It’s already begun…
Thursday, 4 July 2019
By Bernd Struben
- Flipping a losing stock on its head
- Gold miners riding high
It’s already begun…
Were you part of it?
I’m talking about the ASX Algo-Edge trading series.
The exclusive trading series is brought to you courtesy of our sister company, Agora Financial Australia (AFAU).
Over the four-day series, AFAU publisher James Woodburn and former Morgan Stanley money manager Tom Meyer unveil the secrets to trading with a Wall Street insider’s edge.
Secrets that could see you make up to seven times the potential returns over buy and hold investors.
It’s all fully legal, mind you. But it opens the door to a new way to trade the ASX that may well change the way you trade forever.
And James has agreed to make it available free of charge to Port Phillip Publishing’s paying subscribers, like you. (You just need to register with your email address first.)
If you’ve been following along with Port Phillip Insider this week, you’ll have an idea of what this is all about.
We released the first part of the series earlier today. During that session, Tom explained why we’re all pre-programmed to lose money trading stocks. Don’t take it personally. We were all born that way!
Of course, there’s a fair chance you already watched the first part. As of this morning, more than 2,280 of our subscribers had signed up for the ASX Algo-Edge.
That probably doesn’t include too many of our buy and hold investors. As I’ve mentioned a few times, to make this method work you need to be comfortable and willing to trade in and out of a package of six stocks. Though generally you won’t need to adjust your positions more than once per week. If at all…
And to really make the most of it — as I’ll show you below — you’ll want to be comfortable shorting stocks when the time is right. But don’t let that scare you away from the trading series. There are numerous ways to short stocks. It’s not nearly as tricky as some investors make out. Though there are, of course, unique risks involved.
Anyhow, don’t worry if you didn’t sign up for the ASX Algo-Edge trading series yet.
There’s still time.
AFAU has archived today’s session and will archive the other three as well. At least for a few days.
To watch that and tune in for the remaining sessions over the next three days — for free — click here to register with your email address.
Now we pause for a look at the markets…
Overnight, US markets were again in record high territory.
The Dow Jones Industrial Average closed up 179.32 points, or 0.67%.
The S&P 500 closed up 22.81 points, or 0.77%.
In Europe, the Euro Stoxx 50 index finished up 32.65 points, or 0.93%. Meanwhile, the FTSE 100 gained 0.66%, and Germany’s DAX closed up 89.52 points, or 0.71%.
In Asian markets, Japan’s Nikkei 225 is up 54.76 points, or 0.25%. China’s CSI 300 is down 0.49%.
In Australia, the S&P/ASX 200 is up 37.74 points, or 0.56%. That’s enough to put the ASX within a whisker of its all time 2007 high.
On the commodities markets, West Texas Intermediate crude oil is US$57.19 per barrel. Brent crude is US$63.61. per barrel.
Turning to gold, the yellow metal is trading for US$1,420.45 (AU$2,018.55) per troy ounce. Silver is US$15.33 (AU$21.79) per troy ounce. (More on gold below…)
One bitcoin is worth US$11,923.64.
The Aussie dollar is worth 70.37 US cents.
Flipping a losing stock on its head
As you saw in the section above, US markets are trading at record highs. And the ASX 200 is getting darn close to a new record high as well.
Aussie and Yankee investors alike have their central banks to thank for that. There’s nothing the equity markets like more than easy money.
The US and Australian governments are also both dangling the possibility of massive infrastructure spending to further goose their economies. And in Australia, as you know, we’ve got Scott Morrison’s $158 billion income tax cut package coming our way.
That passed today, following a little horse trading with Tasmania’s Jacqui Lambie.
The first $15 billion of that should hit taxpayers’ bank accounts over the coming months, courtesy of our good friends at the ATO. The rest will, presumably, be delivered back into taxpayers’ pockets in stages over the next few years.
And it’s not just the US and Australia. Governments across the globe are going all in to help keep housing prices and stock markets afloat.
So is there anything to worry about?
Of course there is!
Lower interest rates only encourage us to pile on ever more debt. And Australians are already among the most indebted people on the planet.
Low rates also encourage mal-investments. That’s where companies can borrow money for pennies on the dollar to invest in their business. And not just quality stocks with a healthy growth outlook. Bad companies can borrow money as well to prop up their failing businesses.
As for the plans to pour billions of dollars into Australia’s infrastructure? That may boost GDP growth temporarily. But don’t forget it goes hand in hand with the $158 billion tax cut. If you ran your household budget this way you’d, well, be up to your eyeballs in debt.
You can see how this won’t end well.
An epic market crash could still years away. But at today’s levels, a 10% correction is certainly something you should be prepared for. And a 20% fall isn’t out of the question.
Which brings us back to how you can stay in the markets — and potentially pocket big gains — whether stocks are rising or falling. All you need is an established trend.
Now like I said up top, that does mean you’ll need to go short when prices are falling. Meaning you gain when stocks go down and lose when they go higher.
Have a look at chart below:
Source: Thomas Meyer
NOTE: All figures shown above exclude trading fees, taxes and dividends
You probably remember last October through December as fondly as most investors.
During that time, the ASX 200 (and ASX index tracking ETFs) fell 9%. That’s the black line above.
Over that same period, using the methods revealed in the ASX Algo-Edge trading series, you could have hypothetically gained 5%. That’s according to rigorous back testing results.
The Algo-Edge method is the green line. You can see how the performance is almost the mirror image of the buy and hold strategy.
Now granted, a 5% gain isn’t going to change your retirement plans. But it beats the heck out of a 9% loss…no?
Before signing off, a quick look at the gold miners…
Gold miners riding high
Gold retreated a few dollars an ounce overnight. But at US$1,420.45, its still right near six-year highs. And in Aussie dollars, it’s still close to a record high.
That continues to be good news for leading Aussie gold stocks. And great news for their investors.
Evolution Mining Ltd [ASX:EVN], for example, is up 12.4% over the past month.
Shares in $24.8 billion Newcrest Mining Limited [ASX:NCM] are up 15.3% in that same time.
But according to our editorial director Greg Canavan, select gold stocks could have far larger gains ahead. That’s based on a shock he sees hitting the gold markets. One that the mainstream has yet to report on.
Greg lays it all on the line for you in a new, free research report next week. I’ll let you know when you can access that.