Author: Matt Thalman

ETFs To Play The Banking Situation

Posted on by Matt Thalman

With the collapse of Silicon Valley Bank, everyone is looking at the banking industry. Some think it has more room to fall, while others believe now is the best buying opportunity we have seen in a decade.

At this time, I believe it is too hard to pick which direction banks or the market overall is heading.

My reason for saying that is that very few people fully understand the real risk to the banking system at this time.

A few weeks ago, Wall Street banking analysts gave banks good stock ratings. Janet Yellen, the head of the Treasury Department, recently said the banking industry was healthy. Even Jerome Powell, Chairman of the Federal Reserve, recently sat in front of congress and testified that the banking system was solid and well-capitalized.

Well, that certainly wasn't the case for SVB.

While I understand that when Janet Yellen or Fed Chairman Powell make these statements, they are speaking about the whole industry, not one-off banks, as we saw during the financial crisis in 07-08, it only takes a few small cracks in the system to open the flood gates.

And when the 15th largest bank in the U.S. fails, it's hard to ignore that crack, despite the argument that SVB is different from most other banks because they lend to riskier clients in the form of 'start-up' businesses.

The argument that SVB is and was different may make sense, but if that is true, how do you explain Credit Suisse needing a $50 billion loan from the Swiss National Bank?

Finally, for years we have been told that the banks, both here in the U.S. and worldwide, have parts on their balance sheets that are referred to as 'black boxes.' These are certain businesses or investments that we, outsiders, will never get to see. We will never know what those parts of the bank's business look like, and thus, how can we fully understand how healthy or sick a bank is until it's too late?

Maybe you understand the banks better than I do and still want to invest in them, whether long or short; let me give you some exchange-traded funds that you can buy to profit from a bank industry move in either direction. Continue reading "ETFs To Play The Banking Situation" →

Trade With Jim Cramer With New ETF

Posted on by Matt Thalman

Anyone who regularly watches or has only seen Jim Cramer’s TV show “Mad Money” even just once notices that the former fund manager, now a TV personality, makes a ton of stock recommendations while on air.

So many that it is hard to keep up with what companies he likes and which ones he would sell.

Luckily, you will now never have to worry about trying to keep track of his stock picks while he is on air. Two new Exchange Traded Funds will keep track of his stock picks for you and not only keep track of them but give you an accessible, one-stop investment vehicle you can use to follow his advice.

The Tuttle Long Cramer Tracker ETF (LJIM) buys stocks that Jim Cramer tells his viewers on “Mad Money” that he likes. The fund managers also follow Jim on Twitter, so if he tweets that he is optimistic about a stock, the fund can also track those picks. Furthermore, LJIM will also short stocks that Cramer expresses a negative opinion on.

LJIM began trading on March 2nd of, 2023, with an expense ratio of 1.2%. The fund already has over $254 million in assets. The top ten holdings represent 31% of the fund.

However, the fund prospectus explains that LJIM will have a portfolio of between 20 to 50 stocks.

Therefore, the heavy concentration will likely always be present with LJIM. Finally, the balance between each stock held is very close, with most holdings representing just slightly above or below the 3% mark.

The fund holds a very diverse group of stocks. The largest sector is technology, with 18% of assets. Then electronic technology makes up 14.78% of assets. Health technology, consumer services, and finance round out the top five sectors in LJIM.

LJIM is a worthy investment if you are a disciple of Jim Cramer and want to own the stocks he recommends to TV viewers and social media followers. Continue reading "Trade With Jim Cramer With New ETF" →

Watch The Inflation Numbers

Posted on by Matt Thalman

During the first few trading days of March 2023, we watched the stock market falter, housing demand cool, the 10 Year Treasury Bond rises to a 4% yield, and the 30-year fixed mortgage increase above 7%.

This all came after several hotter-than-expected inflation reports hit investor confidence.

The Federal Reserve has also cut back on its interest rate hikes, going from an increase of 75 basis points to 50 basis points, down to just a 25 basis point increase. Those reduced rate hike increases were due to inflation reports trending in the right direction.

However, reports coming out now show inflation has not yet been tamed after the hikes were slowed. And this is having both big and small investors and some Federal Reserve members calling for faster rate hikes in the future.

David Einhorn, who had a 36% return in his hedge fund in 2022, recently said investors should still be bearish on stocks and bullish on inflation in 2023. Einhorn was short US equities in 2022 and performed very well for his hedge fund investors.

Former Pimco Chief Executive Officer Mohamed A. El-Erian recently wrote in Bloomberg that he favors a 50 basis point rate hike at the coming Fed Meeting. He further noted that three Fed Members have publicly announced their wiliness to increase rate hikes by 50 basis points at coming meetings, despite all agreeing to raise rates by just 25 basis points at the Feb 1st meeting.

Federal Reserve member James Bullard is one of those three Fed members who have come out and announced he favors faster rate hikes in the future. Bullard believes inflation can be beaten in 2023, but only with aggressive rate hikes until it begins to come down. His concern is that inflation doesn’t come down but re-accelerates, and we are forced to relive the 1970s.

With the next Federal Reserve meeting just a few weeks away, now is the time to start planning your portfolio. There is a good possibility that even if rates aren’t increased aggressively at the March meeting, they will be increased multiple times over the coming meetings. Continue reading "Watch The Inflation Numbers" →

The Market Is Looking Expensive

Posted on by Matt Thalman

If you are a trader, you don’t care how the market stacks up to past fundamentals.

But, if you are a long-term investor, knowing how the market appears today from a fundamental standpoint, compared to other times, is something you want to keep an eye on.

Knowing when the market is becoming expensive or even overpriced is essential because that tells you it may be time to start taking your foot off the gas. Or the other side of that coin is that the market appears cheap or underpriced.

These times are when the words of Warren Buffett, “Be greedy when others are fearful and fearful when others are greedy,” stand out the most to me.

Buffett is trying to tell investors that when others are buying, despite stocks and the market as a whole being very expensive, you should be concerned. He also says that you should be greedy when others are afraid, likely because of market turmoil and stocks are selling off. Buffett gives you a straightforward, back-of-the-napkin blueprint of when to sell and buy.

With that all said, I don’t believe there are hard-pressed rules on this is when to sell, or this is when to buy.

However, I think now is a time that you should start considering when you will sell or, at the very least, start planning your next moves based on how the market reacts to the coming weeks or months.

One reason I believe we may be hitting a peak is because of general market sentiment. Towards the end of the summer, most market participants, the talking heads on news outlets, and even Wall Street (i.e., the big banks) were saying a recession was very likely in 2023.

However, the market was rallying during that time, then we peaked in August and finally sold off in September. During the fall, the markets were mostly flat, and then things spiked in January. Now the thinking is we may not hit a recession, and inflation may be behind us. Is the market feeling like it could be getting greedy?

But what about the complex data showing us the markets may be overvalued right now? Continue reading "The Market Is Looking Expensive" →

When the War In the Ukraine Ends

Posted on by Matt Thalman

A recent publication from the Kellogg School of Management at Northwestern University discussed the benefits of the post-war reconstruction as a good investment. They use post-World War II as an example of how much money should be spent and how it benefits the war-torn country very quickly.

The paper pointed to specifically The Marshall Plan following World War II. The Marshall Plan had two goals; European economic recovery and the containment of the Soviet Union. Stabilizing Europe’s economies were vital to promoting income growth around the world and entrenching democracies in Europe.

Whenever the Ukraine War is over, I think the Marshall Plan should be adopted identically from what happened 80 years ago since we will essentially be trying to do the same thing in Ukraine as we did all over Europe back then.

However, it will be much more expensive this time around. Post World War II, American leaders sent roughly $130 billion (In 2010 dollars) to help with the European reconstruction of railways, utilities, roads, and airports, the same type of facilities that will need to be rebuilt in Ukraine.

However, economists estimate that restoring the lost infrastructure in Ukraine will cost at least $200 billion, and that figure will climb the longer the war continues. And remember, $200 billion is to rebuild Ukraine.

After World War II, the Marshall Plan not only gave funds to countries that had been friendly to the US during the war but also to Germany and Italy.

The belief back then and now is that not helping to rejuvenate all parties involved after the war ended would only cause more issues later down the road. That has some people thinking that Russia and even Belarus could see new investments from outsiders when the war ends, perhaps not in a straightforward financial manner but in other ways, such as new business opportunities and deals.

At this time, no money has started flowing back into Ukraine to help rebuild the country or increase business and the economy.

But, a deal has already been made between Ukrainian President Volodymr Zelenskyy and BlackRock’s (BLK) CEO Larry Fink that has BlackRock coordinating the investments to help rebuild Ukraine when the war is over. Continue reading "When the War In the Ukraine Ends" →