Is This Asset Class Crypto's Next Big Frontier? 📊

What’s on the Menu 🍴

Happy U.S. Labor Day! While you're flipping burgers and soaking up those final rays of summer sun, don't forget—fall is upon us, and it's more than just Pumpkin Spice Latte season.

For investors, autumn is often a rollercoaster of market volatility, as traders return from vacation and companies prep to release their Q3 earnings reports.

So as the leaves change colors, maybe it's time for you to think about rebalancing that portfolio or finally diving into that investment opportunity you've been eyeing.

Stay tuned, 'cause we've got the lowdown on how to grow your dough this fall.

• Is This Asset Class Crypto's Next Big Frontier? 📊

• Stocks That Could Feast This Fall 🍂

• The S&P 500 Keeps Defying Gravity 🚀

• Why Growing Your First $100k Is The Hardest 💰

Today’s newsletter is a 6 minute read.

Is This Asset Class Crypto's Next Big Frontier? 📊

If you've been around the crypto block, you know that every market cycle has its own narrative that fuels those juicy price booms.

Remember ICO’s, NFT’s, and DeFi?

Well, we think the next big wave could very well be driven by tokenizing Real-World Assets (RWAs).

Sure, this isn't a brand-new concept; back in 2016, the buzz was all about Security Token Offerings (STOs).

But let me tell you, the steam for tokenizing RWAs is heating up faster than a kettle on a winter morning.

According to Boston Consulting Group, the global market for tokenized RWAs is set to soar to a staggering $16 trillion by 2030.

That's not just hot air; we're talking about tangible assets like real estate, fine art, and commodities getting a blockchain makeover.

So, why should you be all ears? Here's the rundown:

1. 24/7 Trading: Who needs sleep when you can trade all day, every day?

2. Reduced Costs: Cut out the middleman and keep more of your hard-earned cash.

3. Global Accessibility: The world is your investment playground, no passport required.

4. Enhanced Transparency: With blockchain, it's like having a security guard for your investments.

5. New Investment Avenues: Get a slice of that Monet or a stake in a skyscraper.

6. Democratization of Investing: Unlike investing in startups, you don't need to be a millionaire to join this party.

7. Financial Innovation: From exotic derivatives to new lending models, innovation is the name of the game.

8. Unlocking Trillions in Value: We're talking about a whole new frontier in the crypto universe.

But let's not get carried away. There are risks, like regulatory curveballs and the ever-present security concerns tied to blockchain. And while tokenization promises better liquidity, it's not a one-size-fits-all solution.

Here are a few charts in the space we’re watching closely when the next altcoin bull market starts:

MKR: The Swiss Army knife of tokens - utility, governance, and recapitalization all in one package for the Maker Protocol.

SNX: Synthetix is paving the way for crafting and trading your favorite synthetic assets on Ethereum's grand stage.

In a nutshell, if you're looking to diversify and get ahead of the curve, RWAs could be your next big move.

And we’re on the hunt to find some massive gainers in the RWA space!

Stocks That Could Feast This Fall

We’re always on the hunt for the next hot themes in the stock market.

So far this year we’ve scored big gains with comeback stocks like META and NFLX, technical short squeezes like CVNA, and structural reversals in crypto via GBTC.

If you missed these opportunities don’t fret! We missed the epic bull run in NVDA this year ourselves.

And remember: there’s always a bull market ahead in something else.

What areas of the market could get investors excited later this year and into early 2024?

Here are a few sectors we’re currently digging into that could start cooking:

Cannabis Stocks

This is one of the most beaten up sectors in the entire stock market. Most cannabis stocks & ETFs are down 50-90% since 2021 despite more states & countries decriminalizing cannabis.

It’s been a tough slog for producers and dispensaries lately as black markets, slow progress on federal deregulation, high taxes, and competition have eroded profits.

But there are finally some bright spots on the horizon.

The Department of Health & Human Services in the US government just recommended that the DEA reclassify cannabis to a much less severe category under federal law.

If the DEA obliges, this could reduce taxes drastically for cannabis based businesses which are currently not allowed to deduct most business expenses due to federal drug laws.

In addition, there’s optimism that the US congress could finally pass the SAFE banking laws this fall, opening up traditional banking & credit relationships for cannabis businesses.

While cannabis stocks rallied 20-50% this past week, these major regulatory catalysts have not fully played out yet and there could be more upside ahead if these continue to progress.

Uranium

We wrote about the uranium theme here in Daily Dough a couple weeks back.

We’re still seeing spot uranium prices tick up slowly, and over the weekend another HUGE piece of industry news dropped:

Cameco, the largest North American producer of uranium, announced that their annual production volume will be significantly less than forecasted in 2023:

Will the lack of supply and rising demand from financial buyers such as Sprott & Zuri kick off a parabolic rise in prices?

We’ll be watching this closely in coming weeks!

Solar & Alternative Energy

The solar sector has gotten hammered so far this year due to rising interest rates and cost inflation. Here’s the year-to-date performance of the Invesco Solar ETF (ticker: TAN):

While higher rates make it harder to finance large solar projects, futures markets are predicting rate cuts next year.

And more importantly, there’s a big tailwind that’s just starting to kick in which will help US solar companies: huge subsidies & credits from the Inflation Reduction Act.

Many of the credits will go to consumers and utilities who buy new systems, but domestic manufacturers of solar equipment will also receive massive subsidies themselves.

Some of these subsidies run until 2032 and will be a significant earnings boost for a handful of companies in the sector that we believe is still under-appreciated.

On top of that the sector still sees huge volume growth ahead in regions outside the US including India, China, and the Middle East.

With valuations in the sector now back down to reasonable levels, we think now could be the time to start dipping a toe in the water.

Our resident stock geek Travis will be doing a stock pitch on a solar company this coming Friday in fact. Tune in to the Twitter Space if you want to hear more!

Cannabis, uranium, and solar might not be on your average investor’s menu right now, but we think they have potential to be juicy return drivers in the coming months.

We’ll keep dishing on all the rising areas of the market here at the Daily Dough this fall!

Why The S&P 500 Keeps Defying Gravity 🚀

It’s been a busy year for investors trying to put capital to work in the stock market.

We have been balancing incorrect economic predictions, a strong labor market, and high interest rates.

The prediction among most professionals has been for a big “stock market crash” as interest rate policies do their “damage”.

Under normal circumstances, this would be a reasonable expectation: Wait for high rates to hurt risk assets, and deploy capital when risk assets sell off for a better deal/valuation.

Unfortunately though, the stock market measured by the S&P 500 is not cooperating for hopeful bears and capital allocators looking for value.

We wrote about the main levels to watch in this S&P 500 corrections a few weeks back.

We’ve seen price as anticipated, bounce off of the very important $4,330 zone.

Unfortunately, this bounce off of $4,330 has been quite stronger than expected.

Investors are now wondering what to do as we sit just shy of 6% from the all-time-high.

We know that the Fed is staying data dependent, and not making any promises on interest rate directions after a key speech at Jackson Hole.

The stock market did react positively last week on slowing jobs data and an employment rate that ticked up (the labor participation rate increased, which played a part in this).

You might be wondering why the stock market would rally on weakening data?

It’s simple: The stock market is counting on the weak data to lead to interest rate decreases (aka: the Fed pivot).

We also know that the stock market is typically forward looking.

It’s not pricing on what’s happening today, it’s pricing on what it thinks will happen in the future.

An important data point to add into the mix is forward earnings exceptions.

This has felt like it’s been constantly ignored, but, earnings expectations are calling for robust growth in 2024.

Yardeni posts its own earnings estimates (250.00 for 2024) and consensus estimates (247.09 for 2024).

This could explain why the S&P 500 just won’t give us the correction we’re all looking for.

In fact, if 250 is the earnings produced in 2024, that’d put today’s S&P 500 valuation at an 18x forward price-to-earnings ratio.

This isn’t cheap, but, it’s not expensive either.

The 5 year average is 18.7x (granted, interest rates were low during most of the past 5 years).

The main takeaway here is, if the market is forward looking, and earnings do improve in 2024, the market might not “crash” after all.

If growth isn’t robust as expected, the stock market could still float higher as the Fed becomes forced to lower interest rates.

Lower interest rates could spur an incredible amount of economic activity in the housing market.

So all in all, bears sort of have both sides going against them if you think about it this way.

Why Growing Your First $100k Is The Hardest 💰

In this week’s video, we'll answer the question: "Why is your first $100,000 the hardest to get or build up?"

And we explore how to get there, and what to do once you invest beyond your first $100k.

Delicious Bites 😋

• U.S. housing price changes over time

• A demographic trend to watch

• Why diamond prices are in a freefall

• The most wanted woman in crypto

• Signs of a bottom? Interest in crypto at 5 year low

Food For Thought 🧠

"Complexity is your enemy.
Any fool can make something complicated.
It is hard to keep things simple.”
- Richard Branson

DISCLAIMER: We are not investment advisors, and this content is for educational purposes only. We don’t offer financial, legal, or tax advice. Nothing we say is a recommendation to buy or sell any assets. Trading and investing are extremely risky, so please be careful and do your own research.