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What about the Bond Market?

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By John De Goey, CFP, CIM

(Special to the Financial Independence Hub)

Over the past several months, much has been said about the stock market, and for good reason.  What can be lost in the shuffle is what has been going on concurrently in the bond market.  It’s at least as bad. Therefore, if you’re worried about stock valuations, you should probably be really, really worried about bond valuations.  There are, in my view, a lot of borderline reckless income ‘investors’ out there who hold bonds simply because of industry dogma.  Bullshift applies to bonds, too.

Some observers fear inflationary pressure on the horizon.  I’m less convinced, but still, real yields have moved higher due to both an improved growth outlook and additional expected fiscal stimulus.  Today, many people seem comfortable in referring to the environment as the ‘end of the bull market’ in bonds.  The obvious next question is: ‘does that mean we are at the beginning of a bear market in bonds?’.  To me, this is a distinct possibility.

After 40 years, interest rates can’t go much lower

For nearly 40 years, interest rates have been dropping throughout the western world.  Now, we’re at the point where, as a practical matter, they can’t really go lower.  We’re also at a point where, policy guidance from central bankers notwithstanding, rates might have to rise sooner than we thought if the inflationary pressure some expect begins to materialize. Continue Reading…

A discussion about Value and Small-cap Factors with Avantis Investors’ CIO Dr. Eduardo Repetto

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Avantis Investors’ CIO Dr. Eduardo Repetto (Link to YouTube clip is in text below)

Over the years, I’ve encountered several financial advisors who liked to use the mutual funds of Dimensional Fund Advisors or DFA, which was founded by alumni of the University of Chicago and based on research on the long-term return premiums offered by small-cap and Value stocks around the world. Even today I own a DFA International Equity fund that was a legacy of my time with a fee-only advisor: that’s generally the requirement for accessing DFA funds.

So I was intrigued when certified financial planner Mike Bayer [CFP, CIM, FCSI) asked me to help him interview two senior executives of Avantis Investors (a unit of American Century Investments) which for the past 18 months has been marketing Avantis ETFs, which take a similar approach with small-cap and value factors and are more accessible to do-it-yourself investors who can buy the ETFs at discount brokerages, just like any other ETF.

Regular readers of the MoneySense ETF All-Stars may recognize the name Avantis. As you can see here, the Avantis US Small Cap ETF [AVUV] was a Desert Island pick of PWL Capital’s Ben Felix and Cameron Passmore. We are about to publish the 2021 edition and as mentioned in the video interview also linked below, that pick is back along with another Avantis selection, which you can learn by watching the video.  In addition, Felix has just released a 15-minute video covering Avantis: https://youtu.be/jKWbW7Wgm0w

In the end, possibly influenced by the arrival of Avantis, DFA itself brought out three of its own ETFs: https://us.dimensional.com/etfs

Bios

Dr. Eduardo Repetto is Chief Investment Officer of Avantis Investors. Previously he was Co-Chief Executive Officer and Co-Chief Investment Officer of Dimensional Fund Advisors. He earned a Ph.D. degree in Aeronautics from the California Institute of Technology, an MSc degree in Engineering from Brown University, and a Diploma de Honor in Civil Engineering from the Universidad de Buenos Aires.

Phil McInnis is also a DFA alumnus, where he was Head of Portfolio Solutions. Today he is director of investments at Avantis Investors®, responsible for marketing content development surrounding Avantis’ investment approach.

Mike Bayer, CFP, CIM, FCSI, is a Toronto-based financial planner with Strategic Analysis Capital Management and blogger at Free Speech Media.

Highlights from the transcript

So without further ado, here is a link to the full interview, which runs almost an hour. However, you can click on a “transcript” link within YouTube, for those who prefer reading and skimming. Below are some highlights:

Continue Reading…

How to stay safe while trading Cryptocurrencies

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Collection from different coins of crypto currency: ethereum, litecoin, bitcoin, monero, ripple.

By Emily Roberts

For the Financial Independence Hub

When you’re doing any kind of business online, we don’t need to tell you that security is paramount. While the security measures that software creators and the makers of our computers, tablets and phones are getting more sophisticated with each passing day, the techniques and scams used by cybercriminals are only matching them every step of the way.

Over the course of the last twelve months, we have all had to be even more careful as the crooks have taken advantage of the fact that people all over the world have had to conduct all their business online, and the cybercrime figures have skyrocketed.

Trading cryptocurrency is just like any other online activity involving money: you need to be extremely careful about the security measures you’re taking and any potential risks that you’re incurring. Here are a few tips to help you stay safe:

Make sure you have a Cold Wallet

If you are just getting into trading crypto then you may not be familiar with the phrases “hot wallet” or “cold wallet.” Simply put, a cold wallet is a place where you can store your currency offline, such as a drive or USB that you can disconnect. We do understand that this may seem like a slight case of overkill if you’re confident in the security measures installed on your device, but it’s always better to be safe than sorry, isn’t it?

Make sure you research and double check your leads

Things can move awfully fast in crypto, and just as in any other online trading, it can be tempting to jump on what seems like a good thing before anyone else gets there. However, you need to remember that this is an incredibly volatile market and if something seems like it’s too good to be true, then it may well be. Continue Reading…

Investing in Bitcoin is a no-brainer

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By Dale Roberts, Cutthecrapinvesting

Special to the Financial Independence Hub

In the Fall of 2020 I initiated a position in bitcoin by way of a closed end fund from 3iQ Digital Asset Management. The initial purchase created a 2.5% portfolio weighting. The explosive price increase quickly took me above my target of a 5% portfolio weighting. I am embracing bitcoin as a core portfolio asset. It is one of the portfolio risk managers. This post will demonstrate why investing in bitcoin is a no-brainer.

To my eye, bitcoin is digital gold. It is a store of value. What makes bitcoin a store of value is due to the fact that it is a currency (digital) and it is scarce. There are only 18,500,000 million coins in circulation (it’s less than that as a few million coins were lost due to owners losing their keys) and the total creation of bitcoin will be capped at 21,000,000 coins. It is the opposite of inflationary.

It is scarce and it will be finite in supply.

Many will say that it is “the hardest currency on earth.”

On the flipside, central banks around the world are printing and borrowing monies at a historic rate. Those fiat currencies will be devalued. This also creates the threat of inflation.

What is bitcoin?

For the go-to post that will help you on your journey to understanding bitcoin, please have a read of should you invest in cryptocurrency?

That post was the result of hundreds of hours of research. In the process I consulted with individuals and firms that had put in thousands of hours of research and due diligence.

One such individual is Arthur Salzer, the CEO of Northland Wealth Management. Northland was the recent winner in North America in the category of Best Family Office Under $2 billion.

A family office firm will manage and protect the wealth of more affluent families. They will typically embrace the same style and financial management techniques employed by pension funds, sovereign wealth funds and endowments such as Yale and Harvard. ​

Protect and grow assets over generations

Given that generational goal I was more than surprised to know that Northland was using bitcoin as a core portfolio asset even more than two years ago. They were early adopters to say the least. And that confidence in bitcoin as a portfolio asset was the result of extensive due diligence.

Clients have benefitted tremendously.

According to a new generation in the financial industry, unless something gets in the way, crypto is on the path to even greater credibility and increased adoption. We’re at the foothills of this long trend of financialization and institutional adoption.

I asked Arthur Salzer of Northland Wealth Management to describe his extensive bitcoin educational journey, and why he has the confidence to use bitcoin as a portfolio asset for Northland family clients.

From Arthur …

The bitcoin journey

Of all my 30 years of professional experience, researching and investing in asset classes such as real estate, stocks, distressed debt, hedge funds and private equity, my journey and due diligence into Bitcoin has been the most interesting. What I discovered was that there are many facets to Bitcoin – as money, as an asset class, as a technology, as a digital payment system, as a store of value, as speech, a belief system, and potentially as a new form of life. Bitcoin are all of these and so much more.

My first exposure bitcoin was in May 2017 and I had just finished a TV interview at the SALT Conference (the world’s largest hedge fund conference) held at the Bellagio in Las Vegas. Two of the staff approached me and asked, “What do you think about bitcoin? We are thinking about buying some.” At the time, the price of BTC was in the US$2,000 range, but there were some eerie parallels with the dot-com bubble around the turn of the century.

I told them, “While I have not invested any of my own or client capital into this sector, some of my friends who have been in since the $100 range, have been selling on a regular basis to reduce the position size recently. I can’t give you more advice than that.” As an investor it’s imperative that you do your own research and as a professional investor, to only comment on what you really know. And at that point in time, I knew I didn’t know about bitcoin.

The turning point

Fast forward to 2021, (and thousands of hours or research later) despite bitcoin’s headline-worthy returns and volatility, many investors still don’t understand it, especially when it comes to valuing it. Many in the financial industry, including Warren Buffett, focus on intrinsic value: an economic good produces cash flow or has overt utility such as stocks, bonds, real estate and consumable commodities. But bitcoin has monetary value, which exists despite an economic good not having intrinsic value. Monetary value usually arises from objects that are scarce, durable and relatively easy to divide.

Since the dawn of civilization, societies have used rare seashells, wampum, glass beads and stones as money or a form of record keeping. Gold is an ideal example since it can be made into jewelry, coins and bars, but bitcoin is unique in today’s digital world since it is scarce, durable, has strong privacy characteristics.

Bitcoin momentum and adoption

Elsewhere, Fidelity Digital Assets, a subsidiary of the namesake giant U.S.-based asset manager that oversees and manages in excess of US $5 trillion in assets, is offering a trading and custody platform for bitcoin. It has also had bitcoin mining operations since 2014, and the Fidelity Center for Applied Technology is a customer of Victoria-based Blockstream, which mines bitcoin in Quebec and Georgia. Not to be outdone, Microsoft is taking advantage of the Bitcoin system’s trust-minimized features and security and building a decentralized identity platform aptly named Identity Overlay Network. Continue Reading…

A complete B2B SEO strategy for 2021

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Photo courtesy of Pixabay.com

By Mike Khorev

Special to the Financial Independence Hub

What exactly is B2B SEO?

B2B SEO strategy comprises digital marketing tactics that aim to help B2B [Business To Business] websites to rank high for certain keywords and terms in search engines like Bing and Google. Unlike optimization for B2C [Business To Consumer], B2B optimization strategies focus on phrases and terms that key decision-makers in a company actively search for at work. This can include managers, team leads, CEOs, CTO, etc.

Why Does It Matter in 2021?

B2B SEO matters in 2021 because it’s the only form of marketing that yields compounded traffic over time coupled with long-term results. 

Here’s why: Any page holding top 10 rankings in Google carries an average age of over 2 years. It’s hard to think of any other distribution and marketing channel that can generate traffic for multiple years.

Here’s another reason: Over 53% of all website traffic across different industries is organic. For the B2B industry, the figures are even promising. Organic searches generate twice the revenue than social media or email marketing for B2B businesses. 

How B2B SEO actually works

At the heart of B2B SEO lies keyword research and understanding customer problems. After that, you have to understand 3 different parts of SEO for B2B industries: 

  • The first one is on-page SEO, which includes optimization of the site page with useful content. It also includes adding headings, title tags, meta descriptions, URLs, alt text, etc.
  • Off-page SEO focuses on link building and securing website authority.
  • Technical SEO helps with the crawling and indexing of a site by search engines. It works on the architecture of the website.

B2B SEO Strategy in 2021

Proper Keyword Research

At this point, you have to figure different queries across different stages of the sales process that people at managerial positions are using to search for similar businesses like yours. 

To get help with keyword research, you can use SEMrush. It will give you information about your target buyer persona and what kind of keywords they are using to find solutions to their pain points.

You must work on finding the most important keywords that align perfectly with different phases of a sales funnel.

In case you have trouble finding the right set of keywords to act as a starting point for your B2B research, asking these questions might help you: 

  • What problems are my target personas facing?
  • Where are they looking for the solution to their pain points?
  • How can you come up with a viable solution?
  • What are the key features of your service/product?
  • Which keywords are your competitors for organic traffic generation?

Find Top-of-the-Funnel Topics

The top-of-the-funnel topics are the most general topics that a broad range of users are searching for. As you reach the narrow end of the sales funnel, the range of topics also keeps getting smaller and narrower.

If you’re doing B2B digital marketing, it’s important that you strategically pick and write about the top of the funnel topics. These topics and keywords get several-fold search traffic than the bottom-of-the-funnel topics. If you write about the latter your outreach will be limited. Continue Reading…