Some investors make bets based on technical indicators.

Others track more outside-the-box omens, such as which team wins the Superbowl in a given year.

But one often-overlooked market indicator, a commodity used in manufacturing, has out-tested them all…

And even earned an honorary medical degree.

Wall Street veterans like to refer to this commodity as “Dr. Copper” because of its uncanny ability to diagnose trends in interest rates and the broader market.

It’s more than just superstition…

When copper demand falls, it represents a slowdown in global activity. After all, copper is an industrial metal. If industry slows, typically the economy follows suit.

Just take a look at the metal’s performance relative to global recessions over the past several decades…

And when few medical professionals even knew the full extent that the COVID-19 pandemic would have on our day-to-day lives in 2020, Dr. Copper got solemn.

Prices tanked in the first quarter of 2020, signaling a stall in major projects – everything from electric vehicles to iPhones – that involve the metal.

Copper hit a three-year low of $2.52 per pound on January 27 – long before many U.S. states began their lockdown procedures. It recovered slightly and then posted a new four-year low of $2.17 on March 16.

In July, copper jumped to around $2.95, suggesting a rebound in the global economy, but that run was short-lived.

That’s because it was artificial. Rather than representing a balanced global recovery, the jump was caused by an 89.9% increase in copper imports by China.

Chinese infrastructure and manufacturing make up more than half of the total global demand for copper. And in the aftermath of COVID-19’s grip on China, the Chinese government invested in infrastructure to help jump-start growth.

This boosted demand for copper and inflated the metal’s value.

A more honest performance came after July, when copper took a turbulent ride upward with dramatic drops in August, September and October.

It then began a steadier increase after October 30, likely benefiting from election and vaccine mania in the market.

As of November 17, copper was up to $3.18 per pound, its highest value since spring 2018.

Could this be a sign that the economy is about to rally?

To help answer that, we need to look at how copper sizes up against its more popular cousin, gold.

Whereas the price of gold tends to rise on the expectation of lower interest rates, the price of copper tends to do the opposite. Therefore, the ratio is considered a leading indicator for the yield on the 10-year Treasury.

A rising copper-to-gold price ratio indicates a strengthening economy. And a falling copper-to-gold ratio indicates a weakening one.

With copper at $3.18 and gold at $1,951.70 per ounce, the ratio currently sits at around 0.0001.

For some perspective, that’s right around where the cooper-to-gold ratio was in January 2009 – the steepest part of the recession.

But remember, the copper-to-gold ratio’s directionality is more important than its value…

In January 2009, the ratio was still wrapping up its steepest descent since the one that began in 1969.

Today, however, the copper-to-gold ratio appears to be rising. It’s been steadily – albeit slowly – climbing from its 30-year low of 0.00008 in March.

And the yield on the 10-year Treasury has followed a similar trajectory.

This suggests that we could see a rebound in growth expectations and inflation in the U.S. and globally.

This lines up with a variety of other trends that Chief Income Strategist Marc Lichtenfeld investigated for readers of his monthly newsletter, The Oxford Income Letter.

In the September issue, he wrote, “I expect 2021 to be the year of infrastructure,” and recommended a play that would hedge against rising prices.

He added, “I expect inflation will be a problem sooner than people think.”

All of this, and a Biden win, could bode well for copper – and the economy – moving forward.

The Biden-Harris campaign has indicated that rebuilding and strengthening America’s infrastructure will be a “top priority.”

And with copper’s importance to construction, a 10-year, $1.3 trillion investment in American infrastructure could boost demand just as it did for China in July.

But that’s not all. The Biden administration has also made plans to invest heavily in renewable energy, particularly in vehicle electrification. It plans to build 500,000 charging stations across the country.

Because copper is a stellar conductor of electricity and heat, this could be the metal’s biggest chance yet to shine.

Sixty percent of copper’s uses are for applications in renewable energy and electricity – so if the campaign is able to deliver on its promises, it could provide just the surge in demand copper is looking for.

And if history is our guide, what is good for copper is good for the economy…

So head into 2021 with a glimmer of hope – and a portfolio that, like this durable metal, is built to last.

Good investing,

Mable

The post Look to Dr. Copper for an Economic Cure appeared first on Investment U.

In this week’s episode of his YouTube series State of the Market, Chief Income Strategist Marc Lichtenfeld answers some of readers’ most common questions about bond investing…

And even shows viewers how to purchase a bond, live online.

There has never been a more crucial time for investors to look to this asset class. The market’s ungraceful tumbles earlier this year humbled many of us, and no one wants to get caught off guard twice.

But bonds do more than just keep your savings safe…

They can also provide steady, reliable income that can even compete with the yields on most blue chip stocks.

Take the bond Marc features in this week’s episode, for example. With a discounted price of just $936.16 compared with bonds’ par value of $1,000, this bond offers the opportunity for a 2.9% coupon and nearly $65 savings – which together create a 4.689% average annual total return.

That’s more than the yield that investors who flocked to Pfizer (NYSE: PFE) this past week will earn on their money…

And it’s 100% guaranteed by law that bondholders will earn that yield – regardless of what happens to the company in the near future.

In a market environment where nothing is certain, that’s an appealing promise…

Many investors are intimidated by bonds because they’ve never been told how they work. But in Marc’s State of the Market videos last week and this week, he walks you through…

• The mechanics of a bond, in which investors act as “backers” to a company that needs a loan
• Maturity date, the date at which a bond comes due and bondholders are paid back their principal
• Par value, the $1,000 standard by which all bonds are priced
• CUSIP, a bond’s “ticker symbol” under which it trades
• Coupon, the amount that a bond pays per year in interest based on its $1,000 par value
• Yield to maturity, the return a bondholder will receive if they hold the bond until its fixed end date
• Yield to worst, the lowest possible yield a bond is allowed to pay by law.

He’ll also walk you step-by-step through the process of purchasing your first bond.

Click here to watch.

Bond investing is a proven way to protect your portfolio while earning secure income. In fact, it’s one of the best ways to diversify your holdings.

Bonds’ impressive performance under a variety of market conditions creates an environment similar to a permanent bull market in stocks – one where your principal is guaranteed and all you have to do is sit back and watch your nest egg grow.

Watch Marc’s latest State of the Market video now and learn how you can get started.

Good investing,

Mable

The post It’s Time to Buy Your First Bond appeared first on Investment U.

It’s time we talked about the “B” word…

Bond.

These investment vehicles have a stodgy reputation.

But day trading detractors can laugh all they want…

In the meantime, corporate bondholders can collect legally guaranteed yields that often beat out blue chip stocks.

Consider this… Chief Income Strategist Marc Lichtenfeld has never lost money on a bond.

He has also never recommended a bond that has lost money.

So bonds may not get the glory – but they almost always win.

That’s why they’re a critical part of any income investor’s portfolio.

And in this week’s episode of the trailblazing YouTube series State of the Market, Marc shows you exactly how to add these steady coasters to your retirement plan.

A Bond That Cannot Be Broken

The reason bonds – specifically corporate bonds – have such a high win ratio is because they don’t function the same way that stocks do.

When you buy a stock, you become part owner in a company, taking on its successes and its failures…

But when you buy a corporate bond, Marc likes to say that you are more of a “backer.”

All publicly traded companies carry debt to expand their businesses, and, as a bondholder, you make a loan to repay that debt.

If the company’s stock price goes down, no problem…

As long as the company doesn’t go completely bankrupt, your principal will be returned to you.

Moreover, if you buy in below par, your bonds have the ability to appreciate in price (generate capital gains) – in addition to paying you interest along the way.

Which means, in addition to providing additional security, bonds produce profits two different ways.

Here’s how…

How to Use Bonds to Your Advantage

All bonds are issued in increments of $1,000, called “par.”

(That $1,000 is called “$100” in “bond speak.”) You receive your $1,000 back no matter what happens to the price of the bond.

That means you can buy a bond at a premium – for example, $1,020 – but you will still receive $1,000 at the bond’s end date, called its maturity.

You can also buy a bond at a discount…

And because you will still receive $1,000 at maturity, you will profit the difference between your purchase price and par (your capital gains) plus all of the interest that you earned in the meantime.

And just like with a consistent dividend payer, those interest payments add up…

(Click here to watch Marc’s latest video and see just how much.)

Granted, this assumes that you are willing to hold each bond to maturity – which is Marc’s recommendation for all bond purchases.

Nonetheless, sometimes there are special circumstances.

So to give yourself the best chance to profit, stick to bonds that are below par, at par or at a slight premium – and do your research to ensure the companies are strong.

To get started, watch Marc’s latest video now.

Good investing,

Mable

The post Why Beauty Is in the Eye of the Bondholder appeared first on Investment U.

Happy Halloween from Wealthy Retirement!

In this week’s edition of the popular YouTube series State of the Market, Chief Income Strategist Marc Lichtenfeld covers something that’s got investors across the political spectrum spooked…

Next week’s decisive 2020 election.

As the COVID-19 pandemic rages on, investors on both sides are concerned about what this coming Tuesday will mean for their portfolios.

Some are flush with holdings that rely on a “pro-business” president who’s lax on regulations…

While others have already been banking on a Biden presidency, as we’ve seen lately with renewables’ spectacular rally.

But as Marc explains in this week’s video, the market is rarely that straightforward.

For instance, regardless of who wins, Marc believes we could see a “sell the news” reaction, where investors who see the market turn their way take profits before it has a chance to zigzag again.

And COVID-19 has already proved how unpredictable the coming months could be…

But it’s not just the future that has investors bamboozled. As Marc reveals, we’re overlooking critical trends from the past as well…

For instance, conventional thinking has it that a Republican president is by default a more positive influence on the stock market (even if not the economy).

But that hasn’t always been the case…

Since 1952, the stock market’s performance during Democratic administrations has outshone its performance during Republican administrations. Historically, Democratic administrations have seen double the average stock market return.

And while President Trump does sport the sixth-best stock market performance of past presidents going back 100 years…

The truth is, he’s in varied company, joined by a host of more progressive presidents from recent history.

In fact, he’s bested by Franklin Roosevelt, Dwight Eisenhower, Calvin Coolidge, Bill Clinton and Barack Obama.

It all goes to show that it will serve investors best to remain calm – and that conventional thinking might not serve us best…

The Only Way to Win This Election

As Marc explains in this week’s video, the only way to win this election season is to be prepared for anything – and to have faith in the market’s long-term potential.

While he shares some of his top sector picks based on each possible outcome, Marc says that the market is not as straightforward as investors like to think – and the best way to score big is still to stay invested for the long haul.

So regardless of what happens next Tuesday, don’t let the high tensions this election season get you spooked.

Rebalance your portfolio to ensure you have a healthy mix of income generators and stocks from every sector, then lock in and hold on tight.

And most importantly, keep an eye on Marc’s weekly updates. He’ll help you interpret what each twist and turn in the news cycle means for your portfolio – both in the short term and over the coming years.

Click here to watch this week’s State of the Market video.

Good investing,

Mable

The post How to Win This Election appeared first on Investment U.

In Chief Income Strategist Marc Lichtenfeld’s most recent edition of his popular YouTube series State of the Market, he pulled back the curtain on the historic earnings season that officially kicked off this past week.

Some stocks, like blue chip banks Citigroup (NYSE: C) and Wells Fargo (NYSE: WFC), continue to trade at deep discounts due to earnings misses, as Contributing Analyst Jody Chudley revealed on Thursday.

Meanwhile, some winners have already broken away from the pack…

Take Logitech International (Nasdaq: LOGI), for example. This software manufacturer has a strong history of beating analysts’ estimates for earnings, outshining expectations for the past nine quarters.

And shareholders often reap the benefits…

As Marc reveals in this week’s video, the stock posts an average gain of 8% following an earnings announcement.

But this time around, after reporting stellar results, Logitech soared 16% in a single day.

Some investors see this as an anomaly. They believe that stock movements are like coin flips – and that what goes up must sometime come down.

But not Marc…

Instead, Marc compares stock movements to a snowball. He believes that stocks like Logitech build momentum each time they report positive results, making them more likely to do so again.

Which makes impressive streaks of outperformance a powerful buy indicator…

Enter the “Earnings Kings.”

Whereas a Dividend Aristocrat consistently raises its dividend for 10 years or more, an Earnings King outpaces analyst expectations for 10 quarters or more.

Logitech is well on its way to joining this esteemed group.

Keep in mind, though, that beating expectations is less about a company bringing in boatloads of money and more about the company performing better than expected.

Some stocks may post an overall loss – but as long as they lose less than the market anticipated, shareholders are still golden.

That’s why trading earnings announcements is one of Marc’s favorite ways to earn passive income – because often, the market misses out on no-brainer opportunities just like these.

Trading earnings reports – for underdogs and for consistent outperformers like Logitech – is a powerful way to profit from the market’s biggest jumps.

So the next time you start to wonder whether a company with an impressive earnings streak is destined to fall from grace…

Remember that you may actually be in the presence of royalty.

Good investing,

Mable

The post You’ve Met the Dividend Aristocrats… Now Meet the Earnings Kings appeared first on Investment U.

This week in his flagship YouTube series State of the Market, Chief Income Strategist Marc Lichtenfeld got political…

And he revealed the tickers of four investments that are destined to help investors profit no matter who wins the upcoming election.

They all hail from the energy sector – and represent its up-and-coming cohort of clean energy stocks that promise to replace fossil fuels as renewables become increasingly inexpensive.

Regardless of your views on alternative energy, it’s clear that technology is advancing even faster than we can keep up with – and that Big Oil is suffering as a result.

Take one look at the Energy Select Sector SPDR Fund (NYSE: XLE), which favors an oil-dependent energy sector, and you’ll see what I mean…

Oil prices have always had their ups and downs, but there will come a point when fossil fuels reach a permanent decline – and you don’t want to be caught holding the bag when that happens.

Think of it this way… how would you have felt if you had passed up on Apple (Nasdaq: AAPL) at the dawn of the iPod for a CD manufacturer?

Revolutions strike the S&P 500 every day. And as Marc explains in this week’s video, this one is in both candidates’ best interests – even if they have not been friendly to renewable energy in the past.

That’s why Marc is arming viewers this week with his top investments in the renewables space. This healthy mix of stocks and exchange-traded funds (ETFs) can help you cast a broad net over the sector, adding exposure where it counts.

What’s more, he’ll even show you how to get in on these picks at a discount.

Tune in to this week’s State of the Market for all the details.

Good investing,

Mable

The post Profit No Matter Who Wins the Election appeared first on Investment U.

You’ve heard it before: If something seems too good to be true, it likely is.

Yesterday in his popular State of the Market YouTube series, Chief Income Strategist Marc Lichtenfeld tackled one of the financial world’s most insidious products – which is also one of its most tempting ones.

Especially when they’re peddled by stars like Tom Selleck…

I’m talking about reverse mortgages. Reverse mortgages offer borrowers a dazzling amount of money upfront or in installments, and they have to be paid back only after the borrower moves out of the house or passes away.

It sounds like the perfect solution for aging in place. Most borrowers would love this kind of arrangement…

If not for the fact that as the years went by, most borrowers would be going broke.

The devilish genius of reverse mortgages is that they use the power of compounding against the borrower. Between mortgage insurance (which is required for everyone), fees and premiums, a borrower’s loan balance would continue to grow.

And remember how powerful compounding can be to grow your wealth over the years?

If you’ve ever struggled with credit card debt, you know that compounding works in reverse too.

Consider this…

A 65-year-old borrower in Wealthy Retirement‘s home city of Baltimore with a $300,000 home can receive more than $79,000 upfront from a reverse mortgage. Yet over the life of their reverse mortgage, they will pay nearly $18,000 in fees.

And that’s only if they own their house outright before taking on a reverse mortgage…

The fact is, less than half of even the market’s most “cash rich” borrowers are in that position by their 70th birthday.

But It Gets Worse

“No problem,” you might say. “Just pay off the loan on time, and you’ll go on your merry way.”

That’s where we hit a fatal snag…

Reverse mortgage borrowers have only one year after they move or pass away to pay off their enormous upfront allowances.

What’s more, if a borrower ever stops living primarily in the home or falls behind on property taxes, home maintenance or insurance during the life of their loan, the lender can come and demand their money back early.

Not to mention that if a borrower passes away before the loan expires, any heirs to the home are on the hook for the fees. In addition, any cohabitants who aren’t on the agreement could need to vacate the premises.

There are many provisions that protect the lender – and few that protect the borrower.

Chief Income Strategist Marc Lichtenfeld likes to compare reverse mortgages to annuities because they can be vague, dastardly and expensive.

And as with annuities, the spirit behind reverse mortgages can be downright dishonest.

You may remember that several years ago, annuity sales plummeted when the advisors who recommended them were required to act as fiduciaries (advisors who work in a client’s best interests).

The chart above shows the volume of reverse mortgages peddled leading up to the spring of 2018, when more restrictions were placed on sales. Most of those restrictions protected borrowers.

It’s clear that lenders are well aware of how dangerous these investments can be.

If you have no other way to fund your retirement and you have a large amount of equity in your home, you could look into a reverse mortgage as a way to afford high upfront expenses – but even in that case, it may be more prudent to downsize.

If lenders don’t have a vested interest in protecting you, it’s up to you to protect yourself.

Good investing,

Mable

The post Avoid This Financial Product appeared first on Investment U.

Would you throw away $100?

If you’re one of the income-minded investors here at Wealthy Retirement, odds are you could find a good use for that money. And you certainly wouldn’t waste it.

Yet many Americans are missing out on money that is legally owed to them – in amounts that can far exceed $100.

As the years go by, often, things slip through the cracks. We plow through a variety of insurance policies, deposits and accounts, and even the most diligent saver could fail to realize what they’re owed from old stock holdings and pension benefits.

That’s where this week’s State of the Market video comes in…

Yesterday, Chief Income Strategist Marc Lichtenfeld revealed why there is $80 billion of unclaimed cash out there – and how to claim the share that is rightfully yours.

Simply visit the free site Marc mentions in his video and search for your name or those of your relatives (including those who may be deceased). Be sure to also search for funds under any state where you may have lived in the past.

Click to file a claim, fill out additional paperwork in the mail and you’re done.

But if that sounds like a hassle, consider this…

Had you invested $100 in the market 10 years ago, by now, you’d have nearly tripled your money.

That’s despite March’s ruthless market crash – and it doesn’t include compounding, income from dividends or growth from reinvesting income.

It wouldn’t have taken an investment in a destined winner like Apple (Nasdaq: AAPL) or Netflix (Nasdaq: NFLX) either – just a humble bet on the broader S&P 500.

Not to mention that an extra $100 wouldn’t come amiss in your emergency fund, considering the rainy days we witnessed this spring and summer. And if you don’t use it, someone will…

Where Is My Cash?

When a person has unclaimed property, their state makes a concerted effort to track them down. But if this fails, the funds can be used to cover government activities.

But even if you have become your state’s local lender, you can rest easy. Claims from individuals (and their heirs) who are owed money will always be honored by the state.

You just have to follow the money trail…

And these 10 minutes of detective work have scored Americans as much as $32.8 million apiece, according to CNN.

The top three states for unclaimed funds are Maine, Arizona and Maryland – but every state promises to hold up its end of the bargain. The money is never gone for good unless you decide it isn’t worth pursuing.

But let’s just say you wouldn’t throw away $100…

Take a look at Marc’s State of the Market video to start claiming what’s rightfully yours.

Good investing,

Mable

The post Claim What’s Rightfully Yours appeared first on Investment U.