The market just had an amazing past 12 months. Investors pushed through the S&P 500 losing over a third of its value in under five weeks during the first quarter of 2020. Only to then experience a record-breaking rally which took the market all the way to all-time highs in just five months time.

Shockingly, 2020 ended with the S&P 500 still higher by 16%, which means an almost doubling of its normal annual return rate. Very good considering that the pandemic hit the economy hard.

Generally speaking, these numbers precede a market crash

Most investors are wondering if the market is overheating.

Let’s consider this: Since 1950, the S&P 500 has went through 38 corrections of 10% or higher. That’s one large move downward every 1.87 years. We might not know the month a crash could happen, or how bad it will be, but we do understand that one is always around the corner.

One thing we can do is study history for guidance. One sign in particular is currently flashing that big problems are nearly here.

The Shiller P/E ratio is based on past 10 years’ average inflation-adjusted earnings. And 150 years of this metric has an average of 16.8. But currently, the Shiller ratio for the S&P 500 is calculated at 34.5 — more than 2x its normal, historical average.

There have been just five occurrences when the S&P 500 has had a P/E above 30: 

  • 1929: Right after Black Tuesday, the Dow lost about 89% of its total value.
  • 1997-2000: Preceding the tech bubble burst, the Shiller ratio was at a record of 44.2. Then, almost 50% of the value of the S&P 500 was destroyed when the bubble burst, with the Nasdaq being slammed even harder.
  • Q3 2018: During Q3 of 2018, the ratio was over 30. This was right before the Q4 selloff when the S&P 500 shed as high as 19.8%.
  • Q4 2019/Q1 2020: Before the covid crash of 2020, the Shiller metric went over 30. The S&P 500 then dropped 34% in February and into March.

History teaches us that when the Shiller ratio goes over 30, bad things are coming. Of course, it’s not possible to predict when Covid might upend the best bull market in history. But regardless, history has shown when stocks reach two to three times higher than their long-term average, a crash happens soon after.

Bitcoin dropped by up to 11% this Thursday, reaching its lowest point in almost three weeks, as the top cryptocurrency was slammed by a one-two punch that hurt its user base’s faith.

The first incident, Janet Yellen, the likely incoming treasury secretary, hinted during her hearing that Washington should “curtail” the usage of Bitcoin because of illegal activities.

And second, a report came out from BitMEX Research which argued that a critical flaw named “double spend” had happened within the blockchain.

Double spend is an event that allows someone to spend their bitcoin twice. It is a feared occurrence for Bitcoin fans and investors, and it was believed that the issue was solved when Satoshi Nakamoto wrote his Bitcoin white paper back in 2009.

Early tries to start a digital cash technology were stopped by these types of vulnerabilities that enabled double spending and destroyed faith in the system.

BitMEX Research claimed that “it seems as though a small double spend of about 0.00062063 BTC ($21) was found.”

BitMEX later stated it looked like this was actually a RBF transaction, which is the word to describe an unconfirmed transaction being replaced by a newer one which pays a bigger fee. But BitMEX’s Fork Monitor claimed that “no (RBF) fee increases have been seen.”

In the end, the double-spend event seems to not have taken place, according to CTO of Bitfinex, Paolo Ardoino. In a message to reporters, Ardoino said, “What occurred is that two blocks were mined at the same time. As a result, a chain reorganization happened, which did not end with double spend.”

Meanwhile, large investors continue to increase their exposure to bitcoin. Filings with the SEC show that BlackRock has allowed two of its funds to start buying the cryptocurrency.

It’s always difficult to buy a stock which is at record highs. Nobody wants to spend money for shares to suddenly discover they picked the worst time to buy.

Yet with many top-performing stocks, you just can’t sit around waiting for a buy opportunity to show up. If you’re unwilling to purchase shares at or close to record highs, you may never have a chance to buy, and you will miss the big opportunity to boost your overall profits.

In this article, we’ll reveal three popular companies that recently hit record highs. Each of them has more headroom for future increases — and a strong history of amazing business execution.

1. MercadoLibre

First is MercadoLibre (NASDAQ:MELI) a high-achiever among this list. The Latin e-commerce giant has seen its stock nearly 3x in the past year, and it has increased by 18% in just the first month of 2021.

MercadoLibre is a market leader within the booming e-commerce industry. Even before covid. They serve Brazil and other nations in Latin America. MercadoLibre’s online store is rapidly changing the way people shop in the area. Moreover, their additional services like their payment network and shipping platform have been picking up traction.

The problems of Covid helped increase the internet shopping trend worldwide, and MercadoLibre jumped to take advantage of that. Now that the convenience of MercadoLibre’s online shopping and epayments have caught on in Latin America, the stock has a long way to go to reflect its possibilities.

2. Johnson & Johnson

Johnson & Johnson (NYSE:JNJ) is probably the most vital company in the healthcare industry. Its pharmaceutical segment is the largest part of the organization, with tons of new treatments helping millions of people worldwide. It also contains a big consumer-health division that’s behind brands like Tylenol and Band-Aids. J&J’s medical-device division is also a leader.

Over the long term, pharmaceuticals have brought in the most growth, as candidate treatments have routinely won approval to replace older treatments that lose their patent protection. But much of the news about J&J has been about its part in creating a covid vaccine that could possibly become the first to give protection with only one dose.

Plus, it’s the only stock of these three that pays a dividend, with a yield of 2.5% to shareholders. Moreover, the company has a history of dividend growth that goes back decades. Combine all of that, and J&J makes a healthy portfolio even healthier, even at record highs.

3. Alphabet

Alphabet (NASDAQ:GOOGL) (NASDAQ:GOOG) is among tech investors’ favorite, mostly due to Google’s dominant ownership of the online advertising industry. The company has seen its stock skyrocket since its IPO in 2004.

Alphabet is keeping its huge advantage in the internet search industry, with recent studies putting their share of web searches at 92%. Moreover, Google’s Android operating system is the standard for most smartphones sold across most of the world, with only Apple‘s (NASDAQ:AAPL) iOS giving any noteworthy challenge.

Going forward, Alphabet’s growth can be driven by any number of strategies. Google will keep bringing in tons of cash and R&D in areas like AI and autonomous vehicles is progressing very well, despite regulatory pressure, the business overall looks very solid.

But maybe best of all, even as Alphabet has reached record highs, its stock has not increased much when compared to other big technology stocks. Even just catching up to the numbers of Apple, Alphabet shareholders would get a juicy payoff in 2021.

Don’t be scared

There’s always a possibility that buying at record highs will be a bad choice. But in the long run, it’s the strength of the foundation of a company that matters whether a stock rises or falls. Alphabet, Johnson & Johnson and MercadoLibre all have staying power to give solid profits to investors over the long term.

During the Senate Finance Committee hearing this Tuesday, upcoming Treasury Secretary Janet Yellen reasserted commitment to market-set currency rate. 

After being asked about the dollar and market-determined exchange rate, Yellen responded by saying that “America does not want a weaker dollar to get a competitive advantage, and we should be against other countries doing so as well.”

These words do not surprise anyone as investors and markets were anticipating Yellen to stress this point within her testimony.

“I believe in exchange rates that are market-determined. The price of currencies should be up to the markets,” Yellen said.

The Treasury Secretary nominee went on to say she would work with Biden to object to other countries who attempt to claim a competitive advantage in trade by manipulating their currency.

She said that such targeting of exchange rates for commercial advantage should not be allowed.

“I believe in a strong American economy that gives its citizens good jobs. Stability in our financial system is good for all of us,” Yellen said.

If she is confirmed, Yellen will replace Treasury Secretary Mnuchin and will make history as the first female treasury secretary.

Gold kept its daily gains after her comments, with much of the response of investors already priced in. The Feb. Comex gold futures were last at daily highs of $1,841.30, an increase of 0.62% for the day.

Yellen also sounded alarms over the risk to the economy if officials do nothing, saying that it is better to “go big” right now.

“Without further steps, we risk a deeper, more painstaking recession — and long-term damage of the economy later on,” she said. “Neither President-elect Biden, nor myself, present this relief deal without an acknowledgment of the nation’s debt crisis. But as of this moment, with interest rates at historic lows, the smartest move is to act big.”

Getting folks back to work is our initial task, Yellen stated. The second task is to rebuild our economy to generate more prosperity for everyone.

The pandemic triggered devastation, she added. “Eighteen million unemployed people are being paid every week. Food banks are running low. The damage has been far-reaching, and as President-elect Biden said last week, our response must be as well,” she said.

Microsoft (NASDAQ:MSFT) is taking a huge gamble on self-driving technology with a newly inked agreement with General Motors (NYSE:GM) and Cruise. 

Cruise and GM announced on Tuesday that they have agreed to a “long-term relationship” with the software company to “hasten the success” of autonomous-vehicle products. 

Microsoft is allying with GM, along with Honda Motor, and institutional backers in a brand new fund raising round of more than $2 billion that increases Cruise’s valuation to over $30 billion, the companies announced. 

Cruise’s electric (and self-driving) taxis will utilize Microsoft’s Azure cloud-computing services.

Under the agreement, Cruise will release its autonomous vehicles using Microsoft’s Azure, and GM will use Azure as its own cloud provider. To reciprocate, Microsoft will use the expertise from Cruise and GM to increase Azure’s market share in the transportation industry. 

Cruise’s leader and CEO Dan Ammann, applauding Microsoft as “the standard of trustworthiness and democratization of technology,” said the software giant will be their “force multiplier” as they move to release their fleet of self-driving taxis. 

For Microsoft, the ability to work along side Cruise — and to claim GM as a long-term customer — helps its continuing push to win against cloud competitors like Amazon‘s AWS and gives it a foot in the autonomous-vehicle door as a player in an industry that is heading for mainstream adoption. 

For Cruise on the other hand, it’s another big ally that could help push it higher — both in investors’ eyes but also in terms of technology.

Details of the timing and size of Microsoft’s stake in Cruise has not yet yet been revealed. 

Gold investors and hedge funds have greatly lowered their gold exposure as the asset continues to be pushed down by a stronger dollar and increasing bond yields, according to the latest information from the Commodity Futures Trading Commission.

The CFTC disaggregated Commitments of Traders release revealed hedge fund managers lowered their speculative long stakes in Comex gold futures to a level of 131,057 contracts, down from 36,039. During that same period, short positions up-ticked by 2,296 contracts to a level of 52,823.

“Gold experienced a huge reduction in overall longs after traders were scared by the increase in ten-year bond yields above 1% and a sturdier dollar,” said the head of commodities at Saxo Bank, Ole Hansen.

Gold’s net length now is at a number of 78,234 contracts, a fall of over 36%. Optimistic bets in gold have lowered to their lowest number since May of ’19, according to the information.

The huge drop in speculative desire pushed gold lower under $1,850 per ounce during the survey time frame.

Analysts argue that the aggressive selling of gold could go on. Although long-term circumstances look bullish for the precious metal, investors at TD Securities reported Friday that weakening interest could damage the asset.

“From here forward, gold might stay in this unfortunate position until economic conditions prompt investors to lower their optimism— which in our opinion may happen soon,” the analysts said.

However, other analysts see a positive trend as demand for exchange-traded gold-backed products has risen as speculators change their long positions to short.

“ETF investors view the price as a great buying moment,” said Carston Fritsch, one of Commerzbank’s precious metals analysts. “Bloomberg says ETF holdings went up by almost 17 tons. The inflow was triggered mostly by the SPDR Gold Trust, which is a favorite among larger institutional investors.”

Although investors have been quickly leaving the gold market, the silver market seems to be holding.

The disaggregated report revealed speculative long positions in Comex silver futures decreased by 3,485 contracts. During this time, short positions increased 461 contracts to a level of 27,861.

The net length of silver currently stands at 41,944 contracts, lower by 8.5 percent from the previous week. And its weakest level since late Nov.

During the survey time-frame, silver was able to maintain support of above $25 per ounce.

If you’re retired or closing in on that moment, you probably already understand your investing should be more about reliability than anything — especially as it relates to income. Your paychecks are going to end and Social Security probably won’t cut it.

With this in mind, investors searching for dividend-paying stocks to own through your golden years may want to research The AES Corporation (NYSE:AES), Fifth Third Bancorp (NASDAQ:FITB) and Automatic Data Processing (NASDAQ:ADP). Let’s take a look at all three.

AES Corporation

Dividend yield: 2.2%

Dividend CAGR (5 year): 6.5%

Utility company AES should go on your list of dividend-producing stocks for your perfect retirement portfolio.

You may not be familiar with its name, but that’s for a good reason — it’s a small utility company according to most standards, with a market cap of just $18 billion. And a big portion of its power production takes place in foreign nations; AES has operations on four separate continents. Ownership of this stock grants you easy geographical diversity, plus the reliability of a utility. Consumers might cut back on spending, but they won’t cut back on electricity.

AES has a unique edge to it — it’s positioned for the “green” era of power production. The company is the biggest solar farm producer in the world, and the global leader of battery energy storage. Previously this month, the company made a deal with Hawaii to build a solar pumped storage location for a hydro power project. In Nov, the company made an agreement with the Alberta Investment Management Corporation to combine its sPower solar energy platform with AES’ clean energy business. This new group will eventually create 12 gigawatts of power, given the latest plans. Overall, AES increases its production by 2 gigawatts and 3 gigawatts every year, while it also removes coal-powered plants.

It’s hard to put a number on how the planet’s shift away from fossil will help AES. But since the International Energy Agency predicts the planet’s renewable energy power production will grow 50% between 2019 and 2024, AES is stationed to do well in the future.

Fifth Third Bancorp

Dividend yield: 3.3%

Dividend CAGR (5 year): 15.7%

Record-low interest rates have been a problem for banks. Margins on loans are directly connected to the current rates at the time. The greater the rate, the more money a loan makes. The weaker the rate, the less money is made with lending activities. Bank of America announced a 17% lowering in its 3rd quarter net interest income. Wells Fargo reported the same type of income fall for the same period. All of the biggest banks in the industry, besides Wells Fargo, have kept their dividends. It has been hard after the Federal Reserve upped their stress tests after the pandemic started.

Fifth Third Bancorp is a strange player in all of this. Its third quarter net interest income fell, but just by a small 6% year over year. Through most of 2020, their net interest income was actually up by about 1%. While the regional company did take some earnings hits in the initial quarters of last year, those problems were related to costs linked with the pandemic and not due to the decrease of profits on loans. Its Q3 per-share profit of $0.78 is close to the average, and whats more, it is more than enough to pay their dividend, which is currently at $0.27.

With that income well shielded by a very stable business, retirees can focus on this company’s better-than-average dividend yield of 3.3% and its excellent dividend growth rate.

Automatic Data Processing

Dividend yield: 2.3%

Dividend compound annual growth rate (CAGR) (5 year): 11.4%

Automatic Data Processing isn’t the type of company that investors research on a daily basis. That’s due to it being boring. The company handles payroll checks for other companies. ADP has expanded its HR tools to areas such as employee time clocks and recruitment. It’s not a super-growth industry, and there’s no barrier to entry to stop others from getting into the market.

But there’s one special thing about Automatic Data Processing’s setup that retirees should appreciate. That’s their recurring revenue. Its clients send ADP a predictable monthly fee for using their services, which means a reliable revenue flow to support its dividend. Because of this, ADP has paid dividends every quarter going on decades, and it has increased its quarterly payment every year for almost half a century.

And these increases have not been small. The dividend has increased at a compounded annualized pace of over 11% just in the previous five years. Actual growth of profits has been nearly as impressive. Clearly ADP is very good at adding and keeping customers in its client file.

Analyst Don Dolev, from Mizuho Securities, has forecasted that Paypal will bring in up to $2 billion in revenue from bitcoin by the year 2023. This year, he says he expects the payment giant’s total revenue to increase 20%.

Dolev says there is a “big increase in engagement because of crypto,” with half of Paypal crypto users using the app daily. “Our survey shows a large increase in engagement” said Dolev in a message to clients.

Paypal revealed this past October that its 346 million users can now buy and sell bitcoin within their Paypal accounts. The giant’s crypto service, which uses the fiat-to-crypto exchange called Itbit, has exploded with public interest since then.

During this unveiling, Paypal was buying as much as 70% of all new bitcoin. Dolev’s research discovered that bitcoin traders use the app three times as often as non-bitcoiners and that they had much more significant cash balances in their Paypal accounts.

Dolev boosted his target value for Paypal stock from $290 to $350. The stock ended at $239.79, down 0.94%, on Friday. Over the previous 52 weeks, the stock has claimed a top value of $249.85 and a low mark of $82.07.

In another related piece of news, Lisa Ellis, and analyst for Moffett Nathanson, said that Paypal’s crypto service will give the company a potential $600 million in revenue in 2021. “Over the long haul, we think Paypal’s cryptocurrency goals have huge strategic benefit,” she said to Market Watch.

Ellis went on to say this will aid in “making the Paypal app a ‘go to app’ for a broader spectrum of financial services, and  help them shape the long-term position of cryptocurrencies in the consumer payment industry.”

4 Mistakes That Can Destroy Your Retirement

A lack of savings is not the only thing preventing a comfortable retirement. Regardless of your funds, there are some mistakes people make that destroy their retirement plans from the get-go. Avoid these four pitfalls so you don’t destroy your peaceful retirement.

Early Withdrawal Penalties

There quite a few penalties and rules when taking money from your retirement account before a particular age. It’s important that you know those rules if you want to maintain your retirement plan. If you choose to withdraw from your 401(k) or IRA before age 59½, there is an early withdrawal penalty. Usually, you need to include that in your gross income and will pay another 10% tax penalty. But there are some loopholes to these withdrawal penalties. Discuss this with your adviser before taking money out of your retirement account early.

Not Getting Employer Match

A new survey reveals that around one-third of people are not investing enough into their company-sponsored retirement options to get the complete match from their employer. The value of this missed match is around $750 each year. That might not sound like much, but it can lead to missing out on $100,000 in missed savings during the entire length of your career. Check with your HR department to guarantee you are getting your complete match. And if not, set a goal to increase your contributions to match your employer’s threshold. You need to grab hold of this free money.

High Fees On Investments

It is vital to know exactly what you are being charged for your investments. Fees that seem small, like 2%, can carve up your savings over decades. Those costs compound just like your returns do. That means you are losing money in the fees, but also on the growth those dollars could have had. As an example: Say you have a retirement account with $100,000 in it and zero fees, and the account gets a 6% return every year for 25 years, that leads you to $430,000. Now let’s calculate that same account with a 2% cost each year for the same period; that leads you to just $260,000. That tiny number destroys almost half of your value. This is why you must know about investment costs if your retirement is going to be successful.

Not Caring About Compound Interest

Compounding is exactly why everyone should start saving early. On a very foundational level, compounding interest is earning upon interest. When savers ignore the incredible power of compound interest, they are ignoring the potential to grow their retirement funds faster. If you begin with $5,000 every year at age 25, you would be at $1.3 million at age 65, this is with a 8% return. But if you waited for age 35 to do the same thing, your savings would be sliced by 50%. Timing is vital for allowing compound interest to work on your behalf, and that’s why you need to plan long-term when thinking about retirement.

How To Stay On Course?

Many folks think they can create their own retirement, that may work if you are in your 20s. But the closer you are to retirement, the more vital it is to have a comprehensive plan to keep you on course. The issue is, only one in five people have a on-paper plan for retirement. Your retirement is more than just how much you have in savings. It takes a comprehensive plan to get you through a comfortable retirement. Your complete goal should be to have a plan that includes strategies for health care, Social Security, and taxes during retirement. That is the only way to retire without worry. So sit down with an adviser and discuss your goals. The two of you can create a comprehensive plan to help meet all your retirement goals.

Exchange platform eToro, who is based in Israel, is struggling to keep up with surging demand for Bitcoin, sending a message to all users warning them of possible trading limits starting this weekend.

“The explosive demand for crypto, combined with limited liquidity, challenges our ability to fulfill buy orders.”

Because of this, the company is warning of “possible limitations” on purchasing crypto and that “spreads on assets may also be bigger than normal.”

EToro has been overcome by success. Yesterday, one of its officials, Brad Michelson, said that in the past 11 days, 380,000 new accounts had been opened and that volumes had went up 25 times higher than the same period last year. As of January 9, eToro claims over 17 million users.

Founder of Quantum Economics, Mati Greenspan — formerly an analyst at eToro — said to Cointelegraph that the warning was “a sign of a potential incoming liquidity squeeze.” He recommended users against trying to remove funds off the trading platform.

Should eToro go through with the new measures, users will be limited on their maximum exposure for each cryptocurrency, and could be unable to put in new buy orders. Greenspan went on to clarify by saying it means some “might have to wait to put a buy order in.”

An eToro official reported to Cointelegraph that “our experience of the 2017 rally helps us to understand the possible problems with extreme volatility in these markets. We want to make sure our clients are also fully aware of the possible risks.”

Last week, the company limited European users from margin trading because of greater market risks and brought their minimum deposits up by 400% to $1,000 as a way to lesson the number of new user registrations.

Other exchanges are also experiencing exploding volumes, with Coinbase’s volume reaching $9.5 billion, which is an increase of 50% from its last all-time high of $6.5 billion. Binance also pushed through its peak of $23.7 billion, reaching over $30 billion on January 12.

Very soon, other exchanges will begin hitting liquidity issues Greenspan says, stating it is “very likely” that we will see this happening on other systems in the future.

Worries about the limited Bitcoin supply have arose over the past six months with the giant fund Grayscale grabbing up Bitcoin at a jaw-dropping rate. The company now has $20 billion in its possession as its Bitcoin buying beats out mining production by nearly 3 to 1 in December of last year.

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