What to do in a falling market

Tuesday, 26 June 2018
Melbourne, Australia
By Bernd Struben

  • Is your portfolio prepared?
  • Biotech could rescue office relations

Yesterday marked the first day of publisher Kris Sayce’s four-part masterclass series. The series is called ‘How to Make Money from Shares That Go Down’.

With markets around the world looking shaky, the methods Kris reveals could mean the difference between you pocketing hefty gains in the year ahead…or sharing in the losses borne by buy-and-hold investors.

As I cautioned last week, this isn’t a method everyone will be comfortable with. And it’s not without risk.

But Kris is convinced stock markets are set for an epic crash within the next 18 months. And his free masterclass series is intended to show how you could not only escape the pain, but potentially profit from it as share values tumble.

While the class kicked off yesterday — and runs through Thursday — it’s not too late to attend. If you haven’t already signed up, you can do so here.

You’ll find Monday’s class archived, so you can watch that at your leisure and not miss out on anything.

And remember, the masterclass is free to all our paying subscribers.

Now to the markets, where tech stocks led the way down in the US, with the Nasdaq losing 2.09% overnight.

Markets

Most major indices across the globe all lost ground as we slept in Australia. And Asian markets continue to slide at time of writing.

Overnight the Dow Jones Industrial Average closed down 328.08 points, or 1.33%.

The S&P 500 lost 37.81 points, or 1.37%.

In Europe the Euro Stoxx 50 index finished down 72.39 points, or 2.10%. Meanwhile, the FTSE 100 fell 2.24%, and Germany’s DAX dropped 309.39 points, or 2.46%.

In Asian markets, Japan’s Nikkei 225 is up 11.49 points, or 0.051%. China’s CSI 300 is down 0.87%.

In Australia, the S&P/ASX 200 is down 17.60 points, or 0.28%.

On the commodities markets, West Texas Intermediate crude oil is US$68.26 per barrel. Brent crude is US$74.91 per barrel.

The spike in WTI crude prices comes despite Saudi Arabia pushing OPEC to expand output by roughly one million barrels per day in Friday’s meeting in Vienna.

That’s less than the 1.5 million barrels per day Russia had suggested. But enough to compensate for lost output from Iran (due to sanctions) and Venezuela (due to government ineptitude).

I’d written to you that WTI should fall on that news and slide back below US$60 per barrel by the end of northern summer. Hidden in the fog of my crystal ball, however, was the loss of 350,000 barrels per day from a Canadian oil sands facility.

From Bloomberg:

Just as OPEC and allied producers agreed to pour more oil into global markets, a transformer blast first reported by Bloomberg News last week cut power to Alberta’s giant Syncrude plant, which turns heavy crude into synthetic light oil for U.S. markets…

The 350,000-barrel-a-day facility, one of the biggest of its kind in the world, is going to be out of commission until the end of July, the company said.’

That’s good news for oil bulls and most oil stocks. And bad news for companies and households who’ll be paying more for their energy. And pretty much anyone who drives a car.

Fortunately, it’s only a temporary outage. If Syncrude is back in action by the end of July, as expected, WTI should settle back below US$60 per barrel heading into August.

Turning to gold, the yellow metal is trading for US$1,265.45 (AU$1,707.53) per troy ounce. Silver is US$16.32 (AU$22.02) per troy ounce.

One bitcoin is worth US$6,228.38.

The Aussie dollar is worth 74.11 US cents.

Is your portfolio prepared?

As you can see in the markets section above, stock markets around the world are suffering from the trade war jitters.

Investors have been writing off Donald Trump’s trade threats as just so much bluster. And fair enough. ‘The Donald’ is well known for his bluster. But he’s also known for his unpredictability and tenacity.

When it comes to ‘levelling the playing field’ in global trade, Trump looks to be digging in. And I expect he won’t back down until he gets some meaningful new deals from major trading partners.

That reality now appears to be dawning on mainstream investors.

This headline comes from Bloomberg, ‘Trade-War Fears Spread in U.S. Equities as Tech Shares Lead Drop’. The article continues:

This is a whole new breed of trade-war selloff.

A look at market internals shows that Monday’s equity retreat has a decidedly different tenor than what prevailed last Tuesday. Both the severity and breadth of the damage have increased dramatically.

Technology and domestically focused stocks are two areas of the market that showed some resilience last week as rhetoric between the U.S. and China heated up. On Monday, however, the Nasdaq 100 and Russell 2000 indexes trailed not only the S&P 500 Index, but also industrials.’

If you’re not familiar with the Russell 2000, it’s a small-cap index. It’s the blue line in the chart below:



chart image

Source: Bloomberg
Click to enlarge

While US markets have taken a battering, they look brilliant compared to China’s.

The S&P 500, for example, is still up 2.19% for the calendar year. The Shanghai Composite Index, on the other hand, is down 14.50% over that same time.

But Fidelity International, for one, isn’t convinced things couldn’t get a lot worse for US and global markets alike.

From The Australian Financial Review (AFR):

Fidelity International and Thomas Miller Investments have cut equity holdings amid growing tensions between the world’s two largest economies.

Declines in global shares have accelerated as US President Trump threatened tariffs on European cars and another $US200 billion of Chinese goods, in addition to levies set to take effect next week.

“It may well be that everyone eventually comes to their senses and the rhetoric comes down a bit, but as investors we have to work on the basis of probability,” said Abi Oladimeji, chief investment officer at Thomas Miller, which has cut stocks and boosted cash and alternative assets recently…

After decades under a free-trade regime, even the most veteran investors have little experience in dealing with the fallout from protectionism.

China and the European Union warned that unilateral trade barriers could push the world into a recession.

For now, markets are still far from a meltdown, but losses are building.’

Reducing your exposure to stocks and boosting your cash allocation is certainly something to consider when faced with falling share prices.

If the shares you unload today end up falling 20% or more, you’ll be happy with your cash in the bank.

But what if instead of holding cash — paying at most 3% a year — you were making money on the stocks you used to own even as their share prices crash?

That’s the idea behind Kris Sayce’s four-part masterclass series.

If you want to learn more, and you haven’t signed up to ‘How to Make Money from Shares That Go Down’ yet, you can do that here.

Biotech could rescue office relations

As a white male — tall and from a privileged background, no less — I’m on thin ice the moment I mention #MeToo.

Fortunately skating in dangerous territory has never dissuaded me.

To be clear, discrimination and intimidation based on a person’s gender are inexcusable. Let alone resorting to physical violence because you’re bigger and wired to be more aggressive.

But from my own skewed manly perspective, I find the whole ‘empowerment via victimisation’ movement puzzling. And the boundaries keep expanding.

We’re told that companies need quota systems to ensure women are equally represented. Forget about getting the best people into the job…be they male or female. Just so long as we have gender diversity, it will all work out.

Then there was the recent brilliant idea of separate taxes for men and women (blue and pink forms). Never mind that many women are high earners and many men scrape by on the minimum wage.

Now sexual harassment in the workplace is set to go from an act that can rightfully see the offender sacked to one that’s a criminal offence. That brings the government into the matter. And you know how efficient and effective our government is.

This idea that women are natural victims — which they are not — could spectacularly backfire. Indeed, there are already signs the #MeToo movement could be setting women back rather than helping them progress.

From the AFR:

Concerns are emerging that the #MeToo movement is curtailing the willingness of men to mentor and work alone with female colleagues, a trend that could harm women’s ability to get ahead in the workplace.

Evidence that office relations between men and women are coming under pressure comes as Sex Discrimination Commissioner Kate Jenkins finalises her plans for a national inquiry into workplace sexual harassment…

A survey by an online mentoring platform, Art of Mentoring, found that the proportion of men who felt uncomfortable working alone with a female colleague had surged to 15 per cent from 7 per cent since the launch of #MeToo…

That’s a concerning trend. For both men and women. And for the companies that employ them.

Women make up slightly more than half of all voters. And they have had the right to vote in Australia since 1902. That goes all the way back to 1895 in South Australia.

Women are just as smart and capable as men. And I’m confident the coming years will see women continue to close the ‘gender gap’…without perpetually carrying the label of victims.

But what about the victims of violent offenders? I wrote about that in yesterday’s The Australian Tribune. I suggested women be allowed to carry mace and stun guns if they choose, which is currently illegal in Australia.

That’s a stop-gap measure, of course. Ideally, we need a less violent society. And medical researchers in Norway may have stumbled onto a possible answer.

As The Australian reported, antibodies from violent offenders injected into mice made those mice aggressive.

One day, in a laboratory in Norway, scientists injected mice with a chemical taken from the blood of criminals — and the mice turned mean.

As the proteins coursed round their rodent brains, they seemed to inherit the impulses of the murderers, rapists and gang members who provided them…

Now scientists think this chemical, an antibody which is involved in the human stress response, may give a clue as to what makes humans aggressive too…

‘[Professor Serguei Fetissov] stressed that a far bigger sample was needed to make firmer conclusions or to understand the mechanism before anyone considered using this as an intervention to, for instance, “cure” violent offenders.

OK. So scientists are some way from curing violent offenders.

But these kinds of biotechnology studies offer real hope for real change and improvement in the world. And the companies that bring them to fruition should make early investors massive gains.

Over at Exponential Stock Investor, Ryan Dinse has been scouring the biotech world for small-cap stocks that could deliver truly eye-popping returns.

As he wrote in Money Morning yesterday:

If I’m correct, over the next few years, you’ll see transformations in medicine that will make those we’ve seen in the last 15 years of genomics seem pretty run-of-the-mill.’

After months of research Ryan has targeted four small-cap biotech stocks he believes are best positioned to make the most of these coming transformations.

Now these aren’t just any small-caps. And they’re not just any biotech stocks. I’ve run out of time and space to give you more details today.

But earlier today Ryan released his brand-new research dossier called ‘Project: Shivom’.

It’s a lengthy read, so make sure you set aside a bit of time to do it justice. I think you’ll be glad you did.

You can find out all about ‘Project: Shivom’ and the four stocks Ryan’s targeting here.

Questions, comments, feedback? Send them to letters@portphillipinsider.com.au.

Before logging off, here’s the latest in the always entertaining world of US politics, from The Australian Tribune:

Trump Slams “Filthy” Restaurant Over Political Discrimination’

You’ve probably seen the signs in pubs and restaurants. You know, the one that reads, “We reserve the right to refuse service to anyone.” But you probably don’t expect that to ever apply to you.

Certainly not if you’re top player in the White House administration. Yet that’s exactly the situation that confronted Sarah Huckabee Sanders.

US President Donald Trump has…’

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