Higher and higher…

  • Open for business
  • Members’ views
  • Not a ‘supercycle’
  • In the mailbag

The bull market continues.

Although, as the title of Vern Gowdie’s new eBook — How Much Bull Can Investors Bear? — suggests, it may not last for long.

Vern’s book will be available online in the coming weeks.

Look out for details.

Meanwhile, the Dow Jones Industrial Average today blasted above 19,000 points to close above that level for the first ever time.

Who said Donald Trump would be bad for the markets? Investors love him. For now…

Markets

Overnight, the Dow Jones Industrial Average gained 67.18 points, or 0.35%.

The S&P 500 gained 4.76 points, or 0.22%.

In Europe, the Euro Stoxx 50 index added 11.36 points, for a 0.37% gain. Meanwhile, the FTSE 100 added 0.62%, and Germany’s DAX index gained 0.27%.

In Asian markets, Japan’s market is closed for the Labour Thanksgiving Day holiday. China’s CSI 300 is up 0.36%.

In Australia, the S&P/ASX 200 index is up 60.17 points, or 1.11%.

On commodity markets, West Texas Intermediate crude oil is trading for US$47.94 per barrel. Brent crude is US$49.04 per barrel.

Gold is US$1,214.62 (AU$1,636.78) per troy ounce. Silver is US$16.72 (AU$22.54) per troy ounce.

The Aussie dollar is worth 74.2 US cents.

Open for business

This afternoon, at 2:00pm AEDT, we opened the doors to the 2016 intake for Port Phillip Publishing Alliance membership.

Remember, just 500 spots are available. Once those 500 places are taken, we’ll close the doors, even if that’s well before midnight on 30 November — the official closing date.

Once the doors close this time, we can’t say when we’ll reopen them. But the last time we offered new Alliance memberships was in December 2015. So we may hold the next intake in November or December next year.

If you missed the email, check it out. You can go here to find out the full details on the Alliance program. You really shouldn’t miss it. Go here.

Members’ views

Staying on the Alliance, yesterday we showed you some of the messages we’d received from current Alliance members. Here are a few more.

These include the questions we sent them to help prompt answers. Some members opted to answer each question, others decided to just give us their overall feedback.

Today, we’ll focus on the former. These answers came from Alliance member, Lindsay:

Question: How have you found your Alliance membership so far?

‘Answer: Excellent value, both educationally and financially.

Q: What do you see as the main, overarching benefit of Alliance membership?

‘A: The offer of a vast variety of economic and technical commentaries coupled with various approaches to stock market investment. It is especially of note that these commentaries may at times utterly disagree… This is a most refreshing quality of the service.

Q: Are there areas for improvement regarding Alliance membership; if so, what are they?

‘A: I would like to be able to manage my subscriptions, i.e. turn them on or off and have some other way of screening the content of those services which I am not focussed on. With some for example I would need to click a link enter a password to download the report, just to have a peek… The number of emails is simply overwhelming and it is not possible to read all, although I appreciate it is very generous!

Q: The core aim of Alliance is simple: To make you smarter, better-informed and wealthier over time than you would be if you simply followed mainstream advice. Can you please explain how your Alliance membership is helping you towards this goal?

A: Absolutely! There is simply no better way than to read the variety of opinion and to discover which approaches are personally engaging or successful.

Q: Have you received any specific advice or recommendations that have done well since you joined Alliance?

A: Many of the editors have discussed the need to discover what kind of investor one actually is, rather than what one thinks one is, that it will take time to discover and that it is an emotionally challenging process. Ultimately, as has often been said, one has to sleep well at night.

Q: As an Alliance member, you are automatically enrolled in every new service we publish (depending on the membership level). How valuable has the decision to join Alliance been for you over time?

A: Joining was a very good decision and I value very highly the mentorship, integrity and diversity of opinions of the editors, a big thank you to you all!

This reply came in from Alliance member, Peter:

Question: How have you found your Alliance membership so far?

Answer: I find the service excellent as I can browse through a range of the different services, each of which has its own unique perspective on the market. I read a broad range and am better able to make my mind up on how to invest.

Q: What do you see as the main, overarching benefit of Alliance membership?

A: The greatest benefit of Alliance membership is the breadth of views available and the ability to see common threads as the views of different analysts become closer at times. This allows for a broader perspective on the market and the directions in which the global economy is headed.

Q: Are there areas for improvement regarding Alliance membership; if so, what are they?

A: I would like to see less wordy write ups. I am busy and I find to get the information I want is becoming more time consuming. Tighter writing styles would suit me with less repetition. 

Q: The core aim of Alliance is simple: To make you smarter, better-informed and wealthier over time than you would be if you simply followed mainstream advice. Can you please explain how your Alliance membership is helping you towards this goal?

A: Since becoming an Alliance member I am far better informed with the huge breadth of views available to me. I am making more money investing in shares now that I ever did previously, when I took some mainstream advice as well as tips from brokers etc. As an Alliance member I was able to move on to a far better informed position.  

Q: Have you received any specific advice or recommendations that have done well since you joined Alliance?

A: I have done well out of specific recommendations, such as Appen where I made 4.5 times my money on the trade, Lucapa Diamond where I did well but would have done better if I had followed stop loss advice better and Capilano Honey which was a good trade for some time.

Q: As an Alliance member, you are automatically enrolled in every new service we publish (depending on the membership level). How valuable has the decision to join Alliance been for you over time?

A: Alliance membership has been well worthwhile and has saved me a lot of money compared to individual memberships of the services which I both receive and use regularly. If I did not have Alliance membership I would be nowhere near as well informed or comfortable as an investor and share trader.

And Alliance member, Dean, answered our questions as follows:

Question 1: How have you found your Alliance membership so far?

Answer: Outstanding value. To think that this service lasts for life is simply amazing. The smorgasbord of data, viewpoint, analysis and suggestion is incredible.  

Q: What do you see as the main, overarching benefit of Alliance membership?

A: The depth and range of viewpoint. The ability to experiment and choose which investing/trading style (or blends of) fit your own investing/trading approach.

Q: Are there areas for improvement regarding Alliance membership; if so, what are they?

A: When attempting to contact the editors of the individual services it is sometimes difficult to determine which email addresses to use. Having said that though, queries do always seem to find their way to the editors even if a general Port Phillip Publishing email address was used in the first place.

Q: The core aim of Alliance is simple: To make you smarter, better-informed and wealthier over time than you would be if you simply followed mainstream advice. Can you please explain how your Alliance membership is helping you towards this goal?

A: I now do not refer to any other financial media. Including Bloomberg. I don’t need to. Between Alliance membership and the charts from my brokerage accounts I get all the information I need for investing/trading.

Q: Have you received any specific advice or recommendations that have done well since you joined Alliance?

A: Time Trader forecasted a sideways year in 2016 and consequently I have refrained from heavy trading, particularly since around May/June. This has resulted in preservation of capital that may have otherwise been eroded. 

Q: As an Alliance member, you are automatically enrolled in every new service we publish (depending on the membership level). How valuable has the decision to join Alliance been for you over time? 

A: The value to me is immeasurable. Sometimes I find it difficult to believe that this range of services is being provided for life, with potentially more to come over the years. Being able to explore these different services over time and create my own personal blended investing/trading style is deeply appealing. I have favourites but deliberately consume all the collateral from all the services to gain a deep, balanced view of the financial world.

There are many more testimonials from members extolling the virtues of Alliance membership. But don’t just take their (or my) word for it. Check it out. Go here.

Not a ‘supercycle’

The US market may be soaring higher and higher, but Telegraph commentator Ambrose Evans-Pritchard isn’t convinced it’s sustainable.

He writes:

Rampant speculation and exaggerated hopes of a Trump-led boom have fuelled a blistering rally in industrial metal prices.

Oil is recovering from the dead. Intoxicating talk of a new commodity supercycle is suddenly on everybody’s lips.

It is as if we were returning to the glory days of break-neck industrialisation in China and the rising powers of Asia, but this time the bulls risk bitter disappointment.

Evans-Pritchard points to the stronger US dollar as a reason for caution.

On the day that Donald Trump became president-elect, the Aussie dollar surged to 78 US cents. Today, it’s trading at just over 74 US cents.

As the prospects of the US Federal Reserve raising interest rates next month have grown, so, too, has the strength of the US dollar.

In fact, based on the futures markets, there is now a 100% probability of the Fed raising rates.

Of course, up until the results starting coming in, many thought that Hillary Clinton was close to a 100% probability of winning the race to the White House.

Even after the polls closed in the UK, the markets had factored in a 100% chance of Britain staying in the European Union — that was why the pound sterling spiked after early exit polls…and then slumped as the votes were counted.

Now, we’re not saying that the Fed’s decision will necessarily be the next ‘Black Swan’ event to hit the market. As we’ve noted before, ‘Black Swan’ events are unpredictable, so, by their nature, you can’t predict them.

Even so, when the futures market has factored in a 100% chance of something happening, it’s still worth considering the possibility of the opposite taking place.

It’s still three weeks until the Fed meets. The market has soared on the belief that a Donald Trump presidency will reward the US economy with a new growth spurt.

We’ll remind you, dear reader, that, while the Fed decision is still three weeks away, it’s still nearly two months until Trump enters the White House.

We figure (and we could be wrong) that, at some point, reality will set in. The concept of ‘buying the rumour and selling the fact’ should be well known to you.

It’s hard to think that the market hasn’t done a whole bunch of ‘rumour buying’ over the past couple of weeks. Stocks have soared, even here in Australia.

Resources stocks, such as BHP Billiton Ltd [ASX:BHP] and Rio Tinto Ltd [ASX:RIO], have done particularly well.

And why shouldn’t they? If the new president wants to build a big new wall, and if he wants to repair the crappy and crumbling streets of New York, it will require a whole bunch of resources.

The type of resources that BHP and Rio will be happy to supply.

But, like Evans-Pritchard, we find it hard to believe that the market will sustain this rally. Whether it falters in the coming weeks, before or after the Fed meeting, or before or after Trump takes office, is anyone’s guess.

We just know one thing: With the Dow up 190% since the 2009 low, we’re very happy to maintain our bearish view of the market.

In the mailbag

More mail hits the mailbag on climate change. Almost more than we can handle. But we’ll sift through it, anyway.

Here’s one letter, from subscriber, Matt:

I loved your latest piece on two topics: NBN How not to run a business and Climate Change. I agree with you on all accounts.

The NBN story is just appalling. Apart from the total blowout in costs (a Telstra technician told me the other day that the cost to date is actually $80 billion) it is being rolled out in the most sparcely populated regions. So much for our Prime Minister’s constantly regurgitated rhetoric of “Jobs and Growth”. I usually side with his party’s policies but the PM’s continual chanting of this hollow throwaway line leaves me cold. How can this country have Jobs and Growth when we can’t even log on to a decent internet service with acceptable speed, as is the case for the majority of the country. I rarely bother watching any sort of video on line as the constant buffering and interruption is too much to bear. I live in a densely populated region on the Sunshine Coast in QLD. For the first three years we were here the best speed available was via satellite which was intermittent and slow, then by shear chance we managed to secure a connection via the phone line when a port became available at the local exchange after someone else have moved and just cancelled their service. Of course we can only get ADSL…that’s not ADSL2 or ADSL2+…just slow most of the time… The Clever Country!!

The even more appalling situation is the means by which world governments have hoodwinked the general public into believing and embracing the Climate Change fairy tale. Remember when it used to be Global Warming, but then temperatures started to go down, so they changed the title to Climate Change. I will start to support this movement when all the billions that will be changing hands…mostly from the average wage earner into the government coffers…is used to stop logging and de-forestation in countries such as Africa, South America and New Guinea…also in Tasmania…which is destroying the lungs of the earth as well as countless animal and plant species. However, that doesn’t build up the wealth of the elites so it will be conveniently ignored. By the way if you were a climate scientist operating on a government funded grant, how long do you think you would last if you didn’t comply with the herd and only provided untainted data which showed that mankind is not having any significant effects on the temperature of the planet? By ensuring that all of your data pointed towards climate change you can be guaranteed of continued funding. Have any of these people actually watched an ice cube melt in a glass of water and found that the water level in the glass is the same as it was before the ice cube melted? Rising sea levels?? Apart from this the oceans of the world have been taking in and releasing far greater quantities of CO2 over millions of years than mankind could ever generate. Also we will see who will be charged all of the carbon credits the next time a volcano erupts and again, releases far more carbon emissions than we could ever hope to reduce. Good luck with this one worldwide population. The history books will look back on our primitive beliefs in amazement.

Subscriber, Geoff, writes:

Keep it up Kris.

The climate change clowns all parrot the same “97% of scientists…” I’m a scientist and I don’t recall getting surveyed on that one. It’s more likely to have been 97% of scientists receiving grants to study climate change. If they were to present data that shows there’s no climate change the grants would dry up.

And this one from subscriber, Geoffrey:

Here’s a polite comment on your views on climate change.

I’m a scientist (among other things). So, when I studied the field (primarily physics) I learned about a thing called a hypothesis.  As you’d know — basically it’s a supposition or proposed explanation made on the basis of limited evidence as a starting point for further investigation.

I recall some of my lecturers using the term to describe the accepted mainstream ideas in our field and other scientific endeavours — with statements like “Evolution is a hypothesis we have to explain the development of diverse species.” They did qualify the comment with observations along the line of, “Much of the evidence is compelling and consistent. However, it’s a hypothesis. Not a proven fact.” And even if something is “proven in science” we still tend to say “It’s just our best hypothesis until a better or more accurate explanation comes along.” Scientists tend to make cautious statements referring to evidence and flagging the limits of our measures, experiments and models.

Man made CO2 based climate change is a hypothesis. It appears to be supported by evidence. And there are other climate hypotheses, also supported by evidence. Unfortunately, for the evangelical supporters of man made CO2 based climate change, the ability of their climate models to forecast is poor. And the moment a hypothesis stops accurately forecasting the real world or experimental results — as scientists we have to say “This hypothesis is incomplete, and while it seems likely, more research, debate and improved models are required.”

As soon as scientists start calling people who challenge their views “****heads” and forecasting the “apocalypse is coming tomorrow” I dismiss them as religious or political zealots. They demean the field of climate science. And along with them I’m inclined to dismiss their hypotheses (which they portray as fact). They are most certainly not behaving as scientists are expected to behave. Their very failure to entertain new ideas, to park emotions and engage in courteous, evidence based debate and investigation proves them to be some other creature.

I believe climate changes; and in long term climate cycles, there’s a load of evidence for this and no one disputes it. The hypotheses explaining the cause and mechanism of the change is the issue under debate. When man made climate change supporters resort to insult in response to questions or differing opinions one begins to wonder just how many holes there are in their hypotheses. I’ve become a man made climate change sceptic partly for this reason. I have some scientific concerns too.

There was a time when everyone agreed the world was flat. That didn’t turn out too well. I don’t care if most scientists in the world agree with the hypothesis about anthropomorphic climate change; I do care that their climate models can accurately predict the climate short, medium and long term. If not the ideas are nothing more than the flavour of the moment.

Not all the letters we’ve received are supportive. Subscriber Andrew sent us a link to a recent article in the Sydney Morning Herald for a story syndicated from the Washington Post.

The original headline reads, ‘The North Pole is an insane 36 degrees warmer than normal as winter descends’. The Aussie version used the same headline, but converted it to 20 degrees Celsius.

The article used this chart to show how temperatures north of the 80th northern parallel are warmer than average:





Source: Washington Post
Click to enlarge


If you hadn’t guessed, the line to grab your attention is the red line. Look at it…shooting higher. That snapshot was on 16 November.

Below is the latest chart, which comes directly from the source, the Danish Meteorological Institute:





Source: Danish Meteorological Institute
Click to enlarge


Interesting. We’ll agree that it’s still above the long-term trend. But we’re still waiting for the Sydney Morning Herald and others to amend their story to say that it’s now only an ‘insane’ 15 degrees Celsius warmer than normal…and getting colder.

And we wonder when the Sydney Morning Herald or Washington Post will delve into its archives for a December 1959 issue of its newspaper to see if reporters screamed loud about climate change during a similar temperature spike that year:





Source: Danish Meteorological Institute
Click to enlarge


Or what about the huge and anomalous temperature volatility in 1972? Did the Washington Post or Sydney Morning Herald issue deadly warnings about climate change back then?





Source: Danish Meteorological Institute
Click to enlarge


Wouldn’t you know it, the right hand of the two temperature spikes was an ‘insane’ 20 degrees Celsius (the scale on this chart is Kelvin) above the average.

Funny that.

Folks tell us that we have to prove that climate change isn’t real. Wrong. The mad climate change scientists need to prove it is real. Because, so far, we haven’t seen any evidence that can’t be easily counter-argued — even by a science ignoramus like your editor.

Really, it doesn’t take much effort to blow more than a few holes in their weak and weary scare-mongering analysis.

Cheers,
Kris