What is quantitative easing?

Qhat is QE?

We are entering a new paradigm; get used to forever Quantitative Easing – QE, though it will be given other names along the journey to make it appear more palatable. The US and by default worldwide debt is set to soar to preposterous levels; get used to it and embrace this fact for nothing has changed since we got off the Gold standard and nothing will change until the system collapses, though waiting for that day might prove to be fatal as the masses are completely asleep.

If a national debt of almost $22 trillion is shocking to some; imagine how they will feel when the debt soars to $100 trillion. Many might say no way in hell that is going to come to pass. Take a look at the national debt numbers in the early 1900s. Go back to 1900 and then fast forward to the present. Once upon a time, our national debt was less than 1 million USD.

Now if you told people back then it would be at $22 trillion one day; would the reaction not be the same? We will go on record to state that there is a good chance that worldwide debt will surge to $1000 trillion before the masses discover the emperor is naked, fat, bald and ugly; until then they will continue to believe he is a handsome prince. It currently stands at $247 trillion.

 

Clarida hints at the Forever QE reality

In a Feb. 22 speech, Clarida acknowledged no doubts. He said that radical monetary policy has worked, that it will continue to work, and that it may well become more radical. He contended that low-interest rates are here to stay and that new policy “tools” must be sharpened and kept at the ready. As to potential adverse consequences of administered rates and the mind-control games meant to “anchor” our collective expectations of the future, he mentioned none.

Certainly, rates are astoundingly low—Bank of America Merrill Lynch recently was able to count $11 trillion of bonds worldwide quoted at yields of less than zero. Clarida said that the decline in the so-called neutral rate of interest “is widely expected to persist for years.” Full Story

Stories like this barely receive much media attention, and the masses are too busy dealing with the problems on reality TV or being misdirected by highly politicised B.S. News that only serves to allocate even more time to trivial matters. These developments indicate that developed nations like the US and most of western Europe will become increasingly hostile places to live in. This topic is beyond the scope of this publication, but the trend is in place, the US is no longer the bastion of Freedom and will soon not make it even to the top 10 of the best places to live in.

 

In The Forever QE Era; strong corrections have to be embraced

In terms of the stock market, until the Fed changes its mind, all sharp corrections have to be viewed as buying opportunities, and backbreaking corrections have to be placed in the category of “once in a lifetime events”, provided of course the trend is positive. That is what we are here for; to inform you if the trend is positive (Up) or negative (down). The world is going to witness a Fed that has decided to make a cocktail of Coke, Heroin, Crack and Meth and take it all in one shot. Imagine what a junkie on this combination of potent drugs is capable of doing, and you will have an idea of where the Fed is heading in the years to come.

Now the Gold bugs will cry “I told you so”. Our response to this statement; not so fast little bugs. While precious metals will do well, we think stocks in key sectors (and we are not referring to Gold stocks) will pulverise the precious metals sector in terms of returns. One such area is robots (particularly Sex-bots) and AI.

Courtesy of Tactical Investor

 

Random views on QE

What is Quantitative Easing?

Quantitative easing is an unconventional monetary policy in which a central bank purchases government securities or other securities from the market in order to increase the money supply and encourage lending and investment. When short-term interest rates are at or approaching zero, normal open market operations, which target interest rates, are no longer effective, so instead a central bank can target specified amounts of assets to purchase. Quantitative easing increases the money supply by purchasing assets with newly created bank reserves in order to provide banks with more liquidity.

KEY TAKEAWAYS

  • Quantitative easing, or “QE,” is the name for a strategy that a central bank can use to increase the domestic money supply.
  • QE is usually used when interest rates are already near 0 percent and can be focused on the purchase of government bonds from banks.
  • QE programs were widely used following the 2008 financial crisis, although some central banks, like the Bank of Japan, had been using QE for several years prior to the financial crisis. Full Story

Quantitative Easing Explained

Quantitative easing is a massive expansion of the open market operations of a central bank. It’s used to stimulate the economy by making it easier for businesses to borrow money. The bank buys securities from its member banks to add liquidity to capital markets. This has the same effect as increasing the money supply. In return, the central bank issues credit to the banks’ reserves to buy the securities.

Where do central banks get the credit to purchase these assets? They simply create it out of thin air. Only central banks have this unique power. This is what people are referring to when they talk about the Federal Reserve “printing money.”
Lower interest rates allow banks to make more loans. Bank loans stimulate demand by giving businesses money to expand. They give shoppers credit to purchase more goods and services.

By increasing the money supply, QE keeps the value of the country’s currency low. This makes the country’s stocks more attractive to foreign investors. It also makes exports cheaper.

Japan was the first to use QE from 2001 to 2006. It restarted in 2012, with the election of Shinzo Abe as Prime Minister. He promised reforms for Japan’s economy with his three-arrow program, “Abenomics.”
The U.S. Federal Reserve undertook the most successful QE effort. It added almost $2 trillion to the money supply. That’s the largest expansion from any economic stimulus program in history. Full Story

 

Why do we need quantitative easing?

The aim of QE is simple: by creating this ‘new’ money, we aim to boost spending and investment in the economy.
We are tasked with keeping inflation – rises in the prices of goods and services – low and stable.

The normal way we meet our inflation target is by changing Bank Rate, a key interest rate in the economy.

When the global recession took hold in late 2008, we quickly lowered Bank Rate from 5% to 0.5% to support the UK’s economic recovery. Lower interest rates mean it’s cheaper for households and businesses to borrow money – which encourages them to spend and invest, whether that’s a family buying a new car or a company wanting to build a new factory.

But there’s a limit to how low interest rates can go. So when we needed to act to boost the economy, we turned to another method of doing so: we introduced quantitative easing. Full Story

The Boom And Bust Cycle: Fiat

The Boom And Bust Cycle: Fiat

The Boom and Bust Cycle: Opportunity Knocking?

Remember that when the markets eventually correct, this correction will be broadcasted as a crash (that’s the name of the game; scare the hell out of the masses) and it will be blamed on Trump. No, we are not getting sentimental on Trump. In reality, each president has only so much room to do what it is good for the people; most presidents don’t even use this little leeway they are given but focus on themselves.  As long as Fiat is around, every president will be bought and paid for. The big players have trillions at their disposal, so the dream of finding a great leader is just that, a “big dream”. Mass psychology covers the aspect of mass manipulation very well and how the top players go out of their way to create situations that will alter the masses angle of observance. Alter the angle and you alter the outcome by altering what the masses deem to be true or false.

Freedom is an Illusion

You are only free to do things that you are allowed to do, and this includes the president. Reflect on that we will expand on it later; we already provided you with a big hint. In case you missed the hint is “fiat money”.  At the tactical investor, our focus is on dealing with reality and spotting new trends. Everything else falls into the idle gossip category. It might feel good to rant and rave about stuff like this, but it is a waste of energy.  The focus should be on finding a way to play with the hand that you have been dealt.

The markets follow the same path; until Fiat is eliminated this talk about the world coming to an end is nothing but rubbish. All those self-proclaimed masters of wisdom are either dead, dying or becoming highly irrelevant. Focus on the trend for that is all that matters; it is the only way to maintain your health and your wealth.

This market will experience many corrections in the years to come, some will be mild, some will be strong, and some will appear to be devastating. If you follow the trend, you will know when to move into cash and when to jump in. From a “super trend perspective” every back-breaking correction (emphasis on back-breaking) should be viewed as a long-term buying opportunity.

Trump’s presidency has made for some entertaining Moments

Overall the Trump presidency has made for some pretty damn good free entertainment; it is quite amusing to watch the other side react and equally amusing to watch the nonsense the Trump Team can come out with at times to defend their position. As time passes by, it appears that Trump is focussing more on himself than on making the country great. Who knows, he might suddenly change direction; he has a habit of doing the unexpected.

From a psychological perspective, you should hope that some shock announcement is made regarding “Trump”; it will scare the hell out of the masses, and the market will drop like a rock creating a lovely buying opportunity.

The press has always gone out of its way to twist the news and sell the masses rubbish, especially when it comes to the financial markets. However, the veil has fallen completely after Trump won the presidency. The utter garbage they focus on illustrates that IQ is no longer a pre-requisite.  We would not be surprised to find out if most of those individuals who pass for reporters have an IQ that is slightly above 70. An IQ of 70 equates to that of a retard. However, on the flip side imagine how difficult it would be if everyone were a genius, so be grateful for these penguins, as their reality is based on what they read. They make trading the markets infinitely easier as their behaviour is predictable.

From an Investment perspective- Trump Administration is bullish for the markets

Trump is bombastic, so he will go out of his way to say things that will shock the markets but as the primary trend is bullish, these pullbacks ranging from mild to wild should be viewed through a bullish lens.

The Fed via fiat money indirectly controls the media; the press through the garbage they print and pass of as news control the masses.  You could not ask for a better setup of mind control; the masses think they are free, but they are not; they are free to make decisions in areas that do not matter. Look around slowly and determine for yourself if they are free.

DOW long time charts

Sit down and watch the show for are things about to get more interesting and nuttier at the same time.  We suspect a lot more heads will roll and the cries of rage and frustration will soar to heights never seen before.  Market Update May 19, 2017

Bottom line

All massive corrections should be viewed as buying opportunities provided the underlying trend is up (bullish). The stronger the deviation from the norm the better the opportunity

Courtesy of Tactical Investor

Random views on Boom and Bust Cycle

What is Boom And Bust Cycle
A boom and bust cycle is a process of economic expansion and contraction that occurs repeatedly. The boom and bust cycle is a key characteristic of today’s capitalist economies. During the boom the economy grows, jobs are plentiful and the market brings high returns to investors. In the subsequent bust the economy shrinks, people lose their jobs and investors lose money. Boom-bust cycles last for varying lengths of time; they also vary in severity.
BREAKING DOWN Boom And Bust Cycle
Since the mid-1940s, the United States has experienced several boom and bust cycles. Why do we have a boom and bust cycle instead of a long, steady economic growth period? The answer can be found in the way central banks handle the money supply.
During a boom, a central bank makes it easier to obtain credit by lending money at low interest rates. Individuals and businesses can then borrow money easily and cheaply and invest it in, say, technology stocks or houses. Many people earn high returns on their investments, and the economy grows.
The problem is that when credit is too easy to obtain and interest rates are too low, people will overinvest. This excess investment is called “malinvestment.” There won’t be enough demand for, say, all the homes that have been built, and the bust cycle will set in. Things that have been overinvested in will decline in value. Investors lose money, consumers cut spending and companies cut jobs. Full Story

 

Boom and Bust Cycle, What Causes It, and Its History

The boom and bust cycle is the alternating phases of economic growth and decline. It’s how most people describe the business cycle or economic cycle.

In the boom cycle, growth is positive. If the gross domestic product growth remains in the healthy 2-3 percent range, it can stay in this phase for years. It accompanies a bull market, rising housing prices, wage growth, and low unemployment.

The boom phase doesn’t end unless the economy is allowed to overheat. That’s when there’s too much liquidity in the money supply, leading to inflation. As prices rise, irrational exuberance takes hold of investors. The GDP growth rate grows above 4 percent for two or more quarters in a row. You know you’re at the end of a boom phase when the media says the expansion will never end and when even the grocery clerk is making money from the latest asset bubble.

The bust phase is like life in the Middle Ages. It was brutish, nasty, and mercifully short. It usually lasts only 18 months or less. GDP turns negative, the unemployment rate is 7 percent or higher, and the value of investments falls. If it lasts more than three months, it’s a recession. It can be triggered by a stock market crash, followed by a bear market.

A stock market crash can cause a recession. As stock prices fall, everyone loses confidence in the state of the economy. When investors don’t feel confident about the future outlook, they pull out their investments. Full Story

 

Causes of Boom and Bust Cycles

Boom and bust economic cycles involve:

  1. Rapid economic growth and inflation (a boom), followed by:
  2. A period of economic contraction / recession (falling GDP, rising unemployment)

Causes of boom and bust cycles

1. Loose Monetary Policy

If monetary policy is too loose, it means real interest rates are too low given the state of the economy, e.g. UK economy in late 1980s. Loose monetary policy reduces the cost of borrowing and mortgage payments (increasing disposable income). This will cause a rise in investment and consumer spending. This rise in aggregate demand can cause excessive growth in the money supply and cause economic growth to be above the long run trend rate.
In the post-war period, the UK has had a long run trend rate of around 2.5%. This means that typically, productive capacity (AS) increases by about 2.5% a year. If interest rates are kept low, aggregate demand (AD) will increase much faster then the rate of productive capacity and economic growth will be too high. If economic growth is substantially above the long run trend rate, we will tend to see:

Rising inflation. Demand grows faster than supply. Therefore firms put up prices.
Wage inflation. Due to high demand for labour, there will be labour shortages leading to wage inflation. Full Story

 

Popular Media Lies To You: Don’t Listen To Experts As They Know Nothing

 popular media lies - fake news

What should traders have learned from the Nov-Dec 2018 crash? 

There is only one answer really; fear pays poorly.  We sent out an inordinate amount of updates during the crash phase, as we did through every crash like phase the market has experienced over the past several years. The reason we did this, was to prove in real time that giving into fear is a waste of time, money and good health. Once again the so-called crash of 2018 will have to be labelled as the crash that never was.

One day the market will experience something that will fall under the “crash” category that all the experts have been warning since the inception of this bull. For that to occur, bullish sentiment will have to soar to the extreme ranges and remain in that zone for an extended period.

 This Stock Market Bull is unlike other bulls

Long before this pullback, we stated that this bull market would soar to heights that would surprise even the most ardent of bulls, and that prediction has mostly come to pass.  Some of the most ardent of bulls started to keel over as early as 2016, and the last strong correction virtually knocked all of them out.  So where did they err? Over-reliance on old systems; the paradigm has changed, the players have changed, and as a result, the perceptions have changed. When it comes to the markets; the main driving force is emotions (perceptions); everything else on its top day is secondary at best.

Media Lies To The Masses;  Trying To Convince Them That Nothing has changed

This bull market is unlike any other; before 2009, one could have relied on extensive technical studies to more or less call the top of a market give or take a few months; after 2009, the game plan changed and 99% of these traders/experts failed to factor this into the equation. Technical analysis as a standalone tool would not work as well as did before 2009 and in many cases would lead to a faulty conclusion.  Long story short, there are still too many people pessimistic (experts, your average Joes and everything in between) and until they start to embrace this market, most pullbacks ranging from mild to wild will falsely be mistaken for the big one.

The results speak for themselves; the majority of our holdings were in the red during the pullback, but now they are in the black, proving that one should buy when there is blood flowing in the streets. It is a catchy and easy phrase to spit out but very hard to implement, because when push comes to shove, the masses will opt for being shoved.

V readings are still at ultra-high levels

V Indicator

We have alluded to the fact that there is a pattern between extreme weather and market action. Extreme weather usually pushes many people to act in wildly unpredictable ways. Look at animals when there is a sign of impending danger they act strangely, humans are not that different. The only real difference is that humans are not aware of this and tend to blame other factors for this irrational behaviour; this behaviour is reflected in and out of the markets.  Violent crimes and or bizarre crimes usually surge during these periods.   However, one of the best places to see this type of action is in the markets and the action over the past three months is clear evidence of this.

We have spotted what could turn out to be a new trend between the V-indicator and the Trend Indicator.  Our hypothesis:

“Higher  (V-Readings) readings, are more likely to ensure that the least probable outcome will come to pass in regards to the markets.”

For example, the least probable outcome from Dec 2018 to Jan 2019 was for the markets to mount a strong rally, but that is precisely what took place.  This pattern, if it continues, will provide another level (secondary) of confirmation that this bull market is destined to trend a lot higher than the most ardent of bulls could ever dream of.

Follow the trend for it is your friend, the rest is just hot air and noise

Courtesy of Tactical Investor

 

Random views on Popular Media Lies

Forget fake news, investors should realize the markets are fake, says asset manager

The global rally in financial markets is unsustainable because it only seems to respond to changes in the real economy when it fits a certain narrative, according to the CIO of investment firm Fasanara Capital.

“I call it fake markets… you know, these days they talk about fake news (but) these are fake markets in a way right?” Francesco Filia, CIO of Fasanara Capital, told CNBC on Wednesday.

Filia argued financial markets had become “complacent” and “insensitive” to fundamental changes in the economy. He suggested while markets appeared to surge higher on so-called good data, a mirrored response lower on negative sentiment had not been evident.

“I think this kind of market environment is both unstable and unsustainable… at some point, something is going to happen that is going to all of a sudden wake up markets as to this overvaluation,” Filia said.
European bourses were trading lower on Wednesday after European Central Bank President Mario Draghi appeared to hint the ECB would be prepared to scale back its monetary policy amid improving economic prospects for Europe.

Meanwhile, in the U.S., the broader S&P 500 index posted its biggest one-day drop in about six weeks overnight and closed at its lowest point since the end of May. Wall Street’s losses appeared to accelerate on news that the U.S. Senate had delayed voting on a health care reform bill. Full Story

Why robot traders haven’t replaced all the humans at the New York Stock Exchange—yet?

As in so many other industries, robots have been marching into Wall Street for years. That’s especially the case in stock trading, where algorithms now do the majority of buying and selling. Instead of a boisterous trading floor, these days many US equity transactions happen in a data center in suburban New Jersey. One place where human traders are safe, though, is the New York Stock Exchange, which has roots going back two centuries. The stock exchange has made sure its human presence is protected, for now.

NYSE’s several hundred traders and brokers are the face Wall Street, and form a crucial part of the NYSE brand, which is perhaps the best known in the financial industry. The stock exchange packs a marketing punch few, if any, businesses can match. But given that computers dominate stock trading just about everywhere else around the world—and play a pretty big role at NYSE, too—it’s reasonable to ask whether the people milling around the trading floor at 11 Wall Street in Manhattan are worth keeping around. Critics argue that it’s a façade for television cameras, a kind of capitalist Disneyland.

“If you were going to start from scratch, trading would be fully automated,” said Larry Tabb, founder of research and consulting firm Tabb Group. ”That said, I think the human role does provide assistance in trading.” Full Story

Stock Market Fake Risk, Fake Return? Market Crash?

With seemingly everyone from the blogosphere to the Tweeter-in-chief chiming in on fake news, have investors considered their risk/return profile may also be “fake”? When it comes to investing, who or what can we trust, is the market rigged, and why does it matter?

For eight years in a row now, an investment in the S&P 500 has yielded positive returns. In recent years, expressions like “investors buy the dips” and “low volatility” have become associated with this rally.
In the “old days”, investors used to construct portfolios that, at least in theory, provided a risk/return profile that they were comfortable with. For better or worse, I allege those “old days” are over. To be prepared for what’s ahead, let’s debunk some myths.

The system is rigged
For those that say the system is rigged, I concur. In my assessment, central banks are largely responsible for a compression of “risk premia.” All else equal, quantitative easing and its variants around the globe have made assets from equities to bonds appear less risky than they are. This is at the very core of central banks efforts to entice investors to take risks, as risk taking is key to making an economy grow. In practice, central banks have foremost pushed up financial assets, but have largely disappointed in generating real investments. As a result, those holding financial assets have disproportionally benefited. Full Story

Fiat Money – The main driver behind boom & Bust Cycles

Fiat Currency

Fiat Money The Root Of All Things Bad

The mother of all evils is fiat. Without Fiat, none of the above developments would have taken off. As money can be created out of thin air, those in the know have unlimited mechanisms to increase their wealth easily. The devastating boom and bust cycles the markets experience are not natural; they are created. Each cycle is pushed to the MAX in order to create more of an opportunity for those in the know how. Now if you control the money, you can purchase all the main media outlets. When you control the media and the money supply you are king of the hill; less than 10% of the populace is strong enough to resist from falling for what they have directed to see.

The left and the right are being directed;

They are both being played, and none is the wiser.  This technique is used everywhere. The strategy employed is to provide the masses with two to three options to give them the illusion of choice but all the choices lead to the same outcome, and that is what they fail to see.  When one takes an extreme position it does not matter whether you are swinging to the right or to the left, you are being controlled and it’s impossible for that person to see anything else besides the data they have been fed.

So how does this all tie up; all those events we briefly mentioned are being used and will be used to polarise the crowd even more? What is immoral today is moral tomorrow; what changed? The only thing that changed was the perception. So if you program children young enough with the perception you want, you can make them accept almost anything as moral, and that is what the public education system is all about.  Remember nothing is free and what appears to be free usually ends up costing you 10X more down the line. One wise man I knew would often use this sentence when anyone made references to free stuff. He would say I am not rich enough to accept free things.

Fiat Money is behind everything

As Fiat is behind everything, and the money supply continues to go ballistic, we can expect levels of polarisation to soar to levels that are unimaginable today. With an unlimited supply of money and a vast understanding of the topic of Mass psychology, there is almost nothing in place to stop the top players from pushing these trends to their limit. The only defence is not to allow your emotions to do the talking, sit down and imagine its reality TV minus the Boob tube.

We have gone on record for several years on end, stating that market crashes are nothing but buying opportunities and today we provided a brief glimpse into the reasoning behind this stance.  There is no way the Fed is going to allow the markets to crash and burn. They will create the illusion of a crash, and the masses will react in the way they have been programmed to react; dump the baby with the bathwater. The conniving top players will come in and scoop everything.  What separates a correction from a crash? Your entry point; the early bird gets the worm, and the late bird has to contend with the bullet.  That is why mass psychology states that one should sell when the masses are euphoric and buy when the masses are panicking or in a state of uncertainty.

 Take a look at these charts, and a pattern will start to emerge

FRED-1

The shaded areas represent recessions, and a recession usually follows a disaster.  After each recession, the currency in circulation continued to soar.

FRED-2

 

The same thing occurred with M1 money stock, and after each recession, the M1 money stock surged even more. Look at the spike after the 2008 financial crisis.

Fred-3

 

Moreover, the same can be said of the monetary base, but the move in this chart was explosive after 2008.

In 1790 the national debt was a minuscule $75.4 million, and today we add more than that on a monthly basis. So when experts especially from the “hard money camp” state that the masses will revolt one day. The only part that is true in that sentence is “one day” but that day could be decades away from today because their perception has been altered. They believe that the dollar is good as gold and as long as they believe that, Fiat has no chance of being unseated and nothing is standing in the way of the national debt moving to $100 trillion.  If it could move from $75.4 million to almost $21 trillion without the masses revolting; the move from $20 trillion to $100 trillion is paltry by comparison

So what stands out is that the principles of Pavlov have been used wonderfully against the American and now the world populace at large. The masses have accepted that if there is a crisis, the government will find a way to solve it. Indeed they will find a way, but they will pass the bill onto the unsuspecting masses in the form of inflation and taxes;  double whammy for inflation is a silent tax.

Therefore we can make the following conclusions

  • Nations will continue to take on more debt; the US will lead the pack. In order to do this without interference from the masses, disasters and divisions will have to be created. Remember the saying conquer and divide or united we stand but divided we fall. The only ones falling will be the masses. History indicates that the ones that are least able to pay always pay for the lion’s share and they do so for the disasters created by the very people that are sending them the bill. There are no free meals, just illusions of free meals.
  • If the above premise is correct, then the next conclusion is that the governments will never allow a repeat of the great depression. Today’s society will never accept hardships like that; they will string the people in charge of the nearest tree, but this is precisely the mindset the top players fostered. For in the guise of helping the masses than can fleece the living daylights out of them. Ultimately this informs us that every market crash no matter how bad or strong will prove to be a buying opportunity for  it gives these players an excuse to ramp up the money supply

A disaster needs to be manufactured in order to provide the masses with a solution

You can only provide the masses with a solution if you manufacture a disaster that appears to be so terrible that the masses will accept conditions they would not have accepted before the disaster because they have been led to believe the aftermath will be infinitely worse. It is a win-win situation for the top players; they get their cake and their pie.  This is why we do not fear stock market crashes because we understand the game plan and we know that the masses will always be used as cannon fodder.

Having said that, jumping and buying stocks when the markets are crashing is not an easy thing to do. We spent over a decade in coming out with the trend indicator, and we have our custom indicators to inform us of when a trend change is close at hand or when the markets are exhibiting definite signs of a bottom.

What are the average player’s options?

Take time to understand the main principles of Mass Psychology as without that you will give in to fear every time the market’s pullback strongly. Understand that our first reaction is to flee when confronted with any danger, don’t fight that feeling, study it and understand it for it is. When you study it, you will come to see how bad such emotions are and in doing so, you will have moved to the stage where you will have the power to say yes or no when exposed to a similar situation.  Read history books; you do not have to learn from your experiences only; you can learn by studying the reactions of other people

Once you have mastered that, find 2-3 technical indicators that appeal to you.  They must appeal to you; don’t just choose them because they sound fancy or they are promoted as being the best ones out there.  Once you find some appealing technical indicators, study them and look for patterns.  Technical analysis is like art; beauty is in the eye of the beholder.  Use long-term charts preferably weekly and monthly charts.

Courtesy of Tactical Investor

Random views on FIAT money

Boom and Bust Cycles Are Primarily Due To Fiat Money

Make the Masses focus on other factors so they don’t focus on the Fiat Money Factor
The ploy from the day we got of the Gold Standard has been to redirect the masses attention. The masses are directed to focus on they could buy with all this money. In other words, Fiat money appears to be incredibly valuable, even though it has no intrinsic value.

To cement this illusion, a small segment of the population is paid fantastic salaries and their flamboyant lifestyles are broadcasted for everyone to see. The goal of creating divisions in society is to make one group of individuals wish for the lifestyle that this other group is living. The more divisions you create, the greater the cover; in other words, these divisions are created to ensure that the masses forget the real task at hand. This has worked very well, for almost no one today questions Fiat. Their main agenda today is to make more money so that they can lead a better life; little attention is paid to the fact, that they have to work harder and harder for less and less. The money they are paid is constantly being diluted; this is the true defintion of inflation. An increase in the money supply and not an increase in prices. Rising prices are only the symptom of the disease. Full Story

World FIAT Currencies List

Unlike commodity money which is covered by the value of the precious metal it was created from, usually silver or gold, the value of fiat currency is dependent on the interaction between demand and supply forces. The parties, buyer, and seller, engaged in its exchange will come to an agreement on its value.
Fiat is a Latin word. Translated into English, fiat means “Let it be done”. Fiat Currency is money that does not have intrinsic value but is recognized or accepted as a form of legal tender through government regulation. To read more about fiat currencies click on the following links to jump to the correct sections:
While most money was backed by physical goods or precious metals, fiat currency is contingent on people’s belief and faith in a country’s economy.

Many of today’s paper money is considered fiat money. They do not carry user value. The function of the paper money is to facilitate a payment. A government would produce coins out of precious metals and manufacture paper currency that would have an equivalent value in terms of a physical good. In the case of fiat currency, it cannot be redeemed. Neither can fiat currency be converted.

Fiat currency because popular and widely used in the 20th century particularly during the period of 1968 and 1973 when the Bretton Woods Agreement was terminated and the United States no longer allowed the U.S. Dollar to be converted to gold. Full Story

Billionaire Tim Draper: Only Criminals Will Use Fiat Money, As Cryptos Will Hit Mainstream in Next Few Years

Legendary billionaire venture capitalist, Tim Draper has predicted that in the next five years, fiat currencies will only be used by those involved in illicit activities.

According to the well-known bitcoin (BTC) bull, cryptocurrencies will achieve mainstream adoption within the next few years – while fiat money will mostly be used by criminals. Draper’s comments came during an interview (on February 18th) with Fox Business in which he told the financial news outlet that cryptocurrency transactions can be tracked easily through block explorers.

Draper, who acquired 30,000 bitcoins during a US Marshals Service auction (after they had been seized from Silk Road’s black markets), remarked:
“The criminals will still want to operate with cash, because they catch everybody who is trying to use Bitcoin.”

Last year in August, an agent working for the US Drug Enforcement Administration (DEA) had said that it was easier for her department to monitor cryptocurrency transactions – when compared to illegal deals conducted using fiat money. The agent had explained that block explorers provide advanced tools which allow government agencies to accurately track crypto transactions on the blockchain.

During his latest interview, Draper also mentioned that he thinks the fiat money in his bank account is not as secure as his cryptocurrency holdings. According to the business tycoon:
“My bank is constantly under a hack attack.”

Full Story

Business Investing and Stock Market Uncertainty

Business Investing and Stock Market Uncertainty

Business Investment; the best time to buy is when the crowd is scared

One of the best places to invest in is the stock market, provided one understands how the masses operate. The mass mindset is wired for failure; it is programmed to panic when anything stressful presents itself and that is very dangerous when it comes to the stock markets. In short, as a business investment, the stock market could be considered to be one that provides the best return on capital provided one does not allow one’s emotions to do the talking.

Look at the recent headlines; all the top players are going out of their way to create a mountain out of a molehill. I wonder why? Are they doing this because they love the masses so much? We think not; the idea is to fleece the masses both ways; on the way and on the way down.

Nothing drives the masses more insane then uncertainty. Suddenly create the illusion of uncertainty, and all hell will eventually break loose.  All hell is the secret code word for long-term opportunity.  Individually these stories are not a big deal, but what stands out is all these comments were made around the same time; it almost seems like a coordinated event.

Even Stan Druckenmiller doesn’t know where markets go next

After a wild three months in the financial markets, the billionaire investor is warning that trading conditions may become even more challenging as central banks withdraw stimulus from a global economy that’s already slowing. He anticipates lousy returns on stocks for years to come and has been buying US Treasuries on the expectation that yields will keep dropping.

“If you look at the indicators I have historically used in my business, they’re not red yet, but they are definitely amber. https://bit.ly/2Q1qgYY

Greenspan Says Politics Today Are Unlike Any He’s Seen

Former Federal Reserve Chairman Alan Greenspan said the current state of U.S. politics is unlike anything he’s seen.

“I was in the U.S. government for almost 20 years and I’ve never seen anything remotely close to what we’re observing today,” Greenspan said on Bloomberg TV on Wednesday. “I think the economic outlook is being significantly affected by the poor politics,” he said, adding that he’s “very much concerned.” https://bloom.bg/2SmATr2

Janet Yellen is worried about the next financial crisis

Janet Yellen is worried about the next financial crisis and told a small, intimate audience at an event Wednesday night in Washington, D.C., that her biggest concerns were the potential for reversal of financial safeguards put in place after the crisis and growing corporate debt.

“I am worried that we are in a deregulatory mode and I see a lot of pressures building in the system to go further to really weaken fundamental safeguards that were created in Dodd-Frank. We are a decade after the financial crisis so that would be worrisome and wrong to do,” Yellen told the audience at the Women in Housing and Finance holiday event. https://on.mktw.net/2SOVuEu

 

What was the difference between the Feb 2018 correction and the current one?

At least there was a proper trigger for that event. Bullish sentiment surged to a seven-year high, even though it only maintained this reading for roughly ten days. Had that correction morphed into a back-breaking correction, we could justify it as at least two triggers were there; bullish sentiment soared to a seven-year high, and the markets were trading in the extremely overbought ranges. This time around, bullish sentiment did not even make it to the 54% mark, and our indicators had already pulled back from the overbought ranges. In fact, they were dangerously close to the oversold ranges on the monthly charts.

Higher interest rates were never issue

The next interest rate hike was already priced in and so were the effects of the tariffs.  However, when these events were weaponized, they started to become an issue.   Now that the big players have seen the benefits of this type of attack first hand expect it to be used ruthlessly in the years to come.  However, if you stop and focus on the forest as opposed to a single tree, this weapon will have no effect on you.

After everything was said and done, if you had held onto your shares from the 2008 crash and then added more as the market tanked incrementally, you would have made a fortune ten years later.   Let’s look at some random examples. To simplify matters we are going to assume that one lot of each stock was purchased roughly at the highest price during the 2007-2008 top and an equal amount was purchased at roughly at the lowest price in 2009.  However, any person employing simple Technical Analysis and Mass Psychology would have achieved a better average entry price, even though they did not purchase at the top or the exact bottom.

Courtesy of Tactical Investor

 

Random views on Business Investing

The Stock Market: Risk vs. Uncertainty

Life is risky. The future is uncertain. We’ve all heard these statements, but how well do we understand the concepts behind them? More specifically, what do risk and uncertainty imply for stock market investments? Is there any difference in these two terms?

Risk and uncertainty both relate to the same underlying concept—randomness. Risk is randomness in which events have measurable probabilities, wrote economist Frank Knight in 1921 in Meaning of Risk and Uncertainty.1 Probabilities may be attained either by deduction (using theoretical models) or induction (using the observed frequency of events). For example, we can easily deduce the probabilities of the possible outcomes of a game of dice. Similarly, economists can deduce probability distributions for stock market returns based on theoretical models of investor behavior.

On the other hand, induction allows us to calculate probabilities from past observations where theoretical models are unavailable, possibly because of a lack of knowledge about the underlying relation between cause and effect. For instance, we can induce the probability of suffering a head injury when riding a bicycle by observing how frequently it has happened in the past. In a like manner, economists estimate probability distributions for stock market returns from the history of past returns.

Whereas risk is quantifiable randomness, uncertainty isn’t. It applies to situations in which the world is not well-charted. First, our world view might be insufficient from the start. Full Story

How Do Investors Respond to Uncertainty?

By Jyoti Madhusoodanan

Uncertainty in the economy—triggered, say, by a change in government, a diplomatic conflict, or a turn of the business cycle—is usually considered bad news for people who want to invest their money. But a new analysis from researchers at the Yale School of Management and Northwestern University looked at an unprecedentedly wide range of markets and found that investors are more concerned about actual volatility in prices than periods of high uncertainty. Indeed, their analysis suggests that investors historically have viewed periods of high uncertainty as being good news.

“There’s good reason to believe that just uncertainty by itself is bad,” says Yale SOM professor of finance Stefano Giglio, who led the study. The theory goes that a jump in uncertainty makes firms and individuals less likely to invest, driving down growth. “But we also know that when there’s high volatility there’s also high opportunity. So it wasn’t entirely clear: Are investors truly worried about market uncertainty?”

To answer that question, Giglio and his colleagues examined the prices of options, which are contracts that give investors the ability to buy or sell assets at a pre-specified price at some point in the future. They drew these data from the CME group, which includes information from the Chicago Mercantile Exchange, the Kansas City and Chicago Boards of Trade, and the New York Mercantile and Commodity Exchanges. Full Story

Understand the difference between risk and uncertainty while investing

Most people are unable to appreciate the difference between risk and uncertainty. When you invest in the markets or in any other asset class, there is an element of risk.

If you have seen investors getting confused between risk and uncertainty then they are not the only ones. Most people are unable to appreciate the difference between risk and uncertainty. When you invest in the markets or in any other asset class, there is an element of risk and also an element of uncertainty. In many ways, you can say that uncertainty is a very extreme form of risk. You can predict risk based on a mathematical formula and set the limits. In case of uncertainty, it is hard to set limits. That is why uncertainty cannot be managed; it can only be insured against.
Risk has a negative connotation and a positive connotation to it. For example, stock markets hate risk and any stock with a higher degree of risk gets a lower P/E valuation. What is the positive connotation of risk? Remember, all your investment decisions are risk-return trade-offs. To earn higher returns, you need to take higher risks. However, higher risk, by itself, does not guarantee you higher returns. How do we define risk? The risk is the potential for loss. Full Story

Long Term Trends: stock market bull vs bear

stock market bull vs bear

The monthly chart of the Dow going from 1985

Each point on this chart represents a month’s worth of data; the worst one day crash (black Monday) is just an insignificant blip on this long-term chart, clearly proving that until Fiat money is eliminated that stock market crashes from a long-term perspective represent buying opportunities.

stock market bull and bear

The yearly chart of the Dow from 1985

The same chart but now each point represents a year’s worth of data; one could argue that depending on the time frame one chooses, a back-breaking correction on the daily and weekly charts might appear as a small event on the monthly charts and almost a non-event on the yearly charts.

The stronger the deviation, the better the opportunity; markets always revert to the mean.  No matter how much one might be tempted to disagree, the above charts state otherwise.

 There are two main underlying themes behind every single market crash; a euphoric crowd and an extremely overbought market. Both elements were missing this time around, clearly highlighting that something else is at play here, and it smells dangerously akin to market manipulation.  Market manipulation via weaponized news?

From a long-term perspective, this sharp pullback is creating another once in a lifetime buying opportunity event. The crash of 2008 was one of the most painful in recent history and yet despite this vicious pullback; the Dow is still trading well over 200% above its 2009 lows.

Another myth that is peddled over and over again is the issue of how long it takes a market to recoup it has lost gains. Our response is who cares? What matters is the stocks you are buying and not a particular market index. A vast number of stocks had already tacked on gains of several hundred percentage points before the Dow traded above its 2008 highs.  The same is going to happen this time around.  Strong companies will recoup their gains 2X to 3X faster than the broader markets, so when the Dow trades past 27K, some of these stocks will be showing gains in excess of 100%.

So what is going on now?

Why are the markets acting differently; one-word weaponized News.   The action has been downright brutal, but something was off, the crowd was never euphoric, and the markets were not trading in the extremely overbought ranges.

The markets had already priced in Tariffs and a rate hike, but then things changed. Suddenly Trump had to emphasise that he is “tariff man”.  Then he starts taking pot shots at the Fed.  The Fed, in turn, takes shots at him, albeit indirectly, and the media goes ballistic.   We are not taking sides here, what we are trying to portray is that old news was and is being turned into something sinister. Moreover, not a day goes by without some old nonsense being respun into a scarier version of the original story. When spin doctors are in charge of the media you need to take their sage advice with a shot of whiskey and a barrel of salt. In other words, when they scream you sing and vice versa. Mass psychology states that stock market crashes are buying opportunities; end of story.

Courtesy of Tactical Investor

 

Random Views on Long Term Trends in stock market 2019

Stock Market Tantrums Are Over, But For How Long?

Equities have been behaving like a recession is looming. That dire outlook seems overdone. While major global stock markets were battered in 2018 – and even the initially resilient U.S. Standard & Poor’s (S&P) 500 stumbled – we still expect equities to deliver solid returns in 2019. Assuming no price-to-earnings (P/E) expansion this year, and tagging on a 2% dividend, the S&P 500 could return 8%. Any modest P/E expansion could deliver 12% returns. Bank earnings this week, including JP Morgan and Wells Fargo, are likely to restore some faith in equity markets over the short-term.

However, trade tensions between the U.S. and China and fears over Federal Reserve System of the United States (Fed) tightening are definitely taking their toll on investor sentiment. Earlier in January, Apple posted a reduced revenue outlook, blaming Chinese demand, causing its stock price to tumble. Yale University’s Stephen Roach warned that it was “the canary in the coal mine.”

These fears could strangle growth, but fundamentally, the bleak backdrop for equities is starting to improve. Investors want evidence that the Fed is not on autopilot, and will continue to be hyper-sensitive to data disappointments until they get some positive U.S.-China trade news. A reduction in these risks could see an expansion in the P/E ratio – delivering a boost to equity markets. Full Story

Sven Henrich: My 2019 stock-market outlook

Cataclysmic action in the fourth quarter left investors shell-shocked, as U.S. stocks plummeted and over 90% of dollar-based asset classes fell for all of 2018.

Macro monsters from trade wars, Brexit, slowing economic growth, a slump in global property prices, political uncertainty, yield-curve inversions, deficit explosions, technical breakdowns, etc., are lurking everywhere, leaving investors blindfolded while they try to navigate highly volatile market waters in search for a safe destination in 2019.

As we learned in 2018, extremes can become more extreme, long-term trends matter, patterns matter, divergences matter, technical disconnects matter and now we’re dealing with the aftermath and their implications.

My main market message for 2019: Pay close attention and stay fully informed. There are a lot of complex moving technical and macro pieces driving markets and the global economy that make for a foggy outlook for the year ahead.

Wall Street tends to focus on a destination when it projects higher year-end target prices. Indeed, as in 2018 and in 2008, Wall Street is again projecting higher prices for this year. While higher prices are always a possibility, my focus in this report is on the journey rather than the destination, as I expect wild price swings within the 2018 range (2,340-2,941 points in the S&P 500 Index SPX, +0.12% ) and possibly a much lower range still to come. Full Story

Stock Market Forecast For 2019: 7 Critical Trends To Watch

The new year begins with a gnawing question: Is the stock market correction of the past three months a harbinger of an awful 2019, or a launchpad for a new bull market? While it’s folly to make a decisive stock market forecast for 2019, a few trends hold clues.

On the face of it, financial markets seem to sense trouble. On Christmas Eve, the S&P 500 index hit the 20% threshold for a bear market.

Few experts see a recession, but signs of slowing economic growth are piling up. The 10-year Treasury yield has fallen to the lowest since April, even as the Fed tightens and unwinds its quantitative easing program.
Of all these factors, two stand out because of their unpredictability and consequences: trade policy and interest rates. The trade war can expand suddenly into multiple industries and cause spillover effects. Markets fear Fed rate hikes will overshoot, sending the economy into recession.

Here’s a look at each of the seven factors, plus tips on how stock market investors can prepare for whatever 2019 brings.

1. Stock Market Volatility
For much of 2018, the stock market tolerated a trade war, Treasury yield anxiety, Europe’s political spasms and other risks. In the final months of the year, investors could bear it no longer. As 2019 begins, the market has to pick itself up from the worst correction since 2011. On Dec. 20, the Nasdaq sank to a bear-market depth. Full Story

 

 

Stock Market Correction

Stock Market Correction

What is the difference between a Market correction and a back-breaking correction?

A sharp stock market correction is the thing that we encountered in Feb of this current year. The pullback is sharp and quick, and the dread dimensions rise significantly.  A backbreaking revision is unique. The term itself is demonstrative of the distinction. The pullback is exceptionally solid however the unpredictability is crazy, and the market seems, by all accounts, to be bipolar.  Chaos is by all accounts the request of the day, and even the absolute most impassioned of bulls begin to scrutinize their stance.  Every positively trending business sector encounters one such adjustment. Be that as it may, it is difficult to tell ahead of time which redress is going to fall under the extremely difficult category.  Trying to figure out which adjustment falls in this class has an exceptionally high open door cost. It is hard to break out of the “uneasiness arrange” in the event that you have been stuck in it for quite a while. These brokers in the long run get their desire of solid adjustment, however they are scared to the point that they can’t act; they keep on expecting that the market will prop up lower and lower.

Advanced warning for market correction

We expressed in July 2017 that the there would be one revision where the Dow would shed 3500-5000 points.

Without a smidgen of uncertainty, we can express that there will be somewhere around one rectification that drives the Dow lower by 3500-5000 points before this positively trending business sector is over.  Market refresh June 2, 2017.

Two help focuses become possibly the most important factor. On the off chance that the Dow closes underneath 2400 on a month to month premise, at that point we can anticipate that the pullback should fall nearer towards the 5000 point range.  If the Dow closes beneath 23348 on a week by week premise, at that point the above standpoint will likewise hold. 23348 is the low the Dow set in  April of this year. Market Update Dec 18, 2018

As the above help calls attention to taken out, we expressed that the following stage was for the market to test the 22,000-23,000 territories. That has happened, the following stage for the market is to step water while gathering up speed to slant higher.  This stage will be pressed with unpredictability as the market powers the feeble hands to dump their stocks. Brokers who have experienced this stage before will perceive for it is; an ideal purchasing opportunity occasion.

So do not focus on what happens if the stock market crashes scenario; instead, focus on building a list of stocks you always wanted to own at a lower price. History and Mass psychology both  illustrate that permanent stock market bears die broke and that stock market crashes have always proven to be buying opportunities; pull up and long-term chart and try to argue otherwise.

 

THE STOCK MARKET CORRECTION IS PURPOSELY BEING MADE TO LOOK WORSE THAN IT IS

It looks terrible, the media is siphoning apocalypse type situations, solid bulls are appearing of shortcoming, and even contrarian financial specialists are beginning to break. Unadulterated contrarians are more brilliant than the majority, yet they do have defects; the most brilliant financial specialists are the ones that put the standards of mass brain research into play. They watch the mass mentality, and they comprehend that notwithstanding when dread begins to crawl into the condition, they are constrained to ask this question:  Was the group in a condition of rapture when the market beat out? In the event that the appropriate response is “no”, at that point regardless of how horrendous the image may look, the end diversion is that the group is being set up for a bogus descending move.   And the ordinary reaction would “why”. Simple answer, this is an advanced form of Pavlovian training.

Stock Market TrendAnxiety Index gauge

Take a gander at the above notion information; in the meantime refresh conveyed before today we expressed that bearish slant would come in the 45-47 territories; rather, it remains at 49, which is right around a seven-year high rather than a multi year high. We turned wary in Feb of this current year and put all our plays on hold in light of the fact that bullish assumption took off to a seven-year high; despite the fact that this flood in assessment was transitory, it was sufficient for us to turn mindful. Given the present pattern, the following refresh could drive bearish readings north of 50. This information was gathered up to Saturday of a week ago. At the present time the quantity of people in the bearish and unbiased camps means an astounding 80; this consolidated score nearly coordinates the perusing of the 2008-2009 base. The last time we had such readings was more than 10 years back.

Presently take a gander at the nervousness check, this is the most minimal perusing since the initiation of this measure and given the present pattern it could finish up redlining one week from now; we may even be compelled to broaden the range if the perusing is altogether higher than the current week’s perusing.

 

Let us look at some other factors

  • The S&P 500 is trading 14.3 times below 2019 earnings of $178 per share. However, we if remove the highly overpriced FANG stocks, it is priced roughly 12 times 2019 earnings. The historical average is 16.2
  • Value line states that over 100 companies have a forward P/E of 8 or lower; the last time this took place was during the 2008 meltdown but the economy was in shambles at that point, and that is not the case today.
  • A lot of fear is being created due to an inverted yield curve; first of all not all inversions lead to recessions, and secondly, there is roughly a two year lag between the inversion and the recession
  • Investors are sitting on hoards of cash; this refers to those that were active in the markets. If we include those who have avoided the markets, then one can state that there is a huge group that has missed this entire Bull Run. They will be dragged into this market for the top player’s need many suckers do dump their huge holdings onto.
  • The number of “Gloom & Doom” articles is surging, and soon we will have individuals predicting Dow 10,000. Insanity sells; investors were lapping the nonsensical targets of 100K, 200K and the last target of $1 million issued for Bitcoin with straight faces.  Very few insane high-level projections have been made for the Dow.

Conclusion

A backbreaking correction is not easy to deal with. In fact, it is hard for everyone to deal with; the only way to get through it is to pull up long-term charts and examine previous corrections. When you look at those charts, try to imagine what the investors felt as the markets pulled back. If you experienced one of these previous corrections remember the thoughts flashing through your mind. One does not have to go back to far; 2008-2009 the markets experienced one of the most brutal of corrections.   The master of “Gloom” were projecting Dow 2K during the height of the corrective phase; ten years later, one can clearly see how full of rubbish they were. These same guys are now laying out similar predictions.

The best time to kill a Bull is when it is fat, lazy and arrogant. The current bull is a lean and could turn into a “mean fighting machine” after the recent pullback.

 

Courtesy of Tactical Investor

BOJ can’t exit stimulus – Amazon is invading finance – NYC’s Empty Storefronts

BOJ can't exit stimulus - Amazon is invading finance - NYC's Empty Storefronts

BOJ can’t exit stimulus when inflation below 1 pct – BOJ Gov candidate Ito

TOKYO (Reuters) – The Bank of Japan likely won’t be able to exit its massive stimulus programme while inflation is hovering below 1 percent, Takatoshi Ito, an academic who is a potential candidate to become the next BOJ governor, said on Wednesday.  “What’s important is for inflation to accelerate, which would give (the BOJ) quite some flexibility in guiding monetary policy,” Ito, a Columbia University professor, told a seminar in Tokyo.

The BOJ has already laid the groundwork for normalising monetary policy by revamping its policy framework last September and gradually slowing its bond purchases, though raising its yield targets would be some time away, he said. “While inflation is hovering below 1 percent, it would be hard for the BOJ to exit (from ultra-loose monetary policy),” said Ito, who is considered a candidate to succeed BOJ Governor Haruhiko Kuroda when his five-year term ends in April next year.    Full Story

As predicted the trend stated this would happen. More central bankers will join the inflation is not an issue club.

 

 

Amazon is invading finance without really trying

Many people believe that big technology companies will soon become major competitors to traditional banks. But Amazon has invaded their turf without offering many financial services—its mammoth cloud-computing business is instead reshaping how the financial industry works.

Amazon Web Services (AWS) is the biggest provider of cloud computing, which has “massively” lowered barriers to entry for financial startups, according to Antony Jenkins, the former Barclays CEO turned fintech entrepreneur. He says tech firms used to raise millions of dollars just to buy servers; now, people who want to take on banks can use the tech giant’s cloud to quickly set up systems. Full Story

Watch what will happen when they start to attack. And what nobody is talking about is China. Alibaba is going to rip this sector apart.  They are already huge in Asia with Ant financial. Banks are going to face massive competition.  And after that, the next sector to get ripped will be the medical sector. Many businesses that exist today will not be around ten years from today.

 

 

New York City’s Empty Storefronts And The $15 Minimum Wage

“Why Is New York Full Of Empty Stores?”

That’s the question posed by the New York Times editorial board in today’s paper, as it worries about a “scourge of store closings that afflicts one section of the city after another, notably in Manhattan and parts of Brooklyn.”

The editorial offers few answers to its question and at least one bad solution in the form of a new “vacancy tax” for building owners with unoccupied storefronts. But perhaps the most notable omission from the Times’ editorial is the board’s own role in exacerbating the city’s troubles through its advocacy for a $15 minimum wage.

The concerns about retail employment aren’t anecdotal: According to Labor Department data, 2016 was the first year since 2009 where New York City’s retail trade. Full Story

 A trend in motion is unstoppable. Trying to control a trend is like trying to fight an anaconda with a toothpick.  Wage Deflation is here to stay, and it’s going to gather incredible momentum in the months and years to come.

Millennials: Agrihoods – Investing – Retirement

Agrihoods: The newest trend in millennial living

Agrihoods: The newest trend in millennial living

Millennials are harkening back to simpler days and creating communities on farms, surrounded by nature’s bounty and benefits. There are now more than a hundred of these neighborhoods — called Agrihoods — across the country, Full Story

This living in the nature type development is in its infancy and it’s too early to determine if it will become a trend. However, what this data reveals is that Millennials don’t have fixed values and have they are not loyal to any given brand or ideology. The next generation is going to be even more unpredictable for marketers seeking to make long-term projections.  However, unpredictability is fantastic especially for those who put the principles of mass psychology into use.  This is the reason many companies that look solid today will not be around in the years to come as they will either refuse to adapt or refuse to look at the situation from a different angle.  One area that is  going to experience a sea of change is the financial services industry.

 

Here’s why millennials would rather save than invest

Here’s why millennials would rather save than invest

Millennials are wary of entering the stock market.

New data from the latest Merrill Edge Report shows that, when asked what they’d be able to rely on in 20 years, millennials’ top response was their savings account, according to 66 percent of respondents.

When Merrill Edge asked older generations the same question, the majority of Gen-Xers (71 percent) said they’d be able to rely on their 401(k). The top response among boomers (54 percent) was their pension.

“In stark contrast to older generations who are relying on outside sources for their future financial security, millennials are looking to their self-created savings years down the line,” Aron Levine, head or Merrill Edge at Bank of America, writes in the report. “Millennials place even greater trust in their own stewardship than they do in their personal relationships with their significant other and friends.”

The report shows that young people today are taking a “do-it-yourself” approach to finance and investing, choosing to rely primarily on their own savings in place of vehicles like a 401(k) or IRA. Though many millennials do utilize these tools as well, there’s still an underlying feeling that their own efforts are more dependable.

Full Story

 

Will you have enough to retire?

Will you have enough to retire?

Methodology

This calculator estimates how much you’ll need to save for retirement. To make sure you’re thinking about the long haul, we assume you’ll live to age 92. But you could live to be 100 or incur large medical bills early on in retirement that may raise your costs even further. Social Security is factored into these calculations, but other sources of income, such as pensions and annuities, are not. All calculations are pre-tax.

The results offer a general idea of how much you’ll need and are not intended to be investment advice. The results are presented in both future dollars (at retirement) and today’s dollars, which is calculated using an inflation rate of 2.3%.

How we calculate your savings goal?

First, we determine what your income will be at the time you retire by growing your current income at an annual rate of 3.8% (the inflation rate of 2.3%, plus the salary growth rate of 1.5%). We then assume you can live comfortably off of 85% of your pre-retirement income. So if you earn $100,000 the year you retire, we estimate you will need $85,000 during the first year of retirement. For each subsequent year, we increase your income need by 2.3% to keep up with inflation. We then factor in Social Security by subtracting your estimated benefits (more on that below) since that income will reduce the amount you will need to save.

The second step is to calculate the total savings you will need at the time you retire, in order to generate enough income for each year of retirement. To do this, we determine what it would cost to purchase a fixed income annuity, with inflation-adjusted payments, using a discount rate (or rate of return) of 6%. The cost to purchase this hypothetical annuity is your target savings goal.

Full Story

Experts Making Stock Market Crash Forecasts usually know nothing

Stock Market Crash Forecasts usually know nothing

Over the past several years the Naysayers have predicted the Market would crash and burn; we blatantly disagreed and opted instead to state that the market would continue to soar higher and higher. Despite the severe beating these naysayers have taken, they insist on regurgitating the same trash over and over again in the blind hope that by some miracle their insane ramblings come to pass.  As soon as October was upon us, these experts started screaming at the top of their lungs. What was their latest prediction; a repeat of the 1987 Stock Market Crash.  We immediately repudiated these predictions. Here is a brief excerpt from the article posted in October by Tactical Investor.

They never seem to let up on pushing this sewage onto the unsuspecting masses. This is a clear example of insanity in action;  mouthing the same thing over and over again with the desperate hope that this time the outcome will be different.  The outcome will not be different this time, at least not yet. These guys should focus on writing fiction for reality seems to elude them completely. For years we have stated (and rightly so) that until the sentiment changes, this market will continue to soar higher and higher.

The latest nonsense is to state market omens that have a terrible record of coming to pass are about to trigger a crash; ones odds are better if one looks at tea leaves, plays with skull bones or hires some monkey to throw darts at a board with the words up or down plastered on it.   One has to determine the trend first and look at several underlying forces before one can attempt to predict where the market is headed. However, these fools read a book or two, memorise someone else’s theories and assume all of a sudden they are experts. Fundamentals and technical’s are both useless when used in isolation. One has to look at the emotion driving the markets. In other words, what are the masses thinking or doing? When one looks at the sentiment data, the conclusion is inescapable. Stock markets always crash on a note of euphoria and the masses are far from being happy.

Wall Street Experts Good For Nothing but Hot Air

Over the past 20 years U.S Markets have experienced two brutal crashes and on both occasions, almost all of the so-called  Wall Street experts were caught with their pants down.  The two cases in questions are the Housing bust and the dot.com bubble. Additionally, almost every two top economists failed to predict the great recession of 2008.  On the same token, these Jackasses (otherwise known as experts) failed to predict one of the biggest bulls of all time.

Masses are not embracing one of the Most Hated Bull Markets in History

The images below speak a thousand words, so there is no need for us to add any commentary.

Bullish Neutral Bearish Index

Anxiety Index

 

The Technical Outlook

Dow chart November 16th

While the Dow is trading in the extremely overbought ranges, any pullback will most likely end in the 21,000-21,500 ranges.  For the correction to pick up steam, it would need to close below this level on a weekly basis.  As the trend is still positive, the odds of the Dow crashing are very low. At the most, the Dow would test its breakout point which falls in the 18,900-19,200 ranges unless the trend were to turn negative suddenly or the masses suddenly embraced the market with gusto.  At this point, the trend is strong and showing no signs of weakening.  Remember that the markets can remain irrational for much longer than most traders can remain solvent by betting against it.

Inflation remains a non-issue on a worldwide basis

Central banks worldwide are either standing down or opting for rate cuts.  This indicates that while the economy is improving somewhat, the global economy is far from healthy and low rates will continue to dominate the scene.  In a lower rate environment corporations borrow more money and the new game is to use this money to buy back shares and in doing so magically improve the EPS.

Conclusion

When the Dow was trading below 20K, we stated that the next target was 21K; this target was struck in a few short months. After that, we raised the target to 22 and 23K.  Now we will go on record and state that the Dow is likely to test 28,000-28,500 with a possible overshoot to 30K before it crashes.  We will be providing our subscribers with an in-depth analysis of the path the Dow will traverse to achieve this target.    We don’t expect the Dow to just shoot to these targets, certain requirements have to be fulfilled, but so far the Dow is following the path we expected it to take.

Before you listen to these so-called experts who seem quite happy to dish out faulty information, take a look at their track record. A simple search will reveal that over 90% of them are full of hot air and had any of these Dr’s of Doom followed even a sliver of their advice, they would have been blown out of the game long ago. The fact that they are still here tells you that they are trying to pan their sage advice to you in return for a certain fee; advice they would never follow.

A simple game plan

View strong corrections through a bullish lens. This game plan will remain valid until the masses turn bullish or the trend turns negative.  The stronger the deviation, the better the opportunity.

 

Published courtesy of the Tactical Investor