Author: Matt Thalman

Bitcoin And Cryptos Tank After Futures Trading Begins

Posted on by Matt Thalman

During the last week of September, the major cryptocurrencies got crushed. Bitcoin fell more than 20% from September 21st through September 26th and then slightly rebounded on the 27th by a little less than 2%. A 20% drop for the most well-known cryptocurrency is not uncommon these days, as it fell that much back in July. However, that doesn’t make it an easy pill to swallow when it happens.

But while Bitcoin fell 10% on September 24th, it's closet rivals, Ethereum, Ripple, Litecoin, and bitcoin cash fell even more, somewhere between 15% and 20% respectively. The likely cause was the lack of interest from institutional investors after the highly anticipated Bakkt crypto platform began trading its “physically” settled bitcoin futures contracts.

The Bakkt platform was announced more than a year ago and had partnerships with Microsoft and Starbucks and was being touted as a way for institutional investors to get involved with cryptocurrencies. The platform allows futures trading of crypto’s but settles the order with physical coins, not cash like other crypto futures platforms currently offer. The thinking was that because the futures contracts had to be settled with actual coins, this would increase the demand for the different crypto’s being traded through the futures contracts.

However, during the first hour, the platform was live, only five contracts were traded, and even after ten hours, only 28 contracts had traded hands. Many industry experts, both who follow the crypto markets and general futures contracts actually have come out and stated this sort of activity is normal for the first few days of a new commodity being offered through regulated futures contracts. They claim some brokers aren’t ready to clear it, while others want to wait and see how things go, while others may not even have the tickers populated on their risk systems. Continue reading "Bitcoin And Cryptos Tank After Futures Trading Begins" →

Dividend Stocks Yielding More Than Bonds

Posted on by Matt Thalman

A weird thing happens when investors start seeing signs of a recession or just start convincing themselves that a recession is inevitable and coming soon; interest rates begin to fall, which means bond yields begin to drop. Most investors are told when they start investing that stocks are risky, but they offer better long-term growth, while bonds are safer, but they don’t offer investors as much potential growth.

While these statements may be true during certain situations, they certainly don’t always hold true. Sometimes, stocks may be both less risky and offer higher growth than bonds. I personally believe now be may one of those times.

As things sit now, bonds are offering rather low yields. The three-month treasury is paying 1.78%, the 12-month treasury is paying 1.75%, while the even longer five-year treasury is only offering a yield of 1.56%. The ten-year treasury is at 1.68%, and the 30-year treasury is sitting at 2.13%. These returns are hardly likely to keep up with inflation over those longer periods. Buying an investment that may just keep up with inflation seems somewhat risky to me.

Even the bond ETFs that have performed well year-to-date and pay yields to their investors aren’t currently offering anything much better than what investors can get from Treasuries. The Vanguard Long-Term Corporate Bond ETF (VCLT) which is up 21% year-to-date is offering one of the best yields at 3.5%. But this ETF is rather risky considering if, and when interest rates turn around, this fund will get hit.

On the other hand, certain stocks are currently offering higher yields, while also offering the chance for stock price appreciation, regardless of which way interest rates run. Let’s take a look at a few of my person favorites equity Exchange Traded Funds, which offer both growth and healthy, reliable yields. Continue reading "Dividend Stocks Yielding More Than Bonds" →

Some Bond ETFs Are Having A Good Year

Posted on by Matt Thalman

With the Federal Reserve once again in an “interest rate-cutting” mood, some bond investors are making fantastic returns in 2019. Several bond ETFs are beating the S&P 500 year-to-date, despite the popular index increasing by more than 20% thus far in 2019.

Perhaps you are wondering how boring old bonds could be beating top growth and technology stocks in 2019?

Well, the answer is simple; when interest rates fall, long term bonds that have higher “nearly guaranteed” yields become more valuable. If current 10-year Treasury yields are around 1.75%, but you own an older 10-year Treasury bond that is yielding say 3.0%, investors who are looking for safe, reliable yields, will be willing to pay a nice premium for your older 10-year Treasury bond.

Funds such as the Vanguard Long-Term Corporate Bond ETF (VCLT), the Vanguard Extended Duration Treasury ETF (EDV), and the iShares 20+ Year Treasury Bond ETF (TLT) are all increasing in value as interest rates decline. Year to date, these three ETFs are up 21.37%, 25.01%, and 18.36% respectively, all without using any sort of leverage.

The three bond ETFs mentioned above are all increasing in value while current interest rates fall. However, these three funds and many others like them will do the opposite when interest rates begin to climb higher. But, since the Federal Reserve and other central banks around the world are in rate-cutting mode, investors can reasonably expect rates to stay at their depressed states for some time, if not go even lower. Continue reading "Some Bond ETFs Are Having A Good Year" →

Is Bitcoin The Place To Be In A Volatile Market

Posted on by Matt Thalman

Many investors have called Bitcoin the digital version of gold. Obviously, we know it is in a lot of ways the digital version of cash, but the comparison to gold would potentially mean that if the stock market continues to be volatile or potentially crash, then Bitcoin would be an excellent place to be invested.

However, while someday Bitcoin may genuinely be the digital version of gold, it is not yet trading as such, I’ll explain in a moment, and therefore is not likely the best place to be parking your cash while the stock markets decide which direction it wants to go.

A simple chart of with the price of Gold and the price of Bitcoin overlaid on top of each other, clearly shows the two investments have not moved side-by-side over the past year, let alone the past month when the stock has been flipping from trading lower by 1% to trading higher by the same amount every few days. Since August 8th, 2018 Bitcoin and Gold have moved in the same direction at the same time just 51% of the time. Not really movements or assets that I would call correlated. Although, since May 8th, 2019, around the time we started seeing an uptick in volatility in the stock market, the two assets have been moving in sync 58%. Still not a sign of strong correlation, but better than before and a sign that someday, Bitcoin and Gold may move much closer together.

At this time, though there are just too many unknowns with the future of Bitcoin from both a legal standpoint and an adoption standpoint for it to trade hand-in-hand with Gold.

First and foremost, Bitcoin is illegal in a handful of countries around the world. China is the largest anti-crypto country, but the list also includes Algeria, Egypt, Morocco, Bolivia, Colombia, Ecuador, Saudi Arabia, Iran, Bangladesh, Nepal, Pakistan, Cambodia, and Indonesia. Continue reading "Is Bitcoin The Place To Be In A Volatile Market" →

5 Marijuana ETFs You Can Invest In Today

Posted on by Matt Thalman

Until April Exchange Traded Fund investors only had one legitimate option, the ETFMG Alternative Harvest ETF (MJ), if they wanted to invest in the marijuana industry. But in April the AdvisoreShares Pure Cannabis ETF (YOLO) began trading. Then in July, the industry saw a marijuana boom when three new ETFs focused on the controversial industry began trading. On July 9th The Cannabis ETF (THCX) began trading, then the 23rd saw the Amplify Seymour Cannabis ETF (CNBS) begin trading and finally on the 25th the Cambria Cannabis ETF (TOKE) opened for business.

Before we get into the differences of each ETF, I wanted to let everyone know that for the most part, all five of these ETFs are rather easy to buy. In the past when I have written about the marijuana ETFs, I often mentioned the Horizons Marijuana Life Sciences Index ETF (HMMJ) which is actually traded on the Toronto Stock Exchange. Thus for U.S. investors, it can be difficult to purchase this fund unless you have an account which allows trading on foreign exchanges and in my experience, most retail investors don’t have those types of accounts.

I know these five are all easy to buy because I actually bought all five of them. I have two different brokerage accounts, one with Merrill Lynch and one with TD Ameritrade. The TD account allowed me to purchase all five ETFs with absolutely no issues and the Merrill Lynch account allowed me to buy MJ no problem. However, the Merrill Lynch account required that I call in and have a Merrill Lynch representative assist with the purchase of YOLO, THCX, CNBS, and TOKE, but not because they were marijuana ETFs but because they were thinly traded or had small asset bases.

So, let’s take a look at the five US listed marijuana ETFs and see what makes them different. Continue reading "5 Marijuana ETFs You Can Invest In Today" →