LINK to MarketWatch article: MarketWatch article

Warren Buffett, the voice of reason in the stock market, recently announced that he was retiring at the end of 2025. “He was like the Rock of Gibraltar,” says Jeff Bierman, chief market technician at Theo Trade and an adjunct professor of finance at Loyola University Chicago. “Losing him concerns me. It marks the end of an era of old school fundamentals that used to drive the markets until the early nineties. It’s a sad chapter that is closing, but at the same time, it opens up a Pandora’s box for much more volatility going forward.” 

The Pandora box, according to Bierman, is a “mercurial president where on any given day, there can be a tweet, a social media post, or a television appearance where one word from him drives order flow. Each morning, I wake up and wonder what he’s going to do to torch my portfolio or lift it up.”

Bierman says he worries about the unpredictability of President Trump. “To me, that is the perfect storm of a market that will remain volatile for at least the rest of the year. Trump is like the sun and everything revolves around him. Because of that, both professional and retail investors alike are constantly on pins and needles.” 

In this recent interview, which has been edited for length and clarity, Bierman discussed his views about the market, including stocks he is buying and what he’s avoiding.

MarketWatch: In our last interview, you warned about a volatile stock market. Have you ever seen a stock market as volatile as this?

Bierman: Not where one individual has such an impact on the market and not where so many asset classes are offered. I’ve seen volatile markets, but I haven’t seen a market quite like this where one single individual has the power to drive order flow.

MarketWatch: What should traders and investors do when the market is so unpredictable? 

Bierman: Trade small. Don’t be fully invested at all times in one single product. Also, the indexes are likely to underperform for the next few years. For the last hundred years, the indexes have delivered an 8 percent return. Prior to this year, three out of four years, the S&P 500 was up 20%. The likelihood of that repeating itself is nearly impossible statistically. So, investors need to recalibrate their expectations. If you can get a 5% to 6% return over the next three to four years, you’ve done very well.

MarketWatch: Do you have any other advice for traders and investors? 

Bierman: Cut down your position size. If you’ve been holding concentrated positions of 10%, you want to cut those in half. Also, consider international markets, or moving your money into precious metals such as gold and silver. You could consider moving your money into commodities that have been beaten down --- such as oil. Oil will eventually find its bottom,w which should provide good cash flow and dividends. 

MarketWatch: In our last interview several months ago, you said if we take out 5,600 on the S&P 500, we would go to 5,200. We are now a little above 5,800. What do you say now? 

Bierman: We did take out 5,600 and went down to 4,800. Now, we have circled back to 5,800. Let me put it in perspective: The all-time high on the S&P 500 is 6,147. Then we went down to 4,800, which is a decline of approximately 21%. We have retraced a little more than 61.8% of that, which is a normal Fibonacci retracement sequence. Nobody knows what will happen next. 

MarketWatch: Although you don’t make predictions, what are the possible scenarios? 

Bierman: I think the momentum is behind the market, although it is overextended. We could push higher, but to push back to all-time highs, you’re going to need tailwinds. We will need the Fed to cut rates, which they might do in the early part of summer. We also need for inflation to come down. We also need to get more clarity on the financial impact of tariffs, and tailwinds from technology and financials. The good news is we have tailwinds from financials, but they are now near fully priced. 

MarketWatch: What if the S&P doesn’t make it past 5,900? What could happen? 

Bierman: If we don’t push past 5,900, the S&P 500 could fall to 5,200. To make it past 5,900, you need a lot of liquidity, which you don’t have. You need a lot of tailwinds, which you don’t have. And you will need the president to be less volatile and back off his aggressive tariff agenda.  I’m telling you we are at a critical juncture where the market could retest the high.  Nevertheless, it would not surprise me to see the S&P 500 retest the intermediate low between 5,200 and 4,800. That is a real possibility. 

MarketWatch: Are there any particular stocks that you think are worth buying?   

Bierman: I happen to like financial stocks such as JPMorgan (JPM), Goldman Sachs (GS), Visa (V), Mastercard (MA), and PayPal (PYPL). They are all good places to park your money. I like financials with steady cash flow, decent dividends and relatively below average multiples. The financials should not be as impacted by the tariffs compared to other sectors. I also like pharmaceutical stocks such as Bristol Myers Squibb (BMY). They delivered much better-than-expected earnings and the valuation is compelling. I also like Merck, which had great earnings. I also like Baxter International (BAX) even though the dividend is not as compelling but has decent upside. 

MarketWatch: Are there any stocks you don’t like and would avoid? 

Bierman: I think Walmart is in a bubble and Costco is ridiculously expensive, but I think there’s compelling value in Target (TGT), BJ Wholesale (BJ), and TJ Maxx (TJX). I also think much of the AI trade has been played out. I think you need exposure to AI but not to be overweight. Many high-profile companies are cutting back on their spending budgets and resorting to layoffs as a result of the uncertainty around the economy, and that could trickle into AI. 

MarketWatch: In our last interview, you said you were buying semiconductors. Are you still buying those? 

Bierman: No, I’m holding off on most semiconductors at this point, but I do see compelling value in On Semiconductor (ON), Western Digital (WDC), and Storage Technology (STX), and Dell Computer (DELL). 

MarketWatch: Are there other investments you are recommending? 

Bierman: You need some exposure to fixed income, whether it’s an annuity or a short-term bond. I don’t like long-term bonds due to their elevated exposure to interest rate risk and lack of liquidity premium. I’d suggest short-term bonds or bond mutual funds. For stock market investors I would tilt more towards large cap stocks away from small cap stocks because small caps tend to lead to the downside in an economic slowdown. I’ve been moving more towards dividend intensive stocks for protection. 

 MarketWatch: Is there anything about the stock market that people don’t know? 

Bierman: Liquidity in this market is about as thin as it has been in many years. Insiders are not buying with conviction. If insiders are not buying with conviction, it is not a vote of confidence for the market going forward. Most fund managers are buying rather selectively. Right now, 20 to 30 stocks are carrying the market higher while the other 470 stocks are underweight or just left behind. It gives an image that the market is healthy when it’s really not on solid footing. Because of the relative scarcity of liquidity, I would not rule out a 2009-style flash crash either.

I interviewed stock-market veteran Louis Navellier, who remains bullish about the stock market.

LINK TO ORIGINAL ARTICLE: MarketWatch article

Stock-market veteran Louis Navellier, the chairman and founder of investment firm Navellier & Associates, is well-known for spotting high-potential stocks through a combination of data-driven, quantitative analysis and hands-on fundamental company research.

Navellier, an occasional MarketWatch contributor, publishes several investment newsletters focused on growth stocks and is the author, most recently, “The Sacred Truths of Investing: Finding Growth Stocks that Will Make You Rich.”

Turbulent financial markets and the steep decline of the “Magnificent Seven” big-tech growth stocks and other former investor favorites make this a good time to catch up with Navellier for his perspective on what has happened to the stock market and what he sees coming.

In this recent interview, which has been edited for length and clarity, Navellier discussed stocks, bonds, the economy and tariffs. He also called out some of the stocks that have passed his firm’s strict test of relative strength. (Navellier commented before the market’s rally this week on better-than-expected tariff news.)

MarketWatch: The stock market now seems to be more reactive to politics than the business fundamentals you focus on. But it’s quarterly earnings season now. Against that backdrop, what’s your outlook for stocks?

Navellier: It’s imperative that earnings resume working. That’s why our firm focuses on earnings and not the ongoing tariff drama. I know we’re going to have double-digit earnings growth this year. There will also be falling rates. We have a pro-business president, but he’s an acquired taste. Not everyone is used to him and he did overreach, for lack of a better word.

MarketWatch: What is keeping you upbeat about stocks right now?

Navellier: Wall Street strategists are lowering their targets, but I ignore those people. I care about the analysts doing the actual earnings estimates for all my portfolio companies. At the end of each quarterly earnings season, I retest my quant systems. Here are a couple of observations: First, the companies we chose have to be in the top 45% of fundamentals. Then, when we do our quant-model overlay, we want the company to be in the top 5%.

MarketWatch: Let’s talk about those companies. What are some favorite stocks that have passed your test?

Navellier: Our largest holding is Nvidia Corp. Our second-largest holding is Eli Lilly & Co. We’re very bullish on Lilly, although they’ve struggled because there were rumors of U.S. tariffs on the pharmaceuticals. We also have a lot of Costco Wholesale Corp. shares. We view Costco as a luxury retailer. Go to their parking lot and see who is loading up. Another major holding of ours is Super Micro Computer Inc. We’ve been in it for years and rode it through all the ups and downs. They make the best server systems for Nvidia.

MarketWatch: To be bullish on U.S. growth stocks is to be bullish on America. But the recent decline in both the U.S. dollar and Treasurys suggests that many investors are looking elsewhere in the world. What would you tell them?

Navellier: I’m very bullish on America. We have a better model — no matter who we elect. We’re food and energy independent. The world economy is shrinking. Only America, Brazil and India are growing, and Brazil’s about to stop growing.

The dollar’s down this year, and people are net sellers of Treasurys. There is a lot of concern about America and its deficits and leadership. I’m not trying to pick on President [Donald] Trump, but he clearly doesn’t sell well everywhere. The bond market has temporarily calmed down, but the jury is still out. The bond-busters may sell further. When the dust settles, the dollar will come back. Hopefully, the dollar’s appreciation will offset those 10% tariffs.

MarketWatch: There’s been no “Fed put” to support the stock market so far. Are you expecting the Federal Reserve to cut interest rates this year?

Navellier: The Bank of England and the European Central Bank are both going to cut rates, and U.S. rates are going to come down once bond investors calm down. I’m still expecting up to four Fed rate cuts, and then we’ll get this turbo boost.

Overall, I expect a global interest-rate collapse — a real collapse. There’s deflation in China — they just dumped a whole bunch of goods on us. Meanwhile, oil prices are at a four-year low.

MarketWatch: The Trump administration’s on-again, off-again trade tariffs have whipsawed investors. Where do you see U.S. trade policy ultimately taking the economy?

Navellier: The U.S. has a big underground economy, so you either have to do a VAT (value-added tax) or a tariff. The U.S. government is going to raise money to pay down the federal budget deficit. I think we will have freer trade when it’s all said and done.

MarketWatch: Do you see a recession in the U.S. before that happens?

Navellier: No. The U.S. economy may have a negative first quarter because of the trade imbalances, but I think we get our mojo back in this current second quarter. There is no doubt that business planning was hurt by the uncertainty surrounding what Trump is doing. Hopefully, all will be forgiven and we’ll get back to normal. Even if you’re a Trump supporter, you were probably slightly annoyed for a while.

MarketWatch: Any advice for how investors can get a better read on the markets, with so much uncertainty around?

Navellier: The best tip sheet is Truth Social — Trump’s social media platform.

MarketWatch: Anything else, or is that enough for now?

Navellier: I would recommend that people own monopolistic stocks that dominate their business. I like margin expansion (i.e., an increase in a company’s profit margins). I like it when a company’s earnings grow faster than sales. I also like earnings surprises and guidance. Don’t get distracted by all of the noise. Markets are liquid, especially when earnings come out. The other times it’s a bunch of games and shenanigans. The main message is to buy and hold, and also to buy monopolies. My 1,000% winners were all monopolies.

I interviewed social media star Steve Burns for my latest MarketWatch column. As you will find out, he is short-term bearish but long-term bullish. Read the article below to find out what he wants to buy when the selloff ends.

Link to original article: MarketWatch article

One truth of stock investing is that it’s better to be early than broke. 

Veteran stock trader Steve Burns learned this lesson the hard way. Burns is a popular figure on social media, where he addresses experienced and novice traders alike to help them steer clear of the stock market’s cliffs. 

In a MarketWatch interview last December, Burns declared that U.S. stocks were in the “greatest bubble in the history of civilization.” He predicted that the U.S. market would soon suffer a correction — and he’s been spot-on so far. 

With the Trump administration’s trade tariffs tanking stock markets in the U.S. and worldwide, Burns said he’s moved his portfolio completely to cash, at least for the time being. In this interview, which was conducted last week as the global market selloff accelerated, Burns said he’s been surprised by the speed and ferociousness of the market’s slide, and speculates about how Trump’s tariffs could impact stocks this year. (This interview has been edited for length and clarity.)

MarketWatch: Four months ago, you were bearish about the U.S. stock market. With the market selling off, do you think we’re close to a bottom? 

Burns: In the short-term, I am very bearish. This is a historical crash and a 50% correction is probable over the next nine months to a year.

But I’m long-term bullish. At some point, this is going to work out, but right now the market is trying to reprice every company on an individual basis based on their risk exposure to tariffs. Oil is signaling a huge recession even though OPEC (Organization of the Petroleum Exporting Countries) reduced its crude oil production. 

MW: How has this tariff-induced selloff affected your portfolio?

Burns: On April 3, I moved to cash. I dipped into small-caps that morning but got stopped out. I went to cash because this looks like a macro tariff-tantrum crash that has very little to do with technical analysis. Everything looked great from a technical standpoint before the tariffs, but now the technicals are broken. Everything relies on how quickly the Trump administration can come to trade agreements, especially with China. If not, there could be a depression, especially in other countries. 

MW: Besides tariffs, what else is a catalyst for this selloff? You said technical indicators had been strong. 

Burns: The AI bubble popped with DeepSeek (a Chinese AI app founded in 2023 that competes with ChatGPT). I don’t know if we’ll get back to the highs in the AI-sector stocks, but I think that Nvidia is still a good long-term play because they are the supplier of the chips. Alphabet, Meta Platforms, Amazon.com, and Apple all got popped when people realized the pricing was not equivalent to the value of their business models. 

MW: Let’s talk about the U.S. economy. There’s concern that the U.S. will experience a bout of stagflation — slower growth and higher inflation. The housing market is frozen as buyers balk at high mortgage rates. Trump has been trying to get the U.S. Federal Reserve to bring down interest rates. What will it take to lower prices? 

Burns: To lower inflation and bring mortgage yields down, the stock market would have to crash. It looks like the Trump administration is trying to cause a bear market in equities so they can get more people to buy bonds and drive mortgage yields down. It seems like their top goal is getting inflation down and they will do whatever it takes to do that.

MW: The stock market is clearly showing it disapproves. 

Burns: They don’t care. It’s almost like they want to cause the stock market to go down and cause bond yields to go up, which will force the U.S. Federal Reserve to cut interest rates because the economy is so bad. I’m speculating, but I think Trump would rather have the stock market crash now so he can go into the 2026 midterm elections with the stock market at all-time highs. 

MW: What will it take for the Trump administration to succeed? 

Burns: That pathway will be very hard with the political pressures, especially if the U.S. goes into a deeper recession and doesn’t come out by the midterms. Trump could buckle if the economy is in a shambles by the midterms. He has a year and nine months to rebuild a long-term supply chain. 

MW: What would cause you to move out of your cash position? 

Burns: I’m looking for an established base built on a bottom. The first indicator I look for is a price above the 200-day moving average. What could stop the selloff is if the U.S. can get a deal with China. We could have a monstrous rally — but China looks like it’s doubling down. 

MW: What would you consider buying once the market recovers?   

Burns: I’d consider Alphabet and Block. Many people aren’t buying Alphabet’s YouTube is overtaking Disney and Hulu combined. YouTube is the No. 1-watched media site now. Alphabet’s stock, however, has been driven down by the government’s push to break it up. Block, which used to be Square, is a great financial play in fintech (financial technology). It’s a future national cash register — a new way of connecting monetary payments. 

MW: What should traders and investors do to reduce risk? 

Burns: It’s not a great time to take huge positions. It’s a good time to test the waters to see how the tariffs will play out over the next few weeks. That means having smaller position sizes. It’s very dangerous to short after the market has already dropped into a correction. 

MW: What would you tell buy-and-hold investors right now? 

Burns: Buy-and-hold now is similar to buying and holding in 2000 or 2007, which I lived through. That got me away from buy-and-hold. If you’re in your 20s and have a 20-year time horizon, buy-and-hold makes sense. But not if you’re older. I can’t imagine putting all my capital into buying and holding right now with the current valuations. The odds are good that there will be a 50% correction once every 15 years. 

Michael Sincere is the author, most recently, of “Help Your Child Build Wealth: A Parent’s Guide to Teaching Children To Be Successful Investors,” and “Mr. Sincere Teaches You How to Sell Covered Calls.”

I wrote the following article about social media star Tori Dunlap and the money tips she has to help women get richer. Here is a link to the original MarketWatch article: MarketWatch Interview

Tori Dunlap founded “Her First 100k” to help women better understand their money and finances — and to guide them through the myriad obstacles they often face in building wealth. Dunlap followed this up with a financial advice book, “Financial Feminist: Overcome the Patriarchy’s Bullsh*t to Master Your Money and Build a Life You Love,” and currently offers money-management tips on her “Financial Feminist” podcast. 

 Dunlap’s popularity — she has millions of followers on social media — has helped her achieve financial independence. Dunlap wants other women to follow her example. “I’m passionate about women making sure they not only have their own money, but have control over those funds,” she says.

Building your wealth starts by learning everything you can about personal finance, Dunlap says. These five questions to ask yourself are a good place to start:  

•            Are you negotiating your salary effectively? 

•            Are you thinking about starting a business? 

•            Are you getting compensated for your actual worth? 

•            Are you spending money according to your values? 

•            Are you certain your money is well spent on the things that you actually love and need, as opposed to spending mindlessly? 

In this recent interview, which has been edited for length and clarity, Dunlap explains how to build wealth, find investments that protect your portfolio from market volatility and improve your financial security.

MarketWatch: How did you make your first $100,000?  

Dunlap: It was a combination of things. First, it was the ability to graduate with no student debt. I worked three jobs on campus and worked summers. My parents contributed to my college fund. Secondly, I prioritized spending according to things I wanted to do rather than feeling I had to spend money on everything. Third, I had a side hustle, which allowed me to save a portion of my income. I opened up a Roth IRA when I was 22 and maxed my contribution every year. 

MarketWatch: What do you want women to learn about building wealth like you have? 

Dunlap: I want women to know that it’s possible for them to build wealth in a sustainable way. Women are less likely to invest than men, and often start later in life, which causes them to miss out on millions of dollars in compound earnings — but there are resources out there designed specifically for them.     

MarketWatch: What specific advice would you give anyone wanting to build wealth? 

Dunlap: First, I would make sure your savings are automated. Building your emergency fund should be at the top of your list, regardless of how much debt you’re in. Another tip would be to make sure you are fairly compensated for your work. Negotiate for more, or move on. Third, make sure you’re investing as early and consistently as possible. 

MarketWatch: Is it hard to follow this advice? 

Dunlap: Yes, it’s easier said than done! There are many systematic barriers that keep women from building wealth. The trillion-dollar student-debt crisis impacts women more than men. The wage gap and pay gap — women are constantly up against these barriers in addition to just trying to manage their personal finances. 

MarketWatch: What are some common mistakes that women make with their money? 

Dunlap: This may shock a lot of people, but a vast majority of women don’t know that the Roth IRA or the 401(k) is not the investment itself. A lot of women think that they deposit their money into mutual funds, but don’t realize that their investments really go into a cash account. It is a two-step process; make sure you transfer money into your account, and then buy investments with that money. Otherwise, you’re keeping your money in what I jokingly call “financial purgatory!”  

MarketWatch: What stock-market investment approach do you recommend? 

Dunlap: Sustainable long-term investing, rather than trying to pick the next hot stock. Essentially, this means you’re not putting all of your eggs in one basket. You’re making a more diversified, low-risk choice. I personally like index funds for that reason, and own shares of Vanguard Total Stock Market ETF (VTI)

MarketWatch: What are effective ways for an investor to handle stock-market volatility? 

Dunlap: Make sure you have at least a three-month emergency fund in a high-yield savings account. This is just like a normal savings account, but it’s going to earn you way more in interest. Be protected in case of an emergency before you start investing. Second, have a secondary source of income to insure against losing your job or facing a financial emergency. You don’t want to be solely reliant on one source of income. 

MarketWatch: What is one of the most important lessons you have learned about money? 

Dunlap: One of the biggest financial decisions concerns your choice of a partner. Whether it’s marriage or a long-term relationship, that partner is going to directly impact almost every financial choice you make. 

MarketWatch: Why do your podcasts and books resonate with so many people, especially women? 

Dunlap: I think that a lot of personal-finance education was shaming and judgmental. It was focused on how you didn’t make the right choices or that you are not working hard enough. It is refreshing to a lot of women who are outwardly feminist. Her First $100K is a feminist company that talks about money. That idea has connected with our community of 5 million women who feel safe and aren’t judged for their personal finances. We also take something that has felt intimidating — personal finance — and make it easy to understand. 

MarketWatch: What else can women do to improve their financial lives? 

Dunlap: I’m passionate about women making sure they not only have their own money, but have control over those funds. If they need to get out of unsafe situations that they don’t want to be in anymore, they should have access to their own money. And if a relationship should end, they need to learn everything they possibly can about personal finance so that they’re able to stand on their own two feet. 

I always tell women that a financial education is the best form of protest. In a society and system that makes sure women are controllable by constantly franchising them, and keeps them playing small, having money means having options. I’ve seen it with literally millions of women who can leave abusive marriages, take care of their ailing family members, pay off their student loans, save that first thousand dollars and breathe easier because they have their own money. 

Michael Sincere is the author of Help Your Child Build Wealth and Mr. Sincere Teaches You How to Sell Covered Calls. 

The following is a column I wrote for MarketWatch on what veteran trader Jeffrey Bierman thinks about the stock market, and the stocks he likes --- or doesn't like.

Link to MarketWatch article: https://bit.ly/4jq80XV

Jeffrey Bierman, an adjunct professor of finance at Loyola University Chicago and founder of Genisuscog.com, says the market is trying to figure out a lot of conflicting information, including the biggest wild card of all, Donald Trump. 

“Trump is a wild card in terms of his habit of tweeting,” Bierman says. “He’s mercurial.” Every time he comes out and says he’s going to cut taxes, impose tariffs, or invade Greenland, he creates a crosscurrent of uncertainty, which keeps the market guessing. If there is anything the market doesn’t like, it’s uncertainty. They like clarity and steadiness. You are not going to get that from him. This will be the year of volatility. It will be the new norm.” 

MarketWatch recently spoke with Bierman to discuss his contrarian views about the market, including the names of stocks he is buying and the ones he’s avoiding. This interview has been edited for length and clarity. 

MarketWatch: What do you think of the market right now? 

Bierman: It’s a trader’s market, not an investor’s market. The market is going to move in fits and starts for an extended period. You’re going to have a lot of false breakdowns and false breakouts. The key support level on the S&P 500 is around 5,800 (editor note: which was hit the day after the interview). The next line of defense is 5,600. If we take that out, we’ll mostly trade down to 5,200. 

MarketWatch: Do you expect a crash?  

Bierman: The odds of a crash are not high, but the odds of a garden variety 10% correction is fait accompli (i.e., inevitable). It’s likely and it’s healthy. The momentum to the upside is broken, but the long-term trend is not broken. 

MarketWatch: What preparations are you taking? 

Bierman: I’m lightening up on my exposure to technology. Hardware and software are in a bull market, so I’m scaling back my exposure to them and taking profits. I’m deploying that cash to semiconductors, which are in a bear market. I like stocks that have been beaten down. The semiconductors look awful.

MarketWatch: What specific stocks do you like --- or not like? 

Bierman: I added Applied Materials (AMAT) to my portfolio and also Qualcomm (QCOM) because the valuations are compelling. What I am avoiding like the plague are Intel (INTC) and Advanced Micro (AMD). They are highly overpriced in a highly competitive space. They are not gaining traction.

MarketWatch: Are there any investment themes that you like? 

Bierman: I like nuclear energy and AI healthcare, but not AI computers. The AI momentum trade is not going to work this year. I own Medtronic PLC (MDT) and Intuitive Surgery (ISRG), and they are both doing very well. My long trades are mostly pharmaceutical companies. It’s been the most hated sector for the last four years, which is why I went back in it. I’m also selectively buying consumer staples. 

MarketWatch: What investment themes are you avoiding? 

Bierman: I am avoiding retail such as Costco (COST) and Walmart (WMT), and stocks such as Lululemon (LULU), which is at its 52-week high. If the market corrects 10% and consumers are tapped out on debt, they will dramatically curb their spending. Consumers have used their investment portfolio as if it was an ATM machine. This will affect retail stocks.

MarketWatch: What advice would you give traders? 

Bierman: I would tell them not to be too bullish or bearish in their thinking because their thesis can turn against them. If you’re a trader, manage your risk. Don’t take big positions, and curb your expectations. Trade half the size you usually trade. Also, keep larger than normal cash on hand. Finally, be unemotional. Don’t fall in love with your stocks. There is a point where you have to cut your losers. You have to admit you made a mistake and walk away.  

MarketWatch: Should traders follow the strategies that have worked in the past? 

Bierman: The market may have had a 25% return last year and the year before, but we are not getting a 25% return this year --- although it could be positive. Because of the generalized tweets from the new president and macro data from the Fed, it will a bump and grind, fits and start market with unexpected spikes in volume and volatility at any given time. 

MarketWatch: Are there any indicators that you use? 

Bierman: The number one indicator I use is MACD (Moving Average Convergence Divergence). The second indicator I use is RSI (Relative Strength Index). The third indicator I like to use are channels. 

MarketWatch: What do these indicators tell you?

Bierman: I use these indicators to identify market strength and weakness. Because of algorithms (algos), stocks that are strong continue to be elevated and overbought and the weak continue to be depressed and oversold --- regardless of valuation. Algos buy into strength and sells into weakness. 

MarketWatch: Are algos that powerful? 

Bierman: Most investors aren’t aware that about 95% to 99% of all trades on any given day are done electronically by algos. They’re preprogrammed machines that are buying and selling based upon order flow and slopes (i.e., uptrends and downtrends). They’re completely detached from fundamentals. Don’t underestimate the power of algos. They took this market up and defended it for years. They can take the markets down either slowly or quickly. 

MarketWatch: What happens if the algos start selling? 

Bierman: Right now, we’re in a purgatory of nothingness as the algos keep swing trading. Because key support levels haven’t been violated, the market isn’t moving lower. However, if the market starts to go into a downward spiral and we’re down 20% to 25% in a month, the government might step in and curb the algos by changing the rules of the game. If the algos cause price deterioration and destroy the market, the government will impose regulations on both the upside and downside. Investors should be prepared that gains on the upside will also be curbed. 

MarketWatch: Is there anything else that could collapse this market? 

Bierman: If money managers start to back out of the Magnificent Eight stocks, the eighth being Broadcom (AVGO), then it could unravel the market and create an incredible meltdown. If the trend is broken, there will be forced liquidations by either margin calls or customer redemptions. The Magnificent Eight could also be the reason the market falls by 15% to 20%, and in a short period. This is the year it could happen.

MarketWatch: Is this your prediction? 

Bierman: No. I’m not saying it’s going to happen, but I would not be surprised if it does. It only takes a few seconds to wipe out these stocks. If things start turning down from a slowing economy, it could be the death nail that forces the market lower. There is one thing that I am certain of: We are going to have a 10% correction this year. I don’t know when, maybe April or the summer. The market needs to go through a garden variety correction. A lot of people are calling for a 40% haircut. I’m not. I’m not expecting a massive meltdown but I am expecting a substantial correction. 

MarketWatch: Do you have any hedges? 

Bierman: My hedge is to buy a little gold and silver. I bought Newmont Corporation (NEM) and VanEck Gold Miners ETF (GDX). Everyone should have some exposure to gold. 

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

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: 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).

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.