Make 100% Or More On This Next Big Market Trend

January 22, 2018 Jay Soloff

One of the early financial market themes for 2018 is the renewed interest in commodities. We’ve seen early gains so far in gold, oil, and natural gas, to name a few. At least one of the drivers behind the buying is the expected increase in interest rates.

As a reminder, commodities are usually priced in dollars on a global scale. As such, when US interest rates go up, it generally pushes down the value of the dollar and makes commodities more affordable on a relative basis (in non-dollar currencies).

Because interest rates are set to go higher this year – perhaps more than initially expected – commodities are starting to attract buyers. If inflation is finally starting to rear its head, it means the Fed could be forced to raise rates faster than planned. Commodities prices may or may not add to the acceleration of inflation, but they definitely experience increasing demand in periods of rising inflation.

It’s probably not a surprise, but traders may be positioning for a rise in commodities pricing. The usually not-too-heavily-traded PowerShares DB Commodity Tracking Index (NYSE: DBC)had a fair amount of action last week, for example.

A trader looks to have purchased 10,000 April 17 calls for around $0.50, which the ETF trading just under $17 per share. That’s a $200,000 bet that DBC will be at least $17.50 by April expiration. The trade will generate $1 million for every $1 above the breakeven point.

Here’s the thing…

I’m not a big fan of DBC as a commodity tracking ETF and wouldn’t recommend emulating this trade. It’s not that I disagree with the premise – in fact I do believe commodities are going to rally – but I’m not a fan of the instrument itself.

You see, DBC is supposed to track a broad-basket of commodities, but over 50% of the index weighting is based on energy commodities (mostly oil). As such, the price of DBC is going to be heavily skewed by what happens in the energy markets. My feeling is, if I want to have that much exposure to energy commodities, I’ll use a targeted energy ETF.

For a broad-based ETF, I actually want all the important commodities to be as equally weighted as is reasonable. A much better product for this type of weighting is the iPath Bloomberg Commodity Total Return ETN (NYSE: DJP).

DJP doesn’t trade a lot of options, but it’s viewed as a good representative of the commodities market as a whole. Energy commodities only have 30% weighting in DJP, which is in-line with the number of commodities it contributes to the index. DJP does a better job of representing metals and agricultural products.

As I said, DJP doesn’t trade a lot of options, but it does have options listed. If you’re bullish on commodities in general (as opposed to specific commodities) you could put on a DJP call spread in April for a reasonable price.

For example, the April 25-27 call spread (buying the 25, selling the 27) should only cost about $0.40 with the stock trading around $24.50. That gives you a breakeven point of $25.40 with max gain of $1.60, and over 3 months of control. With the options so cheap, you could conceivably generate returns of 300%.

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Source: Investors Alley

Cryptocurrency

Bitcoin’s Not Dead

January 19, 2018 Adam Sharp

Stories about bitcoin dying have been written many times.

On Tuesday, there was one in The Atlantic titled, “Is This the Beginning of the End of the Bitcoin Bubble?”

This happens whenever bitcoin is down a nasty 20% in a day. The naysayers assume something very bad must be happening.

So even though bitcoin is still up 100% over the last three months and has done the entire boom-bust-boom cycle hundreds of times before, this time looks different. It looks scarier because it’s happening right now.

It’s in our nature to assume the sky is falling when something unexpected happens.

If you manage to hold crypto for long enough, that goes away.

Embrace the Dips

All the early crypto adopters were on buying sprees this week.

So when my mother-in-law texted me her condolences about bitcoin, I smiled and kept looking for bargains.

I don’t get upset when the prices of cryptos drop. That’s like yelling at the weather. Plus, only through these dips do we have the opportunity to buy cheap.

Once you really understand and appreciate what cryptocurrency is about, price shouldn’t matter that much.

It’s a bet on the future of money. That’s all I need it to be. No matter what happens to the price tomorrow, it will still be my wager – a hedge, of sorts.

Maybe if I had a larger crypto portfolio, these dramatic shifts would affect me more. But I don’t think so. I’ve talked with many crypto traders, and most of them feel the same way.

The global enthusiasm for crypto didn’t disappear overnight. It just fizzled for a moment due to a natural but significant sell-off.

You can’t kill off a movement this strong with a little negative price action and some scary headlines citing “possible government bans.”

Don’t get me wrong, governments are still the primary threat to cryptocurrency.

But cryptocurrencies present their own interesting dilemma for governments. If a government bans cryptocurrency, it is admitting that it fears for its own currency. It is telling its citizens that it decides what is best for them and their families.

So, naturally, governments will try to scare us into thinking cryptocurrencies are dangerous. The tools of criminals, hackers and worse.

We’ll have to stand up for our right to choose the currencies of our choice. It won’t be easy, but it’s a goal worth fighting for.

Good investing,

Adam Sharp
Co-Founder, Early Investing

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Source: Early Investing

Cryptocurrency, Technology

Where Is Blockchain Heading? Your Questions Answered

January 19, 2018 Dana Blankenhorn

The talk around bitcoin, cryptocurrency and blockchain is getting silly.

This is because now that the mainstream business media has hold of the story, they’re desperately trying to fit it into past patterns. History may rhyme, but it never repeats.

The TV machine trots out so-called “experts,” employees of large companies and salesmen, who are just as clueless as you or I about what will happen. Instead, they trot out theories and talk analogies. It’s 1994 for blockchain, they say (maybe). They say some of the dot-com winners went on to great things — look at Amazon.com, Inc. (NASDAQ:AMZN) (name three more).

I was there. In 1999, I was an “e-commerce expert” with a six-figure paycheck. In 2002, I made precisely zero dollars. Same in 2003.

The truth is that almost every company we thought would be worth something in 1999 turned out to be worth nothing. It even took Amazon 10 years to get back to its 1999 price. If you were near retirement in 1999, you probably weren’t around to see it.

What about Alphabet Inc (NASDAQ:GOOGL, NASDAQ:GOOG) and Facebook, Inc.(NASDAQ:FB)? Google didn’t become public until 2004. Facebook didn’t exist in 1999. Apple Inc. (NASDAQ:AAPL)? The iPhone was still eight years away.

Forget first-mover advantage. Look for second-mover advantage — the guy who learns what the first mover is doing wrong and takes over from him (or her).

One of the more hilarious calls of the dot-com “experts” in the 1990s was to tell Yahoo! to stop focusing on mere “search” and become a “portal.” Buy GeoCities, they said. Buy Broadcast.com. Yahoo! did.

What we know, from history, is that first-mover advantage in the internet age wasn’t worth a thing. Even Bill Gates knew nothing. If you want to chuckle, read Gates’ 1995 “magnum opus,” The Road Ahead. He barely had a clue. And if Bill Gates didn’t have a clue in 1995, neither do you.

I’ll take your questions now.

Is bitcoin a bubble?

Yes.

Are the other alt-coins bubbles?

Yes.

Does that mean they’ll all be worth nothing in a year?

No, but most will.

Can I tell the difference, right now, between the winners and losers?

Not bloody likely.

What about ICOs?

You mean you want to buy something you can’t value, that’s completely unregulated, and that might be as phony as Bitconnect, which closed Jan. 17 after being accused (repeatedly) of running a Ponzi scheme? Have fun!

What about blockchain? Is blockchain like the internet in 1994? Is it going to create enormous value over the next 20 years?

Why, yes. It will also destroy millions of jobs, including high-salary jobs — especially for those in the business of making premature predictions.

How, then, do I get ready for blockchain?

The only stock I can recommend is Microsoft Corporation (NASDAQ:MSFT). The combination of blockchain and the cloud is the raw material from which a lot of great stuff is going to come. We just don’t know what it is yet.

If you want to go out on a limb, try some IBM (NYSE:IBM). It’s grabbing on to blockchain like a dying man grabs for a cancer cure. It also has cloud-related business. Maybe something will come of it.

Beyond that, understand what blockchain does, and in the future, look for companies that prove an ability to make markets with it.

Here is all you really need to know.

Blockchain automates trust.

It does this by encrypting each block of a database, organized as a general ledger. Buyers and sellers can be tied to transactions, bids and asks, without being identified until after the deal is done, if then.

All that paper you shuffled to get a car loan or a mortgage and all those forms you filled out at a doctor’s office or for the government? They’re just blocks in a chain. We can find them, we can refer to them, and we can make them legally enforceable so you never need to fill out a form again.

Let that help you get to sleep at night.

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Source: Investor Place

Technology

These Five Startups Shine Brightest at Vegas Tech Show

January 18, 2018 Andy Gordon

Why go to Vegas?

I don’t gamble.

And I’m not into seeing past-their-prime performers like Celine Dion or the Righteous Brothers command the stage.

For me, there’s only one reason…

To get a peek at some of the amazing technology on display at the Consumer Electronics Show (CES).

The massive exhibition attracted 1,200 exhibitors and 185,000 visitors. Adam and I went there last week as guests of Indiegogo and its co-founder Slava Rubin and CEO David Mandelbrot.

The company had one of the bigger booths among the 800 companies at the Eureka Park venue in the Sands Expo halls. Eureka Park, by the way, is reserved for startups only.

Over a sumptuous dinner one evening, Slava told us that an increasing number of visitors to the Indiegogo site are interested in buying equity stakes in companies. Until recently, Indiegogo offered only perks and rewards.

It’s always a positive to welcome aboard a company of Indiegogo’s stature and success. Indiegogo is a true crowdfunding pioneer. Over the past 10 years, it has raised $1.3 billion for 800,000 entrepreneurs.

So why is the company reaching out to us?

Because Indiegogo sees a similar opportunity in equity crowdfunding. The fact that it’s partnered with MicroVentures, a highly regarded equity funding portal and one of our favorites, will make it even easier for us to work with it to find high-quality startup deals.

Tooling around Eureka Park, I saw a number of impressive products. I suspect some of them will end up raising via Indiegogo/MicroVentures.

Below are the five that stood out the most to me. Keep in mind that while I found their technology fascinating, whether they evolve into successful businesses is another matter. As such, don’t construe what follows as investment recommendations.

Aris MD: The things you learn at CES! The co-founder of Aris, Chandra Devam, told me my kidney and lungs are different from yours in shape, location and pathology (or just plain wear and tear). Surgeons aren’t really sure where to cut. They have a general idea, but that’s it. Aris’s virtual reality /augmented reality technology takes a diagnostic image – an MRI, for example – and lets the surgeon practice in immersive reality before the surgery.

Aris MD’s Goggles

Source: Aris MD

I put on these goggles at its booth. And, with a little help, I extracted a person’s brain. What came into view was a 3-D image floating right in front of me. There was no tumor, but if there was, I would have been able to see its true shape, size and depth. Amazing.

Robomart: Imagine tapping a button on your phone and in five minutes, a vehicle packed with fresh food items stops in front of your house. No driver or human to be seen. No cash register to bother with. No money exchanged. You simply take what you want and you’re automatically debited. This will be the model competing with Uber Eats and Amazon’s Whole Foods hookup – not just an order, but a range of selections from the entire food store coming to you.

A Robomart delivery vehicle

Source: Business Insider

Hologruf: It’s 3-D, portable and easy to install. Hologruf’s hologram system projects signs and displays that float in midair.

Imagine you’re in an auto dealership and the car drives right up to your seat as a hologram. Hologruf wants to make that a reality. Seeing its holograms up close, I can attest to their outstanding quality.

BLOCKS: You’re familiar with building your own pizza or hamburger… but how about your watch?

It makes perfect sense. Smart watches can now do so many things, BLOCKS founder Omer El Fakir told me it makes no sense to manufacture a one-size-fits-all watch anymore. With BLOCKS, you start off with a core that has smartphone notifications, fitness tracking, Alexa personal assistant and other features…

And go from there.

You can add functions by buying individual modules. For some, that may mean a fingerprint sensor module. For others, an air quality monitor module. Or perhaps all you want is an extra battery module.

My favorite module? Probably the flash memory, which keeps your data safe and close by.

The core costs $259. The modules cost between $30 and $40 each. Would you buy one? I’m tempted.

Olli: Branded as the world’s first 3-D-printed car and first self-driving car to incorporate the artificial intelligence capabilities of IBM Watson, Olli is the brainchild of Local Motors. I took a tour while taking on the persona of a near-blind person. As I entered the vehicle, it told me where I could find a free seat, alerted me to my stop and gave me directions to my destination when I left the vehicle.

An Olli 3-D-printed car

Source: Local Motors

Olli has gone through several iterations and is still under development. The company has scheduled several deliveries for mid year, when the Olli team will be monitoring how it performs in different environments and use cases.

It wasn’t easy picking my top five. There were many others I also liked. Hopefully, down the road a bit, I’ll be seeing a couple of these companies on crowdfunding sites.
Technology is just part of the equation of what makes a startup successful in the long run. But developing exciting technologies that also address real needs gives these companies a leg up out of the gate.

It doesn’t get any easier. But having talked to dozens of founders at the show, I think they know that already.

Good investing,

Andy Gordon
Co-Founder, Early Investing

Source: Early Investing

Growth Stocks

3 Stocks Taking Off From Trump’s Tax Cuts

January 18, 2018 Tony Daltorio

The cut in the U.S. corporate tax rate from 35% to 21% is supposed to do everything from juicing the U.S. economy to levels not seen in decades to enriching both shareholders and consumers alike. But the reality is likely to be quite different.

The first thing it will bring is a muddied fourth quarter earnings season for investors. A one-time tax on accumulated offshore earnings and revaluations of deferred taxes, based on the new rate, means a lot of potential charges and writeoffs for multinational companies. For firms that report only GAAP earnings, the headline impact on earnings could be quite large.

Investors should look through these one-off charges and focus on what the long-term effects will be on the companies they are invested in.

While many on Wall Street make proclamations about the benefits of the corporate tax cut for banks, I believe the sector still faces too many headwinds (like continuing low interest rates) for me to be interested in investing into banks. Instead, I’d rather focus on three other sectors – with still relatively low valuations – that should benefit from the changes in the tax law regarding U.S. corporations.

Airlines to Fly High

One of the biggest beneficiaries of the tax cut is the U.S. airline industry. Since most of their income is taxed domestically, the lowering of the tax rate to 21% from mostly in the mid-30s%, is a big deal.

Take Delta Air Lines (NYSE: DAL), for example. Just last week it said that the tax cut will boost its earnings by about $800 million a year. That translates to about $1 per share in increased earnings for 2018. Delta management raised their earnings per share guidance for 2018 to a range of $6.35 to $6.70, up 20% to 30% from the year earlier level.

Delta, like many U.S. airlines, pays no cash taxes. However, Delta expects it will become a cash taxpayer in 2019 and 2020, so the lower rate will be a boon.

The tax cut is a bit of icing on the cake for Delta, which is doing very well currently. In the latest quarter, it reported an 8.3% revenue rise to $10.2 billion, which beat market expectations. Passenger unit revenue (PRASM) increased 4.2% in the quarter as Delta regained some of its pricing power following a nasty airfare war.

That’s the danger for the airline industry and the tax cut. Will the airlines just use the windfall to launch into another round of airfare wars? The industry has squandered windfalls in the past, such as from plunging oil prices.

Oil Company Tax Gusher

Speaking of oil, the oil industry should be another beneficiary of the changes in tax law. According to Bloomberg, it pays the second-highest effective tax rate of any sector – 37%. So a drop to 21% is an obvious boost.

Other tax perks for the industry were left in place. For instance, the century-old tax treatment of allowing oil companies to expense intangible drilling costs was retained. As was another century-old treatment that affects small independent companies and royalty owners – the percentage depletion deduction.

A new provision allowing businesses to expense the full cost of new investments in certain plant and equipment for the next five years will give a boost to many in this capital-intensive industry. Giants like Chevron have an $18.3 billion capital and exploration budget in 2018 and ExxonMobil has an even bigger $22 billion budget.

And it’s not just the big oil firms to benefit. The oil refining segment should really get a major boost. The largest company in the segment, by market capitalization, Phillips 66 (NYSE: PSX), will receive a 16% boost to 2018 earnings according to an estimate from Piper Jaffray’s Simmons & Company energy investment bank unit.

Phillips 66 is a leading player in each of the segments it operates in: refining, chemicals and midstream. The company will invest $2-$3 billion in capital investments this year. Yet, it still increases payouts to shareholders on a regular basis.

Retail Rebound

The third sector to look for benefits from the tax cut is retail. The tax cuts should give them a respite from being Amazoned out of existence, thanks to a soon-to-be increased cash flow. This holds true for the vast majority of retailers whose operations are domestically based. Wall Street analysts believe the average retailer will get a 15% earnings boost from the changes in the tax law.

One of my favorites in the sector is Ulta Beauty (Nasdaq: ULTA), which operates 1,058 stores and generated $4.8 billion in revenues in 2016. It should get a double boost – not only from the tax cut itself, but from consumers with a little extra in their pocket spending on simple luxuries like makeup, lip gloss, etc. Perhaps that’s why the stock is already up over 6% year-to-date.

Hopefully, the tax cuts will reinvigorate this once ultra-high growth company. Especially since parts of the company are still growing fast… e-commerce sales in its latest quarter did soar by nearly 63%. Management has forecast sales growth for 2018 in the 10% to 11% range.

Bottom line for you – the number one item to remember regarding the tax cut is that, like all three companies I spoke about in the article, it will boost domestically-focused companies much more than it does multinational companies. Of course, multinationals have other things going for them, such as a weak U.S. dollar.

Here are other important points to keep in mind regarding the tax cut: Even for companies within a sector that will generally receive a boost from the tax cut, some companies will benefit more than its competitors. So before investing, make sure to do your due diligence to see whether a company will really get a big bump from the change in corporate taxes.

Options

This Energy Trade Could Post Triple-Digit Gains

January 17, 2018 Jay Soloff

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.

Dividends, REITS

3 High Yield REITs for Retirement

January 17, 2018 Tim Plaehn

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

REITS

Buy These 3 REITs for High Yield and Tax Breaks

January 16, 2018 Tim Plaehn

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%.

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%.

Source: Investors Alley

Cryptocurrency

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

January 16, 2018 William White

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

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.

Pot Stocks

This Controversial Industry Is Here to Stay

January 15, 2018 Chad Shoop

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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Source: Banyan Hill

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