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Warren Buffett’s Berkshire Hathaway (NYSE:BRK-A)(NYSE:BRK-B) did not do well in 2020. When a stock hands over a gain of a measly 2% while the S&P 500 index gives 16%, it was a terrible year for that investment.

But this year could be different for Berkshire’s holdings. In fact, here are a few Buffet stocks that could make the legendary investor smile this year.

1. Apple

Apple (NASDAQ:AAPL) is possibly Buffett’s favorite stock, behind only Berkshire itself. But unlike Berkshire, this technology goliath was red hot in 2020 with its shares increasing by nearly 81%. And don’t think that Apple’s growth will vanish this year.

Wedbush analyst Daniel Ives believes Apple could skyrocket up to a $200 per share value. That’s an increase of more than 50%. I’m not sure if the stock will keep that jaw-dropping level in 2021, but there are many reasons to be bullish about Apple.

Maybe the most important reason to be hopeful is Apple’s iPhone sales. Newsmagazine said in December that Apple wants to increase its iPhone production by around 30% in the first part of 2021. This could lead to Apple’s quarterly sales in the second part of 2021 being very strong.

Also, Apple’s other products and services continue to have solid momentum. The company released high-end AirPods Max headphones that look to be destined to become another huge success.

Apple’s value might seem steep at more than 30 times expected earnings. But don’t think that will stop the tech giant’s prospects in 2021.

2. Mastercard

Mastercard (NYSE:MA) did better than the major market indexes in 2020 with an increase of almost 20%. I expect this year to be another market-beating year for the payment giant.

The pandemic hit many industries hard, with the travel industry especially hit hard. That was not good news for Mastercard. And the company’s Q3 results showed it, with both earnings and revenue missing analysts’ estimates. 

I see Mastercard as a great pandemic rebound play. As vaccines become more widely available, the world could finally get a leg up on the pandemic. That should kickstart an economic recovery and give a big boost to Mastercard’s business.

One other reason why I’m hopeful about Mastercard. The company’s leaders approved a $6 billion buyback program this past December. So Mastercard will be fighting to repurchase its own shares in 2021, which should increase its stock price. Warren Buffett has been a fan of Mastercard for a while. But he might adore it in 2021.

3. Bristol Myers Squibb

Buffett bought a lot of pharma stocks in the third quarter of 2020. Several of them could do very well this year. I’m especially hopeful of Bristol Myers Squibb (NYSE:BMY).

BMS is very cheap right now. Its shares are trading at a very low eight times expected earnings. But don’t let that cheap valuation scare you. It does not reflect on the company’s growth prospects at all.

BMS could soon win approvals for its new blockbuster cancer immunotherapy Opdivo. Meanwhile, Zeposia, its treatment for multiple sclerosis has already won regulatory approval and has a great shot at winning more approvals for treatment of ulcerative colitis. Also there is Inrebic, which seems to be inches away from securing European approval for treating myelofibrosis. The company’s cancer cell therapies ide-cel and liso-cel could also win approval in the U.S. this year. 

While BMS awaits these huge events, its current lineup continues to impress with healthy sales for blood cancer drugs Pomalyst and Revlimid, cancer immunotherapy Yervoy and blood thinner Eliquis. For all these reasons, I think BMS could be a big winner in 2021.

Alibaba has been slammed over the past couple of two months. And now we can expect bulls to start sweeping in and start buying the e-commerce giant.

Alibaba  (BABA) stock has been hit hard recently. Shares of the Chinese e-commerce giant are higher by 1% on Monday, but that is after their painful end to last week.

In the short trading week (due to the holidays), Alibaba did not give investors holiday cheer. Instead, it gave them lumps of coal by losing 13% of its price on Friday, ending with a total loss of 15% for the whole week.

At the lowest point on Friday, its shares were 18% lower as investors sold their shares one after another.

At the low of $211, its stock had lost 34% from its highs on Oct. 27. What happened in these two months?

Well, first the Ant IPO was pulled days before its public debut. And since Alibaba holds one-third ownership in the company, this was a huge negative and the data clearly shows it.

While the IPO was delayed because of regulatory problems, new regulatory issues being aimed at Alibaba are the latest triggers for a deeper selloff.

As we get to 2021, this looks like a purchase opportunity rather than a selling moment. Management agrees, as they are now increasing the company’s share repurchase plans.

Alibaba Stock Trading

Monthly chart of Alibaba stock.
Chart courtesy of TrendSpider.com

Because of the triggers mentioned above, look at what has happened to Alibaba stock over the past couple of months. After increasing for almost half a year, investors took a sharp gut punch.

But hope is not lost.

The stock is getting support at its 21-month average. It’s getting support at $211.70, which is the 2018 high. Further, the shares bottomed near this number on Friday, low-ticking at the number $211.23.

The 2018 high may seem irrelevant, but look at how obvious this range was in late 2019 and the first part of 2020. This range was risky, highlighted by the wicks, but there were no complete closes above $211.70.

This continued for six months — until this past year.

A top company being lower by 30% from highs looks like a safe investment. Conservative traders can calculate their risk against recent lows and look for a rebound.

With a daily close under $211, it could place the monthly volume weighted average price measure close to $197. It could also cause the 200-week moving average, which is currently near $187, to come into the play.

Those would be negatives to watch.

But on the positive, look for a return back to the stock’s 50-week moving average close to $240, followed by the 10-month moving average, which is currently around $246. When and if we reach the latter, the 200-day moving average becomes important.

Although it could take time for the stock to fully recover, it seems like a good dip to buy for hungry bulls.

Dow futures rose slightly Monday morning, right beside Nasdaq futures and S&P futures, with new tariffs counter-balancing positive Chinese data. Apple (AAPL) is consolidating at a profitable zone. But Amazon, Shopify, Microsoft (MSFT) and Zscaler (ZS) are revealing a sell rule that is always important to follow.

Large institutions will often buy top stocks at 10-week moving averages. But when a stock plummets under this important level in heavy trading, it shows the end of the run.

Meanwhile, Apple’s AirPods were big sellers over the holiday. And overall online sales continue to skyrocket, which is great news for Amazon.com (AMZN) and e-commerce tech company Shopify (SHOP). Mall visitors dropped on Black Friday, but increasing buy-online-get-offline orders show that traditional outlets like Target (TGT) are coping well with lockdowns.

Dow Jones Gives Big Signs

Dow Jones futures increased 0.2% vs. fair value, after going as high as 0.5%. S&P 500 futures went to 0.2%. While Nasdaq futures hit 0.2%. Note: Premarket moves in Dow futures doesn’t always lead to real world trading in the next session.

These futures rose on optimistic Chinese factory data, combining gains on new Trump tariffs vs. Argentina and Brazil.

Chinese activity increased for the first time in half a year. Going up 0.9 point to 50.2, above the break-even level of 50 and defeating forecasts. The non-manufacturing index also jumped from 1.6 points to 54.4. Also, the Caixin survey had Chinese manufacturing increasing at a faster pace, ticking up 0.1 point to 51.8.

The ISM manufacturing index will be out on Monday at 10 a.m. ET and the services gauge out Wednesday and Friday we have the November jobs report.

Meanwhile, in the AM on Monday President Trump tweeted he was reinstating aluminum and steel tariffs vs. Argentina and Brazil, saying they were guilty of “massive” currency depreciation, hurting American farmers.

Stocks Rally

The market rally is looking great. Even after Friday’s small pullback, the Dow rose 0.6%. The S&P 500 went up 1% and the Nasdaq increased 1.7%.

Growth stocks also had a great 7 days. With the best ETFs such as the iShares Expanded Tech-Software Sector ETF (IGV) gaining 1.9% and the Innovator IBD 50 ETF (FFTY) going up 2.3%. While the VanEck Vectors Semiconductor ETF (SMH) increased 1.5%.

Should You Hold Or Sell Apple?

Apple has gained 21% from its flat-base buy point of 221.47. It has now moved into the profit area of 20%-25%. Which is seen on the Marketsmith charts as the lime green area.

With these numbers, most stocks will consolidate or pullback greatly. You may watch a stock go sideways. Or you might see some or all of your gains evaporate. So it’s a great idea to withdraw some profits from stocks after a 20%-25% gain. (If a stock rockets 20% in the first two weeks after a surge, try to hold it for eight more weeks.)

But on the other hand, some stocks will keep going for long runs. So how should you handle this?

It’s all based upon your confidence in the company and stock. If you believe Apple will be a big winner yet again, you might keep most of your holdings.

The Sell Signal To Watch: The 10-Week Line

Now of course, the market doesn’t care about your emotions or hopes. When a company goes past the 10-week line in large weekly volume, it’s an obvious sign that big funds are selling. Chances are great that the stock will keep falling. Also take into account the relative strength line, which follows a stock’s performance versus the S&P. 

Let’s Discuss Amazon

In 2018, Amazon was winning in a multiple year run. With its huge role in cloud computing and of course e-commerce, Amazon seemed unstoppable.

But the stock went down in the week of Oct. 5. Ending just below its 10-week as the market correction started. The next week, Amazon dropped again in the biggest volume in three months, well under its 10-week. That showed a clear sell signal.

Two weeks after, Amazon went below its 40-week line, which then became another resistance area. Amazon has not yet returned to old highs. 

One of the challenges retirees face today is low interest rates. To help manage, try these three plans.

Years ago, retirees could live off the interest from bonds and CDs. But a lot has changed. Now interest rates are at record lows, and retirees are not getting the income they need.

But don’t fear. Retirement is not out of reach. You just need to plan smarter. And here are three examples of just how to do that. With the end result being to boost your retirement income.

1. Begin by lowering your expenses.

My clients write down all their expenses. Each item is then thought about. I ask them, can we reduce this expense in anyway? Can you go without it or live with it on a smaller level? Cellphone bills, cable bills, subscriptions, these all add up fast.

Other expenses are harder to find. Cash gifts to adult children are very common. Retirees need to have a discussion with their adult children on how that money could harm Mom and Dad’s ability to retire safely.

In addition to this, go over your insurance and request proposals for home, health and auto. I can normally find better deals for my clients. Or, another idea that sometimes works, try increasing your deductible. Doing this will save you cash on premiums. This assumes of course that can meet the higher deductible when you file a claim.

For life insurance, does it still make sense? If your mortgage is paid and your kids out of college, maybe redirecting your dollars to long-term care insurance could be better.

2. Reduce your taxes smartly

Search through your tax returns for leaks. Are you canceling income with losses? If any of your stocks or funds lost money, you can take up to a $3,000 loss against your income. Are you giving to charity in the most tax favorable way? Giving a stock could be much better than giving cash. Giving stock lets you “sell” without paying taxes on that selling. This lets you preserve your cash for living expenses.

And if you have self-employment or consulting income, are you putting money into a retirement account? Self-employed (SEP) IRA are tax-deductible. You should use them to reduce your taxable income and build your savings for future needs.

3. Let your portfolio do the work.

Many retired people set up dividends and interest to be reinvested back into their portfolios. Instead, have all portfolio income paid to you. My retired clients get a weekly check or a wire to their bank account from their interest and dividends. The advantage? You won’t touch your principal. The downside is of course that growth might be limited. That is just a trade-off. And for retirees, it might be a good trade-off to make.

The key is to understand that the old-fashioned “living off interest” way of retiring is not a possibility any longer. These days, retirees must be smarter.

If you are feeling uneasy about retirement, you should go see an experienced financial adviser.

But here’s why you should rest easy.

Nobody knows exactly how coronavirus will change the economy — whether over the next couple of months or over the long term. What we do know is that the number of COVID-19 diagnoses continues to rise, and is now twice what it was when it peaked this past April.

Some states are responding by ordering new lockdowns while some are demanding people wear masks to contain the virus.

The situation is creating a lot of chaos for businesses. Restaurant chains, for example, face different restrictions in each state, which makes it harder to operate. Companies in the entertainment, travel, and retail sectors are dealing with similar issues.

Yet regardless of the terrible news, the market has been surviving — maybe even downright thriving. However, soon that’s going to change. An economic crash could be around the corner. But it won’t be the complete disaster you may believe.

Source: Getty Images.

The market will go down

The market hit a free-fall earlier this year in February and March, but turned around thanks to anticipation of an economic recovery. This optimism has continued among investors despite coronavirus being worse than ever.

Nationwide business closures increase the chances that the economy will falter again. But the one factor that could guarantee a bear market will happen is the government allowing unemployment to expire.

Thanks to the CARES Act, workers are now collecting an extra $600 per week in addition the the usual unemployment benefits. That figure was selected by Congress with the aim of keeping the average person’s income equal to their previous ‘working income’. But for many, it means they’re earning more in unemployment than they made from working.

That is being taken away this July — and politicians have not discussed the idea of extending it. When this change happens, millions of Americans will go through a major income drop, and many won’t have the money to pay their expenses. That could have a disastrous chain-reaction effect across the entire economy and cause more business to fail and more people to not pay their rent. It will also be terrible for any business that relies on consumer spending, especially the restaurant business which is already suffering.

This is while more than 10% of Americans continue to be unemployed — which is worse than the Great Recession — and that data may soon get worse. By removing the $600 a week payment away, D.C. may set off an economic chain reaction that leads to a stock market crash.

Relax and invest

The latest stock rally was shockingly quick, likely due to the special circumstances that triggered the bear market in the first place.

Historically, the market takes more time to recover from such downturns. But after a while, it always returns to new highs. If it goes down as a result of coronavirus, no one knows what will happen.

There could be a double rebound as a result of optimism, the discovery of new treatment options, or the public acceptance of a perfected coronavirus vaccine. But it’s also possible those things won’t happen, and stock prices will be down for a much longer time.

But what we do understand is that the historic pattern is that recessions are followed by larger upturns. 

Because of this, during a recession, you should take the time to re-think each company in your portfolio. If you still feel your investment is still wise, then a downturn is the perfect time to add to your positions. For example, ask yourself has anything changed for this company in the long term. If the answer is so, then definitely hold and maybe even buy more.

Tesla, with yearly sales of $28 billion, has reached a value greater than the ten biggest carmakers in the world, who have combined sales of over $1.3 trillion.

Tesla Inc. (TSLA) shares hit another jaw-dropping high this Monday as traders and investors reacted to the carmaker’s record delivery of almost 500,000 vehicles last year.

Tesla shipped right under 181K cars during Q3 of 2020, which is a 61.2% increase from that same time last year. This number brings its yearly number to 499,550, just under Elon Musk’s 500,000 goal. While the company’s year-end production was right under 510K vehicles.

“With Tesla ending the year at 180K sales, and with output from their Shanghai facility increasing and the Berlin location starting production, we are somewhat shocked that the anticipated outlook for this year is just 784K units,” stated Joseph Osha, an analyst for JMP Securities  . “Our current estimate is 841K, and from what we see from the fourth quarter’s numbers, we would anticipate the 2021 forecasts to increase.”

“We think that Tesla sales in America could benefit Biden’s policies, potentially giving tax credits to EV buyers,” he said. “The one worry we do have is the Chinese market and the friction between the U.S. and Chinese governments.”

Tesla shares popped 5% higher in early trading on Monday to $743.76, an all-time high putting the company’s value at  $702.9 billion, greater than the whole market cap of the world’s ten biggest carmakers by volume, including Volkswagen AG VLKAY, Toyota Motor Co. (TM),  General Motors (GM) and Ford Motor Co. (F) 

Tesla ended Thursday December 31 at $705.67 per share. Which was an all-time high that brought its year-to-date gain to an amazing 743.4%.

The company said it sold 442,511 Model 3/Ys over the year, with 57,039 Model S/X cars also being shipped. Production figures were marked at 454,932 and 54,805 units.

Wedbush’s Dan Ives stated that the 500,000 delivery number was “not even seen as possible back in spring and summer,” and forecasts of sales as large as 710,000 for 2021, a 40% growth, would “put Tesla on the path to strong growth into 2022.”

“Obviously, competition is growing, with local players in Europe and China getting more efficient and companies in the US going after Tesla’s foundational EV income. And since the market is exploding, this industry will create multiple players all going for this EV goldmine,” Ives said.

Wednesday January, 6th 2021

PayPal will soon offer direct sales of cryptocurrency to its hundreds of millions of users, according to three insiders.

As of now, PayPal can be used to withdraw money from crypto-exchanges like Coinbase, but this new change will be the first time the company has offered direct sales of cryptocurrency.

“From what I understand, they will allow customers to buy and sell of cryptocurrency directly from PayPal and Venmo,” an industry source told CoinDesk. “They will also have wallet functionality so customers can store their crypto there.”

It is uncertain which cryptocurrencies will be available. The industry insider said they anticipated PayPal “would work with different exchanges to help with liquidity.”

Another source confirmed the plans, then went on to say the new service could happen in “the next quarter, maybe even sooner.”

PayPal did not comment on its plans.

Luxembourg-based Bitstamp and San Francisco-based exchange Coinbase were said to be among the possible partners. Both of these companies also declined to comment.

But an important fact is that PayPal has a relationship with Coinbase, starting in 2016. And in 2018, Coinbase made instant dollar withdrawals to PayPal possible for U.S. customers. Going even further, last year, European Coinbase users were allowed to withdraw to their PayPal accounts, quickly followed by Canadian users.

Meanwhile, other apps that offer cryptocurrency are raking it in. The payments company Square launched by Twitter’s CEO, began offering bitcoin purchases with its Cash App in 2018. A great move than has earning the company a whopping $306 million in bitcoin revenue according to its latest earnings report.

Revolut, a company based in London, began offering crypto to its users after arranging a 2017 partnership with Bitstamp, which raised $500 million, putting the platform value at $5.5 billion. And Robinhood, the wildly popular stock investing app, first offered crypto in February of 2018.

Cryptocurrency is increasingly viewed as a no-brainer way to bolster customer numbers on financial apps and create new revenue. Dan Schulman, PayPals CEO, has made certain his goal this year is to rapidly monetize Venmo, which has a user base of over 52 million accounts.

Job postings reveal the truth

At the beginning of 2020, PayPal posted jobs to step up its new division, called the “Blockchain Research Group”. They published eight engineering openings: four in Singapore and four in San Jose.

After PayPal’s short relationship with Facebook’s Libra project last year, their goal is now expanding its own payments expertise, one of the inside sources added.

During an interview with CoinDesk, PayPal CTO Sri Shivananda said they want their own “experience and perspective on the technology itself to understand how the technology can help our company contribute to open digital payments which serve everyone.”

Shivananda was not able to go into detail about any of the company’s specific plans.

“We are a big proponent in the possibilities of blockchain. Currency digitization is only a matter of when not if,” Shivananda said.

Generation Xers and Millennials may soon inherit almost $70 trillion from Baby Boomers. And Kraken Intelligence, the research team at the Kraken crypto exchange has put out a new report about how the ‘Great Wealth Transfer’ Will create a ‘Great Bitcoin Adoption.’

According to the document, if Millennials were to invest just five percent of their new found wealth into Bitcoin, they would increase the price to $350,000 by 2044. This would essentially give the group almost $70 trillion in wealth from a starting pool of $971 billion.

Investments from a generational perspective 

As Bitcoin has grown in popularity, older people with a love for traditional assets have been skeptical of cryptocurrency.

The report analyzes data on this topic, going into how the upbringing of Generation Xers and Millennials affected their opinion on Bitcoin and crypto in general.

“…older people have had a less favorable view of bitcoin than Gen Xers and Millennials…. with 41% of Generation X and 55% of Millennials believing that cryptocurrencies will soon be ‘very’ or ‘somewhat’ widely used for legal transactions before 2030.”

As many Americans verge on retirement, the document suggests younger people are going to have more available investing options. 

“…the larger percentage of Gen X and Millennials will continue to drive adoption [of cryptocurrency] for the coming future. While this can be explained by these generations having greater competence with newer technology, we should also take into account that bitcoin’s volatility is not suitable for people nearing retirement.”

The Coming Wealth Transfer

American Baby Boomers currently have about 57% of the total wealth, about $50 trillion of that will pass to Gen Xers and Millennials in the next two years. This is called the “Great Wealth Transfer”.

If these citizens were to invest just 1% of this money into bitcoin, the price could rocket to $70,000 — maybe more — in 2044. And finally, these numbers are based only on American investors. If you include the whole world, the real numbers could be much higher. Leading to crypto-friendly generations earning big.

Precious metal began the week with mixed signals as gold traded steady but silver broke with its sister commodity to increase in value by 1.11%. This was at the close of the Asian markets and going into the start of the European markets. Compare this change to last week, when gold did very well by rising just below 6%. Now, as we go into the election, more volatility could be coming.

The stimulus deal is one of the biggest pieces of news going into this week. Trump’s team requested that Congress approve a coronavirus relief bill without a Democratic agenda mixed in. This bill would allegedly use leftover money from a previous business aid program which is now expired.

The risk consensus in Asia was good at the beginning of the week with only the Nikkei 225 (0.30%) trading under flat. And  China’s Shanghai Composite (2.45%) and Australia’s ASX (0.49%) trading well. Although the Chinese bourses was still catching up from the holidays.

The Forex markets are looking very boring and light on much movement at all. Just some small Japanese yen growth. With GBP/NZD being the worst performing couple by trading at 0.35% in the unfortunate red and only the Kiwi dollar outclassing the JPY as EUR/NZD trades at 0.30% lower. 

On Monday, traders and investors will be eagerly anticipating comments from BoE Governor Bailey and ECB President Lagarde, de Guindos. But the information we have available right now is very sparse.

Gold futures ended around 25% higher last year with the majority of the increases happening from March 16 to August 7 when governments and central banks were announcing and starting large-scale stimulus plans. But since that high, gold has had a hard time as the economy emerged from recession and officials started to better understand the financial crisis.

In flooding the economy with dollars, officials followed the playbook from the 2007-2008 housing crisis, which at that time, helped bailout the world economy. This strategy seems to be working so far.

The Fed gave dollars away to anyone and gold shot up accordingly since most investors followed the belief that a “weak dollar means strong gold.” But gold began to lose momentum when governments started to see an end to the crisis.

In early August, they began to believe their policies were working and that the money faucet could start to be closed. They continued telling banks and investors that they would again make aggressive moves if needed, but mostly they would keep policy normalized with a few changes if needed.

Once the American election was over and the Covid vaccines were made official, those dollars had to move somewhere. But they didn’t go to gold. People came out of gold and went into higher-yielding things like stocks. Currencies from commodity-producing nations also won big as assets like palladium, copper, platinum and silver increased.

What traders and investors discovered last year, and what will probably continue as we move into 2021, is that gold is an investment. It’s not necessarily a safe-haven asset like some brokers claim. Gold is competing for the same money that is going into bonds, stocks and higher-yielding currencies like the New Zealand and Australian Dollar.

With gold as an investment, you should search for where it has real value. Last year, it rallied at $1461.70 and stopped at $2099.20. By November 30, gold had lost 15.82% of its previous gains. Reaching a number of $1767.20, which was slightly under 50% of its total 2020 rally.

Now, starting 2021, investor response to 50% to 61.8% of 2020’s range at $1780.50 to $1705.20 will set the consensus for this year, at least on a technical level.

The fundamental data is even harder to understand if you keep up with the news. Covid deaths continue to increase and gold has gone nowhere, so I assume it’s ok to remove safe-haven buying as a reason to buy gold.

The dollar currently is trading at a 2-1/2 year low against other major currencies so it seems its connection to gold is skewed. Otherwise, its price would be rising this year.

Until cash starts to go back into gold, traders and investors will continue pushing investments like silver, stocks, other currencies and of course Bitcoin even higher. This is due to gold being too expensive in comparison, which ruins its appeal as an investment. Another negative is that it doesn’t pay a dividend or interest.

Gold will probably continue to be well-founded in 2021 due to the Fed’s stimulus policies, but it will suffer if it’s forced to compete with other assets. There will be a reset some point during the year. Investors will then transfer their money out of assets that have made huge gains. It’s then that gold will likely grow, but until that happens, we could be see a rangebound trade.

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