Author: Smart Investing

Stock market

DataTrek Research: The Dull Market Sell Signal

Posted on by Smart Investing

The market action of the past few weeks, despite a few large down days, has been largely sideways. While investors are a bit fearful whenever the market isn’t shooting up like a rocket, it isn’t the end of the world.

In fact, dull markets with a lot of long sideways trends, tend to be bull markets. Especially if market volatility remains low. But if that volatility starts to meaningfully pick up, a shift could occur.

Historically, volatility has averaged between 17 and 20, as measured by the COBE Volatility Index (VIX).

Today’s investors are coming off the low volatility period of the 2010s. That’s when markets often traded with a VIX under 15. Occasionally, the VIX will spike higher. It spiked to over 40 in August 2024, even as the stock market dipped a total of 8.5% from peak to trough.

With a current read around 20, volatility is within its historical norms, and a sign of a dull market.

What makes for a dull market? It’s much like the one we’re in now. Corporate earnings are growing. GDP growth is stable. Monetary policy is stable. And among other things, there are no issues in the financial system.

Looking at these metrics, it’s likely that the bull market trend is still intact, even if it’s dull right now.

 

For the full details on when to sell a dull market, click here.

Economy

The Compound: Stocks React to Negative Economic Surprises

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Despite hitting all-time highs last week, markets feel much more defensive. Market structure is breaking down. And stocks may see a pullback from here following months of a narrow trading range.

Why would stocks pull back now? Because investors are looking at a variety of negative economic surprises. That includes the ongoing economic data, as well as new developments occurring daily. With rising uncertainty, a retreat in stocks is the likely outcome.

For instance, one negative economic headline relates to defense spending. President Trump’s plan to cut defense spending isn’t good for defense contractors.

Yes, other countries may increase their spending plans to compensate. But it likely won’t offset the overall decline from a cut in U.S. spending.

Next, President Trump’s plans to shrink the government are deflationary. Yes, most investors want to see waste and abuse phased out. However, the simple fact is that less spending, even if wasteful, translates into a lower GDP.

These economic surprises may be good in the long-term. It can mean a shift away from soaring debts and deficits. But in the short-term, it means that markets face a belt tightening. And markets aren’t  fan of that.

So far, markets are unlikely to see a major crash. But a pullback or even healthy correction could be in the cards as the news headlines turn negative.

 

To see the full video, click here.

Cryptocurrencies

Bitcoin Magazine: The Future of Bitcoin: Scaling, Institutional Adoption, and Strategic Reserves

Posted on by Smart Investing

The cryptocurrency market has gone sideways the past few months. Part of that looks like a healthy trend, following a big move higher at the end of 2024. Such pauses have been normal in prior crypto rallies as well.

So far, investors are waiting on the next big move higher. And as a result, much of the froth in the market is gone. That could be setting up for the next move nigher.

So far, bitcoin dominance remains intact. The largest cryptocurrency by market cap continues to gain market share. Smaller cryptocurrencies have yet to take off.

Part of that may be due to bitcoin’s increasing institutional adoption. In the first year of bitcoin ETFs, those funds have acquired record amounts of capital. And governments are discussing how to hold bitcoin on their balance sheet, as well as how much to own.

Meanwhile, new technologies are being created to better unlock the full potential of bitcoin. That includes ways to make bitcoin easy and simple to buy, hold, and sell. Or to use for transactions and not just a store of digital value.

Given bitcoin’s capped supply, it remains attractive relative to most altcoins out there today. In a strong rally for bitcoin, a catch-up rally could unfold in the altcoins. But for now, with bitcoin consolidating ahead of its next move higher, investors may want to stick with the industry leader.

 

To see the full developments underway in bitcoin now, click here.

Stock market strategies

Martin Shkreli: A Lot of People Don’t Understand Growth Stocks

Posted on by Smart Investing

Investors tend to lump their stock investments into either growth or value. And most investors have an idea of what each of those terms mean. But they’re also investor-specific. One investor’s value play may be a more of a growth play to another.

It’s also easy to call a stock growth based on one or two factors. But it may be a confluence of factors that make an investment truly a growth story compared to a lucky trade.

For instance, some growth investors look for a company that’s building customers and revenues, but may not be earning a profit yet. Others may look for a company that can grow beyond cash flow to actual profits.

One component to identify growth stocks is a company with a high net profit margin. That can show what a company brings in before its expenses, before growth profits. That may be more important than the current valuation of a growth stock.

But no matter what metric an investor prefers for growth, understand that good investments compound. A company with compounding growth will be better than a more cyclical company that oscillates between growth and contraction.

Companies that can deliver long-term compound growth offer the best returns over time. Adding those companies to your portfolio gives you compounding wealth as well.

 

For the full read on why growth matters, click here.

 

Commodities

Kitco News: The World Is Being Repriced Right Now

Posted on by Smart Investing

President Trump is off to a rapid start in his second term. Markets are a bit skeptical about the impact of tariffs. However, investors remain on board with polices like deregulation and low taxes.

But Trump is looking at ways to make big changes in how the U.S. government manages his assets. He’s signed an executive order to create a sovereign wealth fund. Such a fund could better monetize the country’s assets.

That includes assets such as land. The U.S. government owns most of the land in the Western United States. Selling off some of that land, or extracting the resources from that land, could generate billions annually that wouldn’t need to be taxed or borrowed.

That move couldn’t come at a better time. Many nations are sitting on record debt levels. And issuing new debt isn’t having the same impact on GDP that it used to. Over the past 20 years, nations have created $185 trillion in interest-bearing debt. That debt has only generated $46 trillion in GDP growth.

The creation of a sovereign wealth fund could lead to a revaluation of U.S. gold holdings. Currently, the metal trades over $2,900 per ounce. However, it’s still listed on the government’s books at just over $40. And a sovereign wealth fund could also own digital assets such as bitcoin.

 

To see the full ways the United States could better reprice its financial assets, click here.

 

Stock market

Heresy Financial: This Always Happens Right Before a Market Crash

Posted on by Smart Investing

Markets continue to hover near all-time highs. However, several market indicators are known as leading indicators. They can signal a shift in the economy before that move is apparent and the stock market sells off.

By understanding these indicators, and where they are now, investors can be well-positioned ahead of a selloff. While it may not mean avoiding an investment loss entirely, it can mean avoiding the bulk of a loss during a market downturn.

One indicator investors can look for is signs of market euphoria. Today, there are several indicators that measure the fear and greed in the market.

Currently, that reading is near neutral after stocks have been slowly grinding higher. However, at market peaks the reading may soar to over 80 out of a possible 100.

Another indicator is high stock market valuations. Investors have been watching Magnificent 7 stocks rally hard.

But their growing earnings and revenues are keeping their valuations stable right now. So it’s not fair to compare these stocks to the dotcom bubble that burst in 2000 quite yet.

A better recent example was the valuation in SPAC companies in 2021. Those companies were valued at multiples of revenues that they may not have even reached for several years. When valuations rely on a perfect future unfolding, an investment may be at an overly high valuation.

 

To see the full list of indicators that occur before a market crash, click here.

Economy

Macro Optics: Shadow QE Has Been Going On For 2 Years

Posted on by Smart Investing

Most investors have had some caution over the past few years. Why? Rising interest rates. That’s because interest rates represent the cost of money. And those rates rose from near zero percent to their highest level in 15 years.

Consequently, the cost to borrow money has increased significantly. However, that’s just the headline news. Behind the scenes, the banking system has continued to create money. That has expanded the money supply.

As the money supply expands, asset prices generally rise. So even though interest rates have been rising, it’s the increased money supply that have kept markets high.

Rising bank credit indicates that the economy is likely to keep trending higher for now. That’s also a sign that the stock market can trend higher. Improving credit market conditions continue to lead the financial markets.

Signs of financial stress have been on the decline as well. That’s another sign that borrowers and lenders are sitting comfortably right now. But the current read of financial stress is at its lower bound, and could see a spike higher given the current low levels.

Meanwhile, central bank demand for gold continues to rise. As does demand for physical gold by major non-government banks. That could be a sign that markets are preparing for a rainy day now, even while conditions are calm.

 

To see the full analysis behind today’s market conditions, click here.

Commodities

Metals and Miners: There’s Potential For Significant Returns In Mining Stocks

Posted on by Smart Investing

Gold rallied over 24% in 2024. That allowed the metal to not only make new all-time highs, but also beat out the S&P 500. So far, the metal is continuing higher in 2025, even as stocks have stalled out.

Gold prices topped $2,900 going into the start of the week. And with reports of shortages for gold bars for delivery by central banks, the price may yet trend higher. And that’s before retail investors pile in.

While gold’s price has been soaring, mining stocks have traded poorly. They’ve yet to capitalize on gold’s price running higher. That could be due to rising costs, which have weighed on profitability. Those higher costs have led to a higher cost per ounce to mine gold.

However, it could also be a sign that gold’s demand has been for the metal itself so far. But as gold shortages manifest, companies that mine the metal should see stronger returns.

Typically, it’s in the latter half of a commodity rally that the big gains are made on smaller opportunities.

The gold mining stocks have plenty of upside from here, provided gold can continue to trend higher. So far, mining ETFs like the VanEck Gold Miners ETF (GDX) is up about 15% since the start of the year. Investors can buy a basket of miners to profit from gold’s next likely move higher.

 

To view the full interview, click here.

 

Income investing

Dividend Growth Investor: 25 Companies Rewarding Shareholders With Raises

Posted on by Smart Investing

Markets have been increasingly volatile since the start of the year. Tech stocks have fared worse, with many tech stocks trading in a range since last summer. As the tech rally slows down, so does the overall return in the stock market.

However, investors can still take advantage of income opportunities today. While tech stocks have gotten all the attention, that’s kept dividend-focused companies off the radar. And that makes for a better value for investors today.

A staggering 69 companies announced dividend increases in the past few weeks. However, only 25 of those companies have raised dividends for at least 10 consecutive years.

Yes, past performance is no indication of future performance. But, companies tend to stick with consistency when it comes to paying a dividend.

Among companies raising their dividends now include food giant Mondelez International (MDLZ). The international packaged food giant raised its payout by 12%. And shares have a current yield of just over 3%.

Several pharmaceutical companies have raised their dividends recently. That includes Ely Lilly (LLY), which raised its dividend by 15%, and raised its payout for the 60th consecutive year. Lilly’s dividend is small at 0.8%, but long-term buyers will be rewarded with higher payouts over time.

While pharmaceutical companies have been out of favor with investors recently, they will cycle back in time.

 

To view the full list of companies that raised their dividends for at least 10 consecutive years, click here.

Income investing

Freedom 35 Blog: Could TLT Make a Big Comeback in 2025?

Posted on by Smart Investing

One of the more interesting developments in financial markets over the past few months has involved interest rates. As the Federal Reserve has lowered its short-term rates, long-term rates have trended higher. Typically, that’s the opposite of what should happen.

The 10-year U.S. Treasury even closed in on a 4.8% read at the start of 2025 before pulling back. What can investors expect from rates going forward?

First, it’s likely that traders were overly aggressive sending rates lower ahead of the Fed’s initial rate cuts. Now that the Fed has slowed the pace of its rate cuts, it’s clear that rates shouldn’t have declined as low as they have.

But it’s also clear that rates moved too high in response to that development. That suggests that investors may see rates tick lower in the months ahead. Cooler inflation or jobs data could also fuel a further move lower.

If that’s the case, then investors will want to own long-dated bonds. This can be done individually, or with ease with an ETF. One such ETF is the iShares 20+ Year Treasury ETF (TLT). TLT’s price should rise as yields fall, reflecting a rise in the price of the bonds in its portfolio.

TLT currently pays a 4.2% dividend, and the potential from capital gains as interest rates decline make it attractive.

 

To see the full analysis behind buying TLT now, click here.