At their core, prediction markets allow participants to buy and sell contracts based on whether they believe a specific event will occur. The price of these contracts fluctuates as traders place bets on what they think is most likely to happen.

For example, a prediction market might ask, “Will a particular candidate win an upcoming election?” A contract tied to a “Yes” outcome may trade for 65 cents. In simple terms, the market is suggesting there is roughly a 65% chance of that event occurring. If the event ultimately happens, the contract settles at $1. If it does not occur, the contract becomes worthless.

Supporters of prediction markets argue that they can provide valuable insights because participants have financial incentives to make accurate forecasts. Unlike opinion polls, which simply ask respondents what they think, prediction markets require traders to put money behind their beliefs.

These markets have been used to forecast political races, economic trends, corporate earnings reports, and even the likelihood of certain legislative actions. Some researchers believe that prediction markets can sometimes be more accurate than traditional forecasting methods because they aggregate information from many different participants.

However, prediction markets are not without controversy. Critics argue that market prices can be influenced by speculation, misinformation, or sudden news events that may temporarily distort public expectations. Additionally, regulatory questions have emerged regarding whether certain prediction markets resemble gambling or financial derivatives.

For individual participants, prediction markets can be both educational and risky. Traders who correctly anticipate outcomes may earn profits, while those who make incorrect predictions can lose money. As with any form of speculation, participants should understand the rules, fees, and risks before investing funds.

Several online platforms now offer prediction market contracts on a variety of topics. Depending on the platform and jurisdiction, users may be able to trade contracts tied to elections, economic indicators, sports outcomes, entertainment awards, and other real-world events.

As technology continues to evolve, prediction markets are attracting increasing attention from investors, academics, policymakers, and everyday consumers interested in measuring collective expectations about the future. Whether viewed as a forecasting tool, an investment opportunity, or a form of speculation, prediction markets represent a growing intersection of finance, data, and public opinion.

How Prediction Markets Work at a Glance

1. A question is created about a future event.
2. Traders buy “Yes” or “No” contracts.
3. Contract prices move based on market demand.
4. Prices often reflect the market’s estimated probability of an outcome.
5. When the event is resolved, winning contracts pay out while losing contracts expire.

Important Reminder

Prediction markets involve risk. Participants should only use money they can afford to lose and should carefully review the rules and regulations governing any platform before trading.

Interested in Learning More About Investing?

Prediction markets are just one way people attempt to forecast future events. If you’re interested in exploring stocks, ETFs, and financial markets, you can learn more through this resource:

👉 Start Here

Disclosure: We may both receive a referral reward if you sign up through this link.

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Why isn’t it mandated in building codes that the roofs of these sprawling structures be covered with solar panels? There are miles and miles of roofing on air-conditioned, huge buildings using power from a stressed grid, when they all could be creating their own power.

How can this be mandated?

Meg Quinn Coulter, Los Angeles

..

To the editor: Voting for politicians who are in the pockets of Big Business creates an environment of unregulated growth that eventually steamrolls over individual citizens.

Those same politicians know they will get reelected anyway because their voters only pay attention to the culture-war issues, and then whine about economics and government arrogance afterward.

David G. Echt, Torrance

..

To the editor: The best way to get rid of warehouses? Stop feeding the pig.

Stop buying online and support brick-and-mortar businesses.

Sandy Mishodek, Running Springs, Calif.

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It has always been a rat race between smartphone makers, especially in the congested Android market, but recent changes in the who’s who is shaking things up a bit. With Huawei’s exit in many listings, the opportunity for Chinese brands like Xiaomi and OPPO to take over has never been greater. As the latest data from Europe proves, Xiaomi definitely took advantage of that situation.

Strategy Analytics says that Xiaomi shipped 12.7 million smartphones in the region in the second quarter of 2021, up by 67.1% from the same period last year. It narrowly beat Samsung, which shipped 12 million units, but the Korean brand actually lost shares in comparison. Despite its 15.7% year-on-year growth, Apple was pushed to third place.

The biggest growers, however, were OPPO and Realme, despite having the lowest shipment volumes among the top 5. OPPO shipped only 2.8 million but grew by 180%, while Realme’s astounding 1800% growth was thanks to only 1.9 million smartphones shipped. As expected, Huawei is nowhere to be seen, but neither is Vivo.

These might just be numbers, but it reflects a significant change in market trends, at least in Europe. Consumers are gravitating away from the likes of Samsung and Apple to get their smartphone fix, especially with new affordable 5G devices. More importantly, brands like Xiaomi and OPPO are starting to be seen in a more favorable light in recent years, providing enough threat to longtime market leaders in different regions of the world.

JC Torres | Contributed

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WASHINGTON (AP) — Prices for U.S. consumers jumped in June by the most in 13 years, evidence that a swift rebound in spending has run up against widespread supply shortages that have escalated the costs of many goods and services.

Tuesday’s report from the Labor Department showed that consumer prices in June rose 0.9% from May and 5.4% over the past year — the sharpest 12-month inflation spike since August 2008. Excluding volatile oil and gas prices, so-called core inflation rose 4.5% in the past year, the largest increase since November 1991.

The pickup in inflation, which has coincided with the economy’s rapid recovery from the pandemic recession, will likely intensify a debate at the Federal Reserve and between the Biden administration and congressional Republicans about how persistent the accelerating price increases will prove to be.

The Fed and the White House have made clear their belief that the current bout of inflation will prove temporary. As supply chain bottlenecks are resolved and the economy returns to normal, they suggest, the price spikes for such items as used cars, hotel rooms and clothing will fade. Some economists, along with Wall Street investors, have indicated that they agree.

“The headline inflation numbers have been eye-popping in recent months, but underlying inflation remains under control,” said Gus Faucher, an economist at PNC Financial Services. “Once again a few categories — used vehicles, airfares, rental cars, hotels — are experiencing huge price gains because of the recovery from the pandemic.”

Still, continued higher inflation does raise the prospect that the Fed could decide to act earlier than expected to pull back on its ultra-low interest rate policies, which have been intended to support more borrowing and spending. If so, that would risk weakening the economy and potentially derailing the recovery.

For now, price increases are running ahead of the wage gains that have kicked in this year, which means the financial burdens on millions of households have grown more difficult. Average hourly earnings increased 3.6% in June compared with a year earlier, normally a solid gain, but far less than current inflation.

Lower-income workers are also hardest hit by rising food prices, which rose 0.8% in June, and gas costs, which rose 2.5% last month and 45% from a year ago.

One reason why year-over-year inflation readings are now so high is that the most recent prices are being measured against the sharp price declines that followed the eruption of the pandemic in March of last year. That statistical distortion began to fade in June and will no longer be a factor when July’s year-over-year inflation figures are released next month.

Looking past those distortions, prices are rising faster than they did before the pandemic but not as much as the recent monthly numbers suggest. Greg McBride, chief financial analyst at Bankrate, noted that compared with June 2019, inflation has risen at about a 3% annual pace over the past two years. That is up from a 2.6% annual inflation pace from May 2019 to May 2021.

In addition, some ongoing price spikes could fade soon. Hotel room prices surged 7% in June alone and 15.1% in the past year, the most on records dating to the 1950s. But that surge has merely returned hotel prices to pre-pandemic levels and so may not persist.

Airline fares, which jumped 2.7% last month, have skyrocketed nearly 25% compared with a year ago. Yet airline ticket prices are still below pre-COVID levels.

Prices for used cars are far above where they were before the pandemic and soared 10.5% last month alone — the largest such monthly increase on record. That spike accounted for about one-third of the monthly increase in consumer prices for a third straight month.

Used cars have become vastly more expensive largely because semiconductor shortages have cut production of new cars, thereby leading more buyers to the used car lots. And many rental car companies sold portions of their fleets during the pandemic to raise cash and are now desperately buying up used cars to replenish their supply.

The shortage of rental cars combined with greater demand has elevated vehicle rental prices by an astounding 90% in the past year.

The surge in used car prices, though, isn’t likely to last. Prices are starting to drop at wholesale auctions where dealers buy vehicles, and used vehicle demand may be slowing.

David Kelleher, who runs a Stellantis (formerly Fiat Chrysler) dealership in Glen Mills, Pennsylvania near Philadelphia, has observed that fewer of his customers are seeking used vehicles.

“I think the word got out that it was a tough time to buy a used car,” Kelleher said.

Kelleher, who has now cut prices on the roughly 150 used vehicles he has in stock, says other dealers are reporting the same conditions, and he expects customers to return once the price declines take full effect. Still, supplies of new vehicles remain tight and prices high, a trend that could sustain customer demand for used vehicles.

More broadly, other trends are keeping consumer prices high: Restaurant prices rose 0.7% last month and 4.2% over the past year, a sign that many companies are raising prices to offset higher labor costs.

The cost of household furniture increased 0.7% from May to June and 8.6% compared with a year ago, as more Americans have upgraded their homes after spending more time there during the pandemic. Mohawk Industries, which makes carpets and tiles, has said it will raise prices 6% to 10% — its third price hike of the year — to cover higher costs for raw material, labor and shipping.

The spice maker McCormick & Co. said it plans to raise prices to offset higher raw materials costs. Likewise, Conagra has said inflationary pressures have reduced its profits. The company, which makes everything from Duncan Hines to Pam cooking spray, has said it will raise prices to offset some of those costs. PepsiCo, too, said it will likely raise prices for its drinks and Frito-Lay snacks after Labor Day.

So far, investors have largely accepted the Fed’s belief that higher inflation will be short-lived, with bond yields signaling that inflation concerns on Wall Street are fading. Bond investors now expect inflation to average 2.4% over the next five years, down from 2.7% in mid-May.

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With so much at stake, the agency that manages the tax revenue generated from these transactions has started to examine the effects of the population’s net migration. At times, the research may prompt more questions than answers.

California Controller Betty Yee released a report last month using 2019 data, titled “The Impact of Migration on California Income Tax Revenues.” The agency surmised it’s too soon to tell whether those moving out of the state during a pandemic year have upset the balance of government financial coffers, even if a steady flow of migrants have moved in.

From 2015 to 2018, the data showed a net reduction in tax revenue from those coming in compared to residents departing by 0.2% of California’s personal income tax revenue. The state stands to gain or lose at least $1 billion in personal income tax revenue from residents in flux because of the gap between the departing residents paying in the previous year and migrants handing over payments the year after arrival, the Controller’s Office reported. In that respect, the shift represents a strain on state coffers.

The state’s income tax ranges from 1% to 12.3% — with an additional 1% surcharge on taxable incomes of more than $1 million.

When a business wanders

Since California first adopted a corporate income tax in 1929 and a personal income tax six years later, finance stakeholders have asserted high tax rates would squash the state’s economy.

Nevada jumped on that opportunity in 1937 by mailing out brochures to thousands of millionaires across the nation suggesting they relocate to low-tax Nevada. The Silver State boasted no corporation, state income and inheritance taxes.

A top-of-mind issue with rising costs causing many to flee California, businesses leaving the state totaled 18,000 between 2008 and 2016, according to data analyzed by CNBC.

“We are not aware of any popular reports on the number of businesses moving to California, so it is not clear what the net movement of businesses is,” the report reads.

The comings and goings of companies out of the state are hard to measure from tax data because a business may simply cease to exist and therefore not pay. The issue becomes more complicated when only part of the business moves. There, the state sets the tax bill as a “single sales apportionment,” which accounts for the percentage of sales made in that state.

Another consideration to resident and business migration is a lesser-known feature of California tax law called “source taxation.” California imposes tax bills on all business income earned in the state regardless of where the owner lives. So if an owner flees the state but continues to operate a business in California, the income is still taxed.

What happens when property tax revenue during a state exodus or home sell-off is reduced — especially since many local governments allowed residents to delay tax bills due to COVID-19 hardships?

“It’s too early to tell,” said Barbara Green, who works as the change-in-ownership supervisor in the Sonoma County Assessor’s Office. At this point, the local government’s tax management division is too busy to make that assessment because of the multitude of applications to transfer taxes from one property to another within the state’s boundaries for the over age 55 subset, she said.

The basis for Proposition 19, approved by voters last fall and effective at year-end, may account for a massive reduction in property tax revenue for each jurisdiction, especially if a resident is migrating in from a less expensive locale.

To Napa County Assessor John Tuteur, migration may hinge on the generation that’s moving. “It depends on what age we’re talking about. If we’re talking about the (age) over 55, they’re taking advantage of the tax transfers. But I would guess that more than half the homebuyers are under 55,” Tuteur said. “What in-state migration we’ve had has helped.”

SUSAN WOOD | NB BUSINESS JOURNAL

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WASHINGTON (AP) — Two months of sharply rising prices have raised concerns that record-high government financial aid and the Federal Reserve’s ultra-low interest rate policies — when the economy is already surging — have elevated the risk of accelerating inflation.

In May, consumer prices rose 5% from a year earlier, the largest such year-over-year jump since 2008.

Many economists see the recent spike as temporary. Others say they worry that higher consumer prices will persist. Jason Furman, a Harvard professor who was President Barack Obama’s top economic adviser, thinks the reality is more complicated. He does, however, lean toward the higher-inflation-will-persist camp.

Furman notes that while most economists expect inflation to slow from its current quickened pace, not all think it will fall back to the Fed’s preferred level of 2% a year.

The Associated Press spoke recently with Furman about why higher inflation might prove only temporary, why it might persist and whether a little more inflation is all that bad.

The interview was edited for length and clarity.

Q. WHAT’S DRIVING INFLATION UP, AND DO YOU THINK IT WILL PERSIST?

A. There’s been a lot of very temporary inflation from a set of quirks related to the economy’s reopening. For example, used car prices have absolutely soared, and other prices are getting back to where they were pre-pandemic. I don’t think anyone thinks the recent rate of price increase is going to continue. The question is, how much does it slow down? Does it slow down all the way back to the 2% increase every year we used to see? Or does it slow down less than that, and we’re left with something more like a 3% increase every year?

Q. HOW BAD WOULD 3% INFLATION BE? IS IT SOMETHING WE REALLY NEED TO AVOID?

A. I don’t actually think 3% inflation would be terrible, but it depends. If policymakers tried to lower inflation from 3% to 2%, (by raising interest rates), that could be pretty painful. If wages don’t keep up with prices, that would also be troubling. But if we want to operate the economy, year in and year out, at a higher inflation rate going forward, I don’t see that as a problem. But I do think it’s important to make policy based on the most realistic and accurate expectations for what’s happening in the future.

Q. BEYOND THE ECONOMY’S REOPENING, WHAT MIGHT DRIVE A MORE SUSTAINED BOUT OF INFLATION?

A. I think the four reasons why you might worry that inflation is going to be more persistent are, No. 1, there are some shoes that haven’t dropped yet. The biggest of them being the price of shelter — that’s rent. And then it’s something called owner’s equivalent rent, which is what it costs a homeowner to live in their home. (Both rents and home prices have risen sharply.)

Second factor is some prices are sticky. That means they don’t adjust really quickly and right away. A lot of prices change once a year, and you’re going to see more of those price changes over time. Wages also tend to be sticky. A lot of employers might in September decide on new wages for January.

The third factor is that it’s likely that demand continues to exceed supply through the rest of the year. People have a lot of money. They’re spending that money, but not everyone’s back to work, which means we can’t make everything that people want to buy.

And finally, and most speculatively, expectations for inflation play a big role in the dynamics of inflation. Could expectations change? Could they become unanchored if people start to expect more inflation? It would be self-fulfilling.

Q. HOW DOES THE CURRENT SITUATION COMPARE WITH THE SPIRALING INFLATION OF THE 1970s?

A. There’s no danger of a repeat of the experience like the 1970s. The Fed learned that lesson. They’ll never let inflation get to 10%. The 1960s is the model for what we’re going through now. Inflation crept up from about 1.5% to about 5%.

One of the troubling things in the 1960s was that wages didn’t keep up with prices, and so people saw their purchasing power, their real wages fall. I’m not saying that’s what’s going to happen now, but that is the scenario to be worried about.

Q. DO YOU THINK THE FED HAS PROPERLY ASSESSED THE RISKS?

A. They shifted policy in the right direction at their latest meeting (on June 15-16). But I think they’re going to surprise themselves that they’re going to end up with a very strong recovery in jobs, that we’re going to end up with more inflation than we expect. And so they’re going to raise rates sooner than they think they’re going to.

Q. WOULD THAT SLOW THE ECONOMY OR POTENTIALLY CAUSE A RECESSION?

A. There’s two scenarios for the Fed. The most likely one is that our unemployment rate is quite low in 2022. Inflation is running above trend. And so the choice is very easy. They’ve achieved roughly their maximum employment mandate. They raise rates. The bad scenario for the Fed would be the unemployment rate remains elevated and inflation is running at 3% and then their dual mandate will be pulling them in different directions. And I’m not sure how they would resolve that.

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“California’s small businesses have been hampered and hammered by this pandemic, and we are using every tool at our disposal to help them stay afloat,” said Governor Newsom. “Help is on the way in the form of a $6.2 billion tax cut, which will provide support, not to large publicly traded companies, but to the mom-and-pop businesses – the beauty salons, restaurants and dental offices – which have been resilient during this difficult time. This small business tax relief is exactly what is needed to keep businesses open so they can continue paying their employees.”

Under the legislation, AB 80 by Assemblymember Autumn Burke (D-Inglewood), the forgiven PPP loans that businesses received from the federal government during the pandemic will not be counted as taxable income, and these businesses can also deduct the costs of expenses that those loans paid for. This is additional state tax relief for the small businesses that have been struggling most, and may very well make a difference in their choosing to reopen, stay open, or shut down as they look to the future.

The Governor signed the legislation in San Fernando after meeting with local business owners that have utilized federal Paycheck Protection Program (PPP) loans to keep operating during the pandemic. He was joined by actor, restaurateur and Los Angeles native Danny Trejo.

California small businesses are drivers of economic growth – creating two-thirds of new jobs and employing nearly half of all private sector employees. California is home to 4.1 million small businesses, representing over 99 percent of all businesses in the state and employing nearly half of the state’s total workforce.

This new tax relief is in addition to the support that Governor Newsom has already provided for small businesses and workers throughout the pandemic. In February, the Governor signed into law a comprehensive package of immediate actions that sped up much-needed relief to businesses suffering the most significant economic hardship due to COVID-19 – a package that provided $2.5 billion in grants worth up to $25,000 each for small businesses across California, more than half of which have gone to minority and underserved businesses.

For the full text of the bill, visit: http://leginfo.legislature.ca.gov.

Gov.ca.gov • Contributed

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WASHINGTON (AP) — Several million people stand to save hundreds of dollars in health insurance costs, or more, under the Democratic coronavirus relief legislation on track to pass Congress.

Winners include those covered by “Obamacare” or just now signing up, self-employed people who buy their own insurance and don’t currently get federal help, laid-off workers struggling to retain employer coverage, and most anyone collecting unemployment. Also, potentially many more could benefit if about a dozen states accept a Medicaid deal in the legislation.

Taken together, the components of the coronavirus bill represent the biggest expansion of federal help for health insurance since the Obama-era Affordable Care Act more than 10 years ago. “Obamacare” not only survived former President Donald Trump’s repeated attempts to tear it down but will now get a shot of new life.

Consider a couple of examples: A hypothetical 45-year-old making $58,000 now gets no aid under the ACA. With the bill, they’d be entitled to a $1,250 tax credit, or 20% off their premiums, according to the Congressional Budget Office. A 64-year-old making $19,300 already gets generous subsidies that reduce premiums to $800 a year. But with the bill, that person would pay no premiums for a standard plan.

Because health insurance is so complicated, consumers are going to have to do their homework to figure out if there’s something in the bill for them. And health care benefits are not like stimulus checks that can be blasted out. There will be a lag as government agencies, insurers and employers unpack the bill’s provisions.

There’s also a political twist. Since most of the health care aid is keyed to the pandemic and expires by the end of 2022, that will let Democrats set up election-year votes to make new benefits permanent, or build them out even more.

“There was always a hope that we were going to be able to return and build on where we started in 2009-2010, and we finally got to a place where it was possible,” said Judy Solomon of the Center on Budget and Policy Priorities. Her organization advocates on behalf of low-income people and was an early supporter of the health care law.

“We had this massive fight that went on for 10 years,” said blogger Robert Laszewski, who followed “Obamacare” for an industry audience. “Over the weekend, it’s like it’s been erased.”

The COVID-19 bill follows President Joe Biden’s strategy of building on the health law to move the U.S. toward coverage for all. It’s still unclear how big a dent the legislation will make in the number of uninsured people, which has risen to an estimated 33 million or more.

A major health care item in the bill will depend on some Republican-led states going along. States mainly in the South have refused to expand Medicaid to low-income adults under the ACA. The legislation offers them a temporary infusion of billions of dollars to reconsider. If those states, including Texas, Florida and Georgia, were to do that, Biden would be closer to his coverage goal.

Even if the hold-outs spurn the offer, the legislation provides plenty of other benefits.

The biggest winners will be the more than 11 million people already enrolled in “Obamacare” as well as those who are now shopping for HealthCare.gov coverage. Biden has opened up a special sign-up period through May 15.

The bill would change the formulas for health insurance tax credits to make them more generous for most people, and also allow a wider number of individuals to qualify. That makes coverage more attractive for people who are considering whether to buy and more affordable for those who already have it, mainly low-to-moderate income working people.

Insurers are hoping that the federal Centers for Medicare and Medicaid Services will be able to quickly update HealthCare.gov software, allowing the companies to promote lower premiums and attract more consumers while the current sign-up window remains open. Industry also wants the agency to automatically adjust what existing customers are paying, sparing millions the headache of having to go back and reapply.

In a politically significant change, the bill would provide health insurance tax credits to people with solid middle-class incomes who don’t now qualify for help with their premiums. That’s a demographic that includes many self-employed people and business owners who were hit with higher premiums as a result of the ACA, but cut out of the benefits. Their complaints fueled Republican opposition to the health law. “These are the people Trump was responding to,” said Laszewski.

Another inducement is aimed at people who have lost jobs. Those who collect unemployment this year, if even for one week, would qualify for the most generous ACA tax credits as well as its biggest reductions in copays and deductibles.

Other people who lose their jobs may want to keep their employer coverage. A federal law known as COBRA allows that, but the employee has to pay the full premium, often a prohibitive expense. The bill would provide a temporary 100% subsidy.

Republicans cite the health insurance provisions as an example of coronavirus overreach by Democrats. Policy consultant Brian Blase, a former health care adviser in the Trump White House, says most of the additional subsidies for coverage will merely substitute for what private households would have otherwise paid. If made permanent, he predicts that over time the sweeter tax credits will have the unintended consequence of enticing small businesses to stop offering coverage to their workers.

“This subsidy expansion largely replaces private spending with government spending.” said Blase.

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Now more than ever, building relationships is important to small businesses so they can compete in the global marketplace.

The Smart Money Network is a community of digital marketing experts whose mission is to support entrepreneurs as they grow their businesses, especially in the new and increasingly online economy.

Having a partner to navigate the field of digital marketing can help small businesses get the edge they need. The Smart Money Network collaborates with small business clients and coaches them on how to engage a target audience with the right message at the right time, using a combination of digital tools and the power of persuasion.

The Collaboration Starts with A Conversation.

“Conversation is the seed of opportunity,” according to the Smart Money Network website. Experts work with small business owners and entrepreneurs to find and build relationships with their target audiences using social media platforms such as LinkedIn, then deploy tried-and-true principles of persuasion that convert to new business opportunities.

Author Robert Cialdini describes six principles of persuasion in his book, “Influence – The Psychology of Persuasion.” These principles include the concepts of scarcity (making your product or service seem more desirable), reciprocity (using small favors to entice), likability (pleasantness can go a long way), consensus (word of mouth that others use your product or service), consistency (customers need to feel they can count on what you say you will deliver), and authority (make sure you support your products or services with facts about your experience and credentials).

These principles can be applied in the world of digital marketing, which is becoming increasingly essential in the post-COVID-19 entrepreneurial environment. More people are spending more time online, and learning how to grab the attention of potential clients can help businesses flourish.

Smart Money Network creates intentional done-for-you social media campaigns that position clients as authoritative and credible resources, and drives up to 30 new business opportunities a month.

According to Smart Money Founder and CEO Mike Harris, “You only have about three seconds to capture someone’s attention and give them enough information to determine whether you are worth connecting with.”

Visit smartmoneynetwork.net to learn more about how to make the digital connections that can boost your business.

-NewsUSA

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The scorching heat is with some added humidity. Around here it is called earthquake season, and there have been plenty of those recently too. The weather hasn’t been the only thing heating up. Metals have moved to their 52-week high. Gold moved first up to into the low $1,400’s, and silver eventually followed up to the lower $16’s. They are hitting the ceiling so to speak for the last 52 weeks. Our Firm recommends taking profits here. In June we gladly recommended to buy around $14.50 and here around $16.45 is a good exit point. This trade would return around 14%. Pretty hot for two months. Don’t get greedy here. Yes, it could break out, but it could also fall back to its lows.

Netflix took a big hit recently with subscriber growth missing expectations. The market is frying it punishment for the big miss. As a FANG member Facebook, Amazon, Netflix, and Google, it possesses the ability to move sharply and strongly. These stocks have led the market with their returns outperforming every index. Time to start watching it. Its all-time highs were just shy of $400. Priced at $306 this is a 25% discount. We do not recommend buying here. Our buy limit is just north of $250. This would be a 38% discount. As Warren Buffett states, “Whether we’re talking about socks or stocks, I like buying quality merchandise when it is marked down.” The lower you buy an investment, the less risk to the downside it has and the more upside there is. When you flip these numbers by buying at $250 and selling at $400 it represents a 60% return.

Alpha is watching the Volatility Index, and it appears to be at annual lows around $12. The high of the year boiled over $36. At a third of its price range, we are watching to see how low or how comfortable the market gets. The VIX, known by this symbol, is a popular measure of the stock markets expectation of volatility implied by S&P500 index options. The higher it is, the higher the expected volatility the market is expecting. Lower means there is very little expected volatility.

A good time to look for investment opportunities is usually when this index is high, reflecting that the market has fallen. You can purchase this as an ETF such as symbol TVIX. It is negatively correlated to the stock market. Adding it to your portfolio when the market is at all-time highs is similar to pouring a cool glass of lemonade on a hot July afternoon. It doesn’t turn down the heat, but it will balance you and allow you to endure the heat. If the market falls from here, the VIX will go up offsetting the drop you may have.

As Maynard Ferguson said, “So cool your hot, so hot your cool.” That’s the way every portfolio should be.

Andrew F. Kotyuk, CIMA* is CEO and Principal of Alpha Wealth Management LLC. For questions or investment topics please email me afkotyuk@alpha-wealth.com.

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