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]]>Within the world of technology, NVIDIA CEO Jensen Huang is as big a rock star as Swift is in the music world. Mr. Huang will deliver the keynote speech on Monday, March 18, from 1-3 p.m. PDT. During the two-hour speech, Haung will unveil the latest breakthroughs in AI, advanced computing and robotics. With over 900 sessions covering a wide range of topics and over 300 exhibits showcasing cutting-edge technologies, this gathering of the industry’s finest luminaries, developers, researchers and investors promises to move the market — probably higher.
Click on the link here for FREE virtual registration to the event. Investors have been wondering out loud just how transformative AI and other leading technologies will impact not just the industries they are familiar with, but every industry that is in the nascent stages of implementing AI and the array of new technologies that will change the economy as we know it and shape the future of just about everything.
Specific topics to be highlighted include:
Investors will be able to zero in on specific areas of interest to understand the forthcoming impact these technologies will have on current occupations, career planning and which jobs and skill sets will be most impacted, both positively and negatively, by these advances.
So many investors are in the dark about what is happening with AI, with just as many thinking they have missed the investment proposition of this breakthrough technology that is in its second full year of dominating the stock market. Given the current pause in the tech-led rally that began in January 2023 and is now running though the first quarter of 2024, this “Woodstock of technology” conference should provide a huge opportunity for investors to gain knowledge, confidence and conviction about all things AI.
Last week’s hot inflation data from the release of the Consumer Price Index (CPI) and Producer Price Index (PPI) reports spooked the bond market, triggering a three-day selloff that was felt mostly by the tech sector. With the end of the quarter coming into view following soon thereafter by first-quarter earnings season, it stands to reason that this pullback will be looked back on as window of opportunity to initiate and add to the best of breed technology stocks.
The NVIDIA GTC conference will confirm the AI sector’s leadership and reveal certain companies that are not in the limelight, but provided compelling evidence they should be. The strong will get stronger, and yet many innovative younger companies will emerge from the show as potential home runs for investors to consider.
This event, where much of the content is free for virtual participants, is a gift at a particularly important time for stock market sentiment, and I do not think it will disappoint attendees or market participants. Quite the contrary, NVDA GTC will likely reignite the animal spirits that had the Dow, S&P and Nasdaq tagging new all-time highs a little over a week ago. Taylor Swift’s 2024 Eras Tour will include 29 performances. This show comes around just once a year. Do not miss it!
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]]>The post TikTok Ban Obscures Chinese Stock Gold Rush appeared first on Stock Investor.
]]>The country’s stock market is teetering on the brink of collapse.
And it is about to lose its biggest foothold in America — TikTok.
Yet, beneath its crumbling economy, military weather balloons and blatant propaganda tools lie some epic opportunities…
…if you have the stomach and the knowledge.
Because as Jim Woods wrote in his newsletter last month:
“China has been so battered for so long, that there is a lot of deep value here for the ‘blood in the ‘’red’’ streets’ investors.”
And boy was he right.
However, this battle-tested veteran didn’t recommend buying individual Chinese stocks.
He was more interested in the exchange-traded funds (ETFs) like the CHIQ.
And here’s why…
Predictable Manipulation
China’s heavy-handed approach creates gaping economic inefficiencies.
When markets falter, President Xi calls on his “national team” to prop up prices.
$17 billion flowed into index-tracking funds in January as the Hang Sang fell over 13% while the CSI dropped over 7%.
Jim Woods saw this coming from a mile away.
In late February, he highlighted the Chinese ETF CHIQ in late February, which has rallied rather nicely since then.
This ETF focuses on the Chinese consumer, a recent passion project for the central government.
You see, around 2018, when President Xi decided to smother his own economy, notable shifts were already taking place.
The once burgeoning retail market had slowed markedly. Developers left cities abandoned, including weird copies of Paris (Tianducheng) and England.
Source: Shutterstock
So, Xi and co. shifted the focus to the consumer… which went terribly.
For starters, a lot of the consumer wealth was tied up in real estate.
Then you had a growing population of unemployed younger adults who didn’t have any money to spend.
Once the pandemic hit, everything collapsed.
That’s why it took China far longer to recover even a sliver of its former economy.
While it’s not the growth engine of the early 2000s, the old girl still has some life left in it.
As Jim pointed out, China’s consumer spending rebounded nicely in Q4 2023.
Source: National Bureau of Statistics of China
Combined with looser central bank policy, it was only a matter of time before Chinese stocks caught a lift.
The resurgence may be largely tied to China’s desire to travel. After all, its people have been cooped up longer than any other country.
But make no mistake, this doesn’t make China a long-term investment.
Beyond what most people understand about China’s politics, there’s a little-known fact about how they treat foreign investors.
Money in. Nothing out.
When we buy a stock, we’re taking partial ownership in that company. This entitles us to a portion of the profits (or assets).
That doesn’t happen with Chinese companies.
American depository receipts (ADRs) aren’t actual shares of a company. It’s a note that the intermediary ties to shares of the company they own overseas.
So, we can only own Chinese companies indirectly.
But there’s another key feature you probably weren’t aware of.
Many of the Chinese companies we, as Americans invest in, don’t pay dividends. In fact, a much smaller percentage of Chinese companies pay any dividends.
Alibaba is a perfect example.
Despite generating billions of dollars in cash every year, it doesn’t pay dividends.
What do its managers do with the money?
Other than squirreling away $80 billion on its balance sheets, they do share buybacks.
Plenty of investors will tell you that’s even better than dividends.
But you have no legal ownership rights in China. So, what is that ADR in reality?
We’d argue nothing but paper profits at best, and air at worst.
That’s why it’s flat-out dangerous to own shares of individual Chinese companies long-term.
Any one of them can be nationalized at any moment.
Chinese ETFs reduce that risk through diversification, similar to junk bond funds.
Short of an all-out ban, like between the United States and Russia, the majority of the ETF holdings should remain intact.
Opportunistic Investing
If China is so unstable, and capable of changing at a moment’s notice, how can investors uncover pockets of value?
As Jim showed with his ETF selection, you can have some sector or thematic idea so long as you have the data to support it.
China, like any large institution, isn’t going to change its broad economic policies overnight.
As long as you study the general movements of the government, you can steer clear of the catastrophic zones and towards the diamond caves.
Because when things look THIS bad, you know the opportunities are even juicier.
But rather than try to run this maze solo, take this opportunity to check out Jim Woods’ latest report on China.
In it, he details the broad economic themes driving the Chinese government, and how to exploit them for gain.
Click here to explore Jim Woods’ report.
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]]>The post Covered Put – Option Trading Strategy appeared first on Stock Investor.
]]>The covered put can be used when an investor is trying to increase his profits from shorting the underlying stock or when he is protecting his short position against a slight rise in the price of the underlying stock. This article will give investors a better understanding of this effective option strategy.
An investor who uses the covered put has a neutral to slightly bearish sentiment on the underlying stock.
The maximum profit an investor gains from this strategy is equal to the premium received for the option sold. Therefore, the potential gain is limited.
On the other hand, the potential loss is unlimited. In the worst-case scenario, the stock price expires above the strike price. If this happens, the investor is left with a short stock position while the price of the stock is rising. Since there is no limit on how much the stock could rise, the potential loss is unlimited.
Let’s look at an example of this strategy.
Assume stock ABC is trading at $30. An investor writes a covered put by selling a put option with a strike price of $30 that expires in a month. He receives a premium of $200, which is his potential maximum profit. At the same time, he shorts 100 shares of ABC stock.
At expiration in one month, if ABC is still trading at $30, then the put option will expire worthless. The option seller will cover his short position with no loss and will walk away with a profit of $200.
If ABC falls to $27 at expiration, then the put option would be exercised. If this happens, the option seller is obligated to buy the shares of stock at $30 rather than $27. That is a $300 loss. However, he also shorted the stock at $30. From that, he made a $300 gain. The $300 loss from the option is offset by the $300 gain in the short position. The investor walks away with a profit of $200 because of the premium paid to him.
If the stock rises in price to $35 at expiration, then the option seller is going to incur a loss. The short stock position will suffer a loss of $500. However, the option seller is gaining $200 from the premium. In total, the option seller is going to lose $300.
These are the possible results for a covered put strategy. The best result occurs when the underlying stock price remains relatively neutral.
If an investor feels that a stock price is going to remain neutral over a certain time period, then using the covered put is a great strategy to earn a small profit.
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]]>The post Covered Call – Option Trading Strategy appeared first on Stock Investor.
]]>The covered call is a conservative but effective strategy that can be used to generate small profits. This article will explain everything there is to know about the covered call and give investors confidence to add this strategy to their investing playbook.
The covered call is used when an investor expects the underlying stock to have a slight increase or decrease in price. This is not a strategy to use when an investor is heavily bullish, or bearish.
By using this strategy, an investor walks away with a premium regardless of what happens to the underlying stock’s price. However, this strategy puts a cap on the stock’s profit potential.
Let’s look at an example to gain a better understanding.
Assume an investor owns shares of stock ABC. ABC is trading at $20. The investor sells a call option for ABC that expires in a month with a strike price of $23. The investor receives a premium of $2 per share for selling the option. However, he caps his potential upside on the stock at $23.
This example will play out in one of three scenarios:
These three scenarios show the possible results of executing the covered call strategy. An investor will get his best result from the strategy if the stock price remains relatively neutral. If this happens, the investor walks away with the premium while still owning shares of the stock.
The covered call is a safe and effective strategy that investors can use to earn small profits in option trading.
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]]>The post The Question You Should Ask Whenever You’re Wrong appeared first on Stock Investor.
]]>Since Joe Biden gave his State of the Union (or shall we say “Disunion”) speech last week, I’ve encountered a plethora of negative comments about the future of America.
Is the American Dream Over?
“If Biden is re-elected, it will be the end of the American Dream as we know it,” said one pundit on Fox News.
The critics are out in force. Supply-side economist Steve Moore writes, “Biden is intentionally trying to dismantle the American economy with his imbecile energy, climate change, crime, border, inflation, debt and high tax policies.”
Glenn Beck, the host of Blaze TV, recently warned that America may face multiple terrorist attacks in one day, similar to 9/11, given the open borders policy of the Biden Administration.
Recently, I attended a private meeting of political leaders and pundits who thought that President Biden’s address was the most polemical, shrill and divisive talk they had ever heard.
I’ve been watching State of the Union addresses all my adult life, by both Republicans and Democrats, and in many ways they are always polemical and divisive. What was amazing to me is how “sleepy” Joe Biden performed. He must have been well rested and jacked up with some pretty incredible drugs to do as well as he did.
President Biden did say some things that were crazy, such as when he asserted that voting for former president Donald Trump is a “vote against democracy.”
Hey, wasn’t it the Democrats who want to remove Trump from the November ballot in Colorado and other states? Talk about anti-democratic! I was glad to see the Supreme Court ruled 9-0 against the Colorado decision. Let the people decide. Isn’t that what democracy is all about?
Why Then Is the Stock Market at an All-Time High?
Kevin Roberts, the new president of the Heritage Foundation, recently declared, “The American Dream is being threatened as never before!”
If that is true, why is the stock market at or near an all-time high? What are the prophets of doom and gloom missing?
That’s the question I always ask when I’m wrong about something:
“What am I missing?”
Wall Street is a good bellwether of what is going on the country. So far, the benefits outweigh the costs. The economy is recovering from the Covid pandemic, inflation is coming down, corporate profits are strong, new technologies are being introduced and there’s a strong movement to reverse the “cancel” and “woke” culture in the United States.
We have gridlock on Capitol Hill that is keeping a lot of bad legislation from becoming law. The Supreme Court has reversed many bad decisions by the lower courts.
We Remain Fully Invested
So, all is not lost after all. In my newsletter, Forecasts & Strategies, we remain fully invested, despite occasional corrections in the market.
We are also well diversified in some “contrarian” investments such as Bitcoin and gold, both of which continue to outperform and offset any selloffs in the stock market.
By remaining positive and fully invested, we have made good money in 2024.
The American Obituary Has Been Written Many Times
The American economy has been left for dead many times, only to be resuscitated with renewed vigor. We have survived civil and world wars, the Great Depression, the inflationary 1970s, terrorist attacks and more.
As J.P. Morgan once said, “The man who is a bear on the United States will eventually go broke” (“Maxims,” p. 111).
I encourage you to read my favorite J.P. Morgan story found on pp. 218-219 in “The Maxims of Wall Street.” See www.skousenbooks.com.
American exceptionalism is alive and well. We are still the Promised Land with millions wanting to live and work here.
Solving Our Unfunded Liability Problem: Look to Canada!
One serious problem in America is the irresponsible, out-of-control deficit spending and national debt, created by both Republican and Democratic leaders over the years. The trouble is getting worse, with rising interest rates to pay the debt and the growing unfunded liabilities from Social Security and Medicare.
Robert Poole of the Reason Foundation warns:
“The Congressional Budget Office (CBO)’s latest 10-year projection is frightening. CBO projects annual federal budget deficits to increase steadily, exceeding $2.5 trillion by 2034, assuming current policies continue… The federal government is projected to borrow an additional $20 trillion over the next decade, the CBO estimates.
“One driving factor is the impact of higher interest rates on the current $34 trillion (and growing) national debt… By 2034, annual interest expense is projected to be $1.6 trillion — more than one-fourth of all federal tax revenue.
“The Penn Wharton Budget Model suggests that the United States has about 20 years to fix this debt/deficit problem — ‘after which no amount of future tax increases or spending cuts could avoid the government defaulting on its debt.’
“On August 2, 2023, Fitch Ratings downgraded the federal government’s long-term debt rating from AAA to AA+. And on November 10, 2023, Moody’s Investors Service reduced its outlook on the U.S. credit rating from ‘stable’ to ‘negative.’ Standard & Poor’s did its downgrade in 2011. These are warning shots across the ship of state’s bow.”
Sounds ominous. What to do?
Canada faced a similar problem back in the mid-1990s. Deficits were getting out of hand, and the Canadian dollar was sinking. The Conservative Party and the Liberty Party of Canada worked together and resolved to cut government spending, lay off federal workers and then went on a supply-side tax-cutting program that resulted in economic growth and deficit reduction.
What about the unfunded liability problem, which causes national bankruptcy? Again, Canada offers an incredible example of solving the issue.
Last week, Andy Puzder and Terrence Keeley wrote an op-ed in The Wall Street Journal on the success of the Canadian social security system, which has earned a 9.3% annualized return over the past 10 years (versus almost zero return in our Social Security Trust Fund). They wrote:
“The Canada Pension Plan’s superiority stems from its asset allocation. The fund invests about 57% of its assets in equities and 12% in bonds; the rest is divided among real estate, infrastructure and credit. Over the past 10 years, the Canada Pension Plan has realized a 9.3% annualized net return. Similarly to how Social Security works, Canadian citizens pay into the program and are guaranteed lifetime benefits.”
At some point, the United States will need to imitate the Canadian model. Here is a chart on the difference between the two:
In sum, there are solutions to all of our problems — if we know where to look and remain optimistic.
Sound Advice from the ‘Investment Bible’
In my home, I have a whole section of my library devoted to dozens of books written by doomsayers and Cassandras, such as “The Coming Deflation”…. “How to Prosper During the Coming Bad Years”… “Bankruptcy 1995”… “The End of Inflation” and so on.
I’ve also collected a bunch of quotes on doomsayers and Cassandras in “The Maxims of Wall Street.”
Jim Woods, my colleague at Eagle Publishing, is a big fan.
Jim states, “I’ve always felt that a collection of wisdom from the best brains in that industry has been most special to me. And on this front, there is no better ‘how to’ anthology than the one by my friend, fellow Fast Money Alert co-editor and brilliant economist, Dr. Mark Skousen. The ‘Maxims of Wall Street’ is a collection of some of the greatest wisdom ever to flow from the biggest and brightest names on Wall Street. Great investors such as Jesse Livermore, Baron Rothschild, J.P. Morgan, Benjamin Graham, Warren Buffett, Peter Lynch and John Templeton are just a sneak peek at some of the names you’ll discover in this fantastic collection. Then, there is profundity from the likes of Ben Franklin, John D. Rockefeller, Joe Kennedy, Bernard Baruch, John Maynard Keynes, Steve Forbes and numerous other luminaries too copious to mention.”
If you don’t have an autographed copy of my collection of quotes, stories and wisdom of the world’s top traders and investors, please order a copy now.
It is in its 10th edition, having sold nearly 50,000 copies. It has been endorsed by Warren Buffett, Kevin O’Leary, Jack Bogle, Kim Githler, Bert Dohmen, Richard Band and Gene Epstein in Barron’s.
I offer it cheaply to my Skousen CAFÉ readers: Only $21 for the first copy, and all additional copies are $11 each (they make a great gift to clients, friends, relatives and your favorite broker or money manager). I sign and number each one, then mail it at no extra charge if you live in the United States. If you order an entire box (32 copies), the price is only $327. As Hetty Green, the first female millionaire, once said, “When I see a good thing going cheap, I buy a lot of it!”
To order, go to www.skousenbooks.com.
You Nailed it!
Friedrich Hayek Won the Nobel Prize 50 Years Ago
“Mises and Hayek articulated and vastly enriched the principles of Adam Smith at a crucial time in this century.” — Vernon Smith (2002 Nobel prize in economics)
March 23 is the anniversary of the passing of a giant in economics — the Austrian economist Friedrich Hayek (1899-1992).
He is most famous for his bestselling book “The Road to Serfdom,” written near the end of World War II, an admittedly a pessimistic book, warning the West that its move toward socialism, fascism and communism was indeed a “road to serfdom.”
Then, when he won the Nobel prize in economics in 1974, he warned again of the dangers of “accelerating inflation,” which he said, were “brought about by policies which the majority of economists recommended and even urged governments to pursue. We have indeed at the moment little cause for pride: as a profession we have made a mess of things.”
Fortunately, we have moved away from the road to serfdom, especially after the collapse of the Berlin Wall and the Soviet socialist central planning model.
But the road to freedom has been a checkered one, and we must always be alert to losing our liberties in the name of inequality, fairness and social justice.
Last month, Tom Woods interviewed me in honor of the 50th anniversary of Hayek’s winning the Nobel prize. Watch the interview here.
Mark Skousen, Friedrich Hayek and Gary North in Austria, 1985
I had the pleasure of interviewing Hayek for three hours in the Austrian alps in 1985. He was especially happy to hear I resurrected his macroeconomic model in developing gross output (GO). See www.grossoutput.com, a measure of Hayek’s triangles.
This week, Larry Reed, former president of the Foundation for Economic Education, wrote this wonderful tribute to Hayek.
Highly recommended.
Good investing, AEIOU,
Mark Skousen
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]]>The post ETF Talk: Bitcoin Is IBIT of a Trend appeared first on Stock Investor.
]]>Bitcoin has been making huge waves in both the market and the news, with the latest headline reporting it hit a record high of $72,000 on Monday. With high inflation a continuing threat in 2024, hedge investments such as Bitcoin have been experiencing a rebound, with some experts speculating that its value could reach up to $100,000 during the next year.
Adding to the excitement is the recent introduction of Bitcoin exchange-traded funds (ETFs), including one that recently amassed over 200,000 BTC in assets — the iShares Bitcoin Trust (IBIT).
Opened in January of this year by BlackRock, Inc., this fledgling ETF has already carved out a comfortable spot for itself in the market. IBIT is a passively managed fund that seeks to track the spot price of Bitcoin, with the intention of providing investors with easy access to the cryptocurrency, without the hassle of having to acquire, hold and trade it directly.
IBIT is backed by Bitcoin held in what is known as “cold storage.” Cold storage is a safeguarding method that generates and stores private keys corresponding to the trust’s Bitcoins offline, making them more resistant to hacking.
The trust’s holdings are valued daily based on the CF Benchmarks Index, which tracks the once-a-day benchmark rate of Bitcoin’s price in U.S. dollars. The index aggregates the trade flow of several Bitcoin platforms during its observation window with a focus on transactions the index provider finds relevant.
Currently, the fund has an expense ratio of 0.12%, and $13.58 billion in assets under management. Plus, 100% of the fund’s holdings are in Bitcoin, making the trust’s sole investment focus on the cryptocurrency. This is excellent for investors looking for an easy way to invest in Bitcoin.
Courtesy of www.stockcharts.com
As of March 11, the trust is up an astounding 51.45% in the past month. Since the ETF launched recently, IBIT does not yet have a three-month or a year-to-date performance listed.
While Bitcoin is currently all the rage, it might not be the right investment choice for your portfolio. Before jumping into any investment, trend or not, you should always consider your investment goals and do your due diligence before adding any stock or exchange-traded fund (ETF) to your portfolio.
As always, I am happy to answer any of your questions about ETFs, so do not hesitate to email me. You may see your question answered in a future ETF Talk.
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]]>The post Sleep Is a Virtue appeared first on Stock Investor.
]]>He’s a career politician, a Democrat and someone who holds many political and philosophic ideas that I stridently disagree with. He’s also a man who has many, shall we say, “backward” ideas on how to live.
Perhaps the best example of these ideas was illustrated way back in 2008, in an article I wrote about my five-hour plane ride with then-Senator Biden, “We All Scream for Ice Cream: A Joe Biden Tale.” If you haven’t yet read this article, let me give you the Cliff Notes version: He ate his meal in reverse order.
This behavior revealed what I concluded to be a type of reverse-thinking pathology of the sort that leads to bizarre and backward ideas, the latest of which being the proposals found in so-called “Bidenomics.” This is the economic playbook that consists of bigger and bigger government subsidies and spending, and more rules and regulations as a panacea for growing the economy from “the middle out and the bottom up — not the top down.”
Now, as a free-market advocate and a radical for laissez-faire capitalism, you likely know what I think about these ideas. So, the president and I certainly don’t share this key philosophic view.
However, I do share one important thing with Joe Biden that I want to tell everyone about, right now, as it just might save your life (and I mean that with no sense of hyperbole).
Last summer, the White House confirmed that President Biden had recently begun using a CPAP machine to treat sleep apnea. The admission came largely in response to the visible indentations caused by the CPAP straps that were seen on both sides of the president’s face after he began using the device.
Now, if you don’t know, a CPAP (continuous positive airway pressure) machine is a device that uses mild air pressure to keep breathing airways open while you sleep. It is the primary treatment option for sleep apnea, a sleep disorder in which breathing repeatedly stops and starts, forcing a person to essentially wake up constantly during the night, therefore depriving him/her of entering the various necessary sleep stages. It’s also a condition that an estimated 30 million people in the United States have, a number that I suspect is way too low.
I say that, because last year, I was diagnosed with severe sleep apnea, a condition I suspect I had been suffering from for many years without even being aware of it. And here, you see, is something I have in common with Joe Biden — we both have sleep apnea, and we both use a CPAP to help us deal with this subversive health condition.
Your editor wearing his “nasal pillow” CPAP machine.
Like the president, I experienced some facial indentations when I first began using my full-face CPAP. However, when I switched to what is called a “nasal pillow” device, the facial indentations disappeared.
Now, the reason I am writing about this medical condition I share with President Biden is because sleep apnea is a very serious problem that, left untreated, can result in a host of serious health complications. For example, multiple studies have shown an association between sleep apnea and problems such as type 2 diabetes, strokes, heart attacks and even a shortened lifespan.
I don’t know about you, but I love my life, and I want it to continue for many years to come. I also want that life to be as free of disease as possible, and as healthy as possible. And considering that more and more research has revealed that quality sleep is a critical component of optimal health, a kind of health superpower, if you will, it only makes sense to get the best quality sleep you can.
Finally, I want you to seriously consider this vital health issue, because you may suffer from sleep apnea and not even realize it. If you, or most likely your partner, notice that you snore heavily, or if you feel sluggish in the morning, have unexplained fatigue and mood swings or if you have dry mouth and/or headaches when you awaken, you may have sleep apnea.
To begin the process of treating this condition, I recommend seeing your doctor and having them refer you to a sleep specialist for an overnight sleep study. This is when you go to a sleep facility, where they place sensors on your head and body that monitor your sleep and calculate your “apnea events” during the night.
According to the American Academy of Sleep Medicine (AASM), sleep apnea and the number of apnea events are categorized into mild (five-15 events/hour), moderate (15-30 events/hour), and severe (>30 events/hour). When I did my sleep study, I was off the charts at 66 events per hour. That means more than once per minute I was waking up and gasping for breath!
Thankfully, this situation is now under control. In fact, my CPAP monitor actually tells me how many apnea events I experience per hour. Last night, it was 0.0 events. So, from 66 events to zero — that is what you call deep sleep progress.
So, if you have any suspicion at all that you may be suffering from sleep apnea, I strongly urge you to find out if you share what the president and I share — a condition you should by no means feel embarrassed by, one that can be treated by medical technology and one that can help you live a healthier life.
Ok, now call your doctor.
*****************************************************************
Something for Nothing
No, you don’t get something for nothing
You can’t have freedom for free
You won’t get wise
With the sleep still in your eyes
No matter what your dreams might be
–RUSH, “Something For Nothing”
You’ve likely heard the constant chorus of people who want to achieve things in life, but that also want to do it with as little effort as possible. Indeed, this seems like a mantra for generations after mine (yes, I’m a boomer). Yet, there is no shortcut to success. If you want something, you’re going to have to put work into it.
Want more money? Restrict your spending and make good investment decisions. Want a better body? Perform intense strength training and keep your calories slightly below maintenance. Want to live joyously? Do hard things that challenge your mind, body and spirit and that give you a sense of real accomplishment when completed. Because you see, you can’t get something for nothing. Everything in life must be earned and fought for. So, stop dreaming and start doing!
Wisdom about money, investing and life can be found anywhere. If you have a good quote that you’d like me to share with your fellow readers, send it to me, along with any comments, questions and suggestions you have about my newsletters, seminars or anything else. Click here to ask Jim.
In the name of the best within us,
Jim Woods
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]]>The post Day Trading Uses Three Strategies of Andrews’ Pitchfork appeared first on Stock Investor.
]]>Andrews’ Pitchfork may sound a bit mysterious initially, but the three key strategies are not that daunting with expert guidance. Invented by Alan Andrews, the technical indicator of trendlines that bear his name can help day traders to identify profitable opportunities, as well as what are known as “swing” possibilities.
Andrews’ Pitchfork aids traders in gauging overall cycles that affect spot price activity. Day traders may be able to time their activity to buy during brief dips and sell amid upticks.
Day Trading Uses Three Strategies of Andrews’ Pitchfork, Stock Sherpa Says
“The Andrews Pitchfork is one of the only predictive tools available to market technicians,” said Ahren Stephens, co-leader of the Trading Room and Pick of the Day advisory services. “It is an incredibly versatile tool that originated in the golden age of technical analysis in the early 20th century.”
Ahren Stephens co-heads of Pick of the Day and the Trading Room.
Roger Babson, an entrepreneur, market forecaster and ultimately a politician, began studying the markets at an early age. After Babson’s oldest sister, Edith, drowned during the 1880s in the Annisquam River in Gloucester, Massachusetts, he wanted to understand gravity to the fullest.
To do so, Babson created the Gravity Research Foundation in 1960, which gives awards to essays on gravity-related topics. Generally, Andrews’ Pitchfork is based on the work of Sir Isaac Newton. The Newtonian law that every action has an equal and opposite reaction came into play to create Andrews’ Pitchfork to help plot trend lines on financial charts, rather than hand-draw Action Reaction sets, Stephens explained.
During the Depression period of the late 1920s and early 1930s, Andrews managed money for Joseph Kennedy, a prominent political family patriarch, and generated more than $450 million in the stock market crash of 1929. Today, that $450 million would be worth billions of dollars today, Stephens continued.
Andrews ended up working at the University of Miami and developed the Action Reaction course. When he launched his course at the University of Miami, the line of students seeking to take it was so long it was wrapped around the block.
Day Trading Uses Three Strategies of Andrews’ Pitchfork: Secrets Unveiled
The three secrets of using Andrews’ Median Line, previously called the Normal Line by Babson, were unveiled by Stephens during his presentation at the Money Show/Traders Expo event in Las Vegas in February 2024. Stephens told me the audience seemed especially attentive. Maybe the compelling term Andrews’ Pitchfork Secrets had something to do with the strong interest.
The word pivot also is integral in understanding the first secret of the Andrews’ Pitchfork. The following description should be illuminating.
By identifying the major pivots on that chart, a trader can find possible turning points in the future by using the Andrews’ Pitchfork tool, Stephens said. Stephens and senior partner Hugh Grossman avoid complication by generally only trading options in the SPDR S&P 500 ETF Trust (SPY), a fund that seeks to provide investment results that correspond to the price and yield performance of the S&P 500 Index.
Hugh Grossman leads DayTradeSpy’s Trading Room.
The S&P 500 Index tracks a diversified group of large-cap U.S. stocks across all 11 Global Industry Classification Standard (GICS) sectors. CICS also has 25 industry groups, 74 industries and 163 sub-industries into which the S&P uses to categorize all major public companies.
Chart courtesy of www.stockcharts.com
Day Trading Uses Three Strategies of Andrews’ Pitchfork: Secret 1 – Recognize Pivots
If an investor can think of ABC, that person can find the pivots that will allow one to forecast the probable path of the price of any stock or commodity, explained Stephens, who added that the technique is used when he guides subscribers in the Trading Room advisory service.
“Many people in our Trading Room want to know how we come up with our amazing predictions in our crystal ball,” Stephens told me. “And the answer is we use tools that can find the probable path of the price.”
Day Trading Uses Three Strategies of Andrews’ Pitchfork: Secret 2
Andrews Pitchfork Secret #2 is to trade in the direction of the trend for enhanced profitability. That may sound easy. But identifying the trend and knowing when to buy and sell are of paramount importance.
“Knowing the direction of the trend will help you understand and correctly forecast and trade the probable path of the price,” Stephens said. “Are we making higher highs and higher lows? Are we making lower highs and lower lows?
“By identifying and marking the correct larger timeframe direction, specifically the Daily and 240-minute trend direction, you are able to catch the momentum of larger traders and institutions and have the wind at your back to help push you to greater profits.”
Day Trading Uses Three Strategies of Andrews’ Pitchfork: Secret 3
Andrews Pitchfork Secret #3 is to enter at the test and retest to gain the best entry, but exit at extremes, Stephens advised. To maximize gains, the goal is to let winning trades run, but keep losses small, Stephens advised.
“To utilize the best entries, you need to draw a fork that can contain the price,” Stephens said. “After a test of a median line, whether it’s the lower parallel, the upper parallel, or the middle median line, you need to determine if the price is going to hold that area and continue running in the trend.”
When the price continues in the trend, a trader can maximize profits by continuing to follow the price to the next median line on the chart, Stephens said.
“This is where the test and retest of the Median Line comes in,” Stephens explained. “When the price hits a level of support and rises, this is a test. When the price hits the area again, this is a retest.”
The same principle applies with a diagonal line. When the price tests and retests, that indicates a chance to board a virtual “elevator to profits,” Stephens counseled.
“Think of it this way,” Stephens opined. “When you are wandering around the mall, eventually you have seen everything you want to see and want to go to the next level. You need an elevator to get you to the next floor.”
When investing in the markets, the catalyst could be a news event, a geopolitical event, an earnings release, etc., Stephens continued.
“You need this to move the price from level 1 to level 2,” Stephens told me. “It is the same thing with the Andrews Pitchfork as well. When you have found a catalyst and an entry on a retest of the fork, the elevator will take you to the next level of profits.”
Day Trading Strategies Highlighted in Ultimate Trading Workshop
Grossman, who launched DayTradeSpy’s Trading Room, teams up with Stephens to offer their Ultimate Training Workshop to help people day trade profitably. They created a set of training videos based on a live event held a few months ago, teaching everything they thought would help day traders.
“No stone is left unturned,” Grossman said. “If you have never traded options before, this is what you need. Even if you are a seasoned trader, the nuances, tips, tricks and traps you will pick up from this series of 11 sessions, each roughly an hour and a half in length, will benefit you immensely.”
The two investment gurus share their “deep in the trenches” experience with concepts that cannot be found anywhere else, Grossman said. Key topics include setting up Schwab (formerly TD Ameritrade) Think or Swim charts to visualize patterns, identifying key indicators and strategies, “repairing trades,” money management and more, he added.
Stephens provides a deep-dive analysis that can answer many questions in the Q&A section of the Ultimate Training Workshop, Grossman said.
“It’s all there,” Grossman advised. “Of course, there may be other updated information only available through our trading room sessions, but the Ultimate Training Workshop will provide you the launch pad you need to get started day trading SPY options.”
The videos are available for at least six months and they can be viewed as often as desired during that time period, Grossman said.
“Fast forward, pause and rewind,” Grossman continued. “We recommend going through them at least once completely, even if you are an experienced trader. It’s the little subtleties that can make all the difference in your trading. Take advantage of 40+ combined years of Hugh and Ahren’s market participation… master the UltimateTraining Workshop.”
A Scalping Strategy Involves Buying ‘at the Money’ Calls
The duo also use a scalping strategy that involves buying ‘at the money’ options, Grossman told me.
“I like to buy 30 to 100 contracts, investing up to $20,000 per trade, depending on expiration dates,” Grossman said. “While it sounds like a high-risk trade, and it could be, by using our proven indicators, we minimize the risk. We make our gains quickly and, of course, see a prompt return of our capital in the process.
“I generally earn $500 to $1,000 on such trades. Repeating the process delivers several thousand dollars before most of corporate America takes its first coffee break.”
Further out expirations, of three to six days, offer a measure of stability and security, Grossman said. They also give traders high liquidity, he added.
Soaring Geopolitical Risk
Geopolitical risk is soaring amid escalating wars and threats around the world. Such risks may may develop further interest in day trading to avoid longer-term investments that can backfire during tumultuous times.
Under the direction of President Joe Biden, America’s Department of Defense (DoD) unexpectedly announced on Tuesday, March 12, that it would give up to $300 million in additional military aid to Ukraine. The assistance comes at a critical time during Russia’s invasion of Ukraine that began in February 2021, as waning supplies of military equipment forced Ukrainian soldiers to retreat on the battlefield in key places that they had retaken from the aggressors during its counteroffensive in the past year.
The Carnegie Endowment for International Peace, a Washington-based think-tank, estimated that Russia’s artillery was firing at five times the rate of Ukraine’s rapidly shrinking capacity to fire back at the attackers.
With a lack of replacement funds available to replenish DoD inventories, the Biden administration had paused Presidential Drawdown Authority (PDA) packages since December 2023. The DoD subsequently identified contract savings from previously appropriated supplemental funding that can be used to replace its equipment stocks. The move offers a short-term stop gap, but it is “nowhere near enough” to meet Ukraine’s battlefield needs, according to the DoD.
“Without supplemental funding, DoD will remain hard-pressed to meet Ukraine’s capability requirements at a time when Russia is pressing its attacks against Ukrainian forces and cities,” the DoD added.
New Supplies for Ukraine
The equipment worth up to $300 million encompassed in this announcement include:
“U.S. leadership is essential to sustaining the historic efforts of some 50 allies and partners from around the globe that have committed more than $87 billion in security assistance to Ukraine since Russia launched its unprovoked, full-scale invasion in February 2022 – a war of choice that continues to undermine global security and stability,” according to the DoD. “Security assistance for Ukraine remains a smart investment in our national security. It deters potential aggression elsewhere in the world, while strengthening our defense industrial base and creating highly skilled jobs for the American people.”
U.S. Congressional leaders have been not found a compromise that would protect America’s southern border to win support from House Republicans to provide fresh funding of $95.3 billion mainly for Ukraine and Israel. The bi-partisan bill previously passed the U.S. Senate.
House Speaker Mike Johnson (R-La.) has stated his top priorities are to secure the southern border of the United States and to fund the operation of the U.S. government. The latter concern received a extra time to seek a solution late last week with passage of short-term funding to avoid a default on the country’s debt.
Addition of Sweden Strengthens NATO
With the addition of Sweden to NATO on May 7, the organization now has 32 member nations. The addition makes the alliance more united, determined and dynamic than ever, President Biden said.
“NATO will continue to stand for freedom and democracy for generations to come,” President Biden said in a statement. “I look forward to hosting all 32 Allies for the 75th Anniversary NATO Summit this summer in Washington, D.C.”
President Putin’s surprise attack of Ukraine with Russian forces more than two years ago has turned into a quagmire that has caused him to send continuing waves of soldiers into battle as human sacrifices to gain land that is within the sovereign borders of its neighboring nation. The invasion, which President Putin still calls a “special military operation,” shows no signs of waning. Russian political opposition leader Alexei Navalny was imprisoned by Putin and transferred to an Artic prison where he died suddenly on Feb. 16 under mysterious circumstances after appearing in good health at a court hearing the previous day.
After refusing to release Navalny’s body to his mother for a funeral, Putin relented days later once enough time had passed to prevent the detection of any traces of poison. The burial, held on Friday, March 1, drew thousands of mourners.
Navalny, who was serving a 19-year prison term for what Westerners would describe as publicly offering alternative views about Russia’s future direction, was convicted of “extremism” after he returned to the country following his survival of poisoning in August 2020 reportedly carried out under the direction of Putin, a former KGB agent. Navalny’s family claims their loved one was fatally poisoned at the arctic prison with a nerve agent on Putin’s orders.
Geopolitical Risk Mounts in the Middle East
The Middle East remains a powder keg with Hamas militants and the Israeli Defense Force (IDF) engaged in a war that reportedly has led to more than 31,100 deaths in Gaza alone. The war began on Oct. 7 when Hamas fighters invaded southern Israel in a murderous assault that reportedly killed 1,163. Other barbarous acts included rapes, torture and the abduction of at least 250 others.
Israel responded with a military assault on the Gaza Strip to destroy tunnels used in attacks against its civilians and to pursue the perpetrators of the Oct. 7 butchery. IDF officials report that hundreds of its soldiers have been killed in Gaza during its military response.
A week-long truce in late November led to Hamas freeing more than 100 Israeli and foreign hostages in exchange for Israel releasing about 240 Palestinian prisoners. However, talks aimed at securing the release of additional hostages have not produced results.
President Biden recently approved and initiated a humanitarian air drop of relief supplies and plans to build a temporary port to provide additional aid for Palestinians in Gaza. Roughly 130 hostages abducted on Oct. 7 by Hamas remain trapped there, but Israeli officials say about a quarter of them are believed to be dead.
Paul Dykewicz, www.pauldykewicz.com, is an accomplished, award-winning journalist who has written for Dow Jones, the Wall Street Journal, Investor’s Business Daily, USA Today, the Journal of Commerce, Seeking Alpha, Guru Focus and other publications and websites. Paul, who can be followed on Twitter @PaulDykewicz, is the editor of StockInvestor.com and DividendInvestor.com, a writer for both websites and a columnist. He further is editorial director of Eagle Financial Publications in Washington, D.C., where he edits monthly investment newsletters, time-sensitive trading alerts, free e-letters and other investment reports. Paul previously served as business editor of Baltimore’s Daily Record newspaper. Easter Season Sale! Paul is the author of an inspirational book, “Holy Smokes! Golden Guidance from Notre Dame’s Championship Chaplain,” with a foreword by former national championship-winning football coach Lou Holtz. The uplifting book is great gift and is endorsed by Joe Montana, Joe Theismann, Ara Parseghian, “Rocket” Ismail, Reggie Brooks, Dick Vitale and many others. Call 202-677-4457 for reduced pricing on multiple-book purchases.
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]]>The post Gold’s Break Out to a New All-Time High Is Legit appeared first on Stock Investor.
]]>There is a growing consensus that the Fed Chair’s two-day testimony on Capitol Hill last Wednesday and Thursday, followed by a jump in the unemployment rate to 3.9% (the highest level in two years), is laying the groundwork for a rate cut in June. The latest forecast from the CME Fed Watch tool shows a 57.4% probability of a quarter-point cut to 5.00-5.25%.
This growing narrative is pressuring the value of the dollar lower. It’s the view of many that the dollar gained in value at a time when the size of the federal debt was rapidly increasing only because the Fed increased rates 11 times, thereby offering higher yields on Treasuries to more than offset the weight of the growing debt burden. From the chart of the U.S. Dollar Index (DXY) below, one can see how the dollar lost 6% in value when the Fed started telegraphing to the markets that rate cuts in 2024 were part of the path forward for monetary policy.
When the Consumer Price Index (CPI), Producer Price Index (PPI), Personal Consumption Expenditures (PCE) and employment popped higher than expected in February, the dollar recovered 4% to the 105.0 level seen on February 13, followed by a fresh slide lower to close at 102.7 as of last Friday, when the higher unemployment figure crossed the tape, further galvanizing traders’ conviction that the Fed has the green light to begin easing. Major technical support for the DXY sits at 99.2 and a level that, if broken, opens the way for a move lower to 95.0.
Source: www.bigcharts.com
The latest update on the soaring national debt is also fueling the gold rally. The pace of growth is now increasing by approximately $1 trillion every 100 days — a shocking number that now sits at $34.4 trillion and is picking up speed. Breaking it down, that’s $10 billion per day, $416 million by the hour, $6.94 million by the minute and $115,740 per second (source: U.S. Treasury). Buyers of gold see this as a fundamental risk to financial markets, thereby raising caution about how the Treasury is going to be able to sell such vast amounts of Treasuries on an ongoing basis, especially if rates start to fall, making Treasuries less attractive.
Late last year, Moody’s reduced its U.S. credit rating outlook from “stable” to “negative” largely due to political gridlock in Congress.
“In Moody’s view, such political polarization is likely to continue. As a result, building political consensus around a comprehensive, credible multi-year plan to arrest and reverse widening fiscal deficits through measures that would increase government revenue or reform entitlement spending appears extremely difficult.”
Federal spending is on an unsustainable trajectory and is the key driver of growing deficits and debt. Spending is growing faster than the economy. Raising taxes is not a workable solution because taxes cannot grow faster than the economic base in the long run. Source: Congressional Budget Office.
Not knowing the outcome of the future elections, a combination of increasing revenue AND spending reforms, is in my view, the only way this situation gets bipartisan support. According to the Peter G. Peterson Foundation, “spending for net interest will become the largest “program” in the federal budget within the next 30 years, outpacing spending on Medicare and Social Security.” Even though the Fed is supposed to keep its nose out of fiscal policy conducted by Congress, critics are quick to note that at some point, fiscal policy collides with monetary policy.
Higher gold prices are also being juiced by global tensions. The latest ceasefire talks between Israel and Hamas broke off late last week, right in front of Ramadan, further ratcheting up the risk of a wider regional conflict. Yemen’s Iran-backed Houthi rebels have launched repeated strikes on international commercial shipping in the Red Sea since mid-November in response to the conflict in Gaza, although the merchant vessels targeted have often had little or no link to Israel. The latest Houthi attacks involved sophisticated drones with the U.S. and Royal Navy being the primary targets.
Abdul-Malik al-Houthi — Leader of the Houthi movement.
Source: Wikipedia.com
The precious metal has gained more than $300 an ounce since the start of the Israel-Hamas war. Demand for a traditional safe haven has analysts now forecasting the price of gold could challenge $2,300 per troy ounce. Considering the current set of catalysts that also include the Russia-Ukraine war and the tensions involving China and its ambitions towards Taiwan — this upside breakout in gold prices not only looks legit, but it also has the technical makings of taking out $2,300 per ounce like a hot knife through butter. If modern Bitcoin is not appealing as a hedge against potential volatility, then the oldest storehouse of wealth in history might be a smart addition to one’s portfolio.
Annual demand growth in the OTC market hit 753% last year, the most since at least 2011, World Gold Council data showed. Investors are expected to continue accumulating gold at an accelerated pace this year. If modern-day Bitcoin is not appealing as a hedge against potential volatility, then maybe the oldest storehouse of wealth in history might be a smart addition to one’s portfolio.
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]]>The post Should You Sell Nvidia (NVDA)? appeared first on Stock Investor.
]]>A few months ago, he boldly claimed that Nvidia is the world’s most important company.
It’s not like he had a crystal ball or anything.
But there isn’t anyone better than George at investing in technology. Period.
This is the same guy who told Ronald Reagan semiconductors would shape the coming decades.
And he was RIGHT.
But even George acknowledged there’s a cult-like following snapping up shares of the AI giant.
So, we posed a simple question to him: Should you sell Nvidia?
His answers might surprise you.
By the Numbers
Let’s start with some basic valuation metrics for Nvidia:
All of these numbers are high. But they’re not as ridiculous as you’d expect.
For the better part of the last decade, Amazon traded at a P/E ratio well over 100x.
Tesla did as well until the last few years.
History tells us only one chapter of a story. We have to look to the future to come up with true value.
And that’s where things get interesting.
Last year, Nvidia’s revenues grew by 126%!
That’s the kind of number you expect from a high-tech startup, not an established player.
Yet, this just scratches the surface.
Underneath, we find the company’s profitability rose alongside revenues.
Year over year, growth for major categories are as follows:
Source: Nvidia Q4 2023 Investor Presentation
These are mind-blowing numbers.
And yes, it all came from AI, a segment that’s seen… no joke… 75% CAGR over the last five years.
Source: Nvidia Q4 2023 Investor Presentation
Is Growth Sustainable?
This incredible performance all stems from the insatiable appetite for AI systems.
Customers like Meta are ordering billions of dollars in chips.
However, a lot of analysts are worried this may turn out like the pandemic — an initial surge that falls back to some sustainable, slower pace.
That’s true… to a point.
Estimates point to a 69% revenue growth next year, with cash flows increasing by 129% and earnings by 149%.
That means the stock trades at 39x next year’s earnings and cash, which is high but not absurd.
In order for today’s prices to be out of touch, growth would need to grind to a complete halt the following year.
Neither we nor George Gilder see that happening.
Will Nvidia keep up this blistering pace?
Unlikely.
But it doesn’t need to.
Achieving double-digit-percentage revenue growth over the next five years, which is definitely feasible, would make the stock pretty cheap today.
Understanding Mania
The thing most investors fail to grasp is that value is all relative.
For example, Advanced Micro Devices (AMD) trades at 398x earnings and 204x operating cash flow, with a year-over-year revenue decline of 3.9% and forward growth estimates of 11.3%.
The stock is up 159% in the last year.
Nvidia is up almost 300% during the same time.
Both are heavily invested in AI technology.
Yet, AMD is the stock that seems absurdly overpriced, not Nvidia.
People often mistake percentage price gains for froth because they’re too lazy to look at the fundamentals.
While it can be a good indicator, it’s the fundamentals that matter in the long run.
Take Super Micro Computers (SMCI) for example.
This stock is up 1,058% in the past year.
Sounds insane.
Yet, the stock trades at 88x earnings and 57x forward earnings.
What about cash?
The company had negative cash flow in 2023.
A lot of folks would stop there at that warning sign.
But if you look deeper, it turns out that’s all from an inventory built for the heavy amount of orders they booked.
Exclude that and the stock trades at around 69x operating cash flow.
Is the stock overpriced?
Given that its 40-60% revenue growth, though exceptional, is not anywhere close to Nvidia’s, we’d argue that compared to Nvidia, yes, it is.
But it’s not stratospheric either.
However, that doesn’t preclude shares from gyrating in wide ranges as they seek an equilibrium.
Where We Stand
These gyrations offer interested investors opportunities to snap up shares at a discount.
But if you expect another 1500% gain on these companies within one to two years, then you’ve got to get ahead of the curve.
George Gilder’s Technology Report is more than just receiving an investment newsletter…
…it’s a visionary’s perspective on the future of technology.
Don’t just watch the future unfold; be an active participant in shaping it.
Invest wisely in the AI revolution, guided by the expertise of George Gilder.
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