Thursday, March 23rd, 2023
Four (4) Practical Tips To Utilize During Market "TURMOIL"

September 15, 2008, was a date that marked an important change in the way investors looked at the markets.

If your memory is a little fuzzy, that’s the day that the investment bank Lehman Brothers filed for bankruptcy.

Most of us in the market the day know what happened next. Waves of foreclosures… More bankruptcies… Global trade halted… Credit markets went bone-dry.

In fact, we came extremely close to a “SYSTEMIC MELTDOWN", according to the International Monetary Fund (IMF). From the peak on October 9, 2007, to the bottom on March 9, 2009, the S&P 500 dropped 56.8%.

I’m not here to bring these events up to force you to relive those days. Instead, I am here to remind you of a simple fact: YOU, ME, WE, THE ATWWI FAMILY DID NOT MERELY SURVIVE... WE THRIVED!!!

Fast-forward to March 2020. Less than 12 years after the financial crisis, we were subjected to another economic trauma as Covid-19 spread around the globe and brought life to a standstill. States issued “SHELTER IN PLACE" orders, stores closed, and people stayed at home. ZOOM meetings became a "THING". Food, guns, and ammo flew off the shelves (along with toilet paper). And once again, markets "TANKED".

What’s important to keep in mind is that this is in the rearview mirror. Still, I wouldn’t blame you one bit if you didn’t get a bad feeling in the pit of your stomach when this latest bout of volatility hit and the markets started trending lower.

After two (albeit very different) major economic crises in our lifetimes, investors are understandably justified to feel a little "TRAUMATIZED". In fact, one of the most frequently asked questions I get is what to do when the next big market crash comes???

It’s time to put some of those concerns to bed. Below is a list of tips I have edited and compiled from over the years that I always keep handy. They address how to stay "OBJECTIVE" with your portfolio regardless of what’s going on…

Four (4)Tips That Will Maintain Your "SANITY" While You Are In a "INSANE" Market
1. Remember that the experts can be wrong. In fact, the experts can be wrong for a long, long time. Business television channels find guests with extreme views just to drum up ratings. So please don’t lose a minute of sleep over the ramblings of pundits or television talking heads.
Try to take a cold "RATIONAL approach to what the “EXPERTS” say. Ask yourself where their bread is buttered, so to speak. Think for yourself.

2. Maintain a comfortable CASH cushion. Investors, have been made to feel guilty about holding CASH. It’s as if they are shirking their responsibilities. They feel like they should always have their entire portfolio working for them. But CASH does work for us. CASH holds up pretty darn well in a downturn. CASH helps us sleep better at night, no matter what the market throws at us... And CASH allows us to buy opportunities during a downturn without liquidating another position.

How much CASH you hold is a personal decision based on your financial needs, market conditions, and your "RISK" tolerance. BUT, if you wake up during the night worried about your investments, you probably need a little more CASH in your portfolio.

3. Count your gains or dividends. Positive reinforcement is a valuable tool, especially if the pundits (or markets) turn negative. I like to review the gains I’m sitting on from my longest-tenured holdings to see how far I’ve come. The point isn’t to deny reality but rather to gain "PERSPECTIVE". When you’re sitting on a long-term winner of, say, 250%, then a 10% correction is a lot easier to digest.

4. Reevaluate your holdings. The goal for most investors is to buy, hold, and reinvest for the long haul. It rarely pans out that way.
BUT, when global economic or political conditions change, it is always a good idea to assess its potential impact on your holdings. To do this, you must stay OBJECTIVE VOID OF EMOTION!!!
This can be difficult when information is limited, and panic starts to rear its ugly head.

NOTE: Sell ONLY what you believe has a significant negative outlook — and leave your other positions alone...

PEACE & BLESSINGS,
Kenneth Reaves, Ph.D.

Wednesday, March 22nd, 2023
Be "FOCUSED" Going Into Today's FED's Announcement

You know what the central banks do in times like these - they select who will be the "WINNERS" and the "LOSERS". Ultimately, at the end of the day, the FED determines who comes out on top. So, congratulations to all the Credit Suisse (CS) investors on their IPO exit after 117 years. That's what perseverance looks like... AND to the original investors of 1856 - hats off to you.

As we've seen over the past two weekends, the central bankers and the FDIC have been playing a game of cards, trying to piece together the right banks. It's reminiscent of that scene from 'Too Big to Fail' where the Timothy Geitner character has to shuffle through a bunch of cards to find the perfect match.
BUT, don't walk away from your trading desks just yet because this banking crisis is far from over. There are a few more banks in the game, and the rumor is that Berkshire Hathaway could be throwing its hat in the ring, especially out west. So keep your eyes peeled for more deals on the horizon.

I'm keeping a watchful eye on relatively more unstable banks, like PacWest (PACW). Let's remember that insiders bought it up around $15. As we dig deeper into this crisis, with Janet Yellen announcing yesterday (Tuesday, March 21st, 2023) that they are willing to "BACK-STOP" the system even more, the riskier assets become more appealing because they have yet to implode.

PACW remains at the top of my watchlist. I'm currently evaluating the optimal approach for trading it, and a high probability trade looks more favorable, such as selling a "PUT SPREAD" rather than outright buying it.

The challenge for YOU, ME, WE, the ATWWI FAMILY right now is to remain optimistic amidst this crisis while it's apparent that the government is improvising as they go along. They have essentially resorted to the same playbook as they did in 2008, just redefining the term "BAILOUT".

During her statement to the American Bankers Association, Janet Yellen emphasized that their focus is on the entire system, NOT individual banks. It's not a "BALOUT"; it's something called a "COMMERCIAL SOLUTION".

It's a new term that they have come up with. So, is there light at the end of the tunnel??? It's hard to say.

Looking at the regional banks affected by this crisis, it's evident that the coasts are bearing the brunt while the midwest remains relatively stable. FRC and similar companies will likely face increasing pressure from their peers, the FDIC, the private sector, and government to find a private solution after receiving substantial $30 billion injections.

Nevertheless, the FDIC and government are currently focused on individual bank deposits, leaving the larger players to tackle the equity equation on their own. This explains why Warren Buffett's name has been surfacing lately.

As traders, it's important YOU, ME, WE, the ATWWI FAMILY remain"ADAPTABLE" and make "INFORMED/INTELLIGENT" decisions based on market trends. If we notice positive momentum and capital movement, we must be prepared to take advantage of it.

With the market at a crossroads, we will have to wait until later today (Wednesday, March 22nd, 2023) at 2:35 pm ET, for "HIS ROYAL HIGHNESS" FED Chairman Powell to speak and lead the way.

PEACE & BLESSINGS,
Kenneth Reaves, Ph.D.

Tuesday, March 21st, 2023
ETFs That Monetize The Current Banking Situation

With the collapse of Silicon Valley Bank (SVB), everyone is looking at the banking industry. Some think it has more room to fall, while others believe now is the best buying opportunity we have seen in a decade.
At this time, I believe it is too hard to pick which direction banks or the market overall is heading.
My reason for saying that is that very few people fully overstand/understand the real "RISK" to the banking system at this time.

A few weeks ago, Wall Street banking analysts gave banks good stock ratings. Janet Yellen, the head of the Treasury Department, recently said the banking industry was "HEALTHY" . Even Jerome Powell, Chairman of the Federal Reserve, recently sat in front of congress and testified that the banking system was "SOLID and WELL-CAPITALIZED"

Well, that certainly wasn't the case for SVB....

While I overstand/understand that when Janet Yellen or FED Chairman Powell make these statements, they are speaking about the whole industry, not one-off banks, as we saw during the financial crisis in 07-08, it only takes a few small cracks in the system to open the flood gates.

When the 15th largest bank in the U.S. fails, it's hard to ignore that crack, despite the argument that SVB is different from most other banks because they lend to riskier clients in the form of "START-UP" businesses.

The argument that SVB is and was different may make sense, BUT if that is true, how do you explain Credit Suisse (CS) needing a $50 billion loan from the Swiss National Bank?

Finally, for years we have been told that the banks, both here in the U.S. and worldwide, have parts on their balance sheets that are referred to as BLACK BOXES". These are certain businesses or investments that we, outsiders, will never get to see. We will never know what those parts of the bank's business look like, and thus, how can we fullyoverstand/understand how healthy or sick a bank is until it's too late???

Maybe you overstand/understand the banks better than I do and still want to invest in them, whether "LONG" or "SHORT"; let me give you some exchange-traded funds (ETFs) that you can buy to profit from a bank industry move in either direction.

First, let us look at the "BULLISH" ETFs in the banking industry, and then we will touch on "BEARISH" ones.

Starting with the largest banking-related ETF, the Financial Select Sector SPDR ETF (XLF)* has almost $30 billion in assets. Then we have the Vanguard Financials ETF (VFH)*, which has around $8 billion in assets. After VFH, the remainder of the roughly 47 financial-banking-related ETFs has under $2 billion in assets.

*NOTE: UTILIZE ATWWI HOLDINGS STRATEGY TO REFERENCE MULTIPLE BANK/FINANCE STOCKS

This means XLF, and VFH are probably where most ATWWI FAMILY members should stick with if you are "BULLISH" on the industry since they will have the most liquidity and are least likely to close down if it gets hit with a significant loss.

If you want banks strictly in your ETF, look at the SPDR S&P Bank ETF (KBE)* and the Invesco KBW Bank ETF (KBWB)* or the iShares U.S. Regional Banks ETF (IAT)*. Those two only invest in banks, as opposed to companies like Berkshire Hathaway or BlackRock which are both found in the top ten holdings of XLF and VFH.

*NOTE: UTILIZE ATWWI HOLDINGS STRATEGY TO REFERENCE MULTIPLE BANK/FINANCE STOCKS

However, both ETFs are financial company focuses, meaning they will own banks and other financial industry businesses.

Suppose you want some leverage with the bank ETFs. In that case, you can buy Direxion Daily Financial Bull 3X ETF (FAS)*, the ProShares Ultra Financials ETF (UYG)*, the MicrosSectors U.S. Big Banks Index 3X Leveraged ETN (BNKU)*, or the Direxion Daily Regional Banks Bull 3X Shares ETF (DPST)*.

*NOTE: UTILIZE ATWWI HOLDINGS STRATEGY TO REFERENCE MULTIPLE BANK/FINANCE STOCKS

Now if you are looking at the "BEARISH" side, I would start with the fact that your options are limited to four (4) ETFs.

We have the ProShares Short Financials ETF (SEF) and the 1X short ETF. This would be the least leverage and, therefore, the least "RISK" for ATWWI FAMILY members who believe the banks/financial industry is heading lower.

The next is the ProShares UltraShort Financials ETF (SKF) which will give you 2X short exposure. Then we have the Direxion Daily Financial Bear 3X Shares ETF (FAZ), which will give you maximum exposure to the downside.

Finally, we have the MicroSectors U.S. Big Banks Index 3X Inverse Leveraged ETN (BNKD)*, the only way for an investor to short just banks.

*NOTE: UTILIZE ATWWI HOLDINGS STRATEGY TO REFERENCE MULTIPLE BANK/FINANCE STOCKS

However, this is also a 3X leveraged fund, meaning it will be risky and with any leveregd products, not something you will want to sit in the long term due to the CONTANGO factor.

Financial industry investors may have a rough road ahead since there is so much uncertainty about the overall health of the industry. BUT, you have a few options to invest in the sector using exchange-traded funds.

PEACE & BLESSINGS
Kenneth Reaves, Ph.D.

Monday, March 20th, 2023
Three (3) Ideas That Will Improve Your Financial Situation

According to a recent Bank of America (BAC) poll, increasing savings and paying off credit cards were among Americans’ top financial New Year’s plans in 2023. Setting financial objectives might be easier said than done.
When people think of budgets, they think of something that’s restricted and makes their lives pretty unpleasant. BUT, becoming more financially savvy can be EASY. Budgeting can be really EASY.

Here are three (3) ideas that will improve your financial situation.

1) Adhere to the 50/35/15 technique
The 50/35/15 technique is one of my favorite ways to budget since it simplifies the process. It just asks you to track three (3) expenditure categories and can assist you in creating a budget you can stick to.
To use this technique, allocate 50% of your income to necessities such as rent and food. Next, set aside 35% for investments, retirement, and debt reduction. desires like dining out with friends. Finally, allocate 15% of your funds to desires like dining out with friends and entertainment.
It is OK to be wrong by a few percentage points when dividing the money. The recommendation can serve as a starting point; you can change the figures based on your lifestyle and the ongoing cost of being "YOU"*.

* Utilize ATWWI: Beginner’s Trader/Investor(s) Webinar
{Episode #133}, February 25th, 2021

Reference Document #1

2) Balance reducing debt and investing
High-interest debt may quickly become unsustainable, and it might be tempting to devote all your funds to reducing it.
Nonetheless, investing for the future is also essential. The earlier you begin investing, the longer your money has to grow and generate compound interest.
It may appear that you must pick between the two, but it is possible to do both. You should begin by paying off loans with high-interest rates. Higher interest rates will cost you more over time, and therefore it is prudent to pay off loans with the highest rates first.

Secondly, you should concentrate on paying off loans with lower interest rates. While low-interest debt is typically less expensive, you can also begin investing in your matching 401(k).

3) Market volatility should not deter you from investing
Statistically speaking, if you plan to retain your ASSets and be a long-term investor for 25-35 years, your chances of losing money are minimal, and your wealth will increase.

PEACE & BLESSINGS
Kenneth Reaves, Ph.D.

Friday, March 17th, 2023
Learn How To Trade The FED

Nothing ranks higher for market momentum than dropping five trillion dollars from the "HEAVENS".
The FED has been controlling the flow of capital for markets since Lehman Brothers kicked off the crash of 2008.
What else would you call owning 25% of American Debt???
There have been very few moments over the last 15 years where the FED hasn’t offered some kind of support.
Each time the FED has come to the rescue, markets have responded with massive "BULL" rallies.

I pay close attention to the eight (8) Federal Open Market Committee (FOMC) meetings and their corresponding minute releases.
I also watch for each speaking engagement by the different FED bank Presidents. Occasionally, you can pick up signals that will make markets
have violent reactions.If you have ever monitored the FED for trade, you know that the first move is usually a "HEAD- FAKE" as the street digests pertinent information. Pay close attention to the minutes and press conference as a shift in "TONE" can set markets loose.

A great resource for tracking the probability of FED Fund Rate increases, is CME group’s FED watch tool found at:
https://www.cmegroup.com/trading/interest-rates/countdown-to-fomc.html

I look for every "EDGE" available to me, and watching the expected targetrate probability from the FED gives me a good clue to overall
market sentiment. If the FED raises rates higher than expected, the market will react negatively, sending prices lower.
It is always "WISE" to keep an eye on this data. Remember, the FED effectively took control of the stock market after the financial crisis of 2008. As a result, the single most significant contributor to price direction in the market is the FED lending rate.

We can expect "NEGATIVE MOMENTUM" to continue under the promise of the FED reducing its balance sheet. I see very few reasons for capital to come off the sideline until the FED reverses course and goes back to cutting rates. At that point, we may see another "BULL" market rivaling 2020 thanks to a phenomenon known as the "BULLWHIP" effect, where "OVERREACTIONS" cause "OVERCORRECTIONS".

PEACE & BLESSINGS
Kenneth Reaves, Ph.D.