More and more Americans are investing into cryptocurrencies. Should retirees follow?
Cryptocurrency has become a booming investment over the previous year as more people start dabbling in this sector. The reality is there is a lot of money to be had in cryptos. But there is also risk involved — usually more so than with stocks. And that leads to the question — should retirees invest in crypto? Or are they better off being safer with their funds?
Limiting Your Risk
As a good rule, retirees are usually advised to be more conservative in their portfolios than people who are still many years away from retirement. The reason for this? Retirees usually cash out their investments and use this money to pay for their living costs. Many seniors cannot live on Social Security alone, so they invest their savings into bonds and stocks and take withdrawals as required.
Taking these withdrawals can sometimes mean cashing out their investments when those investments are down. And since stock values usually fluctuate more so than bonds, seniors are usually advised to get away from stocks and buy up more on bonds because they are a more dependable investment.
Since crypto is more volatile than even stocks, at first glance, it might not seem like a good investment for any retiree. But that does not mean retirees, must stay away entirely.
Some retirees have access to many sources of income. For example, someone could have the money coming from their pension, Social Security, an investment property, a retirement plan, and a separate broker account. So it would not be a bad idea for a financially-healthy senior to put a small amount of money into crypto.
Those who are more cash stripped, however, might want to steer clear of crypto. Because cryptocurrency is somewhat new, it is hard to know whether it will be a solid long-term investment. Much of it will depend on whether it turns into a widely accepted payment form and if demand stays good. So retirees who do not have a lot of financial breathing room might be better off playing it safer and not going into digital coins.
Author: Steven Sinclaire
Tech stocks have taken somewhat of a beating recently as the Nasdaq has gone down faster than the overall market. This tech-filled index is only down just single digits from its high, but it might go lower. Savvy investors often use a “ready-to-buy” list if the market crashes. We asked two contributors which stock they would buy during any market pull back in October. They said The Trade Desk and StoneCo.
The Trade Desk
Advertising is in the middle of a once-in-a-generation change. Viewers no longer use schedules for viewing. The one-size-fits-all advertising strategy is going away. Target markets are now scattered as they are hard to reach. That is where The Trade Desk comes in.
The company’s tech platform is not bound by traditional constraints and can assess 12 million ad impressions every second. This not only gives marketers more for their money but also helps them better target a fragmented market.
Rather than competing against the world’s largest ad agencies, it partners with them to use data it gathers to boost its algorithms. The company uses very advanced technology to make very fast decisions with great precision.
Also, The Trade Desk is not concerned about the death of cookies (announced recently by Google) for several reasons. First, the company has created its Unified ID 2.0, the best accepted alternative to cookies in the industry. The platform has been used by a growing list of top tier names in the world of advertising, giving The Trade Desk a big edge.
The company’s recent results paint a great picture. Revenue in Q2 grew 101% y/y/, though that was partially because of easy comps. At the same time, EPS also doubled, and customer retention stayed higher 95%, which it has done each quarter going back seven years.
Finally, when looking for a stock to purchase during a crash, historical perspectives matter. In Feb. of 2020 — as panic about ad spending set in — The Trade Desk stock was among the ones hardest hit, falling around 54%. However, after hitting the bottom in March, The Trade Desk then went much higher, climbing over sixfold from its lows and over triple its past all-time high, which it hit just before the start of the covid pandemic.
StoneCo
This Brazilian fintech stock is a company Warren Buffett’s team bought before its 2018 IPO.
StoneCo has earned business by getting rid of the “bureaucracy.” It goes to the client, finding places of demand, and then quickly opens offices close to its customers. This personal touch has led to its fast stock and revenue growth in previous years.
But covid hit Brazil especially hard, dramatically slowing the firm’s growth. Also, challenges with a new credit registry system forced StoneCo to freeze new loans temporarily, and CEO Thiago Piau said “was a negative influence” on reported revenues.
Consequently, in the first part of 2021, revenue of less than 1.5 billion Brazilian reais ($270 million) increased only 7% compared with the first part of 2020. This is a big decline from the 63% revenue growth seen for the 12-month period in 2019 right before the covid pandemic started. Also, the firm would have had a loss in the first two quarters of this year if not for an R$841 million ($153 million) unrealized gain on their investment in Banco Inter.
Also, the company continues to reveal signs of good expansion. In the first part of 2021, the overall payment volume (TPV) of R$111 billion ($20 billion) went up by 47% compared the first six months of 2020. Furthermore, active clients of almost 767,000 went up by 45% over this same period. Such numbers show that once StoneCo can get beyond the pandemic and the credit system problems, massive growth in the stock and the company should resume.
Author: Blake Ambrose
The Senior Citizens League (TSCL) is one of the largest nonpartisan senior citizens support groups, and the group currently has more than a million signatures for their petition to get support and focus for an emergency $1,400 check to deal with unprecedented inflation.
The petition says: “I (and my spouse) want Social Security receivers to get a $1,400.00 emergency check to deal with these unprecedented inflationary times.” Social Security benefits are among the few types of retirement income being adjusted for inflation.
Among the arguments being made by the petition is that the COLA boosts are not enough for seniors who are living on a fixed income along with 5% inflation being experienced over the previous 13 months. The petition says, “In 2021 Social Security benefits went up by only 1.3% increasing the average benefit by just around $20 per month. But around 86% of Social Security recipients polled say their expenses went up by a lot more than this amount.”
One of the areas that has had the greatest rise in prices is the meat sector. Although total inflation has come in about 5%, prices for chicken have gone up by 7.2%, pork prices are up around 9% and prices for ground beef are almost up a large 13% from just this last year.
A $1,400 check might help seniors to afford groceries easier give they are on a tight income. Around 25% of low-income seniors admitted to food insecurity, according to SNAP research.
Social Security recipients are expected to get a 6% COLA increase in 2022 — one of the largest on record — but rising Medicare costs and inflation are eating away at most of this. A fourth stimulus check can help seniors who are struggling to recover from a year of exploding prices and supply chain problems that are still hurting the possibility of recovery for simple grocery items.
Joe Biden has been silent about any such stimulus payment, choosing instead to give American tax payer money to illegals flooding into America, including most recently thousands of Haitian refugees whom his White House has allowed into the country.
Author: Blake Ambrose
Robert Kiyosaki, the famed investor and author of the popular “Rich Dad” personal finance books, is another finance expert now speaking out in support of cryptocurrency, along with silver and gold.
In several tweets over the previous few weeks, Kiyosaki promoted his preference for these three investments, even saying to his fans to, “Get silver, gold Bitcoin, and ethereum before the biggest crash in world history.”
US Gov out of money. Shutdown looming. Dems blame Republicans for the problem. Evergrande Chinas biggest property developer with 800 projects in 200 cities out of money. Get the message? Get gold, silver, Bitcoin, ethereum before the biggest crash in history. Take care.
— therealkiyosaki (@theRealKiyosaki) September 23, 2021
He later said via Twitter that he did not plan to sell his bitcoin, silver, or gold investments, as he has “lots of cash.” However, he even revealed an exact date for this prediction, making timing important.
Giant stock market crash coming October. Why? Treasury and Fed short of T-bills. Gold,silver, Bitcoin may crash too. Cash best for picking up bargains after crash. Not selling gold silver Bitcoin, yet have lots of cash for life after stock market crash. Stocks dangerous. Careful
— therealkiyosaki (@theRealKiyosaki) September 26, 2021
While his views might seem fringe — or even somewhat alarmist — his thoughts about crypto might be worth considering. In spite of 32 hacks this year so far, leading to investors losing $2.99 billion, and two of the largest hacks in cryptocurrency history happening within the previous three months, coins like Bitcoin and Ethereum have gone up steadily in value. Bitcoin hit $50,000 USD just today.
Likewise, some well-known investors are diversifying their portfolios using gold. Palantir Technologies, led by Peter Thiel, recently bought $50 million in gold as a hedge against inflation. Yahoo Finance stressed that in the first part of 2020, with uncertainty on Wall Street because of the Covid pandemic, gold went up in value from $1,509 to $1,772 per ounce. Likewise, the value of silver has gone up 30% in the previous two years.
If investing in crypto, silver, or gold bullion seems too risky or hard, experts say investing in stocks connected to these assets might be a good idea. For instance, Tesla’s Bitcoin investment has the EV maker’s stock connected to crypto’s value. PayPal has a feature that its users can use to buy, sell and keep crypto on its platform. And GPU manufacturer Nvidia’s products are being used in the world of crypto.
Also there are ETFs and investments into gold mining companies that will allow you to take good advantage of increasing gold prices without the inconvenience of storing the yellow metal itself.
Author: Scott Dowdy
Nio shares have gone down since July, but Goldman analysts think the worst times are now behind the Chinese electric car manufacturer that wants to challenge Tesla in the upcoming years.
Nio shares traded much higher on Thursday after the Chinese Tesla competitor was upgraded to a ‘buy’ at the financial giant Goldman Sachs.
Goldman Sachs analyst Fei Fang increased his rating on the carmaker to from a ‘neutral’ to a ‘buy’ while leaving his target for the company unchanged at $56, stressing that the China group had shed $28 billion from their market cap since hitting a peak in July.
“We think Nio’s promotion of the ET7 is strategic. The design, like the wheelbase, is in line with other full-size premium sedan vehicles including the BMW 7 series and the Mercedes S-class,” Fang said.
Nio’s United States listed shares were measured 7% higher in morning trading to exchange hands at $36.02 each.
Although a much-smaller competitor to Tesla, Nio is growing its sales at a quicker rate: its Sept. quarter number of 24,439 cars delivered was dwarfed by Tesla’s number of 241,300, but its growth of 100.2% was 30 percentage points beyond Tesla’s.
Goldman’s review shows that electric vehicle penetration is going forward, market shares are consolidating towards the largest manufacturers and the anticipated demand could be catalyzed by new models.
Nio introduced their ET7 as its fourth passenger-focused model and sedan back in January. And now Goldman thinks the price point, which is in line with the BMW 5 series and Mercedes E-class, as being a good selling point for the Chinese company.
Nio is also moving globally, by announcing its “Norway Strategy” back in May. The company recently started Nio House in Oslo and debuted its ES8 car in that nation. The company wants to launch the ET7 in the country next year.
The company also plans to add 120 Nio Space and 20 Nio House retail establishments this year, bringing its overall store count to 366 by December.
While the EV sector is growing, it is still a volatile one with stiff competition.
Author: Steven Sinclaire
The bullish movement in bitcoin has taken the crypto to $55,000. The positive bullishness around bitcoin was increased by the news that the investment firm created by billionaire George Soros owns bitcoin.
The fund owns “some coins…but not a bunch,” Dawn Fitzpatrick, CEO of Soros Fund Management, said to Bloomberg.
“Bitcoin is no longer an alternative investment,” Fitzpatrick said. “I am not sure bitcoin is seen only as an inflation hedge. It has crossed the chasm to go mainstream,” he said.
Earlier, the firm also reported it liquidated a $5 billion 2020 investment to use the money in cryptocurrency, with a special interest in the DeFi sector.
This Thursday, bitcoin reach a high of $55,735.52. At the time of this writing, it was selling for almost $54,000. Ytd, bitcoin is higher by over 85%.
The latest price increase has moved bitcoin’s cap to $1 trillion, which is over the total value of Facebook.
Institutional involvement into bitcoin was also one of the main drivers that led to bitcoin’s move to all-time highs of almost $65,000 this spring.
U.S. Bancorp also announced this week that it was giving new cryptocurrency services for large institutional investors.
“Investor interest in crypto and demand from our clients have gone up strongly over the past few years,” said Gunjan Kedia, vice-chair of United States Bank Wealth Management and Investment Services, in a news release. “Our institutional and fund custody clients have hastened their plans to give cryptocurrency.”
On top of this, comments from Fed Chair Jerome Powell and United States SEC Commission Chair Gary Gensler that there were no plans to restrict or block bitcoin trading is also helping sentiments.
Powell said to the House Financial Services Committee last week that the Fed had “no intention to ban” cryptos.
Meanwhile, Gensler told the same committee this week that the SEC is not planning to ban crypto either.
Any bans “would be up to Congress,” he stated. “Our approach is quite different. It is a matter of how do we get this field inside the investor consumer protection that we have and work with regulators to guarantee that the Treasury dept. can deal with money-laundering and tax compliance? And then the financial stability problems that stable coins might cause as well,” Gensler said.
In a report published this week, Bank of America, a top bank in the United States said that bitcoin and the crypto has “become too large to ignore.”
Author: Blake Ambrose
The Chairman of the Federal Reserve, Jerome Powell, has confirmed this week during a hearing with the House Financial Services Committee that he did not have any intention to block or restrict the use of cryptos. He also spoke about the regulation of stablecoins.
Powell Says He Has Not Plans To Block Crypto
The chairman of the Board of Governors of the Fed System, Jerome Powell, spoke about cryptos, stablecoins, and central bank digital currencies (also called CBDCs) during a hearing under the House Financial Services Committee this week. The central focus for the meeting, however, was the Fed’s and the Treasury’s responses to the coronavirus pandemic. Treasury Sec. Janet Yellen talked for the Treasury Dept..
U.S. Congress-member Ted Budd from North Carolina stated: “In a July hearing among this committee, you were asked about CBDCs and their impact on stablecoins and other cryptos, and you said, ‘You would not need stablecoins, you would not need cryptocurrencies if you had a digital United States currency.’”
Congressman Budd continued:
“So Chairman, in terms policy, is it your plan to ban or limit cryptocurrencies as we are witnessing in China.”
Powell promptly responded with: “No.”
The Fed chairman then followed his answer up with an admission that he “misspoke” before when he said, “you would not need cryptos.” Powell said, “Take the word crypto out of the sentence.”
Congressman Budd felt that his answer about the banning of cryptocurrencies was not completely clear so he asked again. “But, there is no intention to ban?” Powell then confirmed there was no intention to ban cryptocurrency.
The Fed chair proceeded to discuss about stablecoins, saying that:
“Stablecoins are akin to money market funds. They are like bank deposits but they are also to some extent outside regulation and it is appropriate that they get regulated, with the same activity and the same regulation.”
On Friday, the Wall Street Journal said that the Biden White House is trying to regulate stablecoin issuers like banks.
This comes at a time when Americans are more and more using cryptocurrencies as a way to escape inflation.
Author: Blake Ambrose
Bitcoin boosted to about $50,000 as Bank of America analysts threw their support behind cryptocurrency as a new class of asset.
The gain pushes prices to the highest since early Sept., when El Salvador launched the cryptocurrency as its legal tender. Bitcoin increased by as much as 2.8% in NY to get to $50,369.
The universe of digital assets is “too big to ignore,” said the strategists including Andrew Moss and Alkesh Shah. “Our view is there is more opportunity than skeptics believe they will see.”
The BoA report reveals that enthusiasm for cryptocurrency is getting traction among investors despite its controversies. And just last month, China gave a total ban on transactions and United States financial watchdogs are looking into some of the largest crypto exchanges.
In the opinion of BoA, more regulation might be a positive thing for cryptocurrency in the long run. Once rules are created, the uncertainty could be lifted, the strategists said.
Bitcoin has been slowly going back to its past highs after a slowdown back in May that was caused by China’s crackdown on crypto mining. Prices are higher than 60% since the July low.
With its recent rally, Bitcoin has broken through two crucial resistance levels and the crypto is now selling at the top end of its two month range, as reported by Arcane Research. The digital coin was around $45,000 for some time before finally breaking through. This means the $46,000-$48,000 area is a good support level and the coin might trade in this area for some time, Arcane said.
Katie Stockton, the founder of FairLead Strategies, said that the crypto might soon be testing its April all-time high close to $65,000.
“We believe short-term conditions will be seen long enough for a test of minor resistance close to $52.9K, a breakout higher would be for the all-time record high,” she said.
“The Bitcoin price has moved a lot recently and so when we witness dips, we usually see this as an opportunity to buy the dips,” Grayscale CEO Michael Sonnenshein stated during his recent interview.
Author: Steven Sinclaire
Affirm Holdings which uses a very old concept — buy now, pay later — recently had a presentation where it announced products that will expand its market in the consumer sector. The bigger message, though, is that Affirm might have the ambition and possibility to become more than just a buy now pay later giant.
With their technology, they may remind investors of a much larger and more established fintech company, PayPal. Here are two reasons why Affirm might eventually grow to be a giant PayPal-like stock.
1. It’s quickly building its network
Affirm’s growth depends on how it can increase the network of merchants and the amount of consumers who use its platform. In other words, they have to deeply penetrate the landscape.
Normal credit card companies have long kept a grip on short-term borrowing, but buy now pay later has become a popular alternative. Affirm allows consumers to make purchases with a set number of installments without fees, charges or interest rates. Merchants join with Affirm, where consumers usually buy more often and spend more for every order. Shoppers average a 85% higher order value, and a 20% repeat purchase rate when compared to other retailers.
Affirm’s value as a tool has caused major merchants to signon as partners, including Amazon, Walmart and Shopify. These are all relatively new partnerships; Amazon is testing, Shopify opened its installment program (Shop Pay) recently, and Walmart said it was replacing its layaway program with Affirm’s services.
2. New products beyond buy now pay later
Affirm management recently led an investor forum, revealing several new services and products that give a look at its long-term road map. The top one was Affirm Card, which connects to a consumer’s existing checking account. Users can then pay for things using the Affirm Card just as they would with a debit card but will have more options, like the ability to break certain transactions into buy now pay later installments.
Affirm also announced its SuperApp, which could work as an “all-in-one” smartphone app where customers can use different financial services. It also announced plans to have cryptocurrency investing. CEO Max Levchin did not give many details during his presentation. Still, it seems as if the company wants to expand well beyond buy now pay later lending, and further into the broader ecosystem of consumer finance. Exactly like PayPal did early on.
Author: Scott Dowdy
On the heels of China’s Evergrande’s debt problem, there are now increasing signs of problems in China’s real estate market after one developer has failed to pay their bond payment this Tuesday.
Ratings agencies have downgraded the Chinese developers Sinic Holdings and Fantasia Holdings over risks from their stressed cash flows.
Fantasia did not repay the principal on $206 million for a bond that matured this week, it said inside a filing to the Hong Kong exchange.
The firm has ceased trading of its company shares after September 9. Those shares have gone down by almost 60% ytd.
Evergrande Fears
The damage from Fantasia, however, would be smaller when compared to Evergrande.
Evergrande is the world’s top indebted real estate developer with debt of up to $300 billion, while Fantasia has overall debt of 82.9 billion yuan (which is $12.8 billion), according to its financial documents.
In a report put out before the company’s filing this past Monday night, Fitch Ratings stressed the existence of a private bond not revealed inside the company’s financial documents, and said Fantasia had made a late payment on the $100 million due for this particular bond.
“We believe the these bonds mean the company’s liquidity circumstance might be tighter than we previously thought. The late payment also increased doubts about the firm’s ability to repay its maturities in a timely manner,” Fitch said.
“Furthermore, this event casts doubts about the transparency of their financial disclosures,” it said.
Fitch Ratings this Monday said it downgraded Fantasia from “B” to “CCC-,” saying the firm’s cash flow “could be more restricted than expected.” According to its webpage, “CCC” is “substantial risk,” with a “true possibility” of default. “B” rating means material risk is seen, but a some safety remains.
China’s property sector has been under the spotlight after the debt issues of Evergrande came to light.
Evergrande — the second developer in China by volume of sales — has warned two times it might default, creating investor worries. It did not make interest payments on two United States dollar offshore bonds, and has been working to raise cash to pay investors and suppliers.
Author: Scott Dowdy