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Dow Could Hit 100,000 By 2030; Adviser Urges Investors To Prepare

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The Dow Jones Industrial Average could hit 100,000 by 2030, according to financial author and adviser Ric Edelman. Edelman, who believes incredible profits are in the making for those who prepare for new economic realities. If it doesn’t hit 100,00, he said, it will probably hit 150,000.

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The blue-chip index currently trades at around 21,000, meaning a surge to 100,000 would mark a roughly 376% increase.

In his book, “The Truth About Your Future: The Money Guide You Need Now, Later and Much Later,” Edelman tries to educate investors on saving for retirement in the age of technology with life expectancies of 110 and 120. People will need to work much longer than they do today because they will live much longer.

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Fortunately, technology has reduced the cost of investing, thanks to exchange-traded funds.

Retirement Will No Longer Exist

“We’re not going to have a future the way our parents and grandparents had theirs,” Edelman told interviewer Scott Gamm in “The Street,” a Yahoo interview show.

Retirement now, as a 20th Century innovation is gone. It won’t exist in the 21st Century.

“You need to save in companies that are going to survive and thrive in the 21st Century,” he said.

Gamm asked Edelman how a person who has failed to start saving early can make up for getting a slow start. “It’s never been easier thanks to the Internet, and exchange traded funds and products of that type,” Edelman said. “Investing has gotten cheaper, it’s gotten easier, it’s gotten faster, it’s gotten safer.”

“Exponential technology also brings with it exponential growth… compound interest,” Edelman said.

And when you take advantage of saving not for 20 or 30 years but for 50, 60 years, you’d be amazed how much wealth you can create.

The Growth Of The Gig Economy

Gamm pointed out a person can also create wealth by having a “side hustle” as opposed to a 9-to-5 job. Edelman agreed. “Thanks to the gig economy, the shared economy, you have the ability to make money on a part time basis with very low risk, very low barrier to entry,” he said. “Anybody can do this, and an awful lot of Americans are.”

He said 16% of American workers are strictly working as contractors who work only when they feel like it.

Will The Trump Rally Continue?

Donald Trump

Noting that some people might be afraid to invest in the markets, Gramm asked Edelman what he thinks of the Trump stock rally. “We’re going to see a continuation of this for the next several decades,” Edelman said.

Over the last 50- or 60-year period, the DJIA has increased. “There’s no reason to think that won’t continue, in fact, financial technology makes that easier,” Edelman said. “We’re going to see incredible profits in the United States as well as globally.”

In his first market update to his clients last month, Edelman noted that the DJIA was up 11 percent since the election, and the S&P 500 index was up 9 percent. If this pace continues, he said stock prices will gain 24 percent this year alone.

He acknowledged there is concern that the “Trump Rally” will fizzle, and that it’s simply the “honeymoon period” new presidents typically experience. Trump’s failure to repeal the Obamacare also fuels this concern since Trump promised he would repeal Obamacare.

Should Trump also fail to reform the tax code and rein in the budget, will stock prices fall?

Why Trump Doesn’t Own The Rally

Edelman claims it’s incorrect to believe that the rise in stock prices is only due to Trump. While the election has excited investors since he’s seen as a business-friendly president, that’s not the only reason stock prices are up. Edelman points to the following economic factors fueling rising stock prices:

• U.S. corporate earnings increased 8% in the fourth quarter. Profits from overseas operations, meanwhile, rose 14.5% compared to the same period the prior year. This marks the biggest advance since mid-2010, according to the U.S. Commerce Department.

• Individuals, not just companies, are now making more money. Personal income is up 4.6% compared to the prior year. Salaries and wages are up 5.5%, according to the Bureau of Economic Analysis.

• The overall economy is growing. According to the Bureau of Economic Analysis, gross domestic product increased 2.1% in the fourth quarter.

• Consumer confidence rose in March to its highest level in 16 years, according to The Conference Board.

When people are confident they will continue to make more money, they are willing to spend more, Edelman noted.

Hence, sales of newly-built homes increased 6% in February, marking a 20% gain over February 2016 and the largest increase in five years.

The president cannot claim responsibility for much of the improvement, Edelman noted. But his positive attitude and his statements that please Wall Street contribute to the country’ economic improvement.

Trump wants to:
• reduce corporate and individual tax rates
• reduce regulation
• increase jobs
• bolster U.S. competitiveness in foreign markets
• repatriate billions U.S. corporations have overseas
• spend $1 trillion on infrastructure

Such positions please investors since they support an environment for improved corporate profits which translates into higher stock prices.

What If Stocks Fall?

The question remains: if Trump fails to pass his policies, will stock prices fall?

This is possible, Edelman noted. Hence, he gives the following advice:

He reminds his clients that portfolio diversification is important since it helps manage risks if stock prices fall. His company’s managed asset program is not totally invested in U.S. stocks.

Strategic rebalancing is also important. Most Edelman managed asset portfolios have been rebalanced this year. The company has been a seller, not a buyer, of over-performing funds. This is a way to maintain proper asset allocation.

Third, Edelman reminds clients of a core market truth. A stock price decline is not synonymous with a loss. Investors should consider what happens after a decline. History indicates stock prices move only in two directions: up and down. If prices drop, sit back and wait. Because markets move in cycles, prices eventually rise. It is always important to remember, however, that past performance does not guarantee future results.

Fourth, keep in mind every new president suffers slips in his early days, and Trump is no exception.

President Clinton failed to pass a health care overhaul in his first term. George H.W. Bush sent commodities prices into a spiral by saying he hates broccoli. The stock market survived such “crises.”

Fifth, keep in mind the stock market has increased dramatically in the last six months. Even if the Dow fell 10 percent, it would still be ahead of where it was on Election Day.

Consider All Aspects Of Financial Security

Lastly, consider that a person’s financial security will not be determined primarily by any president or Congress. A person determines their own future.

Every individual must focus on the aspects of their personal finances that they can control. This includes making sure wills and trusts are up to date, that too much in interest isn’t being paid on the mortgage, that one has the right kind and amount of insurance, the right amount of cash reserves on hand, and proper contributions are being made to retirement plans.

Edelman is chairman and CEO of Edelman Financial Services LLC. He has a radio show, six books, a column, conferences and nearly half a dozen appearances on Oprah. His books include “The Truth About Money; Ordinary People, Extraordinary Wealth” and “The Lies About Money.”

Important: Never invest (trade with) money you can't afford to comfortably lose. Always do your own research and due diligence before placing a trade. Read our Terms & Conditions here. Trade recommendations and analysis are written by our analysts which might have different opinions. Read my 6 Golden Steps to Financial Freedom here. Best regards, Jonas Borchgrevink.

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3.9 stars on average, based on 8 rated postsLester Coleman is a veteran business journalist based in the United States. He has covered the payments industry for several years and is available for writing assignments.




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4 Comments

  1. corporate_citizen

    May 13, 2017 at 7:02 pm

    We’ve all heard this bull(ish) talk before, just before the dot.com crash:

    https://en.wikipedia.org/wiki/Dow_36,000

    Bottom-line, the stock market cannot rise without liquidity; the hyper-liquidity dumped by central banks for decades, now. Having said that, there is a possibility that the US equity market will rocket upwards due to flight capital if foreign markets flounder. With interest rates at 5,000 year lows, sovereign debt may likely be the catalyst.

  2. thoth

    May 14, 2017 at 7:59 am

    Does the Fed have enough money to buy all those stocks?

    Oh yeah…… Wonder whats it’s balance sheet will look like in 2030

  3. kochelli

    May 15, 2017 at 6:12 pm

    This doesn’t make sense. Probably a typo…

    If it doesn’t hit 100,00, he said, it will probably hit 150,000.

    • Edward Talliot

      May 15, 2017 at 6:42 pm

      Yes, most likely..

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Goldman Sachs Is Getting Serious About Cryptocurrency

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Goldman Sachs made a significant push into the cryptocurrency market earlier this month by hiring Justin Schmidt to lead its digital asset division. While the bank remains non-committal about the scope of its cryptocurrency operation, actions speak louder than words.

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Goldman’s Hire

Financial news site Tearsheet first reported the news of Schmidt’s hiring in an article on Monday, indicating that the former cryptocurrency trader had reported to work on Apr. 16. The article quoted Goldman Sachs spokewoman Tiffany Galvin, who issued the following statement:

“In response to client interest in various digital products, we are exploring how best to serve them in the space. At this point, we have not reached a conclusion on the scope of our digital asset offering.”

The Wall Street bank has quietly led the institutional push toward cryptocurrency, having already cleared bitcoin futures on behalf of clients. Goldman CEO Lloyd Blankfein announced last autumn that the bank was exploring the possibility of cryptocurrency trading services.

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In December, Bloomberg reported that the bank had already decided to set up a trading desk to make markets in digital assets, with a tentative launch expected by June of this year. Blankfein later tempered those expectations by indicating that his bank would be merely clearing futures on bitcoin for the time being. (That said, Goldman Sachs has owned a stake in a bitcoin trading desk since 2015 as part of a $50 million funding round in Circle Internet Financial.)

The addition of Schmidt, who is an MIT computer science graduate, is a strong sign that Goldman is moving forward with its plans to service the digital currency market. This could entail helping clients gain exposure to the asset class using both conventional and non-conventional methods. A trading desk model would mean that cryptocurrency transactions are actually facilitated through the investment bank, which would give Goldman the distinction of market maker.

Institutional Interest: The Key to the Future?

Some of bitcoin’s biggest advocates believe that institutional trading is necessary to increase mainstream adoption of cryptocurrency and promote stable markets.

Efforts are also underway to convince the U.S. Securities and Exchange Commission (SEC) to allow for the first bitcoin exchange-traded fund (ETF). Such a move would bring crypto into the fold of a $5 trillion (and growing) ETF market. However, this would require the SEC to adjust an important section of the 1934 Securities and Exchange Act. The regulator has launched formal proceedings on the matter after CBOE presented a new case for bitcoin futures.

The institutional tide will likely grow now that the cryptocurrency market has returned to grow. The asset class has added more than $150 billion in value since hitting new bear-market lows earlier this month.

Billionaire George Soros is among the big names planning to enter the market, according to various reports. Soros is famous for shorting the British pound in 1992, where he netted $1 billion in profits for betting that the Bank of England (BOE) would abandon the European Exchange Rate Mechanism.

Disclaimer: The author owns bitcoin, Ethereum and other cryptocurrencies. He holds investment positions in the coins, but does not engage in short-term or day-trading.

Featured image courtesy of Shutterstock.

Important: Never invest (trade with) money you can't afford to comfortably lose. Always do your own research and due diligence before placing a trade. Read our Terms & Conditions here. Trade recommendations and analysis are written by our analysts which might have different opinions. Read my 6 Golden Steps to Financial Freedom here. Best regards, Jonas Borchgrevink.

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4.5 stars on average, based on 354 rated postsSam Bourgi is Chief Editor to Hacked.com, where he specializes in cryptocurrency, economics and the broader financial markets. Sam has nearly eight years of progressive experience as an analyst, writer and financial market commentator where he has contributed to the world's foremost newscasts.




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Netflix Shares Surge After Hours amid Record Growth in Subscriptions

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Netlix Inc. (NFLX) has proved it can raise prices and still attract a record number of new users. The Los Gatos, California-based streaming service added 7.41 million customers in the first quarter, smashing analysts’ forecasts by about 1.7 million.

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Netflix Earnings

In addition to adding a record number of subscribers, Netflix posted per-share earnings of 64 cents on revenue of $3.7 billion. Analysts in a consensus estimate called for earnings of 64 cents per share on sales of $3.69 billion.

International streaming dominated subscription growth with a net gain of 5.46 million new users. Europe and Latin America were largely responsible for the better than expected growth. U.S. additions totaled 1.96 million.

Netflix succeeded in adding new subscribers even as it hiked the price of its streaming service, a sign the company was delivering desirable content. In addition tot he 700 titles planned for release this year, the company is investing billions into original content. Moving to in-house production will allow Netflix to save money by avoiding hefty markups charged by rival studios.

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After falling 1.2% on Monday, share prices spiked 5.2% in after-hours trading. At $323.70 per share, the company should surpass $140 billion in market cap at the start of trading on Tuesday. That’s a 600% increase since 2014.

Share prices are recovering after a difficult stretch for so-called FAANG stocks, an abbreviation that represents Facebook, Apple, Amazon, Netflix and Google-parent Alphabet. FAANG investments lost more than $320 billion over a three-week stretch ending Apr. 2.

At the close:

Dominance of Over-the-Top Content

Netfix has established a dominant position in the market for over-the-top content, or OTT, which generally refers to internet-based streaming services. Cord cutters in the U.S. market alone topped 22 million between 2016 and 2017, bringing the total number of consumers without pay TV to about 57 million.

High-speed internet is not only disrupting traditional media, it is destroying it. This extends far beyond the entertainment segment to also include broadcast news and other mainstream media outlets.

OTT content could be worth $62 billion by 2020, putting companies like Netflix at the top of the heap for investors looking for promising plays during the tail end of the bull market.

The success of Netflix has spawned several paid and free alternatives, including emerging juggernauts like Amazon Prime Video, Hulu and Sling TV. Traditional media companies like HBO have also adopted the subscription streaming model.

As cord-cutting continues, price elasticity of demand could grow for streaming services. In other words, companies can charge more for their service without fear of lost revenue. That was certainly the case with Netflix during the past quarter.

 

Featured image courtesy of Shutterstock. 

Important: Never invest (trade with) money you can't afford to comfortably lose. Always do your own research and due diligence before placing a trade. Read our Terms & Conditions here. Trade recommendations and analysis are written by our analysts which might have different opinions. Read my 6 Golden Steps to Financial Freedom here. Best regards, Jonas Borchgrevink.

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4.5 stars on average, based on 354 rated postsSam Bourgi is Chief Editor to Hacked.com, where he specializes in cryptocurrency, economics and the broader financial markets. Sam has nearly eight years of progressive experience as an analyst, writer and financial market commentator where he has contributed to the world's foremost newscasts.




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Revolut: Apps For Cryptocurrencies

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For the last few months, it seems like we have been transfixed in the collapse of crypto prices, trying to figure out what is going to cause the next move up.  The answer is not easy to find. So I thought it might be an interesting change of pace to look at a fintech company that is participating in the crypto movement but has a few other cool things going as well.

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This may not fatten your investment account immediately but it should take your mind off bitcoin for a few minutes.  After that, who knows.

Big Valuation

Revolut is a UK based payments company in business since July 2015.  Last summer Revolut founders Nikolay Storonsky and Vlad Yatsenko raised over $66 million in VC funding and another $23 million from crowdfunding.  Yes, the Crypto buzz had something to do with their success. But there is quite a bit more.

Storonsky must be pretty good with a pitch deck considering the implied $200-$400 million valuation of the company.  He and his partner have deep experience in the global payments business. Nikolay spent years as a currency trader with Credit Suisse so he understands the absurd level of fees charged by the current system.

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The technical wizardry, however, rests with his partner Yatsenko. Vlad spent over ten years building financial systems for major Wall Street investment banks.  He serves as the company’s CTO.

Crypto Link: An Interesting Approach

According to company literature, the Revolut app allows customers to open a current account in under a minute, and includes a prepaid contactless MasterCard debit card.  So far there is nothing unusual about Revolut. But wait, there’s more.

The firm launched personal international bank account numbers (IBANs) across Europe just recently, and plans to integrate virtual currencies like bitcoin, Ethereum and Litecoin in the future.  This includes plans to add a wealth of new services in the coming months from the integration of cryptocurrency to pay-as-you-go travel insurance at the tap of a button.

Even before this gets accomplished, Revolut offers a currency exchange with 25 different currencies and a peer-to-peer payments service.  As Storonsky tells his story, “ . . . what we are demonstrating goes beyond banking.”

The one question investors are raising is how all these wonderful free services will be monetized.  An announcement this week should provide at least some answers.

CNP Fraud Prevention

Revolut has a new product aimed at tackling online card fraud. The mobile-only bank unveiled a virtual card that wipes a user’s card details and introduces new details each time they make a payment.

When people make an online payment, they enter card details and most often online retailers hold onto the data. This is where fraudsters have a field day.

In the trade it is known as Card Not Present (CNP) fraud.  As online shopping has increased steadily, CNP fraud has risen exponentially – something like 50% annually.

What happens is, every time you make a transaction, Revolut software deletes the card details so it’s impossible to make any transaction after that.  Just in case you were wondering, all the data remains in the browser of the customer. So the quality of customer service is not sacrificed.

Full Disclosure  

Revolut is not your typical ICO (i.e., all whitepaper and no product).  It is not fueled by any cryptocurrency or token. I first came across Revolut following their VC round last year and was impressed with the valuation, background of the founders and the business model.  I have no vested interest in the company. Someday the VC will want to cash out most likely through an IPO. So Revolut is a name you will want to keep track of.

Featured image courtesy of Shutterstock. 

Important: Never invest (trade with) money you can't afford to comfortably lose. Always do your own research and due diligence before placing a trade. Read our Terms & Conditions here. Trade recommendations and analysis are written by our analysts which might have different opinions. Read my 6 Golden Steps to Financial Freedom here. Best regards, Jonas Borchgrevink.

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4.4 stars on average, based on 64 rated postsJames Waggoner is a veteran Wall Street analyst and hedge fund manager who has spent the past few years researching the fintech possibilities of cryptocurrencies. He has a special passion for writing about the future of crypto.




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