Why you DON’T have to buy this market…

Tuesday, 9 January 2018
Melbourne, Australia
By Kris Sayce

  • Synchronised bull****
  • Small stakes
  • Ignore the bears
  • How much can a koala bear?

First, some housekeeping.

We reopened our Crypto Tech Investor service today.

If you were on the priority access list, make sure you check your email. It went out around 12:20pm today.

The subject line was ‘It’s go time…’

The price action in the cryptos market is extraordinary. As we’ve said before, we’ve never seen anything quite like it.

As I write, the seven open positions on Sam Volkering’s crypto recommendation list are:

  • Crypto 1 – up 984%
  • Crypto 2 – up 359%
  • Crypto 3 – up 1,982%
  • Crypto 4 – up 2,111%
  • Crypto 5 – up 799%
  • Crypto 6 – up 1,157%
  • Crypto 7 – up 986%

The eagle-eyed reader will note that these returns are less than they were yesterday. That’s not uncommon with any investment. The value of investments both rise and fall.

But with cryptos, the rises and falls tend to be bigger than most other investments. Most other investments we know about, anyway.

That’s why we’ve quarantined access to the Crypto Tech Investor service. Only those investors who have expressed an interest in this low-stakes, high-risks and potentially high rewards sector, get the chance to join.

Plus, we’ve raised the bar even further. To try to ensure only serious investors join, we’re not providing a trial period. You’re either in, or you’re not. No mucking around.

And with the potential for the gains like shown above, it’s no wonder Sam’s Crypto Tech Investor is one of the most popular services we’ve ever launched.

So, if you joined the priority list and you want to join Sam’s Crypto Tech Investor service, make sure you find the email we sent you earlier today.

The subject line was ‘It’s go time…’

And now, on with the show…

Markets

Overnight, the Dow Jones Industrial Average closed down 12.87 points, or 0.05%.

The S&P 500 ended the day up 4.56 points, or 0.17%.

In Europe, the Euro Stoxx 50 index closed up 8.82 points, for a 0.24% gain. Meanwhile, the FTSE 100 fell 0.36%, and Germany’s DAX index gained 0.36%.

In Asian markets, Japan’s Nikkei 225 index is up 122.97 points, or 0.52%. China’s CSI 300 is up 0.4%.

In Australia, the S&P/ASX 200 is up 16.63 points, or 0.27%.

On the commodities markets, West Texas Intermediate crude oil is US$62.21 per barrel. Brent crude is US$68.20 per barrel.

Gold is trading for US$1,318.94 (AU$1,677.84) per troy ounce. Silver is US$17.12 (AU$21.78) per troy ounce.

The Aussie dollar is worth 78.61 US cents.

Bitcoin is US$15,267.12.

Synchronised bull****

Markets and asset prices are at or are near a record high.

That’s true in the US and Europe, and it could soon be true in Australia.

The way things are, it seems it wouldn’t take much effort for the Aussie market to rise to a record by the end of the year.

Hence, your editor’s nervousness.

We’re nervous about high stock prices.

We’re nervous about high house prices.

We’re nervous about high cryptocurrency prices.

But shame us for our nervousness. Perhaps we should follow the advice from an article in this week’s The Age. The headline, ‘Stocks are at an all-time high. Is it too late to get in on the action?

The article relates…

The Dow Jones industrial average hit the 25,000 mark for the first time on Thursday, and I confess it made me giddy’, writes Thomas Heath of the Washington Post.

Heath continues:

But when will it pass? And is it too late to jump in and grab a ride while it’s still going up?

“I can relate this question to family discussions we just had at Christmastime,” said Suzann Pennington, chief investment officer at Foresters Asset Management.

“I have a brother who is almost 60 and looking toward retirement in five to seven years. He asked me if he should dare to put more money into the market.”

“I said, ‘You have to’. It goes back to the expression, ‘Make hay when the sun shines’. The sun is shining. We have synchronised global growth for the first time since the Great Recession.”

The article offers another view…which happens to be the same view:

Dive in, says super-bull Ivan Feinseth, chief investment officer at Tigress Financial Partners.

“The market is going a lot higher,” Feinseth said.

“You have synchronised global growth, positive earnings growth, the tax cut, wage increases and accommodative monetary policy. Markets around the world are making new highs.”

To sum up, the author offers this conclusion:

Pennington cautioned that her only concern is what she can’t see.

“The only caveat is a black swan geopolitical event,” she said.

What could that be? A rare, unpredictable surprise that no one thought possible.

Hence, we shall offer, the reason for the term ‘black swan event’.

Which makes us wonder: if the aforesaid expert is concerned about the possibility of a black swan event, does it really make sense to tell folks ‘you have to’ put money in the market?

Surely the advice would be the opposite — that you don’t have to. Because if the black swan event happens, who’s to say how long the crash and recession would last.

Would it last long enough for the 60-year-old investor to recover their losses…on what would no doubt be a diminishing capital base as they spend their savings in retirement?

Not likely.

But that’s the way it is right now. The higher the market rises, the higher folks believe it will rise. But is it because that’s what they really believe, or is it because they have to believe it?

With so much of their capital tied up in stocks, to think that a crash could happen, and the extent of the wealth destruction, is perhaps a greater disaster than they can bear to admit.

Small stakes

Despite the seeming hypocrisy, this is one reason we don’t have many qualms about recommending folks look at cryptocurrencies.

Yes, they’re risky. They’re volatile. And they could be the biggest asset bubble the world has ever seen…but, they are also an asset class with a very low barrier to entry.

When there is the potential for a crypto to rise 1,000% in a short timeframe, you don’t need to stake a lot. In fact, crypto expert Sam Volkering says punters should only stake a few hundred bucks, or whatever they can afford to lose, if things do go pear-shaped.

And looking at Sam’s track record so far, it seems as though he’s helping folks clock up quadruple-digit percentage gains in no time.

And according to Sam, more opportunities for big gains could be on the way. If you joined the priority list, remember to check your email from earlier this afternoon. The subject line was ‘It’s go time…’

Ignore the bears

Finally, over to Phil Anderson. Phil is someone else who would tell your editor not to be such a worry-wart.

Phil’s message: Don’t listen to the bears, this bull market still has further to go.

Check out Phil’s latest guest essay below.

Cheers,
Kris


How Much Can a Koala Bear?
By Phil Anderson

‘Now, I don’t like to speak Illawarra, but I was shocked; I mean how much can a koala bear?’

Remember these immortal words?

They’re lyrics, in part, from Austen Tayshus. A line from his song ‘Australiana’.

The song spent seven consecutive weeks at number one right around Australia in 1983.

The single was banned in Victoria for a week. Because of a few swear words on the B-side ‘The Comedy Commando’.

Speaking of ‘bears’, whatever happened to those China bears?

You know the ones. The hedge fund managers that without a doubt believed that China was going to collapse back in 2012. And told you to back their belief with your money.

Jim Chanos was one. Remember him?

In 2012 he said China was in a bubble. That was on Bloomberg Television, 3 May.

In 2013 he claimed it was ‘now the best time in recent memory to get short’ in China. That was on CNBC, 19 December.

Again in 2015 he said China’s model was broken.

He’s still at it. Quoted on Bloomberg back on 19 May this year, he came out and said:

Stresses in China’s banking system are becoming more apparent amid the mounting pile of credit extended by the nation’s lenders’.

Do these guys ever give up?

Not until they run out of money it seems.

Hedge fund manager, Paul Hart spent seven years and $240 million, waiting for the crash in China.

Specifically he was betting against China’s currency. Bloomberg reported on 7 September:

The trade went against him almost from the beginning. After holding steady for the first six months of 2010, the yuan strengthened for the next three and a half years. It eventually reversed course, but the sharp devaluation that Hart had anticipated never materialized. His second China fund shut in December. All told, he lost between $240 million and $250 million.’

Buy high, sell low it seems.

Not the way to make a fortune. It’s trading against the trend, not to mention betting against the Chinese Government.

But wait there’s more!

How much can a Koala really bear?

And the answer is about US$6 billion!

The Financial Times reported back in October that funds manager, Mr. Crispin Odey placed some ‘poorly timed’ bearish trades during the past several years. Betting on a total economic collapse that in a very short time turned $12 billion of client monies into $6 billion!

A string of ill-timed bearish trades and client outflows have slashed in half the money managed by Crispin Odey, one of London’s best-known hedge fund figures.

The outspoken investor who was a prominent backer of Brexit has seen the assets in his flagship Odey European fund fall from €2.5bn at the start of 2015 to €184m, according to fund documents.

Total assets managed by Odey Asset Management, which include funds not run directly by Mr Odey, have fallen from $11.7bn at the start of 2015 to $6bn at the end of August.

Imagine that…

$11.7 billion in funds under management at the start of 2015, down to $6 billion by the end of August 2017.

I don’t write this up to highlight the woes of another market participant. Trading markets is a tough business.

I write this up to tell you that market knowledge is important. And it can be really profitable if used wisely.

So there’s no need to make a tough business even tougher than it already is. That’s just ignorance. At the very least, you can see there’s a very clear real estate cycle at work here. I’ve been long and loud telling everyone I know that the US economy — and by extension much of the rest of the world — sees a very clear 18–20 year real estate cycle.

History is very clear on this. I even wrote a book about it called The Secret Life of Real Estate and Banking.            

Now for the steak knives…

Yet another case of a short who lost his shirt late last year. As the US market shattered records and climbed to higher heights. As I told you they would.

Hugh Hendry, one of Britain’s highest profile hedge fund managers, is winding down his flagship fund amid sustained losses, according to a letter to investors seen and quoted by the Financial Times back in November, 2017.

Hendry’s fund shrank in size from $1.3bn in assets under management in April 2013 to $30.6m currently. But, it gained prominence thanks to his bets against banks during the financial crisis.

These guys were trying to short markets at one of the strongest times in the real estate cycle. This wasn’t hard to gather. History shows quite clearly from 2010, to today, it is time to be bullish.

The time to go short in these markets is not far off.

If you’d like to know more about that, go here.

Now, imagine what these guys could have been worth if they’d put all their funds — and that of their clients — into bitcoin?

Best wishes for 2018,

Phil Anderson,
Trader and Editor, Cycles, Trends and Forecasts