Author Archives: Martin Dorman

Fiat Currency Definition, Bubble, and why it is destined to fail?

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Fiat Currency

Fiat Currency: Instruments of Mass Destruction

We are entering a new paradigm; get used to forever QE, though it will be given other names along the journey to make it appear more palatable. The US and by default worldwide debt is set to soar to preposterous levels; if a national debt of almost $22 trillion is shocking to some; imagine how they will feel when the debt soars to $100 trillion.  Market Update Feb 28, 2019

If you shook your head vigorously when you read the above statement,  print it and put it somewhere, you can easily access and then review it a few years from today.  You will be unpleasantly surprised to see how much the situation has changed; the masses are not paying any attention to the national debt.

Central bankers have become very adept at deflating a nation’s currency while maintaining the illusion all is well. This is achieved by subsidising key industries, using a basket of goods that (and the sectors these goods originate from are usually the one’s receiving massive subsidies) paint a false picture regarding inflation and most importantly, they control the media.    Let’s briefly look at some of these subjects today.

The press and the crowd effect

Any student of history can spot a pattern that goes back to ancient times; the powers that be knew that the key to controlling the masses was to control the news outlets. In the old days that meant having control of the gossipers, as time passed on, the name gossiper was replaced with the term reporter.  Today’s reporters are only concerned with the number of eyeballs they can attract to a given story; it does not help that the people that hire them also encourage this behaviour.  The press is the most potent weapon available; it can destroy a person even if he is 100% innocent. Mass media’s sole function is to manipulate the masses; think about it mass media is not for the observer or for the critical thinker; it’s for cows who are begging to be led to the slaughterhouse, hence the term mass media. If you want to have a good idea of what is really going on; you will read several sources that are not widely referenced by the masses and then use that (collective) data to paint a picture.

Elias Canetti’s view on crowd behaviour is spot on:

It is only in a crowd that man can become free of this fear of being touched. That is the only situation in which the fear changes into its opposite. The crowd he needs is the dense crowd, in which body is pressed to body; a crowd, too, whose psychical constitution is also dense, or compact, so that he no longer notices who it is that presses against him. As soon as a man has surrendered himself to the crowd, he ceases to fear its touch.

That is the mass mindset for you, individuals feel great when they all share a common theme and a so-called common goal, but nature clearly states that everyone cannot win and that there has to be a loser or losers for every winner as it depends on how much the winner takes home. 10 losers might be needed to fund one big winner.  Teamwork never pays off except for the person that is pushing the concept of teamwork.  Misery loves company; how rare it is to find a group that is happily sharing positive stories; bragging does not constitute a positive development, in fact, it is usually a sign of mental instability.

Subsidising goods

The idea here is to keep critical products at prices that appear to be reasonable. If essential items become too expensive to purchase, the crowd will scream. However, if they have access to reasonably priced education via public schools and colleges, access to affordable food and other basic necessities, then one can create the illusion that inflation is not an issue. So when we state that inflation is a non-event, we are using the Fed’s distorted figures to make this point. In reality, inflation is a massive problem. Just look at the cost of housing, which includes buying or renting, one can easily see that inflation is an enormous problem. Another area is medicine; anyone with a brain can see that inflation in the medical sector is alive and thriving.

Getting the mass to believe old newspapers (your paper money) is real money

In this area, they have been incredibly successful; very few of today’s young generation even understands the concept of hard cash or what constitutes real money. They assume fiat is real and they are now embracing digital forms of fiat such as Bitcoin.   This means that the central bankers are now in a position to inflate the money supply beyond the wildest dreams of their predecessors.  There will be a day of reckoning but those waiting for that day will probably see their day of reckoning first. Until the masses start to doubt Fiat money, nothing will change; the masses are showing no signs of resisting Fiat. So no matter what the hard money expert’s spout, their knowledge is useless for nothing will happen until the masses reject Fiat.  Just like the stock market is unlikely to crash until the Masses embrace this bull market.

Emotions govern everything, and if you can identify the emotion driving the masses, you can profit from almost any situation.

Central bankers have suddenly changed their chant

What is remarkable is the speed at which central bankers changed their tune and how equally fast and without question, the masses accepted this change.

Nobody is objecting to QE, 10 years ago, they made a big noise, but now the populace at large believes it is a necessity.  Let’s start off with the quote we posted by Clarida in the last update, for it clearly tells us that the Fed is not going to stop supporting the stock market, but in fact, it will take even more drastic measures to help the markets in the future. Let the contents slowly sink in, and you will understand why Central bankers will not stop deflating the currency until the masses scream bloody murder and by then it will be too late.

Clarida acknowledged no doubts. He said that radical monetary policy has worked, that it will continue to work, and that it may well become more radical. He contended that low-interest rates are here to stay and that new policy “tools” must be sharpened and kept at the ready.

U.S. inflation forecasts decline, supporting rate-hike holiday

The survey of consumer expectations, published on Monday, is one of the Fed’s price gauges as it weighs the need for rate rises. It showed one- and three-year ahead inflation expectations were down 0.2 percentage points to 2.8 percent last month, with sharp declines in expected medical care expenses. Both the one- and three-year gauges had been roughly unchanged since April 2018.

Stable and low inflation is one of the main reasons that the U.S. central bank, having raised interest rates four times last year, is now taking a wait-and-see approach to any more tightening in 2019.

The New York Fed’s survey found that consumers expected tame inflation despite also forecasting their own wages would rise. Average one-year earnings growth expectations increased to 2.5 percent last month, from 2.4 percent the month before. Consumers also forecast a lower likelihood that unemployment will rise. Economists are debating whether rising wages and low unemployment figures still translate into higher inflation as orthodox economic theory assumes. Full Story

ECB holds interest rates steady to curb Eurozone slowdown

Policymakers at the European Central Bank on Thursday announced a new round of cheap loans to banks and said record low-interest rates would remain unchanged “at least through the end of 2019.”

Previously, the bank had indicated that the earliest rate hike would come in the fall. The measures aim to allay fears of a eurozone slowdown spurred by uncertainty over Brexit, a US-China trade war, and threats by Washington to impose tariffs on European auto imports.

“We’re coming out of, and maybe we still are in a period of, continued weakness and pervasive uncertainty,” ECB chief Mario Draghi told reporters in Frankfurt.

“Our decisions certainly increase the resilience of the eurozone economy,” he added. “But can they address the factors that are weighing on the economy in the rest of the word? They cannot.”

Carsten Brzeski, the chief economist at the bank ING Germany, said the measures came surprisingly early.

“It is clearly an attempt to stay ahead of the curve,” he said. “Any next step from here to tackle a severe downswing of the economy would now require unprecedented measure. Full Story

 Global economy: Why central bankers blinked

The wariness descending over leading central banks is a jarring contrast to the buoyant mood this time last year. At the gathering of business and political leaders in Davos, Switzerland in January 2018, optimism was simmering, with one survey of bosses putting confidence at its highest for six years. The IMF hailed the broadest synchronised global upsurge since the start of the decade, with 120 economies enjoying a pick-up in growth.

An update from the IMF last month bemoaned the “backdrop of weakening financial market sentiment, trade policy uncertainty, and concerns about China’s outlook”. Growth in advanced economies will slow from an estimated 2.3 per cent in 2018 to 2 per cent in 2019 and 1.7 per cent in 2020, it said. Global manufacturing activity is at a two-and-a-half year low.

“You are getting a much more sober assessment of global growth,” says Mohamed El-Erian, chief economic adviser at Allianz.

What has gone wrong? The sea change reflects, in part, a realisation that policymakers became overly bullish last year, says Mr El-Erian. The Fed, in particular, over-reached by signalling four increases in interest rates for 2018 when the global economy was still fragile, he says. Its new-found caution is providing “air cover” for other central banks to mark down their own rate expectations. Full Story

What do these headlines indicate?

These stories confirm that we were on the right track when we stated that the Fed had no intention of pushing rates too high for the past 24 months. We pointed to the reaction from the bond markets, Baltic dry index, the world economy, etc.; these indicators showed that this rate hike scheme was nothing but a game of smoke and mirrors.    This manipulation of the money supply is going to affect the stock markets dramatically; every single expert that refuses to adapt will be flung under the bus; there will be no exceptions.

The markets will experience many corrections ranging from wild to mild, but almost all of them will prove to be buying opportunities unless the trend changes.  If one takes a look at the megatrend (megatrends are ultra-long term trends) then every back-breaking correction has to be embraced; however, by employing human emotion as a timing indicator, we can determine the optimum time to jump in and out of the markets.

Easy Money altering Market Dynamics

Such vast amounts of money sloshing around can alter the picture dramatically; what should happen in most cases does not.  Under normal circumstances, precious metals should have soared to the moon, inflation should have been rampant, commodities  (in general), should have risen in value. The housing sector should have tanked as rates would have risen in an inflationary environment, hundreds of business should have filed for bankruptcy, the stock market should have experienced another back-breaking correction, and the list of woes goes on. But almost none of the above has occurred, which clearly indicates that the old tools economists and financial experts are relying on are practically useless.

Random Quotes About Fiat Currency 

“Growth for the sake of growth,” says Edward Abbey, “is the ideology of the cancer cell.”

“Anyone who believes exponential growth can go on forever in a finite world is either a madman or an economist.” economist Kenneth, Boulding

“If corporations are indeed ‘persons,’,” David Niose writes in Psychology Today, “their mental condition can accurately be described as pathologic

Interesting article on how Fiat destroys cultures

https://mises.org/wire/how-fiat-money-destroys-culture

Fiat Currency Helps Foster Chaos

Be prepared for the unprepared and remember everything can change but human emotions never do; 90% of humans are wired to do the exactly the same thing at precisely the wrong moment, ensuring that the maximum amount of damage will be inflicted by their ill-planned actions.  If you can identify the emotion driving the masses, it is not too hard to find a way to stay out of harm’s way.

However, every problem ranging from declining moral standards, corrupt politicians, surge in wars, political polarisation, and a host of other terrible factors,  can in some way be attributed to  FIAT  Money. As the money supply increases, the situation will continue to deteriorate.  Freedom levels have to be curtailed the more a nation debases its currency and nowhere will this been seen more clearly in the US. Think about how much freedom we have lost since 911 and how the national debt soared after it.

Taking things are a step further

This 2-hour movie is an excellent starting point as to why the Top Players go out of their way to control the masses.  The idea has always been to target the next generation at the earliest age possible, and with the passage of time, these guys are getting better and better at this game.  This video covers a lot more than this concept, hence the length, it definitely makes for an interesting watch.

Final Parting Thoughts on Fiat Currency 

Never wear your emotions on your sleeves; observe and use the data to formulate a plan. If one is part of the emotional chaos, one cannot see or hear anything other than the picture they are being directed to examine. Only a calm mind can see what is going on. You have a millisecond to question the emotion that is about to take over; will you examine it and in doing so open a new door, or will you allow it to take over and lead you astray. Insanity is doing the same thing over and over again and hoping for a new outcome. New outcomes come from new actions, not hope; change the angle of perception and in doing so change the outcome.

Courtesy of Tactical Investor

Retirement is a lie

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Retirement is a lie

Tell Me Sweet Little Lies 

And that is how the Retirement lie was conceived; continue reading to find out the details:

The world is going to end, the US dollar is going to crash, Gold will soar to the Moon, and Pigs will fly over it. Well, we added the last bit to throw in some humour. Are you not sick of the stories talking about how things are only set to worsen? If you add all the proclamations made by these so-called wise men for the past 100 years, the world as we know should have ended several times over.

The fact that it has not points out that all those wise pundits were wise only when compared to the reliable donkey.  Life is very short, and most people spend a vast amount of their time focussing on what was, what should be and what could be. How about trying a new approach; enjoy the moment, for that, is all you have.  If you have a decent roof over your head, money in the bank and food, you are infinitely better off than over 50% of the world. Let that sink in for a moment. Anything more than that pushes you, even further up the rung of wellbeing.

Seeking Wealth Is not Bad, But

At least seek it with a smile and not a frown. Enjoy the day as a child would. Have you seen how children can have so much fun with so little and how when they grow up they can’t even have half the fun despite having 10 times more?  We seek things that we are not even sure we need; the seeds were incepted starting from your first trip to the brainwashing centre (otherwise known as school), and if allowed to grow, these fears turn into gigantic monsters.

For example, each year, the experts keep stating a person needs more and more money to retire; here is the sad fact, by the time the average person retires, he/she will be a living zombie. Free thought will be a thing of the past; worse yet, you work until you are 65, but the average life expectancy in the USA is 78.6 years.

Retirement is lie

So let’s get this straight, give up the best years of your life, worry throughout that time if you will have enough to retire, and you only have 13 years to enjoy it. Well, it sounds perfectly sane, doesn’t it? Waste the best years of your life, worrying about the worst years of your life. What could possibly go wrong with such a scenario? Keep in mind that the average life expectancy has been dropping in the USA for the third year in a row.

One needs significantly less than the experts claim

The sad fact is you don’t even need half of the ridiculous figures experts are pushing because even at ¼ of the stated figures which are surpassing one million, most of the world’s population stands no chance of achieving the stated goal. The stated goal like everything mass media and the experts push is to get the masses to buy into the lie they are selling and sow the seeds of doubt. Doubt then gives way to fear and paranoia and the rest, as they say, is history.

How do people get their info? Don’t they see the world through a prism? What is this prism for most individuals; TV, and Mass Media?  What if the intention were to provide the masses with the wrong image or ideas, therefore no matter how hard they tried to solve the problem, they would fail, as they would be analyzing the wrong data. Think of Pluto’s allegory of the caves.

What is worse fear or the frightened? To be continued subtly in future updates

Courtesy of Tactical Investor

 

Random Views on Retirement Lies

Retirement is a big fat lie

Today, most people in the world can expect to live 60-70 years; in highly developed countries about 70 to 80 years, and in a few rich countries, more than 80 years. But, for most of human history, human beings have had a life expectancy from birth of only 30 to 40 years. It wasn’t until the mid-20th century that human life expectancy moved to 50 to 60 years.

So, the concept of Retirement is a relatively new phenomenon. In my work, I talk to a lot of people over age 50. Some people say “Yes, retirement is a lie because I haven’t saved enough for retirement, so I guess I’ll work forever”. Others tell me “No. I’ve saved money for many years for my retirement – of course I’m going to retire”.

If we’re going to live until our 70s, 80s or more, what are we living for? What are we saving all this money for anyway? What are we working towards?

Three Retirement Stories

Jane worked in retail for a number of years after the kids were grown. She liked to get out of the house, make a little money and socialize with co-workers. When her husband retired after 40 years with “the phone company”, he started to nag her to quit working so they could travel, and so she quit. Full Story

One Big Retirement Lie… And What You Need To Know About It

Over the last few decades, retirement planning, and even the very essence of what it means to be “retired,” has dramatically changed. And while some of the “old” rules of retirement still apply, those looking to enjoy a comfortable retirement in today’s world often need to buck old trends.

Case in point… in the past, the old adage was that, in general, during your working years you should put as much money as possible into your 401(k) and tax-deductible IRA to save for retirement and lower your tax bill. The idea was to get a deduction during your working years, when your tax rate was higher, and to later take that money out of your tax-deferred accounts in retirement, when your tax rate was lower. For some, that’s certainly still true today, but for many others, the reality is that retirement will bring with it a higher tax rate. In such situations, old-school tax-deferral strategies are less effective, and may even be detrimental to your long-term retirement success.

There are a number of reasons your tax rate might be higher in retirement than it is today. Take, for instance, the Tax Cuts and Jobs Act, passed last December, which temporarily lowers taxes for most Americans through 2025. If no changes occur before then, however, we’ll see a reversal of that trend, and many Americans will see higher taxes in 2026, even if their income remains the same.

RETIREMENT IS A LIE!

The concept of retirement you have been taught is a lie!

Billions of dollars of marketing, and hundreds of thousands of financial advisors & so-called “experts” will tell you saving 10-20% of your income for 40 years will make you financially independent.

WRONG!

(Don’t worry. I have an answer at the end of this.)

Let me explain why….

Figures Don’t Lie, But Liars Figure

I read an article from Ben Stein, actor and economist, shared an experience he had as a boy in the 1950’s. He told his father (an economist at Harvard) that he learned the world would run out of food in the following 10 years. His father assured him it wouldn’t happen. Ben insisted that “figures don’t lie.” His father’s response was, “Figures don’t lie, but liars figure.”

Most of us would say, “It must be true.” However, if you use an online calculator, you’ll see that his math is wrong. You would have $979,000! Almost $200,000 less! He can’t even get that number right. And that’s not adding to the fact that the market DOES NOT get 12% returns consistently. Although the S&P 500 index “averages” more than 10% a year, actual yields are less than 8% a year. And those numbers don’t include fees or inflation. Full Story

Risk and Opportunity; When To Buy & When To Run

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Risk and Opportunity; When To Buy & When To Run

Risk and Opportunity; Investing is analogous to war

One needs to understand the difference between a battle and a war. You can lose several battles but still win the war, or win many battles and still end up losing the war. It comes down to how much damage you incur as opposed to losing or winning the battle. If you minimise the damage, you can lose several battles in a row, retreat and regroup and come back and win the war.

Bullish and Bearish cycles are akin to battles fought in a War

Each cycle should be considered a war, and as long as you win the war, the individual battles are meaningless. The mass mindset focuses on each battle, students of mass psychology focus on the war.

When it comes to investing one can experience extended periods of success, where the markets do exactly what they are supposed to do, but the equation must balance and sooner or later the market will go through a phase of turbulence. In these turbulent times, like the current one, we will experience more losses, but when the turbulence vanishes, the win ratio and the percentage in gains will be far higher than experienced during the phase of turbulence. Until October we had a remarkably long winning streak.

Every bull market goes through one shakeout (strong pullback phase)

One never know when that will occur exactly. A shakeout is not the same as a market putting in a long-term top.  This is done to get the masses to alter their perception. The big players need someone to sell these stocks to before they cash out.  The masses eventually buy this strategy, and when they do, the top is usually close at hand. Once again, look at Bitcoin, everyone was happy when it traded past 10K, they turned ecstatic when it broke past 15K and then they assumed that nothing would hold it back.

During this shakeout stage, it is essential to have stops in place and deploy one’s money at different intervals. Nobody can change this order. No one can tell with certainty when the markets will experience a stronger than normal pullback because this market is as manipulated as they come; after 2008, free market forces ceased to exist.  However, if the trend is positive, then those pullbacks have to be viewed through a bullish lens.

The following inferences are therefore possible:

In times of risk, the masses seek to take on more risk as opposed to taking on less risk. The masses beg for the opportunity to buy low and sell high, but when the moment finally arrives (and the risk factor is much lower) they baulk, and their argument is always the same “it is different this time, the market is going to crash, and we need to bail out”. However, they never put forth the same argument when the markets are racing upwards, and analysts all over the place are issuing insane targets such as $1 million, and they now assume the next stop is the sun or another galaxy. Instead, the next stop is usually “hell”.

Run when the Masses Turn Euphoric

When the masses believe they have found the next best thing to white bread, its time to head for the hills. Case and point Bitcoin. Throughout its fall, the masses remained bullish, and despite the heavy beating it has already taken experts are still issuing insane targets even now when Bitcoin is trading below 5K, which means that Bitcoin the odds of it hitting 3K are far higher than 15K.

Imran Wasim, a financial analyst at AMSYS Group, told News BTC he was far from downbeat, predicting cryptocurrency will become “more mainstream” in 2018. https://bit.ly/2DZs7fo

Bitcoin Price Forecast: Tim Draper Predicts Bitcoin Will Be Worth More Than $100,000.

Llew Claasen who is the executive director of Bitcoin foundation recently stated that he expected Bitcoin to hit $ 40,000 by the end of this very year. He further added that 90% of the cryptocurrencies will actually fall. https://bit.ly/2FHTVX0

Tom Lee, co-founder of Fundstrat Global Advisors, lowered his year-end target to $15,000 from $25,000 — still well above where the cryptocurrency was trading on Friday.

A key driver was bitcoin’s “break-even” point, the level at which mining costs match the trading price. That level is down to $7,000 from an earlier estimate of $8,000 for the S9 mining machine by Bitmain, according to Fundstrat’s data science team. Based on that, Lee estimates that fair value for bitcoin would be roughly 2.2 times the new $7,000 break-even price. https://cnb.cx/2BhvnQD

Alexander V. van Dijl, Financial expert:

At the beginning of this year I predicted a bitcoin value of 150.000. While that seems like a lot today, I believe some firm price movements will take place in the (very) near future. Something big will happen, perhaps a large retailer will accept bitcoin, perhaps adult advertising will accept bitcoin as payment. Something big will happen that will cause the price to skyrocket again. 150.000 is my prediction for January 1st

Eric Brown, Founder and CEO of Aliant Payment Systems:

My Bitcoin price prediction for 1 January 2019 is $23,000.We were practically at this price once, and we know what it takes to get it back there. We are very much in the infancy of this type of currency, and as technology grows, so does the value of the currency. The future is technology and Bitcoin is the currency of that technology.

Sam Russell, Co-Founder / EVP Strategy and Innovation at WORBLI:

If the fundamentals on Bitcoin positively change in September with the upcoming proposals for an ETF approval by the SEC, we can expect buying pressure to increase pushing price up to previous market structure highs of $11,400 testing resistance in that area. Should that happen, Bitcoin would effectively change in trend. My guess — 17,000 USD https://bit.ly/2wJoUu8

The sensible thing to do is to implement a strategy that works both in good times and turbulent times, and that is what we are doing.

Courtesy of Tactical Investor

Random Views on Risk and Opportunity

The First Risk and Opportunity in Active Investing

What is the most significant risk in quant (and all active) investing today?

The First Moment (the mean)

The Second Moment (under-estimating tracking error)

The Third Moment (skewness, left tails, crash risk)

Mis-specified risk model (hidden factor biases, factors ‘eating’ alphas)

Sub-optimal portfolio construction methodology (error maximization)

Higher than expected transaction costs

Individual stock risk

Quants typically chose 2, 3, 4, 5 and 6.

In my view, the most important risk in active investing is #1: The First Moment.

This is the no-alpha risk = strategy does not outperform the benchmark = the long-term mean <=0

The lack of alpha in the industry is not news, and many are trying their best, but I believe the reason more effort is not producing better results is because we are trying to solve the alpha risk as an engineering problem rather than an architectural one.

Today’s quants are already very well equipped to deal with risks 2 through 7. These risks have engineering-friendly convergent solutions. 50 years ago, some of these other risks might have been at the top of my list, but after decades of advances in these areas, these risks are much less problematic than the First Moment Risk (as a side: in total portfolio mandates from the asset owner’s viewpoint, Crash Risk #3 is still very much alive and real). Full Story

What Is Opportunity Cost?

Opportunity costs represent the benefits an individual, investor or business misses out on when choosing one alternative over another. While financial reports do not show opportunity cost, business owners can use it to make educated decisions when they have multiple options before them.

Because by definition they are unseen, opportunity costs can be easily overlooked if one is not careful. Understanding the potential missed opportunities foregone by choosing one investment over another allows for better decision-making.
How to Calculate Opportunity Cost
The formula for calculating an opportunity cost is simply the difference between the expected returns of each option. Say that you have option A, to invest in the stock market hoping to generate capital gain returns. Option B is to reinvest your money back into a business expecting that newer equipment will increase production efficiency, leading to lower operational expenses and a higher profit margin.

Assume the expected return on investment in the stock market is 12 percent over the next year, and your company expects the equipment update to generate a 10 percent return over the same period. The opportunity cost of choosing the equipment over the stock market is (12% – 10%), which equals two percentage points. In other words, by investing in the business, you would forgo the opportunity to earn the higher return.

Opportunity cost analysis also plays a crucial role in determining a business’s capital structure. Full Story

Use The 50-Day Moving Average To Pinpoint Opportunity Or Risk

An ax can be either a useful tool or a dangerous weapon. In stock charts, the 50-day moving average has a similar dual nature.

The 50-day moving average takes a stock’s prior 50 daily price closes and averages them. Do this every day in an upward-trending stock, and you’ll get a line on a chart that runs below the stock’s price bars while smoothing out the jumps and buckles.

The line serves a startling number of uses. When a stock is basing, a cup base with more than half its bulk above rather than below the line is a sign of health. Another sign of a stock’s strength: a flat base that finds “support” at its 50-day line.

What is support? Institutional investors often use the 50-day or 10-week line as a reference point, stepping in to add shares to their positions when a stock pulls back to the moving average. This buying creates upward pressure — or price support — to help keep the stock’s prices above that moving average.

This is why rising stocks often rebound from their 50-day lines, turning brief pullbacks into follow-on buying opportunities. It is also why 50-day and 10-week moving averages tend to cradle advances that can run across many months.

On the dangerous side, a rallying stock that collapses below 50-day support in heavy volume is often sending a sell signal. Once below that line, institutional investors may use the 50-day line to mark a sell level. Full Story

Americans Are Scared Of Investing And The Reason Might Surprise You

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Fear of Investing

Americans Are Scared Of Investing and the question is why

The answer to this question is simple; the focus on the wrong factors such as news which is akin to gossip, political rhetoric, advice from experts (more like jackasses) and a plethora of other equally meaningless reasons.  Let’s look at some of these factors individually.  We will repeat this again, but the key to all this is understanding the key concepts of Mass Psychology; the most important of which is that one should never allow one’s emotions to do the talking.

From a psychological perspective, polarisation is a positive development as long as the trend is up.  When people are driven by emotions (especially people in power), they cannot think clearly, and their only ambition is to destroy their opponent.

When one cannot think clearly, one is destined to lose the war; it is just a matter of time. Those that can remain calm in such periods usually stand to walk away with the most significant gains.   Individuals from both parties will be going for the jugular, and some of these attacks will temporarily shock the markets. At the Tactical Investor, we embrace shock type events (as long as the trend is up) and the stronger the deviation, the better the opportunity.

Focusing on the Fear Factor Will Always Lead To Losses

Therefore, do not focus on the fear factor, but try to direct your attention to the “opportunity factor” if another shock type event hits the markets. The trend is up and showing no signs of weakening. Therefore we must treat anything the media attempts to market as a disaster, as an opportunity factor. The media is an extension of the mass mindset. For any con, you need at least two elements, a con artist and a bunch of idiots.  An observer is not part of this equation for he/she does not equate with the conman or the idiot, the observers function is to observe, and then use the data to plot the most favourable path.

Take this as an early warning that should the media jackasses start pushing another B.S story, instead of panicking, one should break out of a bottle of champagne, and as the masses panic calmly sip on that champagne and build a list of strong stocks one always wanted to purchase. For those allergic to work, the option is simple; sit back and relax, for we always view stock market crashes as opportune moments when the trend is positive.

The masses are still too nervous for this Stock Market Bull To Die

Anxiety Index
Bull Neutral and Bear Index

Looking at the data above, the most compelling piece of information is the number of individuals in the neutral camp has not declined significantly and when you combine the number of individuals in the bearish camp, the total still adds up to 62.  The” toothless wonders” of the world still outnumber the bulls, and that is a very bullish factor.  Let us not forget that the masses are still sitting on a vast pile of cash; they are waiting for better times to buy, having forgotten that the best time to buy just eclipsed them about a month ago.

These sagacious men will once again buy close to the next stop and then wonder why their gameplan did not lead to a positive outcome.   The best time to buy is when the masses are in panic mode, and when one feels far from certain about the future of the markets; certainty is the secret word for failure when it comes to the stock markets.

This bull market is unlike any other; before 2009, one could have relied on extensive technical studies to more or less call the top of a market give or take a few months; after 2009, the game plan changed and 99% of these traders/experts failed to factor this into the equation. Technical analysis as a standalone tool would not work as well as did before 2009 and in many cases would lead to a faulty conclusion.  Long story short, there are still too many people pessimistic (experts, your average Joes and everything in between) and until they start to embrace this market, most pullbacks ranging from mild to wild will falsely be mistaken for the big one.  Market Update Feb 28, 2019

Never Allow Fear To Take Over

One should remember this paragraph every time the urge to panic starts to rise; no bull market has ever ended on a note of fear or anxiety. Despite the media trying to create a new narrative to prove otherwise for the past several years; they have failed miserably, proving that news, in general, should either be treated as rubbish or viewed through a humorous lens.   Americans  fear all the things they should not & embrace nonsense which they should ignore

Random Views on Why Americans Are Scared Of Investing

Millennials are afraid to invest in the stock market

“New survey data suggests the ‘Someday Scaries’ could be” a factor holding young people back, Ally reports. About 61 percent of adults say they find investing in the stock market “scary or intimidating.” And millennials feel significantly more intimidated than Baby Boomers or those in Generation X, it says.

“The way to mitigate risk is through diversification. Investors should look at investing offers that provide a diversified portfolio with a balance based on their overall investing goals. In general, a portfolio that contains a variety of ETFs, bonds and cash is a great place to start,” he says.

“Start with a savings account that will give you a competitive rate of return and pay yourself first by putting whatever you can, even if it’s just a small amount, from each paycheck into that savings account.

“History has proven again and again that the key to achieving financial security is to start saving and investing early,” he says. “What people need most is to face the ‘Someday Scaries’ head on and get started, taking one small step at a time.” Full Story

People Are Still Scared of Investing

Only about 4 in 10 Americans and only 1 in 3 Millennials have money in the stock market. The most common justification – that those who don’t invest simply don’t have the money – doesn’t cover all the bases.

What governs the behaviour of those who have the money and choose not to invest in fear.

To a seasoned market participant, the fact that everyone with the means to invest doesn’t invest is baffling, but the implications are far direr than just missed opportunities.

Many Americans’ financial futures are uncertain, not because they don’t have the money, but because they don’t know what to do with it. Innovations and market events of the last decade haven’t dramatically improved financial literacy or investor confidence either. Full Story

Here’s why some Americans can’t invest in the market

For the rest of us, pay remains stagnant, with recent — and not exactly robust — nominal gains being erased by inflation. At the same time, life can feel increasingly unaffordable. Child care is staggeringly expensive, while the percentage of Americans with employer-provided health insurance who need to meet a four-figure deductible is rising rapidly, no doubt a factor in why one of three campaigns on the depressingly omnipresent GoFundMe is medical fundraisers. Four out of ten people say they couldn’t come up with $400 in an emergency. Consumer sentiment is falling even as retail sales increase. New business formation is falling dramatically. The government safety net continues to deteriorate.

Finally, too many are dependent on the markets for their retirements. Few workers outside of government employees currently enjoy access to pensions, with the result being that they are bound to use 401(k)s and Individual Retirement Accounts to attempt to provide for their post-work lives. The money in these accounts is mostly invested in the stock market. Even if the amounts in question are not exactly riches (half of those invested in the stock market have a sum total of $40,000 or less in play), it is enough to create a palpable sense of fear among many anytime the stock market indexes swoon — a “heads I don’t win, tails I lose” situation. Full Story

 Survey finds that Many Americans Afraid of Investing

More than 1 in 3 Americans surveyed are afraid of investing. 43% of females surveyed are afraid of investing in the stock market compared to 31% of males, according to a new CreditDonkey.com survey

Fear of the unknown will stop most anyone in their tracks, even if a potential reward awaits them. In a new survey of more than 1,200 Americans by CreditDonkey.com, 46% of respondents revealed they are afraid of death and 37% of respondents said they are afraid of investing in the stock market.

Some 73% feel investing in the stock market is gambling while 31% think the stock market is rigged.

“It’s almost never profitable,” one respondent wrote. “The chances you’ll profit are the same as scratching a lottery ticket.”

Another respondent claimed the market is “rigged to benefit those already in power, the elite 1%.”  Full Story

Follow the Trend and ignore the noise for the trend is all that matters, the rest is rubbish

Courtesy of Tactical Investor

USA Debt To GDP Means Nothing To Bonds and Stocks

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USA Debt To GDP Means Nothing To Bonds & Stocks

Strangely and (possibly) sadly, bonds and the equities markets seem to be paying no heed to the ever-growing debt, which has just surpassed the $22 trillion mark.

US Debt To GDP; Is Anyone Paying Attention To It

Bonds are looking for any reason to mount a long term rally, after being held hostage to the Fake threat of inflation. A  very desperate Fed t is trying to maintain the illusion that the USD is the strongest currency in the world. This was achieved by shoring up interest rates even though the data (yes we know its manipulated but since it has been always been manipulated it should be used fairly in raising and lowering rates) since the onset has indicated that inflation is a non-event.

The Fed appears to be operating like an insane person that is convinced his left toe is talking to him.  However, most central bankers are not taking the same path, and some emerging nations are only raising rates because they are being forced to in order to defend their currency against a stronger dollar.

A monthly close above 147 will most likely push bonds to the 152-154 ranges with an overshoot as high as 159.00. The long term outlook for interest rates is negative; in other words, rates are heading lower and savers are going to be punished again.

Global Currency War

When the Fed started its rate hiking program we stated in our view the premise behind this move was to make the US dollar the most attractive currency in the world in the midst of the global currency war that has been taking place for over a decade. In this race to the bottom,  the idea is to finish last. The US continues to rack up huge debts, and in order to continue doing this, it is currency has to look attractive.

When it starts to lower rates again and it will be forced to do so, it will be starting from a very high point, and as it lowers rates, other developed nations will be forced to follow suit; you ask why? Nations want to have a competitive advantage when it comes to exports. China and Germany understand that better than most nations.

Germany abuses the EU

Germany has in essence been abusing the EU via the Euro: it has found a way to raise its exports to levels it would never have been in a position to do so under the German Mark. If it were using the “Mark“, it is currency would be 20% higher and its exports would be nowhere near current levels. So it seems that US Debt To GDP ratio is something nobody cares about or no one is paying attention too; at least that is what the top players appear to be doing.

For the astute investor that is paying attention to the US Debt To GDP ratio, the best way to protect your assests is to view stock market crashes as buying opportunities.  Until fiat is eliminated the Fed will always intervene and prop the market up again and therefore market crashes provide the smart player with a chance to purchase top rated companies at a huge discount.

Why the US can afford a stronger currency

The US is not an export-dependent market so it can afford to have a currency that is valued slightly higher, than most. As the US will be starting from an advantageous position, it is currency will still be attractive relative to other major currencies, even when it starts to lower rates. Most nations economies are export dependent so as the US lowers rates they will be forced to do so in kind, which effectively means that the USD will maintain its position as one of the most attractive currencies out there. It is a splendid plan, but the Fed has to be careful that it does not overplay its hand.

As we stated not too long ago, worldwide debt is soaring; in 2017 it stood at $233 trillion. So what is another trillion here or there; it is already so high that collectively the world’s nations will never be in a position to pay it back.

BOE all Bark and no Bite

The BOE would not be making statements that amount to the ramblings of an insane person if everything was going according to plan; they keep hinting that they are going to raise rates again, but the August rate hike could end up being the last, and they might be forced to make a U-turn. The Brexit chaos has already affected economic activity in Britain, and the once robust housing sector is grinding to a halt. House sales fell to their weakest level in five years.   The BOE would have to be extremely daft to raise rates in such an environment.

EU playing game of Cat and Mouse

They have done nothing. One minute they state they are ready to raise rates, the next minute they cite new issues that call for more caution.  Here is the latest from Draghi:

“We need to monitor these trade risks very carefully over the coming months,” Draghi said. “However, we still see the overall risks to the growth outlook as broadly balanced, in large part because the underlying drivers of domestic demand remain in place.”  Full story

In other words, Draghi is saying; we will state that there is a need for a rate hike, but we will not do anything about it because the outlook is quite terrible

Japan, on the other hand, cannot afford a very strong currency

The Boj hs continued to huff and puff but other than that they have done nothing and it will be hard pressed to do anything.  Interest rates were left untouched at -0.1% citing

The central bank also revised down inflation forecasts again, saying that the momentum toward achieving the price stability target of 2 percent is not sufficiently firm despite years of massive monetary easing. Interest Rate in Japan averaged 2.81 percent from 1972 until 2018, reaching an all time high of 9 percent in December of 1973 and a record low of -0.10 percent in January of 2016.

The inflation forecast for the fiscal year ending March 2019 was lowered to 0.9 percent from 1.1 percent previously estimated. Also, the central bank now expects inflation to average 1.4 percent for fiscal 2019 (vs 1.5 percent) and 1.5 percent for fiscal 2020 (vs 1.6 percent). Full Story

Interesting development on the weekly and Monthly charts

We have a very interesting development; under normal circumstances when the weekly and monthly charts are trading in the oversold ranges, the ensuing move up is almost always huge.  Utilities typically don’t fare well in a rising rate environment, but the MACD’s on the Monthly charts of the Dow utilities are also very close to experiencing a bullish crossover; we have several strong factors indicating that rates should drift lower.   The only thing that could delay this trend is a stubborn Fed. Mass psychology states that one should focus on investments that the masses are either ignoring or unaware off. Hardly anyone is aware of the stealth bull market that is taking place in the bond arena.

Courtesy of Tactical Investor

Random views on USA Debt To GDP


The National Debt Explained

The national debt level of the United States is a measure of how much the U.S. government owes its creditors. Since the government almost always spends more than it takes in, the national debt continues to rise. As of January 3, 2019, the national debt stands at $21.974 trillion, according to the U.S. Treasury Dept. It has increased 10 percent since President Trump took office in January of 2017. Under President Obama, the national debt increased 100 percent, from $10 trillion to $20 trillion.
It is easy to understand why people (beyond politicians and economists) are starting to pay close attention to the issue these days. Unfortunately, the manner in which the debt level is explained to the public is usually pretty obscure. Couple this problem with the fact that many individuals do not understand how the national debt level affects their daily lives, and you have a centerpiece for discussion — and confusion.
National Debt vs. Budget Deficits
First, it’s important to understand what the difference is between the federal government’s annual budget deficit (or fiscal deficit) and the outstanding federal debt (or the national public debt, the official accounting term). Full Story

What Is the National Debt in 2019 and What Does It Actually Mean?

If there is one thing you take from this article, one single fact worth pulling out, it’s this: The national debt has no analogy to personal finances. There is absolutely no national credit card, no tab for some other nation to “call in,” each American does not “owe” $42,998.12.
It is a borderline disservice to our readers even linking to that last source because none of this exists. It’s fake, fantastical and make-believe. These ideas come from the fiscal version of Narnia, where economists do battle against rational hobgoblins wielding enchanted slide rules. If you ever find yourself comparing the national debt to a household checkbook, step back through the nearest wardrobe. Hard. Repeatedly.
Good. Now that’s out of the way.
Note: All numbers are accurate and current at time of writing.
What Is the National Debt?
The national debt is the full measure of currently issued government securities. When the government’s combined public and internal obligations exceed its total revenue, it issues securities such as bonds, notes and bills which add to the national debt.
The U.S. Gross National Debt is approximately $21.9 trillion. This debt comes in two forms: intra-governmental and public. Full Story

Why the $22 trillion national debt doesn’t matter – here’s what you should worry about instead

The U.S. federal government’s debt load hit another milestone this month: It’s now a record US$22 trillion in nominal terms.
That’s $67,000 for every man, woman and child living in the U.S., and it’s up $2 trillion since President Donald Trump took office in 2017. For comparison, U.S. debt is more than the total size of the United States’ $20 trillion economy and equivalent to the gross domestic products of China, Japan and Germany combined.
This hefty sum is a reflection of the large annual budget deficits that the federal government has run, pretty much continuously, since 1931. Prior to that, surpluses were much more common, apart from the years following the Civil War.
With another round of anxiety-causing debt-ceiling debates likely to return in the coming months, like other economists, I believe it is worth asking whether we should even care about the size of government debt.
Default isn’t imminent
First of all, it’s important to note current U.S. debt levels do not indicate any risk of imminent default.
As long as the U.S. federal government remains an “ongoing concern” – fiscal institutions are strong and effective, taxing authority is maintained and the long-run productive capacity of the nation’s economy is secure – there is no economic reason to fear default on the nation’s debt. Political reasons, such as debt-ceiling mischief, are another matter. Full Story

DOW 30 stocks – what are they saying about the markets?

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DOW 30 stocks
Stock Monthly  ChartComments
MMMExtremely OversoldHas moved deeper into the oversold ranges since our last analysis (Nov 30 Market update)
AXPExtremely Overbought
AAPLExtremely OverboughtPlenty of room to pull back before it moves into the oversold ranges
BAOversoldVery close to moving into the extremely oversold ranges
CATOversoldVery close to entering the extremely oversold Zone
CVXOverbought
CSCOExtremely overboughtRelatively new Bearish MACD crossover
KOExtremely oversoldHolding up nicely and trending upwards. Dow players can use pullbacks to open positions
DISOversoldCould make for an interesting long term play
DWDPExtremely oversold50-52 ranges could be a good place to nibble at the stock
XOMOversoldMACD’s in Bearish crossover
GSOversoldMACD’s in Bearish crossover, likely to hit  160-165 before a bottom is in place Nov 30 market update. The stock traded in the above ranges and then bounced higher.   The 160-165 ranges could be a good place to nibble at the stock.
HDExtremely oversoldEntering into the seasonally bullish period; 160-163 ranges are a good place to nibble at this play.
IBMExtremely oversoldPattern is improving
INTCOverbought
JNJOversoldHolding up very well, trending higher. A test of the 120 ranges without closing below this level on a monthly basis will be a bullish development
JPMOverbought
MCDExtremely oversoldUnusually strong, trending upwards. Ideal entry points for an initial position 160-162
MRKNeutralStrong pattern
MSFTInsanely overboughtBearish MACD crossover,  potential shorting candidate for risk takers
NKEInsanely overboughtBearish crossover in progress
PFEOverbought
PGExtremely oversoldBullish MACD crossover, and solid pattern
TRVExtremely oversold$110 better; a good place to nibble
UTXOversoldClose to trading towards the extremely oversold ranges
UNHOversoldMoving towards the extremely oversold ranges, but the pattern is stable, the next bullish crossover could lead to an explosive move
VZNeutralBullish MACD crossover in progress should  continue trending to new highs
VInsanely overboughtBearish MACD crossover, good shorting candidate for risk takers
WMTOversoldMoving towards the oversold zone. 84-86 good place for a nibble
WBAInsanely oversoldBullish MACD crossover, pattern improving.

The Dow 30 stocks should be signaling all is not well, but?

We have three more stocks for a total of 18 that are now trading in the oversold to extremely oversold ranges since the last analysis. It, therefore, seems highly unlikely that the markets will crash under such conditions. The best plan, therefore, should be to switch the TV off as listening to the talking heads can only be viewed as a healthy thing if you like taking a hammer to your head. 

Listen to music, watch a movie, read a book, and sip on your favorite drink. For when it is all said and done, which by the way it never is, for if this were true, the talking heads would keep quiet and focus on the phrase “silence is golden”.  I digress, so when it is all said and done, these talking heads bring nothing new to the table; their best gift is to regurgitate verbal vomit and try to market it as something new.

Mass Psychology clearly advocates that stock market crashes are nothing but long term buying opportunities.  Pull up a long term chart and you will be forced to arrive at the same conclusion.  The Big player’s game strategy is to get individuals to focus on words such as bear market, crash, and end of the world, etc.; in doing so, the crowd focuses on the tree and forgets the forest.

Courtesy of Tactical Investor

Random Views on the Dow 30 stocks

Dow 30 Stocks: 2019 Comparative Performances And Prospects By Grant Henning, Ph.D.

Summary
2019 year-to-date, share-price-percentage gains for all 30 DJIA stocks.
Comparative 2019 dividend offerings for all 30 DJIA stocks.
Comparative 52-week momentum by relative strength, bounce/lag momentum, and regression residual methodologies.
Ranked summative prospects for Dow 30 stocks.
Looking for a portfolio of ideas like this one? Members of Value & Momentum Breakouts get exclusive access to our model portfolio. Start your free trial today »
This is a special contribution article by Prof. Grant Henning based on his published research on the BLM technical theory. The model and comments are expressly based on his own proprietary methodology and forecasts.
Comparative Analysis of Dow 30 Stocks
There is generally high interest in the performances of the 30 large-cap stocks comprising the Dow Jones Industrial Average. This is because these stocks are perceived as low risk, highly liquid, reliable holdings for long-term investors, pension funds, endowments, and hedge funds. Added to their promise of steady, low-volatile growth, is the prospect of dependable dividends. These benefits make these stocks ideal holdings for large-scale, low-risk investors.
Aggressive individual stock traders often shy away from these stocks because of the perception that such stocks are unlikely to produce the same high levels of growth that are available through some more volatile small-cap and micro-cap stocks. However, it will appear below that this perception is not always accurate. Clearly, some Dow 30 stocks do outperform many smaller cap stocks on the other major indices. Full Story

Dow Jones Stocks To Buy And Watch In April 2019

After a blistering two-month start to 2019, the Dow Jones industrials slowed its pace in March. But there are clear winners — and losers — at the end of the first quarter of 2019. Among the Dow Jones stocks, a number of members are in or near buy zones, including blue chip stock Apple (AAPL) and chip giant Intel (INTC).
Boeing (BA) was the top-performing Dow Jones stock through February with a scorching return of over 36%. But Boeing stock gave up its leadership mantle when it plunged over 13% in March, in the wake of the Ethiopian airplane crash.
Cisco Systems (CSCO), International Business Machines (IBM), United Technologies (UTX) and Apple are the top four performers through the first quarter.
On the downside, the bottom three stocks through the first quarter are Walgreen Boots Alliance (WBA), Pfizer (PFE) and Coca Cola (KO). Since the start of the year, the three Dow Jones stocks are down 7.4%, 2.7% and 1%, respectively.
Year to date, the Dow Jones industrials have gained 11% through March after trading mostly unchanged for the month. The tech-heavy Nasdaq composite and S&P 500 index are up 16.5% and 13.1% through the March 29 close, respectively. Full Story

The 5 Best Dow Jones Stocks to Buy Now

Despite all the pundit noise and hate, the Dow Jones Industrial Average is still a wonderful place to find great stocks and big-time dividends. The thirty Dow Jones stocks are still powerhouses in their respective fields and feature enviable moats, large cash flows and big-time profits. With the Dow 30, you really are getting the top dogs of America’s economic landscape.
There’s a reason why nearly $20.2 billion still sits in the SPDR Dow Jones Industrial Average ETF (NYSEARCA:DIA), and that’s because the index remains a pretty solid collection of blue-chip stocks.
But not all thirty stocks in the Dow Jones index are big buys at the current moment. Some — be glad you didn’t buy General Electric Company (NYSE:GE) when it was still in the Dow 30 — are actually lousy to purchase in today’s market.
With that in mind, here are five of the best Dow Jones stocks to buy right now! Full Story

The Market Crash – Media Hoax And Ignorant Experts

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Market Crash

Trading is all about Volatility: the Media is all about hoax

Market crash and Media Hoax: Volatility readings have shot to a new high; 2018 has been a very active year as far as this indicator goes. This indicator has provided and continues to provide (advance) warning that traders should be prepared to deal with a more volatile market. Volatility is a terrible thing, only if one allows one’s emotions to do the talking; otherwise, it should be viewed through a positive lens as it keeps the masses uncertain.

On Monday (Dec 24), we had the worst Christmas Eve session in history.  On Wednesday, another milestone was achieved; the Dow experienced its largest one day point gain ever.  On Thursday, we set another record; the markets experienced the largest intraday reversal in over ten years. Such moves confirm uncertainty is at the helm and bull markets have never ended on a note of uncertainty.

There are certain things that it’s fairly easy to predict far in advance, because they happen with routine regularity: The sun will rise in the morning, Christmas will be held on December 25, the Detroit Lions will not win the Super Bowl.

But there’s a difference between those certainties and trying to claim any real confidence about events that are by and large impossible to know in advance: what cultural issues will be salient political topics next year, what non-Mueller subject will President Donald Trump fulminate about on Twitter tomorrow.

And yet, in an age of social media, everybody is now a pundit—which is not a bad thing, but often takes the shape of overconfident prognostications that are more often wishes about what we hope happens rather than thoughtful analyses of what will.

As 2018 draws to a close and we again turn our thoughts to the new year, POLITICO Magazine brings you its fifth annual “worst predictions” list, reflecting on the gulf between what actually happened this year and what some people were so sure would.

Extreme Uncertainty should be viewed through a bullish lens

This market is not only experiencing an extended bout of volatility, but it is going through a bipolar phase as politics is being used as a weapon to move the markets. Without getting into details, politics (as politics, unless it’s related to the markets, is beyond the scope of this publication) is being used in a wicked manner to turn the masses on each other and to whip the markets. Whether you love or hate Trump, one thing stands out like a sore thumb; the media have never attacked a sitting president in such an aggressive manner. Trump has probably been attacked more than the last four presidents combined. Indirectly, this is having a significant impact on the markets.

Emotions drive stock markets

If you drive the masses insane with the rage, the driving force behind the markets change. Now you have a rage/frustration factor to add to the equation.  The press has decided to turn regular politics into a weapon of mass destruction. Every single, stupid, meaningless event is turned into some political story. Today’s reporters are akin to prostitutes who will do the bidding of the highest bidder. Most of them would be perfect candidates for electric shock therapy, for only a severely disturbed person could hold a straight face while falsely pushing out stories under the guise of news when at best they would fall under the category of C**P.

We are not only talking about the events that are occurring in the US but all over the world. For example, look at the way the press and the elites are going out of their way to subvert the will of the people regarding Brexit by using every dirty trick in the book. They are falsely laying out stories that border on the surreal regarding the fallout Britain will suffer if it leaves the EU; these stories are rubbish, and in the long run, Britain would thrive by ridding itself of the shackles the EU has imposed on it.  This tactic of mixing economics with politics to create uncertainty in the markets is being used quite ruthlessly. However, it is a deviation of the same old con; get the masses to dump quality shares at rock bottom prices.

When Emotions Talk, The Money Walks

Bear in mind we are examining the data from a trend perspective and not an emotional perspective.  It is the press that is willfully weaponizing the news and going out its way to sow the seeds of division, and in doing so, they have created so much angst and uncertainty, that these emotions finally found their way into the markets.  One day the significant correction of 2018 will be used as an example to illustrate how an out of control press went out of its way to print rubbish instead of facts, in order to manipulate the perceptions of the masses.

We went on record to state that if Trump won the elections, that from an investment perspective it would be a fantastic development for the markets.  Moreover, these statements were made before he was declared the winner.  After he won the election, we went on record to state that the political landscape would resemble a soap opera on steroids.

If you want to rob a man without resistance, then all you need to do is make him focus on an issue that makes his blood boil. That is what is going now; the masses are being given two main options, both of which lead to unfavorable outcomes. We expect the attacks on Trump to surge to even higher levels, but from nowhere the resistance will suddenly coalesce and mount a counter attack.  However, this was the grand plan all along; conquer via division.

Now as the masses are inflamed and filled with rage, laws will be passed that will make it insanely easier for corporations especially banks to rob them.  Never allow emotions to drive the decision-making process; the outcome is always bad in the long run.

Since bottoming in March 2009 the stock market has seen plenty of pullbacks (5% to 9.9% declines) and corrections. In 2011 we even came within a stone’s throw of an actual bear market. Each correction is associated with its own market fears, specifically obsessing over risks to the economic and earnings fundamentals that ultimately determine share prices.

In 2011 it was fears over the European Sovereign debt crisis and the US debt ceiling showdown (US lost its AAA credit rating from S&P) that was supposed to plunge the world back into recession and send earnings tanking. In 2015 (a year which saw two corrections) it was fears over China’s slowing growth, rising interest rates, and crashing oil prices (sound familiar?)

https://www.youtube.com/watch?v=a-xpKMfsyWM

Now the market’s “wall of worry” is once more about Fed rate hikes, slowing growth (due to the trade war which is likely to end by February) and overall slowing global growth rates (plus a yield curve inversion in the US). But guess what? The stock market has generated 9.2% CAGR total returns since 1871 through far worse events than these current risks. We’ve suffered depressions, World Wars, killer flu pandemics (1918 Spanish flu killed 5% of the world’s population), and numerous recessions and financial crises. Unless you think the world is literally going to end it’s almost certain that the stock market will be higher over the next five to 15 years.

Bears are out in full force, claiming that the world is coming to an end.

Bullish Neutral Bearish Trend Chart

Now think about this; How many perma-bears are rich? The truth is that most perma-bears have been bankrupted several times over. Bull markets last longer than bear markets, and the returns are significantly higher.

Anxiety Index

Despite the rally, the gauge on anxiety index is still trading outside the extreme of extreme zones and bearish sentiment increased by another two points.  Individuals from the neutral camp migrated towards the bullish and bearish camps.  Bearish sentiment is very close to surging to a seven-year high.  A move to the 57 ranges would achieve this feat.

 

 

Insiders are on a massive buying spree

Insider buying has surged to an eight-year high. These guys have insights into their companies, and if the markets were going to fall apart, they would not be investing their cash into a dying asset.

The number of corporate executives and officers scooping up shares of their own companies has doubled in the past two months from the prior two. As a result, insider buyers are outpacing sellers by the most since August 2011, data compiled by The Washington Service showed.

 “Insiders are pretty well informed at the micro level of their businesses,” Todd Fungard, who oversee $1.2 billion as chief investment officer of McQueen, Ball & Associates Inc., said by phone. “It’s a good sign that business leaders still see demand at their companies and feel comfortable buying their own stock despite the headline risk.”

The last time insider buying spiked in this fashion, in August 2011, the S&P 500 was in the middle of a 19 percent retreat before staging a 10 percent rally in each of the next two quarters. Full Story

Courtesy of Tactical Investor

Stock Market Bull run 2019

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Stock Market Bull run 2019.
For those that pursued our recommendations of not surrendering to fear and rushing with the group, the prizes are beginning to stream in. Most importantly, we scored our first grand slam for the year, shutting a large portion of our situation in AMKR calls for practically 125% in increases. Dread never satisfies; figure out how to manage it today, or hazard paying the dread premium forever.
Over the years we have found out that the most significant dynamic force that drives the markets is emotions. Psychology is the study of emotions and mass psychology is the study of the masses.This is why we put this section together.  The stocks for dummies part focuses on the KISS principle; Keep it simple stupid. Our, focus is on teaching individuals, how to use Mass Psychology to their advantage. To figure out how to angle you need to comprehend that dread has no spot in the condition of life; this is something pretty much every administration out there deliberately disregards since they would prefer not to show their endorsers how to angle. Unfortunately, what is far and away more terrible is that a considerable lot of them don’t realize how to angle themselves.

The Masses are still nervous.
Overall the masses are still nervous as can be seen by looking at the sentiment data above. While the number of bulls has risen, there are still too many individuals in the neutral camp. Additionally, the markets are climbing a wall of worry, which is a very bullish development. Trade wars, government shutdown, political infighting, and a host of other events; despite this, the markets are trending upwards, slowly but surely. Eventually, when one or two of these negative factors are eliminated there is every reason to believe that the markets will explode. In opposition to what most master’s express the majority drive the business sectors, and the majority choices are altogether motivated by feeling. Hence in the event that you distinguish the feeling that is driving the majority, you can at first put the standards of contrarian investing into play. In any case, rather than salvaging when things begin to warm up, the laws of mass brain research are used. Mass brain research expresses that you possibly desert and venture when the majority are foaming with bliss and the other way around.Fear does not pay, and we once again proved that in real time; when the markets were pulling back sharply, we refused to give into to it and to all of you that took a similar path, congratulations are in order. Until the masses turn euphoric, stock market bull run 2019 will remain in play.


Stock Market Bull run 2019 will Fool Market Timers
Now the reason most market timers fail is that they are trying to time the markets and therein lays the mistake. They should be timing the emotion. Emotions drive the markets; everything else is noise. Identify the emotion, and you identify the trend, and then the rest is history. The masses are always wrong in the long run and therefore if they are euphoric, its time to move to cash or short and vice versa. Remember mass psychology is not about identifying a change in emotion but identifying extreme changes, and that is where it differs from contrarian investing. We do not take an opposite stance until the emotion driving the masses hits a boiling point. Bottom line, there is going to be a lot more nonsense thrown out there, but until the masses are ecstatic, this market is unlikely to crash.

The mass mindset is wired for failure.
The normal dealer has a tangled perspective on the business sectors and the world. They are everlastingly eager to twist the meaning of hazard and chance to suit whatever point of view is playing the lead job right now. At the point when costs are low, they accept that it is the wrong time to purchase since they will undoubtedly go lower, and when they are taking off upwards, they expect that it is the opportune time to purchase since they will undoubtedly take off considerably higher. The idea of hazard to remunerate is tossed out of the window; they state they look for an open door with generally safe, yet their activities talk generally. No Bull Market has ever finished on a note of dread; they end when the group is in a condition of delight.

One needs to comprehend the contrast between a fight and a war. You can lose a few fights yet at the same time win the war, or win numerous fights and still end up losing the war. It boils down to how much harm you bring about instead of losing or winning the fight. On the off chance that you limit the harm, you can lose a few fights straight, retreat and regroup and return and win the war.

Each positively trending business sector encounters no less than one sharp pullback (shakeout).

One never knows when that will happen precisely. A shakeout isn’t equivalent to a market putting in a long haul top. The enormous players need somebody to pitch these stocks to before they money out.

Not at all like the shakeout stage, one can distinguish a fixing stage dependent on market conclusion. Amid the garnish stage, the majority remain surprisingly versatile when the market encounters a sharp redress; they have now been persuade that each pullback is a chance. At the point when the majority trust this, its opportunity to set out toward the slopes. Case and point Bitcoin. All through its fall, the majority stayed bullish, and in spite of the overwhelming beating it has officially taken specialists are as yet issuing crazy targets even now when Bitcoin is exchanging underneath 5K, which implies that Bitcoin its chances hitting 3K are far higher than 15K.

Courtesy of Tactical Investor

Market Timing

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Market Timing

Market Timing works provided it’s done properly

Market Timing comes down to having the right perspective; one can determine whether a market is topping or bottoming but one can’ determine the prcecise day the market is going to put in a top or a bottom.  For example, our call in Oct 2007 was almost perfect. It worked out because we did not attempt to determine the exact day the market would hit an inflexion point.

We are expecting a pullback in the short-term time frames; this might or might not materialise as short-term timing is the most unpredictable period to deal with; if it does transpire risk takers and futures players can buy calls on the Dow, QQQQ’s, OEX and SPX indices; futures players can go long Dow or SP 500 futures contracts.  Wait for at least a 600 point pull back from the current level.  Market update Oct 16, 2007

This was sent out early on Oct 17th. The Dow moved up traded as high as 14012 and thus if you subtract 600 points from this level you get 13412. The Dow traded as low as 13407, and thus it traded within our suggested entry range.

 

Market Timing; offers illusions of wealth To Fools

The only area that has been somewhat tricky to predict has been the very short-term time frame. And indeed this to be expected as markets are nothing but a manifestation of insanity in real-time.  As we have stated before stock market timing is at best tricky and at worst a ludicrous to a treacherous endeavour.  We look for are signs of bottoming or topping action, and when we see this, we either bail out or start to look for new attractive entry points. For the masses, Market Timing will remain an illusory concept at best. It will offer the allure of wealth but is more likely to send the believers to the dog house.

 

The key to Market timing is not trying to determine the exact date

The key to Market timing is not trying to determine the exact date

Our primary goal in market timing is to just warn our subscribers when we feel the markets are due for a pullback or a run-up.

We also look forward to pullbacks because in almost every case they are overdone, and they usually produce some very attractive buying opportunities.  One day we expect that one of these stated pullbacks is going to be rather extreme in nature.  Our motto is that disaster is nothing but opportunity waiting to hug or kiss you. Return the favour instead of slamming the door on it.

The word crisis in Chinese is composed of two characters-one represents danger and the other opportunity.  Our take on this is that a crisis is dangerous for those who are desperately seeking safety. However, it is lucrative for the astute and patient investor.  When one does this one discovers lot’s of lovely hidden gems just waiting to be picked up at incredibly low prices.

A crisis is an opportunity knocking in disguise

One thing most players have to remember today about market timing, is that the markets have become even more wicked and tricky than ever before. And the reason for this is that individuals as a whole today are more evil and treacherous than ever.  Bottom seekers have to wait even longer before a bottom formation starts to manifest itself and vice versa. So if you are sitting there desperately waiting for something to happen the chances are that you will lose your patience and bail out before it occurs.

The best thing to do is to understand that nothing goes up or down all the time. Eventually, it will start to stabilise. Your job as an unbiased, objective observer is to sit and wait patiently for this situation to transpire. If you try to force something or push the markets into doing something the only one falling off the cliff will be you. The markets listen to no one, care about no one, respect no one and look to destroy everyone. The market is primarily a reflection of your deepest fears staring you right in the face and most people usually, blink when this happens and or look the other way.

 

Desperation leads to losses

How many times have you seen traders get desperate or lose their mind or rant and rave when a stock or an index is doing nothing but just moving sideways. Countless times. Market timing? What have they gained other than increasing their blood pressure and overall stress?

We at TI have long decided that to try to time a specific bottom or top is like trying to hit the bull’s eye while being blindfolded. We look for is a bottoming process or a topping process. And then we look for the psychological factors to confirm that we are indeed close to a bottom or top.

We either look for signs of greed or fear and when we see this, we take action. That’s how we were able to buy palladium initially in the 140-180 ranges, Silver bullion in the 4 dollar ranges, Gold in the 300 dollar ranges.  We also got into Oil stocks when oil was trading well below 35 dollars a barrel, uranium stocks before the main move up started (here we jumped in and out of several 100% plus winners), and the list goes on. Using this same technique, we warned our subscribers of the housing disaster in late 2005, the Gold top in 2011, the Euro Top in 201, etc.

 

We looking for Bottoming or Topping signs

Most of the time we did not get in at the exact bottom or top but usually jumped in a bit too early and jumped out a bit too early, but we would rather be in and out early than late, and get killed in the process, market timing is the key. Look at the chaps that refused to listen and held onto their real estate. Today they would give anything to go back to 2004 and 2005 and be able to sell them at or close to the top.  Now, these very same geniuses are going to have to wait maybe 9-11 years if not more before prices go back to what they used to be.

You don’t need to be rich to make money, but you do need to have the mindset of the wealthy to do so. What do we mean by this?  Usually, wealthy individuals are not desperate to make money; the reason being that they already have enough to live well on, and so anything extra is a bonus.

 

Riches come to those who seek it & poverty to those who chase it

Because they are relaxed and not in a rush; that’s what needs to be learned by most novice traders. Do not rush, do not push for results, find an opportunity and let opportunity do the work for you. In the interim read a few good books and take the time to study yourself. Point and case when we first recommended palladium in the 140-180 ranges; it did nothing for a long time after we got in.

 

However, when it finally started to move it moved like a rocket. And in less than one year it had gone from under 180 to over 420 dollars. Was it not better to simply buy and wait after the main investment criteria were fulfilled. It experienced a severe correction, was putting in a bottom formation and most importantly the masses were ignoring it? In fact, almost no one was talking about it in late 2004 to early 2005.

 

Wealthy Mindset is Key to Success

It’s far more important to have the mindset of the wealthy and to attempt to vault from poverty into riches.  Is it the money that makes you happy or the perception that you have money? Look at it this way if you were locked up in some place in a third world country with almost no money to spare and just barely enough food to eat. Would you then not consider yourself rich if you were given a simple job, a car, a house and a computer. The funny thins is that most people already have this and much more; the sad part is that there are a lot of people in these 3rd world countries who are struggling to survive on under a dollar a day.

Keep in mind the saying that “misery loves company” to which we added “and stupidity simply demands it”.  Why don’t we say happiness loves company or intelligence demands it because it’s not true? Individuals usually do not like winners they start to get jealous when someone talks about winning or they feel upset when someone is unusually happy. The reason is simple they are envious because they would like to be like this person. But they do not know how to do this,  correction, they do know how but they don’t want to try.  Which brings us to another TI saying “life is not bad or good, life just is; it’s our perceptions that oscillate from bad to good”.

 

Riches just like happiness are a state of mind

It’s in our capacity as humans to change our perceptions and in doing so immensely improve the state of our lives, yet most choose to drivel in sorrow and misery. Opportunity is forever knocking but most people forget to open the door in time, and when they do open it they are usually waving goodbye instead of saying hello. 

Every disaster, even painful situations always brings forth incredible opportunities. Most people fail to see it because they have been trained to focus on pain and misery.  What is even sadder is that they concentrate on this pain and misery and do nothing to alleviate it.  If you are going to focus on this area for heaven’s sake do something about it.

At the very least try to help yourself or those that are close to you but instead most people sit there like donkey’s, wailing and hoping that someone else takes pity on them and tries to help them. In this way, a lifetime is wasted in misery and pain and inadvertently trying to drag in as many other innocent bystanders as possible into this tragedy.

 

Do not chastise yourself for past mistakes but learn from them

And ask yourself why you did what you did and then write this down in your trading journal.  The tragic part of most people’s lives is that they can dedicate so much time preparing themselves for a particular career,  etc. However, they spend a tiny amount of time trying to get a better understanding of themselves and how the mass mindset operates.  In fact,  it can be stated that most people live and die without really knowing who they are and what they want.

People are born happy and usually die miserably as they have forgotten all the very basic tenets of what happiness is all about.  Remember the times as a child and young adult when you could laugh at almost anything and life was to some extent a joy. Now look at where most people are; they are sloughing away to pay for things they don’t really need. For example, vacationing at some expensive resort. Just because it has some sand and unlimited food does not mean it’s not a prison. You have physically and mentally restricted your movements and the worst part is that you have done this voluntarily.

 

Give the Mind a break and take a vacation

How can staying in such a prison truly be a vacation?  The masses have found a way to lock themselves up somewhere out of their own will. A vacation is not a place where you lock yourself up but open yourself up to new experiences. A vacation is where you take your mind away also and not just your body.  To achieve this you have to give it something new, something to look forward too. For example, visiting a strange country; take in the sights and mingle with the natives. Avoid resorts if possible and spend most of your time outside.

 

When on vacation spend as little time as possible at the Hotel

You should only use the hotel to shower and for a good nights sleep. For the most part you should be out and about, interacting with the people, taking in the new sights, savouring the new food.  If you do this not only will you have a  real vacation but you will immediately open your mind to new possibilities. And that is what investing is all about, the opening of the mind to new possibilities.

Go back to that moment in time when as a child you experienced unadulterated fun or pleasure. Ask yourself what made the moment wonderful. In most cases, it was simple things that money could never buy.  Perhaps it was a lovely picnic or a drive down in the countryside on a nice sunny day with a loved one or even just alone. Or maybe trying some new tasty dish, spending time with good friends and so on.  Now notice that as an older adult if and when you have one of these moments of happiness how touched you are by them.  You incredibly good when it happens and when it’s over you long for it again. However,  you never try to dig down to ask yourself what was it that brought it about in the first place.

 

Be yourself and live in the moment

Live in moment

The answer is very simple; when you stop acting, stop pretending and just allow yourself to be who you really are without the disguises, the masks, the pretences and so forth you put yourself into a position where a ray of light can finally break through the gloom. It’s not hard to have a good time it’s just hard to see that it’s so easy to do so. This brings us to another TI saying; “life’s simplicity is what makes it so complex” stop trying to learn how to live a better life and just start to. Tomorrow begins today for tomorrow never really comes. Was not today the tomorrow you worried so desperately about yesterday.

Would it not have been better if today could have been the tomorrow you smiled about and looked forward to yesterday?  We could speak at length on this topic and probably fill a book with all the points we could make on it; sadly we do not have the time to undertake such a massive endeavour on such short notice.  The main thing to remember is that happiness is a state of mind. And as my late father Solon Palha used to say “happiness is a mind in peace and hell a mind in pieces”.

 

Psychology is one of the oldest sciences out there

Psychology is one of the oldest sciences out thereIt’s just that for a long time it existed under different names the primary one being philosophy. As they say history repeats itself over and over again and the past is actually a window into the future.  One good book that should be compulsory reading for all traders is a book titled “Michel de Montaigne – The complete essays”. You can pick this up for as little as 10 dollars from Amazon. This Gentleman was born in the 1500’s and his writings display an incredible.

Posted courtesy of TacticalInvestor.com

US household debt rising again to 13.21 Trillion dollars

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US household debt rising again to 13.21 Trillion dollars

NEW YORK, May 17 (Reuters) – U.S. household debt grew by $63 billion, or 0.5 percent, to $13.21 trillion in the first quarter, driven largely by the increase in mortgage balances, a New York Federal Reserve quarterly report released on Thursday showed.

The amount of mortgage balances rose by $57 billion in the first three months of 2018 to $8.94 trillion. Families, however, paid down their home equity loans, which fell by $8 billion to $436 billion, according to the report.

“Although household debt has been growing for five years, its growth has been slow relative to earlier periods, as mortgage debt has continued to be relatively flat,” N.Y. Fed analysts wrote about the report’s findings.

Overall tight lending standards have likely contributed to the modest increase in mortgage debt, they said.

Meanwhile, the U.S. housing sector has continued to its recovery since the global credit crisis a decade ago, according to N.Y. Fed analysts. Full Story

All is well until it’s not but before the party ends we expect debt levels to soar 2X to 3X higher and the ensuing stock market bailout will probably amount to  $5-$7 trillion.  I know it sounds insane and the first reaction is to say you have lost your mind.  Ah but go back in time, the national debt was once less than one million dollars, and it took almost 100 years to get to one trillion, and now we add one trillion every year.  It’s all a matter of perspective; the masses believe that paper is fine and will believe it fine until the system implodes. A system only implodes because the masses have lost faith in it and the current players are masters in the Art of Mass psychology. If you understand the concepts of mass psychology well and have the money, you can make almost anyone believe that they are doing things out of their free will, when in fact, they are not. 

To do this one needs boatloads of money and complete access to the press.    So here is one technique that is used almost all the time with deadly precision.  You give the masses two choices, both equally different and both of which are backed up a lot of so-called experts. Unbeknownst to the masses is a simple fact;  both choices are wrong.  Look at how brilliant this plan is; you introduce the illusion of choice while knowing both choices will lead to the same outcome. Its treachery on steroids and if one wants to take things up a notch, you introduce a third party that comes out with fringe based ideas; this creates the illusion of freedom as the idea is to make it look like even nut jobs have say. 

Even in this area, the financial arena leads the way in deception; they treacherously use mass psychology  to whip the masses into a frenzy.