Your Money University

  1)   Proshares S&P 500 Short ETF (SH):   This ETF is an inverse ETF that trades at a -1 to 1 performance of the S&P 500. For every 1% that the S&P 500 falls, the SH will gain 1%. When S&P 500 selling picks up, I prefer to purchase an equal weighted stake of SH to my other positions in a long-term portfolio. I don’t want to sell my long-term positions, but I do want to hedge against a downturn.  2) Options on the  Proshares S&P 500 Short ETF (SH) : There is an active options chain for this ETF. If you purchase the in-the-money call for the following month (March 17, 2023), you can replicate the performance of 100 shares of the ETF with a small amount of capital. The only difference is that it will require some ability to pay for time in the options chain. I don’t like to use spreads largely because it caps the potential upside of the trade.  3)  ProShares UltraPro Short S&P500 (SPXU):  Finally, there is the high-octane tra...

Buying back missed NI years - UK (2023) “Buying back missed years can be a good way to bolster retirement income as just one qualifying year of NI at the standard rate of £824.20 adds up to £275 per year (1/35 of the full rate of the state pension) to your pre-tax state pension – putting the breakeven point of making those contributions at three years after you start claiming your state pension,” says Alice Haine, personal finance analyst at Bestinvest.  You’ll make the money back as long as you get your pension for three years. Anything after that would be profit, making it a worthwhile investment as this £824.20 outlay would amount to £5,500 over a typical 20-year retirement.  If you purchase back five years of NI for £4,121, that will boost your retirement pot by £27,500 - a staggering return on investment of nearly 600%.  That’s a pretty good return on the initial investment, especially if you’ve got the extra cash and were thinking of investing it in something else....

Reading the market  In fact, 12-month returns after a day like today – a 90% down day in a bear market – are almost always significantly positive, going back to 1995.  So that would give you an Alpha of 1.7% and 15.4% which is a great probability.

  The Industrials Sector Index Fund $XLI   During this bull market in particular, the one that turned 8-months old earlier this week, Industrials have been a real leader. The Industrials Sector Index Fund $XLI is the best performing sector of them all since the June lows. Now take a look at Industrials on an equally-weighted basis relative to the S&P500 equally-weighted. From a broader perspective, Industrials are breaking out to new 14-year highs relative to the rest of the market: One thing we know for certain is that new 14-year highs are not something we see a lot of in downtrends. This is a group we want to continue to own. It's not anything new. We've been all over this theme since it started to develop last year. Here's Deere $DE for example pushing up against new all-time highs attempting to break out of this massive base: Are you fighting these trends? I can't imagine why you would. There is more sector rotation and emerging leadership taking place in this ...

The only number that came out remotely good was PPI excluding Food, Energy & Trade Services year-over-year.  It wasn’t that long ago that the Fed reduced rate hikes to 0.25 basis points, but now Cleveland Fed President Mester said she saw a compelling case for a +0.50 basis point rate hike.   And now the dot plot of the Fed Funds rate will probably edge above 5% before all is said and done.  But is this news really affecting the market? Even though the market sold off yesterday - the S&P 500 (SPY) lost over 1% -  we’re still holding the long-term trend that started before 2023.  Sure, we need a higher high soon, but right now we’re still holding the trend line. If we zoom out to the weekly chart, we can see that we’re still in the uptrend that started in October of last year.  I’m looking for the 400 level to hold (4000 on SPX).  That’s only about 2% away from current levels. And if we go out even further to the monthly chart, we can see a simi...

  buyers are becoming increasingly aggressive as prices advance. When we look at how many stocks are seeing bullish momentum readings we are really analyzing the breadth of momentum for the broader market. This chart shows the highest percentage of NYSE stocks achieving overbought readings since spring 2020. If you can remember, back then, it was a great time to buy stocks. These kinds of breadth thrusts tell us that buyers are becoming increasingly aggressive as prices advance. More importantly, they tend to occur in the early stages of new bull markets...

  February Hangover . The November through January period is historically the most bullish 3 months of the year. And then comes the February Hangover. We're in the middle of that right now. Look at the average performance of every February going back to 1950: And remember, this is the most bullish quarter of the 4-year presidential cycle. Of the 16 quarters in the entire cycle, the one we're in is historically the most bullish.

  Do we have the will to do it? Leaders of foreign countries have solved fiscal crises -- witness Sweden in 1992, and Canada in 1995. Sweden even solved its Social Security problem through privatization. Why can’t the United States get its act together? The chart below shows how the Federal debt is growing hyperbolically. You can watch the federal debt grow every second by clicking  here . It is mesmerizing. The Fed's 'Wrecking Ball' [There's Only One Way To Dodge It] According to  Top 20 Living Economist  Dr. Mark Skousen... The Federal Reserve's moves are about to get even more dangerous... Forcing everyday investors to make panic-fueled decisions. To learn all about the Fed's "wrecking ball" -- and what Dr. Skousen is doing with his own personal investments --  click here now. 'What, me worry?' In response to the debt issue, let me first refer to economist American “Austrian” economist  Murray Rothbard,  who wrote the following in his mammot...

What happens in January matters for the rest of the year .   Today, stocks are in a clear uptrend. Take a look... You can see stocks' incredible performance since the October low. And you can see their huge January returns as well. Stocks have finally gained some upward momentum for the first time since the start of the bear market. That's good news for investors in the months ahead... especially since last month was so strong. You can see it in the table below. Going back to 1950, it shows what January performance means for stock returns in the months that follow... Over all periods, stocks have typically jumped 6.8% in the final 11 months of the year. And the market has moved higher 75% of the time. What happens in January has a massive effect on those returns, though... A positive return in January led to 11.3% gains over the rest of the year. And the win rate jumped to 86%. Meanwhile, if January was a loser, the rest of the year was barely in the green, rising just 0.7%... ...

Overbought BMI doesn’t guarantee an imminent pullback I also programmed my system to calculate what I call the Big Money Index, or BMI for short. It is the 25-day moving average of unusually big buys and sells for stocks and ETFs. The Big Money players are mostly hedge funds and other institutional players who account for 70% to 90% of all trading volume most days. Just last week, the BMI popped above 80, which put it in overbought territory for the first time since last August. Both the BMI and the  SPDR S&P 500 ETF Trust (SPY)  sold off – before rebounding and surging higher in October. I want to be very clear that an overbought BMI doesn’t guarantee an imminent pullback. In 2020, as the markets and economy were rallying after the COVID-19 shutdown, the BMI stayed up in overbought territory for nearly three months. And yet, there was a lot of money to be made in that time.

 Soft or Hard Landing for markets Let's see if the charts can guide us to a landing we can walk away from.   GDP is no longer cleared for landing: A spate of better-than-expected economic data has the Atlanta Fed’s forecast for Q1 GDP growth up to 2.2%. That’s a long way above the Wall Street consensus of -0.2%.   Wages are still coming in hot: The 6.1% wage growth reported this week suggests we’re not yet ready to land this thing. But a significant turn lower in the hottest sub-category (job switcher) may keep us from overheating.   Employment is showing no signs of cooling off: At 196,000, this week’s initial jobless claims are less than half what you’d normally see at the start of a recession.   Employers may be hoarding employees:   Construction workers, for example, are no easier to find than before mortgage rates doubled and housing sales cratered.    Housing tailwind? With 30-year mortgage rates back down to 6.1%, we’re interested in buying...

 Getting Bullish You can see the AAII Bulls and Bears, along with their consecutive streaks plotted below: And now you're seeing the unwind really get going. There's nothing like price action to change sentiment. We now officially have 1 week in the books with more bulls than bears. 1 week.

Distorted unemployment rate On its surface, the labor participation rate looks like it's plummeting. It was 62% in December... inching toward its lowest level since the mid-1970s (not counting a brief dip at the onset of the pandemic). And it has been trending lower since 2007. Take a look... If participation is tanking, folks claim the unemployment rate may not be as useful as it once was. They say unemployment looks low because people aren't looking for work, not because everyone has jobs. In fact, some argue it means the unemployment rate is  artificially  low. It's true that weak labor-force participation could be cause for concern. If fewer people are looking for work, it might suggest a shortage of workers in the economy. That could slow economic growth. Here's the issue... Most people don't really understand the labor-force participation rate. Many people can work but choose to not work as they have the money before retirement age levels.