Blowback

  • A ‘new normal’
  • Asymmetric warfare
  • ‘Overnight Dividends’ series starts this Wednesday

The term ‘blowback’ is used by intelligence agencies to explain the negative consequences of a particular course of action.

In other words, when country A does something to country B, which country A believes to be for the good, the ‘blowback’ is when country B or someone or something sympathetic to country B retaliates.

We refer to this term after noting a headline in today’s Wall Street Journal: ‘Europeans Ask if Violence Is Becoming Fact of Life’.

The article continues:

In less than two weeks, Western Europe has witnessed the calm of everyday life repeatedly shattered by high-profile, indiscriminate acts of savagery, raising the sense that violence is becoming a new normal.

This is ‘blowback’.

Anyone who lived in the UK until the late 1990s to early 2000s will know about ‘blowback’. Hundreds of years of British meddling in Ireland resulted in a constant fear of terrorist attacks.

Terrorist attacks by those with Middle Eastern origin in the US and Europe are a result of Western meddling in the Middle East.

For a good part of the 20th century, the West thought it could carve up the spoils in the Middle East, impose and depose various tribal and religious leaders, and draw arbitrary boundaries, all without any negative consequences.

In more recent years, the West has tried to play the ‘democracy’ game…claiming that the meddling is simply to sow the seeds of democratic values in the Middle East.

Very noble. And maybe they genuinely believed it was the right thing to do, and that it would work.

However, before meddling, they may have considered the fact that the Middle East has been the way it is for 4,000 years. You only have to read Greek history and the Bible to understand that conflict in the region isn’t a new phenomenon.

To think that a brief war, and the imposition of another Western puppet government with a new democratic system of government could erase 4,000-plus years of history is…well…naïve.

Any point to this? Not really. Except to say that as much as we would like to provide a rosier picture, we can’t. Europeans (if they do think this way) probably are right to conclude that violence, at least for the foreseeable future, is ‘a new normal.

Back to the markets…

Markets

Over the weekend, the Dow Jones Industrial Average gained 53.62 points, or 0.29%.

The S&P 500 index added 9.86 points, or 0.46%.

In Europe, the Euro Stoxx 50 index closed up 3.74 points, for a 0.13% gain. Meanwhile, the FTSE 100 added 0.46%, and Germany’s DAX index lost 0.09%.

In Asian markets, Japan’s Nikkei 225 index is up 122.58 points, or 0.74%. China’s CSI 300 index is down 0.15%.

In Australia, the S&P/ASX 200 index is up 27.91 points, or 0.51%.

On the commodities markets, West Texas Intermediate crude oil is trading for US$44.20 per barrel. Brent crude is US$45.73 per barrel.

Gold is US$1,317 (AU$1,762) per troy ounce. Silver is US$19.48 (AU$26.07) per troy ounce.

The Aussie dollar is worth 74.72 US cents.

Asymmetric warfare

By the way, although some may see it as distasteful to link increased terrorist violence to an investment service, we see it as our duty to provide you with the details, and then let you decide.

You’re an adult. You can make up your own mind. You don’t need us to sugar-coat things for you. If you don’t like the association between terrorism and investing, that’s fine.

But understanding the relationships between investing, macroeconomics, and geopolitics is likely to be an even bigger fundamental part of investing in the years ahead.

That’s why we have Jim Rickards on our staff.

Jim has briefed the White House, US security and intelligence agencies, and Wall Street (among many others) on the risks and opportunities posed by what we know as asymmetric warfare.

This is a big challenge.

Historically, when countries went to war against each other, there was a certain degree of equality. Even when the sides were unmatched, the creation of coalitions and alliances would often help to somewhat level the playing field.

But that has changed in a big way in recent years.

The United States is, without doubt, the biggest military force in the world. It dispatched Saddam Hussein’s Iraqi army in a few short weeks. That was back in 2003.

You may remember then US president, George W Bush, landing in a jet on an aircraft carrier, with a large banner that read ‘Mission Accomplished’ displayed behind him.

Not so. 13 years later, the US is still in Iraq. The mission wasn’t accomplished.

While the US was able to make short shrift of the Iraqi army, it has had less success in the asymmetric warfare against ‘insurgent’ groups.

The world’s most powerful army, air force, and navy, are unable to beat a ragtag band of ‘private armies’.

In fairness, this isn’t new. Referring back to the British involvement in Ireland, the might of the British Army was never able to beat the ‘private’ Irish Republican Army (IRA).

Nazi Germany strode across the Maginot Line into France. Within days, the French government had fled, the French army had laid down its guns, and the puppet Vichy government was installed into power.

Yet, despite its might and five years of occupation, Nazi Germany couldn’t defeat the French Resistance fighters. Again, a ragtag band of fighters outfought a massive military machine.

There are many other examples around the world, where the might of the state’s war machine is no match for the flexibility and unpredictability of small-scale ‘private’ armies.

Part of what Jim Rickards attempts to do in Currency Wars Trader is to identify the risks from these asymmetric match-ups, and then use his analysis to find the best way of playing it. He does that with the help of Australian based analyst, Shae Russell.

While the investment service they run is called Currency Wars Trader, it’s important to note that the opportunities they identify aren’t just related to currency wars.

The investment opportunities are as widespread and diverse as the risks they identify.

It’s a unique investment service. As far as I’m aware, there’s nothing else like it in Australia.

For instance, one of the recent trade ideas in the Currency Wars Trader service was a play on the ‘Brexit’ saga. The trade has been active for a week, but it’s still trading within the buy range.

Anyway, if like many folks, you like reading about macroeconomic and geopolitical events, but you want an investment angle too, Currency Wars Trader could be the type of investment advisory that suits you to a tee.

Check it out here.

‘Overnight Dividends’ series starts this Wednesday

This weekend we announced the launch of a special three-part training series on ‘Overnight Dividends’.

The series starts this Wednesday. You can go here for details.

What are ‘Overnight Dividends’? Naturally, the three-part event will reveal the full details.

In truth, while the ‘overnight’ part of the event is correct, the ‘dividends’ part isn’t. ‘Overnight Dividends’ aren’t really dividends at all.

Like a dividend, ‘Overnight Dividends’ involve you receiving a cash payment into a bank account. But ‘Overnight Dividends’ aren’t paid by the company you invest in. In fact, with the ‘Overnight Dividends’ strategy, you’re not actually investing in a company at all.

Sure, in some cases the outcome is that you do end up investing in a stock, but not always. I know this because I use the ‘Overnight Dividends’ strategy myself.

I’ll admit that I haven’t used the strategy as much as I’d like to use it. Out of the five ‘Overnight Dividends’ trades I made last financial year, in three instances I ended up investing in a company’s shares, but on two occasions I didn’t.

Instead, I just got to keep the ‘Overnight Dividend’ payment.

In total, from just five positions, I generated $819.70 in extra income (before transaction costs) from ‘Overnight Dividends’. I know, it’s not a huge amount.

But I’ve only been fiddling about with the ‘Overnight Dividends’ strategy. In reality, if I put the proper time and effort into it (and if I had someone to show me which trades to make), I could realistically make six to eight times as many ‘Overnight Dividend’ trades during the year.

All else being equal, that could see my $819.70 in ‘Overnight Dividends’, increase to nearly $5,000 or more.

What’s more, because I’ve only been playing around the edges with this strategy, again, if I had someone showing me exactly what to do, I’m certain I’d have the confidence to increase the amount I received from each transaction.

That could see my ‘Overnight Dividend’ proceeds increase to $10,000 or more, each year.

And that’s not even the best of it. The ‘Overnight Dividend’ strategy isn’t just a one-off transaction. Each trade can be just the first step of a multi-trade strategy, which can increase the number and value of ‘Overnight Dividends’ you’ll receive.

Look, I know this may all sound super cryptic. But I can tell you that, since rediscovering this strategy, it has completely changed the way I invest in blue-chip stocks.

As an example, in April this year, I placed a trade to earn (before transaction costs) $180 in ‘Overnight Dividends’ from Woolworths Ltd [ASX:WOW].

The payment hit my account the next day — within 24 hours. All that needed to happen after that point was for the Woolworths share price to stay above $20 per share by the end of June.

If it did, I would get to keep the $180…and it did. I didn’t even need to buy Woolworths shares in order to get the $180. Of course, I was ready and willing to buy them if the share price fell.

That’s the key to the ‘Overnight Dividends’ strategy.

If this kind of investing approach strikes a chord for you, I urge you to take part in the ‘Overnight Dividends’ training information, starting from Wednesday.

In my view, it’s must-read investing material. Go here to find out more.

Cheers,
Kris