COVID-19 vaccination update The good news: COVID-19 cases and hospitalizations have improved recently in the U.S. As of February 15, 2021, 54.6 million doses have been given. An average of 1.64 million doses per day are being administered. The bad news: Infections of the more contagious variant from the U.K. are doubling every 10 days in the U.S. This mutant strain may reverse the positive trends that have occurred since January 9, 2021. More infections would slow the reopening of the economy and be a headwind for job creation. Retail trading: Froth and frenzy Retail investors are bidding up so-called “meme” stocks…
Insights & Advice
Exchange Traded Funds
Stocks versus Bitcoin
There was no contest this week. Cryptocurrencies took center stage as the stock market churned, chopped and gave investors a little indigestion. Welcome to the market’s brave new world. It appeared that Bitcoin was the answer to whatever ails you. Higher interest rates, the threat of higher inflation, weaker (or stronger) dollar, no problem, just buy Bitcoin. By the end of this week, the crypto coin had chalked up a 15% gain and was trading above $52,000. Ethereum, Bitcoin’s younger cousin, was also up 10%. None of the financial market’s usual suspects—stocks, bonds, or commodities—could come close to those kinds…
Financial froth infects markets
One sure sign that stocks are getting overdone, is the actions of overconfident investors that bid up stocks in a euphoric frenzy, only to dump them at the first sign of trouble. These behavior patterns normally usher in a corrective stage in the stock market, but exactly when that will occur is anyone’s guess. Investopia’s definition of froth “refers to a market condition where an asset’s price begins to increase beyond its intrinsic value.” Wall Street’s “Reefer Madness” event this week is just such an example. Certain stocks in the Cannabis sector saw their share prices double and then triple…
Capital Ideas: Politics unusual
COVID-19 Vaccination Update As of February 2, 2021, 32.8 million Americans have now received at least one dose of a COVID-19 vaccine. That was more than those who tested positive for the virus. The average daily rate of vaccinations has reached 1.34 million doses per day. The average daily rate may be affected by the snowstorms of last week, but it seems to be trending upward. Trading a Pullback Valuations are staggeringly high. Nonetheless, I remain invested in equity for the portion of my portfolios intended for that. Despite sky-high valuations, I am hesitant to take bold defensive moves. I…
Stocks regain momentum
What a difference one week makes! Stocks recouped all their losses this week, and then went on to make new highs. The outcome of President Biden’s proposed stimulus bill will determine the market’s next move. Let me set the record straight. Last week, I wrote that I expected stocks to stumble, hopefully preparing readers for a possible decline of 10-15%. That was a mistake. Instead, traders bought last week’s 3% dip, and, at this point, we are now back to square one. Well, not quite. The U.S. dollar, the Ten-Year U.S. Treasury Bond, and the price of gold have all…
Make way for the retail investor!
By now, you may have realized that this is not your father’s stock market, nor will it ever be again. An entirely new army of investors have arrived on the scene with different attitudes, values, and beliefs. You can either get on this train or be left behind. Back in the day, burnt by the Financial Crisis of more than a decade ago, many investors decided to forsake the stock market, embracing bonds instead. Over that time, Americans amassed more than $3 trillion in savings and 94% of that money went into bonds. Those bond buyers have had a good…
Negotiating the market in a pandemic
Dalton, Mass. — I made a couple more trades in my portfolio last week, so I wanted to dedicate the bulk of today’s column to keeping you in the know. A couple of my put/call hedged strategies reached a hair’s breadth of achieving their maximum return cap. The way these things work, as the prices go higher, the potential downside is reset. While the downside protection remains from the starting point of the ETFs’ anniversary date, you could “lose” the appreciation you had made up until that point. That was wonky. Let me rephrase. I invested in some things that could…
Stocks and Mutual Funds versus Index Funds
On a daily basis, I review portfolios of stocks and mutual funds from clients and readers. What strikes me most about all these portfolios is that I rarely come across one that has done better than the market. A large part of the problem lies in their choice of investments.
This Fund is a Winner
From time to time, a really interesting fund will come to my attention. One such fund, the ETF Market Opportunity Fund (ETFOX), has chalked up some impressive returns over the last several years and appears ready to offer investors a rewarding and safe ride out of this recession. Better yet, the manager, Paul Frank, is a local boy living with his family in Old Chatham, New York.
Inverse Securities—How to protect your Portfolio in Down Markets
Traditionally, investors run to cash or bonds, preferably Treasury bonds, when the stock markets decline. They exit, waiting on the sidelines, hoping to re-invest at the lows. Sadly, that strategy has proven to lose investors more money than if they had done nothing. Yet, no one wants to suffer the pain of watching their portfolios go down month after month. My advice is to hedge your investments in dire times like these with inverse exchange traded funds that protect your portfolio in downturns.