Why These Banks Want to Join the Blockchain Revolution

Like anything new and revolutionary, cryptocurrency has its believers and its skeptics.

Both are making a ruckus.

The mainstream press isn’t helping matters. As far as I can tell, it’s gamified the subject. The side – whether it’s pro or con – with the most quotes published wins.

What a load of rubbish! We all know that multiple opinions expressing the same point of view do not represent “proof,” no matter how passionately they’re expressed.

And it sure does make for a noisy room.

Is the technology real? Does it have legs? Is it disruptive, if not revolutionary?

Here’s the thing. I’m not interested in your opinion.

Don’t tell me. Show me.

It’s pretty simple. Are you blowing the technology off? Or are you actively exploring or developing it?

Sorry, JPMorgan CEO Jamie Dimon, you can’t say it’s a fraud and also have your bank adopt it.

That’s just utter nonsense.

A more valid exercise is to note what potential users of blockchain technology are doing.

And what better sector to hone in on than our antiquated global financial system where billions of people move trillions of dollars every day.

Remarkably, cost, speed and security are about the same now as they were 50 years ago. The major innovations have been in convenience, thanks to the ATM and advances in online banking.

But ATM use can come with fees. And online banking still has some surprising bugs. I recently found this out firsthand after learning that the online account balance I see is different from the online account balance my bank (PNC) sees. Totally confusing.

Global trade and cross-border payments are also surprisingly clunky. For example, letters of credit involve several banks, hefty fees and long waits. When I ran my global trade and finance business about a decade ago, I avoided the wait by doing something called “import factoring.” It cost me a precious 2% to 3% to get the cash quickly, but it was worth it.

The beauty of blockchain? With it, all but a small fraction of that 2% to 3% would go away. Trade finance, security clearance and settlements, cross-border payments, and insurance are all areas where blockchain technology can make a big difference.

Just another opinion? Well, let’s focus not on what the banks are saying, but what they’re doing.

Here’s a look at their blockchain-related activity so far, courtesy of Outlier Ventures…

Who’s missing? PNC is one (surprise, surprise). Chase is another. That’s about it.

All the other large commercial banks are eyebrow-deep in blockchain initiatives.

And as you can see, they already have “proof of concept.” That means the technology does what it’s supposed to do in controlled settings or on a small scale.

Rigorous live-use testing awaits. That’s going to be key.

All the major banks – except Goldman Sachs, Banco Santander and Morgan Stanley – recently completed an academically tested prototype to automate and digitize money transactions around trade on R3’s Corda ledger.

Again, the actual field testing of Corda’s settlement algorithms is just beginning. We’ll know more soon.

JPMorgan, Wells Fargo and asset management firm Northern Trust are using Hyperledger Fabric for private equity deal record-keeping.

These big banks believe the reduced costs, greater speeds and more user-friendly interfaces are all within reach. Now, that doesn’t mean it will happen… or, if it does happen, that things will go smoothly.

From 2013 to 2016, financial institutions filed 2,700 patents in areas like blockchain technology. It’s hard to imagine that all this activity will yield nothing.

Innovation is coming to the banking industry, and blockchain technology is leading the charge. Let’s zoom in on three companies for a closer look…

  • Mastercard: Daily transactions are mounting, as are the challenges to capture, store and protect all the transactional data that credit card companies collect.

Mastercard is turning to the blockchain for a possible solution. It recently filed a patent for the creation of a blockchain-based “uniform settlement system.” Basically, Mastercard wants to create a ledger to store a verifiable and immutablerecord of data, such as purchase orders, invoices and transaction data.

Among other things, doing so would vastly enhance the security of the data it collects. This is no small thing in light of the massive Equifax breach.

  • Bank of America: It leads all other banks in number of blockchain patents filed so far with at least 39. The patents include internal security tools, cryptocurrency aggregation, risk detection systems and storage, and direct person-to-person payments. Bank of America is working closely with Microsoft Azure to explore blockchain solutions for supply chain finance.

Microsoft itself just announced that its own enterprise blockchain framework will be online by 2018. It’s not clear how soon Bank of America’s patented technology might be ready for the marketplace. What is clear is that it wants to be a leader in blockchain utilization.

  • JPMorgan: Imagine two banks doing business with each other. Each has its own “private” blockchain. Each has large corporate customers. The banks need to protect data about their clients. But they also need to reveal the amount and type of currency, the rate of exchange, and the institution initiating the transfer.

This is where Quorum comes in.

JPMorgan designed Quorum for its institutional clients. Built on top of Ethereum, it features private smart contracts. One of its first uses is as a settlement layer for cases ranging from simple equity trades to complex derivatives.

In its early iterations, Quorum can run transaction settlements on a blockchain with the ability to both protect proprietary data and interact with a public blockchain.

Authorities would be able to audit the internal blockchain for compliance while companies do business on the public one. A nice start.

By the way, JPMorgan is a member of the Enterprise Ethereum Alliance, the largest open-source blockchain alliance in the world. It has more than 150 members, including Microsoft, Mastercard, Intel, Scotiabank, ING, BP, Cisco and the Indian government.

My gosh, it’s early. But, given all this activity (as opposed to just words), I don’t see bitcoin or Ethereum going away. The rewards of building, accessing or investing in the best blockchains will be enormous.

It’s early, but not too early.

Blockchain technology is on the cusp of overhauling the global financial system as we know it. Perhaps the Bank of America said it best…

“[It’s] very important… to reserve our spot [early] even before we know the commercial applications…”

Good investing,

Andy Gordon
Co-Founder, Early Investing

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Source: Early Investing 

AMD Is the Tech Bargain You’ve Been Waiting For

Everyone loves a bargain.

We love that feeling of uncovering a hidden gem that everyone else has overlooked. The mispriced vintage Corvette with the small scratch in the quarter panel that you could easily buff out. The big-screen HD TV in the open-box area of your local electronics shop.

You get the picture.

But even your most savvy bargain hunters have nothing on investors looking for “the next big thing.” In fact, this speculative drive to “get in early” often leads investors sorely astray.

Their emotions get the better of them, as they inflate what are essentially short-term market trends into major stock-trading drivers

This leads to unreasonable expectations and equally unreasonable stock prices.
It leads to irrational trading.

 One of the best examples of irrational expectations this year is Advanced Micro Devices Inc. (Nasdaq: AMD).

Cryptocurrency Craziness

If you remember the last time I checked in with AMD, the stock was riding high on an influx of revenue from the growing cryptocurrency mining market. Ethereum was the “next big thing,” and investors were speculating heavily with AMD’s value despite signs that this fad wasn’t going to last.

Even Wall Street analysts were guilty of pumping up AMD stock amid the Ethereum fad, with several boosting their ratings and price targets to, honestly, unsustainable levels. AMD stock quickly shot into overbought territory, driven by a fad and a wild surge in emotional investing.

Back then, I warned investors that AMD was due for a correction as “profit-takers emerge, and the more bearish contingent in the brokerage community begins to sound off on valuation concerns and cryptocurrency pitfalls.”

This week, Morgan Stanley did just that. The brokerage firm said that “cryptocurrency mining-driven sales for AMD’s graphics chips will decline by 50% next year, or a $250 million decline in revenue.” Morgan Stanley also noted that video game console sales would drop by 5.5% in 2018, but that’s a drop in the bucket for AMD, and investors were likely already expecting this given the age of the current generation of consoles.

You could almost hear cryptocurrency speculators’ hearts break as AMD stock plunged 9% following the report.

The Real AMD

To remember the real reason you should be investing in AMD, we have to look back to 2016. The company caught fire early last year when it previewed several new chips, including its new central processing unit (CPU) chipset, Ryzen, and its new graphics processing unit (GPU), Vega. Both products held considerable promise, and AMD was expecting strong sales once the chips launched.

But both Ryzen and Vega blew analyst expectations out of the water. When they hit the market earlier this year, Ryzen and its sister chip, dubbed Threadripper, not only outperformed competing chips from Intel Corp. (Nasdaq: INTC), they beat them in pricing as well. At the same time, Nvidia Corp. (Nasdaq: NVDA) was touting its Titan Xp GPU as the fastest in the world, but AMD’s top-of-the-line Radeon Vega Frontier Edition GPU quickly stole that title.

As a result, AMD saw its market share in the desktop PC market rise roughly 45% to its highest level of that past 10 years at 31%, while Intel’s fell to 69%. It is also stealing server-side and data center market share from Intel via the increasingly popular Threadripper CPU.

And that is just AMD’s core business operations. When we get to areas like virtual reality, driverless vehicles and artificial intelligence, AMD is already on the cutting edge and poised to be a market leader.

Many of you at this point may be asking: “But what about AMD’s weak earnings report last week?”

And I would counter with: “What weak earnings report?”

Just look at the numbers. AMD earned $71 million, or 7 cents per share, last quarter on revenue of $1.64 billion. Not only did this top Wall Street’s expectations, it put last year’s loss of 50 cents per share on revenue of $1.31 billion to shame. What’s more, AMD boosted its full-year revenue growth forecasts from mid- to high-teens to above 20%.

So why did AMD stock plunge roughly 20% after such a stellar report? Because the company said that fourth-quarter earnings would fall 15% sequentially (even though that’s still a 20% increase year-over-year). Once again, it all comes down to an irrational level of bargain hunting, and an excess of emotional trading.

Investing in Advanced Micro Devices

But you are in luck! This emotional storm has left AMD trading at a considerable discount … and quite a bargain given its considerable growth potential — AMD is expected to see sales grow about 17% next year, compared to 12.3% for Nvidia and a measly 2.3% for Intel.

Back in July, I said I would be a buyer at about $13.25. That still holds true, making AMD at below $11 a steal. AMD could easily be worth its earlier valuations north of $15 as Ryzen and Vega continue to add market share and as AMD moves deeper into profitable deals in artificial intelligence (AI) and data centers.

Putting a $15 price target on AMD means the stock has more than 30% upside through next year. How many other large companies, aside from Alibaba Group Holding Ltd(NYSE: BABA), can you say that about?

So, ignore the cryptocurrency hype and focus on AMD’s core products and its potential with leading technologies like AI and data centers. I won’t promise you a smooth ride, but at bargain prices like these, it should be quite a profitable one.

Until next time, good trading!

Joseph Hargett
Assistant Managing Editor, Banyan Hill Publishing

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Source: Banyan Hill

Sports Betting Is a Smart Investment

Just about everybody watches sports. And putting some money (responsibly, of course) on the line can make the games a little more interesting.

Fantasy sports, especially football, have taken America by storm. Every football fan is, or knows somebody who is, in a fantasy football league. Personally, I love the thrill of having my own set of players to root for competitively week by week. It creates interest in teams that I would otherwise never pay attention to.

But there’s an entire industry out there that’s being covered up. And that’s simply betting on sports matches themselves.

Back in 1992, the Professional and Amateur Sports Protection Act banned sports betting in just about every state. The only ones that have legalized it are Nevada, Oregon, Montana and Delaware.

Of course, this hasn’t done much to stop people from continuing to bet on their favorite teams. All it has done is shifted the way that it’s taken place. Now that people can’t easily make legal sports wagers, they’ve simply turned to illegal, underground methods.

Just about everybody watches sports, and may even play fantasy sports. But there’s an entire industry out there that’s being covered up: sports betting.

Obviously, there’s no good way to tell how much is being gambled illegally. As you can see, the chart above projects a $15.8 billion industry for this year.

And that’s just in the United States. Eilers & Krejcik Gaming, the firm behind those estimates, states that Americans could be betting as much as $60 billion per year using offshore websites as well.

But that’s on the very low end of estimates. In 2015, an estimated $95 billion was gambled on college and professional football games in the U.S. $93 billion of that, or 98%, was done illegally. Adam Silver, commissioner of the NBA, has stated that $400 billion is wagered on sports each year.

Even sports websites and channels like ESPN and CBS Sports regularly post the favored teams and the amount of points or runs that they are projected to win by, based on Las Vegas odds. It’s not a secret that a large percentage of the population is finding a way to bet on these games.

There’s an ongoing initiative taken by several states right now to legalize sports gambling. Sparing most of the details, the next big step in this process takes place on December 4. On that day, the Supreme Court will hear arguments for legalizing sports betting across the country.

There are 14 states waiting to hear the Court’s verdict that are willing to offer legal sports gambling within just two years. Another 18 are expected to make it legal within five years.

Obviously, this makes a good investment opportunity … if you look in the right places.

Remember, the smart money gets into trends before they become popular. Investing in an industry a couple of years before it hits its potential is not unreasonable.

The best way to take advantage of this potentially groundbreaking industry before it begins is by buying large casino stocks such as Wynn Resorts Ltd. (Nasdaq: WYNN)Las Vegas Sands Corp. (NYSE: LVS) and MGM Resorts International (NYSE: MGM).

People may not physically show up at these casinos to place their bets. But casinos will make new, easy ways to bet, whether it be through easy-to-use apps, websites or even through texting. They will be the ones taking all of the newly legal bets.

Regards,

Ian Dyer
Internal Analyst, Banyan Hill Publishing

In this exciting NEW VIDEO, Wall Street legend and former multibillion hedge fund manager Paul Mampilly pulls back the curtain on the biggest investment opportunity in the market today. What insiders are calling “The Greatest Innovation in History,” this revolution will mint more millionaires and billions than any technology that came before it. Right now, the current market for this technology is just $235 billion, but given how fast this technology is moving experts predict it will soar to $19 trillion by 2020. But 8,000% growth is just the beginning—and now’s your chance to get in on the action. [CONTINUE TO VIDEO]

Source: Banyan Hill

3 Exploding ETF Trends (and 33 Funds You Can Buy Now)

If you’re like most folks, you probably think it’s tough for any fund to beat the S&P 500, especially in a year when the index jumped some 15%.

But you’d be wrong.

Truth is a lot of funds are doing better, with over 660 beating the S&P 500. And the top-performers share 3 common themes that could tell us a lot about which sectors are poised to take off next year.

Let’s dig in. Along the way, we’ll hone in on the 33 funds that are cashing in as these breakthrough trends head higher.

Trend No. 1: Skyrocketing Faith in Technology (11 Funds)

Markets have always believed that technology will improve the global economy. But every once in a while investors get too excited and see value in all the wrong places.

A classic example? The boom and bust of dot-com IPOs in the late 1990s. The market was right about the Internet changing the world, but it failed to pick the winners and losers.

So we shouldn’t treat the market’s latest bets as gospel. But the trend is clear: bitcoin, hardware and biotech are the real game changers now.

That’s why the Bitcoin Investment Trust (GBTC) is by far the biggest winner of 2017, with 477.5% gains so far. That’s way ahead of the other winning tech ETFs, though many have clocked impressive returns, too:

If you missed the bitcoin wave but still put your money in tech ETFs, you did very well as long as you chose the ARK Innovation ETF (ARKK), ARK Web x.0 ETF (ARKW)Global X Lithium & Battery Tech ETF (LIT), ARK Genomic Revolution Multi-Sector ETF (ARKG)Global X Robotics & Artificial Intelligence ETF (BOTZ), Virtus LifeScience Biotech Clinical Trials ETF (BBC), MG Video Game Tech ETF (GAMR), ARK Industrial Innovation ETF (ARKQ), Global X Social Media ETF (SOCL) and SPDR S&P Biotech ETF (XBI).

These funds are all over the place, betting on social media, biotech, battery technology, genomic research and video games. What they have in common is a belief that many technological revolutions are starting now—and there are identifiable companies that will profit.

Trend No. 2:  Greenback Slump Spurs Emerging Markets (19 Funds)

It’s no secret that the US dollar has had better times. After a bull run through 2015 and 2016, the greenback has given up a lot of those gains to emerging market currencies, the euro and even the post-Brexit pound. If you bet on a stronger dollar through, say, the PowerShares DB US Dollar Bullish ETF (UUP), you probably aren’t happy:

Dollar Droops, UUP Dives

On Wall Street, a lot of analysts and traders made the mistake of betting on a dollar recovery in the middle of the summer. Boy, were they wrong! And while that’s not good for Americans looking to vacation abroad, it’s been great in other parts of the globe, particularly emerging markets and Asia.

So great, in fact, that many China- and emerging market–focused ETFs are up over 50% and a few are close to that mark. This emerging-market strength has also benefited Germany, whose euro currency is getting stronger; the country also sells lots of technology to China.

A ton of winners here, so let’s list them:

Columbia India Small Cap ETF (SCIN)
EMQQ Emerging Markets Internet & Ecommerce ETF (EMQQ)
First Trust China AlphaDEX ETF (FCA)
Global X China Consumer ETF (CHIQ)
Global X China Materials ETF (CHIM)
Guggenheim China Real Estate ETF (TAO)
Guggenheim China Technology ETF (CQQQ)
iShares MSCI Austria Capped ETF (EWO)
iShares MSCI Brazil Small-Cap ETF (EWZS)
iShares MSCI China ETF (MCHI)
iShares MSCI Germany Small-Cap ETF (EWGS)
iShares MSCI India Small-Cap ETF (SMIN)
iShares MSCI Poland Capped ETF (EPOL)
KraneShares CSI China Internet ETF (KWEB)
PowerShares Golden Dragon China ETF (PGJ)
SPDR S&P China ETF (GXC)
VanEck Vectors Brazil Small-Cap ETF (BRF)
VanEck Vectors India Small-Cap ETF (SCIF)
WisdomTree China Ex-State-Owned Enterprise ETF (CXSE)

There have been so many foreign-ETF winners that it’s been tough to pick a loser! All you had to do was see that the dollar’s recent gains couldn’t last after an unprecedented run.

Trend No. 3: Fear Is Disappearing (3 Funds)

The third big trend is, paradoxically, the one that has scared a lot of people. And that’s because a lot of people aren’t scared.

Confused?

It’s an old belief that’s the cornerstone of contrarian investing. The idea is simple: bubbles form when everyone gets greedy, no one is fearful, and asset prices get too pricey. The market has definitely moved away from fear. No evidence of that is clearer than the VIX.

The what?

The VIX, or the CBOE Volatility Index, is a measure of S&P 500 price fluctuations. A higher number represents more uncertainty—that is, more fear. A lower number represents more confidence that a crash is unlikely.

The VIX is currently at 9.95, far from 13.75 a year ago, really far from its long-term average of 18.7 and even further from its all-time high of 67, in the midst of the financial crisis.

The VIX: A Picture of Tranquility

While a lot of pundits have spent 2017 warning that the VIX is due to rise “any day now,” anyone betting that the opposite would happen has made out like a bandit. Just behind bitcoin, the best performing ETFs of 2017 have been short volatility:

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Source: Contrarian Outlook 

Buy These 3 High-Yield Stocks for the Coming Rebound in Energy

The energy infrastructure sector has continued to decline, even as the price of crude oil has climbed and stabilized. This sector is populated by the publicly traded master limited partnerships (MLPs) and corporations that for the most part function like their MLP brethren. Over the last three months, crude oil is up about 5%, yield the Alerian MLP Infrastructure Index (AMZI) has dropped by over 10%. If you like to invest in turn around candidates, there are strong signs that MLPs and related companies will start to turn higher in November.

Underlying energy infrastructure fundamentals look stable and expectations are that most MLPs have businesses continue to grow. In the second quarter, two-thirds of the AMZI component companies increased distributions, with the remainder keeping payouts level. For the third quarter, a pair of distribution cuts have been announced. These reductions are strategic versus signs of desperation. My forecast is that the majority of MLPs will announce distribution increases.

A further sign that fortunes in the MLP space are improving is that bond prices have risen even as equity values declined. This interesting piece of analysis comes from Yorkville Capital:

Year-to-date, the Alerian MLP Index has declined by 5.6%, including distributions this year. Meanwhile, Yorkville’s index of MLP and midstream debt has produced a positive total return of 5.8%. This means that either the equity markets are getting it wrong and the bond markets are getting it right – or the other way around.

Bond investors primary concern is that the underlying business is healthy and stable enough to ensure that they will continue to receive their semi-annual, or quarterly, coupon payments (and principal upon maturity). Therefore, the increasing prices of MLP bonds suggest that MLP businesses are getting less risky and more stable – not the other way around.

On September 27, 2017, Moody’s upgraded their global midstream outlook to “positive” from “neutral” reversing the downgrade they appropriately made in late 2015. Their report highlighted expectations for business fundamentals to improve over the coming 12-18 months and noted that upstream activity out of the E&P industry has ramped with rig counts having doubled off the 2016 lows. Moody’s’ expects midstream EBITDA growth of 8-10% in 2018.

The final puzzle piece of the puzzle for an MLP sector recovery is the possibility that the most recent value drop was due to tax selling. An MLP focused mutual fund, ETF or closed-end fund operates as a taxable corporation, so taking tax losses now can be used to offset future gains and lower future corporate income tax payments. The fiscal year for these funds ends on October 31. If tax selling is part of the cause of the recent down turn in MLP values, we can expect some price support in November.

Earnings season has just started for the energy infrastructure sector and results so far have been positive. If more MLPs and infrastructure corporations report strong third quarter results, the sector could really take off starting in November. Here are three companies with currently attractive dividend yields and the potential for much higher share or unit values.

Targa Resources Corp (NYSE: TRGP) engages in the following energy midstream services:

  • Gathering, compressing, treating, processing, and selling natural gas.
  • Storing, fractionating, treating, transporting, and selling NGLs and NGL products, including services to LPG exporters.
  • Gathering, storing, and terminalling crude oil.
  • Storing, terminalling, and selling refined petroleum products.

In February 2016, to simplify the business structure Targa Resources Corp. acquired all the outstanding common units of Targa Resources Partners LP (NYSE: NGLS) that it did not already own. The company continues to operate using the MLP model, but is a corporation. At the current $41 per share TRGP yields 9.0%. This stock could easily go over $50 in an MLP rally.

Enterprise Products Partners LP (NYSE: EPD) has a market cap more than $50 billion and is the largest MLP by enterprise value. The company’s business segments include:

  • NGL pipelines and services
  • Crude oil pipelines and services
  • Natural gas pipelines and services
  • Petrochemical and refined products services.

EPD has increased its distribution for 62 straight quarters. Unlike most MLPs, Enterprise Products Partners can fund most of its growth projects without issuing additional equity. This $24 MLP could quickly move to over $30. EPD yields 6.9%.

Valero Energy Partners LP (NYSE: VLP) is controlled by and provides pipeline, storage and terminal services to its sponsor, Valero Energy Corporation (NYSE: VLO). Through asset drops from Valero, the cash flow and distribution growth at VLP is very predictable. The VLP payments to investors will grow 25% in 2017 and at least by 20% in 2018, with high probability for 20% growth in future years. Now at $41, VLP could easily surpass its 52-week high of $51. The units currently yield 4.7%.

Owning a bit of the MLP sector should constitute a core part of any serious high-yield investor’s portfolio. And with the way trends appear for MLPs investors in those stocks will not only continue earning a steady stream of income but could very well enjoy considerable share price appreciation. It’s this type of strategy that I use with my new income system called The Monthly Dividend Paycheck Calendar.

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Source: Investors Alley

Amazon Could Jump 50% … and You Could Make 500%

Amazon.com Inc. (Nasdaq: AMZN) isn’t a regular company. It’s a tech company. But it’s run by Jeff Bezos, a financial engineer.

Prior to founding Amazon, Bezos worked on internet-enabled business opportunities at the hedge fund company D.E. Shaw & Co. This was when the internet was brand-new. He left D.E. Shaw in 1994 to start his own internet-enabled business.

Bezos saw the opportunity for technology to disrupt retail. But he also saw the financial opportunity from a 1992 Supreme Court ruling that exempted mail-order companies from collecting state sales taxes unless they operate a physical location in the state.

It’s the marriage of an investment banker’s mind with technology that makes Amazon unique. It’s also what indicates Amazon stock could increase by 50%.

The chart below shows how an investment banker would value Amazon. Price is the blue line.

It’s the marriage of an investment banker’s mind with technology that makes Amazon unique. It’s also what indicates Amazon stock could increase by 50%.

In the chart, the green area shows the total enterprise value (TEV) to earnings before interest, taxes, depreciation and amortization (EBITDA) ratio. This ratio is about 12% below its 10-year average. It’s 40% below its high.

TEV/EBITDA is how an investment banker values a company. TEV is the price to buy the whole company, considering any bonds that are outstanding and other ownership stakes. EBITDA is a rough measure of the cash an owner of a company allocates.

Bezos knows he wants to allocate cash flow to maximize TEV. He’s the perfect guy to run Amazon. He evaluates opportunities based on cash flow rather than technology.

Ratios like TEV/EBITDA are mean-reverting. That means they move above and below average.

Right now, the ratio is well below average. I expect it to move to an above-average level. That indicates Amazon could rally 50% from its current price.

Using call options could magnify the gains, leading to gains of 500% or more. My Precision Profits readers understand how even small moves in stocks can lead to large returns. They enjoyed a gain of more than 400% in Microsoft Corp. (Nasdaq: MSFT) in less than a week after the stock gained 7%.

Regards,

Michael Carr, CMT
Editor, Peak Velocity Trader

In this exciting NEW VIDEO, Wall Street legend and former multibillion hedge fund manager Paul Mampilly pulls back the curtain on the biggest investment opportunity in the market today. What insiders are calling “The Greatest Innovation in History,” this revolution will mint more millionaires and billions than any technology that came before it. Right now, the current market for this technology is just $235 billion, but given how fast this technology is moving experts predict it will soar to $19 trillion by 2020. But 8,000% growth is just the beginning—and now’s your chance to get in on the action. [CONTINUE TO VIDEO]

Source: Banyan Hill

This Indicator Could Signal a Top

Stress. To us, it is measured by our pulse. Our economy, however, isn’t as easily tracked.

That’s why the St. Louis Federal Reserve has done its best to create a Financial Stress Index that tells the stress level of the economy.

The stress index, which is comprised of 12 weekly data indicators, is used to show when the economy is in certain stress situations — either above- or below-average stress.

Take a look:

The St. Louis Federal Reserve has done its best to create a Financial Stress Index that tells the stress level of the economy.

(Source: Federal Reserve)

The average is the zero line, so if the index is above zero, it’s above-average financial stress. Below zero, and below-average financial stress.

Right now, the index is at a reading of about -1.5, well below the zero line. In fact, it’s only been this low twice before, once in 2013 and once in 2014.

When the financial stress of the economy is higher, there’s a threat of a pullback in the stock market.

Take a look at the inverse relationship between the index and the S&P 500.

The St. Louis Federal Reserve has done its best to create a Financial Stress Index that tells the stress level of the economy.

Clearly, as the stress index (orange line) spikes higher, there’s almost always a pullback in the S&P 500 (black line).

Since we are at very low levels for the index, we know at some point financial stress will get worse.

So, what are some possible reasons for it to be worse?

Well, based on the indicators it uses, interest rates and yield spreads are the biggest factors. And President Donald Trump is eyeing John Taylor as the new Fed chair. Taylor is considered to be the most hawkish candidate on policy, meaning he is looking to raise rates at a more rapid pace than we have seen.

Trump’s decision will create moves in the interest-rate market over the next three to six months, so it could easily be the catalyst that creates a bottom in the stress index — and therefore a possible top in the stock market.

Regards,

Chad Shoop, CMT
Editor, Automatic Profits Alert

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Source: Banyan Hill

Why Bitcoin Should Be in Your Retirement Portfolio

Dear Early Investor,

People think you should buy bitcoin because the price might go up.

But the real reason you should own bitcoin – especially in your retirement portfolio – is that it’s a bet on a monetary revolution.

Crypto assets are all about cutting out the banks, middlemen, financiers and academics who control our current monetary system.

The monetary policy of today’s world is a mess rife with conflicts of interest and bad incentives. Every country does it similarly. And government is always tempted to print money. It punishes savers and rewards borrowers.

A well-constructed cryptocurrency, on the other hand, has a hard cap on the number of “coins” in existence.

There will only ever be 21 million bitcoins. You can’t change that number. There are a little more than 15 million available today.

So if we’re looking at bitcoin as a competitor to the dollar, there’s no contest. The U.S. government, for example, borrows more than $1 million each minute… printing money like crazy all the while.

That’s why bitcoin has risen from around $0.005 in 2010 to more than $5,000 today.

Bitcoin is a call option on a future where it is mainstream money. You don’t sell for double or triple what you put in; you hold on and hope it keeps going up. Less than 1% of people own bitcoin today, and if it becomes mainstream money, today’s bitcoin owners may be tomorrow’s new 1% of earners.

But it’s not just bitcoin anymore. There are hundreds of interesting cryptocurrencies out there – all competing against each other, sharing code and breaking new ground.

Here’s what’s really revolutionary about it…

All these “coins” or “tokens” (digital assets) have their own funding mechanism – the initial coin offering, or ICO – in which well-run projects raise tens of millions of dollars each week… hundreds of millions in many weeks, actually.

So they don’t need the stock market or venture capitalists. Crypto is its own funding source.

These crypto projects are trying to do big things like overthrow large incumbent financial institutions, software companies and (in some ways) governments – or at least loosen their monopoly on money.

After all, there’s no good reason a government should have a monopoly on legal tender. Libertarians like Ron Paul have long been calling for “currency competition.” We shouldn’t be forced to use dollars that erode in value.

The stakes are high.

Crypto has the potential to be a better form of money, compared to the current (barbaric) methods employed by most governments.

So that’s why you would want to own at least a little bitcoin in your retirement account. Capital gains taxes can be major there. Because if the crazy revolution happens, you’ll do very, very well, as long as you buy before half of the country gets in.

If it becomes popular as a way to store value for even 10% of the population, that’s more than enough to take it to at least $100,000 per coin by my rough estimates. It’s hard to say exactly, but demand is high and rising fast.

Each bitcoin is divisible into 100 million pieces. Each piece is one “satoshi.”

If bitcoin continues to rise in value, we may start thinking about prices in satoshis, not bitcoins. Bitcoins will be for very large purchases, and satoshis will be for everything else.

This is already happening in the crypto community. When we buy other cryptocurrencies, we usually buy them with bitcoin. It’s easier to think about thousands of satoshis than it is to think about tiny fractions of a bitcoin.

You don’t need to buy a whole bitcoin. Start small, and it could still turn into a great deal of money one day.

If you’re looking to do it in a retirement account, the most well-known player in the space is fittingly called Bitcoin IRA. The company takes a 15% upfront fee, but the tax savings down the road could be tremendous if bitcoin goes mainstream.

If you’re intrigued by bitcoin and the idea of investing in smaller (new) cryptocurrencies, watch my new presentation and join First Stage Investor. It includes my top four coins, all of which are brimming with potential.

Good investing,

Adam Sharp
Co-Founder, Early Investing

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Source: Early Investing

Wall Street’s Glory Days Are Numbered

“Welcome to Wall Street,” said the investment banker.

The year was 1989, and my college’s financial club had organized a trip to the New York Stock Exchange.

Our guide led us to the floor of the exchange because, back then, that’s where all the action took place.

Orders came flying in by phone, and some people even had portable devices to keep track of their stocks on the go.

As the open got closer, the noise rose to where you could barely hear the person standing next to you. But that was nothing compared to when the minute hand of the clock struck 9:30.

The minute we heard the “ding, ding, ding” of the opening bell, it was pure pandemonium.

Today, the floor is a little less exuberant, being mostly there for show now that a good portion of today’s trading takes place via computers.

But even though Wall Street’s essence has remained the same since it began in 1792, I believe its glory days are numbered.

See, Wall Street still has a monopoly on one essential part of trading … but in time, the internet is going to wipe out this current advantage.

Cutting Out the Middleman

Right now, Wall Street is made up by an army of middlemen.

These are your investment bankers, securities exchanges (like the New York Stock Exchange and the Nasdaq), corporate lawyers, analysts, consulting companies, auditors, accounting firms, rating agencies and all-around paper pushers.

These entities exist for one main purpose: to help sell equity or stock to the public. So if you want in on the action, you have to go through this vast network.

And for this monopoly, you pay a heavy price.

According to PwC, an elite consulting company, investment banks charge a 5% to 7% fee to do an IPO, or initial public offering. This is the first time that a company’s stock is offered for sale to the public.

That means if your company’s IPO is worth $1 billion, investment bankers net as much as $70 million in fees.

However, that’s just the beginning…

Exorbitant Fees Cannibalize IPOs

According to a survey of registrations filed by the Securities and Exchange Commission — an arm of the government that regulates stocks — the average cost of these middlemen’s fees amounts to $3.7 million.

While that may sound like a lot of money to you, I actually believe that this average is way too low.

Bottom line: It costs way too much to become a publicly traded company today.

The best evidence of this is the lack of IPOs. After peaking in 1999 with 486 companies going public, IPOs have since crashed.

In 2008, just 31 companies became publicly traded.

And 2016 marked the lowest number of companies going public in nearly a decade, with only 105 IPOs.

Wall Street still has a monopoly on one essential part of trading … but in time, the internet is going to wipe out this current advantage.

A Better Way to Go Public

It’s clear that more companies are choosing to stay private longer.

But now, these companies will have a new way to get their shares and stock to people wanting a slice of the pie.

This new process is called an ICO/ITO, or initial coin/token offering, which is being popularized by cryptocurrencies.

Basically, this is the process of digitizing an asset to make it publically traded via the internet. And if used to sell stocks, this process has been shown to dramatically reduce costs.

According to one Quora user, an ICO can be done for as little as $100. On the high end of the spectrum, an expensive ICO might cost $300,000, said a lawyer on the same site.

That’s still peanuts compared to the $70 million an investment bank will charge your $1 billion company. Or the lowball $3.7 million estimated fees you’d pay an army of middlemen to do an IPO.

Now, to my knowledge, no one has gone this route yet. But the dramatic cost reduction in doing an ICO/ITO offering vs. an IPO means it’s only a matter of time before someone tries this method out.

And once a successful model has been built, it’ll be curtains for Wall Street’s current IPO business.

That’s one of the reasons I’m staying away from traditional Wall Street companies in my services.

Instead, I’m looking for companies that are going to benefit from the new school of finance — be it through ICO/ITOs, mobile payments or even the implementation of blockchain technology.

These trends are the future of investing, and they’re what I research in my flagship Profits Unlimited newsletter. So, if you too want to explore the cutting-edge areas of finance — before other people even hear about them — I encourage you to read up on my service.

Regards,

Paul Mampilly
Editor, Profits Unlimited

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Source: Banyan Hill

Less Than 10% of Millennials Would Keep Paying Back Student Loans: Here’s Why

How’s this for a business proposition? I owe you $17,000. If you forgive my debt, I won’t use Uber or Lyft for my transportation needs. Or, how about I agree to give up texting and mobile messaging for a year in exchange for debt forgiveness? Doubt I’d get any takers.

I received an email about a recent survey,“Survey Reveals What Millennials Would Rather Deal With Than Paying Student Loans”. The sender suggested, “The insights would be a great fit with your audience.”

They questioned 500 millennials, age 18-34. At first, I thought it was a joke:

“We’ve … compiled some key findings:

  • A staggering 49.8% of all respondents said they would give up their right to vote in the next two presidential elections in order to have their debt forgiven
  • Ride-sharing services like Uber or Lyft don’t seem to matter to millennials quite as much… According to the results, 43.6% were willing to give up these services forever in exchange for debt forgiveness
  • Interestingly, 42.4% of respondents would also give up traveling outside of the country for 5 years, while only 27.0% said they would be willing to move in with their parents for 5 years
  • Millennials seem to value texting more than the other options – only 13.2% reported being willing to give up texting and any mobile messaging equivalent for the next year in exchange for having their debt forgiven
  • Only 8.2% of respondents chose to select none of the above and said they would rather keep paying off their student debt”

I asked the sender, “… My generation was faced with a choice. The rich kids went to college, the poor kids joined the military (gonna get drafted anyway) and then came out and used the GI bill to help fund their college. Were there any questions about trading military time for debt reduction? I received a polite response saying that was not part of the poll. Did it even dawn on them to ask?

The survey sponsor appears to be in the loan business, promoting refinancing student loans.

While I passed on the idea, I soon changed my mind. The survey appeared on Facebook, generating some brutal feedback. Many called respondent’s snowflakes and much worse. They felt the respondents had no clue about sacrifice and the real world.

Might part of the problem be the survey itself? If respondents were only given those silly choices, they would check the ones they felt most appropriate. Perhaps student loan debt is not that much of a problem. They are not willing to sacrifice much to make it go away.

Here’s one example. Survey says…49.8% would give up their right to vote in the next two elections to have their debt forgiven. The article also mentions less than half of the millennials voted in 2016.

What some consider sacrifices doesn’t cut it with many Americans.

OK Millennials, listen up!

When you took out a student loan, you entered into a contract, borrowing money to complete your education. You felt your education would lead to a better job and you could repay the debt from your earnings.

The government was a co-signer, guaranteeing repayment of the loan. By doing so, the banks offered YOU very low interest rates.

Today, paying off your debt is an inconvenient challenge. In my article, “Student Loans – A Multigenerational Curse” I outlined you are not alone:

“Since the 2008 recession began student loans have skyrocketed to over $1.4 trillion.

The Wall Street Journal reports, “Revised Education Department numbers shows that … at least half of students defaulted or failed to pay down debt within 7 years.” Many young people (not all graduated) owe several hundred billion dollars they have been unable or unwilling to repay.”

The survey says, “…The Federal Reserve puts the median student loan debt balance at $17,000, with monthly payments of $222.” More than half are failing to honor their contractual obligations.

Government guaranteed student loans are a deal with the devil.

With some very limited exceptions, you cannot discharge student loans in bankruptcy court. As a taxpayer, I LOVE that provision. In 2012 Marketwatchreported:

“According to government data … the federal government is withholding money from a rapidly growing number of Social Security recipients who have fallen behind on federal student loans. From January through August 6, the government reduced the size of roughly 115,000 retirees’ Social Security checks on those grounds.”

What is debt forgiveness?

Unlike bankruptcy, debt forgiveness is when a lender voluntarily agrees to allow the debtor to forego payment of the remainder of the debt. It’s a gift, plain and simple. If student debt is forgiven or defaulted, the government pays off the bank.

Unfortunately some politicos, pandering for votes, are promoting the concept, willingly giving away billions of our tax dollars.

Let’s cut to the core. Asking for debt forgiveness is asking taxpayers, your friends and neighbors, to pay for decisions YOU made for YOUR benefit.

The Student Loan Debt Clock tells us the current total is over $1.5 trillion.Reference.com says there are approximately 138 million US taxpayers. If all student loan debt were forgiven, the cost would be approximately $10,870 per taxpayer.

Its no wonder the feedback on Facebook was so negative. Taxpayers work hard and don’t want to pay off someone else’s debts.

What to do?

Student loans should be a last resort when it comes to financing an education. Students should be educated about debt and the consequences before they take out the loan.

As I outlined in my previous article, college costs should be minimized. Four-year graduation should be expected, 36% of incoming freshmen get it done! Students are making adult decisions, many times at an early age, and parents need to guide them so they don’t end up with a huge debt burden.

I checked out the Army ROTC website:

“Scholarships and stipends in Army ROTC help you focus on what’s important. Namely, getting that college degree – not how you’ll pay for it.”

A college degree and a few years as a military officer have worked well for many young people. If you are not willing to do so, that’s fine, just be responsible and honor your contractual obligations.

27% of the respondents said they would be willing to move in with their parents for student loan debt forgiveness. That’s a bass-akward solution for sure!

A recent US Census Report tells us:

“More young people today live in their parents’ home than in any other arrangement: 1 in 3 young people, or about 24 million 18-to 34-year-olds, lived in their parents’ home in 2015.

… At 24.2 million people, the population of 18- to 34-year-olds living at home is a large and diverse group. …About 81 percent are either working or going to school.”

If you are going to live at home, do it while you are going to a local junior college, saving a tremendous amount in educational cost. The goal is to transition into adulthood easily with no debt burden.

While many parents want to help their children, having them move back home after college for extended periods of time is an economic and emotional burden. Parents must move ahead and get their retirement in order.

Plan B

Based on the survey and available choices, it’s easy to conclude that student loan debt is more an inconvenience (average $222/month???) than a real burden. If debt consolidation will help reduce monthly payments, investigate the option. However $222/month is not the case for many millennials.

My granddaughter and her husband married in their senior year in college. Their combined student loan debt is significant. They both work, husband got a second job and they are responsibly working to pay off their debt and raise a family. Yes it is difficult.

Debt Forgiveness

There are ways to legally obtain some debt forgiveness. Military.com highlights many Student Loan Forgiveness and Discharge Programs. It involves more sacrifice than promising not to text. Here are some options:

“Public Service Loan Forgiveness Program

Under this program, members of the military who have been employed by the military or a qualifying public service job for the last 10 years may have their federal student loans FULLY discharged.

Public service qualifying occupations include:

** Emergency management
** Military service
** Public safety
** Law enforcement
** Public interest law services
** Early childhood education (including licensed or regulated childcare, Head Start, and state-funded pre-kindergarten)
** Public service for individuals with disabilities and the elderly
** Public health (including nurses, nurse practitioners, nurses in a clinical setting, and full-time professionals engaged in health care practitioner occupations and health care support occupations)
** Public education
** Public library services
** School library or other school-based services

You need to be employed in these positions at least full-time, which is considered to be at least 30 hours a week or what the employer considers to be full-time.”

If you have student loan debt, sacrifice and do what it takes to get the loans paid off as quickly as you can. If you are in college, or headed in that direction, get a good education in four years with minimal student loan debt. Work your tail off so you can easily transition to your next step in life.

Decisions and behavior have consequences. Welcome to the adult world!

Stop losses are a MUST. Retirees cannot afford to gamble on the buying power of market coming back in their lifetime; the risk is much too high!

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