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Frequently Asked Questions

Is there any opportunity in the world of sports gambling after the Supreme Courts repeal of the federal ban?

Jul 06, 2018

The Supreme Court has just created a $1 trillion opportunity. How often does that happen? I would say pretty much never. Over my 25 years of investing experience, I cannot remember anything that even comes close to the magnitude of the May 14 ruling.

The court decision opens up a lot of opportunity in an industry that probably wasn’t on a lot of investors’ radar. In fact, Bank of America (BAC) predicts that the gross revenue from legal sports betting will increase from the current $200 million annually to $5-$10 billion in the next five years. The low end of that range represents a 25X gain and suggests that there will be some big winners if this growth comes to fruition.

There are a number of players in the industry that can all succeed and take a big piece of the growing sports gambling pie.

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If you look for stocks that Wall Street isn’t focusing on, what factors do you consider when deciding to buy?

Jun 18, 2018

That’s a good question, and my answer is: It depends. I’m not trying to be funny, so let me explain.

It all starts with what I sometimes refer to as the three-legged stool that incorporates macro and micro analysis. The big three are fundamentals, technicals and intangibles.

I’ll be explaining much more about these in the coming days and weeks, but to really find the best NextGen stocks, I want to see strong fundamentals that show growth (among other things), a solid chart that indicates buyers are in control and intangibles to drive the stock higher. These can be everything from a sweeping theme (like the millennial boom we’ve been talking about) to a specific event to, quite honestly, gut feel sometimes.

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Do you think pot stocks are a good investment?

May 16, 2018

The marijuana industry has already brought in billions of dollars in tax revenue and created more than a hundred thousand jobs in the United States, but what makes that so intriguing is the fact that its use is not currently legal in the country. That may change sooner than later, though, as President Trump recently assured a Colorado senator that the federal government will be hands off when it comes to the 29 states that have voted to legalize marijuana on either a medicinal or recreational level.

Whether you’re for or against its legalization is your business, and I am not here to try to change your opinion. That said, I do believe this is a space with a lot of investment potential. According to New Frontier Data, marijuana sales (both medical and recreational) will reach $11.7 billion this year and climb to $25 billion over the next seven. To put that in perspective, last year wine sales brought in $60 billion.

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Do you see opportunity outside of the United States?

May 04, 2018

I am a huge fan of China as many of its stocks are currently trading at valuations well below those of their comparable U.S. peers. China already boasts the second-largest economy in the world and continues to have one of the best GDP growth rates of all emerging and developed nations, and yet looking out over the long term there is no question that the upside potential of its economy is still far greater than that of nearly any other country.

But investment opportunities don’t only come from emerging markets. Prior to graduating to emerging market status, countries are first referred to as frontier markets, and a lot of these smaller nations are also on my radar for investment potential. It’s a lot like investing in companies – if you get in early, you can make a lot of money.

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I’ve noticed that many of the stocks you follow are either small or mid-caps. Why is that?

Apr 13, 2018

In my NexGen newsletters, our strategy is to look for stocks that have big upside potential in powerful mega-trends that are changing our world. That often leads to smaller, lesser known companies, so by default the majority of the stocks we follow are either small- or mid-cap companies. Many people believe these stocks inherently have more risk, but not only is that a very broad generalization, it is also completely untrue. At one point in time, all large companies were small caps that flourished and grew into today’s leaders. Our goal is to find tomorrow’s leaders now in their early stages and own the stock before Wall Street has caught on to the big picture. We can make a lot of money that way.

Even with the broad volatility so far this year, smaller stocks have easily been outperforming their larger counterparts.

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What do you think about the artificial intelligence trend I’ve been hearing a lot about?

Mar 09, 2018

That's a great question. Artificial intelligence (AI) is a growing topic on Wall Street right now, and I also consider it one of the top NexGen mega-trends for the next decade and beyond. In fact, research firm Tractica expects global revenue to increase from $1.4 billion in 2016 to $59.8 billion by 2025.

When most people think about this space their minds still automatically go to robots and science-fiction products. That’s only brushing the surface, though. You get to the really exciting stuff when you drill down even further, specifically into two niche subsectors called machine learning and deep learning.

The purpose of artificial intelligence is to use computers to complete tasks that would normally require human input, and machine learning gives the technology the ability to learn on its own – without having to be explicitly programmed.

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I’ve read so many different commentaries about what is going on in the market right now that I don’t know what to believe. What is your take on the volatility?

Feb 09, 2018

I understand your frustration! In my nearly two decades of writing newsletters and managing clients’ portfolios, I have experienced my fair share of turbulent markets and the primary link between them is emotions. Even the best investors and traders in the world have to manage their feelings when volatility picks up because as difficult as it is to have a losing day in your portfolio, it will inevitably happen many times throughout the year. Those who come through a pullback successfully have learned how to control their emotions and stick with a system that works. Unfortunately, those investors are in the minority and that’s why we see emotional price swings as the majority sell into the panic rather than basing their decisions on facts. Continue Reading…

Why are REITs worth holding on to if the new tax law has changed how interest rates are calculated?

Jan 18, 2018

The primary impact of the new tax law is that investors will pay less taxes on the dividends generated from them since it is considered pass-through business income. Investors are allowed to deduct 20% of their income and the remainder is filed at the taxpayer’s marginal rate, even if the filer does not itemize deductions.

According to industry leader Nareit, REIT shareholders who are in the highest tax bracket now pay 39.6% on dividends and that would drop to 29.6%. And Ernst and Young’s National Tax Department has said that “this is a deduction that will lower the overall tax rate for individuals who invest in REITs.” On top of that, investors who have rental income outside of REITs could be subject to taxes at the highest rate of 37%, but only 29.6% through a REIT.

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I’ve recently started investing in cryptocurrencies and some of the exchanges, such as Binance, do not accept U.S. dollars. How do we trade on them?

Jan 10, 2018

The one issue with buying coins outside of the four that are listed on Coinbase (Bitcoin, Bitcoin Cash, Litecoin and Ethereum) is that you will typically have to buy them with another coin. The most-widely accepted option is buying them with bitcoins. Two of the major exchanges that accept bitcoin as payment are Binance and Bittrex, and the process of moving bitcoin from Coinbase to both is fairly simple. However, both Binance and Bittrex have halted the opening of new accounts for the time being due to overwhelming demand.

Until they begin accepting new applications again, you can use Kraken. I personally went through the process of setting up an account on this exchange, and it only took about 10 minutes to complete. Once you’re set up, you can buy bitcoins using U.S. dollars and then be all set to purchase other coins.

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What is the most important metric you pay attention to in your technical analysis?

Jan 05, 2018

Boy, it’s hard to pick just one! Every chart is different. But if I had to point you to one, I’d go with the moving average. This is a trend-following indicator that is based on past prices and helps determine support and resistance areas. It’s one of my favorite ways to zero in on the strongest opportunities on my screens, as well as identify buy and sell levels.

I will most often focus on the shorter-term 50-day moving average (the stock’s average closing price over the last 50 days) and the longer-term 200-day moving average (over the last 200 days). Both of these give you a good idea of a stock’s true potential and make interpreting a chart a lot easier!

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