Here is the link to the article I wrote for MarketWatch: https://bit.ly/3VMkdfn

Steve Burns keeps a list of stocks to buy — at much lower prices. Right now he’s short the U.S. market and buying gold and silver. Steve Burns began his stock-trading career in an old-fashioned way, echoing the advice of famed mutual-fund manager Peter Lynch to buy stocks of companies whose products you use and appreciate.

As a teenager, Burns had a job at a store in a shopping mall. He was surprised to discover that many stores in the mall were operated by publicly traded companies. Burns began to follow these stocks. He saw how prices moved, how some companies went public with an IPO and how they were valued. He became aware of the power of compound earnings, and how even conservatively positioned portfolios could grow meaningfully over time. 

When he turned 18, Burns opened an account at a brokerage firm and started buying and selling stocks. This was during the dot-com fueled 1990s bull market, and Burns enjoyed a lot of beginner’s luck — “I had a crazy, absurd run, similar to what people are experiencing now,” he recalls. 

Burns also made his share of mistakes: “I didn’t learn to trade or have a system,” he says. “I was just lucky until I got hit with a 50% drawdown, which was really painful. Now, I trade smaller with smaller gains but avoid those monster drawdowns.” 

Nowadays, Burns is a popular teacher for experienced and novice traders alike. He has a large social-media following and is the author of more than 20 books, including his latest: “The Ultimate Guide to Swing Trading.” He’s also expanding his teaching to personal finance and wealth-building.  

In this recent interview, which has been edited for length and clarity, Burns offered tips for trading this market and voiced his strong concerns about it. Right now, Burns sees “a lot of similarities with buy-and-hold investors and index funds versus how I felt in 1998 and 1999.” 

According to Burns, the U.S. market now is even more dangerous — trapped in what he calls the “greatest bubble in the history of civilization.”

MarketWatch: What do you think of the U.S. stock market right now? 

Burns: We are in the greatest bubble in the history of civilization. It’s caused by too much U.S. currency in the financial system. It all comes back to the U.S. dollar. At the same time, you have the most money flowing into equity indexes, and bonds and metals are rallying. It doesn’t make sense anymore. Everything is going up in price. It’s pretty astounding how little fear and uncertainty is priced into the market right now. I’ve never seen anything like it. 

MarketWatch: Do you think the U.S. Federal Reserve can do anything to deflate this bubble? 

Burns: The disturbing thing is the Fed has cut interest rates, but they didn’t bring down mortgage rates. The Fed has lost control of both the yield and the yield curve. The Fed is now at a dangerous place where they’ve also lost control of interest rates. They could keep cutting rates but the banks don’t want to lower mortgage rates, and bond investors want higher yields for the risks they are taking.

MarketWatch: How bad could it get? 

Burns: The Fed is terrified of a depression so they will not restrict monetary policy. They are flooding the system with money through government debt and cutting interest rates. The real risk is hyperinflation or a [U.S.] dollar devaluation at some point. The last 12 months have just astounded me with the lack of pullbacks, the lack of swings to the downside, and the continuous market above new all-time highs. It’s absurdly overbought. 

MarketWatch: How are you preparing for this possible scenario? 

Burns: I’m holding a lot of real estate as a hedge. I am not looking to be a buy-and-hold investor right now. It’s great to be a buy-and-hold investor during secular bear markets where you can dollar-cost average and benefit from the bull market. It was not great to be a buy-and-hold investor in 2001 and 2002, or 2008 to 2009. It took a lot of people a decade to get back to even. 

MarketWatch: Are there any stocks you would buy after a market plunge?  

Burns: If we have a 50% correction or crash, because everything is way overvalued, I will buy metals such as gold and silver ETFs — GLD and SLV — to hedge against the U.S. dollar devaluation. If we have a secular bear market and a 50% correction, I’d buy Palantir Technologies, Reddit, Nvidia, and Rocket Lab USA. These are four of the best-looking stock charts I’ve seen. 

MarketWatch: What are you buying right now? 

Burns: I’m actually short the market. The only thing that looks good to me right now are GLD and SLV. Everything else looks mind-boggling overbought. 

MarketWatch: What advice would you give traders to manage this and other market conditions? 

Burns: The number one way to manage risk is through position sizing. Regardless of your trading system, position sizing will determine whether you can compound your gains, keep your profits, or be ruined.

Stop and think, ‘Are you operating as a business or as a gambler?’ If you’re a gambler and just making opinions and predictions based on your personal thoughts, you’re going to get in trouble, especially at these huge turning points, because anything can happen. Traders need to ask themselves, ‘Are you just a lucky gambler in the wildest bull market in history?’

LINK to article on Equities.com: https://bit.ly/3Bwo4GE

Nearly all parents want their children to be financially successful. Attaining wealth means more freedom, opportunities, and the ability to handle any financial emergency (and without relying on credit cards).

One of the easiest ways to build wealth is by investing in index funds or stocks. Fact: You and your child can beat most of the market professionals who manage money for a living. It’s often been reported that 90% of the pros fail to beat the S&P 500 index each year.

Many Equities.com readers know that the S&P 500 is a closely-followed index that matches the performance of 500 of the largest US corporations. This is the index that most professional managers want to beat, and the index I suggest that you buy for you and your child.

If you are new to the stock market, below are the steps you may take if you want to help your child build wealth. If you follow these steps, although there are no guarantees, there is a good chance your child will be a millionaire well before they reach retirement age.

I’m not just saying that because it sounds good. I’ve run the numbers: a million dollars is attainable. The sooner your child starts investing, the more money they can potentially make.

Note: Go to bankrate.com and search for the investment calculator. Then plug in the data to see how long it will take to make that first million dollars. The results differ depending on your child’s age, how much they contribute, and whether the money is in a tax-free or taxable account.

The good news is it doesn’t take a lot of money to get started. The bad news is it takes a long time to build wealth, so patience and discipline is necessary. Following are the seven steps needed to help your child build wealth.

Seven steps to building wealth

In my book, "Help Your Child Build Wealth" (Wiley, 2024), I identified seven steps to building wealth:

1. The first action that must be taken is opening a stock brokerage account for yourself, and eventually for your child. Opening a brokerage account is similar to opening a checking or savings account. You can open it with as little as one dollar (or use another currency).

2. Once the account is open, invest as much as you can afford into the S&P 500 index fund each month, even if it’s $5 or $10. The S&P 500 index fund is one of the most brilliant financial products created for most investors. Instead of trying to “beat” the market, the goal is to do just as well as the market (i.e., match it) each month.

3. The first goal is to get your child in the habit of investing every month, what is referred to as “paying yourself first.” Investing in an index fund is a much better habit for children than only being a spender. In fact, your children can do both. They can spend money on the things they want or need. They can also invest a few dollars into an index fund each month.

4. The second goal is to invest a set amount of money into the index fund each month, even if it’s a small sum. This excellent strategy is called dollar-cost averaging.

5. The hard part is what comes next. After investing the same amount of money into the S&P 500 index fund each month, your child must not touch the money no matter if the market is moving higher or lower. With dollar cost averaging, if the market is moving lower, your child will buy more shares of the index fund at lower prices. This is similar to buying stuff at a street market when items are on sale.

6. However, if the market is moving higher, your child will buy fewer shares of the S&P 500 index fund. Whether the market is moving higher or lower, the hard part is to keep investing each month. It takes a disciplined investor to keep investing, month-after-month, and not sell.

7. Those who are willing to accept more risk can invest in individual stocks.

The 529 educational savings plan

An excellent program that will help pay for your child’s college is the 529 educational savings plan. “529” refers to Section 529 in the federal tax code. It enables parents to save money for college, and do it tax-free. The 529 plan is offered by brokerage firms as well as every state government (except for one). The invested money that is growing tax-free can be used for any eligible college.

There’s only one catch to this excellent program. The invested money must be used to help pay for tuition or any educational expense such as room and board, and supplies.

How does it work? Briefly, the 529 plan is funded by investing after-tax money into certain financial products such as index funds or mutual funds (but no individual stocks). It’s easy to enroll your child into the plan. Once the account is open, relatives or friends can contribute to the plan on birthdays or other special events. You can also make lump sum deposits.

The money in the 529 account is allowed to grow tax-free until it is withdrawn. As always, the earlier your child enrolls in the plan, the better. The cost is extremely low, especially if opened with a brokerage firm or state government.

Build wealth by paying yourself first

There are several ways to help your child build wealth, and to do it tax free. The earlier they start investing, the more wealth they will have when they are older. They don’t need a lot of money to get started: Even if they start investing $10 or $20 a month, that will help teach your child the importance of saving money by paying themselves first.

Note: To learn more about how to help children build wealth, read Michael Sincere's latest book, "Help Your Child Build Wealth," which can be ordered on Amazon: https://bit.ly/3OGOVmO or Barnes and Noble: https://bit.ly/49x6gGS .

I wrote the following article for MarketWatch. LINK: https://bit.ly/4g3kNNZ

Robert Ross never expected that his knowledge of stock-trading and investment strategies would make him a social-media sensation.

Ross cut his teeth as the senior equity analyst at investment research companies including Mauldin Economics. He had a knack for financial market analysis and stock picking, and became one of the youngest chief analysts in the industry. 

Now Ross runs TikStocks, attracting a massive social-media following for his practical and insightful market-related TikTok and Instagram videos (@tikstocks). He also publishes a weekly newsletter on Substack called “Let’s Analyze” (tikstocks.substack.com) and is the author of “High-Risk, High-Reward Investing.”

In a recent interview, which has been edited for clarity, Ross shared his perspective about whether the market can extends its impressive year-to-date gains into 2025. (He’s bullish). Among his conclusions: Nvidia 

NVDA1.18% stock is fairly valued but Apple AAPL1.28% shares are expensive; bitcoin’s BTCUSD-0.47% swift run will lead to some profit-taking, and that too many stock investors actually aren’t bullish enough.

MarketWatch: What shape is the U.S. stock market in now?  

Ross: Near term, it’s extended. That being said, we’re in a secular bull market that’s going to last at least a few more years. Historically, secular bull markets are fueled by technological advancement, a fiscal or monetary stimulus, or a liquidity boom. 

We have all three right now. We’re having a huge technological boom with artificial intelligence (AI) that will increase earnings and productivity across all sectors and especially benefit a few stocks like Nvidia. The U.S. Federal Reserve is cutting interest rates, and globally, central banks are lowering interest rates, which is creating a lot of liquidity in the market that I expect to flow into U.S. securities. Another reason the secular bull market continues is we will have a deregulation tailwind happening across the U.S. economy. Overall, I’m bullish and staying invested. 

MarketWatch: Some people would counter that many stocks are too expensive right now. Are you comfortable with current valuations?  

Ross: A lot of stocks aren’t that expensive if you look at them relative to their earnings growth. Earnings growth is what makes stocks go up. Take a look at Nvidia: The company is expected to grow earnings at 35% per year over the next five years, but recently traded at only 35 times forward earnings, which really isn’t expensive —- it’s a 1:1 ratio. On the other hand, Apple is expected to grow earnings at 15% over the next five years and is trading at 27 times earnings. That’s a little less compelling. 

MarketWatch: In general, should investors be afraid to buy when the market looks to be at a high point? 

Ross: No. That’s a trap that many investors fall into. They want to go bottom-fishing for stocks. They want to find stocks that are at their 52-week lows and time the bottom for a turnaround. If a stock is at a 52-week low, especially in the type of bull market we’re in right now, there’s something wrong with that business. I don’t want to buy crap businesses at a cheap price. I’d rather buy a really good business at an okay price. 

MarketWatch: What parts of the market look attractive now? 

Ross: I own the Vanguard Small Cap Index Fund ETF  

VB-0.23%. I like a crypto miner, TeraWulf WULF-0.68%, one of the only carbon-neutral bitcoin BTCUSD-0.47%miners. I also like Upstart Holdings UPST8.00%, which is a great short-squeeze candidate. About 28% of its shares are so sold short. I can see it going significantly higher from here. 

MarketWatch: How do you reduce stock-market risk? 

Ross: I always define my risk before I enter a position. I’ll have a stop-loss in place at a specific technical level. I would never open a position without a stop-loss. If a stock falls below a certain level, I’m out of the trade. I’m happy to sell it and reallocate my money elsewhere, especially during a bull market like we’re in now. If a stock is not going up in a bull market like this, it’s not something I want to own. 

MarketWatch: What’s your take on bitcoin after its sprint to almost $100,000? 

Bitcoin is actually my largest position right now. I’ve held it since 2017. Since that time, the position has gotten much bigger. We’re going to have a lot of tailwinds here, especially since a crypto-friendly presidential administration is coming in. But in the near-term, I wouldn’t be chasing crypto higher. Everyone loves the euphoric highs that we get during these rallies, but with bitcoin, most of the gains since 2016 and 2017 come in about 10 days in a year. We have these massive surges higher. So while I’m not necessarily buying here, I’m not selling either. Happy to keep “HODL-ing,” as they say in crypto.

MarketWatch: How do you manage bitcoin’s volatility? 

Ross: I’m happy to hold volatile positions for the long term if the long-term thesis makes sense. Bitcoin fits into my long-term portfolio because I don’t know when these big surges are going to happen. It’s also dominating my portfolio so I will probably rebalance at some point. Again, I’ve held bitcoin since 2017. In bull markets, it dominates my portfolio. Considering it’s ~20% of my entire portfolio today, I’m not looking to buy right now. 

There are a few indicators I watch to know when it’s time to sell, and I think we’re getting to a point where it’s time to take some profits off the table. I went on record as early as April 2023 stating we were in a new crypto bull run, so I’ve captured nearly all the upside. I like to buy crypto when nobody’s talking about it or cares about it. That is not the case right now. 

MarketWatch: Do you trade options?

Ross: I usually buy LEAPS (Long-Term Equity Anticipation Securities). Right now, I own LEAPS on the Nasdaq Semiconductor Index through an ETF, VanEck Semiconductor ETF 

SMH0.22%, and SPDR S&P 500 ETF Trust SPY0.05%. I’m thinking of buying LEAPS in Tesla TSLA-1.59% for the same reason I bought Upstart. [Telsa CEO] Elon Musk will be in Trump’s administration, which I think will help companies like Tesla, which will benefit from government subsidies. 

MarketWatch: What advice do you have for beginning investors? 

Ross: Too many investors are too bearish. They think the way to make a lot of money in the market is to put on these sexy directional bets, like Michael Burry in “The Big Short.” If you’re right, you make a fortune and if wrong, you lose everything. I think that’s more like a Hollywood dramatization of how investing actually works. The fact is that the S&P 500 

SPX0.05%, since 1921, has finished in positive territory 75% of the time, delivering returns of about 9% per year. 

Everyone thinks the next crash is around the corner, but the fact is market crashes — or declines of -50% or more — are extremely rare, happening only twice in the last century. Overall, the best piece of investment advice came from [former Fidelity Investments mutual-fund manager] Peter Lynch, who said that more money has been lost trying to anticipate the next correction than from the correction itself. 

Michael Sincere (michaelsincere.com) is the author of “Understanding Options,” “Understanding Stocks,” and his latest, “Help Your Child Build Wealth” (Wiley, 2024).

LINK TO ARTICLE: https://bit.ly/3YP4Ch7

The Colorado River is in trouble. 

The 1,450-mile river sweeps across the Rocky Mountains into the Gulf of California, providing water to over 40 million people in seven states. 

The river has lost nearly 20% of its water, reaching crisis levels in recent years. If water levels drop too low, there may not be enough water to generate electricity to meet all of the resident’s needs. Climate change has intensified the problem, including a once-in-a-millennium drought from 2011 to 2017. 

Alarm bells are going off for several more reasons. A population boom means more residents in need of drinking water. Water-guzzling agricultural interests such as mega-dairies need 218 million gallons of water every single day for washing and drinking, as Food and Water Watch reports. Industrial farms also guzzle up millions of gallons of water every day, and the oil and gas industry likewise requires mass amounts to operate. 

But it wasn’t supposed to be this way. 

In 1922, the seven states that relied on the Colorado River for water signed a lengthy, complex pact, the Colorado River Compact. Known as the “Law of the River,” the pact was supposed to give each state enough water to meet their needs. 

Unfortunately, it didn’t work out that way. For decades, corporations, environmentalists, Native American tribes, and the states of Arizona, California, Colorado, Nevada, New Mexico, Utah and Wyoming have fought over water. Each has sent competing proposals to the federal government to help decide the river’s future.

The seven states negotiated a complex agreement among themselves with “interstate compacts, federal laws, court decisions and decrees, contracts and federal actions” to regulate how much water each state was allocated, or their so-called water rights. The agreement also included the water rights to more than two dozen Native American tribes.  

At the time the agreement was signed, there was enough water to meet the needs of all of the states and tribes. But the states severely underestimated how much water was needed to meet the needs of a growing population, thirsty industries, and greedy outsiders.

Part of the problem can be traced to the “water rights loophole.” 

Closing the loophole 

Researchers argue in a paper recently published in the “Water Resources Research” journal there is a “free river condition” loophole in the Colorado Water System that must be addressed, or the problems will worsen. 

“Under these conditions, anyone—whether or not they own a water right—can divert as much water as they’d like until a senior user downstream makes a ‘call’ on the river because they no longer have enough water to satisfy their right,” the paper argues. The authors recommend the government close the loophole and come up with alternative policies. 

If the government does not close the loophole, it is possible that corporations will take advantage of a confusing array of regulations and transfer ownership of water rights to themselves. 

Corporate outsiders buy up water rights

We are already seeing the corporate takeover of “water rights” play out. 

In Cibola, Arizona, Greenstone Resource Partners LLC, an investment company that owns GSC Farm, LLC, purchased nearly 500 acres of agricultural land in 2013 and 2014, the Guardian reported. The town is home to fewer than 300 residents. Greenstone was the “first water brokerage firm to sell rights to the Colorado River,” and almost no one paid attention. 

The company then sold the water rights to the land to the town of Queen Creek, a suburb of Phoenix, for a $14 million gross profit in 2018. 

“More than 2,000 acre-feet of water from the Colorado River that was once used to irrigate farmland is now flowing, through a canal system, to the taps of homes more than 200 miles away,” the Guardian reported. 

Cibola residents were shocked. They thought GSC Farm was a farm. But it was, as the Guardian uncovered, a “water investment firm that had brokered water transfer deals all across the southwest.” 

The company had acquired thousands of acres of farmland across Arizona, operating under 25 other names and affiliates. 

Companies such as Greenstone and others have “been discreetly acquiring thousands of acres of farmland,” to meet the demand of millions of new residents moving into west. 

“Officials challenging the Greenstone transfer in court fear it will open the floodgates to many more private water sales, allowing investors to profit from scarcity,” the Guardian reported. 

It shocked Cibola residents that an outside corporation could siphon their water away from them. But it’s all about water rights passed down since the 1922 agreement was adopted. 

As the water supply shrinks in the west, more corporations may take advantage of confusing water rights regulations and rules, and also inexperienced government officials and residents.   

Conclusion 

If there are more droughts, and as climate change plays havoc with water supplies, there is no doubt that water rights are more valuable than gold. The western states, with input from environmentalists, the government, and other interested parties, must make changes to the original 1922 Colorado River Compact, or water shortages are destined to get worse.

Humbled Trader: "You are never bigger than the market."

Link to MarketWatch article: https://bit.ly/4dWqb3G

Shay Huang, a.k.a. “Humbled Trader,” has amassed a widespread and loyal social-media following for her educational tips on day trading and other short-term market strategies.

It’s a long way from where Huang started, 10 years ago, when she worked in the film and television industry and day trading was just a way to fill free time and earn extra income.

 Huang learned how to day trade by watching YouTube videos and taking online courses. She loved the idea of day-trading stocks from her home with a schedule that fit her lifestyle. During the first two years, she had many losing days. 

In one trading session, she lost more than $1,000 after following the advice of a so-called day-trading guru. That’s when Huang realized that trading isn’t about finding the “perfect” system. It’s more about knowing yourself, learning how to make high-probability trades, and following a structured risk-management discipline. 

Now Huang is a day-trading educator, teaching others what she knows. She shares her good and bad trading days with her many followers on YouTube and Instagram, where she talks about trading lessons she’s learned. 

In this recent interview, which has been edited for length and clarity, Huang discussed her early struggles, the stocks and trading strategies she uses, and her recent switch from day trading to swing trading. 

MarketWatch: Why do you call yourself ‘Humbled Trader’? 

Huang: Because I was humbled by the market. As traders, we go through a lot of phases. In the beginning, you really don’t know anything and should anticipate losing money at first. And that’s fine. I started making money in my third year of trading, and that’s when I got a little cocky. I thought I was the best. That’s when I learned that if you don’t follow the rules, and don’t practice good risk management, all it takes is one trade to wipe out your trading account.  

MarketWatch: What trade wiped you out in that third year? 

Huang: I started shorting Snap when it was $9 per share. When it went to $14, it blew me up. Nowadays, there are certain small-cap stocks with a low float at $5 per share that can go to $90 per share. That will definitely blow you up even if you have only 100 shares. 

MarketWatch: What lesson did you learn from this experience? 

Huang: You have to stay humble. You are never bigger than the market. I also traded too big for my account size. If you are a beginner with a $3,000 account, start by risking no more than $10 or $20 in a single trade. Keep trades small because your losses can spiral, especially when you lack experience. I wish I had traded really, really small with 10 or 20 shares rather than 100 or 500 shares. You’re not going to make much money trading 10 shares, but you are not going to blow up, either. That’s the way to go if you want to learn how to trade.

MarketWatch: How did you recover from the Snap disaster? 

Huang: I had some savings outside of my trading account. I also took weekend and overtime contract jobs. I remember taking a three-month break and coming back to try again. This time I traded a lot smaller!  

MarketWatch: Did you ever think about giving up trading? 

Huang: In the first two years, I never had a green month. That’s when it would have been easy to give up. But once I had a small taste of what it’s like to trade and make money on some of my trades, it was very hard to give that up. 

MarketWatch: How do you determine your trading position size?  

Huang: I’m very strategic now about when to increase and decrease size. When I’m going through a red month, like I did in September, I risk less and size down. Hypothetically, if I normally risk $2,000 on a trade, I may only risk $1,000 or even $500. Conversely, if I start having a green week or month, I’ll return to my normal size. I increase size when I’m doing well. 

MarketWatch: How did you learn to be so selective with your trades? 

Huang: I keep a journal and track everything. I found that on the red (i.e., losing) days and months I trade the largest number of transactions and ticker symbols. I realized I should do the opposite and be more selective with my trades. Since making that discovery, I’m not in a hurry to make back everything I lost. I just go back slowly, dip my toes in, and see how the market reacts. 

 MarketWatch: What is your trading style right now? 

Huang: It’s interesting because my trading style has changed. During the COVID-19 pandemic from 2020 to 2021, I day-traded every day. At the end of the day, I closed out and wouldn’t hold any overnight positions. It worked very well. But last year and this year, I’ve transitioned more to swing trading. I may hold overnight for two or three days. For example, Nvidia keeps on trending so I might hold it a month. If I see a trend continuing, I’ll keep holding for a couple of weeks or a month. 

MarketWatch: Why have you changed trading strategies? 

Huang: I’m at a stage where I want a little less stress. Day trading is very stressful. You come in every day starting from zero and you’re trying to find the best opportunities each day. It’s much more stressful than swing trading, when I begin the day with good positions and I’m riding a trend. Also, the market this year has been a lot trickier for day trading. There’s a lot of choppiness as we go into the U.S. election. Although it’s hard for day trading, it’s better for swing trading because the overall direction has been up. 

MarketWatch: What market indicators do you use? 

Huang: I use the eight-, 20-, and 200-day exponential moving average (EMA). If a stock is a loser, I cut it within the first week. When it’s a winner, I let it trail. If a stock I have conviction about breaks below the eight-day moving average, that’s fine. But if it breaks below the 20-day, I’ll use a stop-loss to get out and take my entire profit. A lot depends on how volatile a stock is. 

MarketWatch: Any other indicators that are important to your strategy?

Huang: For swing trading, I only use moving averages, and I look at volume. I use VWAP (volume-weighted average price) only for day trading. I mostly use those two. In the long run, it doesn’t matter which indicator you use as long as you find one that allows you to be disciplined and not take a profit too soon. To be profitable, your winners need to be exponentially bigger than your losers. That’s how you stay in the game. 

MarketWatch: What are the three biggest mistakes that traders make? 

Huang: Number one is they risk too much, especially in the beginning. The second mistake is they hold a losing position for too long. They keep thinking it will come back. Or if short, they think it will fall. That’s what happened to me in the Snap trade. It was a day trade, but because I was losing, I turned it into a swing trade. Big mistake. The third mistake is they sell their winners too early. 

MarketWatch: What’s the best trading advice you ever received? 

Huang: The best tip I have for beginners is to go long on the green days and go short on the red days. It’s the simplest thing because stocks tend to trend, especially larger-cap stocks. Obviously, you have to know how to buy the dip but in the bigger picture, on green days stocks tend to keep trending higher and on red days prices tend to go lower. It sounds very basic, but understanding that helped me a lot. 

MarketWatch: How do you prepare for the market day? 

Huang: I start the day scanning sectors and stocks. In the premarket, I can see how the market is shaping up from how many stocks are gapping up or down in the premarket, and which sectors are gapping up or down. I look at sectors, then I look at individual stocks and any news associated with them. If there are no gapping stocks, I know it will be a very boring day. I wouldn’t be day trading on these days. 

MarketWatch: How do you take advantage of market volatility? 

Shay: A lot of times when many stocks gap down, traders can take advantage of market fear. For example, in early August we had two or three days with a huge gap down in the S&P 500. Those are the days that experienced traders can go long when stocks begin to bounce aggressively. 

MarketWatch: What have you found is the real secret to successful trading? 

Shay: It’s going to sound like a cliché but trading is mostly about understanding yourself and your triggers. What triggers me is when I sell a stock and then see it go higher. You have to be very good at self-reflection. Trading is not just you against the market. It’s also you against yourself. 

LINK TO ARTICLE: https://bit.ly/48lFce5

Hurricane Helene and Hurricane Milton touched down just weeks apart and left more than three million Florida residents without power.

However, there was one energy-efficient, sustainable Florida community where the lights remained on. 

At Hunters Point, homes protected by hurricane-proof windows and doors didn’t flood. The waterfront development in Cortez, Florida, was built by the developer Pearl Homes. 

Pearl Homes makes the case that its property is the “the first and only net-zero single-family home community in the United States.” Pearl Homes defines net-zero as homes that produce more energy than they consume. 

“The streets surrounding the homes are intentionally designed to flood so houses don’t. Power and internet lines are buried to avoid wind damage. The sturdy concrete walls, hurricane-proof windows and doors are fortified with a layer of foam insulation, providing extra safety against the most violent storms,” reported CNN in a recent article on Hunters Point.  

After the storms, the lights stayed on all night and in the days to come, thanks to solar power and battery storage. 

“Everybody around us was completely dark at like five in the morning, and you see the lights on in our houses,” Marshall Gobuty, the founder and president of the Pearl Homes development, told CNN. “So, it really was a test of why we did this.”

Mobile homes destroyed

Hundreds of mobile homes in Bradenton Beach, Florida, did not have these energy efficient, stormproof luxuries. They were badly damaged by the dual hurricanes and are now likely to be condemned. Many residents in the mobile home community, Sandpiper Resort, were told by the city that any home with flooding from either of the two hurricanes “had to be destroyed.” 

The only other option for remaining in the community is for mobile homeowners to build homes higher than 12 feet in order to comply with the city’s flood ordinance. Considering the high cost of rebuilding, this option is well beyond the financial means of most of the residents. 

Not surprisingly, the mobile home residents are devastated. 

“Who knows where we are going to go. I have no clue at this point,” Bill Wisotzke, the president of the board of directors at the Sandpiper Resort, told ABC 7 in an interview.

Built to withstand a Category 5 

When Hunters Point was built, developers wanted the homes to withstand a Category 5 hurricane. The U.S. Green Building Council says the residential development is the first in the world to receive a Leadership in Energy and Environmental Design (LEED) net-zero certification. 

CNN reports that each of the three-story homes is designed with a ground floor as a garage with flood vents to drain rising water. The living space begins on the second floor, built 16 feet above sea level. Steel straps secure the entire home from the roof to its foundation. To top it off, solar panels are affixed to the roof on raised vertical seams, to prevent them from flying off during high-wind storms. 

Because the property sits in a major flood zone, the homes had to be elevated by at least 3 feet. But the developers elevated the homes by 7 feet to provide extra safety. 

Not surprisingly, all of these energy-efficient, hurricane- and flood-proof features are costly. The homes in Hunters Point sell for $1.4 million to $1.9 million, compared to other homes in the area going for approximately $600,000. 

Building a sustainable home 

A sustainable home is built using high-quality building materials that conserve energy and water while reducing waste. A sustainable home also helps protect residents from the effects of climate change and volatile weather events. Because heating and cooling eat up the largest portion of a homeowner’s electricity bill, installing insulated doors, energy-efficient windows, lighting, and appliances helps reduce costs.

In the future, especially in areas susceptible to flood and hurricane damage, homeowners will want greener homes. This involves more than simply putting in energy-efficient appliances, LED lighting, or solar panels.

From the ground up, new generation homes must be built with energy efficiency in mind. There are a few steps that homebuilders can take to accomplish that goal. For starters: 

1.     Self-sufficient, sustainable homes that use eco-friendly materials. 

2.     Homes that help reduce the effects of climate change including hurricanes and floods. 

3.     Using the surrounding environment to help heat or cool homes while also reducing energy costs.  

4.     Installing geothermal heat pumps and wind or solar energy systems including solar panels and a solar water heater.

5.     Burying the power and internet lines. 

6.     Hurricane-proofing windows and doors. 

Admittedly, all of these features come at a high cost, but radically increase the survivability of a home. To reduce a few of the expenses, some homeowners may qualify for an annual residential clean energy tax credit from the IRS.

(More information on that tax credit can be found at irs.gov). 

If you’re a homeowner, you can consider storm-resistant upgrades such as impact windows and other measures to prevent water and wind damage. 

Conclusion 

While energy independence is a worthy goal, it’s essential to protect properties from hurricanes, floods, and power outages. As climate change intensifies, expect to see even more destructive weather-related events that damage property and cost lives.

Although currently expensive, building a sustainable home should be incorporated into the designs of future homes and communities. A sustainable house is not only healthier for the environment and residents, but should save money on water and energy. 

The goal is to build more energy independent houses that use less energy and depend less on utility companies, to bring down a consumer’s electricity bill. For homeowners looking to save energy while living in an environmentally-friendly, energy-efficient house, visit the Department of Energy website to explore more information.

LINK: https://rebrand.ly/1569c03

After three years of aggressively hiking interest rates, the Federal Reserve is finally moving towards “normalizing” rates. Now that the Fed lowered rates by a half percentage point, the biggest cut in 16 years, it’s a good time to discuss how rate cuts affect your investments, especially sustainable investments. 

The Fed is sending a message that it believes inflation is under control and the economy has recovered. Even though the Fed is late in cutting rates (compared to other countries), if it is correct inflation should continue to slowly ease. 

This rate cut will have a huge impact on consumers and investors, affecting mortgage rates, bond prices, hiring practices, real estate prices and most importantly to many of us: the value of our investments. 

Peter Ricchuiti, a senior professor of finance at Tulane University’s Freeman School, who also created the nationally acclaimed Burkenroad Reports student stock research program, explains: “Interest rates are enormously important to stock valuations. More than half of the valuation models I teach at Tulane University use interest rate levels to determine fair stock prices.”

Let’s begin by looking at how lower interest rates affect sustainable investments. 

Climate change

Companies involved in combatting climate change are “generally younger and need to borrow a great deal of money to grow,” says Ricchuiti. “Lower interest rates reduce the cost of borrowing, and therefore helps these businesses increase earnings.”

Ricchuiti notes that the U.S. presidential election will have a far greater impact on climate change than interest rates. “Lower interest rates are a positive for sustainable initiatives and will help stem the tide of blowback from Republican lawmakers.” He adds that he believes this is arguably the best U.S. economy in six decades.

One place where lower interest rates won’t have a noticeable effect is the cost of homeowner’s insurance. Because of climate change, and the increase in climate-related disasters, the cost to insure homes, especially in vulnerable areas of the country, is likely to keep rising. 

Green companies

According to Ricchuiti, “green companies are one of the most interest rate sensitive sectors of the market. The Fed decision to lower interest rates is a big boost to the industry.” 

He explains that when the Fed started raising interest rates, “the shares of green companies such as Sunnova and NextEra Energy began to underperform the general market. However, as inflation dropped about 65% over the past 30 months or so, the shares of many green companies have been outperforming the overall stock market.” 

When the economy is strong, Ricchuiti notes, “companies are more willing to put some of their focus on doing what’s right. When the economy and corporate earnings suffer, these initiatives are pushed to the back burner.” 

The good news for sustainable investors is that clean and green investments will continue to be a high-priority investment, especially as extreme weather events play havoc with the world. Regardless of how interest rates rise or fall, scientists, technicians and researchers will still be asked to solve many of the world’s environmental problems by developing new technologies. 

How the Fed and interest rates affect other areas of the economy

Let’s take a look at other areas of the economy where lower interests may affect your finances:

·       Hiring: According to the Fed, weaknesses in the labor market provided motivation to urgently cut rates. Many economists believed the Fed was “late to the party,” and should have cut rates sooner. Nevertheless, the rate cut should boost the weakening labor market. 

·       Mortgages: Hopefully, the days of high mortgage rates are over. Typically, the Fed will continue to cut rates at future meetings rather than “one and done.” That means patient home buyers and renters should expect to see lower mortgage rates in the months and years to come. Also, those who want to refinance will have an opportunity to refinance with reduced monthly payments.

·       The housing market: Lower interest rates should make it easier for people to rent or buy a home. Higher interest rates caused problems for renters and buyers. Although it won’t happen immediately, the rate cut should provide relief. It will also give home sellers an opportunity to sell their current homes as well as find new homes at lower interest rates. 

·       Savings accounts: The one place where lower interest rates are unwelcome is savings accounts, where lower rates means lower returns. Often, those with large cash holdings parked in savings accounts move their money into the stock market as interest rates fall. 

·       Bonds: Bond prices rise as interest rates fall, so lower rates are good news for bond investors. 

Conclusion

As discussed in a previous article, no matter who enters the White House in January 2025, there is no need to make any sudden financial moves if your candidate loses. In other words, do not “panic sell.”

You can still invest in the stocks, mutual funds and ETFs that reflect your beliefs and values. The clean and green companies that have helped sustain the environment should not be affected immediately by lower interest rates, or even by a new president. 

LINK TO ARTICLE: https://rebrand.ly/qovpf4r

We previously discussed a number of important ideas including thematic investing as well as green, clean and renewable energy. Impact investing is another important financial strategy we believe in.  

What is impact investing?

Impact-investing is a socially-responsible investment philosophy that seeks to earn a profit while helping to improve society, the environment and government. Put another way, impact investors want to use their money to make a positive impact on the world, or as the saying goes: “You can do good and do well.” 

Impact investors can own any asset class or sector, but they tend to focus on agriculture, finance, housing, health care, education and the environment, to name a few. 

For example, impact investors may buy individual stocks, ETFs or mutual funds that own shares in companies that focus on solar power or alternative fuels. They may also make investments that address poverty, help people find affordable housing, enhance health care or improve educational opportunities. All of these are examples of impact investments. 

Note: Although impact investing is similar to ESG (environmental, social and governance), and SRI (socially-responsible investing), they are technically not the same. 

Impact investing and the upcoming election

The outcome of the 2024 presidential election will have huge implications for the future of U.S. environmental policies. Impact investors are already motivated and engaged about the issues. The upcoming election should motivate them to do even more.

Now that the election is only weeks away, accusations will be made against both candidates. This could convince some investors to sell all their stocks and funds just because their candidate lost. This is usually a huge mistake. It is much wiser to take a “wait-and-see’ attitude no matter who is president.  

Even if you believe the “wrong” person has entered the White House, positive or negative changes to the environment or the workplace won’t happen for at least two years, according to several experts. A lot depends on who controls Congress. 

Look for impact investment opportunities

If you are an impact investor, there will be many future investment opportunities. This means focusing on companies that have a positive impact on society. 

If you are a new investor, buying a mutual fund or ETF is a good place to start. This allows professionals to do the stock-picking for you. 

According to the MSCI, here are the “gross returns” of the MSCI USA ESG Leaders index (as of August 30, 2024): 

• 1-year return +26.63%

• 3-year return +9.29% 

• 5-year return: +16.21%

• 10-year return +12.75%

The top 10 companies in the index include Nvidia NVDA 

, Microsoft MSFT , Alphabet A {symbol link=GOOG], Alphabet C, Lilly (Eli) & Company LLY , Tesla TSLA , Visa , Procter & Gamble PG , Mastercard MA , and Johnson & Johnson JNJ . 

Note: The total return of the S&P 500 index during the last year was 27.14%. In other words, the index produced nearly the same result as the S&P 500 index. However, if you had invested in a few of the top individual stocks in the MSCI ESG index, your results would have been even more spectacular. 

Election implications for impact investors

The next president will decide whether oil and gas leasing on federal lands will be allowed, whether offshore regions will be protected or ravaged, such as the Artic. In addition, renewable projects, and clean and green incentives including electric vehicles, will either be prioritized or ignored depending on which party takes office.

The UN Climate Change Conference (UNFCCC COP 30) will take place in Brazil in November, 2025. This is when the parties who signed the Paris Agreement will meet. Depending on who is sitting in the White House in January, the United States will either participate or walk out, as they did in 2020. 

While the president can choose which issues to prioritize, Congress has the power to pass bills. An environmentally friendly Congress (with help from the president) may pass legislation to encourage clean and green spending, tax cuts, federal government subsidies and offer other incentives for researchers and companies who develop impact-friendly businesses. 

One political party may prioritize ESG programs, while another political party may choose to ignore them. It often begins at the presidential level, as the president and their party decide early in their term whether the environment and related issues are important or not. 

No matter which party takes control in January, impact investing will be in the news. There is no doubt that climate change will be at the top of the list beginning with our continuing to participate in the Paris Agreement. 

What can you do to make an impact?

• Vote. When you head to the polls this November (or earlier), your vote has an impact on the future of our environment, society, workplace and economy.

• Research which mutual funds, ETFs or stocks reflect your values. 

• Be careful to avoid misinformation. Doublecheck any dubious or outlandish claims, especially when accusations are made with no facts to back them up. 

• If you are new to impact investing, start small and don’t plunge into an investment with too much of your money. Try to have a diversified portfolio (i.e., don’t put all your eggs in one basket). 

• Keep in mind that no matter who wins the White House in November, there is no way to predict how impact investments will perform in the future.

Note: For a list of impact investments including mutual funds and ETFs, a great source is Morningstar, which rates each fund’s performance while providing a “sustainability” rating.” 

Conclusion

As an impact investor, one of your goals may be to help save the planet from the ravages of climate change while also helping to make life easier for others. No matter your political affiliation, everyone wants to see a robust economy, a healthy environment and a strong infrastructure. 

It may take a while to achieve results, so patience is required. The next president and Congress play an extremely important role in deciding where our tax dollars are spent, one of the reasons why this election is so critical.

LINK TO ORIGINAL ARTICLE: https://rebrand.ly/70280cs

“Dr. Doom” will see you now. 

Investment manager Marc Faber, a.k.a. “Dr. Doom,” earned that moniker after advising his clients to get out of the stock market before the October 1987 crash.  

Faber, publisher of the investment newsletter “The Gloom, Boom, & Doom Report,” doesn’t foresee an imminent market crash now, but is wary of the U.S. stock market and continues to be concerned about stock valuations. Says Faber: “The market has been driven higher by a handful of stocks,” that is, “any stock that has anything to do with artificial intelligence.

These stocks, Faber notes, are “grossly overvalued.”

After 50 years of investing and trading experience, Faber has learned many important lessons. No. 1: Respect the power and unpredictability of the stock market, if only to avoid being caught by surprise when the market makes extreme moves. 

In this recent interview, which has been edited for length and clarity, Faber talked about his view of both the stock- and housing markets, strategies investors should use to protect a portfolio, how interest rates could reach unsustainable levels, and the disastrous effects of still-high inflation. 

MarketWatch: What’s your view of the U.S. stock market right now? 

Faber: I am relatively negative about the U.S. market. Most stocks haven’t done well. However, the market has been driven higher by a handful of stocks — semiconductors and anything to do with high-tech, especially with artificial intelligence. In my view, these stocks are grossly overvalued and have substantial downside. When there is a change in leadership, these stocks will go down as the market moves away from these favorite stocks to more value-oriented stocks. 

MarketWatch: What are the red flags you’re seeing in stock prices?

Faber: First, if you look at valuations by historical standards, they’re very high, especially the favorites I just mentioned. Second, the profit margins of American companies will come down because of inflationary pressures, and also because of weak demand. The problem in America with many sectors is affordability, especially in the housing industry. Housing affordability in the U.S. is at its lowest level ever. That reduces the demand, which reduces earnings potential. 

MarketWatch: What can the U.S. government do to boost economic demand?  

Faber: The question is how can you operate on the economy without putting the patient into the hospital? It will be very unpleasant for two, three or four years. But what must be done — and will be done eventually — is to bring fiscal deficits down. 

There are three choices. First, politicians could increase taxes. However, if politicians go to American voters and tell them they must increase taxes, they will not get elected. Second, politicians could cut government spending. But no one will elect them if they cut police, fire, and army veteran pensions, or cut Social Security contributions for those over 65. The third option, which is what every government has embarked upon, is inflation. 

The government prints money and the inflation rate goes up. But inflation rises because of deficits and money printing. In other words, it’s a tax. The bad aspect of inflation is that it touches different sectors of society differently. For example, I have cash, stocks, bonds, commodities and no debt. I love inflation because the value of my assets goes up. 

But as a social observer, historian and economist, I know it’s a disastrous policy with a disastrous outcome. The poor people get hurt the most during inflationary times because they have no assets. That’s why if you look at every inflationary period in history, wealth inequality increased dramatically. 

MarketWatch: How can investors protect their money in this environment?

Faber: People should reverse their thinking and start to contemplate the view that instead of everything going up, think what would happen if everything that you own goes down in value. I want to stress that it’s not a disaster if everything comes down and you have no debts. The problem arises for people who have a lot of debts, because debts don’t come down. 

If I were an investor, given the uncertainty we have in the world, I would own some precious metals. I’m not saying the precious-metals market will go up tomorrow. But when I look at the debt levels in America — the unfunded liabilities of the U.S. government and those of pension funds, in my view — the only way out is to print money. There is no other option. That’s what governments have always done. 

MarketWatch: Are you shorting the U.S. market?  

Faber: I used to be one of the larger short sellers. But during the technology boom in 1999 and 2000, I lost a lot of money. I decided that shorting stocks in a money-printing environment is a dangerous proposition. Based on fundamentals, a stock should go down, but because of monetary injection, the stock goes up. 

MarketWatch: What is one of the most important lessons you’ve learned about the stock market? 

Faber: I have a very good lesson that everyone should remember: The market is unpredictable. On any trading day, we don’t know how the market will close. And in six months, where will the market be? Do you know? I don’t know. That’s why most individual stock investors and traders will lose money.  

MarketWatch: Are you seeing different conditions in stock markets outside the U.S.? 

Faber: Actually, the whole world has been gambling on the “Magnificent Seven” stocks — especially Nvidia 

Michael Sincere (michaelsincere.com) is the author of “Understanding Options,” “Understanding Stocks,” and the forthcoming “Help Your Child Build Wealth” (Wiley, 2024).

Link to Article: https://rebrand.ly/t2kg9gb

Most of you probably know that governments must soon change to cleaner and greener energy sources to prevent people from suffering or dying from the damaging effects of pollution and severe weather-related events.

Fewer people know that students and environmental activists have pressured university and college officials for years to divest their endowment funds (donations or gifts to educational institutions to support their missions in perpetuity) of all fossil fuel holdings.

The endowment numbers are huge. Universities and colleges have a combined total of $800 billion in endowments with investments in many places, including the fossil fuel industry.

The student’s goal is to force higher educational institutions to stop investing in companies in the fossil fuel industry and to divest all current investments in that financial sector. Divestment is one way to help force environmental changes.

The divestment pressure has shown results. Worldwide, almost 1,500 educational institutions have fully or partially divested from fossil fuels. In the United States, nearly 250 such institutions have “committed to some form of fossil fuel divestment.”

There is political pressure on both sides. On one hand, the fossil fuel industry spends hundreds of millions of dollars to lobby (and finance) politicians to maintain the status quo. More importantly, the industry creates jobs.

On the other hand, as an increase in extreme weather conditions (such as droughts, hurricanes, wildfires and floods) results in more deaths and destruction, world governments will be pressured to find alternative energy sources and reduce their reliance on fossil fuels.

Campaign to change university fossil fuel investments

No one said it’s easy to move from reliance on fossil fuels to clean energy, or that it will happen quickly. After all, jobs (and votes) are on the line. Another factor is that these educational institutions share in the billions of dollars in profits by collecting dividends.

Also, in certain areas of the country where oil is a huge part of the economy, such as in Texas or Alaska, divestment is not welcome.

The good news for investors is that experts say that investing in clean energy and sustainable technologies is more profitable than investing in fossil fuels. The International Energy Agency calculates that “the world now invests $1.7 trillion per year in clean energy, higher than the $1.1 trillion being invested in fossil fuels.”

As new clean and green technologies are developed, additional educational institutions may feel the pressure to divest.

Both small and large colleges and universities have already divested, including Antioch University, Dartmouth College, University of California, Chico State University, Harvard University, Wellesley College, Boston University, Georgetown University, Brown University, New York University, Princeton University, University of Michigan, Unity College, Loyola University Chicago, Rutgers University, Yale, Cornell, Columbia University, and Goddard College, to name a few.

A full list of participating colleges and universities can be found here.

How to start your own divestment campaign

If you are a student who wants to start a divesting campaign at your university or college, there are steps you can take to convince the board of trustees to divert and reinvest in more environmentally-friendly companies.

First, start small by asking for a meeting with the board of trustees, or the university president. In the email or letter, politely request a freeze or drawdown in fossil fuel investments. If university officials are willing to speak to you, that is a significant first step.

However, if the board of trustees ignores or denies your request, you can take other steps:

Recruit friends, concerned citizens, faculty members, donors, or alumni who may be willing to help with a divestment campaign.

Educate students and faculty about the issue such as arranging a debate, show films, write an op-ed in the campus newspaper, write a letter to the editor of the town newspaper or have a divestment party.

Consider creating a website devoted to the divestment campaign, and using social media to bring attention to the issue. Contact the national media to request that a journalist cover the story.

Start a petition to prove there is enough interest in the issue to bring it up for discussion.
Bring the petition to the college president with letters of support from all concerned parties. Try to meet with the board of trustees again to see if they are open to change.

Not all divestment campaigns at universities have been successful even with pressure from students and faculty. If no action is taken by the college president or board of trustees, you could try to turn up the heat with campus demonstrations, sit-ins or walk-outs. Admittedly, these are more aggressive actions that few would be willing to take.

New York University success story

One divesting success story was at Manhattan’s New York University, where four student activists were given the opportunity to tell the school’s board of trustees “why the university should divest the fossil fuel stocks in its $5 billion endowment.”

The students were surprised when board chair billionaire William Berkley agreed with them. He said they no longer owned stocks in fossil fuel companies, and committed to avoid any direct investments in these companies in the future.

Another successful campaign occurred at the University of Michigan. At first, university officials aggressively resisted student’s demands, but after campus protests exploded, the board of trustees agreed to completely divest from fossil fuel companies.

Conclusion

No one is expecting the world to become fossil-fuel free anytime soon, but many, beginning with college students, are working hard to change the public’s mindset.

Environmental scientists warn that if something isn’t done now, future generations will suffer the consequences. Pressuring educational institutions to divert their money to companies that promote green and clean energy is a good place to start.

LINK TO ARTICLE: https://rebrand.ly/hhni8sp

Many investors buy stocks in companies that match their values, whether it be environmental, social or governance issues, minority-owned, women-owned or companies led by women.

For many, this is a smart investment decision. After all, in the United States, “women-owned firms are growing at more than double the rate of all other firms, contribute nearly $3 trillion to the economy and are directly responsible for 23 million jobs.”

As mentioned in Part 1, companies with a larger percentage of women managers tend to outperform those with male leaders. The research measured variables such as profit, corporate governance and creativity. For this reason, many investors seek out companies predominantly led by women, although the list is still small.

“We find that funds managed by women or mixed teams produce similar and sometimes better risk-adjusted returns than male-only managed funds but they are few in number, and find it difficult to raise significant amounts of assets,” concluded a British research study published in the Journal of Applied Finance & Banking.

If women-led or women-owned companies are important to you, the following investments should help give ideas of how to get started. These include stocks, exchange-traded funds and mutual funds that focus on women.

ETFs focused on women empowerment and equality

Let’s start by taking a look at ETFs who invest in companies with women CEOs or women in leadership positions. Although the one-year results below serve as a guide, don’t use past performance as the main reason for deciding whether a security will be profitable in the near term.

Note: The following securities, listed in random order, are not recommendations, but are ideas to motivate you to do additional research. The goal is to invest your money and earn profits with the issues and ideas that are important to you.

Note: Over the last year (as of August 29, 2024), the S&P 500 gained 25.22%.

1. SPDR SSGA Gender Diversity Index ETF

SHE tracks an index provided by MSCI that scores companies based on women representation in leadership as well as their diversity programs for staff.

One-year total return: +27.94% (as of August 29, 2024)
Assets Under Management (AUM): $247 million
Expense ratio: .20%
Top three holdings: Nvidia, Apple, Microsoft (MSFT)

2. Impact Shares YWCA Women’s Empowerment ETF
WOMN tracks an index provided by Morningstar that is designed to include companies with strong gender diversity programs. Additionally, all profits from this fund are donated to the YWCA.

One-year total return: +23.13% (as of August 29, 2024)
Assets Under Management (AUM): $59.4 million
Expense ratio: .75%
Top three holdings: Apple, Meta Platforms, Amazon

3. Hypatia Women CEO ETF
WCEO invests in all publicly traded American companies with female CEOs.

One-year total return: +19.62% (as of August 29, 2024)
Assets Under Management (AUM): $3.3 million
Expense ratio: .85%
Top three holdings: Lumen, Arista, Advanced Micro Devices

4. NYLI Engender Equality ETF
EQUL tracks an index provided by Solactive that is designed to include companies with gender equality, represented by equal pay and balanced leadership.

One-year total return: +20.30% (as of August 29, 2024)
Assets Under Management (AUM): $7.2 million
Expense ratio: .45%
Top three holdings: Kellanova, Globant SA, Halozyme Therapeutics

Mutual funds focused on women leadership

There are also a handful of mutual funds focused on women’s leadership, including the following.

1. Impax Ellevate Global Women’s Leadership Fund
PXWEX uses an in-house gender score to identify companies with diverse leadership, gender equity, and strong diversity programs and practices.

One-year total return: 18.23% (as of August 29, 2024)
Assets Under Management (AUM): $749 million
Expense ratio: .77%
Top three holdings: Nvidia, Microsoft, Apple

2. Fidelity Women’s Leadership Fund
FWOMX invests in companies with female representation in the senior management team or board of directors, or who have what the fund managers consider strong gender diversity practices.

One-year total return: +20.29% (as of August 29, 2024)
Assets Under Management (AUM): $154 million
Expense ratio: .69%
Top three holdings: Amazon, Microsoft, Nvidia

3. Fidelity Women’s Leadership ETF
FDWM follows the same methodology as the Fidelity Women’s Leadership Fund, but is instead available as an ETF.

One-year total return: +20.76% (as of August 29, 2024)
Assets Under Management (AUM): $3.9 million
Expense ratio: .59%
Top three holdings: Amazon, Microsoft, Nvidia

Women CEOs in Fortune 500 companies

The following is a partial list of women CEOs at Fortune 500 companies. As you see below, some of the largest companies in the world are led by women:

·       Karen Lynch, CVS Health CVS

·       Gail Boudreaux, Elevance Health ELV

·       Mary Barra, General Motors GM

·       Carol Tome, United Parcel Service UPS

·       Jane Fraser, Citigroup 

·       Corie Barry, Best Buy BBY

·       Tricia Griffith, Progressive PGR

·       Thasundra Duckett, TIAA

·       Safra Catz, Oracle ORCL

·       Lynn Good, Duke Energy DUK

·       Sarah London, Centene CNC

·       Priscilla Almodovar, Fannie Mae

·       Phebe Novakovic, General Dynamics GD

·       Kathy Warden, Northrop Grumman NOC

·       Vicki Hollub, Occidental Petroleum OXY

Six stocks in women-led companies

In addition to the stocks listed above, the following stocks were culled from a number of online sources. Once again, these stocks are not recommendations, but may be used as a starting point to do additional research.

Reminder: Over the last year (as of August 29, 2024), the S&P 500 gained 25.22%.

1. Arista Networks ANET
Stock price: $349 (as of August 29, 2024)
One-year total return: +87.49% (August 29, 2024)

2. Sunrun RUN
Stock price: 20.64 (as of August 29, 2024)
One-year total return: +47.46%

3. The Hershey Company HSY

Stock price: 191.16 (as of August 29, 2024)
One-year total return: -9.69% (August 29, 2024)

4. Zoetis ZTS
Stock price: $183.26 (as of August 29, 2024)
One-year total return: -1.28% (August 29, 2024)

5. Accenture ACN
Stock price: 342.51 (as of August 29, 2024)
One-year total return: +6.74% (August 29, 2024)

6. Veracyte VCT
Stock price: 32.39 (as of August 29, 2024)
One-year total return: +26.23% (August 29, 2024)

Conclusion

If women-led companies, diversity and gender diversity are important issues for you, there are many excellent investment choices, several which handily beat the S&P 500 over the last year. As always, just because a stock or investment performed well in the past does not mean it will continue to do so.

Never forget that it’s possible for a stock price, or the entire market, to fall. That is the risk that all investors take when participating in the stock market. Fortunately, several women-led companies, including some of the ones listed in this article, have outperformed the S&P 500, and will continue to do so, even if there is a market pullback.

LINK TO ORIGINAL ARTICLE: https://bit.ly/47nmmD2

Now that Labor Day is behind us, it’s a good time to evaluate whether American workers are getting paid what they’re worth. One good way to do that is to compare their pay to the salary of their CEOs.

According to data analyzed by the Associated Press, it’s estimated that many CEOs are getting paid nearly 200 times what their workers were paid last year.

“The median pay package for CEOs rose to $16.3 million, up 12.6%,” through 2023, according to the AP. Wages and benefits for private-sector workers increased by only 4.1% over the same period.

In other words, the typical worker wage not only trails that of their CEOs, but it falls further behind every year. This rising inequality between CEO’s compensation and that of their employees may be one of the reasons that some workers feel they have been left out, and will never catch up. Rampant inflation, which appears to be ending, ravaged employee’s earning power.

A number of outside observers believe that executive pay has reached extreme levels. Tesla CEO Elon Musk is exhibit No. 1.

CEOs with exorbitant CEO-to-worker pay ratios

In June, Equities News discussed how Tesla TSLA 

shareholders approved a $46 billion dollar pay package for CEO Elon Musk, the largest compensation package ever given to a U.S. corporate executive.

Compare that to the salary of the typical Tesla employee. According to Tesla’s 2023 proxy filing, the “median annual pay of a non-CEO Tesla employee was $45,811.” (Musk’s pay was more than one million times that of his employees!)

Although Elon Musk’s pay package is miles higher than that of anyone else, other CEOs have exorbitant CEO-to-worker pay ratios. According to the Institute for Policy Studies annual Executive Excess Report 2024, Ross Stores CEO Barbara Rentler was given an $18.1 million pay package, meaning she was paid more than 2,100 times as much as “the $8,618 pay that went to her company’s ROST 

median-compensated employee, a part-time store associate.”

Another CEO with an extremely high CEO-to-worker pay ratio: Nike CEO John Donahoe earned $32.8 million in 2023, “975 times as much as the athletic wear company’s NKE 

$33,646 median pay,” says the Institute for Policy Studies.

CEOs with the highest 2024 compensation packages

According to the data analyzed by the AP, the following are the top five CEOs who recently had the highest yearly compensation packages (not including Elon Musk).

• Hock Tan, Broadcom: $162 million per year

• William Lansing, Fair Isaac Corp.: $66.3 million

• Tim Cook, Apple: $63.2 million

• Hamid Moghadam, Prologis, Inc.: $50.9 million

• Ted Sarandos, Netflix: $49.8 million

Note: These are approximate pay packages that may include bonuses, awards and other perks.

Female CEOs with the highest salaries

According to the AP’s annual compensation survey, the following are the top five female CEOs of S&P 500 companies with the highest salaries.

• Lisa Su, Advanced Micro Devices: $30.3 million

• Mary Barra, General Motors: $27.8 million

• Jane Fraser, Citigroup: $25.4 million

• Kathy Warden: $23.5 million

• Carol Tome, UPS: $23.3 million

Although more women have broken the glass ceiling and reached the C-suite, the pay gap between male CEOs and female CEOs is still quite wide.

Note: These are approximate pay packages that may include bonuses, awards and other perks.

Suggested solutions

To help fix the CEO-to-worker pay gaps, the Institute for Policy Studies has three recommendations:

• Tax and restrict stock buybacks (which prevents CEOs from cashing in on short-term price jumps they “artificially created.”)

• Subject corporations with excessive CEO pay to higher tax rates.

• Use federal contracts and subsidies to discourage wide corporate pay gaps.

In a poll conducted by Gallup and Bentley University, two-thirds of Americans believe that companies aren’t doing a good job of reducing the pay gap between CEOs and employees. More than half of U.S. adults believe it’s extremely important for companies to reduce the pay gaps between CEOs and average employees.

Not surprisingly, legislation that could reduce the huge gaps between the CEO and average workers has long been opposed by corporate lobbyists. They claim the huge pay bonuses are necessary because CEOs are primarily responsible for increasing the financial worth of the company. Without the skills of the CEO, the lobbyists claim, shareholder value will suffer.

Why are CEOs paid so much?

It’s up to the board of directors to explain to shareholders why their CEO deserves a higher-than-normal salary, especially when the amount is excessive. Many boards are willing to pay huge sums to top-notch CEOs whom they believe have the skills necessary to run the company (and help boost its stock price). They often claim that huge pay packages are necessary to attract and keep top CEO talent.

Institutional Shareholder Services, a proxy advising service, recently issued a press release about a study it conducted that claimed that roughly 70% of S&P CEOs in the study received a pay increase while approximately 27% of them saw their pay decrease.

They also discovered that most of the pay changes resulted from an increased value of stock and option awards. At the same time, they found that “companies in the S&P 500 generally exhibited strong total shareholder returns over the measurement period (one-year).”

Conclusion

As long as the stock market keeps moving higher and profits in major corporations keep increasing, CEO pay will likely increase. In reality, shareholders aren’t complaining and, in many cases, approve bloated pay packages.

Unfortunately, while their CEOs receive astounding salaries, employees often get the shortest end of the stick, especially for employees who earn lower wages (such as those working at retail stores).

LINK: https://bit.ly/3XuRlK6

Many investors buy stocks in companies that match their values, whether it be environmental, social or governance issues, minority-owned, women-owned or companies led by women.

For many, this is a smart investment decision. After all, in the United States, “women-owned firms are growing at more than double the rate of all other firms, contribute nearly $3 trillion to the economy and are directly responsible for 23 million jobs.”

As mentioned in Part 1, companies with a larger percentage of women managers tend to outperform those with male leaders. The research measured variables such as profit, corporate governance and creativity. For this reason, many investors seek out companies predominantly led by women, although the list is still small.

“We find that funds managed by women or mixed teams produce similar and sometimes better risk-adjusted returns than male-only managed funds but they are few in number, and find it difficult to raise significant amounts of assets,” concluded a British research study published in the Journal of Applied Finance & Banking.

If women-led or women-owned companies are important to you, the following investments should help give ideas of how to get started. These include stocks, exchange-traded funds and mutual funds that focus on women.

ETFs focused on women empowerment and equality

Let’s start by taking a look at ETFs who invest in companies with women CEOs or women in leadership positions. Although the one-year results below serve as a guide, don’t use past performance as the main reason for deciding whether a security will be profitable in the near term.

Note: The following securities, listed in random order, are not recommendations, but are ideas to motivate you to do additional research. The goal is to invest your money and earn profits with the issues and ideas that are important to you.

Note: Over the last year (as of August 29, 2024), the S&P 500 gained 25.22%.

1. SPDR SSGA Gender Diversity Index ETF
SHE tracks an index provided by MSCI that scores companies based on women representation in leadership as well as their diversity programs for staff.

One-year total return: +27.94% (as of August 29, 2024)
Assets Under Management (AUM): $247 million
Expense ratio: .20%
Top three holdings: Nvidia, Apple, Microsoft (MSFT)

2. Impact Shares YWCA Women’s Empowerment ETF
WOMN tracks an index provided by Morningstar that is designed to include companies with strong gender diversity programs. Additionally, all profits from this fund are donated to the YWCA.

One-year total return: +23.13% (as of August 29, 2024)
Assets Under Management (AUM): $59.4 million
Expense ratio: .75%
Top three holdings: Apple, Meta Platforms, Amazon

3. Hypatia Women CEO ETF
WCEO invests in all publicly traded American companies with female CEOs.

One-year total return: +19.62% (as of August 29, 2024)
Assets Under Management (AUM): $3.3 million
Expense ratio: .85%
Top three holdings: Lumen, Arista, Advanced Micro Devices

4. NYLI Engender Equality ETF
EQUL tracks an index provided by Solactive that is designed to include companies with gender equality, represented by equal pay and balanced leadership.

One-year total return: +20.30% (as of August 29, 2024)
Assets Under Management (AUM): $7.2 million
Expense ratio: .45%
Top three holdings: Kellanova, Globant SA, Halozyme Therapeutics

Mutual funds focused on women leadership

There are also a handful of mutual funds focused on women’s leadership, including the following.

1. Impax Ellevate Global Women’s Leadership Fund
PXWEX uses an in-house gender score to identify companies with diverse leadership, gender equity, and strong diversity programs and practices.

One-year total return: 18.23% (as of August 29, 2024)
Assets Under Management (AUM): $749 million
Expense ratio: .77%
Top three holdings: Nvidia, Microsoft, Apple

2. Fidelity Women’s Leadership Fund
FWOMX invests in companies with female representation in the senior management team or board of directors, or who have what the fund managers consider strong gender diversity practices.

One-year total return: +20.29% (as of August 29, 2024)
Assets Under Management (AUM): $154 million
Expense ratio: .69%
Top three holdings: Amazon, Microsoft, Nvidia

3. Fidelity Women’s Leadership ETF
FDWM follows the same methodology as the Fidelity Women’s Leadership Fund, but is instead available as an ETF.

One-year total return: +20.76% (as of August 29, 2024)
Assets Under Management (AUM): $3.9 million
Expense ratio: .59%
Top three holdings: Amazon, Microsoft, Nvidia

Women CEOs in Fortune 500 companies

The following is a partial list of women CEOs at Fortune 500 companies. As you see below, some of the largest companies in the world are led by women:

·       Karen Lynch, CVS Health CVS

Gail Boudreaux, Elevance Health ELV

·       Mary Barra, General Motors GM

·       Carol Tome, United Parcel Service UPS

·       Jane Fraser, Citigroup 

·       Corie Barry, Best Buy BBY

·       Tricia Griffith, Progressive PGR

·       Thasundra Duckett, TIAA

·       Safra Catz, Oracle ORCL

·       Lynn Good, Duke Energy DUK

·       Sarah London, Centene CNC

·       Priscilla Almodovar, Fannie Mae

·       Phebe Novakovic, General Dynamics GD

·       Kathy Warden, Northrop Grumman NOC

·       Vicki Hollub, Occidental Petroleum OXY

Six stocks in women-led companies

In addition to the stocks listed above, the following stocks were culled from a number of online sources. Once again, these stocks are not recommendations, but may be used as a starting point to do additional research.

Reminder: Over the last year (as of August 29, 2024), the S&P 500 gained 25.22%.

1. Arista Networks ANET
Stock price: $349 (as of August 29, 2024)
One-year total return: +87.49% (August 29, 2024)

2. Sunrun RUN
Stock price: 20.64 (as of August 29, 2024)
One-year total return: +47.46%

3. The Hershey Company HSY
Stock price: 191.16 (as of August 29, 2024)
One-year total return: -9.69% (August 29, 2024)

4. Zoetis ZTS
Stock price: $183.26 (as of August 29, 2024)
One-year total return: -1.28% (August 29, 2024)

5. Accenture ACN
Stock price: 342.51 (as of August 29, 2024)
One-year total return: +6.74% (August 29, 2024)

6. Veracyte VCYT
Stock price: 32.39 (as of August 29, 2024)
One-year total return: +26.23% (August 29, 2024)

Conclusion

If women-led companies, diversity and gender diversity are important issues for you, there are many excellent investment choices, several which handily beat the S&P 500 over the last year. As always, just because a stock or investment performed well in the past does not mean it will continue to do so.

Never forget that it’s possible for a stock price, or the entire market, to fall. That is the risk that all investors take when participating in the stock market. Fortunately, several women-led companies, including some of the ones listed in this article, have outperformed the S&P 500, and will continue to do so, even if there is a market pullback.

LINK TO MY ARTICLE: https://bit.ly/3T5Yluh

Monday is Women’s Equality Day, celebrating the anniversary of the 19th amendment to the constitution, passed in 1920, which gave women the right to vote. It forbids states and the federal government from suppressing the right to vote based on sex. 

It was a huge victory for women across the United States, as the right to vote is vital to our democracy. It also meant that any candidate running for office had to include issues important to women in their campaign message. 

This obviously influenced the political, social and economic direction of the United States, and paved the way for women to become elected officials. The 19th amendment made it easier for women to run for elected office, including the House of Representatives, senate, vice president, and perhaps even president one day. 

In 1971, New York Congresswoman Bella Abzurg introduced a resolution that made April 26 Women’s Equality Day. In 1972, President Richard Nixon officially recognized this special day with Proclamation 4147, which Congress approved in 1973. Every president since has announced August 26 as Women’s Equality Day. 

Not a level-playing field (yet)

Although women still face obstacles based on gender-based discrimination, the playing field is improving slowly. While the so-called “glass ceiling” still exists (i.e., a barrier to advancement in a profession, especially involving women and minorities), a few cracks have appeared.

One place where women are still not equal is in the C-suite (i.e., top management positions) and in the board room. In 2024, there were 52 women in charge of Fortune 500 companies, crossing 10% for the first time. The number continues to increase, but it will be a long time before women outnumber men as Fortune 500 CEOs. 

According to research, companies with a larger percentage of women managers tend to outperform those with male leaders. The research measured variables such as profit, corporate governance, and creativity. For this reason, many investors seek out companies predominantly led by women, although the list is still small. 

In addition to female-led companies, an investing theme involves investing in ETFs and mutual funds that are led by women. A British research study published in the “Journal of Applied Finance & Banking“ (Vol. 13, No. 5, 2023) by Jacob H. Schmidt and Bianca Hutton Chimes concluded: “We find that funds managed by women or mixed teams produce similar and sometimes better risk-adjusted returns than male-only managed funds but they are few in number, and find it difficult to raise significant amounts of assets.” 

The benefits of having a women CEO

According to research, there are a number of benefits when women are appointed to senior management positions. First, adding women to the C-suite causes organizations to think differently, adding new ideas to the corporation while also encouraging more risk taking. This “changes how these firms made key strategic decisions.” 

The research also shows that when female executives were included in decision-making, the firm gradually shifts from a merger and acquisition (i.e., M&A) mindset to a focus on research and development (i.e., R&D). The shift to increased R&D spending helped senior-level executives be more open “to change and aversion to risk” than when investing in M&A. 

Nevertheless, these are not “hard-and-fast” rules. There are many examples of successful women executives who prioritized M&A investments over R&D. The key point is that the research suggests that having a more diverse management team helps make the entire team more open to change and less risk-averse. Ideally, that makes a company stronger and more flexible. 

Not surprisingly, women CEOs differed in their management style from men, but research studies show that they “were just as effective in terms of the financial performance of their companies.”

Specifically, many women had a more open and positive communication style than their male counterparts, especially during the pandemic, when this research was conducted. In particular, “women CEOs used proportionately more expressions of joy and men used proportionately more anger.” The researchers concluded that during this time period, female CEOs had much more positive communications with their employees compared to men. 

Conclusion

If female power and diversity are important issues to you, in Part 2 we will discuss specific ETFs, mutual funds, and stocks that reflect your values. When a company is diverse, especially in upper management, it is likely to be stronger as it includes a variety of employee experiences, opinions, and viewpoints. 

The goal for many companies is to promote gender equality and equal compensation. As a result, female leadership helps a company to enhance creativity and problem-solving. 

LINK: https://bit.ly/3WZJxOJ

We previously discussed the dangers that many workers face from extreme heat conditions, typically farming and construction industry employees, who often work outdoors without adequate breaks or access to fresh water.

Let’s not forget about white-collar workers, who appear to have cushy jobs in air-conditioned offices, but who may also be exposed to unhealthy environments. The extraordinarily long hours, demanding managers and tight deadlines have pushed some white-collar workers to the edge and, in some cases, have overworked them to death.

In May, 2024, a Bank of America investment banker and former Green Beret, 35-year old Leo Lukenas III, died after putting in 100 hours a week for a month while working on a $2 billion acquisition. He died when “a blood clot formed in a coronary artery.”

Twelve-hour days, 6 days a week, are the norm, say many interns, whose entry-level salaries may reach as high as $200,000 a year. Even 100 hours (or more) per week is possible for those working in high-stress jobs such as investment banking.

Many young employees don’t complain to their managers for fear of looking “weak.” One associate, according to the Wall Street Journal, left Bank of America when he was routinely asked to work 95-hour weeks. The WSJ, who spoke to dozens of bank employees, claimed that some upper managers told junior bankers to “ignore policies that limit working hours.”

These policies were installed years ago after a Bank of America intern in London, Moritz Erhardt, died in 2013 after having an epileptic seizure after working a series of grueling all-nighters. The new rules limited banker hours and gave bankers a “protected Saturday policy.”

Health problems from stress

For many young, ambitious employees, the long hours are worth the opportunity to make big bucks, while showing their managers they are willing to do almost anything to prove their loyalty and work ethic.

Not surprisingly, the excessively long hours and competitive workplace culture has taken a toll on the health of many workers, and not only investment bankers.

Some white-collar workers are sickened by unhealthy work environments such as mold, faulty or noisy air conditioners, and unsafe indoor air. Sometimes, these environmental hazards go undetected for years.

High levels of work-related stress

Stress has been another problem for many white-collar workers, who are often under extreme pressure to meet tight deadlines.

Some workers attempt to hide work-related stress symptoms such as extreme anxiety or burnout. Robert Sapolsky, in an article published by The American Institute of Stress, says: “The body is not designed to handle constant, unrelenting stress. Over time, the wear and tear can lead to severe health consequences.”

According to the American Institute of Stress: “Prolonged exposure to stress can lead to serious health problems including heart disease, hypertension and diabetes.”

A number of research studies have confirmed that long working hours and heavy workloads have led to physical problems such as heart attacks and strokes, weight gain, insomnia, as well as increased stress levels. Workplace stress not only keeps workers at home but makes them less productive at work.

Companies noted for providing first-class mental health support

Several independent sources have mentioned companies that provide first class mental health support to their employees. For example, Upkeep identified companies that have programs in place meant to improve the mental health of their employees.

These companies provided stress management and assistance programs (Johnson & Johnson), wellness programs (Unilever), suicide prevention campaigns (Union Pacific), physical and mental health services (Barry Wehmiller and New Brunswick Power), and a comprehensive mental health program (American Airlines)

Also, Forbes magazine publishes an annual list of the best 100 companies to work for. The list is based on a survey of employees, which asks them a wide range of questions, including if they feel respected, if they receive support for their well-being, and if the company treats them fairly.

This year’s top 10:

1.     Hilton Worldwide Holdings 

2.    Cisco Systems 

3.    Nvidia 

4.    American Express 

5.    Synchrony 

6.     Wegmans Food Markets

7.     Accenture 

8.    Marriott International 

9.    Cadence 

10. Comcast 

What can employers do to reduce worker stress?

There are a number of steps that employers can take to reduce worker stress.

Employers can follow the lead of the companies mentioned above by creating mental and physical health programs. According to the World Health Organization, depression is the biggest worldwide problem for workers, costing businesses nearly $500 billion in “lost productivity.”

Companies can also encourage employees to lose weight by helping them switch from a fast-food diet to a nutritious one. Employers may help workers find ways to quit smoking, provide healthy on-site meals and snacks, and allow unrestricted access to water coolers.

One idea for employers is to routinely give out anonymous stress surveys with an opportunity for employees to provide feedback. Occupational Safety and Health Administration (OSHA) has a survey on their website with sample questions.

Although not always possible, it helps when employees are given more freedom depending on the type of work they do. If this is not feasible, employers may give some workers a variety of jobs rather than forcing them to do the same job every day. Rotating jobs helps reduce burnout.

To avoid emotional and physical work-related problems, employees should avoid working more than 80 to 100 hours a week. A 120-hour work week is not only unrealistic, but dangerous for workers. The human resources department probably has rules that prevent employees from working that many hours, but some managers ask their employees to hide the true number of hours worked.

It’s helpful when new, and typically younger workers, are given adequate training and an ongoing training program. Training programs help reduce stress in workers, especially for inexperienced or new hires.

Comfortable chairs and desks with neck and back rests or support pillows help show office workers that the company cares about their physical and emotional well-being. This may also help relieve repetitive strain injuries, i.e., damage to muscles and nerves resulting from constantly and repeatedly using the same motion.

Conclusion

White-collar workers who are asked to work extraordinarily long hours with unrealistic deadlines risk physical and psychological injuries, including anxiety and stress. It is up to employers, with help from the government, to make sure their employees are not asked by rogue managers to put their health and lives in danger just so they can help achieve a company’s financial goals.

LINK TO ARTICLE: https://bit.ly/3ySQGZ9

"Buffett sold half of his Apple position. Isn’t that market timing?" Stock trader Tom Basso reveals what it takes to win.

Tom Basso, a hedge-fund manager and veteran stock trader, was dubbed ”Mr. Serenity” in Jack Schwager’s classic 1992 book, “New Market Wizards.” 

Here’s how Schwager described Basso more than 30 years ago: “When I first met Basso, I was immediately struck by his incredible ease about trading. He has learned to accept losses in trading not only in an intellectual sense but on an emotional level as well. Moreover, his feelings of exuberance about trading (or, for that matter, about life) bubble right out of him. Basso has managed to be a profitable trader while apparently maintaining complete peace of mind and experiencing great joy.”

After speaking with Basso about the current U.S. stock market environment, it’s clear he hasn’t changed. For him, the headwind for stocks and the challenge for traders and investors now — recession fears, interest rates, geopolitical risk — is just another chapter in a long-running story. 

Basso should know. With 50 years of stock trading under his belt, he has experienced every type of market boom and bust, including the October 1987 U.S. market crash. If you want to know how he usually responds to these ups and downs, it’s spelled out in the educational website for traders he runs: enjoytheride.world.

In this recent interview, which has been edited for length and clarity, Basso talked about trading stocks, sticking to a plan, and how not losing can be more important than winning. 

MarketWatch: “Enjoy the ride, world.” Your trading philosophy sounds like a solution to any challenge, but it’s easier said than done. What advice do you have for stock traders now? 

Basso: You must have a plan. Many new traders, especially those who got their stimulus checks from COVID and were stuck at home because of the lockdowns, decided to take up trading. Many have never seen a disastrous bear market. Most have never seen anything except above-average historical returns on their portfolio. They haven’t been tested very much to the downside. I have been warning everyone to create a plan and then execute it. Otherwise, you will put yourself in harm’s way. 

MarketWatch: What trading plan is best under current market conditions?

Basso: You must have indicators in place that measure where the stock indices are moving. If you are a trend follower, perhaps you notice the market is in a down move. You could sell out of your stocks or exchange-traded funds (ETFs) and move to cash. Other trend followers might get signals to go short. It’s different for different people. Although I use short strategies, some people are restricted from using that strategy. If you’re in cash right now, one plan is to watch until your indicators move to the positive side. Then jump in with full force. 

MarketWatch: Which market indicators get your respect? 

Basso: I follow three indicators that I use in conjunction with each other because each one measures a different form of what I call noise. 

The first one is Donchian Channels, (a technical indicator used to identify bullish and bearish extremes over a period of time). The second indicator is the Keltner Channel, which is basically an exponential moving average that I use over different time periods. The third indicator I use is Bollinger Bands, which uses standard deviation to measure volatility. 

I run all three indicators simultaneously and put stops at the closest point to where the market is. I have plans for the market going sideways, down, or up. This all happens automatically. I could be out playing golf, so I don’t get too stressed about my trades. That’s why [“New Market Wizards” author] Jack Schwager called me “Mr. Serenity.” I do my market work inside of an hour. I’m not sitting in front of a computer screen all day. 

MarketWatch: What does your trading plan look like in action? 

Basso: I don’t know what the market will do. All I know is that if it’s a down move, I act. I already have the plan in place. I have my stops in place. I have the position sized properly for the amount of volatility and the size of my account. I’m neither over-committed or under-committed. I’ll go short, and if the market breaks through the top side, I will get rid of my short positions and go long.

MarketWatch: That sounds like market timing.

Basso: People are fond of saying that you shouldn’t time the market because you can’t afford to miss the 10 best days. I tell them to see what happens when you miss the 10 worst days. Warren Buffett recently sold half of his Apple position. Isn’t that market timing? Buffett has bought and sold lots of companies over the years. To me, everyone is a trader. It’s just a matter of your time frame and what indicators you are using. They are just labels. I don’t worry too much about them. I just measure the market and go with the flow. 

MarketWatch: Many investors rush to buy stocks when the market dips. Is that smart or a recipe for disappointment? 

Basso: If you’re buying the dip when the market is down by 10% or 15%, and the market goes down 50% during a bear market, you’ll be sitting for a long time trying to make back your losses. Every monthly statement that comes in, and every time you look at your account value, will be like a little knife twist in your back. You’re not going to be a happy camper. 

My attitude is to let the market fall to wherever it wants to fall. Sooner or later, buyers will come in, the market will stabilize, turn around and break through to the upside. 

MarketWatch: What are the biggest mistakes traders make? 

Basso: First, they don’t have the right amount of capital. I would encourage traders to save their money and get a second job, then build up a good-sized account so they can diversify and run some sensible strategies. Second, they must size their positions properly. Position sizing affects your results over the long run more than your buy- or sell position. 

MarketWatch: What’s the maximum amount you risk on each trade? 

Basso: I risk no more than 0.5% of my equity on each trade. I learned that from Larry Hite, who was interviewed by Jack Schwager in the first “Market Wizards” book. Don’t lose more than a small percentage on each trade. I cap the risk percent of my equity exactly the same for each trade. I’ve been doing that for over 40 years. Successful traders know how to size their positions. I wrote a book on it and provided the math. A lot of people say they will buy 100 shares of a stock because it’s a nice round number. But 100 shares of Amazon.com is a lot different than 100 shares of a utility company. A lot of new traders hear someone mention X, Y or Z stock, look at a chart, and buy 100 shares without knowing how to size their position, or have a strategy to buy or sell. They are just setting themselves up for failure and a lot of stress. 

LINK: https://bit.ly/4fWjzVg

In Part 1, we discussed what is meant by thematic investing, and in Part 2, we explained the risks and rewards of using this strategy. In Part 3, we discuss how to invest in three specific themes: green, clean and renewable energy. To help give you an idea of possible investments, a list of exchange-traded funds, mutual funds and stocks are listed below.

As you may know, a lot of people want to help solve our environmental problems by investing money into clean, green and renewable energy. Also, a number of institutional investors (i.e., pension and hedge funds) have reportedly invested billions of dollars into green, clean and renewable energy, and that amount is expected to skyrocket over the next decade.

The U.S. Energy Information Administration has reported that by 2050, nearly half the global energy production is likely to come from renewable sources such as wind and solar power.

What is green, clean and renewable energy?

Many people believe that green, clean and renewable energy represent the same idea, but there are important differences. Here are the definitions:

·       Renewable energy: This is any naturally occurring energy source that constantly replenishes itself, usually over a short time period. Theoretically, renewable energy is inexhaustible, meaning that the source is essentially infinite. Examples of renewable energy include wind power (or wind energy), solar power, marine power and hydroelectric power (i.e., energy that uses the natural flow of moving water such as when collected water is released by a dam to generate electricity). Although many renewable energy methods come with tremendous benefits, some renewable technologies may negatively impact the environment. For example, a hydroelectric plant can disrupt fish migration, and also water quality. In other words, some renewable methods are not completely “green.” Impact on the environment varies depending on the source.

·       Green energy: This is any form of energy that comes from natural sources such as water, wind, sunlight or an ocean. Green energy should have very little, or zero, negative impact on the environment. Green energy is considered “clean” because it does not release significant amounts of pollutants (such as greenhouse gases) into the atmosphere. The impact on the environment is almost none (which is why it’s considered the most ecologically friendly).

·       Clean energy: This is any energy source that emits a small amount of pollution, greenhouse gases, or chemicals. Although clean energy has some effect on the environment, the emitted greenhouse gases or pollutants are so small that the environment is not harmed. Impact on the environment: no adverse impact on the environment.

Now that you know a few of the subtle differences between the three energy types, let’s discuss specific investments.

Investing in green, clean or renewable energy

When deciding to be a socially responsible investor, the first step is to do your homework, that is, research. To help get you started, the following is a list of ETFs, mutual funds and stocks — including their one-year performance.

Although the one-year results serve as a guide, they should not be your main reason for buying. In other words, don’t use past performance in deciding whether a theme will become profitable in the near term. Note: The following securities, listed in random order, are not recommendations.

The following are green and clean ETFs. Keep in mind that many ETFs and mutual funds use the terms, clean, green and renewable energy interchangeably.

Ticker

ETF

1-year return (as of 8/9/2024)

LCDT

BlackRock World ex U.S. Carbon Transition Readiness ETF

+8.79%

FAN

First Trust Global Wind Energy ETF

+3.76%

NETZ

TCW Transform Systems ETF

+26.4%

USCL

iShares Climate Conscious & Transition

+22.7%

SPYX

SPDR S&P 500 Fossil Fuel Reserves Free ETF

+21.7%

FSLEX

Fidelity Environment & Alternative Energy

+16.1%

JCTR

JPMorgan Carbon Transition U.S. Equity ETF

+21%

USNZ

Xtrackers Net Zero Pathway Paris Aligned ETF

+22.6%

QCLN

Nasdaq Clean Edge Green Energy Index

-33.5%

ICLN

iShares Global Clean Energy ETF

-18.1%

Green and clean mutual funds: Before investing in a mutual fund, check to see if the fund has a load (sales charge). The following are “no-load” funds, so there should be no extra sales charges.

Ticker

Mutual Fund

1-year return (as of 8/9/2024)

PRBLX

Parnassus Core Equity Investor

+18.5%

PNOPX

Putnam Sustainable Leaders Fund

+24.5%

AMAGX

Amana Growth Investor

+21.7%

FITLX

Fidelity U.S. Sustainability Index

+21.7%

PARMX

Parnassus Mid Cap Fund

+14.2%

GAAEX

Guinness Atkinson Alternative Energy

-11.2%

Green and clean stocks: Although owning a single stock is theoretically riskier than investing in an index, if you do pick a winner, it should outperform an index (because poor-performing stocks in the index negatively affect results).

As you will see below, some stocks performed spectacularly well over the last year, easily beating the S&P 500 index. There is no guarantee these (or any) stock will continue to do as well in the future.

Ticker

Stock

1-year return (as of 8/9/2024)

FSLR

First Solar Inc.

+8.01%

NEE

NextEra Energy Inc.

+12.7%

BEPC

Brookfield Renewable Corp.

-4.39%

NEXNY

Nexans ADR

+55%

HASH

HA Sustainable Infrastructure Capital

+41%

ENPH

Enphase Energy Inc.

+20.6%

Note: If you are a stock picker, you can also choose stocks that are related to renewable energy such as electric cars, battery stocks, green utility stocks, LED stocks and recycling.

Does it make sense to invest in green, clean and renewable energy?

Climate change is a hot topic and will remain so for years to come. Government interest in clean energy depends on which party wields political power, resulting in more or less regulations, and more or less funding.

Investing in environmental themes will be volatile at times, and there will be winners and losers, just as with any investment. Nevertheless, it is possible to be both an ethical investor and good citizen while earning a profit.

Many businesses are already shifting towards environmentally friendly practices because their customers and shareholders are demanding it. It is almost certain that solar and wind companies will find innovative ways to make renewable energy more cost effective and efficient in the future. High-emission corporations will seek ways to reduce their carbon footprints (i.e., the total amount of greenhouse gases generated by their everyday actions.

Already, many utility companies are moving away from reliance on fossil fuels such as coal and gas to reduce their carbon output. This means including wind, solar and other technologies to improve energy efficiency.

Do your research and avoid the hype

Before investing in any of the above themes, do your homework (i.e., research). In early 2024, clean energy investing made the headlines when the Wall Street Journal reported that motivational speaker Tony Robbins invested $200 million into startup Omnis Energy, a West Virginia coal-fired plant that promises to “turn coal into clean-burning hydrogen without emitting any greenhouse gases.”

Robbins admitted that this revolutionary technology is untested, and that he could lose his entire investment, a risk he is willing to take. For most people, it is too risky to invest more than a small sum (or any amount) in experimental technologies.

Invest in the future

While green, clean and renewable have their risks, there is a place for this investment in your portfolio by choosing a broad-based index fund. Investors with a higher risk tolerance may consider green, clean and renewable investments, including the securities mentioned in this article.

As demand for energy increases across the world, and energy usage accelerates, scientists warn that using so much energy may have a detrimental effect on our climate. Higher temperatures are expected to wreak havoc on the environment until companies seek ways to replace fossil fuels with clean energy. These actions will save the planet while also becoming profitable for investors.

LINK: https://bit.ly/46NEWE8

Equities.com spoke with Bill Wong, AI research fellow and lead AI researcher at Info-Tech Research Group. He is an expert on artificial intelligence strategies with a long career consulting, developing and writing about anything related to AI. He has held executive positions at a number of technology companies across the world, and is often asked to speak about AI at conferences and trade shows.

We wanted to know what Wong thought about the effect of AI on the environment, whether it is helpful or hurtful, how much power AI uses, if the government should get involved, and what might happen if technology companies and consumers ignore the effects of climate change.

Equities.com: Is AI a friend or enemy of the environment?

Bill Wong: There are both positive and negative impacts. On the negative side, it uses an extraordinary amount of compute resources, and that hurts the environment. It takes a lot of power, a lot of water and produces carbon emissions to develop these AI models. Power consumption is especially pronounced with the big technology vendors building large language or multimodal models.

EQ: What’s the positive side?

BW: On the plus side, AI has been trained to find best practices for lowering carbon emissions. You can run simulations and have interactive visualizations of the impact of AI on climate change or various weather anomalies. Many AI research laboratories are funded by the Department of Energy in the United States and are currently performing research on mitigating the impacts on climate change.

The EPA uses AI to help enforce environmental regulations. Of course, NASA uses AI to evaluate hurricane intensity and help to mitigate risk. There’s also a program from the Department of Energy called “Wildfire” that uses satellite imagery to assess the risk of wildfires.

EQ: How much computing power do the tech companies use?

BW: The big tech vendors don’t disclose how much resources they use. There have been estimates made, but all we have are ballpark figures. I think some people would be surprised at how much of our resources are needed to do even a simple search.

For example, one of Google’s initiatives was to build a data center in Chile. Everyone in the country was excited about it. However, when they did an analysis on the climate impact, the government was shocked at how much water this data center would require. A Google spokesperson said they submitted a change to the original design to have the center air-cooled instead.

EQ: So the tech companies who use AI are not transparent?

BW: They will argue that they are transparent. They will share some information but not all. What is often lacking is the hardware configuration used to produce the latest capabilities their AI models can deliver.

EQ: Why don’t more people discuss AI power consumption in the States?

BW: In the G7 countries, where water is plentiful, the impact of AI is kind of hidden, unless you are the data center manager who can see the monthly bill for power and water. In countries that are not as well off, the government can see the impact directly.

EQ: What other resources does AI use?

BW: It’s not only the running of the machines but it’s also chip manufacturing that plays a role. The chip manufacturing process requires a ton of resources that leaves a huge carbon footprint, and the data center makes its own carbon footprint.

EQ: Is there a solution to the amount of power AI uses?

BW: At this time, there still seems to be a notion that “bigger is better for AI model performance,” but it is not sustainable, in my opinion. I am joined by several researchers who believe there will be a number of breakthroughs where we may use AI models that don’t consume as much resources as they do today. We can’t continue on this current trajectory indefinitely.

EQ: What can the companies do?

BW: Today, companies planning to use AI can architect their solution using an agent-based approach. Instead of sending all the prompts or queries to ChatGPT or GPT-4, which is a common scenario, you could implement a solution that uses AI models that are more fit-for-purpose. Instead of ChatGPT receiving every request, smaller models can be used to address prompts and queries that can be processed more effectively and efficiently.

EQ: Are companies starting to think about the environmental impact of AI?

BW: We engage with a variety of executives and boards regarding the development of their AI strategy. Often, their primary focus is leveraging AI to improve operational excellence, customer engagement, sales or profit contribution, and their risk mitigation programs. We are also seeing new value-based drivers for their AI investments emerge, such as improving their environment, social and governance programs.

Organizations want to be more energy efficient — it reduces costs and waste. ESG programs can be a catalyst for transforming an organization’s AI strategy for improving business outcomes in a responsible and sustainable manner.

EQ: Should the government get involved?

BW: If the environmental requirements of these AI models continue and innovations do not get introduced to curb the energy consumption requirements, then the government may have to step in. I know the government doesn’t want this responsibility because they don’t want to stifle innovation. I understand that. But that has to be balanced with the health of the planet. Nobody wants to see a scenario where the government has to take drastic measures.

EQ: What happens if people ignore the climate change research?

BW: The current rash of wildfires, flooding and other extreme environmental events will
continue, but at an accelerated rate. If we continue to consume all this energy and resources, and
don’t pay attention to the possible impact on the environment, things will get worse.

LINK TO ARTICLE: https://bit.ly/4ckUujM

In Part 1, we explained what is meant by thematic investing, and how to get started investing in a theme, either as a self-directed investor, or by buying a mutual fund or exchange-traded fund.

To review: Thematic investing is a fancy way of saying that you want a long-term investment based on a theme (i.e., an idea or trend) that you believe will play a significant role in a changing society, the economy, or advancing technology.

Theme examples include solar energy, innovative or “disruptive” technologies, clean energy, renewable energy, clean water, scarce natural resources, to name only a few. Interest in thematic investments has exploded in recent years.

As we discussed in Part 1, it’s less time-consuming and usually less risky to buy thematic ETFs and mutual funds because you are letting a professional money manager do the research and select the stocks.

Here are a few of the rewards when following this path:

The rewards of thematic investing

• The potential for higher returns: As with any investment, thematic investments can become wildly popular among individual investors, with the potential for the stock price to skyrocket. That is what happened with AI and bitcoin. No one could have predicted the success of these two technologies, but those who bought early are ecstatic they did. In the future, there will be other themes that will capture the public’s imagination, but it takes a visionary to predict which ones will make it to the winner’s circle.

• Diversification: Owning a thematic ETF or mutual fund is a double-edged sword. On one hand, it is more diversified than owning only one or two stocks because you own a “basket” or portfolio of thematic stocks. Therefore, if a few stocks in the portfolio fail to deliver, it’s not a big deal. On the other hand, it is less diversified, and riskier, than investing in a broad-based index fund. To reduce risk, and have a more diversified portfolio, it makes sense to spread the risk by having other investments besides thematic stocks.

• Professionally-managed investments: One of the advantages of owning a professionally-managed ETF or mutual fund is that an experienced professional chooses which stocks are in the portfolio. Theoretically, they will do the research, find potential winners and avoid the losers. Most people don’t have the time or knowledge to pick potential winners. This is especially true for thematic stocks, which may not fit neatly into a specific sector or industry.

• Invest in your values and beliefs: Thematic investing allows investors the opportunity to support the issues they are passionate about. Perhaps they are concerned about renewable energy, ethical business practices or clean water. Investing in these themes, or many others, is not only morally and ethically satisfying, but offers an opportunity to earn profits.

The risks of thematic investing

• Not all thematic investments succeed: Although some themes have done spectacularly well, many have not. Because thematic investments are based on long-term ideas and trends, many of the themes will take years, even decades, before making a profit (with no guarantees they will ever profit). Therefore, as with any investment, there is the chance of losing money when investing in a thematic stock or fund, especially in the short term. Kenneth Lamont, a senior manager research analyst for Morningstar, made this observation: “I would suggest that in five or 10 years, the big thematic winners won’t be the companies you think they’ll be. Basically, you are making a bet that a certain theme will play out and pay off.”

• Incomplete track record: Many thematic ETFs and mutual funds have limited track records, making it difficult to evaluate their long-term performance. For example, the first artificial intelligence ETF, Amplify AI Powered Equity AIEQ - $35.88  0.959 (2.879%) , was created in October, 2017, only seven years ago. Even worse, some thematic investments may turn out to be short-lived fads that won’t last the summer. It’s not easy to separate the hype from the facts, especially when they have a short history.

• Increased volatility: Some concentrated or “niche” thematic ETFs or mutual funds will be volatile (such as what recently happened with AI and cryptocurrency stocks). If investing in a thematic fund, you must be prepared for a roller coaster ride during some weeks or months. Increased volatility to the upside can bring fantastic returns when correct about a theme. Increased volatility to the downside occurs when the market recognizes that the theme has no real future, or when you picked the wrong stocks or fund. Sometimes there is a stock market correction, and nearly all stocks get punished. That appears to be occurring right now. Lamont confirms: “You are investing in a highly-concentrated basket of stocks which can be very volatile.”

• High expense ratios and fees: While some thematic ETFs and funds have “reasonable” expense ratios, some charge high fees and expenses (e.g., expense ratios over 1.5 percent is considered high). To avoid this drawback, stick with thematic funds with expense ratios that are below 1 percent.

• Market timing is nearly impossible: Unless the fund manager is a fortune teller, knowing when a specific theme or idea will succeed is a nearly impossible feat. For example, clean energy has been a hot topic that has been discussed for years. While some clean energy ETFs and mutual funds did well, many did not. Fund managers must have the skill to identify which themes have the potential to succeed in the future. Thematic investors must be patient and committed as the theme plays out.

Choosing the right themes

Understanding the risks and rewards of thematic investing is a good start, but to be successful you must periodically monitor your investment while also patiently giving the investment time to grow. Perhaps most important, choose themes that have the potential to outperform over time. No one said this was easy.

Morningstar research analyst Lamont summed it up this way: “Thematic investing has a place in your portfolio, but there are definite risks. They should never take up a large portion of your portfolio, and should not act as a replacement for a broad-based index fund.”

LINK TO ARTICLE: https://bit.ly/4f4pGX3

 Opinion: Global stock investor Jim Rogers: ‘I’m waiting for something to go wrong.’

‘Probably by the end of this year or next year, the bear market will have resumed in the U.S.,’ Quantum Fund co-founder says

Jim Rogers, international investor, author and financial commentator, describes the current U.S. stock market environment as showing all the signs of an aging bull, not a raging one.

Rogers has seen this before. In fact, he’s seen and invested in all types of markets over a career spanning 60 years. Rogers rose to fame in the 1970s as the co-founder with George Soros of the Quantum Fund, which gained 4,200% over the next 10 years while the S&P 500 rose about 50%. 

In a recent interview from Singapore, his base since 2007, Rogers revealed his reasons why the U.S. bull market for stocks may be nearing an end, why bear markets are actually healthy for the stock market, and what you can do now both to protect your portfolio and position it for profits.

MarketWatch: What are you doing with your money with regard to U.S. stocks right now? 

Rogers: I have a lot of cash. I’m waiting for something to go wrong, but I am not selling short at the moment. I don’t call that bearish. I am neutral.  

MarketWatch: What could go wrong? 

Rogers: If you look at the U.S. market, a lot of new investors are coming in and talking about how easy it is to make money in the stock market. You see some stocks that go up every day, but fewer and fewer stocks are going up. Some are going up a lot, but most are not. You see market breadth declining. These are the things that happen before the end of bull markets. Again, I’m not selling short yet —- but these are the signs that develop when a bull market is coming to an end. 

MarketWatch: Do you expect the U.S. stock market to crash? 

Rogers: First, I differentiate between a crash and a bear market. The world has always had bear markets and will again. But bear markets often end in a crash. I certainly anticipate a bear market. The next bear market has to be very bad because debt has skyrocketed everywhere including in the U.S. Pick a country, including countries that didn’t have debt before such as Germany and Japan. Everyone has very, very high debt. So the next bear market has to be bad, and bear markets end in a selling climax, or a crash as you put it. I hope we live long enough to see many bear markets. 

MarketWatch: Why do you want to see many bear markets? 

Rogers: They clean out the system, which nobody likes because it costs them money. But economic recessions or bear markets clean out excesses. That’s the way the system has always worked. Some people get overconfident or overextended and along comes a bear market or recession and cleans out the system. Cleaning out the excesses has always been good for the system — unless you’re the one getting cleaned out. 

MarketWatch: What is your forecast for U.S. stocks over the next few months? 

Rogers: Some people are good at market timing, but I am not one of those people. I am not a good short-term trader. But what I suspect is that probably by the end of this year or next year, the bear market will have resumed in the U.S. It’s already the longest period in American history without a bear market. We’re overdue. 

MarketWatch: How should people protect their investments? 

Rogers: The only way to protect yourself is to invest in what you know about. Everyone knows a lot about something, and that’s where you should focus. If I said you could only have 25 investments in your entire life, you would be very careful, and be a good investor. Many people might say that is boring. If you want to be a good investor, be boring. Stay with what you know. And don’t go down to the bar on Saturday night and tell everyone about the latest hot stock. 

We’ve had the longest bull market in American history. Politicians in Washington say, ‘Don’t worry, we’ve solved the problem.’ But I know that’s a lie. I know that’s wrong. I’m just saying be careful because gigantic debts are building up. If you can add or subtract, you know there is no way America can solve its debt problem. It’s a good time to be an old American, but not a good time to be a young American. I have two daughters, and the problems they will face in their lifetime will be enormous. 

MarketWatch: What do you say to your daughters about how they should invest for their future? 

Rogers: It’s hard to teach young people because they know it all (laughter). I certainly show them history. In 1924, the U.K. was the richest, most powerful country in the world. There was no No. 2. Fifty years later, the U.K. was bankrupt. They couldn’t pay their bills. This happened within 50 years — going from No. 1 to bankrupt. People say this cannot happen to America. Well, it’s happened often in world history, so be very careful, and be worried. Be aware of what has happened in the past, because it will happen again.