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Cryptocurrencies were the investment story for this year with gains handily beating the S&P 500.

The cryptocurrency sector has often been avoided by investors and seen as a retail investor’s world.

However, that seems to be changing with the listings of financial companies such as Coinbase and Robinhood, which give brokerage services to those looking to purchase cryptocurrencies.

The two companies have aided cryptocurrency in reaching the mainstream, but the risks are rising for both of these companies. Even the top cryptocurrencies are struggling to prove any real-world utility, and lawmakers are working to crack down on the sector.

Why I won’t buy Coinbase

Coinbase tried to launch its Lend platform, which was created to allow its customers to get interest on their crypto holdings, but the SEC stopped this move, citing issues with how the product is classified.

The company produced revenue in the first half of this year that was over 10 times more than what it produced last year. However, that performance is not likely to be copied in the future. Because during that time, the market had a surge in the value of most cryptos, taking the overall value of all tokens from $780 billion at the opening of 2021 to more than $2.5 trillion only five months after. Prices have since gone down and failed to reclaim these highs.

Coinbase’s whole business model depends on customers trading tokens, as the firm earns transaction revenue as they do. These fees make up more than 95% of their top line. When cryptos are placid, Coinbase makes less fees, and many investors are now skeptical about the increased market activity lasting into 2022. While analysts predict Coinbase will deliver $6.88 billion in revenue for 2021 (up from $1.28 billion last year), they also believe it will lower to $6.20 billion next year with EPS going down more than 50%.

For this reason, Coinbase seems to me to be a short-term play as opposed to a good company with long-term growth.

Why I won’t buy Robinhhood

Robinhood has also faced government scrutiny as its “gamified” app was found to encourage risky investing among its young users. To make issues worse, the firm made a large pivot this year to focus on crypto markets to satisfy its younger audience, at this same time the SEC was scrutinizing the industry as a whole.

While cryptos make up only 22% of Robinhood’s users’ assets, they now make up over 52% of its overall transaction revenue. That suggests Robinhood’s user base is trading cryptos with more frequency than stocks, and they are forking over higher fees for these transactions. Essentially, Robinhood’s move to cryptocurrency markets could further enhance its customers’ appetite for more risk.

In Q2, over 62% of Robinhood’s $233 million in crypto transaction revenue was from Dogecoin, a meme coin often supported by social media — which certainly does not represent smart investing.

Aside from these issues drawing new attention to Robinhood from the government, there is also the fact that tokens such as Dogecoin probably won’t have staying power long-term. Only 1,700 businesses worldwide accept the coin as a payment method, and that figure is growing at a rate of just 50 businesses per month. It is unlikely Robinhood can create a long-term business from what is ultimately a speculation vehicle.

To end Robinhood’s regulatory problems, it’s coming off a $65 million SEC fine for misleading its users about how it generates revenue. Despite the platform having zero commissions, the regulator discovered its users were charged hidden fees through its payment-for-order-flow model that more than outweighed the trading commissions savings.

Author: Scott Dowdy

Former President Trump has said that inflation is among the top issues that will help him decide if he will run for the GOP nomination in 2024.

Increasing prices have been a fixture of the covid-era recovery, with labor and supply problems converging with strong demand to boost inflation.

During his interview with Yahoo Finance, Donald Trump zeroed in on increasing energy prices, with crude recently nearing $80 per barrel. Then on Monday, oil futures went to their highest spot since 2014.

“And it is very scary when you see gasoline go from $1.87 per gallon when I was in D.C., it went from $1.87 and now it is more than $5 and it could go a lot higher,” Trump said.

Although gas prices are much higher than when Trump was in office, new data reveals the price of gas is lower than what he claimed. AAA’s daily price shows the average price for gas was $3.19 per gallon on Oct. 3, and $4.40 in the state of California — where gas almost always costs more than any other state.

Still, Trump echoed new concerns about increasing prices. Headline prices are higher by 5.3% y/y, while supply chain issues and labor shortages are pushing them even higher.

Core prices have gone up at a somewhat slower rate — but a 25% y/y spike in energy prices is working like a tax on consumers just before the holiday season. Oil futures have doubled since 2020, pushing prices higher.

“It seems to me like inflation will ravage our country,” Trump said to Yahoo Finance.

The Fed’s Open Market Committee says much of the pressures we are seeing are temporary, but has lifted its inflation prediction for 2021 to 4.2%. The central bank linked this uptick to supply chain problems as the United States and world economies recover from the coronavirus pandemic.

“The combination of stronger demand and bottlenecks has caused inflation to run well over targets,” Fed Chairman Jay Powell recently said during a panel talk with other financial leaders from around the globe.

Former President Donald Trump expects the price of oil and gas to keep going up, “What it is going to be one year from now, I believe it will be much higher than” current levels, he predicted.

Author: Blake Ambrose

Investors who bet big money on ether, which is the token of the ethereum network, had a bad month in Sept.

Ether’s monthly numbers fell to its second-lowest level since the month of June, after a 16% fall. The top crypto, Bitcoin, lost around 7% during Sept.

In light of the rally in cryptocurrency over the previous 12 months, a pullback was anticipated. However, it’s hard to connect short-term price moves to any one event. In the previous year, Ethereum’s value has gone up by around 830%, which is the second-highest by overall value.

The Sept. dip is now getting bought by investors. Ether and bitcoin both went up by more than 9% on Friday, the first day of Oct.

However, the roller-coaster of Sept. reflects a worrisome time for Ethereum and is causing issues for developers and investors.

High fees and a slow network continue to be an issue. Despite the London upgrade from Aug., it has had small impact on the volatility of reported fees.

In the meantime, rival cryptos called “ethereum killers” by some people are exploiting ethereum’s problems.

Nonetheless, Ethereum, which is the foundational block for all sorts of cryptocurrency projects, including non-fungible tokens (NFTs), decentralized finance (DeFi), and smart tokens faces some major challenges to defeat the competition.

As a result, companies are now researching platforms such as Cardano, which is used by developers to create dApps, and Solana, which had almost 4,800% growth since Sept. 2020. Because of its cheaper price and faster usage than what ethereum can do, Solana is getting traction in the NFT and DeFi sectors.

A Solana website says the company does 50,000 transactions a second at a price of $ 0.00025 for each transaction. The transaction speed of Ethereum can only do around 13 transactions each second, and the fees are much higher than on Solana.

There is institutional money flowing in too. Polychain Capital spearheaded a $ 314 million sale for Solana tokens recently.

As investors move away from ethereum, alternative cryptos like Tezos, Solana, and Cardano are now increasing.

But these blockchains are not immune to bugs. Solana was hit by a denial-of-service attack just last month, which was done by hackers using bots to flood transactions.

Author: Blake Ambrose

For over 18 months, the S&P 500 has been unstoppable. After the fastest decline of 30% in the index’s history, it has doubled in value since, with growth stocks pushing the crowd forward.

But not all high-growth companies have been faring well in the booming market. There are lots of great companies currently selling at significant discounts against their 52-week highs that give substantial upside for smart investors. The following two discounted growth stocks could possible to turn a $200,000 investment into a whopping $1 million by 2030.

Pinterest: Lower by 44%

Social media company Pinterest has been hit hard since late July, which is when they announced a quarterly reversal of the company’s monthly active user (MAU) growth. Overall, the company had 454 million MAUs, lower from 478 million MAUs in Q1. But if you look at the company’s historic MAU growth over several years or more, you would see that one single quarter fluctuation does not change the firm’s growth trajectory.

What is more crucial to see is that Pinterest’s somewhat slower growth in Q2 did not alter advertisers desire to get to users. Average revenue per user (ARPU) boosted higher by 89% worldwide in the June-ended quarter, with ARPU growth of 163% found internationally. Global ARPU might double multiple times this decade, which should let the company sustain double-digit sales growth through the decade.

 

Jushi Holdings: Lower by 53%

Inside the cannabis industry, small-cap United States multistate operator (also known as an MSO) Jushi Holdings has all the needed tools to quadruple (or more) in value by the year 2030.

If you are wondering why marijuana stocks have increased in smoke over the previous seven months, look no further than Congress not passing any cannabis reforms. Nevertheless, with 36 states already legalizing cannabis in some capacity, Jushi and other companies in this sector have the opportunity to thrive without federal action.

What makes Jushi a good pot stock to watch is its three state focus: Illinois, Pennsylvania, and Virginia. All three of these states give billion-dollar sales markets, and they are all limited-license markets. Illinois and Pennsylvania purposely cap how many retail licenses they give in total and to one business, while Virginia gives its licenses by jurisdiction. With just 24 operating dispensaries at the time, Jushi is seeking possible high-dollar markets where regulators are purposely working against competition. This way it can create its brands and a loyal customer base without getting steamrolled by a competitor with deeper pockets.

Author: Blake Ambrose

While there is not a shortage of techniques that are effective at making money on Wall Street, buying dividend producing stocks has been a very smart method to create wealth.

The biggest problem that income investors have is wanting the top yield possible with the minimum amount of risk. Unfortunately, once you get into the high-yield space (4% and over), yield and risk usually are connected.

But that does not mean all high-yield dividends are bad news. If you want to sit back and get $1,500 in quarterly income, you might do so by putting up an investment of $63,000 and splitting it among these two stocks, which both have great yields.

Enterprise Products Partners: 8.36% yield

If there is a premier ultra-high-yield dividend stock inside the energy sector, its Enterprise Products Partners. Its almost 8.4% yield is amazing but even more so is the fact that the firm has increased its yearly payout for 22 years in row, making it among the safest ultra-high-yield stocks out there.

For most income investors, the ideas about “safe” and an “oil stock” probably do not belong in the same category. Last year’s historic drawdown for oil turned the upstream companies upside down. But Enterprise Products Partners was protected from this thanks to it being a midstream company.

If you need more evidence that Enterprise Products Partners is a solid company, take a look at its coverage ratio. During the worst of the covid pandemic, it did not go under 1.6 (any figure under 1 would mean an unsustainable dividend). Slow but steady growth makes this company one of the best income stocks to buy.

AGNC Investment: 8.99% yield

For people who simply want dividend income ASAP, let me tell you about AGNC Investment. AGNC is a mortgage REIT (real estate investment trust) that gives its dividend every month: $0.12 each month, equating to a $1.44 base yearly payout. It currently gives yields around 9%, but has normally had an average double-digit yield in 11 of the previous 12 years.

What makes AGNC so special is that we have entered the sweet spot where mortgage REITs are doing very well. Looking back at the multiple economic recoveries from the recession, it is normal for the yield curve to turn steep. This describes the situation where long-term bond yields go up while short-term bond yields go down or flatten. A yield curve that is steepening coupled with monetary policy from the Fed is usually a good recipe for net interest margin expansion for mortgage REITs.

Author: Steven Sinclaire

September’s been a terrible month for biotech stocks with the Nasdaq Biotech Index lower by around 5.7% since the close of August. Increasing interest rates is the top reason for the concern, but that is not a good reason to lose all faith in this sector.

Analysts who watch these two biotech stocks believe they are trading for much less than they should. Here is why they could be great bargains right now.

BioCryst

BioCryst shares have already doubled this year, and the analysts who follow this rare disease drugmaker believe it can go much higher. The consensus target for BioCryst at the moment is a 44% premium.

Shares of BioCryst leaped after the FDA approved their first drug, Orladeyo, to treat a rare blood condition known as hereditary angioedema (HAE) in December. The biotech company has been keeping steady for a few months as investors take a wait-and-see approach about the Orladeyo launch.

Sales of Orladeyo in Q2 came in about 161% higher than the past three-month time frame to get to an annualized run rate of about $114 million. That is encouraging, but still is miles behind the current leader Takhzyro, an injection for HAE from the company Takeda that got approval in 2018.

Global Takhzyro sales increased just 6% y/y to a yearly $916 million during Takeda’s recent quarter. Another round of quarterly reports reveal Orladeyo pushing Takhzyro out of the number one spot could push BioCryst stock a lot higher.

CRISPR Therapeutics

CRISPR Therapeutics is lower by around 44% since the gene-editing company peaked in Jan. While the stock might have gotten ahead of itself, analysts are now expecting it to come right back. The consensus target is for a 45% gain very soon.

At recent prices, the company’s market cap is still higher by around $8.5 billion. That is an awfully large valuation for a firm that does not have any commercial products producing revenue jet yet.

In April, Vertex Pharmaceuticals agreed to spearhead the development of the drug CTX001, CRISPR Therapeutics’ top candidate. This is a gene therapy for sickle cell disease. In order to increase its share of possible profits from 50% to 60%, Vertex gave CRISPR Therapeutics $900 million upfront in addition to another $200 million payment if CTX001 gets approval in the United States or the EU.

Author: Steven Sinclaire

Saving money for your retirement is only one part of guaranteeing you have a financially secure future. The other part is about making smart decisions on withdrawing your cash.

Experts say there are numerous retirement strategies that you can use to stretch your money further for a longer retirement. Current conditions, the tax rates and your expected longevity are all issues that must be considered.

Rather than choose one method to use through your retirement, talking to a financial advisor about the following retirement strategies might be a great idea.

1 — Use the 4% Rule

This rule says that withdrawing 4% from your retirement in your first year, and then doing inflation-adjusted withdrawals each year afterword, should guarantee your money is there to go through a 30-year retirement.

While this concept is good in theory, the right percentage for you should be customized for your current age and life expectancy.

I have heard levels as high as 10% or 15% of portfolios. However, taking that much out is risky and might deplete your account well before your retirement ends. Even 4% might be high. It is recommended that you do a 2% to 3% withdrawal to be more prudent.

2 — Fixed Dollar Withdrawals

Some seniors use their retirement accounts as though they were piggy banks, withdrawing their money whenever they need it. However, a better approach is to make routine withdrawals of the same total each month or quarter. Of these, monthly distributions usually make the most sense.

Some mutual funds or annuities promise routine payments of a certain amount. And retirees could also decide to withdrawal any chosen amount from their own funds.

This strategy can give reliable income during retirement, but you must take into account your fund’s performance when you decide which amount to take.

3 — Limit Your Withdrawals to Income

Another way to work with your retirement fund distribution is to restrict your withdrawals to income produced by your investments. That means only withdrawing dividends and interest every year but leaving your principal intact.

This method protects an account from running dry since the principal is not touched. However, the downside is that yearly income might be unpredictable. Also, unless the amount is large, it might be hard to live on just dividends alone.

4 — Consider The Total Return Approach

While restricting withdrawals to income seems safe, it might not be practical for you. The next generation of retirees must be comfortable withdrawing some of their principal.

That is usually done with a total return strategy that takes into account the interest, dividends, principal and growth for purposes of doing systematic withdrawals. And these withdrawals are usually used to form a predictable paycheck every month due to the 4% rule or a close percentage of the overall fund.

Although distributions from a retirement account might equal the same percentage every month, the source of your money can vary. A financial advisor can aid you in determining which funds to withdraw your money from, based on the fund performance, and then rebalance your portfolio as needed.

Author: Steven Sinclaire

Will you get a new $600 stimulus payment? Many Americans have signed a new petition that requests a fourth check be sent out as they still struggle with the continuing damage of the pandemic.

Lawmakers have not yet moved forward with a major effort to deposit yet another payment into Americans’ checking accounts — but the Biden White House did say recently that a certain group of American workers will get a new $600 check.

So, who is in line for this new financial relief? Here is what you should know.

A fourth payment is coming to some workers

According to the announcement from the United States Agriculture Sec. Tom Vilsack, the Biden White House will distribute yet another stimulus check to workers in some industries. Specifically, the money will be sent to:

  • Meatpacking employees
  • Farm workers
  • Supermarket workers

These funds will come from the $700 million program approved to help employees inside these industries. It is not certain exactly how this money will be given out, but up to $20 million of these funds is earmarked for grocery store workers.

The payment was initially approved by the American Rescue Plan, which was passed back in March by the Biden White House. The Dept. of Agriculture had the power to decide how the $700 million dollars would be spent, which included the ability to use it for food workers.

Vilsack said the reason for the new payment, stressing the fact that the new stimulus money is “about the crucial nature of the work that was done during the pandemic.”

The reason for the new $600 check is to reimburse the “essential” workers for expenses such as protective equipment, care for their dependents, lost income during the covid pandemic, and any expenses connected to the vaccinations.

“We recognize that our meatpacking workers, farmworkers and grocery workers overcame great challenges and took on great personal risks to guarantee Americans could feed their families through the pandemic,” Vilsack said while explaining the justification for giving these funds. “These people deserve recognition for this resilience.”

While the money was given by the Biden White House and the United States Agriculture Secretary unveiled the program, the funds will not be given directly by the federal government. The three stimulus checks were were deposited into Americans’ bank accounts by the IRS. But this time, state agencies and nonprofit groups will be giving the funds to eligible workers.

Author: Blake Ambrose

The electric vehicle industry is going through a lot of innovation and a new shake-out might be in the works. It’s a climate that gives interesting opportunities for smart investors, but the circumstances are not without risks. As such, it does make sense for investors in this sector to spread out their investments.

Among the top companies is of course Tesla. But it is likely one you already know. So in this list, we will be going over the other three giants that are not so well known. That is, Nio, Toyota Motor and Lucid Group.

Here is why each of these stocks seem to be so attractive.

Nio

After three years of its initial offering on Wall Street, Chinese EV producer Nio has increased its quarterly revenue from $7 million up to $1 billion. What is more, the company will continue to grow sales rapidly in the incoming years. The company continues to narrow its losses as it continues its deliveries. In the past quarter, it doubled its deliveries y/y to 21,896 vehicles.

The automaker plans to increase its addressable market by creating lower-priced models. Nio is expanding into Europe, too, by starting to sell its latest electric vehicle in Germany by the end of next year.

Toyota Motor

Toyota Motor sold 9.5 million cars in last year, taking the title of the world’s top automaker from Volkswagen. Also last year, Toyota produced net profits of $21 billion for sales of $256 billion. And for some perspective, last year, it moved almost 20 times as many cars as Tesla. Though Toyota is not growing as fast as Tesla, that is mainly because of the difference in their sizes. Value investors will see Toyota as an attractive stock. Toyota has partnered with the company Aurora to push its electric plans. And, it wants to launch 15 new EV vehicles by 2025.

Lucid Group

Since Lucid Group has not yet started commercial deliveries to its customers, it is a riskier EV stock to own than the ones discussed above. It might encounter technical problems getting its cars to market, or its offerings might not do as well as some expect. Another question is if the company can boost production as quickly as it plans to.

On the positive side, the EPA has credited the company’s Air Dream R model with 520 miles on one charge. That is a new record for any electric car. So, the company could deliver what it has said is going well. Models with greater range might help the company carve a spot for itself in the EV markets.

Author: Blake Ambrose

The decentralized foundation of cryptos might be a problem for the Chinese government, Elon Musk has said.

As global officials scrutinize the crypto industry, Elon Musk has shown support for crypto, saying it was indestructible.

“It is not possible to, I believe, destroy cryptocurrency, but it is possible for these authorities to slow its progress,” Musk said during the Code Conference, as reported by CNBC.

According to the CEO of Tesla, the decentralized foundation of cryptos might be a challenge for the government of China, which announced their war against crypto last Friday.

“I suppose cryptocurrency is about lowering the power of a centralized government,” Musk said, adding, “They do not like that.” He also said that the new Chinese crackdown against crypto is possibly to have something to do with the country’s “great electricity generation problems.”

“Part of it might be due to shortages of electricity in many areas of China. A lot of South China is having random power outages since the power demand is so high […] Crypto mining could be playing a role in this,” he said.

Despite Musk not thinking of himself as a “massive crypto expert,” the tech mogul said that regulators should not be attempting to slow down crypto adoption. When asked whether the U.S. government should get involved in regulating cryptocurrency, Musk said:

“I would say, they should do nothing.’”

Musk has come up as a significant cryptocurrency price influencer via Twitter, with many experts connecting his posts to huge price moves for tokens such as Dogecoin (DOGE), Shiba Inu (SHIB), and of course Bitcoin (BTC). The Tesla CEO was widely slammed within the cryptocurrency community after suspending Tesla’s Bitcoin payments over what was said to be environmental worries about mining back in May of this year.

Musk previously caused a lot of optimism in the crypto market by saying his company made a huge $1.5-billion Bitcoin buy in February.

This comes at a time when cryptocurrencies like Bitcoin are also being targeted by regulators in the United States due to their connection and uses in the cybercrime industry worldwide, according to officials.

Author: Steven Sinclaire

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