Most Popular
Author

blake

Browsing

Some may believe, as did the Biden administration, that employing the “R” word is premature. Investors should want a recession to be underway rather than beginning later. If we’re in a recession, there’s some good news for investors.

Stocks rebound faster than the economy

Yes, the stock market takes a dive during a recession. That’s always been the case throughout history in recessions. Without exception. However, it’s vital to note that stocks frequently recover faster than the economy itself.

For example, the worst recession in history may be considered to have begun in mid-1981 and continued through much of 1982. Back then, the Federal Reserve jacked interest rates up as fast as they could to combat rising prices. We’re seeing similar efforts today.

The S&P 500 began to recover months before the recession ended. The index was even higher before the recession had run its course than it was before the recession started.

Investors are forward-thinking. They have the ability to perceive signals of a firm’s performance improving in advance of these signs materializing in economic data. As a result, purchasing pressure that drives the stock market higher frequently precedes the end of a recession.

Historical post-recession performance

Following recessions, the stock market has historically done well. Investors have a lot to be pleased about, according to some research by Kristen McKenna, Managing Director of Darrow Wealth Management in Boston.

McKenna examined all of the U.S. recessions since 1953 through the current COVID-19 recession. During that time, the stock market provided positive gains in the six months after a recession ended approximately 82 percent of the time. The average return was 7%, but there was even better news.

The stock market has a positive return 91% of the time in the year following a recession, with an average return of 16%. The only time during which stocks didn’t produce good returns within a year after the end of a recession was in 2001, when the dot-com bubble burst.

According to McKenna, stocks generally performed worse during the year preceding a recession than they did during the recession itself. If we’re in a recession right now, this may bring at least some level of comfort to investors.

An investor’s best friend

Of course, the greatest investors look at things from a longer-term viewpoint rather than viewing only recessions and their immediate consequences. They consider downturns to be windows of opportunity.

Warren Buffett is an excellent example. “The Oracle of Omaha,” as he is known, wrote in 2008, “Bad news is a savvy investor’s best friend. It enables you to purchase a piece of America’s future at a bargain price.”

We’ll most likely learn whether the US is in a recession soon. Even if it is, there may still be a silver lining for investors. The sooner a recession begins, the faster it will end.

Author: Scott Dowdy

The stock market has been roiled by economic uncertainty over rapid Federal Reserve rate hikes, inflationary pressure, geopolitical conflict, and the persistence of COVID-19 in ways not seen since the Great Recession. Many investors might be unclear whether or how much any firm is worth investing in when times are tough.

Here are some of the reasons why Alphabet (GOOGL -1.25%) (GOOG -1.00%) is one of the finest stocks to invest in right now.

Alphabet’s business is resilient

Snap’s recent earnings report, which came after a terrible earnings result that demonstrated a steep decline in growth, was met with disappointment by investors, who blamed macroeconomic headwinds and Apple’s privacy policy changes for the company’s dismal performance. As a result of Snap’s comments, many internet advertising firms, including Google , fell as a consequence of concerns about slowing ad revenue and the impact of Apple’s ID changes.

While Google has a far more resilient corporate than Snapchat and many other social media firms, it is still vulnerable.

Advertising demand may shrink in an economic recession, but many companies have learned from prior recessions that cutting the ad budget off prematurely might be harmful in the long term. As a result, numerous businesses will continue to advertise, but they will concentrate on advertising that returns the highest ROI (Google’s Paid Search advertising segment), which is due to relatively few media techniques having as high an ROI.

For example, Google claims that its advertising generate an average of $2 in revenue for every $1 spent. Because of these profits, Search today produces 58% of Alphabet’s income.

Strong balance sheet and free cash flow

One of Alphabet’s most significant advantages is its greater financial flexibility during this recession than its rivals.

The Google parent company has $125 billion in cash and short-term assets on its second-quarter balance sheet. This cash is more than enough to cover $61.35 billion in outstanding obligations over the next year, as well as $14.73 billion in long-term debt, leaving plenty of money left over for it to invest substantially in its strategic goals.

Finally, in its most recent quarter, Alphabet produced free cash flow (FCF) of $27.91 billion, allowing the firm to continue investing in its operations. In an earnings call held in June 2022, Alphabet CEO Sundar Pichai stated that the company planned to invest money on long-term, high-value opportunities such as artificial intelligence (AI), search and cloud computing.

The longer a recession lasts, the more capital investment that businesses with strong balance sheets and good FCF can make in critical markets, out-investing competitors who are retrenching as a result of economic difficulties.

Is Alphabet a good buy?

Because Alphabet’s current price already accounts for the risk of continued economic downturn, its stock is currently valued at a premium. As a result, Google presently has a PEG ratio of 0.77, which is near to a historical low. Most investors believe that a PEG ratio of less than 1 indicates an undervalued company.

If you’re an investor seeking for a long-term investment that will survive and flourish in this tough economy, there are few options better than Alphabet.

Author: Steven Sinclaire

The stock market has been unusually volatile of late, with some firms seeing their share prices drop by 80% or more from previous highs. Some of the best-performing equities are attractively priced by the market and may rise significantly over the next several years.

Both Roku (ROKU) and Corsair Gaming (CRSR) are two stocks that appear to be ready to break out. Both businesses serve fast-growing sectors and provide long-term investors with a fantastic buying opportunity.

1. Roku

Despite a decade of expansion, the streaming industry continues to offer prospective stocks for long-term gain. According to data from Nielsen Holdings, streaming usage grew 21% year over year through May, yet it accounted for just one third of TV viewing time. That leaves a lot of potential for the market’s major companies.

Roku will benefit as more advertisers start to shift their expenditures from traditional TV to digital platforms. With about 61 million active accounts, Roku is the one of the most popular operating systems for smart TVs. Each individual user on Roku’s platform is able to be monetized in a variety of ways, including ad-supported content or through a subscription to a streaming service.

Roku’s revenue, which is primarily generated by advertising, has risen sixfold to $2.9 billion in the last five years. That is a tiny piece of the fast-growing $50 billion digital video advertising industry.

The stock is now down 81% from the highs reached last year. With active accounts and platform revenue continuing to rise year over year, it’s only a matter of time until the price soars.

2. Corsair Gaming

The worldwide number of individuals who play games on a computer is estimated at 1.7 billion people. That is up from 1.5 billion before the epidemic began. The number of gamers is also increasing the market potential for gaming peripherals like keyboards, where Corsair Gaming is one of the best brands. Last year, gaming peripherals accounted for a third of Corsair’s overall income.

Corsair’s PC hardware, which accounts for two-thirds of its income, is served by the same manufacturer as high-end components. Gamers regularly replace their computer components, such as new memory modules, to help keep them running smoothly. Some sources of computer parts and processors were disrupted last year due to shortages. Because of increasing GPU prices, many consumers were unable to purchase new PCs.

GPU prices, on the other hand, have already begun to drop. This should result in higher demand for Corsair products, which include power supplies and computer cases, which gamers purchase when building a new gaming PC.

Based on this year’s consensus analyst forecast, the stock has a market-average price to earnings ratio of 17. This value does not take into account Corsair’s projected higher growth rate over the next several years.

Author: Scott Dowdy

The amount of money that an individual’s Social Security cost-of-living increase (COLA) will be in 2023 is something that millions of Americans are eagerly anticipating. Even the most optimistic estimates for the size of the increase may not be high enough to compensate for seniors’ actual higher expenditures.

The fact that Social Security’s COLA calculations does not include the Medicare Part B premiums is one of the main reasons. And in 2022, the costs went up 14.5 percent. However, retirees may be relieved to hear that lower Medicare Part B premiums are on the way.

A biotech’s bad news is great news for Medicare Part B

You might be bewildered as to how Medicare Part B premiums could possibly go down. After all, prices have been increasing at a higher rate than they have in four decades. Everything you purchase these days is more pricey on average.

To answer that question, we must first comprehend why Medicare Part B premiums rose so dramatically in 2022. The Centers for Medicaid and Medicare Services (CMS) provided several explanations for the dramatic rise in April 2021. However, it was the CMS’s prediction of enormous bill increases linked to Biogen’s Alzheimer’s disease drug Aduhelm that generated the most buzz.

In June 2021, the FDA authorized Biogen to market Aduhelm. The drug’s starting price was set at $56,000 by the biotech firm. Alzheimer’s disease affects 6.5 million Americans aged 65 and older. The CMS  costs for Aduhelm would have been enormous.

Aduhelm, on the other hand, hit a roadblock. In April 2022, CMS announced that it would restrict coverage for the drug solely to Medicare patients enrolled in authorized clinical trials. Biogen quickly reduced its marketing efforts for Aduhelm, effectively relegating it to the garbage heap in the United States.

These developments lay the groundwork for a crucial HHS Secretary Xavier Becerra decision. In a press release, Becerra said that Medicare Part B premiums will be “adjusted downwards” because the prior projections of higher costs linked with Aduhelm are no longer accurate.

The big question

But don’t celebrate just yet. There’s still a major uncertainty: Will Medicare Part B premiums really be cheaper in 2023 than they are today, or will only the rate of cost increase be lower? We will not know the answer to this until later in the fall.

After the cost savings from not paying for Aduhelm were estimated, Creerra said he had intended to reduce Medicare Part B premiums sooner. CMS determined, however, that this wasn’t a practical option. Instead, in 2023, the price savings would be passed on to Medicare beneficiaries.

It’s quite possible that in 2023 the Medicare Part B premiums will be lower than what they are now. Perhaps, in the end, all other factors that are contributing to higher premiums will outweigh any Aduhelm-related savings.

Based on current trends, the Medicare Part B premium hike for 2023 is most likely to be modest. However, it will without a doubt be well under what it could have been had CMS opted to fully cover Aduhelm. That is still excellent news for retirees.

Author: Scott Dowdy

Gold’s price dropped below $1,700 an ounce on July 21, 2021, as a strong US dollar overwhelms the value of gold. Since then, gold has made up a little ground and is now down around 1% year to date – considerably better than the S&P 500, Dow Jones Industrial Average, Nasdaq Composite, and many other prominent equities.

Here are three different options for purchasing gold right now.

1. Top gold ETFs

Gold exchange-traded funds (ETFs) allow you to invest in gold without the trouble of storing real bullion. They also minimize the potential for theft or loss, since they are more liquid than physical bullion and can be sold quickly when investors want to cash out.

The iShares Gold Trust, which has net assets of $29.8 billion, and the SPDR Gold Shares ETF, with net assets of $61.34 billion, are two well-known gold ETFs. Both have similar expense ratios (0.25 percent for the iShares Gold Trust versus 0.4 percent for the SPDR fund). Both funds, however, operate in a similar way as they each maintain and insure actual gold in a trust. The iShares Gold Trust has 501.4 metric tons of gold or 16.120 million ounces on July 28, 2022, which is the most recent date for which data is available.

2. A basket of mining stocks

Gold miners like as Newmont Corporation (NEM -1.16%) and Barrick Gold are riskier ways to invest in gold. These companies account for over 35% of the VanEck exchange-traded fund, which has 54 holdings in total. The fund is one of the biggest gold ETFs on the market, with a market cap of about $10.93 billion. However, it is down 20% this year and almost 40% from its peak owing to the fact that gold mining stocks are very sensitive to rising gold prices.

Each miner is subject to its own set of risks, some of which may result in unfavorable outcomes. Last week, New Gold’s important mines were hit by bad weather, sending the stock plummeting over 30% in the early hours of trading on July 12. The good thing about the VanEck ETF is that it spreads that risk across several miners from different countries while providing services for just 0.51 percent.

3. A top miner with a high yield

Newmont has by far the greatest market capitalization of any U.S.-based gold mining company, with a valuation of around $36.1 billion.

Newmont has operations in Australia, North America, Africa, and South America. And that’s just for starters because it offers a portfolio incomparable in the business sector.

Newmont also pays a $0.55 quarterly dividend, for a yield of about 4.8%. Newmont’s role as a source of passive income helps to offset the cyclicality in the gold sector.

Newmont’s dividend is determined by the state of the market, which has fluctuated widely in recent years. However, despite gold’s modest returns over the previous five years, Newmont’s payout has continued to grow.

Author: Steven Sinclaire

Social Security is a life-changing financial security for most Americans, providing one of the greatest anticipated retirement incomes imaginable. Many Social Security beneficiaries, on the other hand, are misinformed, which can be harmful. Here are three typical blunders that individuals make when thinking about Social Security benefits and why it’s important to avoid them.

1. All seniors will receive the same benefit

Almost two in three working Americans (38%) think that everyone will get the same amount from Social Security during retirement. Instead, your benefit payment is calculated based on your yearly earnings and the taxes you paid throughout your working career in Social Security.

Recipients’ avg. monthly earnings over the decades are used to calculate the amount each individual will receive at the full retirement age (FRA). Social Security assumes that people who earned more money during their careers will require less assistance in retirement. The more money you earn, the smaller the percentage of your income Social Security replaces after you retire.

2. Even if you claim benefits early, they will increase when you reach full retirement age

You may begin receiving Social Security when you reach age 62, but you do not have to stop working. The SS full retirement age is determined by the year of your birth: 66 for individuals born in 1943 and later, gradually rising to 67 for those born in 1960 or later.

If you start collecting your Social Security benefit before your full retirement age, it will be reduced by nearly 30% per month permanently because the same total amount of benefit money that you are owed – based on the average life expectancy of 78.6 years – will be distributed over more checks and a longer amount of time. If you live longer than that, claiming benefits early will result in bigger checks for the rest of your life than if you waited till age 70.

3. Annual COLA is guaranteed

The annual cost-of-living adjustment, or COLA, adjusts Social Security payments to compensate for inflation by using a subset of the Consumer Price Index which is known as the CPI-W.

However, according to the SS Act, benefits will only rise if the third-quarter CPI-W is higher than that of the same quarter last year. In some years, there is no increase in benefits at all for inflation – but this is only because inflation itself hasn’t increased.

Author: Blake Ambrose

Don’t be fooled by DexCom’s (DXCM 1.39%) 38% decline this year: This company is brimming with opportunity, and it still has a lot of potential to be a fantastic long-term investment, especially as of this week. On Thursday, July 28, the medical device manufacturer will release second-quarter earnings after the market closes, and it’ll provide significant new data that will likely drive movement in its stock prices.

Investors will be particularly interested in the company’s moves into foreign countries, and key updates about how quickly they should anticipate its presence to grow will be provided. Consider another pair of reasons why it may be a smart idea to invest if you’re thinking about purchasing a few shares.

1. It’ll be reporting on its successes with its recent product launches

The main product of DexCom is its wearable continuous glucose monitoring (CGM) system, and the firm is always working to add more capabilities and release new devices to make life simpler for people with diabetes. Last quarter, the firm began selling a limited quantity of units of its new CGM, the G7, as well as the sale of its DexCom One system in Spain and the United Kingdom. The One product combines older G6 monitors with a modified software package to allow users to monitor and manage their blood sugar levels in real time.

Within the first 60 days of its entry into Latvia, Lithuania, Estonia, and Bulgaria, DexCom One has achieved more than 1% of the market in those nations. That’s especially remarkable when you consider that patients in those countries had to pay for their systems out of pocket. Furthermore, if the firm proves that it can replicate its success in new areas that it just launched in, it will be a very beneficial development for the stock.

In addition, if its G7 monitors are selling well within the months after it debuted in the United States, it will set the stage for a similar success in international markets down the road. If quarterly sales rise by more than 25% year over year, as they did in Q1 when the quarterly sales were $629 million, that is especially good.

2. As a result of its worldwide initiatives, the firm is experiencing significant development, and new efforts to increase even more are undoubtedly on the way.

The second reason to invest in DexCom this week is linked to the first. It’s getting a lot of global exposure thanks to its successful product and new launches. Its revenue from markets outside of the United States increased by 44% in its fiscal 2021, reaching $599 million. At the time, it only generated 24% of its overall revenue from foreign markets, but after Q1 of this year, those same markets accounted for 28% of its quarterly income.

In other words, its overall growth rate is less reliant on U.S. success, which is a good indicator because rivalry will be the fiercest there. And it’s quite probable that the firm will continue to capitalize on its early successes internationally, just as it has domestically.

If you buy shares of DexCom ahead of time, before it makes a formal announcement of another large sales increase, you’ll be sure to benefit from price appreciation in the aftermath as well as any reporting of excellent earnings.

Author: Steven Sinclaire

News agencies and the public become increasingly concerned whenever Joe Biden begins to speak about a possible recession. We can expect debates over whether the United States is, in fact, in a recession in the weeks ahead, but one thing is certain: we are on the verge of catastrophe.

Close attention is typically paid to the gross domestic product (GDP) as a major indicator to obtain an idea of the economy. When GDP decreases for two consecutive quarters, recessions are declared.

While a recession is influenced by a variety of variables, including unemployment, industrial production, retail sales, and income, many people are concerned that an extended downturn may be on the way because macroeconomic factors like inflation and supply chain problems aren’t healing as fast as predicted.

A recession has begun, according to some metrics, with GDP declining two quarters in a row to begin 2022. However, there is now a new asset class on the financial landscape, and it deserves consideration.

Cryptocurrencies have been around for the most part during a period when the United States had never really been that close to a long recession. The only time GDP dipped into recession territory since the Great Recession was in 2020 when the COVID-19 pandemic began and economies all over the world effectively came to a halt.

The cryptocurrency market, on the other hand, hasn’t had time to exhibit how it performs in a major recession. The first cryptocurrency was Bitcoin (BTC 4.86 percent), which was created in 2009. However, there have been several years of poor economic performance throughout the last 13 years that we can examine to get an idea about what crypto’s future may hold if a full-scale recession occurs.

In 2015, the economy went through one of the few downturns since 2009. GDP increased gradually at a slower rate every quarter after 2014, culminating in a 0.1% growth rate in the fourth quarter of 2015.

The S&P 500 also endured its first negative year since the Great Recession in 2015. In this period, the crypto asset class was savagely smashed. The overall market value of all cryptocurrencies fell by almost 70% from the start of 2014 to mid-2015, when it bottomed out.

In 2018, the economy experienced another period of uncertainty. The country’s GDP expanded at a slower rate each quarter in 2018 and eventually fell to a 1.3 percent growth rate. In 2018, the S&P 500 had its worst year since the Great Depression and lost 6% of its value.

Investors who have been in the game since 2018 are no doubt aware of the challenges that year has presented. Following an all-time high of around $750 billion, the cryptocurrency market cap plummeted and eventually fell to just over $107 billion, a drop of 88%. Bitcoin dropped from approximately $19,000 to roughly $3,000.

Author: Scott Dowdy

Most people are probably aware of how Social Security works, given that it’s a huge source of retirement income for many seniors. However, new research has shown that Americans are sorely in need of information on one crucial aspect of Social Security. And if you’re unaware of anything, you might wind up putting yourself through years of financial turmoil.

Get all the right information

There are several aspects that influence your Social Security payment in retirement. These are just a few of them:

  • Your pay history
  • How long you’ve been employed
  • The age at which you submit an application for benefits

Your Social Security payments are based on your earnings during your 35 best-paid years working. Then, after that, your filing age will dictate how much money you receive on a monthly basis.

You’ll receive your entire monthly pension if you wait until FRA to file. However, if you apply for benefits before FRA (you can join as early as age 62), you will lose part of your monthly payment for the rest of your life.

In fact, if you have an FRA of 67 but you decide to proceed with a Social Security application at age 62, you’ll lose 30% of your benefits. Once your work career ends and you no longer receive a salary, this might put you in financial difficulty.

According to that logic, you’d think American citizens would have a decent concept of what their FRA is. However, according to a recent poll by the Nationwide Retirement Institute, only 13% of US adults are aware of their correct FRA. This is a significant issue because you can’t make an educated decision about when to enroll for benefits if you don’t know your correct FRA.

What is your anticipated full retirement age?

Your birthday determines when you qualify for FRA benefits. However, the system is not global.

When you claim Social Security before FRA, your monthly payment will be lower for the rest of your life. Delaying benefits beyond FRA, on the other hand, will result in a bigger monthly payment through retirement.

Of course, you can’t wait indefinitely in exchange for a bigger benefit. When you reach age 70, your benefit will not be enhanced any longer. However, if you don’t have a lot of retirement savings to fall back on, it may make sense to file for Social Security at FRA or later.

Author: Steven Sinclaire

It’s difficult to put aside money for retirement, especially when it’s tight. With a recession possibly on the way, saving for the future is that much more difficult.

However, economic downturns may be one of the finest opportunities to invest. The prices of stocks are significantly lower today, allowing your money to go further than it would during a market boom. If you can manage it, continuing to invest now will pay off handsomely in the long run.

There’s also a straightforward technique to increase your savings by hundreds of thousands of dollars with little effort: earning employer-matching 401(k) contributions.

Double your savings without lifting a finger

If your employer offers matching contributions through your 401(k) plan, you should take advantage of them. This is essentially free money that can quickly double your savings.

This benefit isn’t available in all plans, but if it is, your employer will match your 401(k) contributions up to a certain percentage of your income. While it may not appear to be much today, the employer match can add up significantly over time.

The typical weekly earnings in the United States as of 2021 will be around $1,000, or roughly $52,000 per year. The average 401(k) match is 3.5% of pay. In this example, that works out to $1,820 in matching contributions each year.

Another $1,820 per year may not appear to be much of a difference. But let’s assume your investments yield an average return of 8% per year, which is just slightly below the historical average. After 30 years, that $1,820 per year would grow to almost $207,000.

Keep in mind that this is only considering your employer’s match. Your total savings, when you include your own 401(k) contributions, would be at least twice as much.

How to earn even more

Although a retirement fund worth hundreds of thousands of dollars puts you in a strong financial position, it is conceivable to make even more money. You may enhance your contributions or give your money more time to mature to maximize your investments.

If you’re able to save more each month, that money will go a long way over time. However, this isn’t always feasible, depending on your financial situation. In such situations, you can simply keep your funds invested for longer.

Assume you’re putting aside a total of $3,640 each year, or $1,820 in your own contributions plus the full employer match. With an 8% average yearly return, you’d have roughly $412,000 after 30 years.

However, suppose you kept investing for a further five years. Given that everything else stays the same, you’ll have a total of roughly $627,000. You’d have more than $942,000 after 40 years.

Your employer match is also adjusted to reflect your rising income. As you progress in your profession and receive higher salaries, the amount of money you get from your employer match will increase as well.

Saving for retirement is one of the wisest financial decisions you can make, and now is an excellent time to put money into your nest egg. You may significantly increase the amount of money you save if you use every possible avenue to receive employer matching contributions.

Author: Scott Dowdy

Ad Blocker Detected!

Advertisements fund this website. Please disable your adblocking software or whitelist our website.
Thank You!