Marc Lichtenfeld on the Cost of Prescription Drugs

Transcript:
Samuel Taube: Joining us again by phone is Marc Lichtenfeld, the Chief Income Strategist of The Oxford Club and the head of Lightning Trend Trader, Tactical Trader Alert, Chairman’s Circle Breakout Alert and The Oxford Income Letter. Marc, thanks for joining us again.

Marc Lichtenfeld: My pleasure, thanks for having me.

ST: Today we are talking about the high and ever-rising cost of drugs, a topic that’s been in the news a lot.

So I know that this is a very broad question I’m going to start with here, but what are some of the factors that contribute to the high cost of drugs, particularly brand-name drugs?

ML: I think a lot of people don’t quite appreciate how costly it is to create these drugs because they just hear the expensive price of the drug and maybe the margins on that particular drug.

But to get to the point where a drug is approved by the FDA costs hundreds of millions of dollars, typically. The average drug costs a billion dollars from the time it’s in a test tube to the time it’s approved by the FDA in roughly eight to 10 years.

Also, you have to consider all of the drugs that don’t make it. Because if a company does some drug discovery – it goes into clinical trials and it’s spending millions of dollars – and then the drug doesn’t work, or it’s proven not to be safe, or it’s rejected by the FDA for whatever reason, that’s all money that the company has spent as well.

So when a drug does get approved and does make it to market, not only does the company need to make that drug profitable, but it also tries to recoup the costs of all the failed trials.

Now, just to give you an example of how difficult it is: From the time a drug is in a test tube – so before it’s in human trials – to the time it gets to the FDA and is approved, only one in 1,000 of those drugs makes it all the way to approval. So it’s a very costly business. That’s one of the main reasons why drugs are so expensive.

ST: I see. I had no idea the ratio was that low – one in 1,000. That’s something. So then how are generic drugs developed, given the extremely high barriers of entry that you just described to creating new drugs?

How are generics developed, and why are they cheaper than brand-name drugs?

ML: So the reason they’re cheaper is because the generic drug company doesn’t have to go through all that expense – all that throwing stuff at the wall and seeing what sticks and seeing if the drugs are safe and effective.

Basically, once a drug is off patent – the brand-name drug goes off patent – all a generic drug company has to do is copy it. It can just break down the formula and make it itself. So it’s not paying all those costs for developing the drug and …read more

Starfish Limbs... and Why Bitcoin Forks Are a Good Thing

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Have you ever seen a starfish get a limb cut off?

It might sound cruel, but it’s an impressive sight.

Nature has gifted these creatures with a unique competitive advantage. It’s one that few other species can boast.

Cut off one of its limbs and it won’t die…

It’ll simply grow a new limb over time. And in some cases, the severed limb can grow into a new starfish.

It’s one of the most astonishing adaptive traits you’ll see in the animal kingdom… and it’s all thanks to the principle of decentralization.

Starfish have a decentralized nervous system. Each limb contains most, if not all, of its vital organs. And select species of starfish can regenerate an entire body from a severed limb.

So if a starfish loses its arm, that arm could become an independent starfish… and may even compete with the original for dominance.

I bring this up for a reason…

The principle of decentralization has value beyond the ocean floor.

Decentralized organization is the driving principle behind prosperous free market economies… It’s the signal virtue of political democracies.

And as you can see from this week’s chart, it’s also the key innovation of bitcoin and other cryptocurrencies.

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Bitcoin: the Starfish of the Currency Market?
According to Bitcoin.org, “Bitcoin uses peer-to-peer technology to operate with no central authority or banks… its design is public, nobody owns or controls bitcoin, and everyone can take part.”

In short, bitcoin is a decentralized monetary system built on cryptographic technology.

As the first mover in this new economic landscape, bitcoin has adapted to user concerns thanks to its decentralized nature.

Here’s what I mean…

When disagreements occur on how to improve bitcoin’s underlying technology, developers offer competing solutions. But since there is no central authority to impose a single solution on the entire network, users are free to choose whichever solution they prefer.

If enough users decide not to follow the most popular or mainline solution, they can simply create their own version of the software and maintain a separate ledger of transaction activity moving forward.

You can think of making these splits – or “forks,” as they’re known – as severing the limb of a starfish.

Bitcoin has endured several limb-cutting events over the years… but none have resulted in a deathblow to the original bitcoin currency.

In fact, bitcoin has remained as stable and competitive as ever.

Take some of the forks that occurred in 2017…

In August, a proposal called “SegWit” was introduced to improve bitcoin’s client software and allow bitcoin to handle transactions more quickly.

A small group of users believed the proposal would be ineffective and implemented a fork to avoid implementing the proposal.

As a result, “Bitcoin Cash” was born and began to trade separately from bitcoin. You can see the side-by-side performances of both in the chart below…

In October, another dispute between users took place that led to another fork.

A small group of users wanted to create a version of bitcoin that could be mined using GPU power instead of requiring specialty ASIC mining equipment.

As a result, “Bitcoin Gold” was born on October 24, 2017. Again, here’s a chart …read more

Just How Much Is Enough?

This past May, The Oxford Club led an expedition down the Danube River from Budapest to Passau aboard the S.S. Maria Teresa.

It was a delightful trip filled with historic sites, excellent food and fascinating excursions.

Of course, we also found time while afloat to discuss investment opportunities in world financial markets.

During the final question and answer session, a Member asked,

“We hear a lot of opinions about how to make money. But tell me this: Just how much is enough?”

It’s an interesting question. And I’ve heard some pretty interesting answers lately.

For example, earlier this year The New York Times asked several people how much money it would take “to cancel their worry and bankroll their dreams.”

Their answers were remarkably consistent.

Julien Mellon, a 32-year-old tour guide, said $20 million. That would buy a “beautiful” home with enough left over to provide annual income for the rest of his life.

Celeste Hilling, an executive at Skin Authority, also said $20 million. That would allow her to put her 17-year-old daughter through college, travel, pursue other interests and “give to philanthropy.”

Andrea Todd, a 51-year-old writer and teacher in Sacramento, said $65 million. That would allow her to travel “with immersion in mind” and buy a farm for animals, like Jon Stewart and his wife did.

It’s fun to dream. But these individuals have done something else: checked out of reality entirely.

No one needs $20 million – or $65 million – to feel financially secure and enjoy a full life.

That’s a good thing since few tour guides or schoolteachers accumulate enough to reach the eight-figure mark.

Some will say I’m being a spoilsport, throwing cold water on ordinary people’s dreams.

But fantasies like these can undermine realistic ambitions, chief among these being the desire for some measure of financial independence.

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Don’t get me wrong. If you have highly remunerative skills, an incredible work ethic and a burning desire to achieve great wealth – not to mention a bit of luck – amassing a $20 million fortune is indeed possible in this Land of Opportunity, especially once you learn how to make your money work harder than you do.

But financial goals need to be SMART: Specific, Measurable, Attainable, Realistic and Timebound.

The folks in the Times article have specific and quantifiable goals, but they are short on realism and attainability.

That’s a shame because a lot of individuals could reach financial freedom if they thought about the subject rationally and developed a workable plan to achieve it.

Let’s consider the first step – and answer that attendee’s question:  Just how much is enough?

There is no single right answer, of course.

But it’s certainly possible to calculate an approximate sum that would generate the income you need to finance your chosen lifestyle.

Things you might consider to arrive at your personal number include…

Your age and life expectancy (if you haven’t given this second factor much thought, click here)
Your number of dependents (if any)
Where you live (or want to live)
Your current financial obligations
And the annual cost of living your preferred lifestyle.

Granted, it takes …read more

Why ABM Stock Is Rated a "Hold" Before Earnings

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ABM (NYSE: ABM) is a $3 billion company today. Investors that bought shares one year ago are sitting on a 3.25% total return. That’s below the S&P 500’s return of 21.28%.

ABM stock is underperforming the market. It’s beaten down, but it reports earnings soon. So is it a good time to buy? To answer this question, we’ve turned to the Investment U Stock Grader. Our Research Team built this system to diagnose the financial health of a company.

Our system looks at six key metrics…

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✗ Earnings-per-Share (EPS) Growth: ABM reported a recent EPS growth rate of 1.72%. That’s below the commercial services industry average of 11.73%. That’s not a good sign. We like to see companies that have higher earnings growth.

✓ Price-to-Earnings (P/E): The average price-to-earnings ratio of the commercial services industry is 32.94. And ABM’s ratio comes in at 22.64. It’s trading at a better value than many of its competitors.

✓ Debt-to-Equity: The debt-to-equity ratio for ABM stock is 27.32%. That’s below the commercial services industry average of 156.15%. The company is less leveraged.

✓ Free Cash Flow per Share Growth: ABM’s FCF has been higher than that of its competitors over the last year. That’s good for investors. In general, if a company is growing its FCF, it will be able to pay down debt, buy back stock, pay out more in dividends and/or invest money back into the business to help boost growth. It’s one of our most important fundamental factors.

✗ Profit Margins: The profit margin of ABM comes in at 2.48% today. And generally, the higher, the better. We also like to see this margin above that of its competitors. ABM’s profit margin is below the commercial services average of 10.05%. So that’s a negative indicator for investors.

✗ Return on Equity: Return on equity gives us a look at the amount of net income returned to shareholders. The ROE for ABM is 1.53%, and that’s below its industry average ROE of 17.07%.

ABM stock passes three of our six key metrics today. That’s why our Investment U Stock Grader rates it as a Hold.

Please note that our fundamental factor checklist is just the first step in performing your own due diligence. There are many other factors you should consider before investing. That’s why The Oxford Club offers more than a dozen newsletters and trading advisories all aimed at helping investors grow and maintain their wealth.

If you’re interested in finding Strong Buy stocks yourself, check out 3 Powerful Technical Indicators for Smarter Investing. We’ll show you how to eliminate emotional bias from your trading process with three powerful technical tools you can start using to boost your trading profits immediately. Click here to learn more.  …read more

Could the Securities and Exchange Commission Kill ICOs?

Editor’s Note: Today’s article comes from Andy Gordon, co-founder of Early Investing.

Along with his business partner Adam Sharp, he recently launched Crypto Asset Strategies, a research service devoted to the most profitable opportunities in alternative cryptocurrencies. Click here to learn more.

Cryptocurrencies are flying high. Initial coin offerings (ICOs) have already raised a record-breaking $3 billion-plus this year.

But a few weeks ago, as my plane circled over LAX and prepared to land, I was curious…

Was the crypto community overconfident? Was there going to be an obnoxious level of self-congratulatory backslapping at the conference I was invited to?

I was about to find out.

StartEngine held its ICO 2.0 Summit in Santa Monica, California, last month.

I was going to hear a dozen and a half ICO pitches… and was hoping to walk away with one or two that captured my interest.

(As it turns out, I did find one… a potential recommendation. It’s an exciting investing opportunity that addresses a gigantic market in an extremely clever way.)

As I feared, there was a little too much cheerleading. No one mentioned a day of reckoning. “A bubble? So what?” was a comment that neatly captured the mood of the conference.

But, to this particular crowd’s credit, these people weren’t totally oblivious to some of the issues casting a shadow over the crypto space.

Their biggest worry? The U.S. Securities and Exchange Commission (SEC), followed by the possibility that crypto is in a bubble.

Here are some of the more interesting comments I heard on these and other areas of concern…
What Will the SEC Do?
Several lawyers I talked to mentioned a big clue that SEC Chairman Jay Clayton gave just two days prior to the conference.

During unscripted remarks in the middle of a speech at the Institute on Securities Regulation in New York, he said, “I have yet to see an ICO that doesn’t have a sufficient number of hallmarks of a security.”

While some disputed the legal basis of what Clayton said, the lawyers I spoke to at the conference mostly agreed it’s a strong sign as to which way the SEC is leaning as far as ICO regulation is concerned.

(This gets into the legal weeds about what qualifies as a security, an issue that deserves its own post. I’ll be writing about that soon in my free e-letter, Early Investing.)

If, as feared, the SEC rules that digital coins are actually securities and thus subject to securities regulations, it will make ICOs more complicated and expensive.

Sara Hanks, the CEO of CrowdCheck, said that ICO entrepreneurs should think very carefully about doing an ICO outside of a security designation.

“Even if you have a ‘Plan B’ to revise the legal status of your ICO after the fact, if the SEC says they’re a security, you’d be going down a very expensive path,” Hanks cautioned.

As for the “no harm, no foul” point of view? Hanks pointed out that “a lot of consumer complaints would trigger fed action.”

“The SEC doesn’t hate tokens, but it does hate fraud,” she said.

With consumer complaints on …read more

Buy or Sell Nordson Stock Before Earnings?

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Nordson (Nasdaq: NDSN) is a mid cap company that operates within the machinery industry. Its market cap is $8 billion today, and the total one-year return is 18.59% for shareholders.

Nordson stock is underperforming the market. It’s beaten down, but it reports earnings soon. So is it a good time to buy? To answer this question, we’ve turned to the Investment U Stock Grader. Our Research Team built this system to diagnose the financial health of a company.

Our system looks at six key metrics…

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✗ Earnings-per-Share (EPS) Growth: Nordson reported a recent EPS growth rate of 18.92%. That’s below the machinery industry average of 301.94%. That’s not a good sign. We like to see companies that have higher earnings growth.

✓ Price-to-Earnings (P/E): The average price-to-earnings ratio of the machinery industry is 26.17. And Nordson’s ratio comes in at 23.55. It’s trading at a better value than many of its competitors.

✗ Debt-to-Equity: The debt-to-equity ratio for Nordson stock is 156.94%. That’s above the machinery industry average of 69.08%. That’s not a good sign. Nordson’s debt levels should be lower.

✓ Free Cash Flow per Share Growth: Nordson’s FCF has been higher than that of its competitors over the last year. That’s good for investors. In general, if a company is growing its FCF, it will be able to pay down debt, buy back stock, pay out more in dividends and/or invest money back into the business to help boost growth. It’s one of our most important fundamental factors.

✓ Profit Margins: The profit margin of Nordson comes in at 17.21% today. And generally, the higher, the better. We also like to see this margin above that of its competitors. Nordson’s profit margin is above the machinery average of 8.94%. So that’s a positive indicator for investors.

✓ Return on Equity: Return on equity gives us a look at the amount of net income returned to shareholders. The ROE for Nordson is 30.78%, and that’s above its industry average ROE of 18.45%.

Nordson stock passes four of our six key metrics today. That’s why our Investment U Stock Grader rates it as a Buy With Caution.

Please note that our fundamental factor checklist is just the first step in performing your own due diligence. There are many other factors you should consider before investing. That’s why The Oxford Club offers more than a dozen newsletters and trading advisories all aimed at helping investors grow and maintain their wealth.

If you’re interested in finding Strong Buy stocks yourself, check out 3 Powerful Technical Indicators for Smarter Investing. We’ll show you how to eliminate emotional bias from your trading process with three powerful technical tools you can start using to boost your trading profits immediately. Click here to learn more.  …read more

What Christmas Music Means for Your Portfolio

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I’ll admit, I don’t know how many Christmas songs have been written throughout history. But I assume it must be more than the half-dozen played continuously.

And recent studies have shown that nonstop Christmas music can cause people psychological harm.

Especially when retailers put “Jingle Bells,” “Here Comes Santa Claus” and “I’m Dreaming of a White Christmas” on repeat… starting in October.

Best Buy (NYSE: BBY), Ulta Beauty (Nasdaq: ULTA), Sears (Nasdaq: SHLD) and Michaels (Nasdaq: MIK) are just a few chains guilty of such a crime.

Christmas music can irritate people by reminding them of everything that needs to be done before the holidays.

Plus, if you’re an employee at one of these retailers, caught in the endless Christmas music loop day in, day out, you’re bound to be mentally scarred.

But investors should start to love Christmas music… that is, if they don’t already.

It’s the harbinger of an annual holiday shopping blitz that fuels the markets through the end of the year.

Now, the markets have already had a solid year…

Despite the recent post-tax-bill blues, the Nasdaq is leading the pack, up 24% year to date. The Dow Jones Industrial Average is up 22%, and the S&P 500 is putting up a solid 16.5% performance.

But the final three months of the year are often when the biggest moves happen.
Summer Lulls and Winter Winnings
In fact, the fourth quarter is typically the best stretch of the year. And that’s because beginning in October, we have all the major spending holidays on the horizon.

Just look at the average quarterly gain of the Dow since 2008…

The slow-moving blue chips on the Dow have averaged a 3.79% gain in the fourth quarter over the last 10 years.

That’s more than double the Dow’s average performance in the third and first quarters. And as you can see, it’s several times the Dow’s performance during the second quarter “summer lull.”

Over the past five years, the Dow has closed out the year strong.

This year, since the start of October, the Dow is up nearly 8%. If the blue chip index doesn’t completely collapse between now and the end of the month, it’ll be the fourth year out of the past five that the Dow has gained more than 7% in the fourth quarter.

In other words, don’t bet against the markets in the fourth quarter. This trend is truly an investor’s best friend.

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At the moment, the Dow is negative for December. But it began December with several straight days of record highs. And since 2008, the Dow has ended December lower than where it began only three other times.

The one outlier is the Nasdaq… the tech index is down more than 1% in December already. And it finished the month of December down more than 1% in two out of the past three years.

The tax bill has created havoc for tech in recent days. But it could also create an opportunity.
Starting the Year in the Red
I’ll take a moment to give my annual warning: Remember, January is one of the worst months of the …read more

Is Sanderson Farms Stock Undervalued or Overvalued Before Earnings?

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Sanderson Farms (Nasdaq: SAFM) is a $4 billion company today. Investors that bought shares one year ago are sitting on a 113.97% total return. That’s above the S&P 500’s return of 22.88%.

Sanderson Farms stock is beating the market, and it reports earnings soon. But does that make it a good buy today? To answer this question, we’ve turned to the Investment U Stock Grader. Our Research Team built this system to diagnose the financial health of a company.

Our system looks at six key metrics…

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✓ Earnings-per-Share (EPS) Growth: Sanderson Farms reported a recent EPS growth rate of 110.33%. That’s above the food products industry average of 20.89%. That’s a great sign. Sanderson Farms’ earnings growth is outpacing that of its competitors.

✓ Price-to-Earnings (P/E): The average price-to-earnings ratio of the food products industry is 27.64. And Sanderson Farms’ ratio comes in at 13.93. It’s trading at a better value than many of its competitors.

✓ Debt-to-Equity: The debt-to-equity ratio for Sanderson Farms stock is 0%. That’s below the food products industry average of 48.10%. The company is less leveraged.

✓ Free Cash Flow per Share Growth: Sanderson Farms’ FCF has been higher than that of its competitors over the last year. That’s good for investors. In general, if a company is growing its FCF, it will be able to pay down debt, buy back stock, pay out more in dividends and/or invest money back into the business to help boost growth. It’s one of our most important fundamental factors.

✓ Profit Margins: The profit margin of Sanderson Farms comes in at 12.43% today. And generally, the higher, the better. We also like to see this margin above that of its competitors. Sanderson Farms’ profit margin is above the food products average of 6.43%. So that’s a positive indicator for investors.

✓ Return on Equity: Return on equity gives us a look at the amount of net income returned to shareholders. The ROE for Sanderson Farms is 21.99%, and that’s above its industry average ROE of 16.24%.

Sanderson Farms stock passes six of our six key metrics today. That’s why our Investment U Stock Grader rates it as a Strong Buy.

Please note that our fundamental factor checklist is just the first step in performing your own due diligence. There are many other factors you should consider before investing. That’s why The Oxford Club offers more than a dozen newsletters and trading advisories all aimed at helping investors grow and maintain their wealth.

If you’re interested in finding Strong Buy stocks yourself, check out 3 Powerful Technical Indicators for Smarter Investing. We’ll show you how to eliminate emotional bias from your trading process with three powerful technical tools you can start using to boost your trading profits immediately. Click here to learn more.  …read more

Dividend Increases: A More Realistic Way to Get Rich

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It never stops.

Friends, family and acquaintances think that because of my job, my pockets are stuffed with winning lottery tickets. All I have to do is pull one out and give it to them.

Below is an actual text I received last week from a friend.

Another guy recently demanded I give him a winner. “I need to make some money,” he said.

I explained that if he doesn’t have much money, he shouldn’t be buying risky stocks or other investments. If he was serious about building his wealth, I’d send him a copy of my book, Get Rich With Dividends. He refused the offer. “I just need to make some money,” he reiterated.

It’s easy to get caught up in bitcoin fever or speculate in biotech or other high-flying stocks. And you can make a lot of money that way.

But there are significant risks to those investments, and if you don’t have a strong foundation already, you will not be able to handle the ups and downs of speculative trades.

It’s why I always recommend investors first build a portfolio of Perpetual Dividend Raisers – stocks that raise their dividends every year.

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Stocks with annual dividend increases significantly outperform the market and tend to fall less during bear markets and corrections.

Dividend Aristocrats are members of the S&P 500 that have raised their dividends every year for 25 years. Since December 1989, when the Dividend Aristocrat Index was created, Dividend Aristocrats have outperformed the S&P 500 2,297% to 1,243%, including dividends. That’s a greater than 1,000% outperformance.

And when a bear market hits, collecting the dividend makes it a little easier to handle the lower prices, especially if you’ve owned the stock for a while and the dividend has gone up every year – you could be collecting a strong yield.

Making 5% in dividends definitely takes some pressure off your portfolio in a correction or bear market.

The next time someone asks me for a “tip” on how to make money (and they will), my advice will be the same: Buy great companies that raise their dividends every year and hold them for the long term.

That’s how you turn $1,500 into $2,500. Maybe not as quickly as JD would like, but with a much higher likelihood and much lower risk.

Good investing,

Marc
Thoughts on this article? Leave a comment below. …read more

The REAL Reason Yellen Is Raising the Federal Funds Rate

Last week, Federal Reserve Chairwoman Janet Yellen announced that the central bank would continue raising short-term rates.

No surprise there. The Fed has lifted rates four times already – and made clear its intention to continue tightening.

What is surprising, however, is that Fed officials resolutely refuse to state the real reason they’re doing this.

So let’s take a closer look…

The central bank purportedly exists to maintain stable prices and create full employment.

Full employment is a squishy term. Historically, it has meant an unemployment rate of less than 5%.

We’ve been there for over a year now.

However, the current unemployment rate of 4.1% fails to take into account all the employable men and women who have given up looking for a job.

Yet with economic growth hitting 3%-plus for two straight quarters – and hiring up – even these folks are being pulled off the sidelines.

As for stable prices, that hasn’t been a problem lately either.

Yes, the cost of healthcare and college tuition is rising faster than most prices. But the core inflation rate is just 1.8%.

Yellen claims she can’t understand why it’s not higher with economic growth and job creation strong.

But what’s more bewildering is why the Fed wants higher inflation. After all, that benefits no one.

Even a 2% inflation rate cuts consumer purchasing power in half over 36 years.

So let’s consider the real reason the Fed wants to raise rates. Is it to tamp down the stock and bond markets?

Absolutely not.

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Falling asset prices undermine consumer confidence and cause households to slam shut their wallets, undermining economic growth.

Is it to benefit savers? Hardly.

Over the last nine years, ZIRP – the Fed’s Zero Interest Rate Policy – has hurt no one more than savers.

Consumers who have set aside safe money to reach short-term goals – like raising a down payment for a house or paying next term’s tuition – have earned essentially nothing.

So why is the Federal Reserve really raising rates?

For one simple reason: to put the arrows back in its quiver.

If we started sliding back into a recession, the traditional monetary response would be to slash interest rates. But when the benchmark is at 1%, there isn’t much to cut.

Moreover, investors are hardly in the mood for Quantitative Easing IV, V or VI. (Especially since the Fed is trying to unload its multitrillion-dollar bond portfolio, not build it up.)

There isn’t much to hope for on the fiscal side either. Having run massive deficits under former Presidents Bush and Obama, the national debt now stands at $20.57 trillion.

We’ve already had the fiscal stimulus (for what it was worth). Piling on more debt in the next recession would only put us in the same league as Greece and Venezuela.

The central bank’s real desire is to slowly raise interest rates – without rattling consumers, investors or business owners – to a level where it can once again stimulate the economy (at least theoretically) by bringing them down again.

So – instead of letting everyone scratch their heads – why doesn’t the Fed simply say so?

Perhaps it’s because when …read more

Forward Guidance: Adam Sharp Explains Initial Coin Offerings and Altcoins

Important Note: During this podcast, we discuss a hypothetical IPO for an imaginary cryptocurrency that we spontaneously named “Sharpcoin” (after this week’s guest, Adam Sharp).

As it turns out, there actually is a small cryptocurrency called Sharpcoin. To be clear, this podcast is not recommending an investment in Sharpcoin.

Transcript:
Samuel Taube: Joining us again today is Adam Sharp, co-founder of Early Investing. Today we are talking about alternative cryptocurrencies, or “altcoins,” and initial coin offerings. Adam, thanks for joining us again.

Adam Sharp: Thanks for having me, Sam.

ST: As our listeners probably know at this point, you’ve had tremendous success investing in, shall we say, “conventional” cryptocurrencies like bitcoin, Ethereum, Litecoin and so on. What has motivated you to start looking into smaller coins and ICOs?

AS: Well, I think it’s just a natural attraction. The type of people who are drawn to bitcoin – they’re obviously looking for something different, something that has a very high potential for returns.

After you get into bitcoin for a while, and you get comfortable with it, and you’ve made a bunch of transactions, and you probably made some money on it, you start to think about what’s next, because there’s all these other cryptocurrencies out there.

There’s now thousands of different cryptocurrencies. A lot of that, by the way, is due to the fact that bitcoin is open-source, which means that anyone can take the code and use it as they wish.

So you can create your own version of bitcoin. Virtually anyone can, but the thing that gives bitcoin itself real value is the fact that it’s so liquid, it has such a good community around it, it can be traded for cash all over the world and some of the best developers in the world are working on it.

There’s certainly a network effect, a benefit that you get once you have a big network like that and it builds over time, but the really neat thing about it being open source is that it allows anyone to create their own cryptocurrency if they want to use the bitcoin technology.

So in 2013, when I started investing in bitcoin, I also – almost immediately, really – just started looking into alternative cryptocurrencies because there were a few around then.

There were probably only about 10 that were worth knowing. A few of those are still alive today. Among them are Litecoin, Ripple, Feathercoin – there are a couple other ones that are still around, but I owned all those at the time.

ST: Did Ethereum exist back then or was that a later development?

AS: No, I think Ethereum was developed in 2015.

ST: Oh, OK.

AS: They had their ICO, which is an initial coin offering – we’ll get into that in a little bit – but nothing really happened with alternative cryptocurrencies for a long time.

We had a very quiet period in bitcoin and other cryptocurrencies from about 2014 to early 2016. It was relatively quiet. Not much happened.

Of course, bitcoin came first and then you see after-effects as people start …read more

Is It Too Late to Buy Bitcoin?

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Just a few years ago, bitcoin was worth pennies. Investors could be forgiven for writing it off as a fad.

Today… not so much.

The cryptocurrency’s price crossed the $10,000 mark for the first time last week. And as you can see from today’s chart, it has indisputably gone global.

More than three-quarters of bitcoin trading volume today is conducted in Asian currencies – specifically the Japanese yen and the Korean won. On top of that, it’s gaining popularity in emerging markets like South Africa and Estonia, as well as in distressed economies like Venezuela.

This surge in global adoption is great news for longtime bitcoin holders. But for the rest of us, it raises a troubling question: Is it too late to buy bitcoin and get in on the gains?
Late to the Party
Believe it or not, many cryptocurrency experts think it might be. Consider these words from a recent article by Andy Gordon, co-founder of Early Investing…
When [one of my relatives] said that bitcoin was in a bubble, he was roughly right. Not that the current bullish sentiment lifting bitcoin’s price to new heights is wrong. But sentiment can be fickle and can turn against an asset class, driving prices down as quickly as they had gone up. Who am I to say that bitcoin is immune to such a reversal? Of course it’s not.
Bitcoin has had quite the wild run this year. Neither the bulls nor the bears can tell you with any certainty whether that run will continue into 2018.

But just because you might be a little late to adopt bitcoin – and that’s still debatable – that doesn’t mean that you’ve missed the boat on all cryptocurrency investment opportunities. In fact, the biggest gains in cryptocurrency history are likely still ahead of us. They just might not be in bitcoin.

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The Birth of a New Asset Class
Thanks to the open-source nature of bitcoin, developers are free to copy its source code, make their own improvements to it and launch their own cryptocurrencies.

There are thousands of these alternative coins (or “altcoins”) in circulation today. And they’re already hammering away at bitcoin’s market share.

I recently spoke with Adam Sharp, Andy’s business partner and the other co-founder of Early Investing. He rattled off this surprising statistic about the cryptocurrency market…
For most of cryptocurrencies’ history, bitcoin has been dominant – 95% of the entire market. Today it’s only around 50% of the entire market.
Maybe bitcoin will keep racking up quadruple-digit gains in the years ahead… maybe it won’t. But for its younger, cheaper altcoin cousins, the sky’s the limit.

That’s why Andy and Adam just launched a new research service called Crypto Asset Strategies to give subscribers the best possible advice on investing in this growing asset class. Click here to learn more. …read more