The Bull Will Keep Running

This post The Bull Will Keep Running appeared first on Daily Reckoning.

Many market bears are coming out of the woodwork. They’re talking up recession and talking down stocks all over town.

But Friday’s GDP report should stop some of that talk. At 3.2%, first-quarter GDP easily topped estimates.

Meanwhile, many Americans are gainfully employed and they’re seeing their wages rise now more than any other time since the Financial Crisis. Interest rates and inflation are still low, and the Fed has stopped cutting rates, at least for now.

After December’s pullback, the stock market bounced back in the first quarter. The S&P 500 saw its biggest first quarter gain since 1998. And both the S&P and Nasdaq are back to record highs! The Dow is close to its own record highs.

The truth is, it didn’t pay to sell your stocks and dig your head into the sand last quarter. And it certainly won’t pay to be a bear this quarter either.

Corporate profits are also still on the rise, despite a slowdown from last year. Now we’re into earnings season again, with companies reporting results for the first quarter.

So far, many of those reports have been excellent.

That’s because many companies have reported profits that are well above investor expectations. Part of this outperformance is due to companies continuing to cash in on the growing economy.
But there’s also the fact that investors anticipated weak profits from the start.

Remember, the last earnings season happened when the market was just starting to recover from the December sell-off. And investors were worried about higher interest rates, the government shutdown and tense trade negotiations with China.

Today, many of those fears have proven to be false or overblown. The Federal Reserve didn’t raise interest rates at all — and signaled it’s not planning to raise them for the rest of the year.

And trade negotiations with China are reportedly going well. I anticipate we’ll receive some more definitive news about the final agreement soon. The final announcement should help drive stocks higher.

In short, this earnings season is helping investors become more confident and sending stocks higher.

But let’s take a look at the bigger picture.

The great value investor, Ben Graham, once said, “In the short term, the stock market is a voting machine. But in the long run, the market is a weighing machine.”

If you’re a longtime investor like me, I bet you’ve heard this quote countless times. But few people really grasp what this saying actually means. Allow me to offer an explanation…

Day to day, or even week to week, stocks get knocked around by headlines — because investors are emotional.

But month to month, or even year to year, the daily noise fades away and the true value of stocks become a lot clearer. For the bulls, that picture has looked pretty good!

Over the last ten years, all three major U.S. stock indices have more than tripled in value.
That’s in spite of all the bad, worrisome news thrown at investors every single day. And for the first time in history, we’ve seen two American companies reach $1 trillion in market value during this incredible stock run.

Better still, the economic outlook for America remains strong. So stocks should have plenty of fuel to keep charging higher as far as the eye can see.

Some would say the current expansion is long in the tooth. But I think we’ve still got plenty of room to run!

Yes, at some point, we’ll see a recession. But for now, the smart money, like me, is still bullish. And you should be, tooo.

Here’s to growing and protecting your wealth!

Zach Scheidt
for The Daily Reckoning

The post The Bull Will Keep Running appeared first on Daily Reckoning.

URGENT: If You’ve Missed the Rally — Read This

This post URGENT: If You’ve Missed the Rally — Read This appeared first on Daily Reckoning.

There’s nothing more heartbreaking than a missed opportunity.

About five years ago, I had a conversation with Jake, a good friend of mine who was also a hedge fund manager.

Jake was telling me his biggest regret when it came to investing.

“If only I had realized how strong the market was in 2012,” he told me with shame in his eyes. “I missed out on one of the best investment periods in my life! One that would have vaulted my company into the big leagues!”

Today, Jake doesn’t have a fund to manage. All of his investors pulled their money from his fund and he’s left managing just a small amount of capital for himself.

I can’t help wondering what would have happened to his career if he hadn’t spent the majority of 2012 through 2015 with his money on the sidelines.

There are some market opportunities you just can’t afford to miss, which is why I want you to pay special attention to today’s Daily Edge opportunity.

The 2019 Market Move You Don’t Want to Miss

Whenever we see the entire market, or even a group of stocks moving higher, it’s easy to think we’ve missed the boat. Human nature tells us to wait for a pullback, rather than jumping in and buying while prices are pushing higher.

That’s exactly what my friend Jake did when the market started trading higher in 2012.

Jake realized that a shift had taken place. But he decided to wait for a pullback before he put the money in his hedge fund to work. If you’re a student of the markets, you know that the market didn’t really pull back significantly until 2015. And by that time, Jake’s investors had lost patience and pulled their money out.

This is the true definition of being “penny wise and pound foolish.”

By trying to time the market and save a few points getting in at a cheaper price, Jake missed three years’ worth of gains for himself and his investors.

I bring this story up because today’s investors may be feeling similar sentiments about the oil market.

In December, the price for a barrel of oil was in a free-fall, with oil futures hitting a low of $43.40 on Christmas Eve.

Fast forward to this week and oil just pushed over $65 per barrel on news that Trump plans to re-implement sanctions on countries that trade oil with Iran.

In short, oil has rallied more than 50% from the December low. And a number of traders that I’ve heard from are lamenting the fact that they didn’t get in when oil was cheaper, and that they can’t buy now because it’s rallied so much.

These traders are falling into the same trap that my friend Jake did. They’re afraid to put their money to work because they don’t want to look foolish if they buy now when oil prices are higher, only to experience a pullback.

It’s a tough spot to be in. Because the more oil rallies, the more they look foolish for not being in the market and taking advantage of higher oil prices.

Fortunately, you’ve been profiting from this rebound in oil, because we’ve been talking about a lot of great opportunities in the energy sector for the last several months.

You have been profiting haven’t you?

If not, don’t make the mistake of waiting any longer. Because this week could be the start of the next big push for energy investors.

An All-Star Lineup of Energy Earnings Reports

This week — starting tomorrow morning — we’ve got a handful of earnings announcements that will give us a good perspective on where energy stocks are headed this year.

Tomorrow, energy titan Hess Corp. (HES) will release its earnings report before the market opens. The company’s management team will then host a conference call at 10:00 EST where they will be sure to discuss their views on the future price of oil as well as the company’s outlook for profits the rest of this year.

And then on Friday morning, Exxon Mobil (XOM) and Chevron Corp. (CVX) will post their earnings before the market opens. The investor conference call for XOM starts at 9:30 EST and the call for CVX is scheduled for 11:00 EST.

(You can listen to the calls yourself via the “investor” tab on their respective websites.)

These three earnings reports will set the tone for the entire energy complex.

Think about the companies that not only produce oil and natural gas, but also the service companies that supply the drilling rigs, and the pipeline companies that transport oil and gas away from the wells. You’ve also got refiner companies that are currently locking in big profits from selling gasoline and diesel fuel at high prices. And even specialty companies that provide sand and water for the “fracking” process.

There are so many stocks in this industry which have already been trading higher this year. You may have seen these movements and told yourself that you’ll buy the next time these names pull back.

Today, I wanted to tell you about my friend Jake’s experience so you don’t make the same mistake and miss out on this opportunity.

Oil stocks may have already moved higher from the December lows.

But they still have a long way to go.

Keep in mind that oil companies don’t need oil prices to continue to move higher to generate profits. Just keeping oil stable at the current levels will allow big companies like Exxon and Chevron to ramp up production and generate big quarterly profits.

And that means pipeline companies will have to transport more oil from wells to the refiners. The refining companies will have to churn out more gasoline and diesel fuel.

And everyone along the way will see profits continue to climb through the summer.

So if you’re sitting on the sidelines wondering when to get in on this energy market, please don’t wait any longer.

The earnings reports coming up this week could spark a new fire under these stocks and keep the positive trend going. You’ll want to make sure your capital is invested so you can profit from this next move.

Here’s to growing and protecting your wealth!

Zach Scheidt

Zach Scheidt
Editor, The Daily Edge
TwitterFacebook ❘ Email

The post URGENT: If You’ve Missed the Rally — Read This appeared first on Daily Reckoning.

Taking a Trip This Summer? Let Your Hotel Pay For It!

This post Taking a Trip This Summer? Let Your Hotel Pay For It! appeared first on Daily Reckoning.

Here at The Daily Edge, we’re all about finding market plays that can give you an advantage and make you more money.

But it’s not just about the cash. Because it really is true that money can’t buy happiness. It’s what you DO with the money that really matters.

Of course, I’m talking about things like:

  • Affording the comfortable retirement you truly deserve.
  • Paying for a special adventure with loved ones.
  • Or even just buying a gift or a meal for your grandchildren.

These are the things that we’re really after when we lock in our profits from the market. And today, I’ve got an opportunity for you to pay for a trip using the very same companies that usually take money from world travelers!

2019 is a Strong Year for Hotels

As the weather turns warm and my kids start looking forward to school ending, I’ve found myself thinking about making memories with the family this summer.

We’re going to spend some time with the in-laws at the beach in June. And maybe after that I could take the kids on a sightseeing trip or to visit my sister in the Midwest. I’ve been checking hotel rates and figuring out which weeks all the kids will be available between camps, sports practices, and other activities.

It seems I’m not alone in thinking about traveling this summer.

This week as I was researching the different market opportunities I follow, I came across an interesting statistic for the hotel industry.

So far this year, hotel occupancy has been very high. In fact, the rate is several percentage points ahead of where it would normally be at this time of year.

It’s especially encouraging to see this trend early in the year. Because as we head into the summer months, hotels typically start to fill up, peaking around 74% in the first half of August.

High Occupancy Drives Hotel Profits

This is shaping up to be an excellent summer for traveling thanks to the strong economy we’re experiencing in the U.S., as well as some encouraging signs from international markets!

In the U.S., the job market has been strong with hundreds of thousands of new jobs created each month and wages rising. This leaves workers with more money for traveling, and in many cases companies are offering more vacation time to attract quality workers!

In addition, although Chinese economic growth slowed last year, there are new signs pointing to a more stable environment in 2019. That could boost international travel which is also great news for large hotel operators.

With so much money available for traveling, and the statistics already showing us that travelers are hitting the road, now is a great time to invest in hotel stocks.

That way, when these companies report strong earnings during the spring and summer months, the stock prices should spike, handing you some extra cash to use on your next excursion!

Let’s take a look at three hotel stocks that will profit from the surge in travel this year.

Three Hotel Plays to Pay for Your Next Trip

Marriott International (MAR) is in an exciting period of growth both in the U.S. and internationally. Last year, the company earned $5.38 per share which was a 40% jump from 2017. More importantly, the company added more than 80,000 rooms during the year which leaves Marriott with many more rooms to rent out during the busy season this year.1

Just this week, Marriott announced that the company will open about 1,000 new hotels in the Asia-Pacific region, helping the company to capitalize on stronger growth expectations for this emerging area of the world. The stock has been moving higher this year and I expect more gains for investors as travelers hit the road this year.

Hilton Worldwide Holdings (HLT) has made some major changes for investors over the past few quarters. The company separated into three distinct businesses: Hilton Worldwide Holdings manages the company’s traditional hotels. Park Hotels & Resorts (PK) focuses more on the resort business. And Hilton Grand Vacations (HGV) is the company’s timeshare division.

Now that the separation is complete, you can invest in HLT and profit just from the company’s hotel business. Investors appear to prefer the ability to zero in on the lucrative hotel business, driving shares of HLT to a new all-time high this week. Investors expect HLT to grow earnings by 72% this year, and that’s the sort of growth that should drive the stock sharply higher this summer!

Choice Hotels International (CHH) operates several well-known hotel brands including Comfort Inn, Clarion, Econo Lodge and Sleep Inn. The company has focused on offering more affordable rates, which allows Choice to capture a large amount of business from young families and budget-conscious travelers.

Choice has about 7,000 hotels representing 570,000 rooms spread across 40 different countries and territories.2 This wide assortment of locations will give Choice Hotels plenty of opportunity to profit from any number of different attractions and destinations. And with profits set to grow by 33% this year, investors should be richly rewarded.

Stay Tuned for this Off-Market Lodging Opportunity

While the hotel business continues to be a very profitable place to invest, many travelers are also considering a different lodging option.

I’m sure you’ve heard of Airbnb, the company that allows individuals to list and rent their homes on a short-term or medium-term basis.

My parents have used this service to rent out rooms in their home and have had enjoyed the experience (as well as the extra money from their guests). If you have extra space in your home, I would highly encourage you to check out Airbnb as a way to generate extra income this summer.

There will soon be another way to make money from Airbnb as the company is planning to offer shares to investors this year.

I wouldn’t recommend buying shares immediately after the new stock hits the market. Hot new IPOs like Airbnb tend to trade high to start with and then sell off quickly as investors take profits.

But the business model is one that could generate big profits in the years ahead. And once the dust settles on Airbnb, the new stock could be a great opportunity to build your wealth from individuals renting out their own properties.

With so many ways to make money from a rush of travelers this year, make sure you’re locking in your share of the profits!

Here’s to growing and protecting your wealth!

Zach Scheidt

Zach Scheidt
Editor, The Daily Edge
TwitterFacebook ❘ Email

1 Marriott International Reports Fourth Quarter Earnings Results
2 Choice Hotels International, Inc., Finviz.com

The post Taking a Trip This Summer? Let Your Hotel Pay For It! appeared first on Daily Reckoning.

Tax Refunds Delayed — Keeping Walmart’s Profits Waiting

This post Tax Refunds Delayed — Keeping Walmart’s Profits Waiting appeared first on Daily Reckoning.

Have you received your tax refund yet?

Chances are good that if you were owed a refund, your return has been delayed. The government shutdown caused the IRS to furlough workers during some of the most important weeks for processing tax returns. And it’s taking the agency time to catch up.

So even if you were responsible and filed your tax return well ahead of the crowd, you may still be waiting on your refund check.

That’s the bad news.

But today, I want to show you why this delay could actually lead to a much bigger check for you.

In fact, whether you’re expecting a tax refund or you’ve got to write that dreaded check to Uncle Sam, this tax refund delay can help you capture some unexpected wealth.

Let’s take a look!

The New Tax Rates Delay Refunds

There’s been a lot of talk about tax refunds recently thanks to the new tax bill that went into law last year.

The new tax bill lowered the tax rate for most Americans, but also made major changes to what deductions families and individuals can make. We’ve talked about many of these changes here at Money & Credit, including the lower withholding rates that have allowed Americans to keep a larger portion of every paycheck throughout the year.

Now that it is time to turn in your tax return for 2018, many of those changes are under scrutiny.

I’ve become keenly aware of these issues in part because my brother is an accountant and is currently up to his neck in personal and small business tax returns. I got a chance to see him over the weekend and he was exhausted. It’s been a stressful year as he has had to work extra hard to make sure that all of the changes are being taken into account for the tax returns he prepares.

“Zach, it’s not just that the IRS was essentially closed for a couple of months. It has also taken extra time for many of the software platforms that we use to update all of the new changes.”

So these are two big issues that are causing a delay in the tax refunds Americans would typically be receiving this time of year.

First, the IRS was closed, causing a pileup in the number of returns waiting to be processed.

And second, individuals and business are taking more time to actually filetheir return because it is taking some time to handle the changes from the new tax bill.

This has had a pronounced effect on retail spending in the United States, which in turn is setting up an interesting opportunity for investors.

Delayed Spending Boosts Spring Profits

Wall Street has been a bit frustrated with how the delay in tax refunds has affected spending in the United States.

You may have heard that recent reports on total retail sales have come in a bit weak. And those “weak” readings have naturally sent some retail stocks lower. After all, Wall Street is worried that lower tax returns could lead to disappointing profits for retailers.

But here’s the thing…

Those tax refunds aren’t “gone.” They’re just taking a little longer to work their way through the system.

Which means American consumers will still be spending the cash that they get back from Uncle Sam.

The spending may have just been deferred from February and March to heavier spending in April and May.

So what does that mean for us as investors?

Well I’m expecting those refund checks to drive surprisingly strong retail sales in this new second quarter of 2019. And I expect those strong sales to catch Wall Street investors off-guard.

Over the past couple of months, a few key retail stocks have been stuck in a holding pattern waiting for good news to hit.

Shares of Wal-Mart Stores (WMT) for example are trading at the same level from late January. And shares of popular retailers like Target Corp. (TGT) and TJX Companies (TJX) have just barely made back losses from late in 2018.

The stock prices for these retailers are being held back in part because many taxpayers haven’t yet received their refunds. And so they’re not in a rush to head out and spend that cash.

But this month, as accountants wrap up their customers’ tax returns and the IRS catches up on its inflated workload, we should see tax refunds making their way to retailers around the country.

And as these retailers start reporting strong spring sales, stock prices will be poised to jump higher.

If you’re one of the forward thinking investors who owns shares of these retailers, you’ll be in prime position to profit from a jump in sales.

So as we head toward the April 15th tax filing deadline, make sure you are positioned to profit from all of those shoppers who will be taking their checks to spruce up their spring wardrobes!

Here’s to growing and protecting your wealth!

Zach Scheidt

Zach Scheidt
Editor, Money & Credit

The post Tax Refunds Delayed — Keeping Walmart’s Profits Waiting appeared first on Daily Reckoning.

Walmart, Target and TJX Reel From Delayed Tax Refund Checks… But Not For Long…

This post Walmart, Target and TJX Reel From Delayed Tax Refund Checks… But Not For Long… appeared first on Daily Reckoning.

Have you received your tax refund yet?

Chances are good that if you were owed a refund, your return has been delayed. The government shutdown caused the IRS to furlough workers during some of the most important weeks for processing tax returns. And it’s taking the agency time to catch up.

So even if you were responsible and filed your tax return well ahead of the crowd, you may still be waiting on your refund check.

That’s the bad news.

But today, I want to show you why this delay could actually lead to a much bigger check for you.

In fact, whether you’re expecting a tax refund or you’ve got to write that dreaded check to Uncle Sam, this tax refund delay can help you capture some unexpected wealth.

Let’s take a look!

The New Tax Rates Delay Refunds

There’s been a lot of talk about tax refunds recently thanks to the new tax bill that went into law last year.

The new tax bill lowered the tax rate for most Americans, but also made major changes to what deductions families and individuals can make.

We’ve talked about many of these changes here at The Daily Edge, including the lower withholding rates that have allowed Americans to keep a larger portion of every paycheck throughout the year.

Now that it is time to turn in your tax return for 2018, many of those changes are under scrutiny.

I’ve become keenly aware of these issues in part because my brother is an accountant and is currently up to his neck in personal and small business tax returns. I got a chance to see him over the weekend and he was exhausted. It’s been a stressful year as he has had to work extra hard to make sure that all of the changes are being taken into account for the tax returns he prepares.

“Zach, it’s not just that the IRS was essentially closed for a couple of months. It has also taken extra time for many of the software platforms that we use to update all of the new changes.”

So these are two big issues that are causing a delay in the tax refunds Americans would typically be receiving this time of year.

First, the IRS was closed, causing a pileup in the number of returns waiting to be processed.

And second, individuals and business are taking more time to actually file their return because it is taking some time to handle the changes from the new tax bill.

This has had a pronounced effect on retail spending in the United States, which in turn is setting up an interesting opportunity for investors.

Delayed Spending Boosts Spring Profits

Wall Street has been a bit frustrated with how the delay in tax refunds has affected spending in the United States.

You may have heard that recent reports on total retail sales have come in a bit weak. And those “weak” readings have naturally sent some retail stocks lower. After all, Wall Street is worried that lower tax returns could lead to disappointing profits for retailers.

But here’s the thing…

Those tax refunds aren’t “gone.” They’re just taking a little longer to work their way through the system.

Which means American consumers will still be spending the cash that they get back from Uncle Sam.

The spending may have just been deferred from February and March to heavier spending in April and May.

So what does that mean for us here at The Daily Edge?

Well I’m expecting those refund checks to drive surprisingly strong retail sales in this new second quarter of 2019. And I expect those strong sales to catch Wall Street investors off-guard.

Over the past couple of months, a few key retail stocks have been stuck in a holding pattern waiting for good news to hit.

Shares of Wal-Mart Stores (WMT) for example are trading at the same level from late January. And shares of popular retailers like Target Corp. (TGT) and TJX Companies (TJX) have just barely made back losses from late in 2018.

The stock prices for these retailers are being held back in part because many taxpayers haven’t yet received their refunds. And so they’re not in a rush to head out and spend that cash.

But this month, as accountants wrap up their customers’ tax returns and the IRS catches up on its inflated workload, we should see tax refunds making their way to retailers around the country.

And as these retailers start reporting strong spring sales, stock prices will be poised to jump higher.

If you’re one of the forward thinking investors who owns shares of these retailers, you’ll be in prime position to profit from a jump in sales.

So as we head toward the April 15th tax filing deadline, make sure you are positioned to profit from all of those shoppers who will be taking their checks to spruce up their spring wardrobes!

Here’s to growing and protecting your wealth!

Zach Scheidt

Zach Scheidt
Editor, The Daily Edge
TwitterFacebook ❘ Email

The post Walmart, Target and TJX Reel From Delayed Tax Refund Checks… But Not For Long… appeared first on Daily Reckoning.

I’m a Terrible Landlord… But Even I Can Make Money in Today’s Real Estate Market!

This post I’m a Terrible Landlord… But Even I Can Make Money in Today’s Real Estate Market! appeared first on Daily Reckoning.

I’ve got a confession to make: I’m a terrible landlord.

No, I don’t own a run-down apartment complex where people have to deal with poor living conditions. Quite the opposite in fact!

When we outgrew our old home when our fourth child was born, I kept the house intending to make some extra income by renting it out. I thought it would be easy money!

Boy was I in for a surprise…

As I found out, my personality just isn’t cut out for being a landlord.

But it’s OK! Because the lessons I’ve learned along the way could help you fare much better than I did. So today, I want to talk about how you might be able to tap into today’s red-hot real estate market to generate reliable income for your family!

The Problem with Being a “Nice Guy”

The first family I rented our house to looked good on paper. The couple had a new child, and the husband worked as a pilot for an airline. His income left him with plenty of cash to pay their rent and everything went well for a few months.

Then the pilot had an affair and left his family. The mom and her baby had no income. And of course I couldn’t put them out on the street.

So I let them stay in the house for several months while the divorce proceedings took place. And of course, I paid the mortgage out of my own pocket while they lived in my house.

Not a great first experience for this landlord!

The second set of tenants wasn’t much better.

Again, I rented the house out to a young family that had enough income with jobs that appeared to be stable.

But the husband lost his job and the family could only afford to pay for basic groceries and utilities with the mom’s income. So once again, I found myself paying the mortgage out of my own pocket with no income from my rental home.

I literally took a side job delivering wings that year, just to keep my own family’s finances intact.

In talking the situation over with a friend, I was told that I was being too nice.

“Zach, I hate to say it, but you’re just getting taken advantage of. Maybe this isn’t the best income strategy for you.”

My friend was right. I’m not cut out to be a landlord.

Fortunately, I now rent the property out to my brother who takes great care of the place and always pays his rent on time. Of course, I cut him an exceptionally good deal. But I’d rather get less income from the house and know that I can count on the check every month.

One day when my brother decides to move out, I’ll take an entirely different approach to being a landlord…

Better Options for “Nice Guy” Landlords

This week, I had a conversation with a friend who is in the market to buy rental property. He’s looking forward to generating passive income from property he owns, while watching that property increase in value over the years.

When I told him my story about being a horrible landlord, he laughed.

“I’m not going to be the one collecting the checks, Zach. And if someone doesn’t pay, I don’t have to be the one handling the eviction process.”

Brandon told me about a service — Roofstock — that allows you to shop for rental property in many different markets around America while helping you with the actual business of renting to tenants.

For instance, the site can help you find a property that already has a tenant in place, and tell you how many months are left on the lease agreement.

Roofstock can also put you in touch with local property managers who can take over the process of renting out your property once it becomes vacant. This is the type of service I could have used years ago, because I was too easy when it came to people’s stories about why they couldn’t pay to live in my house.

Deciding on managing your property with Roofstock will be different for everybody’s individual situation. But I wanted to pass the information along to you because it looks like the kind of opportunity that could really help you if you’re interested in generating income from real estate.

An Excellent Time to Own Rental Property

Despite my personal challenges with being a landlord, the rental business is actually an excellent way to generate income!

And today, the opportunity to make money in this area is especially good.

That’s because mortgage interest rates are actually declining. The Fed has paused its campaign of interest rate hikes, and some economic concerns are causing interest rates to fall.

Lower interest rates make it a lot more affordable to get a mortgage for purchasing property that you can rent out.

At the same time, demand for housing is picking up as a new generation of young adults looks for a place to live.

After the financial crisis 10 years ago, many young adults delayed moving out of their parents homes. A recent Barron’s article noted that about 15% of 25-35 year old adults still live with their parents.1

But now that unemployment has dropped to the lowest point in decades and wages are steadily moving higher, more of these young adults can move out.

This demand for housing has started to drive home prices and rental rates higher.

That means you might have to pay a bit more than you expected to purchase a rental house.

But this trend should continue as more and more adults move out and look for a place to live, which means you can charge higher rental rates — and eventually sell your house for a higher price — as the real estate market heats up.

So today, as you look for more ways to generate income, consider a rental property! Just don’t be a horrible landlord like me.

Here’s to growing and protecting your wealth!

Zach Scheidt

Zach Scheidt
Editor, The Daily Edge
TwitterFacebook ❘ Email

1 How Your Kids Can Ruin Your Retirement — and How to Make Sure They Don’t

The post I’m a Terrible Landlord… But Even I Can Make Money in Today’s Real Estate Market! appeared first on Daily Reckoning.

The Lyft IPO is Rigged!

This post The Lyft IPO is Rigged! appeared first on Daily Reckoning.

THE GAME IS RIGGED!

Consider this alert your fair warning.

This week, you’re going to see A LOT of publicity dedicated to hot technology companies like Lyft, Uber, Pinterest and Airbnb.

That’s because all of these companies (and a few more) are on deck to go public through an initial public offering (IPO). This is typically how new stocks are added to the market and how individual investors like you and me can invest in new companies.

However, today I’m warning you to ignore the hype.

That’s because when it comes to IPO investing, Main Street investors like you are ALWAYS at a disadvantage…

Here’s What You Need to Know About the IPO Market

Let me start off by saying that I have a lot of experience with IPOs.

Back when I was at the hedge fund, it was my responsibility to handle all of the IPO business that our firm took part in.

I would go to the road shows, grab lunch with the executives of the new companies, place calls to the brokers in charge of the deals, and I would literally call in favors that were owed to our hedge fund to ensure the best treatment possible when it came to the hottest deals.

So when I say this market is rigged, I know exactly what I’m talking about.

Here’s how the typical process works…

A company decides that they want to sell shares to the public for two primary reasons:

Reason #1 To Go Public — The company wants to sell shares to raise capital so they can open new stores, hire more workers, or become a stronger business.

Reason #2 To Go Public — Company insiders — AKA founders and private equity owners who got in before you or I ever had a chance to invest — want to sell part of their position at a top-dollar price to lock in a big profit.

Unfortunately, the latter accounts for a large portion of these transactions. And unsuspecting individual investors who buy these shares are usually the ones handing them their profits.

That’s because the men and women on Wall Street — with their millions of dollars in research capabilities and their endless connections — know exactly which IPOs are strong businesses looking to grow and which are full of insiders looking to cash in on their investment.

You on the other hand probably do not have these insights, which puts you at a serious disadvantage when it comes to making money from these exciting transactions.

But that doesn’t mean all hope to cash in on IPOs is lost!

Here’s How YOU Can Profit on the Market’s Hottest New Stocks

To profit from the market’s hot new stocks — like the Lyft IPO that is getting so much attention right now — you need to know how Wall Street approaches these events.

Most Wall Street firms get their allocations of new stock at one price from the broker, for example $35 per share. Once the stock starts trading in the market, the successful ones move sharply higher — maybe starting to trade at $45 or more.

Therefore, these institutions have a BIG incentive to sell these shares and lock in a profit. And that’s what they do!

So you don’t want to be buying in the first few days or weeks after a successful IPO prices. Because in other words, the big institutional investors are SELLING.

But wait a few weeks and after the dust settles, then these same institutions start building their real positions.

This happens after they get a chance to do all of their research, see how the stock is trading, and check in on the managers and see if anything has changed since the company went public.

If these institutions still like the stock after all of this research, they start buying stocks over time. That’s when you want to jump in with them and ride the stock higher — not when the stock is hyped up on its first day of trading.

Bottom line: the whole IPO game is rigged in favor of the big guys on Wall Street.

However, with the right playbook, you can still make money alongside these investors over time. You just need to be patient.

Consider this your fair warning.

Now let’s get to the other most important stories to start your week…

5 “Must Knows” for Monday, March 25th

Apple vs. Cable — Today at 1PM Eastern, Apple Inc. is holding a “special event” to announce new service-related products at its headquarters in Cupertino, California. Early reports indicate that two services expected to be announced include a streaming video service and a premium subscription to its News app. Today’s event is just another example of Apple creating a “moat” around its business, keeping competitors at bay.

New Boeing Details Emerge — New details emerge daily about the status of the Boeing 737 MAX, which not only impacts Boeing’s stock price, but also the prices of airlines globally. The two most recent reports state that Boeing rushed development of the aircraft in order to beat Airbus’ rival plane to market, and that Boeing is currently testing software changes to the plane to avoid future accidents. Stick with The Daily Edge as we continue tracking this story.

Earnings on Deck — There are plenty of exciting earnings reports scheduled to be released this week. On Tuesday, Cronos Group, Carnival, McCormick and KB Homes reports earnings.

On Wednesday, Paychex, Lennar, Five Below, Lululemon Athletica and PVH report earnings.

On Thursday, Accenture and Restoration Hardware report earnings.

And wrapping up the week on Friday, Blackberry and CarMax report earnings.

U.S. Economic Check Up — On Thursday, the Commerce Department is scheduled to publish its most recent estimate of gross domestic product (GDP) growth — a growth measure of the overall economy.

According to the WSJ, the first estimate showed the economy grew at a 2.6% annualized rate in the fourth quarter from the previous three months. But new services-sector data showed Americans’ spending in this area slowed sharply in the fourth quarter, suggesting the economy lost more momentum at the end of 2018 than previously believed. Economists polled by the Journal expect that growth was a slower 2.4% pace.

Trump Proven Innocent — We try to stay away from politics here at The Daily Edge. After all, our job is to make you money, no matter what side you lean towards. However, the headline-grabbing Robert Mueller investigation concluded this weekend and found insufficient evidence that President Trump obstructed Justice. This is good news for anyone with money invested in the stock market right now, as turmoil in the White House certainly wouldn’t be good for investor confidence.

Have a great week!

Here’s to growing and protecting your wealth!

Zach Scheidt

Zach Scheidt
Editor, The Daily Edge
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The post The Lyft IPO is Rigged! appeared first on Daily Reckoning.

“Dad, I Just Hit a Porsche”

This post “Dad, I Just Hit a Porsche” appeared first on Daily Reckoning.

If there’s one text you don’t want to receive from your teen driver, it’s this one:

“Hey Dad, give me a call. I just got in an accident and hit a Porsche”

You better believe I called David right away. Not because I was worried about the Porsche or the expense at all. I wanted to know that my son was alright!

Fortunately, no one was hurt. The Porsche stopped suddenly when making a turn and David barely bumped into it. From the pictures I saw, there was barely a scratch on the bumper.

Of course the jerk driving the Porsche is claiming thousands of dollars in damage along with injuries. He already has a lawyer and is trying to capitalize on the situation.

So while this incident could have been a lot worse, we’ll likely be spending a lot of time and money to clear everything up.

Fortunately, a few short years from now we won’t have to worry about this type of event anymore. And today, I want to show you how to capitalize on some big changes happening on our roadways!

The Dangers (and Expenses) of Human Drivers

Driving seems to be a theme at my house right now.

David had his accident just a few days ago. My 18-year-old daughter has been driving for a year now and is a big help with carpool when we need her. And my 16-year-old daughter is scheduled to take her road test to get her driver’s license this week!

(We worked on parallel parking last night and she’s got the hang of it!)

While I’ve been very careful to teach them as much as I can about safety, and we’ve logged hundreds of hours behind the wheel, my protective side is still worried about them.

After all, there are so many unnecessary deaths on our roads.

Just last week, one of my friends lost his brother in a tragic accident.

A couple of years ago, a friend of mine turned left in front of an unseen vehicle and was killed instantly.

And my kids felt their own sense of grief when one of their classmates died in a crash last year.

According to the National Highway Traffic Safety Administration (NHTSA), there were nearly 40,000 people killed on U.S. roads in 2017, and about 90% of those accidents were due to human error.1

Talk about unnecessary tragedy!

And that number doesn’t even begin to touch the hundreds of thousands of accidents that did not have a fatality — but still resulted in immense costs in medical expenses, vehicle repair, infrastructure repair, lost productivity and more!

Fortunately, something is being done about the dangers on our road. And you can be part of the solution while also collecting income checks and booking investment gains!

Self-Driving Cars are the Answer… And They’re Right Around the Corner!

It wasn’t all that long ago that the thought of a self-driving car sounded like science fiction. But many of today’s new vehicles are capable of operating with minimal input from a driver. And in a short time (probably only a couple of years), we will have vehicles that can completely drive themselves!

Of course, this type of technology isn’t evolving overnight.

It has taken hours and hours of programming time, vast technological resources, and plenty of trial and error to get self-driving cars on the road. And over the next few years, these investments are going to be even more intense!

Self-driving cars will need an estimated 300 million lines of programming code to handle all of the variables the road throws at them. And computer systems will need to handle more than 1 terabyte of information per second to keep cars driving safely.

(To put that number into perspective, it wasn’t that long ago you couldn’t even find a personal computer that could store one terabyte of data, much less process that much information in such a short period of time.)

With this demand for intense computer processing capabilities, semiconductor and memory chip makers are going to see demand increase sharply over the next two years. And communications firms that instantly send traffic and road condition data to fleets of cars around the country will also benefit.

Companies like Broadcom (AVGO), Micron Technology (MU), Verizon Communications (VZ) and many, many more will be launching new business units tied directly to autonomous driving technologies.

Automakers like Ford Motor (F) and General Motors (GM) will profit as an entire population shifts towards safer vehicles that have autonomous driving capabilities.

I still have a lot of questions about how insurance companies will fare once self-driving cars become the standard. Because while there will likely be fewer claims, insurance companies will also be forced to reduce prices as fewer vehicles will wind up in costly accidents.

The important thing is that many, many lives will be saved. Because self-driving cars don’t check their cell phones, get distracted by a billboard, or accidently run into Porsches while making turns.

Thanks to autonomous driving technology, the future will be much safer — and much more profitable! And we’ll be tracking the best opportunities in this ever-growing market right here at The Daily Edge.

Here’s to growing and protecting your wealth,

Zach Scheidt

Zach Scheidt
Editor, The Daily Edge


1 On the Road to Full Autonomy: Self-Driving Cars Will Rely on AI and Innovative Memory

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Buy Alert: 3 “Amazon Survivors” to Grow Your Wealth

This post Buy Alert: 3 “Amazon Survivors” to Grow Your Wealth appeared first on Daily Reckoning.

“Dad, I got a raise!”

I’ll never forget the look in my son’s eyes when he came home from Dunkin Donuts that evening. He was proud of himself, confident, and looking forward to having a bit more spending money in his pocket.

David is a hard working young man. At his first job, he was willing to get up at the crack of dawn to help open the store, even on Saturday when most of his high school friends were sleeping in. He often filled in for other workers too who simply failed to show up.

And in a short amount of time, the managers noticed this dependability and rewarded David with a raise.

“Way to go, David!”

As the U.S. economy continues to expand, more and more workers are getting similar raises. And with more money to spend, a handful of key retail stocks are poised to shoot higher.

Today, I’ve got three favorite plays for you to put in your portfolio right away!

Have Cash, Will Spend

Like any good teenager, David loved to spend the money he earned.

I remember a few weeks after his raise, the doorbell rang. It was a delivery guy with three boxes of new shoes. I had to laugh as I can’t remember the last time I bought three new pairs of shoes at once!

Today, consumers across the country have more money to spend thanks to rising wage growth. In fact, wages are growing at the fastest pace since the financial crisis 10 years ago!

As companies continue to spend more to hire and keep workers, we should see more cash finding its way to consumers. Of course, this is great news for retail companies who rely on discretionary spending to boost profits.

So let’s take a look at how retailers are faring, and where you can find the best opportunities.

Amazon Hasn’t Killed Everyone Yet

There’s been a lot of discussion about how Amazon’s online platform has been a brutal competitor for many large retailers in the U.S.

Heck, Sears and JC Penney are mere shadows of the companies they used to be. And many malls have actually had to close their doors because people just aren’t shopping at these retail hubs anymore. Instead, they’re buying clothes and other merchandise on Amazon.

On top of the Amazon competition, retail investors have also been concerned with the December retail sales numbers which came in well below expectations.

Is this a sign that the consumer has stopped spending? Or that the economy is headed for recession?

Not so fast…

The uncertainty during December (including the government shutdown, the trade war, and a sharp selloff in the stock market) may have caused some shoppers to stay home. But even still, the Commerce Department’s numbers look suspicious. After all, other private statistics like the Johnson Redbook same store sales report showed a much stronger picture.

All told, shoppers may have spent a bit less than expected for the December holiday period, but the overall “wealth effect” isn’t dead yet. And as wages pick up, consumers are certainly going to increase their spending habits.

The key for us as investors is to figure out where that money will be spent, and to invest in companies that will not be harmed by Amazon’s expansion into the retail market.

Today, I’ve got three stocks that fit the bill, allowing you to cash in on rising wages and strong retail spending this year.

Abercrombie & Fitch (ANF) Maybe I’m biased because I have so many teens in the house. But Abercrombie’s brand is resonating with today’s younger demographic. And after pulling back for the better part of this decade, ANF is making a comeback.

The retailer recently reported earnings that beat investor expectations and plans to remodel stores this year to make its locations more attractive for shoppers. Malls might not have the same draw they did ten years ago, but teens are still hanging out and shopping together. And ANF is now in a prime position to benefit.

Shake Shack Inc. (SHAK) One of the things that Amazon can’t replace is the experience of spending time with friends and family. One of my favorite things to do with my kids after school or on the weekends is to go out together and get ice cream or a meal.

Shake Shack is cashing in on this trend with a chain of restaurants that caters to customers who can appreciate a good burger and a great milkshake — at a slightly higher than normal price. By offering premium quality food and beverages, SHAK is able to boost profit margins while still attracting a loyal following.

SeaWorld Entertainment (SEAS) If you’re a parent, you know that taking your kids on a memorable trip can be both exhausting and very rewarding. This year, SeaWorld should see traffic pick up as more families have budgets that can include a theme park experience.

In addition to its water-themed parks, SeaWorld also owns the Busch Gardens brand. This gives the company some diversification when it comes to which experiences parents will pick for their children (or themselves). Look for SEAS to grow profits this year as higher wages lead to family excursions.

And there you have it. Three ways to play the strongest season of wage growth since the financial crisis!

Here’s to growing and protecting your wealth!

Zach Scheidt

Zach Scheidt
Editor, The Daily Edge
TwitterFacebook ❘ Email

The post Buy Alert: 3 “Amazon Survivors” to Grow Your Wealth appeared first on Daily Reckoning.

The Truth About Your 2018 Tax Refund

This post The Truth About Your 2018 Tax Refund appeared first on Daily Reckoning.

Are you counting on a big tax refund to help with expenses this year?

Better call your accountant or double check your return — because you might be among the many Americans who will be extremely disappointed with their tax refunds this year.

According to the IRS, American tax refunds so far are coming in 8.7% lower than last year. The media has been running with this story, coming up with frantic headlines.

“Millions of Americans Could Be Stunned as Their Tax Refunds Shrink,” says The Washington Post.

“Anger, Confusion Over Dwindling Refunds,” says NPR.

And my personal favorite: “Trump’s Tax Cuts Are Already Hurting Americans,” according to Paste Magazine.

As always, though, the truth is more complicated than that.

So today, I want to take an honest look at what’s happening to your taxes, and make sure that you’re making the best decisions to protect your income.

An Interest-Free Loan to Uncle Sam

I’m always amused when someone cheers about receiving a large tax refund.

That’s because the money you receive from a tax refund is yours. It’s always belonged to you. You simply let the government borrow it — free of charge— throughout the previous year.

Should you really be excited about leaving your own money with the government while earning absolutely zero interest on your deposit?

Our tax system is organized so that we set aside a bit of money from each paycheck or Social Security check we earn to cover our eventual tax bill. That way, when your taxes are due, you won’t find yourself with a big bill and no means to pay it.

How much is removed from each payment is typically tied to a table that calculates your estimated taxes for the whole year. It considers things like how many dependents you have and what your projected tax bracket will be.

Once a year, each working American files a tax return. It essentially compares how much was withheld from your paycheck over the year versus what you actually owe. If you withheld too much, you get the excess back as a refund.

But think about what you could have done with that money if you had received it in your paycheck throughout the year!

And that brings us to this year. Tax refunds are projected to be lower simply because Americans got to keep more of their hard-earned money along the way.

When the Trump tax cuts went into effect at the beginning of 2018, it set the stage for most Americans to pay less in taxes over the course of the year. According to the nonpartisan Tax Policy Center, the average taxes paid by individual Americans should decrease by $1,260.

Perhaps more importantly, the new tax code allowed for lower withholding amounts. In other words, Americans didn’t have to wait to file their tax return in 2019 to benefit from the law. Instead, each paycheck was a little fatter. So Americans got a bump in take-home pay right away.

Now, a year after the new tax law went into effect, the media appears to have forgotten about the bigger paychecks. Instead, they’re focused on how Americans aren’t getting as much back from the government — ignoring the fact that Americans didn’t have to give as much to the government in the first place.

Talk about biased reporting!

How to Make the Most of Our Improved Tax Situation

If you ask me, I’d much rather get to keep the income that I earn than let the government hold it for a year at a time.

Here at The Daily Edge, we constantly tell you about opportunities to grow your income in multiple ways — including investing in dividend-paying stocks.

So if you’re one of the millions of Americans who are keeping more of their income from each paycheck or Social Security payment but getting a lower tax refund as a result, there’s a great way to turn the tables in your favor.

Instead of spending the extra money you’re receiving in each paycheck, you could invest it in one or more of our dividend opportunities. It’s easy to set up a dividend reinvestment program (DRIP) or even use a fintech investment program like Robinhood to steadily invest a portion of your income into high-yielding stocks.

If you take this approach, you’ll actually grow the money that you’re saving from the lower tax rates, generating extra income from the dividends that you’re paid. That’s far better than letting the government keep your money for free until it gives you a “refund” at the end of the year.

And if you are still expecting to receive a big tax refund this year, I encourage you to consider a similar approach. If you place a portion of your refund into our high-yield income plays, you’ll protect the extra wealth you’re getting back from the government. And you’ll also be locking in a steady stream of income payments for years to come.

Going forward, you might want to consider changing your withholding options with your employer. That way you can start getting more out of every paycheck today, rather than waiting until the end of the year to get your own money back.

And next time you hear someone complaining about how their tax refund isn’t as big as they were expecting, please remind them that this is actually a good thing. After all, it’s much better to get our own money throughout the year than to keep it in some government account earning zero interest for a year at a time.

Here’s to growing and protecting your wealth!

Zach Scheidt

Zach Scheidt
Editor, The Daily Edge
TwitterFacebook ❘ Email

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