Bitcoins Breathtaking Rise

Twitter Feed, The Morning of January 2nd.

At the time of this writing, Bitcoin has taken the #5 trending spot on Twitter and is edging $33,000 in price. Everyone and their crazy uncle are talking about it, and how they have made money off of it. Why do I bring up what is trending? This shouldn’t be the foundation for discussing an asset, and the adoption thereof… Well, everyone is. The rideshare drivers are talking about how great of an investment it is, the bartenders and even friends at the holiday parties. It is the hype; it is the talk and is something that people are buying into because they want to join the party and get some of the action.  

This all feels too familiar. I want the rise to $50,000, $100,000, or better yet $1M to be straight and swift with no major pullbacks, but this isn’t likely. As a HODLER (Hold on Dear Life), Investor and strong advocate for the decentralization Bitcoin is bringing to finance, when large amounts of retail investors, hedge funds, and other institutions are purchasing for the wrong reasons this is when our ears should perk.

People are beyond calling the people who own Bitcoin crazy libertarians who know there is something better than a currency consistently being debased and manipulated. If you go to Google finance, for the longest time Bitcoin was listed forefront as the currency (now moved to its tab).

Google Finance – Backing the Legitimacy of Bitcoin

I remember all the euphoria in the fall of 2017 with Bitcoin’s meteoric rise to ~$20,000. At this time, it was purely hype-driven. Specifically, you can see Google searches at this time, and it was for everyday people trying to get in on the action.

2017 to Present Google Trends Search Graph

As it can be seen the hype and hysteria are starting to take off again. Although, in my opinion now it is different. With all this crazy stimulus and money printing, we are seeing so much worthless confetti (USD) entering into the market. With this happening, our purchasing power is decreasing while concurrently our savings are going away. Bitcoin solves this, because, in its nature, it is a deflationary asset, meaning every year less and less are being mined. Everyone who is reading this article should have at least a few Satoshi’s (1 Satoshi = 100 millionths of a bitcoin). What do you have to lose, your precious infinite confetti? 🙂 Jokes aside, we want something that finite and the USD is just the opposite.

Why do I say this? 

There are many reasons, but as humans, we should be exploring things that better humanity and adopt them into our lives. By purchasing, you are essentially supporting a cause that leads to the preservation and storage of wealth. This should be something we all aim for, as it is in our best interests to move to one globally decentralized currency, where not a few rich and powerful can get ahead, rather anybody can participate without worrying about unsound money, bad politics, and being controlled.

A lot of this is complicated to understand, what should I know if I want to dabble in it or just get started? 

Bitcoin is a lot of fun, and cryptocurrencies can be addicting to watch. Seeing yourself making 30-50% daily returns is almost unheard of in the stock market. Just as we see these massive rises, we also will face 30-50% pullbacks, and they can be devastating. When people get in for the wrong reason, they sell because they are not making a return and end up taking a massive loss (Just as we see all the time in the stock market). These spectacular gains and nasty crashes can be full of euphoria and sadness, but in the end, know this. You should not day trade unless you are experienced, and it is only a loss if you sell. Invest what you can afford to lose. Do not trade on leverage or take out a second mortgage on your home to buy Bitcoin. Most importantly, buy-in consistently over a period to minimize significant price variances.

What is next? Where are we going from here? 

MustStopMurad posted a fantastic graphic that we should all look at for some of the necessary steps for a large scale currency adoption. I know many people state, “Oh well it is already too expensive, I didn’t get in at $10,000, so I am not going to be able to get in at all.” This limited thinking couldn’t be further from the truth and in fact, we are still in the early stages of Bitcoin’s adoption.

Currency Adoption Chart – Bitcoin

To reiterate what I have said in former videos, and blogs/social media posts in the past we are in uncharted waters. In the past couple of months, we have had tremendous tailwinds helping drive up the price of Bitcoin and its altcoin counterparts, and it is uncertain how long these tailwinds will last. To name a few, from big companies (PayPal, MicroStrategy, Square, Grayscale, and more) putting this on their balance sheets, Biden’s new Treasury pick, the massive money printing from the Federal Reserve, the pandemic driving people to move towards digital currencies, and the erosion of trust in monetary policy long term this asset will perform spectacularly. There will be setbacks, and likely within the next couple of weeks/months, but as we look at the long term it will keep breaking all-time records eventually to $500K per coin. Am I too bold with this statement? Calculated risk and fortune favors the bold.

Nothing stated in this article is a recommendation from Forehand Financial to buy or sell a particular security or asset class. You should wisely consider your tolerance for risk, time horizon, and financial goals before making an investment. With investing, you run the risk of losing money, always read an investment prospectus and make an informed decision before allocating capital to a particular investment. 

My Best Stocks and Crypto Investments in 2020

When investing it is of the highest importance to look at trends and determine how things are likely to pan out. In this article I will not get political, rather I will discuss things as a matter of fact from a policy perspective.

Generally speaking, Trump’s policies favor corporations with the 21% tax rate instead of the former administration’s 28% tax rate. While I thought the likelihood of a Trump second term was a strong possibility, with my investment portfolio I never put all my eggs in one basket (and good thing that I didn’t).

It is well known the Trump cut ties with the Paris Climate Accord a few years back, and what this meant for the progress of EV’s, alternative energy funding, and sustainability is that it took a few steps back from the investment growth in this area for a couple of years. Knowing that democratic candidates tend to favor policies that are for sustainability and green in nature, while also looking at the current state of the world from a sustainability perspective before the election I took a sizeable investment in the following stocks, and have yielded excellent results.

My Best Investments are NIO, XPENG, LI, PLUG, and Cryptocurrencies.

To get kicked off with what these stocks are, I will give a high-level overview. NIO, XPENG, and LI are essentially EV startups in China. With progressive policies under the new administration and the yearning of individuals and companies to be more conscious when it comes to their ecological footprint, I am confident these stocks will continue to grow over the next decade and beyond. I’ve seen countless videos of China where the smog is so thick you couldn’t see several buildings over, even though it was completely sunny out. A dirty musty fog is caused by internal combustion vehicles. My average returns on these stocks are 60%+, because of Biden’s stance on the EV market, and the need to transition to a more environmentally sustainable future. I saw when Trump losing this taking off much more and hedging my portfolio in my direction wouldn’t only mitigate losses in my “Trump” stocks per se but would bring tremendous gains as this industry is young, evolving, and is gaining visibility from some of the most important companies in the world.

On a side note, some may ask why I am an oil shareholder when the best possible answer is to transition to alternative energy? Why don’t I put my money where my mouth is with my oil money? It is not necessarily a black and white answer, and it is the obligation of the oil companies to adopt and progress on the energy transition to be carbon neutral. Should they go out of business? No. There is still a need for oil and gas until the population completely transfers to a more environmentally friendly alternative, that being EV, Hydrogen, or something else.

Gary Gensler, Biden’s new pick for the Commodity Futures Trading Commission (alongside expected inflation under a Biden administration), has brought neck-snapping returns to my portfolio this year. Specifically, my holdings constitute around 5% of my net worth in chronological order and are the following by amount. 1)Bitcoin, 2) Ethereum, 3) Tezos, 4Litecoin, 5) Cosmos, 6) Chainlink, 7) Band, 8) Stellar 9) Compound 10) EOS. I also have some XRP which is a decent crypto asset for transacting, but I am hesitant to mention it here because of its centralization.

My advice to those trying to make a lot of money in this space is to be patient and invest in projects you believe in, that have great growth prospects. There are entire books written on addressing the project fundamentals of these projects. Will any of the projects that I invested in go defunct? Maybe. Does it matter? No – because it is worth the upside risk, and I am diversified.  

Administration and policy investing are so important when it comes to investing. Investing is not just about looking at the current health of a company, rather the entire picture – and beyond. Historical track records can mean a lot. Have you heard the saying I do not have a crystal ball? Looking at a team’s talent, vision, product-market fit, and use case viability is another way of assessing the potential and whether to invest.

If I can leave any parting advice to you today it is this. My best investments this year were based on assessing what is likely going to happen in the future, through hedging bets and taking a risk. Green policies (EV Stocks) and Inflation (Crypto Assets).

What do you think is going to happen in the future and how will you position yourself?

Have you ever said, “I wish I could have gotten into TSLA/AMZN/GOOG/FB/Bitcoin/Ethereum when it was under $100 a share/coin”?

There are other opportunities as ripe as those were, now you can… Think Ahead.

Equity Crowdfunding – A New Way to Invest

I am confident many people have watched the show Shark Tank where a couple of individuals go into a room and pitch their business idea to several angel investors. I find it so fascinating that through a fifteen to thirty-minute pitch, business owners can bring an entirely new set of lifeblood and capital into the business. As an investor and a business owner, there are countless benefits of going this route, but often it can be extremely challenging to connect the Angel Investors with the Business owners and vice versa. So, who fills this gap? How can I get optimal returns on business, increase my risk and reward instead of waiting for an initial public offering half a decade away? Why do I need to be an accredited investor to take advantage of opportunities (Makeover $200,000 per year, or have a net worth of $1,000,000) when I believe in the mission, vision and have assessed the financials as I would with any other investment? I want to capture the upside financially, but also support ambitious and thoughtful entrepreneurs!​

I remember a few years back there was this craze of the crowdfunding platform GoFundMe. We all are familiar with the concept where essentially anybody can create a campaign and raise funds for a given cause. Traditionally, it would be very hard to reach fundraising goals, and if the goals were hit, thousands of dollars of administrative and advertising spend would have had to be blown through. With crowdfunding, millions of people can be reached to help support a given cause. Crowdfunding has now hit the investing space and the opportunities and excitement behind it are endless.


Let us first discuss some of the primary risks of equity crowdfunding, afterwards we will discuss some of the major benefits of equity crowdfunding. When we buy shares of any major company such as Twitter, Verizon, Facebook, or Apple we can see a return or loss quickly. The brokerage companies (Fidelity, Schwab, Robinhood) will give you the updated price in near real-time. This is great because one can take a capital gain or sell a loss relatively quickly if they met their investment objective or wanted to protect themselves from the downside. This is not the case in equity crowdfunding. It can take several years to see a return (if any) with these types of investments, and one’s shares may not even increase in value. Additionally, if you did find a buyer, it would be harder to sell these respective securities due to the price being stagnant. This tends to steer many investors away, as we often live in a culture of instant gratification and reward. The shares are illiquid and there is not a well-known secondary market, which means you cannot sell until it makes it on a public exchange (if it ever does).​

For large established blue-chip companies (AT&T or BP), we tend to receive payment (dividends) for holding the company. This is seldom when investing in startups, primarily because of the profit they do make, they are focused purely on reinvesting in the growth of the business. The reason the blue-chip companies can pay fantastic dividends is that they are established players that are not as focused on growth anymore, rather they are focused on value. The opposite is true for startup investing, everything must be piled back into the business so the company can see optimal growth, and not just please the shareholders. Also, to reduce risk in these investments, invest in several startups as not all may make it to market. Lastly, as we see with larger companies alike, share dilution is a large risk of investing in startups. These companies are trying to raise as much capital as possible to hit business goals and invest in projects. When the company initiates more shares, your percentage holding is reduced. When investing, try your best to make sure clauses protect you against this in their financial filings.


Now that I went over the potential risks, there are so many fantastic benefits of equity crowdfunding. First and foremost, you are supporting entrepreneurs that have spent countless hours, made tremendous sacrifices to make their products, services, and dreams to market. 


​This is so rewarding because you saw an opportunity when a large bank or financial institution did not. You gave the opportunity a chance when nobody else would. It is rewarding from both a support and seeing them grow standpoint, but also if they do make it to public market you will likely see well above 20% returns. This is the risk-reward that you have earned for tying up your money and taking a chance on somebody. Over Sunday afternoon football, or at a bar you always hear one of your friends saying, “oh I should have invested in Apple or Tesla at pre-IPO I would be so wealthy”. Well, now you can invest in companies pre-IPO so missed opportunities are a thing of the past.


There are many perks that the companies will provide you when it comes to equity crowdfunding, but certain governments will even provide one with tax incentives to offset the risk of early-stage investing. It is something that governments can and should incentivize as it encourages job growth, competitive products, and filling product/service gaps in our market.

Overall, I strongly urge everyone to put at least a few hundred dollars into a startup that they believe in. The risks outweigh the rewards when you look at it from an entrepreneurial standpoint. While there may be some owners that don’t grow the business in the best manner, there are countless entrepreneurs out there that want to bring their vision to the world and they cannot do it without you or me. I urge everyone to learn about the benefits and risks of equity crowdfunding and support entrepreneurship.

-Published 9/6/2020

Nothing stated in this article is a recommendation from Forehand Financial to buy or sell a particular security or asset class. You should wisely consider your tolerance for risk, time horizon, and financial goals before making an investment. With investing, you run the risk of losing money, always read an investment prospectus and make an informed decision before allocating capital to a particular investment.  

Biases by Getting Burned in the Market

In today’s day and age, it is all too common to not look at things through an objective lens. Whether there is something in the news, a personal experience, or a statement that a friend makes, sometimes this information comes to us and we look at it as if it is a statement of fact.

Do not be fooled…

Around six months ago I was speaking to a friend about his experiences investing in the stock market. Immediately, his guard went up and he started making comments such as “the markets are too risky” or “most people can lose money in the stock market”. He made these comments with conviction and I could tell by the look in his eyes that changing his viewpoint of this would be next to impossible even if returns fell directly in his lap.

​I went on to question his convictions and it was very interesting to hear his viewpoint. Before the 2008 financial crisis hit, my friend invested heavily in the stock market. He invested near the top and didn’t have the experience of dealing with a stock market recession before. Nevertheless, the market crashed and several of his investments went either bankrupt or he sold at a fraction of what he paid for them. He lost most of his money because he did not manage his exposure, risk, and portfolio correctly.


He experienced the worst the market has to offer, and he lost nearly 55% of the money he put into it. Something damaging that came from this was he missed out on quintupling his net worth over the past decade. While he was playing it safe by being having cash underneath his mattress, inflation was devaluing his net worth and furthermore, he lost out on a life-changing decade bull market. The thing is this is not the most dangerous aspect.

A very dangerous thing in the markets is having a negative mindset based on one’s personal biases.


This personal bias is equivalent to a disease of the mind. The biased person can’t accept the reality of the situation. Furthermore, it is now, unfortunately, a way of life that will take a long time to overcome due to the traumatic experiences of losing more than half of what one toiled for so dutifully. Personal biases are all around us and it is crucial as investors that we remain completely objective with our focus. Please see the list below in which I often see individual investors make personal biases on. These biases happen all the time, and most people get burned by one of these to some extent during their investing years.

  1. Investing in Companies that you like as a consumer
  2. Hyped up companies by the media
  3. Cool sounding ticker symbols
  4. Trends talked about by celebrities
  5. Tips on a stock from a friend
  6. Cinematic and impressive marketing campaigns
  7. Political campaign hopes

​Hype and talk can lead to the fear of missing out on the market. The above examples handicap many investors every year and they would have been in good shape if they did just one thing. Performed objective fundamental and technical analysis. But how fun is this? It is not strictly about fun, as a photographer calibrates a shot through a zoom lens, you need to have the same level of clarity of where you are putting your money. Never let a personal bias sway you, there are hundreds of biases that one may have on any given day, but to act on these would be foolish. To identify if it is a personal bias simply triangulate with people who are willing to disagree with others to see if they agree or not. If it is a personal bias, often, everyone will not agree.


​My friend will be missing out on a lifetime worth of compounding and growing, but I share this with you because I want to show how destructive a personal bias can be from a return’s standpoint. From this example, the personal bias cost him approximately $45,000 over the course of 10 years. This is a significant sum of money, that has been simply wasted. I urge you all to consider, what personal biases do you make on a daily basis in your financial life that are holding you back?

-Published 8/11/2020

Nothing stated in this article is a recommendation from Forehand Financial to buy or sell a particular security or asset class. You should wisely consider your tolerance for risk, time horizon, and financial goals before making an investment. With investing, you run the risk of losing money, always read an investment prospectus and make an informed decision before allocating capital to a particular investment.  

Handling Windfalls of Money

​From an early age, I have always wondered how much money one is given from the start of ones life may negatively impact an individuals work ethic and ability to strive for further opportunities. Many of us know people who were given large trust funds, or large sums of money, and through the years their finances take a downward sloping curve. The best years of their lives are behind them, and it is a situation of maintaining or enjoying what has been bestowed upon them. An opposite situation I have found is when parents have very little throughout their lives and have not saved up for their child’s college education, or to provide them a strong start to put their life on the best trajectory possible. This individual needs to work hard, take on additional work opportunities, and grind every day to get a shot at the American dream. Throughout this blog I am going to address the impacts on performance money brings to kids from an early age, and how it has the potential to position the child on a trajectory of success, failure, or somewhere in between.

Mismanagement of finances has occurred since the dawn of time. You do not have to look far to see that most lottery winners blow through most of their winnings within a few years. Easy come easy go. In the finance community it is widely known that “a fool and his money are soon parted.” There was no effort and challenges to overcome to earn that money, and because of this, it is not challenging to spend this money.


​Some wealth is generational, and some is newly created. An example I am about to bring up has to do with the stewardship of money with a particular group of people, but lessons can be learned from this no matter who you are. Native Americans in the United States have been subject to many opportunity disadvantages over the past hundred years. A particular cash cow for Native Americans on reservations is casinos (Native Americans can run casinos on land in the U.S, and these are extremely profitable). An example I saw a few weeks ago was regarding a Native American tribe in Wisconsin that gives something called “18 Money”. This “18 Money” or “Big Money” is given once the individual turns 18 years old and graduates high school, and from the example, I saw it was around a $250,000 lump sum of cash.


​This money is notorious for being a blessing and a curse because poor stewardship of it leads to many horrible habits that cannot be undone. When many of these fresh high-school graduates who just received the 18 money were asked what they would do with it, many of them said they would buy a Maserati, buy their parents expensive gifts, or spend it on drugs and alcohol. What needs to be addressed here is the behavior aspect. Often, these individuals were living so close to the edge for the first 17 years of their life. They never had money or the opportunity to get money, but they also did not have experience in the management of this either. Many of the native American reservations have taken a step back to assess this situation and have been giving better alternatives to this money. Through education programs/grants, to monthly dividend payouts, better courses of action are being taken to address this situation. Personally, if I ran into $250,000 in cash at the age of 18, with confidence I would have tried to be wise with it, but I may have caved into negative outside influences and become a poor steward because of my lack of education at the time.

Running into big money without working for it does not always yield bad results. I bring this up frequently, and politics aside, but I think George W. Bush and Jeb Bush have done pretty well for ​themselves given how much money they grew up with. Additionally, Richard Branson grew up with some money, but he still has done very well for himself. While we can look at specific examples, and do our best to explain why certain people turn money/wealth into a positive scenario and others frivolously spend it away, the bottom line comes from the strength of the character to draw strong boundaries. Being able to say no frequently and have the right people in one’s corner is so important when trying to avoid being just another statistic. Furthermore, they need to have that innate drive to be successful and begin with the end in mind, rather than focusing on small things such as material objects or the next big party. These things are fleeting and because they give the dopamine rush and are so easily attained, they are the very things that leave those individuals empty-handed down the road.

I see countless individuals playing and hoping to win the lottery in today’s day and age. While this may not sound as sexy, instead try and focus on learning the best stewardship of finances. Learn about money management, listen to podcasts of Dave Ramsey, Chris Hogan, or KPP Financial. You can also read books, subscribe to publications or attend seminars to learn from the minds of the greats. 


By nature, we tend to do what is fun and easy, and sometimes what is fun and easy is not what is best for our monetary goals.  What will give you profound results, in the long run, is sitting down and assessing previous, current, and projected state. Looking from before the current state, what worked and what did not? Apply what worked on the projected state and seek help from others who are strong role models to fill in any gaps. Whether you inherited a large trust fund, ran into 18 money, or started with nothing remember in the end the people who get far financially have a strong financial education and have mentors that have mastered the game.

Thanks, everyone for joining me in today’s blog. Please feel free to comment and share if you enjoyed the content!

-Published 7/1/2020

Nothing stated in this article is a recommendation from Forehand Financial to buy or sell a particular security or asset class. You should wisely consider your tolerance for risk, time horizon, and financial goals before making an investment. With investing, you run the risk of losing money, always read an investment prospectus and make an informed decision before allocating capital to a particular investment.  

Economic Downturns – Avoid the Snakes

Economic downturns affect us more than just the financial aspect. It is known that we are living in uncertain times, and when this happens it can feel paralyzing to the point of not being able to think through things thoroughly. I am not going to lie, over the past couple of months I have hit some dark times, but I have overcome this by connecting with my mentors and talking with my friends and family. Furthermore, I have been able to go on some hikes, do some yoga, and read positive articles which has been a key to getting a level head. I bring all of this up because when you are investing and trying to take advantage of downturns, one needs to have a level head and be in rational thought. The two things that burn most people in a recession are greed and fear. I encourage everyone reading this today to focus on looking within and seeing if they have tapped into one of these two emotions in the past couple of months and if you have, take a big step back and adjust course.

Once when this big aspect has been taken care of, when investing be sure to do your proper due diligence on things that you are investing in. Now, more than ever we are seeing major discounts and big-name investments and many people may have the fear of missing out on the potential upside that these investments can bring. BE CAUTIOUS, TREAD CAREFULLY. Many of these airliners, cruise ships, or service industry businesses are trading 80% less than they normally do, but before you pile in thinking you are buying at a bargain price understand how all the pieces work together. This is not to sound pessimistic but try your best to look at the worst-case scenario of a certain asset class or market. For example, how will this virus alter the industries and the way we live going forward? Are cruises an essential business, and will they be able to stay afloat with such large debt levels? Will cruises get a U.S. bailout (likely not because they are headquartered in Central America)? Make sure to know all the potential downsides, and not to catch a falling knife.

Look up, be happy, because there is a large silver lining to all of this. We are investing in our independence, and likely will diversify our supply chain away from China. This has all accelerated the investment of technology that makes us more interconnected and has developed our communication infrastructure. Look for investments that are deeply discounted and are likely to come out of all of this being the new norm. Avoid industries that people can easily live without (we do not even want many of these stores to be honest). The retail apocalypse has been happening for years, and in this downturn, many companies will not be able to make it through the other side due to antiquated business models. A perfect example of this is Gamestop, JC Penny, Macy’s, Sears, Circuit City, Best Buy, or AMC. Do we need to purchase video games in a store anymore when you can download or order on Amazon/E-Bay? I am surprised they have survived this long, but I see them becoming the next Blockbuster. While not convenient if it does not fit, I think many clothing stores will transition to the online model over the next couple of decades when the ease of return becomes more prevalent. TV’s, speakers, and cameras in the future will primarily be purchased online, so I think Circuit City or Best Buy need to evolve their model to remain competitive in the marketplace. Lastly, as much as I love movie theaters, they are expensive to operate, and many studios are releasing directly to subscription services. They need to evolve and change their model, as this is all proof that entertainment consumption habits change with ease. All these above are examples of what to not invest in (given their current trajectory).

I write this article not as a bear, but as someone who understands many companies will go under, and may not survive the wreckage. Many company’s that have been running poor balance sheets and haven’t evolved with the times should go bankrupt without a bailout. In the business world, this is just how it is, and while many people’s jobs rely on the income from these bankrupt companies, other more meaningful opportunities will arise for them. Why is it that the average tenure for companies on the S&P 500 is around 20 years? Over a couple of decades, companies get comfortable and get delisted as times changes, consumer preferences change, and industries evolve. Be careful where you invest, as we are living in a dynamic time of rapid change and ever-evolving consumer preferences.

-Published 4/25/2020

Nothing stated in this article is a recommendation from Forehand Financial to buy or sell a particular security or asset class. You should wisely consider your tolerance for risk, time horizon, and financial goals before making an investment. With investing, you run the risk of losing money, always read an investment prospectus and make an informed decision before allocating capital to a particular investment.  

Sometimes the Best Trade is no Trade

Now more than ever I know people trying to get involved in the stock market to take advantage of opportunities that didn’t exist a matter of months ago. Every day when there is massive volatility in the markets, I get texts and calls from my friends asking what the next move is, little do they know I can’t predict the future (even though I may try sometimes). There are many patterns in the market, and I think some should be capitalized on and some are just an anomaly. In the past week, we have seen all the stocks that were beaten down do well, and all the recession/pandemic stocks attempt to claw at higher levels with trivial success. We cannot predict the market, and the news is changing so rapidly sometimes it is best to just keep a level head and not make a trade at all. This is hard to tell my listeners because we all love action and making moves that can improve our life. But, from my experience, sometimes the best action is no action and here is why.

Depending on what type of trader you are impacts the message of this blog. From a long-term perspective, it is always best to invest and dollar cost average into the market. From a short-term perspective, best of luck. With volatility that is impacted based on scientific findings, I think it is best to not make a trade at all. When an announcement is made in the left field, while you are trading short term and you didn’t get the news in time you can get burned. It all falls into risk/reward, and I think the waters are ripe right now if you want to be risky, but this article is intended for those who carry a low, semi moderate, moderate risk tolerance. You can see a 20-40% swing in a matter of days, and if you need access to that capital in the near term these short term plays should not be made. Just as we see very aggressive swings down, the bounce back up is likely to occur as quickly.

Note from a Bankrate Article, if you have your 6 months fully-funded emergency fund, you are doing better than 71% of U.S. citizens.

I’ve been hearing the craziest things people have been doing to free up cash to invest in the market, and they are doing this because they think we have hit the bottom and this is a missed opportunity if not capitalized on. For cash, people have been taking out personal loans, home equity lines of credit or even in some cases using cash advances on a credit card to invest. If you must go through any of these measures to attain capital, you shouldn’t be investing in the first place unless you know exactly what you are doing. Although likely, most of these people don’t know what they are doing because they haven’t built a sum of wealth from the market, to begin with, hence their minimal net worth and need for a loan.  

I will never forget this lesson in which sometimes the best trade is being no trade, and I learned it a few years ago from Timothy Sykes the famous day trader known for his large capitalization’s in a matter of hours. The lesson holds the test of time, and I think it is something more of us should consider when we are sitting on a pile of cash trying to capitalize on these fantasy-like market swings. Dave Ramsey famously says, give every dollar a name, and this name is a structured plan. Not businesses in which one is not familiar through inexperience or having the need to fulfill romantic investment desires. The headlines are bright, the percentage gains keep one in awe, the fear of missing out is incredible now. It is easy to look and see what we should have done, the opportunities that we missed cost us a fortune. Often, these lost opportunities torment us. We all need to remember that hindsight is crystal clear, and to take lessons from all that we are going through while keeping a level headed and diversified investment plan in the coming months.  

-Published 3/28/2020

Nothing stated in this article is a recommendation from Forehand Financial to buy or sell a particular security or asset class. You should wisely consider your tolerance for risk, time horizon, and financial goals before making an investment. With investing, you run the risk of losing money, always read an investment prospectus and make an informed decision before allocating capital to a particular investment.  

Downturn Protection by Sector Investing

This screen capture shows the top 11 sectors year to date from Fidelity Investments. When investing, I am sure we all have a favorite sector we lean towards. For some, it is the information technology industry where rapid gains and losses are commonplace, whereas other people enjoy more stability with a higher dividend and often Consumer Staples or utility companies.

Today I am addressing the importance of having an allocation to some extent, to each of these industries in your portfolios, why one should have some exposure to each area and optimal ways of allocating one’s portfolio.  Time and time again, I hear of people investing in their favorite companies and putting a lot on the line because of these biases. When people do this, they are trading with an emotional bias rather than logic and proven principles. First, I am going to run by a situation we just encountered in the past month, and why it is crucial to diversify across industries.

I have been invested in the ­­Oil & Gas industry (-55.37%) or the Airline industry (-41.38%) the past couple of months, it has been beyond painful to watch. Due to the circumstances around our country right now, travel has severely been reduced and as a result, it is impacting airliner’s bottom lines and profitability. Furthermore, I believe they may have more headwinds to face in the coming months because even if the situation is under control here in the U.S, I doubt international routes will open up significantly over the next year. These losses are sobering, and if you were overweight in these industries now is tough, but it is an important learning experience going forward on the criticality of diversification in one’s portfolio.

Just by looking at this graph an individual might think, I am only going to invest in the Consumer Staples and Information technology going forward, because during a crisis they aren’t affected as significantly. While these sectors do hold up well when times are hard, hindsight is 2020, one could have never known this epidemic was going to happen last year.  Furthermore, all sectors move up and down during periods of time. Sometimes financials will be up, and consumer staples will be down, likewise, sometimes Real Estate and Healthcare may both be up, significantly. While certain sectors and industries tend to move concurrently, a balance should be struck to the appropriate allocation percentages per each area.

My strong suggestion would be to just get started allocating across sectors. Simply start doing this, and I guarantee many people reading this are only allocated across ¾ sectors and they may not even know it. If you are invested in an index or mutual fund, you likely have exposure across all the sectors, but the investments just may not be intentional. Knowing there are 11 major sectors, simply allocate 9-10% of your portfolio to each sector.

When you get more advanced with your investments then try and look at how one sector influences another. It is certainly more of an art than a science but think about it in elementary terms. If people stop traveling through the airline and auto industry, what other sector would be directly impacted? The energy sector would be hit hard. Knowing this, maybe it would be best to allocate a smaller percentage of your portfolio to both of these sectors because they go hand in hand. If you are less risky but enjoy stable growth then put a larger allocation to Consumer Staples and utilities. Note, oftentimes returns may be smaller in these areas, and growth may take a while, but you will have a stable and relatively predictable stream.

Being a successful investor is all about reducing unnecessary risks in your portfolio, and it is extremely difficult to reduce risks if you aren’t allocating across sectors and industries optimally. While finding your optimal allocation may take time, getting in the practice of spreading your investments across sectors will help alleviate one, especially in a time like now. In this crazy world, we never know what may happen. A war may break out, an oil spill may happen, natural disasters may damage a countries livelihood, or a virus-like we are seeing now may sweep the world. Being diversified across several sectors will provide one with the assurance they need that all of their eggs aren’t in one basket.

-Published 3/18/2020

Nothing stated in this article is a recommendation from Forehand Financial to buy or sell a particular security or asset class. You should wisely consider your tolerance for risk, time horizon, and financial goals before making an investment. With investing, you run the risk of losing money, always read an investment prospectus and make an informed decision before allocating capital to a particular investment.  

Staying the Path, Through a Pandemic of Uncertainty

Now more than ever, we are living in doubtful times due to things that are beyond our scope of control. Our portfolios are being stress-tested on the allocations we made when times were great. It has always been said that the bulls take the stairs, and the bears take the elevator, and this is certainly the truth this week with the largest point drop since the 2008 financial crisis. Unless you bought the VIX,  inverse index funds, are selling put options, have picked some very lucky names or are shorting many of these big droppers, you have likely lost money to some extent in the past several weeks. In this blog, I am going to address opportunities for safety and ways to remain resilient in these turbulent times.

Investors fear the worst. One of the reasons the market has been dropping so drastically over the past couple of weeks is because the virus outbreak is difficult to quantify. Will it affect 100,000 citizens or 50 million citizens? Fear often drives the market, and investors commonly react emotionally. It’s hard to tell how many people it will impact in the U.S and the financial repercussions industry over the industry. Travel stocks will be hit very hard such as airlines, hotel chains, casinos, cruise ships, and restaurants. Since we don’t know the long-term implications of the pandemic, it would be very risky, but potentially profitable to pick up stocks in these industries. Note, that purchasing in these industries long term would likely be a great play due to healthy valuations and p/e ratios, but don’t expect the volatility in these areas to reduce anytime soon. Companies that may fare better are ones such as consumer staples, IT, Healthcare companies, sin industries, and discount retailers. Think of products that people need to buy while everything is crumbling down to the ground. On the other hand, do people need that vacation to the Caribbean or brand new car?  

Flee to safety. While yields in government bonds are near all-time lows, interest rates have dropped so far, bonds and high yield savings are the safer places to be at this point. Additionally, commodities such as gold, and silver will likely stand the test of time as investors flee falling equities.  Cash-rich businesses, that have little debt are where you want to be right now. Always look for a company with a current ratio above 1, which ensures they can pay current liabilities. Look for long term debt ratios below 40%, and optimally 20%. In these situations, the company (borrower) isn’t over leveraged and can service all debts adequately when the creditor comes knocking. In my opinion, the best place to be when the market faces strong headwinds is in stocks that pay a healthy dividend. Examples of these are oil stocks and certain telecom stocks. The reason to invest in dividend-paying stocks is you are guaranteeing cash-flows every year by doing very little. Even if the stock drops a little, you are guaranteed that dividend yield. I try to avoid stocks that don’t pay me a dividend, and specifically, I aim for dividend yields above 5% and payout ratios below 70%.

Look at this extreme volatility as an opportunity. Remain cash-heavy and be sure to dollar cost average into areas where you see fit. Re-balance your portfolio weekly and don’t be afraid to add to your positions or cut your losses where you see an opportunity or know you made a bad decision. Give every single dollar a name and be sure not to panic as the market sells off. Look at 3-12% losses as discounts, rather than losses. The market is swinging heavily right now due to fear and speculation. With so many large events being canceled, travel restrictions and production shortages the economic activity is slowing significantly, and it is impacting almost every sector. To what extent? How much of this is fear-based? From the point in my second paragraph above, I mentioned investors fear the worst. To come out of this on top don’t try day trading, shorting the market or buying into the fear. While some may disagree, I see something else in the works. I see a red herring (corona-virus), being exasperated by all media outlets for an agenda. I will let you draw your conclusions here since we all have an opinion. Nevertheless, while I never saw the 11-year bull market coming to an end as it is now, and while I am unsure if it will turn into a recession. It is important to remain level headed and remains cautiously optimistic. To do so, save cash, pay off non-income generating debt, live below your means, diversify, dollar cost average, buy undervalued stocks and don’t react emotionally.

-Published 3/11/2020

Nothing stated in this article is a recommendation from Forehand Financial to buy or sell a particular security or asset class. You should wisely consider your tolerance for risk, time horizon, and financial goals before making an investment. With investing, you run the risk of losing money, always read an investment prospectus and make an informed decision before allocating capital to a particular investment.  

The Credit Game – Scoring High

It’s very interesting to think about, how systems that we impose on ourselves can incentivize one to spend negatively. Why would we create a system that encourages one to go deeper into debt just so one could get a higher score? It’s the same thing as encouraging someone with an overeating disorder to go to all you can eat buffets every night of the week and giving them coupons in the process. Only one side wins. The systems that we create curbs customer behavior which can help or hurt individuals significantly in their lives. Therefore it is so important for who we decide the game makers to be.

I am relatively good at tracking my credit scores with Credit Karma (One of my favorite apps on my phone) because I am genuinely interested in seeing how my credit is trending on a month over month basis! With Credit Karma, I realized Experian isn’t reported (Only Equifax and Transunion). I immediately checked to see what my score was with Experian and I was shocked to find it was significantly lower than it was on the other credit reporting agencies. As many of you may know, over the past couple of years I was able to get completely out of installment debt and this is something I value above all else. One of the points being looked at favorably with this FICO Score 8 and 9 are having a non-mortgage installment loan (or credit mix).

This is ludicrous and is something I frown upon highly. The people in charge of the system want you to get into debt so you can get a higher credit score. I find this to be a guaranteed path to never achieving a high net worth, financial freedom and making payments for the rest of one’s life. If you needed to take out the auto loan to get to work and you had no cash, or you needed a personal loan because your water heater broke then I would say go for it. But, doing it just to get a higher score doesn’t make any sense and in fact, I think it is seriously damaging many consumers because they want to achieve a high score and sacrifice their net worth to do so. You are robbing yourself.

The newer scoring model called FICO 10 will release at the end of this year and it will bring some positive changes. The newer model is more risk-averse and looks at how individuals have managed their credit accounts over two years. By doing this, they can see how a person’s spending behavior is trending over time. Is their utilization rate increasing 10% every single month, or are they starting to carry over larger balances? Instead of having a snapshot view like we have now, a long term view is put into place and this helps assess one’s credit picture more holistically. The next thing I am looking forward to is that personal loans are punished much more. Isn’t that crazy? FICO 8 and 9 are out here encouraging you to add installment or personal loans to your mix, whereas FICO 10 it is a ding against you. This is actually what I like to see on the model, but something to note is that this model is always susceptible to change. All the score is, is a combination of algorithms that have been created by humans. One year what may be looked at as a good thing to one’s score, the next year may not be looked at as favorably. Something to note about FICO 10 is that you will either be helped significantly or brought down significantly. Essentially, more weight is being assigned to not increasing your debt, keeping a low utilization rate and not revolving personal loans. Simply, keep your expenses low, don’t exceed 10% spend of your credit limit and never carry a balance (in fact pay the card down before the statement date to get a better utilization rate). You have until the end of the year to prepare and build the best situation for yourself possible before the new scoring system rolls out.

In the end, I think we simply need to look at our credit as a tool that is there to help us, rather than something we actively work toward improving as a number. The model is always changing, but the principles behind debt management are timeless and remain the same. Be timely with your payments, don’t overextend borrowing and have an impeccable track record. You will be able to get favorable interest rates on mortgages in the future and any other creditors you decide to do business with. Throughout your life this has the potential to save you thousands if not, tens of thousands of dollars if applied correctly.

-Published 2/3/2020

Nothing stated in this article is a recommendation from Forehand Financial to buy or sell a particular security or asset class. You should wisely consider your tolerance for risk, time horizon, and financial goals before making an investment. With investing, you run the risk of losing money, always read an investment prospectus and make an informed decision before allocating capital to a particular investment.