Tag: ETF Investing Strategy

Three ETFs Set To Move Higher

Posted on by Matt Thalman

With over 2,300 ETFs to choose from, its not easy finding ones that excite you enough to put hard-earned money into with the goal that it grows substantially higher in the future. Luckily for you, I am continually searching high and low to find ETFs the average investor like yourself can not only buy but own over a period sometimes just months or other times years with the confidence that you will see a solid return. The current economic environment adds another challenge on top of finding quality ETFs to invest in, which is why I will also thoroughly explain why now is potentially a good time to buy.

The first ETF I would like to highlight is one that has already received a boost and will likely continue to move higher due to the Covid-19 Pandemic and how this global problem will likely have a lasting effect on the flow of business. The SoFi Gig Economy ETF (GIGE) has an inception date of May 2019 but now finds itself in a perfect storm situation where the fund was developed to benefit from the "gig economy," which due to the pandemic and social distancing requirements seem to be the sweet spot everyone wants to be. The fund's prospectus states its allocation based on these metrics;

30% to 60% Companies that directly facilitate and participate in revenue generation from gig economy businesses (e.g., app-based platforms, auction sites, web-based stores, and other commission-based platforms) 20% to 40% Companies that enable or support gig economy businesses in marketing and sales functions (e.g., social media platforms, messaging platforms) 5% to 20% Companies that facilitate financial transactions for gig economy businesses through apps or web-based platforms 5% to 15% Companies that support the ability of individuals to operate a gig economy business without participating in a commission or revenue-based model (e.g., companies providing health care, technology, or other back office services) 0% to 10% Other companies that are expected to benefit from the growth of gig economy businesses and associated lifestyle changes for individuals engaged in gig economy businesses

The funds top holdings include Twitter (TWTR), Alibaba (BABA), MercadoLibre (MELI), PayPal (PYPL), Square (SQ), and Lending Tree (TREE) to name a few. All companies that are primed to continue benefiting from the current pandemic and are set-up to be rock stars even once we have moved past the Covid-19 situation. And did I mention the fund is up 37% year-to-date? Continue reading "Three ETFs Set To Move Higher" →

New Sports Betting ETF Hits the Market

Posted on by Matt Thalman

Since the world of sports was put on hold due to the spread of Covid-19 and the attempt to slow its spread, many market participants have noted the rise in 'retail' investors. But, many have claimed that these 'retail' investors aren't just your average mom and pop investor, the young high school or college kid who wants to make a little money while stuck at home, (although we have seen a slight uptick from these age groups and demographics participating in the stock market over the past few months.) Some believe the largest new group of investors with the most impact on the markets in recent weeks are the ex-sports gamblers, especially those gamblers that prefer online sports gambling.

I say "ex"-sports gamblers because besides just recently when PGA Tour Golf and NASCAR began competing again, sports gamblers have not been able to bet on anything when all sports activities were shut down due to Covid-19. So, it is not to say that once professional major league sports begin to operate once again in the US, these sports gamblers won't go back to their old ways of betting on games and not stocks.

However, their 'old' ways of gambling may be changing in a big way in the near term. The online fantasy sports gambling website, DraftKing (DKNG), recently went public and was already operating an online sportsbook and casino before the countrywide shutdown. Furthermore, DraftKings competitor FanDuel, owned by Flutter Entertainment (FLTR), had also already begun to operate online sports gambling websites and apps in states that have legalized sports betting before the Covid-19 shutdowns and stoppage of professional sports. Even MGM Resorts (MGM) has begun partnering with companies to build online sportsbooks and casinos in states those activities are legal.

Some believe that due to the Covid-19 shutdowns, State and local governments who currently don't allow sports betting or online sports gambling will pass laws to allow these activities in the near term as governments try to find new forms of tax revenue. So, while not only is it possible that sports gamblers are now gambling on stocks, but they may be able to legally gamble on sports, regardless of where they live, soon. Continue reading "New Sports Betting ETF Hits the Market" →

An Industry That Could Be A "Savior"

Posted on by Matt Thalman

A few years ago, the investing world was enthralled with the idea that the marijuana industry was going to be the ‘next big investing trend.’ Unfortunately, for most who bought into the hype, the investments in the industry have not lived up to their promises. However, that may soon be changing.

The big marijuana players and their investors have all suffered over the years for several reasons. First, the industry is simply too fragmented for a single or handful of players to dominate the landscape. This is an issue because while competition is good, too much competition doesn’t allow individual companies in the industry to experience the power of ‘scale.’

What that means is, let’s say a marijuana company opens a farm. The farm may be large enough to produce 100 pounds, which is enough to cover the costs of the farm and the farmer. However, that 100 pounds aren’t enough to cover the cost of the transportation of the product from the farm, the distribution center, the security for the farm and distribution center, or the research and development so that the farmer can become more efficient and offer different strains. The fragmentation of the industry also hurts pricing power. The more competition means people trying to push product, perhaps simply to cover costs, means prices hit near rock bottom.

Another reason the industry has suffered is the very slow progress of legalizing marijuana both in most US States and the vast majority of countries around the world. With only a handful of states in the US having legalized the plant and the Federal Government still considering it a controlled substance, adoption rates around the country have been sluggish. When the industry was expecting to grow due to increasing numbers of legalized States rapidly, investors were pouring money into them. However, that money has begun drying up, which is now causing problems on balance sheets and debt levels. Continue reading "An Industry That Could Be A "Savior"" →

The Fed Is Buying These ETFs - Part 2

Posted on by Matt Thalman

In part one of this piece, I pointed out what ETFs the Federal Reserve had purchased as of May 19th. Since then, the Fed has purchased more of these ETFs and began buying corporate bonds directly, not through an ETF.

In this piece, we will look at whether or not you should follow the Fed's footsteps and buy these funds or other bond ETFs, or whether you should find your own path and buy non-bond ETFs in the days, weeks, and months to come.

The first issue with the Fed buying bond ETFs is that the demand for said ETFs likely rose when the Fed was buying. This is simply a supply and demand issue, especially when the bond ETFs wasn't able to issue new shares. Issuing new shares can only be done when the fund was able to purchase more bonds to bundle into its ETF. And since the Fed was dumping large amounts of money into the market in a rather short period of time, the likelihood that these funds where all able to increase their asset bases are not high.

So, the Fed has probably already pushed the price of these ETFs higher than where they would typically be trading. This is not good for new investors. Continue reading "The Fed Is Buying These ETFs - Part 2" →

Financial Sector ETF May Break Below Price Gap

Posted on by Chris Vermeulen

Our research team warned of a peak in the Financial Sector ETF on June 10, 2020, with this article.

It was important to understand the technical setup that existed at that time and what the Fibonacci Price Modeling system was showing then. There was very clear support near $23 that was highlighted by the Fibonacci Price Modeling System, and we were very clear in our future price predictions within that article.

"The $27 price peak sets up directly between our two Fibonacci Daily upside price target (Peak) levels. We believe this setup is a very strong indication that a move to below $23 may be setting up over the next 30+ days. The Q2 data may very well push investors to re-evaluate the potential for the Financial sector if delinquencies and at-risk borrowers continue to default in greater numbers."

The timing of our original article could not have been better for skilled technical traders. Since that June 10, 2020 article posted, the XLF price has fallen almost exactly to $23 (-10.15%).

Currently, the FLX price is recovering just above the price gap that will act as the next "window" for the price to attempt to fill. Skilled technical traders should watch Continue reading "Financial Sector ETF May Break Below Price Gap" →