We had bad intel, Sam’s intrigued…

Thursday, 11 January 2018
Melbourne, Australia
By Kris Sayce

  • Buffett’s take on cryptos
  • Ignore opinions
  • Watch the chart, not the opinion

Yesterday, we wrote:

While Kodak’s announcement may have done wonders for the company’s share price, we’re not sure the crypto community would be quite as thrilled with the company’s endorsement of crypto and blockchain technology.

We feel it must be similar to the reaction you have when a creepy old uncle tells you that you have a pretty girlfriend. It just seems wrong.

Anyhoo, what do we know. Kodak launches a cryptocurrency, and the stock price more than doubles. We look forward to the launch of Kodakcoin. We can’t say for certain that Sam Volkering won’t recommend it in his Crypto Tech Investor service…but something tells us he won’t.

Yesterday, Sam wrote:

Kodak announced today that they will be developing the KODAKOne platform and KODAKCoin cryptocurrency.

Now upon hearing this news we were flabbergasted. In fact, we were taken aback with horror.

However, even we know you shouldn’t be too quick to judge. And we’re not. In fact, this is actually a very good idea…

Part of us wonders, why now? After all, blockchain technology isn’t that new. And yes, coming from the poster child of corporate failures it is a little worrying.

But at the same time, if you look past the name and consider what they’re trying to do, it’s a pretty damn good idea. And we think the start of potentially something quite substantial.

Remember Kodak still comes bearing a powerful brand name. It would be naïve to think they couldn’t resurrect as the platform of choice for photographers to ensure chain of intellectual property and image rights.

As to whether or not the KodakCoin will be worth investing in, well, we’ll look at it and see. If it cuts the mustard and we think it’s worth getting some action in, we’ll tell you. If not, you won’t hear much more about it.

The ‘something’ that told us Sam wouldn’t touch Kodakcoin, clearly had bad information. Sam’s intrigued enough to consider it. That’s what we call visionary.

Anyway, Sam’s Crypto Tech Investor subscribers must be cock-a-hoop right now, what with all those quadruple-digit percentage gains.

Remember, if you’re on the priority access list, be sure to check your email inbox for details of how to join Sam’s premium service.

Now, on to the markets…

Markets

Overnight, the Dow Jones Industrial Average fell 16.67 points, or 0.07%.

The S&P 500 closed down 3.06 points, or 0.11%.

In Europe, the Euro Stoxx 50 index dropped 13.04 points, or 0.36%. Meanwhile, the FTSE 100 gained 0.23%, and Germany’s DAX index lost 0.78%.

In Asian markets, Japan’s Nikkei 225 index is down 100.18 points, or 0.42%. China’s CSI 300 is down 0.3%.

In Australia, the S&P/ASX 200 is down 32.48 points, or 0.53%.

On the commodities markets, West Texas Intermediate crude oil is US$63.49 per barrel. Brent crude is US$69.11 per barrel.

Gold is trading for US$1,319.30 (AU$1,676.10) per troy ounce. Silver is US$17.01 (AU$21.61) per troy ounce.

The Aussie dollar is worth 78.72 US cents.

Bitcoin is US$13,524.99.

Buffett’s take on cryptos

It’s not often your editor and Warren Buffett are on the same page. But overnight, the famed investor offered his two cents on cryptocurrencies.

As reported by CNBC:

In terms of cryptocurrencies, generally, I can say with almost certainty that they will come to a bad ending. When it happens or how or anything else, I don’t know.

Meanwhile, a former extreme bitcoin bear, appears to now take a softer approach. Again, from CNBC:

J.P. Morgan Chase Chairman and CEO Jamie Dimon is backpedaling a bit on his earlier criticisms on cryptocurrencies.

In September, Dimon called bitcoin a fraud. “I regret making” that comment, he said Tuesday on Fox Business.

“The blockchain is real,” Dimon added in the interview. “You can have cryptodollars in yen and stuff like that. ICOs…you got to look at every one individually. The bitcoin was always to me what the governments are going to feel about bitcoin when it gets really big. And I just have a different opinion than other people.”

What do we think? Your editor doesn’t own bitcoin, or any other cryptocurrency. It’s just not our thing.

Does that mean we’re a hypocrite for promoting services that trade cryptos? Not at all. Instead, we take the view that why should we only offer investment ideas about things we invest in.

What if you have a different risk profile? What if you want to take bigger risks than we would take? What if you want to take fewer risks than we would take?

Our role isn’t to tell you to do exactly as we do. Our role is to introduce you to a wide range of investing ideas. It’s then for you to decide where to put your money.

That’s why you’ve chosen to be an independent and self-directed investor. If you just want to follow exactly what someone else does, without even thinking about it, then you’re not an independent investor.

In which case, stop subscribing to newsletters and trading services, and stick your money in a managed fund instead.

Ignore opinions

Speaking of a wide range of investing ideas, today we conclude our guest essays from controversial economist, Phillip J Anderson. In today’s essay, Phil reminds investors to ignore opinions, and to instead focus on the charts.

Read on for more…

Cheers,
Kris


Watch the Chart, Not the Opinion
By Phil Anderson

Earlier this week I talked about the China bears.

Some of these people totally, absolutely believe that China is going to collapse. They also keep telling you to back their belief with your money.

Jim Chanos, hedge fund manager, is a perfect example. On 3 May 2012, Chanos said on Bloomberg Television that China was in a bubble.

On 19 December 2013, he was at it again on CNBC. He was saying that now was the best time in recent memory to get short in China.

Yet again on CNBC, in September 2015, he said that China is in a lot of trouble.

And he’s still at it. On 19 May this year, he pointed to the risks embedded within China’s stressed banking system.

The best way for you to sort the better commentary from all the views, is to consult your charts.

The Singapore stock exchange lists 110 China-related enterprises, whose principal place of business, or head office, is in China.

As of October this year, Singapore’s top 20 listed China-linked firms had already achieved a 39.8% average return. And it’s not the first time this decade they’ve been doing so well.

Here’s the list:



chart image

Source: businesstimes.com.sg
Click to enlarge

It’s the usual suspects: Land stocks, REITs, shipbuilding and aviation. In other words, all the sectors that are supposed to do well in an improving real estate cycle.

The 20 listed stocks in the table above cannot go up unless their earnings are increasing. And if the price is going up, then earnings ARE increasing.

It’s the charts that will tell you what’s going on in the world. Not opinions.

My colleague, Terence Duffy, over at Money Morning Trader pointed this out for you in October of last year. He wrote it up like this:

What you need to know about a company or an industry is contained within the charts, if you know how to read them.

It’s almost our mantra here at Money Morning Trader. “Trade the chart, not the story”.

Here’s an example…

Back in May 2016, the team at Macquarie research waded into the lithium space, producing an in depth report of the sector.

They did acknowledge at the time there were some short term supply constraints, but predicted they would ease by the end of 2017.

Their verdict? There was no shortage of lithium supply.

That view in May only hardened in August 2016 when the Macquarie research team updated their view of the lithium sector. They saw a wave of lithium supply coming on to market, much earlier than expected.

They revised their previous forecasts and went on to state that, “the lithium market looks to be significantly oversupplied from next year”.

The team at Macquarie suggested the lithium price was likely to fall. So they slapped under-perform ratings on a bunch of lithium stocks.

Galaxy Resources Ltd [ASX:GXY] was no exception in receiving an under-perform rating. I can only guess this is perhaps a reason why the company has attracted so much short interest. This week Galaxy Resources still sits in the top dozen of the most shorted stocks on the ASX.

Here’s the weekly chart for GWY, going back to 2012:



chart image

Source: Optuma
Click to enlarge

Why on earth would you go short in that stock?

My biggest — and most costly — learning exercise in markets, by far, has been listening to the opinions of others. And thinking they knew more than I did.

All the information you need to know is in the chart. You’ll find it really helpful to learn to read one.

This is also THE best way to see how my real estate clock is turning. The strength. The turning. Is it ‘on time’? And is it comparable to prior cycles?

All this is in the charts.

Best wishes,

Phil Anderson
Editor, Cycles, Trends and Forecasts