We recently published an article on tax selling stocks, which listed several stocks that had dropped significantly this year. Tax selling stocks are ones which are overly depressed in price due to stockholders wanting to take advantage of their capital losses before year-end. Often, these stocks bounce in January when the selling pressure is off.
Some stock traders like to look for additional criteria when they choose which tax selling stocks to buy, and one that is popular is below-cash stocks. These are stocks that if you divided the company’s total cash by the number of outstanding shares, that cash value exceeds the current stock price.
In other words, the stock is trading below the amount of cash available per share. With that much cash, it is hard for a company to go out of business within a month. In addition, it sometimes makes these stocks takeover opportunities.
Of course, there is no guarantee that these stocks will bounce in January. They could continue to drift downward or stay around the same price for a long time.
Here is a list of non-biotech stocks that are down over 50% year-to-date and are selling below cash per share. Also, all of these are selling below $7 per share. In addition, many of them have had increasing revenues over the past few years.
AFIB
AQB
ASTC
BTBT
CMMB
CNTX
DSS
EKSO
FKWL
FNHC
FVE
LCI
MAPS
MYPS
NUWE
ONVO
ROOT
SLDB
VIVE
Please keep in mind that these are extremely low cap stocks and are therefore extremely speculative.
Disclosure: At the time the article was written, author owned AFIB AQB ASTC BTBT CMMB CNTX DSS EKSO FKWL FNHC FVE LCI MAPS MYPS NUWE ONVO ROOT
The following is a short list of some of the many stocks going ex dividend during the next month.
Many traders and investors use the stock trading technique called ‘Buying Dividends,’ also commonly referred to as ‘Dividend Capture.’ This is the strategy of buying stocks before the ex dividend date and selling the stock shortly after the ex date at about the same price, yet still being entitled to the dividend.
This technique generally works in bull markets and flat or choppy markets, but you need to avoid the strategy during bear markets. In order to be entitled to the dividend, you have to buy the stock before the ex-dividend date, and you can’t sell the stock until after the ex date.
The actual dividend may not be paid for another few weeks. WallStreetNewsNetwork.com has compiled a downloadable and sortable list of the stocks going ex dividend in the near future. The list contains many dividend paying companies, lots with market caps over $500 million, and some with yields over 2%. Here are a few examples showing the stock symbol, the ex-dividend date, the periodic dividend amount.
Cisco Systems, Inc. (CSCO)
1/4/2022
0.37
2.41%
Campbell Soup Company (CPB)
1/5/2022
0.37
3.53%
WD-40 Company (WDFC)
1/13/2022
0.78
1.23%
Lowe’s Companies, Inc. (LOW)
1/18/2022
0.80
1.28%
Clorox Company (CLX)
1/25/2022
1.16
2.72%
Hasbro, Inc. (HAS)
1/31/2022
0.68
2.82%
The additional ex-dividend stocks can be found HERE . (If you have been to the page before, and the latest link doesn’t show up, you may have to empty your cache.) If you like dividend stocks, you should check out some of the other high yield stock lists at WSTNN.com HERE .
Dividend definitions:
Declaration date: the day that the company declares that there is going to be an upcoming dividend.
Ex-dividend date: the day on which if you buy the stock, you would not be entitled to that particular dividend; or the first day on which a shareholder can sell the shares and still be entitled to the dividend.
Record date: the day when you must be on the company’s books as a shareholder to receive the dividend. The ex-dividend date is normally set for stocks at two business days before the record date.
Payment date: the day on which the dividend payment is actually made, which can be as long at two months after the ex date.
Don’t forget to reconfirm the ex-dividend date with the company before implementing this technique.
Disclosure: Author did not own any of the above at the time the article was written; affiliate links are on this page.
By now, you have probably heard the news. President Biden has announced that the U.S. Government will be buying 500 million take-at-home COVID test kits to distribute to Americans.
You will be able to order your free COVID test kit from a website in January.
So who is making the test kits? The government hasn’t announced yet what company or companies it will be buying from, but there are several business involved in producing these kits.
For example, Abbott Labs (ABT) is one of the largest manufacturers of COVID test kits. The company produces five different antigen tests (including theBinaxNow COVID-19 Ag Card2 Home Test), three different PCR tests, three different serological tests, and one isothermal amplification test.
Becton, Dickinson (BDX), which makes several COVID tests, has a BD Veritor At-Home COVID-19 Test.
Quidel Corporation (QDEL), produces many COVID tests, has two at-home COVID tests.
Even Amazon (AMZN) is getting in on the act in partnership with SDS Lab Holdco.
The following is a list of the publicly traded stocks that produce COVID tests. Not all of these companies make an at-home test.
Amazon $AMZN has just released its list of the top selling books on Kindle. In addition, Amazon is offering three months of Kindle Unlimited for just $0.99 through the end of 2021. This includes over two million eBooks, thousands of audiobooks, and up to three select magazine subscriptions.
So what are the top Kindle books? The top five titles in Kindle Unlimited in 2021 are:
The stock market has been suffering during the last several days. As I write this, the Dow Jones Industrial Average is down 528, and the SPY is down 5.85. Since the market has dropped so much, now might be the time to look for short squeeze opportunities.
Here is a quick review about the short squeeze and its terminology. When you short a stock, it means that your goal is to make money from a drop in the price of a stock. Technically, what happens is that you borrow shares of a stock, sell those shares, then buy back those shares at a hopefully lower price so that those shares can be returned. This all happens electronically, so you don’t actually see all the borrowing and returning of shares; it just shows up on your screen as a negative number of shares.
Short selling can be profitable, but sometimes when the stock moves against the short sellers, and begins to rise, the short sellers jump in right away to buy shares to cover their positions, creating what is called a short squeeze. When a short squeeze takes place, it can cause the share prices to increase fast and furiously. Any good news can trigger the short squeeze.
Some traders utilize this situation by looking for stocks to buy that may have a potential short squeeze. Here is what a short squeeze trader should take into consideration:
Short Percentage of Float ~ The float is the number of freely tradable shares and the short percentage is the number of shares held short divided by the float. Amounts over 10% to 20% are considered high and potential short squeeze plays.
Short Ratio / Days to Cover / Short Interest Ratio -This is probably the most important metric when looking for short squeeze trades, no matter what you call it. This is the number of days it would take the short sellers to cover their position based on the average daily volume of shares traded. This is a significant ratio as it shows how “stuck” the short sellers are when they want to buy in their shares without driving up the price too much. Unfortunately for the shortsellers, the longer the number of days to cover, the bigger and longer the squeeze.
Short Percentage Increase ~ This is the percentage increase in in the number of short sellers from the previous month.
Check out the following list, but be aware, that often some stocks are heavily shorted for a reason. All these stocks have significant short metrics, but they have very low market caps and floats.
Company
Symbol
Short Interest
Days to Cover
Float
Cortexyme Inc
CRTX
59%
4.7
15.54M
Intercept Pharmaceuticals
ICPT
35%
10.5
23.58M
Blink Charging Co
BLNK
34%
3.9
36.46M
Beyond Meat Inc
BYND
34%
6.2
56.16M
iSpecimen Inc
ISPC
33%
0.2
3.27M
Gogo Inc
GOGO
32%
6.9
45.67M
So as an example, Cortexyme has 59% of the float shorted, and it will take almost five days for the short sellers to cover their positions, based on the average daily volume.
Obviously, there is no guarantee that these stocks will go up, but if I was short any stock, I wouldn’t want to waste any time covering my position if the stock started to move up sharply, before all the other short sellers clamor in and drive the price way up.
Disclosure: Author didn’t own any of the above at the time the article was written
You have seen the headlines during the last several months. You have noticed the price increases on Amazon (AMZN), in your supermarket, and even at the dollar stores (which should probably now be called the $1.25 stores). Have you considered using gold as an inflation hedge?
Inflation is here and it’s getting worse. Investors and traders that understand this are now looking for ways to profit from inflation.
Of course no one expects hyperinflation, as was seen in Zimbabwe in 2008.
In Zimbabwe, the country’s peak month of inflation is estimated at 79.6 billion percent month over month, and 89.7 sextillion percent year over year in mid-November of 2008. That’s an inflation rate in numerical terms of 89,000,000,000,000,000,000,000%.
Back then, it cost billions of dollars just to buy basic food items. Inflation was so bad that the country allowed currencies from other countries to be used in April 2009. In 2015, Zimbabwe switched to the U.S. dollar as its national currency.
In 2019, Zimbabwe reintroduced the Zimbabwe dollar, but unfortunately, hyperinflation has hit the country again, measuring 737% last year.
So what is a trader and investor to do? Here are several ways to make gold work for you.
Gold
Gold has long been considered a primary inflation hedge. Over the last 20 years, the price of gold has increased by 597%, which works out to an annualized return of 10.19%. Taking inflation into consideration, gold has gone up by 335%, or 7.622% annualized.
Many studies have shown that gold has provided superior returns during times of inflation. In addition, according to a study at the Stern School of Business at New York University, “overall gold by itself is a safe haven with respect to exhibiting lower volatility in response to shocks or negative return days.”
The big question is, if you want to invest in gold, how should you do it?
Physical Gold
Physical gold means gold that you can hold in your hot little hands. This could either be gold bullion or gold coins.
Gold Bullion
Gold bullion is sometimes referred to as gold bars, similar to the bars in Fort Knox. They can be as small as one gram or as large as 400 ounces (27.5 pounds).
The big advantage of gold bullion is privacy. Bullion bars can be kept anywhere: a home safe, a safe deposit box, or in the ground. Another advantage is that bullion is generally less expensive than gold coins, even bullion gold coins.
Gold Bullion Coins
Gold bullion coins are coins that are issued by governments with a very high gold content, but very little or no numismatic value, but are issued as legal tender. In other words, they sell for very close to the price of gold. These coins include the American Gold Eagle and the Canadian Maple Leaf.
These coins also have the benefit of privacy, but they are also issued in various denominations, making them easier to trade. For example, if you have a one ounce gold bar but you want to sell one quarter of the gold, you would be stuck. However, you do have the ability to own four American Eagle quarter-ounce gold coins, or even ten 1/10th ounce coins.
Many investors believe that the gold coins have better liquidity than bullion. However, the premium on gold coins is higher than the premium on bullion, and the smaller the denomination of the coin, the higher the premium.
Numismatic Gold Coins
Numismatic gold coins are coins which have value due to their scarcity, physical appearance, condition, and many other factors. They are collected by coin collectors.
National Numismatic Collection, National Museum of American History
The big advantage is that the value of these coins can increase far more than the value of gold, and can even go up in price if the gold price stays the same or even drops. They are less liquid than bullion coins and have a much bigger spread (the price at which you pay for the coin versus what you can sell it for). The other disadvantage is that the coins have a much higher premium than bullion coins.
There is one big estate tax advantage to owning U.S. numismatic gold coins. Talk to your accountant about it. It is currently legal and above board as far as I know, but I am not an accountant or tax attorney. Consult yours.
Gold Securities
Gold ETFs
Gold ETFs are Exchange Traded Funds that have a goal of tracking the price of gold. There are many of them including SPDR Gold Shares (GLD), iShares Gold Trust (IAU), and SPDR Gold MiniShares Trust (GLDM).
There are even some leveraged gold ETFs, such as ProShares Ultra Gold (UGL), which has a goal of providing twice the daily leverage of gold prices.
Gold Mining Stocks
There are many gold mining companies to choose from. The smaller companies are referred to as junior miners (not minor miners). Some of the bigger ones include Newmont Mining (NEM), Barrick Gold (GOLD),AngloGold Ashanti (AU), and Kinross Gold (KGC).
Gold Royalty Trusts
Gold Royalty Trusts do not do any mining. What they do is provide money to mining companies in return for receiving a stream of income based on a percentage of revenues or percentage of gold production.
Some of the biggest gold trusts are Franco-Nevada (FNV), Wheaton Precious Metals (WPM), Royal Gold (RGLD), and Osisko Gold Royalties (OR).
Gold Miners ETFs
Gold Miners ETFs are Exchange Traded Funds that invest in gold mining stocks. VanEck Vectors Gold Miners ETF (GDX) is the largest of these ETFs. VanEck Junior Gold Miners ETF (GDXJ) holds the smaller (junior) mining companies. Direxion Daily Gold Miners Index Bull 2x Shares (NUGT) is a double bullish ETF.
Gold Futures
One other way to invest in gold, which is the most speculative way, is through gold futures. These are exchange-traded contracts to buy or sell a specific amount of gold in the future at a specified price. The returns can be substantial but so are the risks, as your losses can far exceed the original investment that you put up.
How Much Should You Invest in Gold
Many financial advisors recommend that you hold a small amount of gold, up to 5% to 10% of your portfolio as a hedge. Hopefully, gold will make your portfolio sparkle and shine.
Disclosure: Author is long AMZN, GLD, WPM, and OR.
Do you still have some Christmas shopping to do? Need some last minute gifts or stocking stuffers? Why not some books about investing and trading stocks.
Trade Like Warren Buffett
by James Altucher
Most people don’t realize that not only is Warren Buffett an investor, but he is also a trader, and a successful one at that.
Day Trading Journal
Wall Street News Network
A journal with over 100 pages of specially designed fill-in-the-blank pages to track all your stock, ETF, and option trades, whether they are long or short trades. Fields include: Date, Symbol, Company, Transaction Recommended By, Why decision was made to do this transaction, Buy or Short, # of Shares, Price/share, Commission, Subtotal of opening transactions, Total opening transaction, and much more.
Reminiscences of a Stock Operator– first published in 1923
by Edwin Lefevre
This is the classic book on investing, trading, market timing, and crowd psychology, just as true today as it was almost a century ago. It is based on the life of top notorious trader, Jesse Livermore.
My Adventures with Your Money– first published in 1911
by George Graham Rice
About a conman who make money off the early gold mining stock boom.
Den of Thieves– published in 1991
by James B. Stewart
The “newest” of these old books, it covers the insider trading scandals involving Ivan Boesky, Michael Milken, and other Wall Street financiers during the 1980s.
Storming The Magic Kingdom– published in 1987
by John Taylor
A must read book about the fight for control of one of America’s most famous companies.
Extraordinary Popular Delusions and the Madness of Crowds (1841) by Charles Mackay included as part ofStock Market Trivia Volume 2(2014)
The Extraordinary Popular Delusions book was written in the mid-1800s. It has many chapters, but most are unrelated to investing, such as alchemy, witches, haunted houses, etc. However, three of the chapters have extensive and entertaining information about three of the largest investment bubbles in history: the Mississippi Scheme, the South Sea Bubble, and the Tulip Mania. These three chapters are included as the last half of the Stock Market Trivia Volume 2 book. (In interest of full disclosure, I wrote the Stock Market Trivia 2 book.) In addition, the trivia book includes such things as the chocolate chip cookie/stock market correlation, celebrity stock indices, weird stock certificates, and more.
Investment Trivia
by Fred Fuld III
This book will give you interesting, amusing, and fascinating trivia about investments, money, stocks, bonds, and Wall Street.
INVESTMENT FRAUDS, SCAMS, AND SCANDALS
Wolf Books
The Wolf of Wall Street
by Jordan Belfort
This is the autobiographical story about the guy who made hundreds of millions of dollars by pumping and dumping low priced and penny stocks. The book is filled with sex and drugs and every other kind of decadence. A Martin Scorsese movie starring Leonardo DiCaprio was made from this story. Be forewarned: the chapter that took place in the hospital gave me nightmares for a couple weeks.
The End of Normal: A Wife’s Anguish, A Widow’s New Life
by Stephanie Madoff Mack
An inside look at the Madoff family written by the widow of Mark Madoff and the daughter-in-law of Bernard Madoff.Over 200 five star ratings.
Bad Blood: Secrets and Lies in a Silicon Valley Startup
by John Carreyrou
Named one of the best books of the year by NPR, The New York Times Book Review, Time, Wall Street Journal, and the Washington Post. An in-depth look at Theranos and Elizabeth Holmes. Over 2,600 five star ratings.
If you are wondering what a tax selling stock is, it is a stock that is currently selling for a low price but was trading at much higher levels earlier in the year.
As the year-end approaches, many investors employ the technique called tax harvesting , which is the selling of loser stocks to offset any gains that may have been established during the year.
With all the heavy selling, the price of the stocks that have had big drops tends to tank far more than what would normally take place during the rest of the year.
So traders and investors are on the lookout for tax selling bounce stocks that are heavily hit, hoping for a little (or big) bounce in January, once the tax selling is over.
Here are some stocks that are down over 50% year-to-date and have market caps in excess of $300 million. They are all based in the United States and have forward price to earnings ratios less than 50.
Bit Digital, Inc.
BTBT
Chegg, Inc.
CHGG
CleanSpark, Inc.
CLSK
GrowGeneration Corp.
GRWG
WM Technology, Inc.
MAPS
PLAYSTUDIOS, Inc.
MYPS
Proto Labs, Inc.
PRLB
Sunlight Financial Holdings Inc.
SUNL
Maybe someone’s tax losses can be your tax stock gains.
Disclosure: Author didn’t own any of the above at the time the article was written.
It may be hard to believe because the stock market has been in such an uptrend this year but here are some interesting statistics for stock performance year-to-date.
691 stocks are down over 50% this year
161 stocks are down over 75% this year
14 of the stocks that are down over 75% have market caps greater than $300 million
Here they are:
Deciphera Pharmaceuticals, Inc.
DCPH
DouYu International Holdings Limited
DOYU
New Oriental Education & Technology Group Inc.
EDU
Immunovant, Inc.
IMVT
Metromile, Inc.
MILE
OneConnect Financial Technology Co., Ltd.
OCFT
Olema Pharmaceuticals, Inc.
OLMA
Lordstown Motors Corp.
RIDE
Root, Inc.
ROOT
StoneCo Ltd.
STNE
TAL Education Group
TAL
Talkspace, Inc.
TALK
UpHealth, Inc.
UPH
Yatsen Holding Limited
YSG
Hopefully you bought stocks that are up for the year.
Maybe some of these stocks could be tax selling bounce stocks. Tax selling bounce stocks are stocks that are heavily sold during December for investors that want to take their tax loss for this year, which overly depresses the stock price. Traders like to by these stocks because they expect a bounce back in January after the strong selling is over.
Disclosure: Author didn’t own any of the above a the time the article was written.
Many investors and traders believe that we have finally reached the top, and are in the beginning of a bear market.
Several techniques are available to make money in a bear market, some of which are speculative, and some not so risky. Even if you have a small account, there are ways to protect themselves, and even make money on the downside. Here are some of those strategies.
1. Shorting Stocks
This is one of the most speculative ways of making money in a bear market. In simple terms, you make money when the stock goes down and you lose money when the stock goes up. What technically happens is that you borrow the shares and immediately sell them (this all is done electronically through your brokerage firm) and since you owe those shares, you eventually have to buy them back at some price, hopefully a lower price, in order to return those hares. The difference between your sale price and eventual purchase price is your profit (or loss, if you buy back at a higher price).
Can you make a lot of money shorting stocks in a bear market? Yes. Is it speculative? Very. Can you lose a lot? Most definitely. This is why it is so risky. When you short a stock, the lowest point it can drop to is zero. Whereas, if the stock goes up, the amount it can rise is unlimited. Let’s say you short 100 shares of a stock at $20 a share. If you put up funds equal to 100% of the value of the shorted amount, and the stock drops to zero, you’ve made a 100% return. However, suppose the stock goes from 20 to 100, you end up losing 400% of your money with lots of margin calls along the way. But even on a short term basis, an investor can lose money very fast.
So in summery, do I think you should short stocks? Absolutely not, unless you are a professional trader. The risk is almost infinite. If you understand options real well, hedged short selling might be OK, as long as you are an advanced trader, and know what you’re doing.
2. Short (Bearish) ETFs
The Exchange Traded Fund known as the Bearish ETF or Short ETF is another option. What these ETFs do is provide a return opposite to the return of the index, sector, or industry that it is tracking.
For example, the Short Dow30 ProShares (DOG) provides a return that is the inverse of the Dow Jones Industrial Average. If the Dow goes down 2%, the DOG goes up 2%. The Short QQQ ProShares (PSQ) ETF gives a return that is the inverse of the NASDAQ 100 Index. If you are bearish on gold, you can buy the PowerShares DB Gold Short ETN (DGZ) ETF.
The nice thing about these short ETFs is that your losses are limited. Also, if you are long individual stocks that you don’t want to sell, these can be good for protecting your portfolio on the downside.
3. Leveraged Bearish ETFs
If you like volatility, you will love the leveraged bearish ETFs. What these ETFs do is provide double, and in some cases triple the inverse return of indices.Some examples include the UltraShort Consumer Services ProShares (SCC) and the ProShares UltraShort S&P S&P 500 (SDS).
In addition there are several triple leveraged bearish ETFs. Direxion Daily MCSI Real Estate Bear 3X Shares (DRV), Direxion Daily Energy Bear 2X Shares (ERY), and ProShares UltraPro Short Russell 2000 (SRTY) are just a few of the many leveraged bearish ETFs.
The volatility of these things is substantial, and so are the wide bid and asked spreads that I’ve seen occasionally.
The advantage of these trading vehicles is that they are a way of shorting on margin, with a limit on the downside. The disadvantage is that the losses are quick and large, especially with the triple leverage short ETFs.
4. Bear Funds
It may be hard to believe, but there are actually a large number of bearish mutual funds for the long term bearish investors. These include the Grizzly Short Fund (GRZZX), the PIMCO StocksPlus TR Short Strategy Institutional Fund (PSTIX), and the ProFunds Bear Investors Fund (BRPIX). These funds have minimum investments ranging from $1,000 to $5,000,000.
5. Puts
First, a little about option pricing. Puts and calls are priced on a per share basis, so a put at $1 would cost $100 for a 100 share option, or a call at $3.50 would cost $350.
A put is the option to put your stock to someone at a particular price within a certain period of time. In other words, if you own a stock that is trading at 22 and you buy a put at a dollar which gives you the right to put your stock to someone at $20 per share within three months, there are a couple of things that could happen. The stock could tank to $14 a share and you could put your stock at 20, or just resell the put for 6 (the difference between 14 and 20) and collecting the profit. You would be far better off than just doing nothing. And if the stock goes up or stays about the same, you are just out your $100 for the option. Puts can be useful for experienced traders.
6. Sell a Vertical Call Spread
If you are familiar with options, then selling a vertical call spread is a great way to make money when a stock drops while protecting yourself if the stock goes up. (This happens to be my favorite strategy.)
This involves shorting an out of the money call option and buying a further out of the money cal option at the same time. If the stock drops or stays the same, you make money from the short call which exceeds the loss on the long call. If the stock goes up to the strike price of the short call, you still make a profit. It is only when the stock rises above the strike price of the short call that you begin losing money.
7. Cash
There is one other way to make money in a bear market. Sell everything, and keep your money in cash, with the safest way being a T-bill money market fund, that only owns T-bills. (Money market funds that invest in repos are supposed to be just as safe, but I consider them slightly more risky than T-bills.) The advantages are that you can’t lose money and you can receive an income from the investment.
The alternative cash investment is putting your money in a bank certificate of deposit or savings account. Your money is safe up to the FDIC limits, but the interest rate can be very low.
If we are in a bear market, hopefully you can protect your portfolio and make a little on the downside.
Author does not own any of the above mentioned securities.
