 5,000 pairs of running shoes with 3D printed midsoles by year-end. Adidas plans to raise that number to 100,000 pairs of running shoes in 2018.

The applications of 3D printing are almost endless, extending even into regenerative medicine. A team of Chinese scientists announced last November that they had successfully implanted 3D printed blood vessels made from stem cells into rhesus monkeys. The results were verified by scientists from the U.K., opening the possibility someday of having 3D printed human organs made to order.

3D printing has also invaded the world of racing. At the Bahrain Grand Prix this past April, the McLaren-Honda Formula One team added a 3D printing to its team of engineers and mechanics. That gave its aerodynamic engineers the ability to make ‘tweaked’ parts literally overnight. Of course, none of the parts exposed to high aerodynamic forces can yet be 3D printed. It’s mainly parts such as a hydraulic line bracket.

Three 3D Printing Investments

So how can you invest into the Lazarus-like resurrection of the 3D printing industry?

Normally, I do like to tell you to consider buying a broad-based ETF. And indeed, there is the Ark Invest 3D Printing ETF (BATS: PRNT), which is up 23% year-to-date and 14% over the past 52 weeks.

This fund’s portfolio contains 43 stocks, both on the hardware and software side of the industry. I love its top position, which is the U.K. firm Renishaw PLC. This company not only makes 3D printers, but also is a major supplier of high-tech measurement tools.

The portfolio also includes two companies that I will talk about in a moment as well as some solid holdings including MGI Digital Graphic and Materialise NV. But there are some real clunkers in the portfolio that will hold back its long-term performance. Therefore, I would stick with a leading player or two in the sector.

No discussion of printing technology would be complete without mentioning the ‘gorilla’ in the space, HP Inc. (NYSE: HPQ), although only 38% of its business is from printers and related businesses. The rest is from PCs, notebooks, etc.

HP did make a big move to boost its printer business last year with its $1.05 billion acquisition of the printer business of Samsung Electronics, with its more than 6,500 patents. And even though it has been in the 3D printing business for about five years, HP just trails the leaders in the field. It hopes its Jet Fusion 3D Printing Solution will be a winner. HP has collaborative efforts in the 3D printing space with the likes of BMWNike and Autodesk.

Despite lagging in 3D, HP’s stock has outperformed its sexier sibling Hewlett Packard Enterprise (NYSE: HPE) and has risen nearly 40% year-to-date and 33% over the prior 12 months. But I prefer a purer play. . . . .

The aforementioned 3D printer used by the McLaren racing team was made by the world’s largest manufacturer of 3D printers, Stratasys (Nasdaq: SSYS). I consider it to be the leader in the sector.

The company is working with Boeing (NYSE: BA) and Ford (NYSE: F) to advance 3D printing technology to make 3D parts, not only quickly and reliably, but on a much larger scale than has been possible. The goal is to soon have the ability to print an entire aircraft interior panel or a car dashboard.

Stratasys’ Infinite-Build 3D Demonstrator isn’t quite there yet, but its potential for the disruption of a number of industries is definitely there. In the meantime, I like the fact that Stratasys has also inked deals with other large companies including European giants SiemensAirbus and Schneider Electric.

The company’s potential is not reflected in the stock price, which although it is up 43% year-to-date, is up only 1.5% over the past year. Stratsys is just beginning to reap what it has sown over the past several years, and gathering a growing number of industrial giants as its clients. This should continue to propel its stock higher in the months and years ahead.

3D printing is just one component to a quickly changing world. The changes we’ll see over the next five to 10 years will make the last 25 look like they moved at a snail’s pace. Technology and the human application of it will change how you work, where you live, what you eat, how you communicate, how you get from A to B, even how you sleep. And it will pressure government and society to adapt quickly or fall by the wayside and risk irrelevance. I call this monumental shift “The Singularity”: the convergence of everything – all driven by the rapid ascent of technology and profit motive.

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Source: Investors Alley 

Investing in Cryptocurrencies Is About to Get a Lot Easier

Our dithering government may not know what to make of cryptocurrencies.

But hedge funds do. They’ve already made up their minds.

After all, they’re in the business of making money for their clients, something they haven’t done very well in recent years.

What they are good at is sniffing out new and exciting investment opportunities.

Of course, it doesn’t take a keen nose to discern the enticing aroma of “am I dreaming” gains emanating from the cryptocurrency (or crypto for short) space.

Consider these recent returns…

  • 75,063% from Cryptonite
  • 59,577% from Influxcoin
  • 60,450% from MaxCoin
  • And a massive 823,750% from DubaiCoin.

These are some of the smaller coins that have skyrocketed in the past few months. But the larger ones have also surged.

In less than a year, for example, Ethereum has shot up more than 3,000%.

So it’s not surprising that there are more than 15 newly minted cryptocurrency hedge funds. And, according to Hedge Fund Alert, 25 more are on the way.

One of the more interesting ones?

MetaStable Capital. For one thing, it represents a “who’s who” of Silicon Valley professional investors, including Andreessen Horowitz, Sequoia Capital, Union Square Ventures, Founders Fund and Bessemer Venture Partners.

This isn’t just the smart money. This is the smartest of the smart money.

Then again, it’s not that hard to put your faith and money in one of MetaStable’s founders, Naval Ravikant.

As the founder and CEO of AngelList, he’s well-known to us. Ravikant was instrumental in making AngelList the go-to startup portal for angel investors.

And, impressively, he did it in the very early years of online startup investing, before it became a thing.

Early is what Ravikant excels at. He…

  • Recognizes burgeoning tech trends early
  • Makes an investment
  • Establishes a beachhead for others to invest
  • Becomes a leader and influential insider in the space.

MetaStable currently owns about a dozen different cryptocurrencies, including bitcoin, Ethereum and Monero.

Fortune estimates that MetaStable’s returns since its inception now exceed 1,000%.

That’s pretty good.

To get into this fund, all you need to do is write a check for $1 million and be willing to pay the typical “2 and 20” fees hedge funds foist on their limited partners. So for every $10,000 profit you make, you give back $2,000 plus $200 to the fund.

Alternatively, you could choose to invest on your own.

You’d have plenty of company.

Some people are very familiar with this corner of the investing world. Perhaps they’re blockchain developers or entrepreneurs in blockchain-related companies. Others are serious investors with the background necessary to understand and follow blockchain technology developments.

But many are newcomers to crypto investing.

This is the group Adam and I worry about. They can be overly swayed by the hype ICOs try to generate when they launch. And they’re more liable to overreact to bad news.

MetaStable and this group share an interesting (some would say symbiotic) connection.

Josh Seims, who co-founded MetaStable along with Ravikant and Lucas Ryan, says the fund takes a sort of Warren Buffett approach of investing when others are fearful.

Its pitch deck points out an incident when Bitfinex, a major cryptocurrency exchange, was hacked. The price of bitcoin dropped more than 20%. MetaStable doubled its bitcoin position. Since then, bitcoin has more than quadrupled.

If MetaStable is the “smart money,” then this impressionable group of relatively inexperienced investors is the so-called “dumb money.”

More than most people, I appreciate MetaStable’s value investing approach. Heck, I began my investing career many years ago as a value investor.

And if everybody could join MetaStable’s fund, I’d tell them, “more power to you.”

But that’s not the case. Hedge funds, as you well know, are for the very wealthy.

Crypto investing is open to anybody who knows how to open an account on Coinbase.com or Bittrex.com. That can be and should be a good thing… as long as investors are smart about it and avoid knee-jerk reactions.

There are two ways you can go about crypto investing…

Educate yourself. Understand how the various crosscurrents push and pull the crypto markets. Understand use cases and the concept of scaling. Is the market or need being addressed big enough? And will the technology accommodate it?

Or join the “smart money.” The good news? That doesn’t have to mean writing out million-dollar checks to gain entry to a hedge fund.

Instead, you can join a new crypto investing service my Co-Founder Adam is taking the lead on.

Adam understands more about this sector than anybody else I know. He’s an independent thinker and outstanding investor. He jumped into cryptocurrencies extremely early. He bought bitcoin at $83.40, making a 2,400% gain to date.

He bought Ethereum at $9.70, before it rocketed up to nearly $300. He’s up 3,000% so far.

And now he’s creating a financial service dedicated to helping interested investors make smart investments in digital coins, blockchain technologies and ICOs. The service is affordable and promises to give people the inside track for the best opportunities in the crypto investing space.

Sound familiar?

Adam is following the Ravikant script: recognize the trend early, invest early and then pave the way for others to invest.

And I’m not going out on a limb when I say that Adam is an early adopter and thought leader in the growing crypto investing community.

(Full disclosure: I would never get on board with any kind of crypto investing service if it weren’t being spearheaded by someone of Adam’s caliber.)

We like MetaStable. We like Ravikant and its other founders. But it’s not for everybody.

Our crypto investing service is. It doesn’t cost an arm and a leg. And it’s coming your way soon.

Good investing,

Andy Gordon
Co-Founder, Early Investing

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. ​



Source: Early Investing 

These 3 IPOs Are a Breath of Fresh Air for Investors

Comfort is a double-edged sword.

On one hand, comfort is a reward for a job well done. A chance to sit back on one’s laurels and take it easy for a while, secure in the knowledge that your job, income, investments, etc., will take care of themselves.

On the other hand, comfort breeds sloth. It invites a level of overconfidence and carelessness that can be devastating to your job performance, income streams and investments, if allowed to fester.

Like many investors, I’ve grown a bit too comfortable this year. Not only have I been loath to leave the comfort of my home office and my daily routine, I’ve grown way too accustomed to markets hitting all-time highs every other week.

It’s past time to diversify and inject a bit of new blood into your portfolio. Trading IPO stocks can be a risky bet, but it can also be quite rewarding.This week, I’m shaking things up a bit. I’m writing to you from a cozy little cabin in the Smoky Mountains just outside of Gatlinburg, Tennessee. I’m sitting at a stylized log-cabinesque kitchen table as my family enjoys the outdoors in a cold mountain stream right behind our back door.

With the change in setting comes a change in perspective. We’ve become too accustomed to riding the coattails of big-name tech companies in 2017. As I noted last week, market leaders like Facebook Inc. (Nasdaq: FB), Alphabet Inc. (Nasdaq: GOOGL) and Microsoft Corp. (Nasdaq: MSFT) might be all that stand between us and a major market correction.

It’s past time to diversify and inject a bit of new blood into your portfolio … especially in the tech sector. It’s time to get a little uncomfortable.

When It Comes to IPOs, It’s Quality Over Quantity

Investors were scared off from the initial public offering (IPO) market early in the year. It’s not hard to see why. Both Snap Inc. (NYSE: SNAP) and Blue Apron Holdings Inc. (NYSE: APRN) were extremely hyped heading into their respective IPOs, and both turned out to be abject failures for investors.

Another issue that investors have clung to is the diminishing number of IPOs. Since 1996, the number of companies going public dropped from more than 8,000 to about 4,400 last year. That number is expected to fall even further in 2017.

It’s past time to diversify and inject a bit of new blood into your portfolio. Trading IPO stocks can be a risky bet, but it can also be quite rewarding.

The latter issue can be attributed to a wealth of funding from private offerings — due to the current easy-money environment from the Federal Reserve — and a wealth of red tape. In fact, the head of the U.S. Securities and Exchange Commission (SEC), Jay Clayton, and the president of the New York Stock Exchange, Tom Farley, said that they believe regulations are the No. 1 reason for the decline in IPOs.

But if red tape was really the issue, no company would ever go public.

In fact, the problem with this year’s class of IPO offerings has been quality, not quantity. Snap emerged on the scene only to be copied heavily by Facebook and every other social media company on the market. Blue Apron, meanwhile, was smacked down by Amazon Inc.’s (Nasdaq: AMZN) acquisition of Whole Foods Market.

But when you look beyond this disappointing duo, you find that there are excellent opportunities to be had.

Roku Inc. (Nasdaq: ROKU)

ROKU stock was priced for an IPO of $14 per share. However, Investors weighed concerns about the company’s future ahead of the stock’s launch and decided that Roku has plenty of potential. The shares surged 68% in their public debut, closing at $23.50. ROKU stock has since consolidated nicely despite its ups and downs.

While concerns about content and competition remain for the set-top box maker, Roku has done more than hold its own against much bigger competitors. In fact, Roku had a 32.6% market share of America’s 150 million connected-TV users last year — ahead of Google Chromecast (29.9%), Amazon Fire TV (26.3%) and Apple TV (19.9%), according to research firm EMarketer.

Once the company starts focusing on content — and potentially its own licensed content — it’s off to the races.

Switch Inc. (NYSE: SWCH)

Data centers are big businesses … just ask IBM, Amazon and Alphabet. But legacy data centers are long overdue for disruption. That’s where Switch steps in.

The company offers ultra-advanced, high-tech data center solutions focused on security and sustainability. The company also manufactures all its own data centers using patented technologies, simultaneously increasing margins and cutting down on costs.

It’s part of the reason why SWCH stock jumped 44% during its IPO. Switch currently owns three large high-tech data centers and is developing a fourth. Furthermore, Switch’s SEC filings show that it has been profitable in every quarter of its existence, save one where it paid $27 million to unbundle its power use from Nevada’s grid. This level of profitability and growth should be music to investors’ ears.

Coming Down the Pike

As with most IPOs, SWCH and ROKU will bounce around for a while, providing opportunities for those who missed out on the initial surge. But if you are looking to get in on the ground floor of an IPO later this year, there is at least one “do” and one “don’t” to keep in mind.

Do consider database specialist MongoDB. Why? The company operates what is called a NoSQL database that is poised to disrupt old-school database firms like Oracle and Microsoft. While this may not sound flashy, MongoDB makes the most popular NoSQL software on the market.

Don’t consider HelloFresh. Why? HelloFresh is basically another meals-to-order company like Blue Apron. The firm claims that its IPO will be different than Blue Apron’s, but the business model is essentially the same. What’s more, the real reason that Blue Apron is struggling — Amazon’s Whole Foods acquisition — continues to be the 400-pound gorilla in the room for this market.

It’s past time to diversify and inject a bit of new blood into your portfolio. Trading IPO stocks can be a risky bet, but it can also be quite rewarding.Remember, trading IPO stocks can be a risky bet, but it can also be quite rewarding. After all, you have to take a few chances here and there to keep your portfolio fresh.

On a side note: I took a break in writing today’s article to go for a quick hike, and got to see a black bear mother and her cubs playing from about 500 feet away. Risky? Yes. Rewarding? Most certainly.

Until next time, good trading!

Joseph Hargett
Assistant Managing Editor, Banyan Hill Publishing

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Source: Banyan Hill 

The New Way to Stop Hackers — and Make Profits

At a recent investment conference, someone asked me my opinion on bitcoin and other cryptocurrencies…

I said they were worth paying attention to — not for speculating, but for solving one of the biggest problems of our time: keeping computer networks and data safe from hackers.

I mean, if you want to speculate in bitcoin, Ethereum, Dogecoin — you name it — go right ahead. But the bigger profits will be in the underlying technology that makes cryptocurrencies possible. It’s called a blockchain.

Not Just About Bitcoin

Like anything that’s new, it all sounds a bit scary with a lot of “what ifs” attached. But blockchain is going mainstream faster than most people realize.

  • Lockheed Martin wants to use blockchain technology to keep its defense secrets safe.
  • The Walt Disney Co. built a platform called Dragonchain that’s now open-source.
  • Credit Suisse and other banks are running experiments with logging and tracking their financial deals using blockchain.

We happen to have two companies in the Total Wealth Insider portfolio that are pioneering the use of blockchain technology by major banks, insurance companies and other financial institutions. One is already up more than 25% in six months, and the other I see rising 60% over the next 18 months.

Shared Secrets

So what is blockchain, exactly? Basically, it’s a bit of data — it could be a transfer of money, a contract to buy or sell something or just some information that needs to be kept track of.

But instead of keeping it a secret and hidden away in one place (where it could be stolen or altered without your knowledge), the material is recorded as a “hash” — a random series of numbers and letters — and broadcast to a series of other computers on a network.

The information is attached with other transactions on the network and embedded into a cryptographically sealed “block.” With each series of transactions, the system creates more and more blocks.

Suddenly, it becomes next to impossible to steal or tamper with your data. It would be like hanging a basket (it could be full of cash, or something else) over the crowds in Times Square — everyone can see who makes a grab for it.

Incidentally, what is buried deep inside the new $700 billion spending request from the Defense Department, recently approved by the U.S. Senate?

A request for a new government report that would outline the possibilities of “offensive and defensive cyber applications of blockchain technology.”

Kind regards,

Jeff L. Yastine
Editor, Total Wealth Insider

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. ​



Source: Banyan Hill

How To Profit From One Trader’s Large Bet The Market is Crashing

Predicting where the stock market is going is a tricky business. Very few investors or traders have a consistent, strong track record when it comes to guessing the short- to medium-term direction of the market. That’s because there’s always plenty of noise in the short-term.

While there aren’t any obvious events this year (like an election) which could move the market, there are always plenty of unexpected occurrences which can change investor perception. The biggest potential catalyst in the coming months is probably North Korea. However, investors are already starting to write off the rhetoric involved in the situation.

Of course, you can’t ignore interest rates and upcoming Fed meetings. However, the market feels a December rate hike is all we’ll see this year, and Yellen’s Fed has been pretty transparent. Most likely, the Fed isn’t going to offer any major surprises for the balance of 2017.

On the other hand, the choice of a new Fed Chair could disrupt the markets somewhat if an interest rate hawk is brought on board. A more aggressive approach to raising rates could certainly impact stock prices. However, at this time we don’t have any idea who the next Chair will be and if that person will even be confirmed by the Senate.

Other than political events, which tend to only have short-term impact on stock prices, the only big changes in market direction could come from economic news. Particularly, if there are economic surprises, stocks may react more than expected.

This is primarily only a factor with major reports like monthly jobs, GDP, or inflation numbers. Lately, economic news has been pretty much on target, and there’s no reason to believe it will change significantly. Clearly, the hurricane damage will factor into jobs numbers, but economists will likely have taken those changes into account.

Here’s the thing…

Options traders have a better chance at making consistently successfully trades because they don’t typically have to pick a direction to make money. They can place high probability trades (selling options) which make money if stocks stay in a trading range or move sideways.

In fact, a pretty massive range-bound options trade was just made last week in the SPDR S&P 500 ETF (NYSE: SPY). SPY is the most heavily traded ETF in the world and tracks the S&P 500 index, a common proxy of the overall market. This particular trade was an options strangle, where the trader sold an out-of-the-money call and put at the same time, in the same expiration period (but at different strikes).

The short strangle consisted of selling the December 15th 263 calls and 237 puts. The credit received for the strangle was $1.64, and it traded about 21,000 times. That means the trader collected over $3.4 million in premium as a credit, and will keep all of it if SPY stays between $237 and $263 by December expiration.

Breakeven points for this trade are around $235 and $265. With SPY at roughly $254 at the time of the trade, the trader has more cushion to the downside ($19 down compared to $11 to the upside). Clearly the trader is less worried about upside for the remainder of the year.

Once again, there’s not much expected to occur between now and December which could roil the markets significantly. Of course you never know, which is why I’d recommend a very different trade than this. Frankly, selling strangles isn’t the sort of thing most traders should be doing. Leave that sort of strategy to the big institutions and professionals.

Instead, buying a straddle (buying the call and put at the same strike, at the same time, in the same expiration) could be a profitable strategy while also not in direct opposition to the short SPY strangle we just discussed. You see, a large stock index like the S&P 500 could easily sit within the range of the short strangle, but an individual sector could see a lot more movement.

One such sector is consumer staples. The Consumer Staples Select SPDR Fund (NYSE: XLP) is sitting right at the 200-day moving average, and could easily be much higher or lower by December 15th. Plus, the December 15th 54 straddle (buying the 54 call and put) is trading for less than $2.

XLP would only need to go to $52 or $56 in the next 10 weeks or so to make money. That seems like a very achievable goal with so much time left before expiration.

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Source: Investors Alley

Investing in Cryptocurrency Startups

Most cryptocurrencies are decentralized, meaning they don’t have a corporate entity that one could invest in.

A typical cryptocurrency (what I like to call “crypto”) is, like bitcoin, governed by its users, miners and usually a nonprofit foundation.

So there’s no way to invest in bitcoin as a company. You can buy coins, but there is no stock or equity.

However, there is a dynamic and fast-growing community of private businesses being built around crypto today.

If crypto continues to take off, these companies could be the financial giants of the future.

I’ll tell you about a few of the crypto startups I’m watching, and why I’m excited about the increasing number of these companies using equity crowdfunding.

Bitwise

Bitwise aims to be the “Vanguard of cryptocurrency.” The fintech startup just revealed its first investment product, the HOLD 10 Private Index Fund. It’s a basket of the top 10 cryptocurrencies by market cap.

Co-founder Hunter Horsley told Coindesk

We want to create a meaningful and secure way to own a portfolio of cryptocurrency. We feel that, today, it’s too hard and it’s too expensive.

The company plans to charge 2% per year, with no additional fees. That’s a bargain compared to most crypto hedge funds, which take at least 20% of profits, plus 2% annually.

Bitwise has attracted notable Silicon Valley investors, including AngelList co-founder Naval Ravikant.

For now, the HOLD 10 fund is only available for accredited investors. This is likely due to the fact that the SEC hasn’t approved any bitcoin ETFs yet, but I fully expect Bitwise to go after the broader market eventually.

Coinbase

Founded by Brian Armstrong in 2012, Coinbase has grown exponentially to become the world’s largest cryptocurrency exchange.

With 10.8 million users and 36 million wallets, Coinbase is a force in the crypto community.

Coinbase has processed more than $25 billion in transactions in 2017, according to a Fortune article published in August. It also offers crypto payment processing tools for roughly 40,000 merchant accounts.

The company just announced a $100 million round of funding at a $1.6 billion valuation. Investors in its latest round include top venture capital firms IVP, Greylock and Spark Capital.

This August fundraise made Coinbase the first crypto “unicorn” startup (one that has grown to a $1 billion-plus valuation). Its earliest investors include members of FundersClub, an online investment platform for accredited investors.

The company’s explosive growth has caused some growing pains, however, and Coinbase is struggling to keep up with customer service inquiries. U.S. laws dictate that it follow certain rules designed to prevent money laundering, and partly as a result, the company’s pipeline is clogged.

The good news is it appears to be putting the new round of capital to good use, having recently launched phone support for users. If it can overcome these issues, Coinbase is well-positioned to become a dominant financial institution in this new market.

Bittrex

Bittrex is a fast-growing and disruptive cryptocurrency exchange.

The biggest difference between Bittrex and Coinbase is the number of digital currencies they offer.

Coinbase offers three: bitcoin, Ethereum and Litecoin.

Bittrex allows users to trade 200 different cryptocurrencies, including all the top ones offered by Coinbase. The other 197 “altcoins” are what really set Bittrex apart.

Altcoins have exploded in popularity over the last year, as the price of Ethereum rose from less than a dollar in 2016 to $294 today, giving it a $27 billion market cap.

On Bittrex, users can search for the next big opportunity. Many of the coins on this exchange are tiny, with market caps in the low millions.

Bittrex also offers a flat trading fee of 0.25%, while the fees on Coinbase vary and tend to be higher.

The one drawback to using Bittrex is that you can’t buy coins directly with dollars or other fiat currency, as you can on Coinbase.

Still, it’s a great example of a disruptive startup shaking up the incumbents of a new industry. By offering users a much wider selection of alternative cryptocurrencies, Bittrex is gaining ground on crypto powerhouse Coinbase.

Bittrex’s founding team has deep experience in web security, having worked at Amazon, Blackberry and Microsoft.

With a talented team, great tech and impressive growth, Bittrex is definitely a crypto startup to watch.

Crowded Startup Pipeline

We’re just beginning to see how transformative and disruptive the crypto market can be.

An entire ecosystem of new financial technology is being created. This sort of thing doesn’t happen very often, to say the least.

Many crypto startups will launch over the next few years, and some are likely to become the fintech titans of tomorrow.

We’ve already started to see a few high-quality crypto deals utilize equity crowdfunding.

Just last month we recommended one to members of our research service, First Stage Investor. It’s called Balance, and it’s building a user-friendly financial dashboard app that tracks not only your traditional financial transactions, but your crypto ones too. Soon users will be able to buy and sell cryptocurrencies directly through its app, and many more features are in the works.

The deal was quite popular, and it filled up after the company raised the maximum allowable $1.17 million. With a focus on simplicity and ease of use, Balance is well-positioned to help bring crypto to the mainstream.

Balance is among the first crypto- and blockchain-related startups to utilize equity crowdfunding, and it certainly won’t be the last.

I can’t reveal any details yet, but developments are coming that will merge the equity crowdfunding and crypto worlds in ways I couldn’t have even imagined a year ago.

It’s going to be a very exciting time.

Good investing,

Adam Sharp
Co-Founder, Early Investing

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. ​



Source: Early Investing