Author: Robert Gelber

Weedonomics

Robert Gelber Glossary
Marijuana is going to turbocharge the economy. Pot is entirely legal in a number of US states. This givies us the perfect opportunityto examine the effect it has had in those areas, allowing us to see what we can expect if marijuana were legal across the entire country. Colorado In 2015, Colorado collected more than $135 million in taxes on medical and recreational marijuana. That revenue is leviedon nearly a billion dollars’ worth of sales. The industry experienced tremendous growth, increasing by 42% from the year before. The next year, 2016, saw sales increase again. Total sales for the year were $1.3 billion, an increase of 30%. To put that number into context,consider that marijuana sales are getting closer in size to the overall craft beer market in Colorado, worth around $1.7 billion. It’s important to note that the benefits aren’t solely coming from sales. Legalizing marijuana has created an entire industry – supported by people who work in that industry as well as related industries. Overall, Colorado has added more than 23,000 full-time jobs in the sector. Regulating and taxing marijuana sales has been an enormous success in Colorado. Naturally, growth will slow down as other states join the party. Currently, there’s a tourism effect that can’t be ignored. Visitors from nearby states where weed is illegal are likely to stay home if legalization is pushed through in their home state. weedonomics1

Source: Rand Corp

Washington The success story continues as we move north to Washington. Since legalization in 2014, the marijuana industry generated $1.6 billion in sales. 2016 accounted for $1.1 billion of that, nearly tripling the market from 2015 to 2016. It also accrued $250 million in taxes. The legal cannabis industry is responsible for 123,000 full-time jobs all over the US, and Washington is a big winner, with just under 23,000 jobs added.  California Last year, California elected to legalize the recreational use of marijuana in November of 2016, and while Californians aged 21 and older are currently allowed to possess and grow marijuana –they still are not able to buy it the way you would a bottle of vodka. That’s because the licenses allowing merchants to sell marijuana are yet to be issued. Once that happens, it’s likely to have a significant impact. California is the world’s sixth largest economy. At $2.5 trillion, the Golden State’s economy is comparable with the GDPs of countries such as France ($2.4 tn), Germany ($3.3 tn) and the UK ($2.85 tn). Using population as a crude approximation for expected sales (California has nearly six times as many people as Washington) it’s not hard to imagine that the marijuana market could be as large as $6 billion. Research backs up that idea. Reports from New Frontier Data and ArcView Market Research estimate the market could be as large as $6.5 billion (by 2020) once California residents and visitors canconsume pot freely. These United States So what if all fifty states legalized marijuana? What sort of effect would that have? It’s important to understand that a new industry has knock-on effects that go far beyond just direct sales revenue and tax income for the government. A new industry causes new jobs and gives life to new, related sectors. As the market matures, new segments will be added, leading to further growth and fueling a virtuous cycle. New industries will pop up to serve the distributors, growers and marketing needs of the marijuana market. After all, after prohibition ended people started selling alcohol but none of them thought that craft beer would become a whole segment of its own. In California alone, craft beer sales have already blown past the $6.5 billion mark and contributed to the addition of over 50,000 jobs. Who’s to say that marijuana won’t undergo a similar maturation? Legalization could mean that hemp will make its way back to the US. Suddenly you’ve got a whole new industry based around hemp clothing. weedonomics2 There’s also uptake that needs to be considered. Marijuana use has yet to receive the social approval/tolerance that substances like cigarettes and alcohol have achieved. According to a national survey on drug use, 86% of adults aged 18 and over reporting drinking alcohol at some point in their lifetime. As marijuana gains widespread social acceptance, you can expect to see sales increase. The total US marijuana market across all 50 states could be anywhere from $45-60 billion. You can reach that number if you just extrapolate the estimates on the California market onto the entire US population. And that’s just the retail market – sales of marijuana. The market for related products – growing and irrigation systems, lighting and security systems – would grow as well and could well be worth another $50 billion. It’s hard to estimate just how big the industry could be. The Tax Foundation estimates the total market could be worth $45 billion, but a report from Deloitte estimates the size of the entire Canadian cannabis market at $22.6 billion. It’s hard to imagine that a country like the US, which has ten times the number of people as their neighbors to thenorth, could not at least triple that number. Is it that big of a deal? Depending on your politics, you either see legalization as a boon or a curse. If we just look at the numbers, it’s clear that marijuana will have a clear, positive and sizeable effect on the economy. Hold on though – you say – can a $45 billion market have that big of an impact on a US economy that is worth $18 trillion? Yes and no. It’s true. $45 billion is just one-quarter of a percent of the total US economy. It’s not that large in absolute terms, but when the economy tends to grow at 1.5% annually after inflation, even a 0.25% increase makes a significant difference. If we saw that entire increase in one year, it would represent a 16% change in real GDP growth. That’s a big deal.   This article was first seen on Wall Street Survivor

6 Short-Term Financial Goals Every 20 Year Old Should Set

Robert Gelber Glossary
6 Short-Term Financial Goals Every 20 Year Old Should Set
It’s essential to establish a well-thought-out plan regarding your finances, no matter how young one is. The first thing you need to do is to identify your short-term goals. Though your long-term goals are just as important, the fundamental approach to achieving those hinges on your ability to hit short-term goals. Failure to define your short-term goals clearly will result in your inability to secure a great future in terms of your finances. The following are short-term financial goals you should set to have control over your finances:
  1. Eliminate Debt Take a good, hard look at your financial situation as this is a vital step in achieving financial stability. Before setting out any financial plans and objectives, you ought to consider getting rid of any forms of debt. The sad truth is that you can’t invest your money effectively when you have a lot of debt piled up. Write up a plan to tackle any debt you have.
  1. Start an Emergency Fund In an uncertain world, it’s important to be proactive. Instead of waiting until something really terrible happens, why not have a contingency plan in place? Starting an emergency fund doesn’t require a lot of effort and you can start small at first. Commit to putting away an amount that makes sense for your budget every month. Create a separate checking account for your emergency fund and use automatic withdrawals to fund it. Set it and forget it.
  1. Create a Budget Controlling what you spend your money on can a bit of a herculean task especially if you don’t have your priorities right. At 20 years of age, now is a good time to practice setting and following a budget. If you are not sure how much money you spend monthly, use an expense tracker to assess your spending for at least 2-3 months and then you can decide what to include and exclude in your budget.
  1. Generate Multiple Streams of Income< As you are advance in life, your responsibilities grow with you. More responsibilities translate into more bills, and it’s important to not be dependent on just one stream of income. A steady job is great, but if you aren’t diversified, you will be rocked if you lose your job for whatever reason. Build skills that you can grow a stream of income around.
  1. Invest, even a little With the existence of apps such as Stash, Robin Hood and others, it has become easier than ever to invest in the stock market. The earlier you start, the more time your money has to compound and generate stellar returns. You don’t need several thousand dollars to start investing, just $5 and a little bit of curiosity. Stash, for example, enables users to begin their investment career with as little as $5.
  1. Keep an eye on your credit score Your early twenties are a great time to start building a credit history. If you decide to open a credit card, make sure to use it sparingly and pay off the balance in full, every time. Building a solid history and great credit score can come in handy down the line, giving you access to great deals in the future when you need it. Future you will thank you profusely. If you haven’t established credit yet and are having issues opening one, try setting up a joint credit card with a relative.
At 20 years of age, short-term financial goals can be as simple as exposing yourself to the concepts and ideas that you will need in the future. Practice good habits like paying off credit cards in full, and keeping a budget and it will pay off in the future. At the same, it’s important to educate yourself about investing as early as possible to take advantage of the magic of compounding.

Finviz Review: The Pros & Cons to Using This Stock Screener

Robert Gelber Glossary
Finviz Review: The Pros & Cons to Using This Stock Screener

When looking for investment ideas and tips, stock screeners are a really great idea. The best screeners available provide a large array of different information based on unique criteria, such as P/E ratios or 12-month trailing EPS (earnings per share), and allow you to identify potential winners. But since there are so many of them out there which one should you use? In this article, we’re going to do a finViz review. We’ll look at the pros and cons of using FinViz – a widely known technical analysis platform for investors and traders alike. In this article, we review the pros and cons of using FinViz – a widely known technical analysis platform for investors and traders alike.

Pros

  1. It’s free (ish)
Well, great software becomes even better when it’s available to anyone at no cost.  Despite having a premium version known as FinViz Elite, available for about $25/month, you probably won’t need it because the free version kicks ass. Especially if you are just starting out, it doesn’t make sense to pay for tools and subscriptions on a monthly basis.
  1. Simple UI
The amazing thing about Finviz is its very user-friendly, yet powerful user interface (UI). The overall functionality is quite impressive. For instance, you can hover over any stock ticker that shows up in your screener and immediately have its stock chart pop up on screen. Cool right? Everything is set up precisely, filters make it easy to segment the market the way you desire, and the whole screener is designed beautifully. Other screeners can be guilty of horrible design but Finviz definitely stands out. Finally, and most importantly, it is easy and intuitive to use. 3. Depth of offering Finviz offers a great depth of technical, descriptive and fundamental information on stocks. It also offers great heat maps and insider trading feeds and displays search results very quickly and in a stable manner. News items, on the other hand, are sourced from very reputable media outlets such as MarketWatch, Bloomberg, NBC and much more. FinViz also has a blog that collates information from sources including Zero Hedge, Ritholtz, Seeking Alpha and Vantage Point. One really interesting feature Finviz offers is backtesting. Backtesting is when one tests a trading strategy on historical data to figure out whether or not the strategy would be successful. It is an important instrument in any budding investor’s toolkit and the fact that Finviz offers it is very exciting. 4. Insider Sales Tracking When insiders of a company start dumping stock or buying up stock it is a good idea to not be on the opposite side of that trade. Finviz provides info on insider trading so that you are not left behind. This is a fantastic feature.

Sign Up For Finviz And Find The Best Trending Stocks!

Cons

  1. Ads
Freebies come with some very common problems and such include video ads. The free version of Finviz displays video ads which can be a little annoying if you are not comfortable viewing random ads from advertisers.
  1. Freemium model
Some of the coolest features are not available for free. Finviz uses a freemium model, so they offer the basic screener for free and ask you to pay for all the juicier stuff. If you were excited about backtesting then you will be saddened to hear that this feature is saved for paying customers. Other paid features include real-time stock quotes, advanced charting and email alerts. The Bottom Line Well thats it folks! Thats it for our FinViz review, you can think of it as an easy-to-use tool that is beneficial to any trader interested in technical analysis and vetting their stock picks in a scientific manner. Sign Up For Finviz And Find The Best Trending Stocks! Article first seen on Wall Street Survivor

The Nuts and Bolts of How Hedge Funds Work

Robert Gelber Glossary
The Nuts and Bolts of How Hedge Funds Work
You may have heard a lot about hedge funds on television and perhaps, in newspapers. What exactly is a hedge fund, and what do they do? Hedge funds have been in existence for several decades since the launch of the very first ever fund in 1949 by A.W Jones & Co. Since then, their popularity has soared, and today there are more than 10,000 hedge funds. Break it down: what is a hedge fund? A hedge fund is essentially a group of people who come together to invest in the market. They raise money or provide the initial funds themselves and hope to make a killing in the market. Eventually, they open the hedge fund to others who wish to invest and participate in the profits. Similar to mutual funds, hedge funds invest in many types of securities such as bonds, stocks, and commodities. However, investment techniques associated with hedge funds are more sophisticated and risky. Hedge funds allow investors to gain exposure to more exotic financial instruments, like derivatives and options. And boy, are they popular! Hedge funds being managed globally, are estimated to have a combined value of around $3 trillion. Despite being around for a long time, hedge funds operate with little or no regulation from the SEC – the Securities and Exchange Commission – which is mandated to supervise the activities of such investments.   How do hedge funds work? The goal of a hedge fund is to minimize risk in an unpredictable financial environment. While that seems to be a significant factor driving the establishment of hedge funds, the goal of maximizing profit is probably important too. Remember a hedge fund works by pooling funds together for investment purposes. This pooling of funds allows a hedge fund manager to make tons of money by leveraging other people’s money. Let’s assume that a company called Tiny Pony Investments runs a hedge fund, allowing it to invest anywhere in the world. In Tiny Pony’s operating agreement, the company indicates that it will receive a 20% cut on profits over 5%. Now, five investors who are keen on investing in Tiny Pony Investments decide to sign up, each of them investing 20 million each. Tiny Pony starts out with $100 million in its basket of funds. After a year of activity let’s say Tiny Pony makes $50 million, giving it $150 million in total assets under management. Per the fund agreement, the five original investors are to benefit from 5% of the 150 million – also known as the hurdle rate. And the remaining amount is split 80-20 between the investors and the firm. With this agreement in place, the firm takes $28 million of the remaining $142 million (after the 5% haircut). Many hedge funds work this way, while others implement slightly different structures. Hedge funds typically employ the use of long-short strategies to meet their objective of profiting in risky environments. A long strategy simply means you are betting for the price to go up and a short strategy means you expect the price to fall and you position yourself appropriately. So if you ran a hedge fund, you might buy 100 shares of Google (long) and short 20 shares of Apple such that the dollar amounts of each of your bets are equal. Ideally, you want Google to appreciate and Apple to take a dive.   Other things you should know
  • Hedge funds are not for everybody. Investors who prefer to hedge are required to have a net worth of not less than $1 million. Make sure you count your bank notes before investing in a hedge fund!
  • Hedge funds are not restricted in any form of investments. You can simply invest in anything, from real estate to currencies, unlike mutual funds which have limited investment opportunities. Mutual funds can only invest in stocks or bonds.
  • Hedge funds can take advantage of leverage. What this means is that you can use borrowed funds to increase your Keep in mind that this comes at a huge risk.
  • Many hedge funds charge an expense ratio, and performance fee typically referred to “Two and Twenty” which translates as a 2% asset management fee and then 20% cut on all gains. This is a controversial operating scheme because the manager makes money even if the fund loses money in a given year. The manager is guaranteed that 2% fee in all cases.
Buyer beware Most hedge funds fail to beat the market. There are just a few that consistently outperform. The ones that do attract more assets and become even more insulated from the regular investor than the average hedge fund – already very isolated. Most famously, Warren Buffet bet the asset manager of Protégé Partners that he could outperform a basket of hedge funds by merely investing in a simple ETF. Over a nine-year period, the bundle of hedge funds returned just 2.2% annually, compared with 7.1% for Buffett’s index fund. The reason hedge funds fight an uphill battle is similar to why mutual funds fail to the beat the market. Fees just eat away at the gains. In the context of Buffett’s bet, the billionaire estimated that as much as 60% of the returns produced by the basket of hedge funds were destroyed through fees. The Bottom Line Hedge funds serve a need, just not for your average investor. Hedge funds like Soros Management or Bridgewater Capital are famous for returning 20% year after year but how many people get to participate in that? Article first seen on Wall Street Survivor