Best ETFs For September 2021

That’s why I spend my time crafting portfolios chock full of outlier stocks. If you choose right, you’ll have enormous gains on your hands in the years to come.

Now, I pick my ETFs perhaps a bit differently than other people. I can find outlier ETFs by tracking the Big Money. But that alone isn’t enough: when I catalog the components and find outlier stocks underneath… that’s the winning recipe.

First, I looked at all ETFs making Big Money signals by going to MAPsignals.com and scanning the Big Money ETF Buys and Sells chart. I looked for recent days with heavy buying (the bright blue spikes):

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Source: www.mapsignals.com

Once I knew which ETFs Big Money was buying, then I wanted the best opportunities. Remember: ETFs are just baskets of stocks. MAPsignals specializes in scoring more than 6,000 stocks daily. Therefore, if I know which stocks make up the ETFs, I can apply the stock scores to the ETFs. Then I can rank them all strongest to weakest.

So let’s get to the 5 best ETF opportunities for September.

#1 Real Estate Select Sector SPDR Fund (XLRE)

First off, real estate is hot. We can see that Big Money has been plowing money into this ETF over the last year. We saw a few fresh buy signals recently too:

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XLRE holds some awesome stocks and one great example is Prologis, Inc. (PLD). Below we see the Big Money signals for PLD:

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#2 iShares S&P 500 Growth ETF (IVW)

Next, I’m looking for growth. IVW has it and lots of green signals, too:

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One great stock that IVW holds is Microsoft Corp. (MSFT). It has awesome fundamentals and some recent big money buying:

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#3 Global X Cloud Computing ETF (CLOU)

The cloud is a big area for growth this year. CLOU holds some phenomenal stocks. It’s also collecting lots of green:

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One big winner that caught my eye inside of CLOU is Netflix, Inc. (NFLX). It’s starting to get its mojo back:

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#4 ARK Innovation ETF (ARKK)

Cathie Woods, the star of Wall Street last year has hit some head winds. The ARKK saw huge buying through February then hit a wall. But the pullback, I believe, is an opportunity because it holds some terrific companies:

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It holds a monster growth stock, Square, Inc. (SQ). Big Money has been consistent for years:

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#5 iShares NASDAQ Biotechnology ETF (IBB)

The biotech space has been booming. Big Money has been flowing into IBB:

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It holds some great stocks too. One that I have my eye on is Regeneron Pharmaceuticals, Inc. (REGN), which has benefited from the COVID pandemic:

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Here’s a reminder for what to look for in the charts above:

  • When Big Money buying pours in, stocks tend to go up
  • Repeated buying usually means outsized gains

Let’s summarize here:

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IVW, XLRE, & CLOU rank high. ARKK and IBB however, rank lower on our list, mainly due to weaker technicals. That’s why I think these weaker ETFs represent great potential bargains.

The Bottom Line

IVW, XLRE, CLOU, ARKK, and IBB are my top ETFs for September 2021. Growth, REITs, & cloud stocks have performed well lately. My bet is they continue.

To learn more about MAPsignals’ Big Money process please visit: www.mapsignals.com

Disclosure: the author holds no positions in XLRE, IVW, CLOU, ARKK, IBB, PLD, SQ, or NFLX, but holds long positions in MSFT & REGN in managed accounts at the time of publication.

Investment Research Disclaimer

https://mapsignals.com/contact/

For a look at all of today’s economic events, check out our economic calendar.

Square Generates $55 Million In Q2 Bitcoin Profit, To Expand Cash App To More Users

Square, the payment company owned by Jack Dorsey, earned $55 million as profit from Bitcoin transactions in the second half of the year. The company intends to make the Cash App available to more users by acquiring Australian fintech Afterpay in a $29 billion deal.

Square Generates Over $2 Billion In Bitcoin Revenue

Square, the payment company owned by Twitter boss Jack Dorsey, reported its second-quarter earnings yesterday. According to the shareholder letter released yesterday, the payment company stated that it generated $2.72 billion of Bitcoin revenue for the second quarter this year.

The revenue generated came despite the cryptocurrency market now in a bearish cycle. Square added that of the $2.72 billion generated in revenue, $55 million was the profit. The revenue generated by Square in the second quarter of the year is lower than the first quarter. In Q1, Cash App made $75 million in bitcoin gross profit on $3.51 billion BTC revenues.

The decline in Cash App’s Bitcoin revenue came as the cryptocurrency market experienced a bearish cycle. In recent weeks, the prices of most cryptocurrencies have dropped by nearly 50%.

Bitcoin, the leading cryptocurrency, saw its price drop by over 40% from its all-time high. BTC was trading close to the $65k region in April. However, it dropped to the $30k level in June and July before recently reaching the $40k level again last week. At the time of this post, Bitcoin’s (BTC) price is down by 5.5% over the past day and is trading just above $39k.

BTC/USD chart. Source: FXEMPIRE

Square To Acquire Australian Fintech Afterpay

The payment company announced in a separate press release that it would be acquiring Australian fintech company Afterpay. The deal is reportedly worth $29 billion, and it would allow Square to provide its services to more clients globally.

Afterpay is a payment platform that makes it possible for users to receive products first and pay at a later date. The users can also pay in installments with additional interests attached. According to the company, it currently has over 16 million users.

Square Trading Sharply Lower After Acquisition News

Square Inc. (SQ) is trading lower by nearly 5% in Monday’s pre-market after missing Q2 2021 revenue estimates and announcing the acquisition of Australian fintech provider Afterpay Ltd. for $29 billion. The San Francisco-based payment processor earned $0.66 per-share during the quarter, $0.35 better than expectations, while revenue rose 143.3% year-over-year to $4.68 billion, nearly $400 million lower than consensus.

Revenue Shortfall Sours Bullish Sentiment

The company hopes the Allpay acquisition will accelerate “strategic priorities for its Seller and Cash App ecosystems”. The all-stock deal is expected to close in the first quarter of calendar year 2022, indicating that a secondary offering will be needed to cover the purchase. Square predicts the transaction will be “accretive to gross profit growth with a modest decrease in Adjusted EBITDA markets expected in the first year after completion of the transaction”.

The sell-the-news reaction reveals shareholder anxiety about Square’s long-term growth trajectory. The acquisition will dilute current shares, requiring an equal uptick in income that isn’t guaranteed, given complex integration issues. Even so, the revenue shortfall is a bigger deal because, as PayPal, Inc. (PYPL) and Amazon.com Inc. (AMZN) underscored last week, 2020 COVID beneficiaries are having a harder time maintaining growth as quarterly metrics revert to historical norms.

Wall Street and Technical Outlook

Wall Street consensus stands at an ‘Overweight’ rating after 2020’s phenomenal 347% return, consisting of 24 ‘Buy’, 1 ‘Overweight’, 15 ‘Hold’, and 1 ‘Underweight’ recommendation. In addition, one analyst recommends that shareholders close positions and move to the sidelines. Price targets currently range from a low of $175 to a Street-high $380 while the stock is set to open Monday’s session more than $40 below the median $281 target. This humble placement suggests that Main Street is worried about post-COVID growth.

Square broke out above the 2018 high at 101.15 in June 2020 and took off in a powerful trend advance that posted an all-time high at 283.19 in February 2021. A rapid decline to 191 set the lower boundary of a trading range that has remained intact for the last five months. Price action has improved since a successful support test in May but the stock is now stuck near the dead center of the sideways pattern, likely months away from a sustained breakout or breakdown.

For a look at all of today’s economic events, check out our economic calendar.

Disclosure: the author held no positions in aforementioned securities at the time of publication. 

August Poised for Upbeat Start With Stock Index Futures in the Green

Stocks were weighed down on Friday after Amazon shares took a tumble. All three major stock market indices finished the session in the red. And while the S&P 500 was down for the day, it clocked a gain for the month of July as a whole. Also on Friday, the Dow Jones Industrial Average fell almost 150 points, while the tech-heavy Nasdaq was down more than 100 points.

That Was Then, This Is Now

Stock index futures are trading in the green across the board on Sunday evening. At this rate, investors are poised to leave Friday’s declines and inflation fears behind and begin the month of August on a positive note.

Stocks to Watch

Amazon’s stock plummeted 7.5% on Friday after the e-commerce giant fell short on the top line, a disappointment that hasn’t happened in three years. As the economy has reopened, consumers have turned their attention to other things beyond online shopping.

As a result, Amazon’s Q3 revenue is expected to similarly fall below Wall Street estimates, though it will likely remain above the USD 100 billion threshold. Amazon is not alone amid a trend among big tech companies where revenue is retreating from pandemic-related highs.

Square reported its Q2 earnings sooner than expected. In the report, Square revealed that it is scooping up Afterpay, an Australia-based buy now, pay later (BNPL) startup, in a blockbuster USD 29 billion deal using all stock. Square CEO Jack Dorsey said that his company and Afterpay have a “shared purpose.” Square will integrate AfterPay into its Cash App and Seller divisions, giving more merchants the opportunity to offer BNPL.

In Q2, Square’s revenue soared more than 143% to USD 4.68 billion. Bitcoin revenue came in at USD 2.72 billion via the Cash App. Square’s earnings call will take place on Monday.  The call was originally planned for Aug. 5 but that one has been cancelled.

Look Ahead

The ISM Manufacturing index for the month of July will be released on Monday. Wells Fargo economists predict that the ISM index fell slightly due to the one-two punch of hiring challenges and supply-chain constraints that have taken a toll on the manufacturing sector.

Construction spending data for June will also come out on Monday. Wells Fargo economists are expecting an increase of 0.6% in “construction outlays.”

On the earnings front, Uber Technology reports its Q2 results on Wednesday. DraftKings will report its quarterly results on Friday.

Influencers and Wall Street Keep Bitcoin at the Forefront

The bitcoin price may be in a downturn, but that hasn’t stopped some major influencers and Wall Street banks from talking about its role in the markets. Bitcoin investors are either buying the dip or running for the hills after the BTC price dipped below the psychologically sensitive USD 30K level. Either way, bitcoin continues to find ways to stay relevant.

Bulls and Bears

Most recently, a trio of influencer CEOs comprising Tesla’s Elon Musk, ARK Invest’s Cathie Wood and Square’s Jack Dorsey will gather for a panel discussion at “The B Word” initiative to potentially hash out their differences on bitcoin. The wheels were set in motion for the event back in June when Musk chimed in on one of Dorsey’s Twitter threads about Bitcoin developers and education.

Technically they are gathering to discuss bitcoin and how global institutions can use it to their advantage. It is no secret, however, that while Dorsey and Wood are bitcoin bulls, Musk has been more critical of the leading cryptocurrency of late. He has taken issue with the carbon footprint that Bitcoin mining leaves behind. The Tesla chief has touted what he believes is a more sustainable cryptocurrency, Dogecoin.

Wood’s ARK Invest, meanwhile, has been bolstering its exposure to bitcoin. The firm just doled out more than USD 53 million in shares of Square. The purchase came on the heels of an announcement by Dorsey about Square’s new Bitcoin developer platform for decentralized finance (DeFi). In addition, ARK invested more than USD 14 million for roughly 64,000 shares of cryptocurrency exchange Coinbase.

The bitcoin event is likely to drum up more attention on the bitcoin market.  Whether it will be enough to lift the price out of the grip of the bears is another question.

Bitcoin as an Asset Class

Mainstream financial outlet Bloomberg has just presented an interview with a Wall Street executive about bitcoin from June. In the discussion, J.P. Morgan Asset & Wealth Management chief executive Mary Callahan Erdoes reveals that many of the firm’s clients view digital assets as an asset class even if J.P. Morgan itself does not.

She goes on to say that “time will tell” whether or not bitcoin is a real store of value, pointing to the price volatility that is inherent with cryptocurrencies and saying it must “play itself out over time.”

Jack Dorsey’s Square Targets Bitcoin Network for DeFi

When the bitcoin price is in a downturn, developers tend to focus more on building. That seems to be the case in the latest market cycle, with companies like Square and PayPal both focused on bitcoin. Both companies happened to announce their latest developments at about the same time. Square’s stock is moving higher today while PayPal shares have barely budged.

Square’s Decentralized Push

Square generated USD 4.5 billion in bitcoin revenue last year on its Cash App. Jack Dorsey’s company is already behind Square Crypto, which is dedicated to building and funding open-source Bitcoin projects that support BTC for payments. Now Dorsey has announced a new initiative to create an open developer platform that paves the way for decentralized financial (DeFi) services on Bitcoin.

DeFi is a burgeoning niche in the cryptocurrency industry that gives users the ability to generate passive income through activities such as staking and lending. It also gives people who are either unbanked or underbanked access to financial services that they otherwise would not receive.

Ethereum is currently the go-to platform for decentralized finance. That is the blockchain on which most decentralized applications (Dapps) are built. Ethereum is a natural fit given its use of smart contracts that take the place of third parties such as banks.

Now Dorsey apparently wants to muscle Bitcoin into the DeFi fray. There is currently USD 54 billion in total value locked (TVL) in DeFi, and Dorsey seemingly believes Bitcoin should capture more of it. Square has named Mike Brock to lead the business, which has yet to be named. The work on the project will all be transparent and open-source in the spirit of decentralization.

Responses from the cryptocurrency community were mixed. Independent developer Udi Wertheimer said, “This is good.” Investor Lark Davis asked why not just use Ethereum?

Source: Twitter

PayPal Eases Bitcoin Limits

Payments platform PayPal may not be building out a new DeFi platform, but it is making it easier for users to transact using bitcoin. PayPal has increased the weekly purchase ceiling for U.S. customers to USD 100K, paving the way for higher transactions. As part of the changes, there will be no yearly purchase cap.

Previously, the limit was USD 20K on weekly bitcoin purchases, while the yearly purchase limit was set at USD 50K.

Square and PayPal seem to be giving the bitcoin price a pop, with the leading cryptocurrency up 2% in the last 24-hour period.

Today’s Market Wrap Up and a Glimpse Into Friday

Stocks were mixed once again today, with the Dow Jones Industrial Average extending yesterday’s gains while the S&P 500 and Nasdaq ended slightly lower. The major indices remain within a stone’s throw of yet more records, but investors played it cautious amid more inflation talk out of the Federal Reserve.

Federal Reserve Chairman Jerome Powell expects that inflation will remain at lofty levels in the coming months before retreating. Investors are also worried about the fallout from the COVID-19 variant due to a surge in the number of cases, as it could trigger another round of lockdowns. The result is uncertainty, something that investors are not a fan of.

On a positive note, the number of jobless claims declined in June, as expected, to 360,000 from 386,000 in the previous week. Separately, bond king Jeffrey Gundlach, who is at the helm of DoubleLine Capital, warned on CNBC that the USD is doomed and will decline “pretty substantially” in the “intermediate-term” due to deficits.

Stocks to Watch

PayPal has bolstered its weekly cryptocurrency purchase cap to USD 100K. So far the stock is not reacting and is down fractionally in extended-hours trading.

On the meme stock front, AMC Entertainment regained some ground, rising close to 8% on the day. The stock is up another 8% in after-hours trading as investors look to turn what has been a sinking ship lately around.

GameStop shares were under pressure during the regular session as Netflix strengthens its gaming offering. Shares of GameStop took back some ground in the extended hours, however, gaining 3%. The company announced that investors could pre-order the Nintendo Switch OLED, which will make its debut in October.

Twitter is gearing up for its earnings report this week. Investors punished the stock as the company tweaks its timeline dashboard. Investors celebrated Jack Dorsey’s other company, Square. Dorsey revealed that Square is building an “open developer platform” dedicated to bitcoin.

Look Ahead

Retail sales for June are due out at 8:30 a.m. ET after falling 1.3% in May. Wells Fargo economists predict that retail sales climbed higher by 0.5%, excluding autos, in June. They are keeping an eye on spending trends at restaurants and bars to gauge the strength of the recovery in the services segment.

 

Serious About Expansion? JPMorgan Makes Its Third Fintech Acquisition In A Year

JPMorgan, the biggest bank in the United States by assets, is expanding its market by acquiring more companies in the fintech sector. The bank is set to complete the acquisition of OpenInvest, a San Francisco-based start-up.

JPMorgan to Buy OpenInvest

JPMorgan Chase has agreed to acquire OpenInvest, a San Francisco-based start-up backed by VC firm Andreessen Horowitz and founded by former Bridgewater Associates employees. This latest development continues the bank’s latest tradition of buying fintech companies.

The acquisition of OpenInvest is JPMorgan’s third acquisition of a fintech start-up in six months. The bank acquired 55ip, a firm that automates the construction of tax-efficient portfolios, in December 2020 and followed that with the acquisition of UK-based robo-advisor Nutmeg earlier this month.

Last year, JPMorgan CEO, Jamie Dimon, pointed out that the bank will be more aggressive towards searching for potential acquisitions. The acquisitions would enable banks such as JPMorgan to compete with some of the leading fintech companies, such as PayPal and Square, which have been gaining popularity globally.

Similar to the Nutmeg deal, JPMorgan didn’t disclose how much it would be acquiring OpenInvest. However, the bank said OpenInvest would help its financial advisors customize clients’ investments in ESG, a category that comprises environmental, social and governance factors.

JPMorgan interested in ESG funds

JPMorgan is focusing on ESG due to the rapid growth in the sector. So far this year, ESG funds have attracted massive investments, bringing the total global assets under management to almost $2 trillion.

Mary Callahan Erdoes, CEO of JPMorgan’s asset and wealth management division, said, “Clients are increasingly focused on understanding the environmental, social, and governance impact of their portfolios and using that information to make investment decisions that better align with their goals.”

With OpenInvest, JPMorgan can allow its clients to create highly personalized, dynamic values-based portfolios. This will grant them exposure to ESG investment funds provided by the financial institution.

JPM stock chart. Source: FXEMPIRE

JPMorgan’s stock price is up by less than 1% at Tuesday’s pre-market trading session. Year-to-date, the stock has performed excellently, rising by 22.61% to trade above $154 per share currently.

Best ETFs For July 2021

That’s why I spend my time crafting portfolios chock full of outlier stocks. If you choose right, you’ll have enormous gains on your hands in the years to come.

Now, I pick my ETFs perhaps a bit differently than other people. I can find outlier ETFs by tracking the Big Money. But that alone isn’t enough: when I catalog the components and find outlier stocks underneath… that’s the winning recipe.

That’s how I found the best big-money ETFs for July.

First, I looked at all ETFs making Big Money signals by going to MAPsignals.com and scanning the Big Money ETF Buys and Sells chart. I looked for recent days with heavy buying (the bright blue spikes):

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Once I knew which ETFs Big Money was buying, then I wanted the best opportunities. Remember: ETFs are just baskets of stocks. MAPsignals specializes in scoring more than 6,000 stocks daily. Therefore, if I know which stocks make up the ETFs, I can apply the stock scores to the ETFs. Then I can rank them all strongest to weakest.

Once the ETFs were sorted, I noticed Real Estate funds at the top. That’s why this month the top ETF is IYR.

#1 IYR – iShares U.S. Real Estate ETF

As we can see- there was a lot of Big Money buying plowing into this ETF over the last year. It accelerated noticeably since February:

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IYR holds some great stocks. One fine example is PLD (Prologis, Inc.). Below are Big Money signals for PLD:

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#2 BOTZ – Global X Robotics & Artificial Intelligence ETF

A.I. and Robotics are undoubtedly a huge part of our future. Big Money thinks so too. Look at the buying of BOTZ over the last year below.

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One great example stock that BOTZ holds is Intuitive Surgical. They make the surgical robot called DaVinci. It allows remote surgery- a phenomenal technology.

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#3 VDE – Vanguard Energy Sector ETF

Energy was an unloved sector last year. But it’s having a sudden resurgence. Big Money has been buying VDE:

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VDE holds a bunch of great energy stocks. One such stock that has been a Big Money darling in the past is FANG which is seeing a rebirth:

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#4 LIT – Global X Lithium ETF

Like it or not, lithium is the power of the foreseeable future for EVs. Look at all that green last year:

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And LIT holds some great stocks. One of them is the best-known EV manufacturer which is very reliant on lithium: Tesla Inc.

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#5 ARKQ – ARK Industrial Innovation ETF

The media has recently heaped scorn upon Cathie Wood, CEO of ARK Invest after she was Wall Street’s darling last year. The proof is ultimately not in the headlines, but in the Big Money buying. Here we can see clearly that Big Money loved ARKQ last year. The question is: when we see selling (red) should we worry?

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The answer lies in which stocks the ETF holds. And ARKQ holds some great ones. One such outlier is Teradyne:

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Let’s summarize here: the top 3 ETFs (IYR, BOTZ, and VDE) for July score well in terms of MAPsignals’ scores. That means Big Money has been pouring into them:

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LIT and ARKQ however, rank lower on our list of ETFs. This is because of weak technicals. These weaker ETFs represent great potential bargains.

So, there we have the 5 best ETFs for July.

The Bottom Line

IYR, BOTZ, VDE, LIT, & ARKQ represent top ETFs for July 2021. Real Estate, Energy, and Robotics stocks have performed well lately, which should continue. Lithium has an interesting story too. Paying attention to the fundamental quality of ETF constituents is paramount.

To learn more about MAPsignals’ Big Money process please visit: www.mapsignals.com

Disclosure: the author holds long positions in TER in managed accounts, but no positions in IYR, BOTZ, VDE, LIT, ARKQ, PLD, ISRG, FANG, or TSLA at the time of publication.

Charts Source: www.mapsignals.com, FactSet, End of day data sourced from Tiingo.com

Investment Research Disclaimer

Best Growth Stocks June 2021

The hallmark way we go about finding the best stocks…the outliers, is by looking for quiet Big Money trading activity.

Oftentimes, that can be institutional activity. We’ll go over what that looks like in a bit. But, the 5 stocks we see as long-term candidates are SQ, CYBR, TTD, NOW, & FIVE.

For MAPsignals, we believe the true tell on the near-term trajectory of the stock lies in the trading activity of the stock. The bottom line here is that oftentimes the manner in which a stock trades can oftentimes alert you to the forward fundamental picture more so than by simply looking at a company’s financials alone. We want the odds on our side when looking for the highest quality stocks.

Up first is Square, Inc. (SQ), which is a leading point-of-sale company. They help businesses seamlessly transact with their consumers. They also own the popular Cash App.

When we decide on the strongest candidate for long-term growth, we consider many technical areas important. Square has been pulled lower like many Technology stocks:

  • YTD performance (-6.65%)
  • YTD underperformance vs. technology ETF (-9.91% vs. XLK)
  • Historical big money signals

Just to show you what our Big Money signal looks like, have a look at all of the top buy signals SQ has made recently. It’s had a strong chart over the past few years, too. Green bars are showing that Square was likely being bought by a Big Money player according to MAPsignals. It’s clear there’s a lot of green historically with this stock. That’s exactly what you want to see when looking for a great growth name.

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Source: MAPsignals, End of day data sourced from Tiingo.com

On top of technicals, you need to look under the hood to see if the fundamental picture supports a long-term investment. As you can see, Square’s numbers have been strong:

  • 3-year sales growth rate (+64.45%)
  • 3-year earnings growth rate (-.66%)

Next up is CyberArk Software, Ltd. (CYBR), which is a leading cyber security company. The stock has been a huge winner over the years.

When we decide on the strongest candidate for long-term growth, we look at technicals. Sometimes a pullback is healthy. Here’s where CYBR stacks up:

  • YTD performance (-25.83%)
  • YTD vs. technology ETF (-29.09% vs. XLK)
  • Historical big money signals

While the stock has underperformed recently, look below. These are the top buy signals CyberArk has made since 2015. Clearly the Big Money has been consistent for years:

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Source: MAPsignals, End of day data sourced from Tiingo.com

On top of a great long-term technical picture, one should also look under the hood to see if the fundamental picture supports a long-term investment. As you can see, CyberArk has solid fundamentals:

  • 3-year sales growth rate = +21.53%
  • 3-year earnings growth rate = +34.3%

Another growth name to consider is Trade Desk, Inc. (TTD), which is a online advertising platform. The stock has been in beast-mode for years.

When we decide on the strongest candidate for long-term growth, we want to see a history of big money buying the shares. TTD has that. Also, the shares have pulled back massively in 2021:

  • YTD performance (-36.52% vs. SPY)
  • YTD underperformance vs. software ETF (-32.64% vs. IGV)

Below are the big money signals TTD has made since 2016. That’s a chart of a rocket:

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Source: MAPsignals, End of day data sourced from Tiingo.com

On top of a strong technical picture, one should also look under the hood to see if the fundamental picture supports a long-term investment. Trade Desk’s revenue growth rate is impressive. I expect earnings to rebound in the coming years:

  • 3-year sales growth rate = +39.94%
  • 3-year earnings growth rate = +65.72%

Number 4 on the list is ServiceNow, Inc. (NOW), which is a leading enterprise cloud computing solutions company. The shares have been in bull-mode the past couple of years.

When we decide on the strongest candidate for long-term growth, we consider many technical areas. ServiceNow has pulled back like many Tech names:

  • YTD performance (-16.93%)
  • YTD underperformance vs. software ETF (-13.05% vs. IGV)
  • Historical big money signals

Below are the big money signals NOW has made since 2015:

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Source: MAPsignals, End of day data sourced from Tiingo.com

On top of the technical picture, one should also look under the hood to see if the fundamental picture supports a long-term investment. As you can see, NOW has been growing nicely:

  • 3-year sales growth rate = +32.73%
  • 3-year earnings growth rate = +.49%

Our last growth candidate is Five Below, Inc. (FIVE), which is specialty discount retailer. They have been growing rapidly for years.

When we decide on the strongest candidate for long-term growth, we consider many technical areas important to success with a few for FIVE being:

  • YTD performance (+5.56%)
  • YTD outperformance vs. discretionary sector (+.22% vs. XLY)
  • Historical big money signals

Below are the big money signals Five Below has made since 2015. You can see how powerful the performance has been:

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Source: MAPsignals, End of day data sourced from Tiingo.com

On top of the technical picture, one should also look under the hood to see if the fundamental picture supports a long-term investment. Five Below has grown over the past few years:

  • 3-year sales growth rate = +15.55%
  • 3-year earnings growth rate = +10.53%

The Bottom Line

SQ, CYBR, TTD, NOW, & FIVE represent top growth stocks for June 2021. Given the strong historical revenue & earnings growth, and multiple big money buy signals, these stocks could be worth extra attention.

To learn more about MAPsignals’ Big Money process please visit: www.mapsignals.com

Disclosure: the author holds a long position in SQ in personal accounts, but no positions in CYBR, TTD, NOW, & FIVE at the time of publication.

Investment Research Disclaimer

The $217 Million Dollar Pizza: Don’t Let These 3 Stocks Get Away Like Bitcoin

Price is what you pay, value is what you get.

The infamous Warren Buffett quote sums up investing vs trading perfectly.

The short-term trade is all about instant gratification. Take a pizza for instance. We all know it’s bad for us, but it tastes so good. Maybe that’s why Americans eat 3 billion pizzas and spend $38 billion on them each year.

Short-term trades feel great when we win, just like pizza feels great going down. But later, that pizza might not feel so great. And long-term, we know it clogs arteries and does all sorts of other damage. So, when we tee-up a quick trade poised to clip a profit, the greed center of our brains is hoping to get to the pleasure center.

Short-term traders are often looking for free money.

Maybe this was what Laszlo Hanyecz was thinking on May 22nd, 2010. He was hungry and bought two pizzas in Jacksonville, Florida. Only he made the first real-world bitcoin transaction paying 10,000 BTC for them. Surely, at the time it felt like free money – or rather – free pizza. Who foresaw bitcoin’s future?

Maybe the pizza seller did. Because now those two pizzas are worth $217 million each.

If ever there was an example of someone who likely regretted the short-term trade and wish they’d held for the long-term, it might be poor Laszlo.

There are two sides to every coin (except perhaps bitcoin). What the short-term trade offers in terms of quick excitement, the long-term trade severely lacks. Buy-and-hold investing has a stuffy stigma. Let’s face it, being patient and waiting years for monster gains is boring. Not many want to do it.

That is until one looks up 5, 10, or 30 years from now at someone else’s successful long-term investments.

Imagine you had sold 2 pizzas for 10,000 bitcoins 11 years ago. And then never did anything with the cryptocurrency. Naturally, you’d have forgone a fast in-and-out trade trying to clip a few percent. You also would need the long-term view on bitcoin’s potential. But had you done nothing, you would have turned roughly $16 bucks into nearly half-a-billion dollars.

That, my friends, is the power of long-term investing.

At MAPsignals, we see the investing-world through the lens of stocks: specifically, outliers.

What’s an outlier?

An outlier stock is a stock that makes insane gains, more than most other stocks. Professor Hendrick Bessembinder proved that for the past nearly 100 years, only 4% of all stocks accounted for 100% the gains above treasuries. That 4% represents the outliers.

If you missed the bitcoin boat, don’t worry- I did too. But I did catch some monster outliers that helped me get closer to my long-term investing goals. And today, you’re in luck, because I’m about to share 3 outlier stocks with close ties to bitcoin and cryptocurrency. These stocks represent a great way to own awesome businesses, and simultaneously get exposure to cryptocurrency.

Nvidia Corporation (NVDA)

NVDA is a Technology stock focused on specialized semiconductors. It has great sales and earnings growth and a juicy 62% gross profit margin. It has reasonable debt levels and a reasonable P/E ratio. Their chips are popular with bitcoin miners.

Now, let’s take a look at the Big Money data. What’s that? We have a process that looks for high-quality stocks seeing buy activity in their shares. Only the best ones show up on our weekly Top 20 reports.

What we want to see is a repeat offender. Look how Nvidia has been a Big Money magnet over the years:

Times on the Top 20 since July 1st, 2014: 54

Outlier status: OUTLIER

First signal: 2000-06-05

Performance since first signal: +5433.85%

Here’s a chart of all of those rare signals:

 

Source: www.mapsignals, End of day data sourced from Tiingo.com

Next up is PayPal Holdings, Inc. (PYPL)

PYPL is a Financials stock focused on Consumer Finance Services. It has great sales and earnings growth and a juicy 55% gross profit margin. It has reasonable debt levels and a reasonable P/E ratio. They also own the popular digital payments app, Venmo.

Recently, PayPal has allowed their users (and Venmo users) to transact in bitcoin.

Now, let’s look at the Big Money profile for PYPL.

BIG MONEY DATA:

Times on the Top 20 since July 1st, 2014: 45

Outlier status: OUTLIER

First signal: 2016-09-20

Performance since first signal: +520.53%

 

Source: www.mapsignals.com, End of day data sourced from Tiingo.com

Lastly, there’s Square, Inc. (SQ)

SQ is a Discretionary stock focused on Retail Industry Software. It has great sales and earnings growth and a juicy 28% gross profit margin. It has high debt levels and a high P/E ratio.

They have point-of-sale technology for merchants and the popular Cash App. The latter allows users to transact in bitcoin.

Let’s look at the historical Big Money profile for Square.

BIG MONEY DATA:

Times on the Top 20 since July 1st, 2014: 12

Outlier status: MATURING

First signal: 2017-10-17

Performance since first signal: +535.82%

Source: www.mapsignals.com, End of day data sourced from Tiingo.com

Here’s the bottom line: If you missed out on bitcoin’s massive run, there are stocks that are correlated to the cryptocurrency’s success. If you’re looking for stock exposure that can benefit from the rise in bitcoin, consider Nvidia, PayPal, & Square.

Disclosure: the author holds long positions in PYPL & SQ in personal accounts and PYPL in managed accounts, but no position in NVDA at the time of publication.

Learn more about the MAPsignals process here: www.mapsignals.com

Disclaimer

https://mapsignals.com/contact/

For a look at all of today’s economic events, check out our economic calendar.

Will Earnings Season Bring Volatility To The Stock Market?

The Commerce Department last week reported that the U.S. economy grew at a +6.4% annual rate in the first quarter, slightly below estimates but still strong. If it would have come in real hot and much higher bears would have pointed to fanning the inflation flames even further.

This mindset of “bad-news-could-be-good-news” is helping to keep the stock market at or near all-time highs. If economic data somewhat disappoints it means the Fed stay dovish and accommodative for longer.

Fundamental analysis

That might be important to keep in mind as April data starting this week is expected to be extremely good. The April Employment Report is due next Friday and with upper-end of Wall Street estimates look for upwards of +1 million new jobs being added. Other key April data next week includes the ISM Manufacturing Index on Monday, and the ISM Non-Manufacturing Index on Wednesday.

employment

If the data comes in better than expected the bears will win the nearby battle and have the upper hand when talking higher inflation and the Fed perhaps tightening sooner than anticipated. So this week could be a bit tricky whereas “disappointing-data” could actually be digested as a win for the bulls and “strong data” a win for the bears.

The earnings calendar is packed again next week with big names including Activision Blizzard, Adidas, AllState, Cerner, Cigna, CVS, Dominion Energy, Enbridge, Etsy, Hilton Worldwide, Moderna, Monster Beverage, Nintendo, PayPal, Peloton, Pfizer, Rocket Companies, Square, TMobile, Wayfair, and Zoetis.

COVID-19

Checking in on U.S. progress against Covid-19, the number of adults that have received at least one dose is around 60%-65%, depending on the source. Global cases continue to rise led by India, where new infections have been hitting new record highs every day for weeks now. The country reported a staggering 380k new infections and 3,645 new deaths on Thursday while less than 10% of the population has been vaccinated.

Bottom line, the global restart will not be synchronized like many bulls had hoped would be the case and global growth may continue to struggle. At the moment the U.S. market doesn’t seem to care. It will be interesting to see if increasing inflation and continued global headwinds will eventually come home to roost.

SP500 technical analysis

SP500 earnings season

Earnings season can bring volatility to the stock market. At the beginning of May, cycles turn to the downside. Note, this is only a timing tool and it never shows the amplitude or strength of the move. When cycles are topping, it means we can expect a move down or choppy trading. This is it.

But relying on cycles only is not a good idea. Insider Accumulation Index shows bearish divergence on a daily chart. At the same time, Advanced Decline Line is still strong. The key resistance is around 4250 at the moment. I believe earning season can bring a profit booking to the stock market. If that happens, watch 4000 – 39500. It was a massive resistance and now it might turn into support. Intermarket Forecast is neutral. But if it turns to the downside, we will finally see a pullback in SP500.

For a look at all of today’s economic events, check out our economic calendar.

Why Shares Of Square Are Up By 8% Today?

Square Video 31.03.21.

Square Shares Move Higher After Analyst Upgrade

Shares of Square gained strong upside momentum after KBW upgraded the stock. Digital payments companies have done well during the pandemic, and Square stock moved from the $60 level at the beginning of 2020 to the highs near the $280 level in February 2021 before pulling back towards $200. Currently, Square shares are trying to settle back above the $230 level.

The market expects that trends which gained strength during the pandemic will stay strong for the long-term, and is ready to pay a material premium for stocks in the growing industries.

Analysts expect that Square will report earnings of $1.22 per share in 2021 and $1.88 per share in 2022, so the stock is trading at 122 forward P/E. However, the market looks beyond 2022 and expects huge growth in the digital space, which provides support to Square shares at the current lofty valuation.

What’s Next For Square?

The market sentiment towards payments companies remains favorable. Established players like Visa, Mastercard and PayPal had a strong 2020 and started 2021 on a strong note, although the recent rise in Treasury yields has put some pressure on these stocks.

Square is trading at a significantly higher valuation than more established companies so it will have to show strong growth to justify current stock price levels.

It should be noted that Square invested $50 million in Bitcoin back in October 2020, and started a new round of cryptocurrency adoption by mainstream players. With Bitcoin near all-time highs, Square shares also attract traders who are willing to be on the rapid development of the crypto market.

At this point, rising Treasury yields present the main risk for Square in the near term as higher yields put notable pressure on high-flying tech stocks. In case Treasury yields stay near current levels, investor enthusiasm towards cryptocurrencies and digital payments in general will serve as a major bullish catalyst for Square shares.

For a look at all of today’s economic events, check out our economic calendar.

Square Drops 10% Overnight

Square Inc. (SQ) reports Q4 2020 earnings after Tuesday’s closing bell, with analysts expecting a profit of $0.24 per-share on $3.1 billion in revenue. If met, earnings-per-share (EPS) will mark flat growth compared to the same quarter last year. The stock rallied nearly 23% after blowing away Q3 2020 estimates in November and has added another 39% in the last three months, carving a series of new highs.

Square Payment Solutions

The company provides digital payment and point-of-sale solutions used by Europay, MasterCard Inc. (MA), and Visa Inc. (V). The stock has benefited from the pandemic, with surging revenue as a result of contactless and tap-based technologies. It also offers a suite of small business software for point of sale, terminals, appointments, restaurants, invoicing, as well as loyalty and rewards programs. Last but not least, it’s benefited from a timely $50 million Bitcoin investment made in October 2020.

Deutsche Bank analyst Bryan Keane raised his target to $330 last week, noting, “Depending on the pace of the recovery and timing of incremental stimulus, we see potential in our upside model for gross profit growth to reach as high as 85% year-over-year in fiscal year 2021, which would represent 40% above consensus and our model (we are conservatively modeling the recovery in our core model). In 2021, we expect SQ to continue delivering strong operating leverage, offset by incremental investments for future growth.”

Wall Street and Technical Outlook

Wall Street consensus translates into an ‘Overweight’ rating based upon 24 ‘Buy’, 2 ‘Overweight’, 16 ‘Hold’, and 1 ‘Underweight’ recommendation. Three analysts now recommend that shareholders close positions and move to the sidelines. Price targets currently range from a low of $140 to a Street-high $380 while the stock has opened Tuesday’s U.S. session less than $5 above the median $247 target.

Square fell to a two-year low during 2020’s pandemic decline and turned higher, breaking out above 2018 resistance at 101.15 in June. It’s been on a tear since that time, gaining ground within a rising channel that reveals intense institutional sponsorship. The rally paused above 240 in December while a breakout earlier this month posted an all-time high at 283.19. Many shareholders are taking profits ahead of the report, dropping price 10% overnight.

For a look at all of today’s economic events, check out our economic calendar.

Disclosure: the author held no positions in aforementioned securities at the time of publication.

U.S. Market Wrap and Forecast for Tuesday

Weak price action targeted big tech stocks on Monday, dropping Nasdaq-100 to a three-week low. SP-500 posted smaller losses while the Russell-2000 retraced Friday’s trading range, with the outperformance consistent with positive seasonality.  The WTI crude oil contract surged above 61 after Brazil’s strongman installed an army general to run Petróleo Brasileiro S.A. (PBR), one of the world’s largest oil and gas multinationals. That stock fell more than 20%.

Tesla Breaks Down

Tesla Inc. (TSLA) broke support near 780, completed a double top breakdown, and closed below the 50-day EMA for the first time since November. Dow component Apple Inc. (AAPL) fell nearly 3%, dropping into negative 2021 returns. Boeing Co. (BA) initially shook off the 777 grounding, squeezing short sellers after dropping more than 9%, but still closed in the red. Royal Caribbean Group (RCL) acted like a momentum play despite a billion dollar loss, surging to a 52-week high.

Gold had a strong session while Bitcoin faltered, lifting the yellow metal to the highest high in a week. Bonds slumped at 11-month lows while the 10-year Treasury note lifted above 1.3%, renewing anxiety about surging inflation. Kohl’s Corp. (KSS) rose over 6% as activist shareholders tried to take over the boardroom, just ahead of department store earnings that should confirm miserable conditions in America’s shopping malls.

Homebuilders on Tap

Tuesday’s Home Depot Inc. (HD) earnings will set the tone for mega-caps, with the housing boom likely to translate into a strong quarter. NVIDIA Inc. (NVDA) volatility is surging ahead of its Q4 release later this week. Bears could have the final say, given sell-the-news reactions after other chip reports in the last month. Square Inc. (SQ) could also generate fireworks after its report, with the stock glued to an all-time high after massive upside in the last 11-months

Home Depot will provide just one metric in a week chock-full of housing catalysts.  Home price data will also be released in Tuesday’s pre-market, followed by mortgage applications, January new home sales, and Lowe’s Cos. Inc. (LOW) earnings on Wednesday. Existing home sales wraps up the data flood, telling market players to keep close watch on SPDR S&P Homebuilder’s ETF (XHB), which is trading at an all-time high.

For a look at all of this week’s economic events, check out our economic calendar.

US Stock Market Daily Recap: The Yield Harbinger for Stocks

That correction I’ve been calling for weeks could have potentially started.

While I don’t foresee a crash like we saw last March and feel that the wheels are in motion for a healthy 2021, I still maintain that some correction before the end of Q1 could happen.

Bank of America also echoed this statement and said last week that “We expect a buyable 5-10% Q1 correction as the big ‘unknowns’ coincide with exuberant positioning, record equity supply, and as good as it gets’ earnings revisions.”

But rather than looking at the past, let’s take a look at what’s on tap this week to get you ready for what could potentially be a volatile week ahead.

This coming week, be on the lookout for the January leading indicator index, durable goods orders, and personal income and spending.

On Tuesday, we will also receive the February Consumer Confidence Index; on Wednesday, the Census Bureau will release upcoming home sales. On Friday, the University of Michigan will release its Consumer Sentiment Index.

Of course, as we’ve seen in weeks past, jobless claims from the previous week will be announced on Thursday too. After outperforming the last few weeks, the jobless claims announced last Thursday (Feb. 18) grossly underperformed and reached their worst levels in nearly a month.

Earnings season has been outstanding but is winding down now. Be on the lookout this week for earnings from Royal Caribbean (RCL) on Monday (Feb. 22), Square (SQ) on Tuesday (Feb. 23), Nvidia (NVDA) on Wednesday (Feb. 24), and Virgin Galactic (SPCE) and Moderna (MRNA) on Thursday (Feb. 25).

We have the makings of a volatile week, and as I mentioned before, a possible correction.

Look. Don’t panic. We have a very market-friendly monetary policy, and corrections are more common than most realize. Corrections are also healthy and normal market behavior, and we are long overdue for one. Only twice in the last 38 years have we had years WITHOUT a correction (1995 and 2017), and we haven’t seen one in a year.

While it won’t happen for sure, I feel like it’s inevitable because of how much we have surged over the last few months.

A correction could also be an excellent buying opportunity for what could be a great second half of the year.

My goal for these updates is to educate you, give you ideas, and help you manage money like I did when I was pressing the buy and sell buttons for $600+ million in assets. I left that career to pursue one to help people who needed help instead of the ultra-high net worth.

With that said, to sum it up:

While there is long-term optimism, there are short-term concerns. A short-term correction between now and the end of Q1 2021 is possible. I don’t think that a decline above ~20%, leading to a bear market, will happen.

Hopefully, you find my insights enlightening. I welcome your thoughts and questions and wish you the best of luck.

Will the Russell 2000 Overheat Again?

Figure 1- iShares Russell 2000 ETF (IWM)

The Russell 2000 popped on Friday (Feb. 19) after seeing a bit of a pullback since February 9. Between February 9 and the close on February 18, the Russell 2000 lagged behind the other indices after significantly overheating. I switched my call to a SELL then on the 9th, and it promptly declined by 3.40% before Friday’s session.

I foresaw the pullback but cautiously saw a rally and switched to a HOLD call before it popped over 2% on Friday (Feb. 19).

I do love small-caps for 2021, and I liked the decline before Friday. However, I feel like the index needs a minimum decline of 5% from its highs before switching it to a BUY.

As tracked by the iShares Russell 2000 ETF (IWM) , small-cap stocks have been on a rampage since November.

Since the market’s close on October 30, the IWM has gained nearly 47.56% and more than doubled ETFs’ returns tracking the larger indices. If you thought that the Nasdaq was red hot and frothy, you have no idea about the Russell 2000.

Not to mention, year-to-date, it’s already up a staggering 16.38%.

It pains me not to recommend you to BUY the Russell just yet. I love this index’s outlook for 2021. Aggressive stimulus, friendly policies, and a reopening world could bode well for small-caps. Consumer spending, especially for small-caps, could be very pent-up as well.

But we just need to hold on and wait for it to cool down just a little bit more for a better entry point.

HOLD. If and when there is a deeper pullback, BUY for the long-term recovery.

For more of my thoughts on the market, such as the streaky S&P, inflation, and emerging market opportunities, sign up for my premium analysis today.

Thank you for reading today’s free analysis. I encourage you to sign up for our daily newsletter – it’s absolutely free and if you don’t like it, you can unsubscribe with just 2 clicks. If you sign up today, you’ll also get 7 days of free access to the premium daily Stock Trading Alerts as well as our other Alerts. Sign up for the free newsletter today!

Thank you.

For a look at all of today’s economic events, check out our economic calendar.

Matthew Levy, CFA
Stock Trading Strategist
Sunshine Profits: Effective Investment through Diligence & Care

* * * * *

All essays, research, and information found above represent analyses and opinions of Matthew Levy, CFA and Sunshine Profits’ associates only. As such, it may prove wrong and be subject to change without notice. Opinions and analyses were based on data available to authors of respective essays at the time of writing. Although the information provided above is based on careful research and sources that are believed to be accurate, Matthew Levy, CFA, and his associates do not guarantee the accuracy or thoroughness of the data or information reported. The opinions published above are neither an offer nor a recommendation to purchase or sell any securities. Mr. Levy is not a Registered Securities Advisor. By reading Matthew Levy, CFA’s reports you fully agree that he will not be held responsible or liable for any decisions you make regarding any information provided in these reports. Investing, trading, and speculation in any financial markets may involve high risk of loss. Matthew Levy, CFA, Sunshine Profits’ employees, and affiliates as well as members of their families may have a short or long position in any securities, including those mentioned in any of the reports or essays, and may make additional purchases and/or sales of those securities without notice.

 

Bitcoin – The Surge, The Outlook, and The Beneficiaries

Following greater regulatory oversight and disclosure, Bitcoin has drawn the interest of private and public companies in addition to traders and investors.

A number of companies currently have sizeable Bitcoin holdings. Not only have they benefitted from the 2020 breakout but will see even more impressive gains should Bitcoin hit 6 figures this year.

The Beneficiaries

According to Bitcoin Treasuries, a large number of public trading companies have benefited from holding Bitcoin.

These include:

Microstrategy Inc. (“NADQ:MSTR”) – A U.S entity, with a reported holding of 70,470 BTC.

Galaxy Digital Holdings (TSE:GLXY”) – Canadian entity that purchased $134m worth of Bitcoin on 30th June 2020, equivalent of 16,651 BTC.

Square Inc. (“NADQ:SQ”) – U.S entity, with a reported holding of 4,709 BTC.

Hut 8 Mining Corp. (TSX:Hut-8”) – Canadian entity, with a reported holding of 2,953 BTC purchased in Q2, 2020.

Private Companies

MTGOX K.K – Japan private entity, with a reported 141,686 BTC holding.

Block one – U.S private entity, with a reported 140,000 BTC holding.

The Tezos Foundation – Swiss private entity, with a reported 24,808 BTC holding.

Stone Ridge Holdings Group – US entity, with a reported 10,889 BTC holding.

In addition, there are ETF like entities holding Bitcoin, where institutional and private investors have benefited from the Bitcoin surge.

The largest Bitcoin holders include:

Grayscale Bitcoin Trust – A U.S entity holding a reported 572,644 BTC

CoinShares / XBT Provider – An EU entity holding a reported 69,730 BTC.

Ruffer Investment Company – A UK entity holding a reported 45,000 BTC.

While some entities are established and directly involved in the crypto markets, other Bitcoin holders are not.

With Bitcoin price stability having returned after the slide to the 2020 low of $4,000, the upward trend has drawn sizeable institutional money.

In considering the more than 700% surge since the March low, balance sheets for these entities would have seen marked improvement.

Looking ahead, the number of entities is likely to increase. Existing Bitcoin holders are certainly well placed to reap greater rewards. Existing holders will also benefit from a significantly lower risk of being Bitcoin holders.

Looking Ahead

There have been plenty of Bitcoin price projections for 2021 flying around. When considering the upward surge from last year’s low of $4,000, $100,000 would be a conservative price forecast for 2021.

The largest reported public company Bitcoin holder, Microstrategy Inc., would see its Bitcoin holdings of 70,470 surge in value to $7.05bn. As of the end of 2020, its Bitcoin holding was valued at approximately $2.04bn.

Galaxy Holdings, the 2nd largest public company Bitcoin holder would see its $134m BTC investment hit the dizzying height of $1,665.1bn. With a current market cap of C$1,014bn, a Bitcoin visit to $100,000 would double the companies market cap. Not a bad return for shareholders…

Private companies have an even more impressive exposure to Bitcoin and have seen unprecedented rewards from their Bitcoin holdings.

Japan’s MTGOX K.K., would see its Bitcoin holdings rise from $1.1bn to $14.2bn should Bitcoin reach $100,000 in the year ahead.

Finally, looking at the Bitcoin ETFs, Grayscale Bitcoin Trust reportedly holds 572,644 BTC. A Bitcoin jump to $100,000 in 2021 would give Grayscale and its investors $57.3bn in Bitcoin investment income.

Investor Returns

For investors that have no direct exposure to Bitcoin, indirect benefits to Bitcoin’s newfound strength will boost returns.

Shareholders may also look to pressure companies to rejig balance sheets and have some exposure to Bitcoin. Short and long-term bonds and cash holdings may not cut it anymore.

There are fiduciary obligations, however. So, we may not see public and private companies purchase Bitcoin in the numbers seen to-date.

Few shareholders would complain about the likely dividends that would result from a Bitcoin surge to $100,000.

Downside risks are ever-present, however, and the more risk prudent investor will be mindful of the impact of any Bitcoin meltdown.

The good news, for the companies discussed above, however, is that Bitcoin would need to take quite a hit to give them a Bitcoin loss.