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The stock market had a bad time last week, due to an unexpectedly bad jobs report and an unexpectedly large inflation report. Some volatility is nothing to be concerned about, but some are suggesting a larger, more continued correction might be looming, given historic valuations and other trends following a major market decrease like we experienced last year.

But the crash of last year, when the market pulled back by 33% in just a month, demonstrated some valuable lessons about investing. Here are three reasons not to be worried about a stock market collapse.

1. Patience is rewarded

From Feb. 2020 to March 2020, the market collapsed by 33%. That is a jaw-dropping fall and represented one of the fastest decline in U.S. history. But it was also among the shortest bear markets, as the market regained its previous value by Aug. In under six months, the losses had been removed — and gains made.

Just a year after, the S&P 500 was near 4,100. That’s an 83% gain from the low on March 23, 2020. So, if you dumped your stocks after that collapse, you not only made your losses permanent, but also missed out on gains that you would have gotten if you were patient.

2. Buying opportunities

Warren Buffett has a famous saying: Be fearful when other investors are greedy, and greedy when other investors are fearful. In other words: Seek out opportunities to buy good stocks when others are fearfully selling stocks because that’s where the best deals will be found. For example, last March, Walt Disney stock went down almost 40% from Feb. to March, when it reached a low of $85 a share.

Clever investors jumped on this stock when it was selling that low, because they understood the entertainment giant would be back in a major way. By November, it had reached $140 a share, returning to where it was before the crash. Disney stock is now trading at nearly $171, which is double its low point in March of last year.

3. Long term

When bears growl, it can be scary. But just like coming across a real bear, you should walk away slowly and not do anything in a rush. There is no need to react to a short term bear growl, because you should be thinking long term.

Many bear markets over the years have been categorized as drops of 20% or larger, and more have been 10% or larger. Yet the S&P 500, through all this, has had an average return of 8% per year over the previous 30 years. Over the past 10 years, the benchmark has returned to nearly 11.8% on an annual basis through May 13.

Market corrections are hard on the nerves, but you need to keep these three pieces of advice in mind, and if you do, you will get much better sleep and portfolio returns.

 

Author: Scott Dowdy

So far, over 2 million people have signed their names to a petition calling for $2,000 monthly checks for every American citizen. This petition was added to Change.org in 2020 by Stephanie Bonin, a Colorado small business owner.

In Bonin’s press release, she says she is among the millions of people who fear for their future because of the coronavirus crisis. “With schools and businesses closing across the nation to control the spread of this pandemic, many people have lost their source of income. While others are forced to stay home. This is terrible for working families.”

“I’m asking Congress to give families a $2,000 payment for adults and $1,000 for kids starting immediately, and moving into monthly checks for the rest of the crisis,” said Bonin. “Otherwise, unemployed people and workers living with lowered work hours will not be able to pay their rent or buy food,” she said.

The last check, which passed previously this year, amounted to $1,400 for each eligible person. Since the start of the pandemic, the IRS has given almost $800 billion in Economic Impact Payments.

Bonin’s petition on Change.org has gotten a lot of support. So much so that the platform has put it among the top 10 petitions of 2020.

More than 75 Democrats have called for monthly stimulus payments. However, support among moderate Democrats and most Republicans seems to not be there.

Author: Scott Dowdy

This week the Royal Mint in the U.K reported a shocking 540% increase in silver bar sales when compared to 2020 year.

The Royal Mint also revealed it’s 1oz Britannia 2021 silver coin saw sales skyrocket by 100% between the months of March and April, compared to 2020.

“We had high demand in 2020 as people moved to safer assets during the worst part of the pandemic, but this has continued as more investors realize the positives of precious metals,”  said the director of precious metals at the mint, Andrew Dickey. “Silver has a large appeal because it is intrinsically valuable as a finite resource and has a much lower price when compared to gold – making it attainable by more people.”

Physical demand for the number two precious metal started going up in February after some social media groups attempted to cause a short-squeeze. However, since then, analysts say silver demand is staying strong, with investors wanting to capitalize on that demand as the global economy recovers from the COVID-19 pandemic.

Other analysts say that silver is an attractive monetary hedge against rising inflation.

“Many analysts are predicting a great future for silver for the rest of 2021. Monetary policies are normal drivers for the demand in precious metals – and they are are expected to stay relevant as the economy recovers from covid,” said Dickey. “Also, silver’s use inside new green products and technologies has helped this sentiment towards the asset.”

Strong demand for silver pushed the price to almost a 2-month high just last week to $28 per ounce. Although silver has decreased from its recent highs, it is still maintaining critical support. Silver futures for July last sold at $27.05 per ounce, lower by 0.5% on the day.

Author: Blake Ambrose

Elon Musk, the CEO of Tesla, has put out a tweet announcing that his company will no longer accept Bitcoin for the purchase of its vehicles. Musk cites the environment as issues related to Bitcoin’s mining process, which require energy-heavy computing. Currently, the industry consumes 149.6 terawatt-hours of energy, slightly lower than the energy used by the nation of Egypt.

“Tesla has halted vehicle purchases made with Bitcoin. We are concerned about the increasing utilization of fossil fuels for the mining of Bitcoin, especially coal,” the statement reads.

“Cryptocurrency is a great idea in many ways and it has a promising future, but this must not damage Earth’s environment. Tesla will not get rid of our Bitcoin and we plan to use it when mining goes back to a more sustainable level. We are also seeking out other cryptocurrencies that use less than 1% of Bitcoin’s energy per transaction.”

The announcement triggered a 13 percent collapse for the cryptocurrency as well as a drop in Tesla shares.

The move has surprised many investors, as Musk has been a long-time advocate for Bitcoin, with his company Tesla purchasing 1.5 billion dollars of the crypto, according to the SEC. And with him even changing his Twitter bio to say #Bitcoin earlier this year. In March he said “People can now buy a Tesla vehicle using Bitcoin,” adding that Bitcoin given to Tesla would be kept as Bitcoin and not traded for dollars.

The move comes only days after the Tesla CEO announced his SpaceX DOGE-1 moon mission, the first space mission paid for in Dogecoins, another cryptocurrency that he has supported. It is not clear if that mission is still being planned.

Author: Scott Dowdy
Despite the nationwide Colonial Pipeline coming back online, people are still draining gas stations, and it might take “weeks” until gasoline returns to normal, warns Patrick De Haan, a leading petroleum analyst.

“This situation is out of control,” De Haan said. “Stations fill their storage tanks, and then people run through their supplies. I don’t believe that will stop for another week, maybe two, and then fully return to normal in three or four.”

The Colonial Pipeline, which is the primary diesel and gasoline pipeline serving America’s East Coast, has already restarted their operations, but warned that some people might experience “intermittent interruptions during the restarting phase.”

As of Thursday, nearly three-quarters of stations in the state of North Carolina did not have gasoline, while around half in Georgia, Virginia, and South Carolina were empty.

De Haan warns that those figures could go higher over the next 48 hours before lowering.

He says that people hoarding gas are causing the situation to get worse, along with the compounded problem of their being a trucker shortage.

“A lot of this is because motorists have chosen to panic buy and even hoard gasoline in some circumstances,” he said. “It’s become a drive to get fuel without pipelines, and then the trucker shortage comes in. It’s impossible for trucks to replenish after drivers have boosted their demand to fill up.”

“It will be a challenge for these stations. The problem is not the Colonial Pipeline but getting fuel to those stations. There’s not enough truckers or capacity for all those cars and trucks to fill up…. Even if the Colonial Pipeline was going well last week, this kind of demand would strain the system,” added De Haan.

The surge in demand has brought gasoline prices up. The nationwide average increased over $3 per gallon on Thursday to $3.03, the highest since 2014.

Author: Steven Sinclaire
You will find quite a range of variety when you investigate high dividend stocks. Among them, there are two in particular that are very attractive to income investors. And these two also happen to be very accessible given the fact that they are on the Robinhood trading app which has no minimums for investing.

AT&T

AT&T (NYSE:T) is a telecom giant that has not been a huge winner in past years. However, most people would not mind getting the company’s juicy dividend, which currently brings in over 6.4%.

The company is called a Dividend Titan by analysts and has 36 consecutive years of dividend increases. AT&T has not announced a dividend hike for this year yet. And it is possible that its streak might end, although the firm could increase its dividend only a small amount to preserve its Dividend Titan status.

There are several negatives with AT&T. It owns a majority stake in DirecTV, which has experienced a large decline in customers. The company has a big debt load and its dividend program, while very attractive to investors, makes it harder for the company to compete in the capital-intensive industry.

However, AT&T’s investments in 5G technology might pay off nicely. And its HBO Max business is gaining steam. The company even gave a surprisingly good Q1 result. Even if the stock does not give strong growth, the chances are good the dividends will keep delivering payments.

ExxonMobil

ExxonMobil (NYSE:XOM) has a lot of similarity to AT&T. The stock has underperformed recently. And like AT&T, the company gives a healthy dividend with a yield of over 5.6%.

The company is also a Dividend Titan that might be on the verge of losing its status. Exxon has increased its dividend every year for 37 years. And last year, the company did not announce a dividend increase for 2021. Don’t dismiss the potential for the oil company to push through an increase near the end of this year to maintain its record of dividend increases.

ExxonMobil has one big problem: Nations and corporations are pushing to shift away from fossil fuels to cleaner sources of energy. However, the firm believes this change will take a long time, allowing it to keep profiting from oil and gas while this happens.

Still, ExxonMobil says there’s opportunity with cleaner energy. The company plans to put $100 billion toward capturing carbon emissions of refineries and plants in Texas and keep the emissions underground. This project might give ExxonMobil a new source of revenue growth.

 

Author: Steven Sinclaire

2020 was somewhat of a low year for M&A in the biotech industry. Given the problems from the pandemic, and energy being re-focused on creating vaccines, it is certainly understandable.

But this year should be much better as normal mergers return across the globe. There is enough money going through the economy to believe we will witness a large pick-up in companies buying other companies this year.

In fact, Global M&A reached $1.4 trillion in Q1 according to Dealogic. This is higher by 110% from last year for the same time period. And it’s actually an all-time record.

So, let’s look at three companies who could be the target of an upcoming acquisition. A move that could send their stocks sky-rocketing.

1. TG Therapeutics

In February, TG Therapeutic’s top drug umbralisib got FDA approval to help with marginal zone lymphoma and resistant follicular lymphoma. This mid-cap stock also finished its Biologic License Application (BLA) at the end of Q1 for its combination of umbralisib with ublituximab as treatment for people with chronic lymphocytic leukemia (CLL). Based on results, I anticipate the FDA to give its approval, and the company is ramping up its capacity in expectation of this.

Three weeks after the firm sent in their BLA, it announced very positive data for ublituximab from two trials in people with returning multiple sclerosis, which caused some analyst upgrades and is a great addition on top of its oncology possibilities. The company seems poised for success and has lots of cash to pursue commercialization. However, with a value of around $6 billion, I would not be surprised if a larger company scooped up TG Therapeutics before any of this happens.

2. Clovis Oncology

Clovis is a smaller name in oncology that I see as a possible acquisition target this year. The launch of Clovis’s Rubraca franchise has lagged more than initially expected. However, their revenues did reach almost $165 million last year and managed to give sales growth of 15% compared to 2019. This is despite the pandemic.

Clovis is pushing forward to increase the population for Rubraca with data from a Phase 3 study to treat maintenance ovarian cancer, due out sometime in the second part of 2021. The company has a market cap right over $600 million and ended 2020 with around $240 million in cash. The firm could make a perfect bite-size acquisition for a larger biotech company wanting to expand their oncology footprint.

3. Axsome Therapeutics

Moving away from the oncology sector, Axsome Therapeutics is set for a great year. This central nervous system focused company has a great pipeline and many catalysts that could happen this year. Its top candidate is called AXS-05, which is a drug targeting many indications including agitation associated with Alzheimer’s disease and treatment-resistant depression. The company submitted its New Drug Application for the drug to the FDA for treatment of depression just last week, and it is now under priority review, with approval likely coming in August.

More than this, Axsome started a Phase 3 study for an Alzheimer treatment late last year. There are no currently approved therapies for such an indication. I also love the possibilities of AXS-12, which was granted FDA Orphan Drug designation for narcolepsy treatment, and Breakthrough Therapy designation for cataplexy treatment in people suffering from narcolepsy. Axsome seems like a great “sum of the parts” purchase with a value of right under $2.5 billion.

And those are three biotech companies I love and feel very good about their future in 2021. If they get purchased in 2021, their stock prices could go even higher.

Author: Scott Dowdy

 

 

Consumer prices increased in April at the fastest yearly pace in almost 13 years as America’s economy emerged from lockdown.

The Labor Department announced on Wednesday that prices rose by 4.2% year over year, giving the largest rise since Sept. 2008. Prices jumped 0.8% month over month, speeding up from the 0.6% jump in March.

Analysts polled by Refinitiv were anticipating prices to increase 3.6% from just a year ago and 0.2% compared to last month.

The yearly data has a “base effects” skew because of the pullback in prices that happened at the beginning of the pandemic.

Used auto prices surged by 10% in April, accounting for one-third of the index’s total gain. The price increases were the biggest for the sector since record-keeping started in 1953. Food prices also went up by 0.4% from the previous month. Energy prices fell as a drop in gasoline prices was offset by increases in natural gas and electricity.

Core prices, which do not include food or energy, increased by 0.9% in April, making up the biggest monthly increase since 1982. They were higher by 3% compared to last year. Analysts polled were expecting increases of 0.3% and 2.3%, respectively. Almost every component experienced a price increase.

This rise in prices, which has come after an unprecedented fiscal stimulus that was used to fight the economic slowdown triggered by the pandemic, has some investors weighing the potential for the Federal Reserve to change its plans for future monetary policy.

In 2020, the Fed lowered interest rates to almost zero and said it would continue to purchase an unlimited amount of assets to cushion the economy after the biggest slowdown since World War II. The central bank has announced it would hold rates close to zero, even if inflation were to go higher than its preferred 2%.

 

Author: Steven Sinclaire
The United States is experiencing much faster inflation than analysts predicted. April 2021 saw the consumer price index jump by 4.3 percent, the highest rate on record since 2008.

The Labor Department reported that inflation grew at it’s fastest rate in over 12 years as of last month, following economic recovery and rising energy prices. The consumer price index, which measures energy and housing costs, as well as a fistful of other goods, rose by 4.2% compared with last year, compared with the Dow Jones estimated 3.6% increase. Monthly gains increased by 0.8% compared with an expected 0.2%.

This report comes out as the Biden Administration seeks to spend a whopping $6 trillion on a Green New Deal package and an American Families Plan welfare program.

Author: Jan Burgess

Peter Thiel’s software firm, Palantir Technologies, is now accepting bitcoin as payment. In their earnings call this week, Palantir’s CFO Dave Glazer mentioned that bitcoin being on the company’s balance sheet was “definitely on the table.”

The software company has started accepting the crypto as payment, the CFO said. Additionally, putting the company’s own funds into bitcoin as a form of treasury reserve asset is “definitely on the table.”

Palantir is not the first large tech company with bitcoin on their balance sheet. Analytics firm MicroStrategy, who is also publicly traded, has over $2 billion in Bitcoin assets. Also, Tesla is now accepting bitcoin and has put $1.5 billion into the digital currency.

Glazer was answering a question on the earnings call, and he did not go further into the timing for such an investment into Bitcoin other than revealing that the company is “discussing it internally.” But he said Palantir could use $151 million in cash flow to buy bitcoin “and other investments.”

Peter Thiel, the co-founder of PayPal and Palantir’s co-founder and current chairman, has invested into numerous crypto startups. His venture capital investment firm made a $15 to $20 million bet on bitcoin back in 2017.

Author: Steven Sinclaire

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