“Much has changed in the investment world since last Thanksgiving. With cryptocurrencies and NFTs spreading into the art, music, and real estate industries, just about everyone has heard about decentralized finance, and if you had any part in this yr’s blockchain boom, your crypto-curious or NFT-skeptical family and/or friends may come to the Holiday table with questions on what all of this means for their investment portfolios. Scroll down for some Key answers” — Paul Ebeling
Value stocks boost the S&P 500
DJIA +194.55 at 35813.80, NAS Comp -79.62 to 15775.15, S&P +7.76 at 4690.70
Tuesday, the S&P 500 increased 0.2% Tuesday, as investors continued to rotate out of growth stocks into value stocks. The DJIA rose 0.5%, the NAS Comp (-0.5%) and Russell 2000 (-0.2%) lagged.
The underperformance of the small-cap Russell 2000 indicated the rotation was predominately in the large-caps.
The S&P 500 energy (+3.0%), financials (+1.6%), and real estate (+1.1%) sectors rose between 1-3%, while the IT (-0.2%), consumer discretionary (-0.6%), and communication services (-0.4%) sectors finished lower.
Growth stocks were pressured by another increase in long-term interest rates. The Russell 1000 Growth Index declined 0.4% Vs a 0.6% gainer in the Russell 1000 Value Index +1.1% in 2 days.
- S&P 500 +24.9% YTD
- NAS Comp +22.4% YTD
- Russell 2000 +17.9% YTD
- DJIA +17.0% YTD
WTI Crude Oil futures settled higher by 2.1%, or $1.61, at $78.38/bbl, Gold futures settled $22.50 lower (-1.2%) to $1,783.80/oz, and the US Dollar Index -0.1% to $96.51.
Meme stocks are overall growth stocks, and those on our list traded lower on the day, as rising bond yields threatened higher costs for capital.
Decentralized finance aka DeFi, is growing fast, and a few pointers will help your relatives and friends build their personal wealth and better understand the future of finance.
Crypto is real money, it is virtual cash that’s validated by the people who acquire, hold and accept it as payment. The more people who use it, the more valuable it becomes. And we believe that some countries central banks will adopt crypto as legal tender.
A blockchain is a public record of transactions and other information. Each block is like a line item in a record book—but instead of being stored in a central location, blockchains live on servers, which can be accessed through home computers around the world. Each transaction is secured with unique identifying information, including a time stamp, which cannot be changed. That means there’s no way to cheat the system. That means you can be your own bank and manage your holdings as you see fit, without interference from a central authority aka government.
NFTs represent unique digital assets, the ownership history of which is verified through blockchain technology. Like any other product, NFTs gain value as demand increases. The blockchain provides a way for assets to be sold and traded through secondary markets, and it allows previous owners to earn royalties when an NFT changes hands. As NFTs gain traction across industries, they are becoming more and more reliable as high-yield investment assets.
NFTs can also be used as digital proof of ownership for hard assets, including art pieces, collectibles and real estate.
All investments come with risk, but crypto is not as risky as you may have heard. The notion of placing some of your money at a nearly $60,000 asset like Bitcoin may feel intimidating, but value investors say crypto only becomes safer and safer as the price goes up. That is because demand for crypto is growing faster than supply, and although its volatility is likely to continue, more buy-in equals greater validity and utility. Ride the wave, go higher.
Crypto is unfamiliar territory for lots of people. But in the past yr, it has made exponential gains in cultural relevance, which will only continue to grow.
So, make sure your loved 1s are in on the action, and by the time you sit down for Thanksgiving dinner next yr, they will thank you.
The US Economy
- The preliminary IHS Markit Manufacturing PMI for November increased to 59.1 from 58.4 in October. The preliminary IHS Markit Services PMI for November decreased to 57.0 from 58.7 in October.
Looking Ahead: Investors will receive lots of economic data Wednesday, including weekly Initial Claims, Personal Income and Spending for October, New Home Sales for October, and the final University of Michigan Index of Consumer Sentiment for November.
Mr. Biden Tuesday ordered the release of 50-M bbls of Crude Oil from the nation’s strategic reserve to help bring down energy costs. The move was made in coordination with other major energy-consuming nations, including China, India, and the UK.
Key GOP leaders Tuesday afternoon criticized the Biden administration’s plans to release Crude Oil from the Strategic Petroleum Reserve Energy, saying the call is “not a long term solution that will help hard-working families devastated by these failed policies.
“These surging energy costs across America are the result of the Biden administration’s anti-American energy policies.” This action was planned in January.
Have a healthy, prosperous Thanksgiving holiday week, Keep the Faith!