Update - January 26, 2021

The Big Opportunity When Rates Rise

Is it a coincidence that stocks dipped when interest rates rose last week?

Of course not.

And the more you understand the import of that idea, the more money you stand to make in this stimulus-fueled market.

I hosted our monthly video update for Codebreaker Profits subscribers last week. (Alpha Money Flow subscribers… your video goes live tomorrow!) I spent a good part of our time together discussing the latest moves from the oh-so-crucial 10-year Treasury.

At the time, rates were jumping higher and investors were getting spooked.

But I posed a question.

Is it really any warmer when the temperature rises from half a degree to 1 degree?

Is it really twice as warm?

No… of course not.

It’s still quite cold – even if you use that whacky Celsius scale.

It’s the long-term warming or cooling trend that we must keep an eye on.

If rates keep rising, then we must pay attention. Our MAP theory tells us to adjust our allocations as rates rise.

But there’s no threat of that… not anytime soon.

The Death of Interest Rates

It’s been less than a week since rates climbed above the 1% level, and already they’re looking to retreat back below it.

This clearly isn’t the start of a run toward higher rates.

That means two things.

First, it means our current MAP allocation (aimed at negative real rates) remains spot-on. It means we must invest aggressively and look for plays that take advantage of cheap debt and free-money stimulus.

Second, it means you have a tremendous opportunity to buy stocks on any dips. We’re likely to see them over the next few weeks. Treat each of them as a chance to add to your positions.

All of our positions remain worthy of your money. It is especially true as we head deeper into earnings season.

Once again, we’re about to see the massive effects of all of that free money the Fed and its international brethren have printed up.

Mid-February is going to be a very active time for our portfolio.

Scotts Miracle-Gro (SMG) is expected to announce its latest earnings next Wednesday morning.

Avalara (AVLR) will open its books on February 10. So will CME Group (CME).

Fiserv (FISV) will announce the day before. I’m particularly excited to see what this company has to say. It’s a leader in a very hot space.

10x Genomics (TXG) is set to reveal its numbers on February 16.

KBR (KBR) – a big recipient of stimulus dollars – will update us on the 18th.

And, the stock with perhaps the biggest potential of them all, Alarm.com (ALRM) finishes the month off on February 23.

I don’t yet have a specific date for Afterpay (ASX.APT), but I expect its figures during the first week of March.

The buy now, pay later stock continues to take full advantage of this zero interest rate world. We’re already up 60% since we bought our shares in December.

Finally, Scott’s Miracle-Grow continues to be strong fertilizer for our portfolio. Yesterday, the company announced another $0.62 per share quarterly dividend.

Since we’re already up nearly 90% on the play, the yield equates to a healthy 2% of our original cost. And don’t forget the company has pledged to purchase another $750 million worth of its own shares in coming months.

Indeed… a keen understanding of interest rates and their role in the market is treating us very well.

Enjoy the gains.