Ticker Reports for December 27th
S&P 500 ETFs: Expense Ratios That Can Boost Your Long-Term Gains
The S&P 500 enjoyed an excellent performance trajectory throughout 2024, having returned more than 26% in the year leading to December 27. As a proxy for the broader U.S. economy, this index has demonstrated that the economic environment is strong and continuing to grow, broadly speaking. Of course, this is not to say that all stocks—or certainly even all stocks within the S&P 500—have performed at the same level. Indeed, investors looking for outstanding individual companies over the last year should keep in mind that their benchmark for beating the market is quite high.
Many investors make a wide-ranging S&P 500 ETF or similar product a staple of their portfolio. Funds like the SPDR S&P 500 ETF Trust (NYSEARCA: SPY) or the iShares Core S&P 500 ETF (NYSEARCA: IVV) offer an easy way of accessing the breadth of the index with minimal effort on the part of the individual investor. Whether you include one or more of these funds in your portfolio already or not, though, there may be reasons to consider increasing your portfolio allocation in order to focus more heavily on the S&P.
Winning the Expense Ratio War
Expense ratios—fees that investors pay to ETF managers to cover costs such as portfolio oversight and administration, among other things—make a tremendous difference in the long-term returns of an S&P 500 ETF. SPY, the first-ever ETF and still the largest of all S&P 500 ETFs with more than $632 billion in assets under management as of December 26, 2024, has an expense ratio of 0.09%. The Vanguard S&P 500 ETF (NYSEARCA: VOO), another major player in the space but with a smaller asset base of $583 billion as of the same time, has an expense ratio of 0.03%, or a third of the cost of SPY. It's true that both of these fees are low in comparison to the broader ETF space, but the difference will compound over time for investors buying and holding over an extended period.
Perhaps more importantly, investors should observe that ETF providers have had an incentive to lower their fees on S&P 500 funds as an incentive to draw in additional assets—because the funds track the same index and are often functionally the same, the expense ratio is one of just a few metrics that can sway investors toward one fund or another.
Dollar-Cost Averaging Dominates
Investors with assets already focused on S&P ETFs will nonetheless likely benefit from continuing to contribute toward these investments over time, thanks to dollar-cost averaging. Because the S&P 500 broadly trends higher over time—it reached new records dozens of times in 2024 alone—it's likely that, despite inevitable downturns, it will continue to hit new highs in the future. By investing periodically in S&P 500 funds, even when the index is at or near an all-time high, investors capitalize on the principles of dollar-cost averaging to maximize potential returns going forward.
Investors may look at the recent performance of the S&P 500 and assume that buying into an S&P ETF means buying at the top—typically an investment strategy to be avoided! However, historically, as high as the S&P 500 may be now it is likely only going to go up from here over the long term.
Benefits Over Other Funds
Investors have a host of other ways of accessing the S&P 500, including a growing number of mutual and index funds. However, ETFs often win out based on expense ratio, particularly in comparison with Class C mutual funds, which often have significantly higher expense ratios.
ETFs like the SPDR Portfolio S&P 500 ETF (NYSEARCA: SPLG) may also have an advantage over certain other S&P 500-focused funds because the latter can experience higher degrees of tracking error when the contents of the portfolio of the fund differ somewhat from the index itself and thus yield different results over time. Funds may also be rebalanced at different intervals, potentially contributing to tracking errors or a lack of transparency regarding portfolio content for investors.
The gold trades I'm making right now
Back in November, gold made a tiny move of 1.6%.
But according to my backtesting by using a special type of gold trade, I would have seen a 141% gain in just a week.
It happened again in March. Gold nudged up 1.2%.
This time? A 104% overnight gain.
And in June? A 1% gold move turned into a 74% gain in two weeks.
Granted, there would have been smaller wins and those that did not work out, but you see, there's a reason I'm telling all my friends to hold off from buying gold or regular gold stocks right now.
There's a more lucrative way to play the gold market as we enter a new breakout period.
It's all about catching what I call "Acceleration Cycles."
How AI Implementation Could Help MongoDB Roar Back in 2025
MongoDB: Intuitive and Scalable Database Management
MongoDB operates a database management software. The main differentiator of the software is that it uses a document-oriented data model. This differs from older database systems that use relational data models. They store information in tables. The best way to understand the utility of this is through an example.
An e-commerce company has a strong interest in storing and utilizing the data it has on its customers. They can use the information to give customers personalized product recommendations, potentially boosting sales. However, the data that a company has on each customer can vary widely. One customer might have just made an account and only have their name and birthday entered. Another customer might have made hundreds of purchases, signed up for the rewards program, and submitted a warranty claim.
In a relational model, one table would store personal information, and another would store purchase or warranty data. Aggregating all data about a single customer can be time-consuming and computationally expensive as complexity increases. Additionally, the company must predefine any possible data category it might accumulate. This makes the system rigid and requires system-wide modifications to the database schema that can be disruptive.
In contrast, MongoDB’s system stores all the information on one customer in a single document or profile. This document can store as little or as much information as the company has. Companies can add new categories as they need them for a single customer. This increases efficiency in maintaining the database and makes targeting individual customers easier.
The company’s main offerings are MongoDB Atlas and MongoDB Enterprise Advanced. They do the same things, but MongoDB manages the Atlas system for customers. The other option is for large enterprises. They manage the system themselves, allowing for greater customization. In 2023, the systems accounted for 66% and 26% of total revenue, respectively.
Bad Q1 Guidance Set MongoDB Up For a Tough Rest of the Year
The company’s share price has been crushed after many of its past earnings releases this year. The reaction after its fiscal 2025 Q1 results, reported in May, was particularly adverse. The company saw light consumption on Atlas, causing it to greatly lower its earnings guidance for the entire year. Atlas customers pay more the more they use the system. MongoDB refers to this as consumption, and it directly affects revenue.
MongoDB is trading 52% below its 52-week high that it reached in early February, as of the Dec. 26 close. Most of this has come due to an extreme contraction in its valuation multiple. The company’s forward price-to-earnings (P/E) multiple is down 56% from a peak of nearly 180x. However, it is still trading at an eye-watering 79x.
The Bull Case for a MongoDB Comeback in 2025
One thing that seems to have hurt Mongo in 2024 is businesses directing more spending towards investments in AI, instead of spending at Mongo. However, there has been much made of the lack of truly game-changing AI applications despite the extreme investment. This could start to turn around in 2025. Eventually, if the AI revolution is really going to materialize, AI-powered use cases will need to store and access massive amounts of data.
This is where MongoDB comes in. As AI becomes more widely used, the demand for database software to manage that information must increase. Thus, the transition from AI investment into the application of AI should help Mongo’s business. The company’s management continues to emphasize that its database is well-positioned to support AI workloads.
An important aspect of MongoDB’s long-term growth opportunity is that nearly every industry uses its service. This gives the company the ability to take advantage of the proliferation of AI applications across the entire economy. The total addressable market is thus massive if the belief is that AI will transform every part of the economy.
$2 Trillion Disappears Because of Fed's Secretive New Move
$2 trillion has disappeared from the US government's books.
The reason why is a new, secretive move being carried out by the Fed that has nothing to do with lowering or raising interest rates... but could soon have an enormous impact on your wealth.
Hedge Funds Boost Oil Positions: Is a Major Rally on the Horizon?
This way, instead of blindly following a hedge fund manager or a mega investor, there is a chance to know more in-depth reasons why something might be a buy or a sell, which is especially important when considering exiting a position. That is why today’s hedge fund buying activity in the energy sector, particularly for oil, is important to keep in mind not by itself but by connecting this buying preference to the price action in other markets as a whole.
To keep track of the overall sector, apart from oil prices, investors can look at the broader Energy Select Sector SPDR Fund (NYSEARCA: XLE); this way, they can have a gauge of oil stocks and what the sentiment shifts might be. To follow oil to the letter, that’s where the United States Oil Fund LP (NYSEARCA: USO) also comes into play. However, for those looking for a specific upside in the value chain, names like Occidental Petroleum Co. (NYSE: OXY) and Hess Co. (NYSE: HES) are ones to think about.
What Hedge Funds Noticed From ETF Price Action
Markets today are as interconnected as ever, and the days of individual price action are long gone. This means that more and more hedge funds not involved in quantum computing or artificial intelligence are focusing on trading correlation regimes by connecting the dots to different themes.
What this means is that, for example, as bond prices fall and their yields go up, there is now a positive correlation to oil prices on the downside. That shouldn’t be the case, as higher yields typically signal higher inflation expectations, which should, in theory, be good for oil prices.
Well, these hedge funds don’t just rely on theory; they’ve bought in practice. According to this Bloomberg report, hedge funds boosted their WTI positions to 161,201 lots, meaning that they are starting to acquire net long futures inventory today.
Even producers like Hess and Occidental are doing so, as shown in the commitment of traders report. Merchants want to buy oil today to protect themselves against a surge in prices, which might eat into their profits if they can’t refine and deliver the raw material quickly enough.
This is why Warren Buffett has recently bought up to 29% of Occidental and why Wall Street analysts have a consensus price target of $62.1 a share on the company, calling for a net upside of 29.2% from where it trades today. More than that, those at Mizuho were willing to stand out from the pack.
As of December 2024, these analysts valued Occidental Petroleum stock at $70, implying an even larger rally of 45.5% from today’s levels.
More Ways to Tap Into Upside
Occidental Petroleum is one way to pay the new value run that will come into oil stocks, but it’s not the only one. Hess has gotten bearish traders to back off a bit from shorting the stock over the past month, a trend investors can see through the 9.6% decline in the company’s short interest.
More than this sign of bearish capitulation, investors can look at the new December 2024 ratings on Hess stock from Wells Fargo analysts.
With an overweight rating now, valuations are expected to fall closer to $193 a share for Hess stock, which would mean a net upside of as much as 47.8% from today’s stock price.
With this in mind, investors shouldn’t be surprised to see those from FFG Partners boost their holdings in the United States Oil fund by up to 2.2% as of December 2024, bringing their net position to a high of $5.3 million today.
The same can be said for Hamilton Capital's 5.7% boost in the broader energy ETF as of November 2024, which now holds a $297.5 million stake. All told, these hedge funds and merchants have made the right decision by accumulating oil positions ahead of a potential rotation from bonds.
This is a thesis that retail investors can adopt today and understand that when the same relationship with bonds flips, it is likely time to exit and take their profits home.
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