Author: Matt Thalman

Natural Gas Opportunity For Savvy Investors

Posted on by Matt Thalman

On August 31st, Russia's state-owned energy company, Gazprom, stopped the flow of natural gas in the Nord Stream 1 pipeline. The pipeline ran from Russia to Germany and was scheduled to be discontinued from August 31st until September 3rd. But September 3rd came and went, and the pipeline remained shut down.

At first, an oil leak was reported, causing the pipeline to remain shut down. But then, it was evident that the shutdown was in retaliation to the sanctions the West had implemented against Russia due to the war in Ukraine.

Many experts predict the economic pain in Europe will increase as the cold weather sets in across the continent. Some have gone as far as to say that the economic pain will be felt in both the coming winter and next winter, 2023-2024. Some are even saying that energy rationing will be required to ensure everyone has enough natural gas for heating.

However, many in Europe have been planning for this to occur for some time. Russia had reduced the pipeline operating volume to just 20% of what it could provide.

This was far less than what Europe comfortably needed to make it through winter. Thus, the European Union and other entities have been working on replacing the lost volume through other means. So while the pipeline shutdown is not ideal, it was predicted to happen at some point this winter.

Many are saying Russia is attempting to weaponize its gas supply to hurt the EU and other nations in an attempt to have Western countries drop or reduce sanctions against Russia.

At this time, there is no sign that either the EU or Russia will bend to the will of the other, and it is likely that we will continue to see elevated oil and gas prices in Europe. Thus, comes the opportunity for savvy investors.

I want to note that I am not condoning an attempt to profit from someone else's pain and suffering. I want to point out the high likelihood that natural gas prices will likely increase this winter as the EU finds ways to replace the gas they acquired through the Nord Stream 1 pipeline.

With that all said, let's look at a few of the options you have if you want to invest with the idea that gas prices will rise this winter. Continue reading "Natural Gas Opportunity For Savvy Investors" →

Now is the Time to Hedge Your Portfolio

Posted on by Matt Thalman

A few weeks ago, I asked if you believed the current rally was here to stay. At that time, the market had been rallying since the middle of June. Some market participants were calling the June low 'the bottom.'

Time will tell if June was the bottom, but based on what has happened over the last two weeks of August, I am betting that we have not yet seen the bottom.

Let's review quickly what just occurred. The Federal Reserve's President, Jerome Powell, told the country that there would be "some pain" in the coming months. Powell also said that the Fed would "keep at it until the job is done," referring to getting inflation under control.

Powell didn't detail how severe the pain would be or how businesses and households would feel it. Still, I think it is safe to say that Powell acknowledges we are likely heading towards a recession.

The market's reaction to Powell's comments sent the S&P 500 down 9.2% since the August 16 high of 4,327. The NASDAQ is down 11%, while the Dow Jones Industrial Average is off by 8.2% since August 16.

Not only is the NASDAQ down double digits, but the exchange-traded funds that track the major indexes, The SPDR S&P 500 ETF (SPY) and the Invesco NASDAQ QQQ ETF (QQQ), are both now trading below their 50-day averages. That is in addition to them already having given up their 200-day, 100-day, and 20-day moving averages.

Furthermore, economist after economists, jumped on the 'recession is imminent', bandwagon this past week. Most of these economists have even pointed out that the Federal Reserve has miscalculated the intense inflation we are experiencing.

They were referring to when the Fed told us back in the spring that the inflation we were experiencing at that time was "transitory." The Fed was wrong about that, and it is unlikely that the Fed members want to be wrong again by underestimating the persistence of current inflationary causes.

Due to their previous missteps, many believe the Fed will not take its foot off the gas quickly enough. This makes it unlikely the economy will experience a soft landing which we have been hearing about over the past few months.

And if you don't know the opposite of a 'soft landing' in economics, it's a recession. Continue reading "Now is the Time to Hedge Your Portfolio" →

New Leveraged Marijuana ETF

Posted on by Matt Thalman

Managers of the largest marijuana-focused Exchange Traded Fund now offer a 2X leveraged marijuana fund. Investors must ask themselves, “will this 2X leveraged fund give their portfolio what it needs right now to get back on track in 2022?”

The AdvisorShares MSOS 2X Daily ETF (MSOX) will offer investors a way to gain 200% exposure to the basket of marijuana stocks that the AdvisorShares management team deems viable investments.

The same company manages MSOX as the AdvisorShares Pure U.S. Cannabis ETF (MSOS). MSOS is the largest marijuana-focused fund by market capitalization at $631 million.

MSOS has overtaken the previous ETF to hold that title, the ETFMG Alternative Harvest ETF (MJ), which now has assets under management of just under $400 thousand.

With MSOS being as popular as it is, it makes sense for AdvisorShares to offer a 2X leveraged product. Especially with several states of local governments planning on voting on the legalization and decriminalization of marijuana use. If a few more states start allowing the use of marijuana, we may see the next big rally in the space. This would put MSOS and, of course, MSOX in an excellent position to capitalize on the move higher.

But making a profitable investment usually isn’t always relatively that easy. The MSOX or 2X ETF also deals with contango. The fund tells investors that MSOX should only be used for daily exposure, not a long-term holding.

Plus, little things like when a fund like this debuts is important. For example, the ETFMG 2X Daily Alternative Harvest ETF (MJXL) is essentially the same ETF as the new MSOX. They both offer investors 2X leverage on the marijuana industry.

However, MJXL debuted in July of 2021, and if you have followed the marijuana industry, you will know that industry has been down since around February 2021. The falling underlying assets or company stock prices and the daily contango effect have left MJXL with minimal assets under management. Currently, MJXL has just over $563 thousand in assets.

ETFMG also has the 2X inverted marijuana ETF, the ETFMG 2X Daily Inverse Alternative Harvest ETF (MJIN). This ETF allows investors to short the marijuana industry and get 2X the short exposure. Like MJXL, MJIN doesn’t have a lot of assets under management at just $9.95 million, but it is ten times more than MJXL currently has under control. Continue reading "New Leveraged Marijuana ETF" →

The Most Important Step When Saving for Retirement

Posted on by Matt Thalman

A recent survey from Vanguard showed the median account balance for Americans 65 and older was just $87,700. The median amount saved by Americans aged 55 to 64 was just $89,700. The average for both age groups was much higher at $256 thousand for 55 to 64-year-olds and $280 thousand for those 65 and older.

However, these numbers are very concerning, considering these individuals are either in retirement or near retirement age and don't have enough saved up to retire.

The reality is that while the amount of money those in their 50s, 60s, and older have saved for retirement is not likely enough to give them the retirement that many of us dream about, there is not much we can do to help them at this point.

Many of the greatest investors of our time have all used the power of compounding returns to grow their vast fortunes. Warren Buffet, one of the wealthiest individuals in the world, while an outstanding investor in his own right, acquired the vast majority of his wealth late in life because of the power of compounding returns, not extraordinary investment picks.

Unfortunately, those in their 50s or older just don't have as much time on their side as is required to realize the power of compounding investment returns.

While the younger generations have more time and opportunities to grow their investment wealth, the issue is that many young people don't understand the importance of investing when young. A recent report from Morning Consult showed that half of Americans aged 18 to 34 were not yet saving for retirement, and only 39% of those who were, started in their 20s.

We often hear the same old lines from those who now wish they had saved or even just started investing earlier in life. "I was never told/taught about investing." "No one explained why investing young was crucial to growing a large investment account." "I just didn't have enough money to save when I was young/younger." There are obviously more excuses, but in my experience, these are the top three.

If you are reading this article, you care about your investments. Therefore, you either had someone explain to you the importance of investing, or you taught yourself after realizing why investing was so important. Continue reading "The Most Important Step When Saving for Retirement" →

ETFs That Track Retail Investing Trends

Posted on by Matt Thalman

Over the past few years, retail investors have shown they have the power (money) to take stock prices to 'the moon' if they operate as a group.

Last year it was GameStop (GME) and AMC (AMC).

Just a few weeks ago, it was AMTD Digital Inc (HKD), which was IPO'd in July and has had a trading range of $13.52 per share up to $2,555.30 per share since the initial public offer. HKD is currently trading in the low $200 range.

But just because retail investors can do something, does that mean they should? Are the retail crowd good stock pickers? And should you follow their lead?

At this time, we don't know the answer to these questions. That is because we don't have enough data on whether or not retail investors operating as a whole are good stock pickers. They have only really been flexing their muscle for a little more than a year.

Plus, when they started with GME and AMC, we were still in a bull market. But now, we are in a bear market. So it would be unfair to say the retail investor's recent performance shows their lack of sophistication and that they don't belong picking stocks.

A few Exchange Traded Funds track what retail investors are talking about on social media or buying in their brokerage accounts, and as of late, retail investor stock picks are not outperforming the market.

The VanEck Social Sentiment ETF (BUZZ), which tracks the top 75 companies with the most popular sentiment online based on a proprietary AI model to select stocks, is down 32% year-to-date.

The SoFi Social 50 ETF (SFYF), which tracks the 50 most widely held stocks in self-directed brokerage accounts of Sofi Securities, is down 25.55% year-to-date.

And the FOMO ETF (FOMO), which invests in the areas of the market that are currently in favor with retail and individual investors or currently 'trending,' is down 17.94% year-to-date. Continue reading "ETFs That Track Retail Investing Trends" →