People Are Discovering Bitcoin Worth Thousands of Dollars in Changetip Accounts
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This fund is managed using similar weights as our model portfolio and is comprised entirely of NWM Pooled Funds and Limited Partnerships. Actual client returns will vary depending on specific client situations and asset mixes. Both the Canadian and U. Short rates in both Canada and the U. Thanksgiving inflows supported the market by the end of the month. Current yields, which are what the funds would return if all mortgages presently in the fund were held to maturity, all interest and principal were repaid and in no way is a predictor of future performance, are 4.
Our underweight position in the materials sector helped performance last month, as did our consumer staples holdings. In the NWM U. We initiated a new position in Crown Castle and added to our existing positions in Vulcan Materials. As for the NWM U. The net equity exposure delta in the NWM U. We report our internal hard asset real estate limited partnerships in this report with a one month lag. Not only have U. As a consequence of this strong run in performance, volatility has fallen to multi-decade lows.
Most asset classes are in positive territory this year, and while big-cap U. While most forecasters were predicting positive returns foryear-to-date performance has outstripped even the most optimistic targets.
Valuations for stocks look high, but so do valuations for all asset classes, especially bonds. Economists have had a poor track record predicting the direction of interest rates and bond yields since the financial crisis, typically predicting rising rates, only to see yields generally fall or tread water.
For their part, Wall Street strategists nearly always forecast a rising market so at least they get the direction right some of the time. In order to help forecast what going to happen next year, it is useful to take a closer look at the market year-to-date beyond just the top-line return numbers.
Sectors and industries have been trading independently from each other, resulting in definite winners and losers. Slow domestic economic growth explains most of these trends. First, growth stocks do well when growth is scarce. If the economy is struggling to expand, investors are willing to pay a premium for companies who are still able to grow. Alternatively, with a strong economy, a rising tide lifts all boats, meaning even a company with a struggling business model could see its prospects improve if the economy is strong.
Domestic economic growth has been ok, but only in the third quarter of this year has economic output finally reached its maximum sustainable level according to the Congressional Budget Office.
Absent is a pickup in export growth and with some inventory building, the U. The real story in has been the improvement in global growth, with the IMF forecasting only 6 out of countries will see their economies contract next year, the fewest on record.
This helps explain why large multi-national companies have outperformed this year and why growth stocks are still being favored by investors. Backing up the concern over stagnant domestic growth is the fact the yield curve has continued to flatten. The concern is if the yield curve continues to flatten and eventually inverts.
This is bad and is almost always followed by a recession and a bear market for stocks. Even if the yield curve were to invert, however, it typically takes over a year before the market finally corrects. The Federal Reserve is in a tough spot. They want to start normalizing monetary policy given the economy is no longer in a crisis situation, but the lack of inflation in the economy is making them cautious. Most forecasters believe the Fed will err on the side of caution and raise rates slower than they have indicated.
Low inflation might not be the only factor keeping the long end of the yield curve low, however. S bond markets, thus helping keep longer-term U.
When this happens, rising foreign bond yields should provide room for U. Slow growth and low-interest rates are not a bad environment for investment returns. This Goldilocks environment may result in a flattening yield, but it could take longer than normal to actually invert.
Also, expect investors to slowly shift away from growth stocks and into value names. In early December, we did see a shift. Technology stocks were sold off and domestic value stocks started to perform better.
Was this a sign that inflation and economic growth have turned the corner? We think it is too early to draw this conclusion. Growth stocks were severely over-bought so some kind of consolidation was in order.
The offset to the economy and markets, however, would also cause the yield curve to invert faster if the Federal Reserve believes stronger growth and inflation would follow. Nothing is ever clear-cut when it comes to the markets. Tax reform will be positively received in the short term, but the longer term effects might not be as positive.
Their earnings are deemed to be generated further in the future, and low-interest rates increase the present value of those future earnings. Higher interest rates could facilitate the shift out of the technology and growth sectors, but technology has another factor in its favor.
Many of the faster-growing companies within technology are viewed as disruptive to traditional business models. This is particularly the case with Amazon versus bricks and mortar retail, Netflix versus traditional media, and Tesla versus the big auto companies.
Extreme optimism over new and disruptive technologies has a history of creating valuation bubbles. In the late s, it was the automobile and radio companies that were all the rage, while the late s saw the internet bubble dominate the investment landscape. Today, disruptive technologies could radically change the way we live and work, just like the automobile and radio did, but will they be good investments? According to Wikipedia, between andthere were over 1, automobile companies in the U.
From the dot-com bubble of the late s, only Amazon has gone on to provide good returns for investors. Most internet companies never made money, and few are still operating today. Either way, it deserves a closer look. Sure, we have read as much as we can and can throw around a few buzz words with the best of them, but our understanding is at best superficial.
As you have been sufficiently warned, let us press on. According to the website Coindesk, Bitcoin is a digital currency cryptocurrency created and held digitally. The idea of Bitcoin is attributed to a software developer called Satoshi Nakamoto, though no one has ever been able to find him, and it has even been speculated the name presents a group of individuals rather than a single person.
In return, they are awarded freshly minted Bitcoin. According to the original protocol created by Nakamoto, the total number of Bitcoins that can be mined is limited to 21 million. As of today, about Perhaps even more interesting than the currency itself is the distributed ledger technology it is based on, Blockchain.
The application of Blockchain technology has evolved beyond just digital currencies like Bitcoin, and its application in other areas in the financial services industry is being actively pursued.
Because of its decentralized nature, it is nearly impossible to retroactively alter a single record, making Blockchain technology very secure and efficient. But is Bitcoin a bubble? Opinions on this subject are very polarized. Other cryptocurrencies have also been moving up, as have any companies associated with Blockchain technology.
Reminiscent of the internet bubble of the late s, even companies that have added Blockchain or some association to the technology to their name have experienced nice stock gains. What defines it as a bubble is if the price appreciation itself is responsible for driving prices higher.
There is also an investor psychology element to a bubble, namely FOMO, or the fear of missing out. Vancouver native and ex-internet gambling kingpin Calvin Ayre is also making a big bet on Bitcoin, or Bitcoin Cash to be specific more on the difference below.
Your tax dollars hard at work folks. Or more specifically, your retirement. Certainly, the prospect of Blockchain technology is part of the allure. As we write, volatility appears to be hitting a peak. But does this make it a viable currency or a store of value? Frankly, the volatility of Bitcoin alone precludes it to be used for either. There has certainly been a spike in trading, but few of these are coming from everyday transactions.
Its use as a transactional currency may, in fact, be falling, not growing, as the cost of transactions increases in line with the price of Bitcoin. In order for transactions to be prioritized by miners, fees need to be relatively high and low fee transactions can take days to be confirmed. According to Morgan Stanley, the number of the top global online merchants accepting payment in Bitcoin fell in the third quarter to just three, down from five last year. Some might try and use it to buy a pizza as a novelty, but it makes for an expensive snack.
InBriton James Howells is said to have accidentally discarded a computer containing about 8, Bitcoins on its hard drive. The total cryptocurrency market tracked by the CoinMarketCap.
Using initial coin offerings ICOit is very easy for startups to create new cryptocurrencies and raise money without any of the usual disclosure security regulators require to protect investors. After creating a white paper detailing the purpose and rules of the ICO, investors use either cash or other cryptocurrencies to buy tokens in the new venture. The tokens are typically meant to be exchanged for some future service provided by the project, but they are often kept or traded for profit.
It is unlikely, however, regulators will turn a blind eye forever and rules will tighter in the future. Another cryptocurrency, called Tether, is said to be backed one-for-one with U. Trouble is no one is able to confirm that there is. Security regulations exist to protect the public. When the cryptocurrency market gets big enough that the general investing public is involved, it will be regulated.
