Proprietary Data Insights
Financial Pros Top Lumber And Wood Production Searches This Month
Ever since we started staying at home in March 2020, lumber prices have been on a wild ride.
On Monday, lumber hit $780 per thousand board feet, a roughly 6% decline. So far this year lumber is off 30%.
One possible reason – decreasing demand on the homebuilding front.
With the rate on a 30-year mortgage firmly over 5%, your monthly payment on a new home is approximately $1,000 higher (or more) than it was at the beginning of the year. When rates eclipsed 5% home builders across the country immediately started seeing a demand slowdown with home buyers hitting pause, primarily in response to affordability and loan qualification issues.
Boise Cascade Doesn’t Seem Worried
When we dug into our proprietary Trackstar data, which shows the stocks financial pros are searching for, Boise Cascade (BCC) appeared as a company with meaningful exposure to the lumber market. BCC generates a significant amount of revenue through its Wood Products segment, which includes lumber.
Sales in that segment increased 29% year-over-year, as of Q1/2022.
As for demand, the company doesn’t seem concerned. We dug into the BCC’s earnings call from last week and executives stressed that demand remains strong. In fact, they were almost adamant about it. Either it’s real or they’re trying to convince themselves.
As for the stock, it’s actually up about 10% YTD. Boise Cascade currently pays a $0.16 quarterly dividend and, in what you might call a show of confidence, issued a $2.50 per share supplemental dividend to shareholders on the books as of June 1, 2022.
Cryptocurrency and Meme Stocks
Some Investors Are Sitting On Massive Losses
That’s the bottom line first.
In today’s edition of The Juice, we use a couple cautionary tales to illustrate the best way – practically and psychologically – to make speculative investing part of your portfolio.
Two Sides Of A Bitcoin
Source: Google Finance
That’s an ugly chart.
And it helps illustrate the reality that, according to Glassnode, roughly 40% of Bitcoin investors are underwater on their investment.
Of course, not every Bitcoin trader or investor is in this unfortunate situation. Even on the basis of that chart. If you bought in, say, mid-July of last year and sold in early November, you more than doubled your money.
You can come up with endless scenarios to color the other, profitable side of Bitcoin. Including this one, which just so happens to be an old investing adage – buy and hold.
Source: Google Finance
If you’re a long-term Bitcoin bull, you’re still sitting pretty, amid the recent carnage and even if you haven’t sold.
More on that in a minute.
The Meme Stock Crash
Source: Google Finance
Despite this recent Bloomberg headline, fed by a Morgan Stanley data analysis, there’s probably no way to know for sure just how much traders who entered the market in 2020 are up or down over the last two years.
As with Bitcoin, it comes down to timing and individual context and choices.
That said, it’s safe to say some of these relative novices, led by the stocks only go up mantra, are feeling a world of hurt today.
The Investing Lessons
No loyalty. When you buy a stock or crypto, you don’t take a in sickness or health, for better or worse oath. No matter how loud the self-proclaimed millionaires on Reddit or Twitter yell HODL!
Avoid emotional trading and investing. Treat stocks and crypto like numbers, particularly if you’re getting too attached. As in, you refuse to sell because of loyalty or an us versus them attitude.
Take profits. To that end, there’s never anything wrong with taking profits when you have them. As we’re seeing they can disappear in an instant.
There’s a fine line between buying and holding because you truly believe in something (see the five-year BTC chart) and overstaying your welcome on the basis of overconfidence, emotion, FOMO, and noise from the crowd.
Diversify. You might consider Bitcoin a long-term investment. And that’s fine. However, you can still take profits and spread your long-term money across a wide range of assets, even if that simply means different types of stocks to you.
Only speculate with money you can afford to lose. Even then, avoid gambling. Make educated guesses (at the very least), not long shots in the dark.
The Bottom Line: We’re living through wild times.
If the last two years taught us anything – and they certainly have – it’s to expect the unexpected. This means, at the same time as you invest aggressively, position yourself defensively in other segments of your portfolio.
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