What every investor should know about time

Wednesday, 7 March 2018
Melbourne, Australia
By Bernd Struben

  • This can be known
  • There’s gold in them thar hills…

Time flies over us but leaves its shadow behind.’

Nathaniel Hawthorne

You’ve probably heard of Jim Chanos. His name is often preceded by the title ‘famed short seller’.

Chanos is the founder of hedge fund Kynikos Associates Ltd. And he’s made — and lost — millions short selling stock in companies he believes are set to crash.

Short selling, as a quick refresher, is where you borrow shares in a company, usually from a broker. You pay a fee for borrowing the shares, but you don’t actually buy them.

Instead you sell your borrowed shares at what you believe to be an overvalued price.

If the share price falls, you then buy the shares back at a cheaper price, return them to the broker, and pocket the difference. Of course, if the share price rises, you’ll lose money.

It’s a risky venture, as your losses are theoretically unlimited if the share price goes through the roof.

Chanos gained his ‘famed short seller’ title by betting against US energy company Enron.

Under the watch of CEO Kenneth Lay, Enron went from one of the biggest US companies of the time to an empty shell. The share price fell from a peak of US$90.75 down to US$0.26 on 2 December 2001, when the company filed for bankruptcy.

Chanos pocketed a fortune.

It was a gamble that made Jim Chanos a household name. At least among households with avid investors living under the roof.

But Time Trader’s Phil Anderson does not count himself among Chanos’ fans. As Phil points out, a string of unsuccessful shorts over the past six years makes Chanos’ bet against Enron look a lot like just that. One lucky bet.

Phil says Chanos, and indeed every investor, would do well to study time.

More after the markets…

(By the way, the invitation for new members to join Phil’s Time Trader service ends tomorrow at midnight. You can check out the latest offer on our most popular trading service by clicking here.)

Markets

Concerns about Donald Trump’s tariffs have resurfaced in Asian markets and here on the ASX. And they’ll likely play out in the US and European markets overnight.

The resignation of Trump’s free trade espousing economic adviser, Gary Cohn, is a likely catalyst.

If you’ve been following along with Port Phillip Insider this week, that shouldn’t come as a surprise.

The more Trump is pushed — by world leaders, US corporations, and members of his own Republican party — the more I expect him to dig in and push back.

As I wrote yesterday:

While investor fears of a trade war eased overnight, you can be almost certain Trump will stoke those fears again. Possibly before the end of this week.

That could mean more bad news for most commodities and the broader stock markets. Gold, on the other hand, should benefit.

Gold is up 1.5% since I penned that. If you haven’t read our in-house gold expert’s top three plays in the Aussie gold sector you can find the details here.

Now let’s look at the numbers…

Overnight, the Dow Jones Industrial Average closed up 9.36 points, or 0.04%.

The S&P 500 gained 7.18 points, or 0.26%.

In Europe the Euro Stoxx 50 index finished up 2.54 points, or 0.08%. Meanwhile, the FTSE 100 climbed 0.43%, and Germany’s DAX rose 23.00 points, or 0.19%.

In Asian markets, Japan’s Nikkei 225 is down 126.20 points, or 0.59%. China’s CSI 300 is up 0.02%.

In Australia, the S&P/ASX 200 is down 63.04 points, or 1.06%.

On the commodities markets, West Texas Intermediate crude oil is US$62.04 per barrel. Brent crude is US$65.79 per barrel.

Gold is trading for US$1,339.76 (AU$1,719.41) per troy ounce. Silver is US$16.81 (AU$21.57) per troy ounce.

One bitcoin is worth US$10,799.02.

The Aussie dollar is worth 77.92 US cents.

This can be known

Phil Anderson has devoted years of his life to the study of time.

Not as it relates to Einstein’s theory of relativity. But rather how it relates to real estate and stock market cycles.

He’s based much of his work on centuries of historical data. And he’s built upon the work of legendary trader, WD Gann.

The end result has been a track record of calling market highs and lows that few, if any, can match. And he’s used this knowledge — alongside an exhaustive understanding of charts — to great success in his trading service, Time Trader.

So when big name investors buy right before he expects the market to correct — or short sell right as he expects it to rebound — Phil tends to bang his head against the table.

As you can read from Phil himself:

I want to show you what happens to investors who hold fixed opinions about what the market is going to do. (They get slaughtered.)

Then I’m going to tell you what it shows you about what the markets will do next.

And then I’ll show you just how profitable a knowledge of ‘TIME’ can be.

Let’s chat first about all the hedge fund managers who absolutely believed that China was going to collapse back in 2012. And told you to back their belief with your money.

Jim Chanos was one.

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

In 2013 he said 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 last 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 a crash in China.

Specifically, he was betting against China’s currency. Bloomberg reported on 7 September, 2017:

“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…

And Chanos and Hart are far from alone in their ignorance of TIME.

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!

Here’s how it was reported:

“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 this year.

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 so too is a knowledge of TIME.

Very few traders bother to dig far below the surface in their study TIME. If they bother to study it at all. Yet it can be really profitable…if used wisely. There’s no need to make a tough business even tougher than it already is through ignorance.

And speaking of being ignorant in a tough business, yet another short seller lost his shirt late last year. That’s when the US market shattered records and went from one new high to the next. Just a I told my readers 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 in November 2017.

Hendry gained prominence thanks to his bets against banks during the global financial crisis. But now Hendry’s fund has shrunk in size from $1.3 billion in assets under management in April 2013 to $30.6 million currently.

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

Imagine what these guys could have been worth if they’d been buying the past few years — not selling.

And that’s where TIME can really help you. And it’s why all new subscribers to my Time Trader service get a very handy little one-page document.

This little one-pager shows you what US stock markets will do — each and every year — within the 18-year real estate cycle.

Not possible you reckon?

I beg to differ. This can be known.’

The ‘little one-pager’ Phil refers to is his Financial Timetable. It tracks how US markets have moved since 1954, and projects future movements through 2047.

It’s possibly the most remarkable single page of data I’ve ever run across. I’ve been following it since I first got my hands on a copy two years ago. And so far, so good.

Only time will tell how accurate the forecasts are over the coming decades. But to date, Phil’s been remarkably spot on.

You can find out more about what Phil and his team over at Time Trader have to offer you here.

There’s gold in them thar hills…

Australia may well beat its record level of gold production, set in 1997. That’s when 314 tonnes of the yellow metal were produced.

314 tonnes!

Production in 2017 ramped up by three tonnes, bringing the total to 301 tonnes, according to Surbiton Associates.

From The Canberra Times:

Gold output from Australia, the world’s second-largest producer, may rise to a record this year as a stream of new projects come on line, Australian mining consultancy Surbiton Associates said on Sunday.

Australian gold miners, among the lowest cost globally, have enjoyed high margins in recent years, boosting output as a strengthening US dollar supercharged Australian dollar prices which were then flowed into exploration.’

Australia has some of the largest gold reserves on the planet. And we’re the second largest gold producer, behind only China.

I mentioned gold earlier. And how it may well continue to rise amid increasing investor uncertainty.

But even at today’s prices any junior miner that strikes a rich new vein will see its share price rocket.

That’s why senior resources analyst Jason Stevenson is so excited about his top three Aussie gold plays. Junior miners that his proprietary EP–6 signal indicate should see their share prices enjoy triple digit gains…within the next six months.

If you’ve got the stomach for some serious risk, and the hunger for some serious gains, you can get all the details here.

And finally, this from The Australian Tribune:

‘US Man Sues Walmart Over Gun Ban

“Live free or die.”

So read the licence plates on all vehicles in the US state of New Hampshire. It’s the state motto, after all. Adopted in 1945. And strikingly different from Victoria’s “Stay alert stay alive.”

“I’ll give you my gun when you take it from my cold, dead hands.”

That one’s not a state motto. But it’s…

If you’re fed up with sanitised, politically correct dogma cut and pasted from one mainstream source to another then The Australian Tribune is for you.

And it’s absolutely free.

Sign up here to get The Australian Tribune delivered free to your inbox five days per week.

You can visit our website at https://www.theaustraliantribune.com.au/ to read the complete article above now.

Cheers,
Bernd