Author: Matt Thalman

Market-Cap-Weighted Investing Has Been Good, But Will It Last?

Posted on by Matt Thalman

The major US, and well world indexes, for that matter, are all market capitalization-weighted indexes. This means the index will own a particular amount of one company or another based on that company’s market cap. On the surface, this sounds fine. And decades ago, when the indexes were really starting, this method worked just fine. It was a fast, easy, and simple way for investors and money managers to put together the index.

But fast forward to today and beyond, and market cap indexes may not be the best solution due to the simple issue of the index being too heavily weighted. In a past article, I highlighted how the top 5 companies in the S&P 500 represented 23% of the index. That means 5 companies represent almost a quarter of what an index that supposedly tracks 500 companies is doing.

However, over the past few years, especially the past year, these top five companies, Apple (AAPL), Microsoft (MSFT), Amazon.com (AMZN), Facebook (FB), and Alphabet (GOOG), have performed incredibly well. So, investors who have ridden these market-cap-weighted indexes higher for a few years are very happy and have done very well.

However, there is always a downside risk, and with these market-cap-weighted indexes being so heavily weighted to the top 5 or 10 stocks, the risk is much higher than most investors fully understand. Continue reading "Market-Cap-Weighted Investing Has Been Good, But Will It Last?" →

ETF That Opens The Door To Play Options

Posted on by Matt Thalman

For most investors, the world of “options” is another universe. Most investors don’t understand how they work, how time decay affects them, or why they can dramatically change the price when their underlying asset ‘hardly’ moved. So it's very understandable why a lot of investors simply stray away from options and stick to the ‘simpler’ investments they understand.

However, every investor should at least attempt to understand how options work and why they are important to the market. Further, most (especially long-term buy-and-hold investors) investors should, at the very least, occasionally dabble in options from time to time.

I know what you are thinking, “this guy is nuts, options trading is gambling, not investing, I have been there, done that, and I’m not doing it again.” But hear me out before your stop reading.

First off, I am a long-term buy-and-hold investor at heart, and that is what I recommend to everyone. Historically, long-term buy-and-hold investing is better than trading, short-term market timing etc., etc. However, with options, you can be long-term investors and make a little cash on the side while essentially having zero risk, at least zero risk of losing capital. Continue reading "ETF That Opens The Door To Play Options" →

Cathie Woods And ARK Investments Not Having A Great 2021

Posted on by Matt Thalman

After a few years run where ARK Invests had at least one, if not three, of the top ten non-leveraged ETFs, 2021 appears to be the year ARK may be dethroned as the top ETF provider.

As it sits at the end of July, ARK’s top funds, the ARK Innovation ETF (ARKK), the ARK Genomic Revolution ETF (ARKG), the ARK Next Generation Internet ETF (ARKW), the ARK Fintech Innovation ETF (ARKF), and the ARK Autonomous Technology & Robotics ETF (ARKQ) are all substantially trailing the S&P 500 or the Vanguard S&P 500 ETF (VOO).

ARK

For years Cathie Woods and her team put up astonishing numbers and gave investors market-crushing returns. Some of this success was due to her big, bold calls on Tesla and other future technologies. First, however, these bold predictions, and then, of course, attracted a lot of attention when they came true.

They say success begets failure on Wall Street because once everyone figures out what you are doing, they emulate you, leading you to perform the same as the rest of the crowd. Which, to those on Wall Street, is the same thing as failing. Continue reading "Cathie Woods And ARK Investments Not Having A Great 2021" →

Investing In The Guns And Ammo Boom

Posted on by Matt Thalman

If you thought lumber prices were high in 2021 or that the US housing market was hot, you might be missing the hottest market and the industry that is seeing the highest price increases; the gun and ammunition industry. In 2020 the US saw record levels of gun purchases halfway through 2021, and there is no slowing down.

In 2020, more than 21 million guns were sold in the US; that’s more than double the number of guns sold 20 years ago. And according to the FBI background checks done thus far in 2021, we are likely to see more than 21 million guns sold this year.

With that many guns being sold, it's not hard to see why ammunition is not only in short supply but why prices are up more than 100% when compared to just two years ago. However, despite ammunition prices rising, some people being interviewed say they would buy more if they could get it. Some gun owners have said it's not uncommon to own thousands of rounds for each different type of gun they own.

So, when you add the two factors together, 21 million new guns sold in 2020, and we are well on our way to see close to, if not more than that, sold in 2021, and of course you need bullets for these millions of guns being sold, maybe not thousands, but at least some. Well then, it makes perfect sense why ammunition is in low supply, high demand, and prices are soaring.
As an investor, how can you benefit from this gun-crazy situation? Continue reading "Investing In The Guns And Ammo Boom" →