Tapping into the next investment megatrend

Thursday, 6 December 2018
Melbourne, Australia
By Bernd Struben

  • Trade war on…trade war off
  • ‘Why Scott Morrison Really Saved Liberal MP Craig Kelly’

Almost every investor has spent time looking in the rear-view mirror and thinking…if only!

I certainly have. And I imagine you have too.

For short term speculative investments, you might wish to turn back the clock and invest into bitcoin in January 2016, when it was trading for under US$400. And of course, you’d know to sell at the top. That was in mid-December 2017, when it was fetching US$19,700.

Taking a longer, and potentially more profitable horizon, you could have made a fortune investing in Japanese stocks in the 1980s. That was when Japan was booming and the envy of the developed world.

Of course, you would have had to invest in the right stocks. Like Honda, which gained 761% in two years. Or Sony, which rocketed 735% in five years.

When Japan’s economy and stock markets began to fizzle in the 1990s, the megatrend baton was effectively handed over to China.

As an Aussie investor, I don’t need to tell you the gains that were made by well-placed Australian companies riding the Chinese boom.

Like Northern Star Resources, which gained 3,300% in under three years from 2010–2013.

Or Sandfire Resources, which shot up 13,583% in just over two years, from 12 December 2008 to 24 December 2010.

Our in-house team of analysts call the Japanese and Chinese megatrends the First and Second Waves.

While there are still profitable opportunities in both markets, the cruxes of those waves are receding further into the rear view mirror every day.

Lacking a time machine, the best gains lie in identifying the next megatrend before it unfolds. The Third Wave, if you will. And then positioning yourself in the right stocks to ride that wave…and holding on tight throughout any turbulence.

That’s the idea behind Port Phillip Publishing’s ambitious new endeavour — The Third Wave Portfolio.

The portfolio showcases 10 international stocks our handpicked team of top analysts believe are most likely to ride the Third Wave megatrend of the 2020s. A megatrend that’s already in its early stages of lift-off today.

As publisher Kris Sayce says, ‘It’s the most important piece of medium-term stock speculation research our company has produced.’

I wrote to you about The Third Wave Portfolio over the past few days.

That portfolio was published yesterday, along with a free report that details all the research and rationale behind it.

You can access that free report here.

But don’t wait too long. Our special access offer to The Third Wave Portfolio ends at midnight on Monday, 10 December.

You may decide this isn’t something for you. But I urge you to check it out before then, so you can make an informed decision. You can do that by clicking here.

Now to the markets…

Markets

Overnight, US markets were closed in honour of the state funeral of former President George HW Bush.

In Europe, the Euro Stoxx 50 index finished down 38.98 points, or 1.22%. Meanwhile, the FTSE 100 fell 1.44%, and Germany’s DAX closed down 135.08 points, or 1.19%.

In Asian markets, Japan’s Nikkei 225 is down 483.27 points, or 2.20%. China’s CSI 300 is down 1.62%.

In Australia, the S&P/ASX 200 is down 35.85 points, or 0.63%.

On the commodities markets, West Texas Intermediate crude oil is US$52.80 per barrel. Brent crude is US$61.56 per barrel.

Turning to gold, the yellow metal is trading for US$1,239.69 (AU$1,708.03) per troy ounce. Silver is US$14.50 (AU$19.98) per troy ounce.

One bitcoin is worth US$3.722.11.

The Aussie dollar is worth 72.58 US cents.

Trade war on…trade war off

We’ve spilled a fair bit of digital ink covering the US–China trade dispute.

For months I’ve been forecasting that it will all come to an end in the first half of 2019. And it will end with a fizzle, not a bang.

Over the past few months, most mainstream analysts have gone from fear to euphoria to fear and back again.

We all know the power that media can have over stock markets. So it’s no surprise the flip-flopping takes on the trade war dominating the headlines saw global markets react in kind.

Monday was a day of euphoria. Investors were cheered by Trump’s portrayal of a highly successful meeting with Xi Jinping following the G20 Summit in Argentina. Stock markets soared.

By Tuesday that had all turned sour as investors soaked in Trump’s proclamation that he’s ‘a tariff man’. And tariffs would be back and even higher if the Chinese didn’t live up to the great new deal he envisions.

Silence from the Chinese side further fuelled fears. And stock markets tanked.

Meanwhile, the mainstream financial press happily seesawed from one narrative to another.

Trade war off…trade war on.

That’s why, yesterday, I urged you to ignore the noise, writing:

Do your best to ignore this latest round of negativity.

There are all kinds of factors that will determine the fate of the stock markets in 2019. Some will help boost sentiment and share prices. Others will stir fear and see fresh rounds of selling.

As for the US-China trade dispute, neither side will walk away with everything they want. But I believe the Chinese will make some serious concessions. Enough, at least, to enable the “Tariff Man” to claim success.

Then we can all move on to the next big show.’

Not long after yesterday’s issue went out, Trump was back playing ‘good cop’, tweeting:



chart image

Source: Twitter
Click to enlarge

Whether Trump sounds naïve here or not, he has good reason to be optimistic about the outcome of yet another ‘historic meeting’ with a world leader.

From Reuters:

In a brief statement, the [Chinese Commerce] ministry said China would try to work quickly to implement specific items already agreed upon, as both sides “actively promote the work of negotiations within 90 days in accordance with a clear timetable and road map”.

“We are confident in implementation,” it said, calling the latest bilateral talks “very successful”.

It’s tempting to dismiss this all as wishful thinking. And rest assured many pundits will do so. Particularly those whose analysis, knowingly or not, is clouded by their own politics and dislike for Trump.

But in case you’re tempted to believe them, there was also this:

Sources told Reuters that Chinese oil trader Unipec plans to resume buying US crude by March after the Xi-Trump deal reduced the risk of tariffs on those imports.

China’s crude oil imports from the US had ground to a halt.’

Of course, the trade imbalance between the US and China is only one of the factors that spurred Trump into donning his cape and emerging from the phone booth as ‘Tariff Man’.

Intellectual property (IP) rights is another big factor. With China routinely (and, ahem, allegedly) involved in IP theft, this issue is an even bigger stumbling block. But here too, the Chinese appear to be taking some concrete and timely action.

From Bloomberg:

China announced an array of punishments that could restrict companies’ access to borrowing and state-funding support over intellectual-property theft, a key sticking point in its trade conflict with the US…

China set out a total of 38 different punishments to be applied to IP violations, starting this month.’

Time will tell what kind of follow through there is from the Chinese side. It’s unrealistic to expect an end to all IP theft. But this is certainly a step in the right direction.

Trade war off?

At the risk of sounding like a broken record (remember those?), both sides appear intent on reaching a resolution. And both leaders have much to gain by doing so. I suspect they’ll make enough progress to at least suspend any escalation of tariffs beyond the current 90-day hiatus.

Indeed, in 90 days this may all be water under the bridge.

Comments, questions, idle musings? Send them to letters@portphillipinsider.com.au.

Finally, here are the latest antics out of Canberra from The Australian Tribune:

‘Why Scott Morrison Really Saved Liberal MP Craig Kelly’

We can’t be certain. But we suspect the din over Scott Morrison’s intervention to save Liberal MP Craig Kelly from a sticky preselection in his safe Sydney seat of Hughes would be a lot quieter if Kelly were a woman.

In either case, Morrison has been forced to defend his controversial move after he acted to secure…’

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