Don’t let ‘dead stocks’ pull you down

Wednesday, 23 May 2018
Melbourne, Australia
By Bernd Struben

  • The last thing you want to be doing…
  • $321 trillion in debt
  • Harry Dent Daily

No one likes to lose money.

If you invest in a stock and it heads downhill, you’re likely begin to think about selling. At least, I hope you do.

When you choose to sell depends on a range of factors. Your risk tolerance. How much money you invested. Whether it’s a speculative small-cap play — in which case you might ride out a bigger loss before selling — or a blue chip stock, where you’re likely less tolerant to seeing a 30% share price plunge.

The list goes on.

There are all kinds of exit strategies when a company’s share price is falling. I tend to recommend a trailing stop loss. This follows the share price up — helping lock in your gains — and triggers a sell alert if the price falls by a certain amount from its highs.

I’ve covered stop losses before, so won’t go into greater detail today.

The point is every investor — and certainly every trader — should have an exit strategy for losing stocks.

But what about ‘dead stocks’. That is, stocks that are going sideways…doing nothing?

Time Trader’s Phil Anderson’s T.I.M.E.D. stock trading method is designed to avoid these kinds of stocks like the plague.

(By the way, have you checked out what’s on offer over at Time Trader yet? Phil has agreed to open the door to new members — but only until midnight this Friday, 25 June. Get all the details here.)

We’ll get back to what Phil has to say about dead stocks below.

But first, to the markets…

Markets

Overnight the Dow Jones Industrial Average closed down 178.88 points, or 0.72%.

The S&P 500 fell 8.57 points, or 0.31%.

In Europe the Euro Stoxx 50 index finished up 14.69 points, or 0.41%. Meanwhile, the FTSE 100 gained 0.23%, and Germany’s DAX climbed 92.20 points, or 0.71%.

In Asian markets, Japan’s Nikkei 225 is down 255.61 points, or 1.11%. China’s CSI 300 is down 0.78%.

In Australia, the S&P/ASX 200 is down 9.67 points, or 0.16%.

On the commodities markets, West Texas Intermediate crude oil is US$72.09 per barrel. Brent crude is US$79.35 per barrel.

Gold is trading for US$1,293.51 (AU$1,706.93) per troy ounce. Silver is US$16.56 (AU$21.85) per troy ounce.

One bitcoin is worth US$7,876.55.

The Aussie dollar is worth 75.78 US cents.

The last thing you want to be doing…

If you don’t know offhand, take some time after finishing today’s Port Phillip Insider to see how many dead stocks you’re holding on to.

How much time have you given them to run already? How much more time are you planning to give them?

This is your money doing absolutely nothing for you. And with a lot more risk than sticking that same money under your mattress.

As Phil Anderson says, ‘You want to be in the stocks that are moving.’

Ideally, they’re moving up — after you’ve bought them — to new highs. And if they’re moving down? Then you cut them short and move your capital to a better opportunity.

It’s those stagnant holdings that can really torpedo your gains.

That’s where Phil’s T.I.M.E.D. stock trading strategy can make all the difference.

Here’s Phil’s take on dead stocks:

The dead stocks are those that go sideways, or don’t have a lot of volume in them. And you don’t want to be in those, either.

Now, if you can read a chart effectively, which I can do, then you can avoid the dead stocks by just not getting into the stocks that are going sideways.

The last thing you want to be doing is just getting into those stocks going sideways, because then your money just does absolutely nothing.

And, these days, you’ve got to put your capital to work. You don’t want your money in stocks that are doing nothing. You’ve got to avoid that.

There you have it.

Avoid the dead stocks in the first place. And put your capital to work. In today’s low interest rate environment, that’s more important than ever.

Now to be clear, no man or trading methodology is perfect. Phil can’t guarantee he’ll never recommend a single ‘dead stock’ for the Time Trader portfolio. But if he does he and his team of analysts will cut that stock quickly, while letting the winners run higher.

That’s one of the most important keys to success as a trader.

Phil reveals this — along with the other keys to his success — in an exclusive interview with publisher Kris Sayce. You can access that here.

Turning from potentially outsized profits to mind-bending debts…

$321 trillion in debt

Can you imagine owing $321 trillion (US$243 trillion)?

That’s roughly $42,200 for every person on the planet. Including people who are unlikely to earn $42,200 in their lifetime.

The figure is so large it’s hard to really grasp. Yet this is the total debt the world now finds itself in, according to the International Monetary Fund (IMF).

From The Australian Financial Review:

A new global debt database launched by the International Monetary Fund here in Washington last week shows combined public and private debt has ballooned to at least $US164 trillion ($218 trillion).

Adding in a broader range of debt instruments, including financial sector debt, world debt is at a record high of $US243 trillion, or about 320 per cent of GDP.

Disturbingly, that excludes trillions of dollars of unfunded pensions that governments owe.’

That last line is worth reading again.

Let’s assume every person on the planet put every dollar they earned for the next 3.2 years into paying off that debt. (We’ll need to also assume no one will spend or borrow any more money during that time. Talk about austerity!)

Even then there are unknown ‘trillions of dollars of unfunded pensions that governments owe’.

Those are the kinds of figures that can keep you up at night.

Speaking of…

Harry Dent Daily

You have a 64 times increase in debt since 2000 in China. If you don’t think that’s a bubble, wake up.’

Harry Dent

You may have heard that Port Phillip Publishing managed to secure a deal with the controversial and highly successful economic forecaster, Harry Dent.

Dent has made too many accurate forecasts to list here.

But one example of his remarkable insight came in the late 1980s. At the time Japan was booming. And Japanese, flush with cash, were snapping up property and assets around the globe. Dent saw through the flash. And he predicted the Japanese economy would soon stagnate in a slowdown that would last for more than a decade.

Now he’s agreed to bring that insight to our Australian readers with the Harry Dent Daily eletter.

Dent is actually remarkable bullish on Australia. Though not until after the coming bust.

As he says, ‘You are on the cusp of what we see as the next great opportunities for investments…after the inevitable global crash.’

Australia, he says, has some of the biggest opportunities of any nation in the world. But we’re also facing the biggest threats:

You do have a real estate bubble, the second most overvalued real estate market in the world, second only to China. And China is the epicentre of the global debt and real estate bubble. And when it bursts you will feel that more than we do over in the US and Europe

You are best positioned to take advantage of the next crash if you protect yourself now. That’s what we’re here for today. To take advantage of the sale of a lifetime and the opportunities that will represent including in iron ore and gold.’

Now you may be wondering how much the Harry Dent Daily newsletter will set you back.

The answer?

Nothing.

Yep. Publisher Kris Sayce has added this service to our list of free newsletters. All you need to do to begin receiving it is sign up by clicking here.

Finally, the latest on the banking royal commission and the prime minister, from The Australian Tribune:

 ‘Turnbull Still on Back Foot Over Royal Commission

If Prime Minister Malcolm Turnbull had a time machine he’d surely go back and change a few things.

First, he might do a “take-two” on his original, rather disastrous phone call with Donald Trump. Perhaps he’d leave the Obama era refugee swap agreement to discuss at a later date. Or via a memo.

Second, he’d almost certainly go back and come out strongly…’

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