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.