How you could earn a second income…in minutes per day
Tuesday, 2 October 2018
By Bernd Struben
- Stars aligning for a new crypto boom?
- ‘Overnight Dividends’
While you were sleeping, presumably, the Dow Jones closed up 0.46%.
This sets another new record high for the index, composed of 30 large US stocks including the likes of Exxon, Goldman Sachs, and Walt Disney.
In 2017 the Dow gained a fairly astonishing 25.1%.
So far this year it’s up a more muted, but still solid 8.3%.
By comparison the ASX 200 — composed of roughly 200 of the biggest Aussie listed stocks — gained 7.1% in 2017. And the index is up a meagre 1.2% in 2018.
I bring this to your attention for two reasons.
First, the outsized gains made by the US indices (the S&P 500 climbed 19.4% in 2017 as well) highlights why investors need to look beyond Australia.
Sure, there are some great performing Aussie stocks. But put them all together and their performance over the past two years is dwarfed by the average return of the big US stocks.
Second, before you rush to buy a US index tracking ETF, the boat may well have sailed on this opportunity. That’s not to say the major US indices can’t continue to climb from here. But the 25.1% gain the Dow delivered in 2017 simply isn’t sustainable.
If it were to continue at that pace, the valuations of the combined companies would double every two years and 10 months. That, as you know, is the path towards bubbles…and the inevitable pop! A path we’re already well on our way to.
It’s with this looming ‘pop’ in mind, that some of the largest fund managers are preparing a speedy exit.
This headline comes from The Australian Financial Review, ‘Wilson Asset Management is ready to run for cash’.
The article notes that the group’s fund managers have recently raised concerns, ‘particularly about the state of the US and Chinese economies’.
‘[WAM founder] Geoff Wilson has long expressed concern about the looming end to Wall Street’s seemingly endless bull market, and he did so again on the investor call, where he joked a record number of attendees could be another sign of the top of the market.
‘“We can only give general advice, there’s a disclaimer somewhere,” Wilson said.
‘“That general advice would be: Make sure you have some cash.”
‘To reinforce the point, the WAM team said that within 90 days, 88 per cent of the WAM Capital portfolio could move to cash. At WAM Leaders, it could be 100 per cent cash in 90 days, while for WAM’s micro cap fund, 86 per cent of the portfolio could be in cash in 90 days.’
Having an exit strategy is certainly good general advice. Particularly in markets that are in record long bull run territory.
Although my general advice to you is that 90 days can be an awful long time when markets are truly tumbling.
On 16 May 2008, for example, the ASX 200 was at 5,931 points. By 15 August, less than three months later it had dropped to 4,981 points…a fall of 16.1%.
But this is where you have an advantage over the big fund managers. If you decide it’s time to shift from stocks to cash…or other assets…you can be far nimbler.
More, after the markets…
Overnight the Dow Jones Industrial Average closed up 122.73 points, or 0.46%.
The S&P 500 lost 1.16 points, or 0.04%.
In Europe the Euro Stoxx 50 index finished down 25.17 points, or 0.74%. Meanwhile, the FTSE 100 lost 0.28%, and Germany’s DAX closed down 51.45 points, or 0.42%.
In Asian markets, Japan’s Nikkei 225 is down 176.72 points, or 0.73%. China’s CSI 300 is closed for the week for National Day.
In Australia, the S&P/ASX 200 is up 18.49 points, or 0.30%.
On the commodities markets, West Texas Intermediate crude oil is US$75.13 per barrel. Brent crude is US$84.75 per barrel.
Turning to gold, the yellow metal is trading for US$1,205.88(AU$1,681.61) per troy ounce. Silver is US$14.76 (AU$20.58) per troy ounce.
One bitcoin is worth US$6,492.00.
The Aussie dollar is worth 71.71 US cents.
Stars aligning for a new crypto boom?
If you’re concerned about frothy valuations in the stock markets — not to mention housing markets — cash is generally a good safe haven.
No one knows this better than our wealth preservation expert, Vern Gowdie. But take note. How and where you choose to store your cash — and in which national currencies — can have a huge impact on how you’ll weather a severe market downturn.
Now that we’ve covered security, what about your punting money? The money you can afford to lose investing in higher risk assets with the potential to return far higher gains?
In 2017, investing in a Dow index tracking fund would have been a fairly easy, lucrative way to go…returning roughly 25% that year.
However, the really big gains last year, as you know, were made by crypto investors.
Bitcoin started 2017 at US$985. It peaked on 16 December near US$19,350…a gain of 1,864%.
Then there’s ether, currently in a battle with XRP to retain its standing as the world’s second largest crypto by market cap. Ether began 2017 at US$8.41 and peaked on 9 January this year at US$1,203.71…a gain of 14,230%.
Now that’s all history, of course.
But unlike the Dow Jones, which as mentioned above is up another 8.3% this year and at a new record high, the crypto bubble well and truly popped back in December and January.
Bitcoin is down around 66% from its peak. While ether, currently at US$220.52, is down almost 72%.
Anyone who was drawn in near the highs is certainly feeling stung.
But the important question now is whether the wave of selling is over. And whether a new crypto boom — bubble or not — could be about to take off.
If the rising cryptocurrency interest from institutional investors is any indication, and it usually is, things are looking promising.
As Bloomberg reports:
‘Institutional investors are becoming more involved in the $220 billion cryptocurrency market than many observers may realize.
‘Buyers such as hedge funds have replaced high-net-worth individuals as the biggest buyers of large swaths of digital coins worth more than $100,000 through private transactions, according to Bobby Cho, global head of trading at Cumberland, the Chicago-based cryptocurrency trading unit of DRW Holdings LLC, which handles the over-the-counter purchases.
‘“Wait until institutional investors embrace crypto” has long been the rallying cry for digital-currency enthusiasts as prices surged and collapsed in the past year amid shifting expectations for regulatory acceptance of the asset class.’
Bitcoin is likely to be one of the beneficiaries of any increased investments from the big institutions. But ether could be set for an even bigger bounce.
Also from Bloomberg:
‘Things may be looking up for Ether, the second most popular digital coin, according to cryptocurrency advocate Thomas Lee.
‘The token, which has suffered a severe sell-off this year as investors retreated from the virtual-asset market, is about to bounce back, Lee wrote in a note to clients Thursday. Ether has lost half of its value in the past three months and has underperformed large-cap coins by two standard deviations, which could signal that it’s time for a rebound, he said.’
Lee may well know what he’s on about.
But when it comes to all things crypto, there’s no one I trust more than Sam Volkering and Ryan Dinse, over at Secret Crypto Network.
Sam has just released an updated, print version of his ‘crypto investing bible’, Crypto Revolution.
Before you dip your toe into the crypto markets — or consider selling any of your existing holdings — this one is a must read.
In yesterday’s Port Phillip Insider, I told you about stock market veteran Matt Hibbard’s upcoming online interview series, ‘Overnight Dividends’.
During the three part series, Matt will explain how you can potentially draw 20–40 extra income payments from some of the top stocks on the ASX every year.
For example, Matt’s already used this strategy to help his subscribers collect $218 from Qantas, $186 from ANZ, and $330 from Origin Energy…to name just a few.
Legendary investors like Warren Buffett and Jim Rogers have used a variation of Matt’s method to turn huge profits. But the big players like to make it sound complicated. They don’t like sharing some of their most potentially lucrative secrets with the masses.
Matt Hibbard has no such compunctions. Quite the opposite.
He gained his own knowledge the hard way…as a highly successful trader on the trading floor, back before the days of online trading. And he’s happy to share the valuable strategies he learned along the way.
Starting this Friday, 5 October, Matt will walk you through everything you need to know to potentially start earning a second income of up to $17,160 per year.
The ‘Overnight Dividends’ interview series is free to our paying subscribers…like you.
But you will need to register your interest before Friday so we can include you. You can do that — and get all the finer details — by clicking here.
Finally, here’s the latest from The Australian Tribune:
‘Politically Correct Timebomb: Men “Guilty Until Proven Innocent”’
‘As US President Donald Trump pointed out yesterday, we are living in scary times.
‘While he referred to explosive issues in the US, Australia and much of the rest of the world are facing the same politically correct timebomb.
‘It’s a time where someone — anyone — from your distant past can emerge with wild allegations against you. Even if those allegations are baseless, the burden…’
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.