How to build wealth in your 30s pdf download

women in their 30s

Welcome to the comprehensive guide to achieving financial prosperity in your 30s! This pivotal decade presents a unique opportunity to lay the groundwork for lasting success. In this handbook, we will equip you with invaluable insights and practical strategies to make the most of your financial prospects during this critical phase. Whether you’re just beginning or already on your way, this guide will empower you with the knowledge and resources needed to attain financial independence and long-term wealth.

Establishing a Strong Financial Foundation: Pave the Way

To commence, it’s essential to assess your current financial standing thoroughly. Take stock of your earnings, expenses, and debts. Determine your net worth by deducting your liabilities from your assets. This assessment will give you a clear picture of your position and reveal areas for improvement.

Next, set clear financial objectives for both the short and long term. Whether it’s homeownership, entrepreneurship, or early retirement, defining your goals will give you a sense of direction and motivation. Document them and regularly review your progress to stay focused.

Crafting and adhering to a well-structured budget is crucial to effectively manage your finances. Keep track of your income and expenditures, strategically allocating your funds. Identify areas where you can trim unnecessary expenses, redirecting those savings towards investments and savings.

Tackling debts, especially high-interest ones is vital to wealth creation. Prioritize paying off high-interest debts first while making minimum payments on others. Consider consolidating or refinancing debts to lower interest rates and expedite your journey to financial freedom.

Building a safety net through an emergency fund is imperative to safeguard yourself from unforeseen financial setbacks. Aim to save at least three to six months’ worth of living expenses in an easily accessible account.

Growing Your Income: Nurturing Prosperity

In your 30s, focus on advancing your career and enhancing your earning potential. Invest in gaining new skills, obtaining certifications, or pursuing further education in alignment with your long-term ambitions. Forge valuable connections through networking and seek guidance from mentors to propel your professional growth.

When starting a new job or during performance evaluations, confidently negotiate your salary. Research industry benchmarks for your position and emphasize the value you bring to the organization. A higher salary can significantly impact your long-term earnings.

Diversifying your income streams mitigates risks associated with relying solely on one source of income. Explore opportunities such as starting a side business, investing in real estate, or generating passive income through stocks and rental properties. Multiple streams of income provide a safety net and accelerate wealth-building endeavors.

Maximize your retirement contributions by taking full advantage of your employer’s retirement savings plan, like a 401(k), and contribute enough to receive the maximum employer match. Additionally, consider supplementing your retirement savings with an individual retirement account (IRA).

Investing for a Prosperous Future: Wise Financial Growth

Educate yourself on investing to overcome any initial apprehension. Immerse yourself in books, seminars, or online courses to understand various investment vehicles, such as stocks, bonds, mutual funds, and real estate. Knowledge is a powerful tool in investing.

The key advantage in your 30s is time. Start investing early to benefit from compounding returns. Even modest regular contributions can grow significantly over time. Don’t wait for the “perfect” moment; begin your investment journey now.

Minimize risk by diversifying your investment portfolio across different asset classes and sectors. Avoid putting all your assets in one basket. Strive for a balanced mix of stocks, bonds, real estate, and other investments to optimize potential returns and spread out risks.

Maintain a disciplined investment strategy and resist making impulsive decisions based on short-term market fluctuations. Stay focused on your long-term goals and remember to review and adjust your portfolio periodically to align with your objectives and risk tolerance. Consult a financial advisor if needed.

In Conclusion

Building wealth in your 30s demands discipline, patience, and a long-term outlook. By implementing the strategies outlined in this guide, you can establish a solid foundation, enhance your income, and make astute investments to secure lasting prosperity.

For those seeking to elevate their understanding, consider gaining proficiency in Mass Psychology and contrarian investing fundamentals. These insights delve into the collective behavior of the masses and empower you to make investment decisions that differ from popular sentiment. Mastering these concepts will provide a distinct advantage and the potential to seize overlooked opportunities.

Remember, the key is to begin now, remain consistent, and adapt to changing circumstances. Your future self will undoubtedly appreciate the steps you take today to secure financial independence and a prosperous future.

 

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Embracing the Contrarian King Persona Mindset

lion king

Introduction

In the realm of investments, where conformity is the norm, a distinct breed of investors known as contrarians emerges. These trailblazers defy conventional wisdom, choosing to swim against the tide. Embodying this unique approach is the contrarian king persona, a believer in the art of investing unconventionally.

While most investors follow market trends and popular sentiment, the contrarian king persona forges a different path. Acknowledging the sway of emotions in the market, he refrains from being influenced by herd mentality and instead evaluates situations critically.

A cornerstone of contrarian king persona’s strategy is buying when others sell and selling when others buy. Amidst market panics and price plunges, he identifies opportunities to acquire undervalued assets, enabling him to gain when the market rebounds.

Conversely, during market euphoria, the contrarian king persona exercises caution, waiting for the frenzy to subside before selling assets at a premium.

Embracing the Unconventional: Contrarians and Strategic Investing

However, the contrarian king persona is not a reckless gambler. He values due diligence and risk management, diversifying his portfolio and employing a systematic approach for long-term success.

Though unconventional investing presents challenges, the contrarian king persona remains resolute in his convictions, trusting his instincts. He understands that being a contrarian demands conviction and resilience against short-term fluctuations for long-term gains.

In essence, the contrarian king persona demonstrates the power of investing unconventionally, uncovering unique opportunities and achieving remarkable outcomes by challenging norms. While conventional investors may find solace in conformity, the contrarian king persona recognizes that true wealth is built by venturing into uncharted market territories. Let us embrace his wisdom and cultivate the contrarian spirit on our investment journey.

Forging New Paths: The Odyssey of Tactical Investors

Avoid the “Fashion Contrarian” Trap

Contrarian investing is not a fleeting fashion but a deliberate strategy. Avoid following trends blindly and opt for true contrarian choices.

Harnessing the Contrarian Edge

Employ critical analysis to identify valuable sources of information. Combine contrarian investing with the principles of mass psychology for a deeper understanding of the markets.

Navigating Contrarian Investing: Key Considerations

Avoid popular sites for investment ideas; they often lead to losses. Be independent in your decisions, refrain from speculation, and don’t fall in love with investments.

Shattering Myths: The Fallacy of “Buy and Hold Forever”

Challenge the notion of “buy and hold forever.” Be open to opportune moments to fold and re-open positions.

Emotional Detachment: The Key to Wise Decisions

Maintain emotional detachment from investments; they are merely pieces of paper. Rationally close positions and seek greener pastures. Midst the world of investments, a distinct persona emerges known as the contrarian king persona. Unlike most investors who follow market trends, the contrarian king persona challenges the status quo. He evaluates situations critically, not swayed by emotions or herd mentality.

His key strategy involves buying when others sell and selling when others buy. In moments of panic and plunging prices, he sees opportunities to acquire undervalued assets, positioning himself for substantial gains when the market rebounds. Conversely, during market euphoria, he remains cautious, waiting for the frenzy to subside before selling at a premium.

Unique Insights: Successful Investors Embrace Contrarian Approach

In contrast to typical stock picking, the contrarian king persona follows a methodical approach without relying on experts’ opinions. He believes the most profitable investments are contrarian, buying when others sell and vice versa. This strategy shifts the risk/reward balance in his favor, but he ensures it aligns with his Strategic Asset Mix (SAM) and remains skeptical of new product offerings.

Conclusion: Embracing the Contrarian Spirit

The contrarian king persona embodies the power of investing unconventionally, challenging norms to uncover overlooked opportunities. Despite criticism, he remains steadfast, knowing true wealth is built by venturing into uncharted territories. Let us embrace the contrarian spirit and learn from his wisdom on our investment journey.

 

FAQs

Q1: What is a contrarian king persona in the context of investing? A: The contrarian king persona represents a unique breed of investors who challenge conventional wisdom and follow an unconventional approach to investing. They defy the crowd and critically evaluate investment opportunities, buying when others sell and selling when others buy.

Q2: What sets the contrarian king persona apart from traditional investors? A: Unlike traditional investors who rely on market trends and expert opinions, the contrarian king persona makes independent decisions based on thorough research. Emotions have no place in their strategy, as they focus on long-term gains and buy undervalued assets in times of market panic.

Q3: How does the contrarian king persona approach market euphoria? A: During market euphoria, the contrarian king persona remains cautious and waits for the frenzy to subside. He understands that inflated prices can exceed intrinsic values. Instead of following the hype, he sells at a premium and locks in profits.

Q4: What challenges does the contrarian king persona face? A: The contrarian king persona often faces criticism and skepticism from others who question their unconventional decisions. However, they remain resolute in their beliefs and trust their instincts to withstand short-term fluctuations for long-term gains.

Q5: What is the main takeaway from the contrarian king persona’s approach? A: The contrarian king persona demonstrates the power of investing unconventionally, uncovering unique opportunities and achieving remarkable results. Embracing a contrarian spirit can lead to success by challenging the status quo and venturing into uncharted market territories.

Q6: What is a contrarian king persona’s focus in investing? A: The contrarian king persona focuses on identifying turnaround opportunities in the market. They seek well-financed companies growing at a decent rate, undervalued by the market for the wrong reasons. These opportunities are often ignored or disliked by the masses.

Q7: How does a contrarian king persona make investment decisions? A: Contrarian investors do not rely on experts to make decisions. They know what they want and methodically open positions in stocks that meet their criteria. Emotions play no role in their approach.

Q8: What does “stock picking” mean, and how does it relate to the contrarian king persona’s approach? A: “Stock picking” refers to selecting individual stocks for investment. The contrarian king persona’s approach involves looking for opportunities when the masses are selling (buying) or buying (selling). This contrarian strategy aims to tip the risk/reward balance in their favor.

Q9: How does the contrarian king persona differ from typical retail investors? A: contrarian king personas avoid being manipulated by Wall Street’s exploitation tactics. They focus on well-researched, contrarian investment opportunities rather than being swayed by popular sentiments and hot stock tips.

 

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Who Said “Buy When There’s Blood in the Streets”?

blood on the streets

Unveiling the Enigma: “Who Said Buy When There’s Blood in the Streets”

In the realm of financial ventures, a renowned adage echoes, “Who said buy when there’s blood in the streets.” This intriguing phrase alludes to the art of procuring stocks or assets during periods of severe market turmoil and anxiety. The symbolic “blood” represents the widespread fear and distress among investors, giving rise to substantial drops in prices. Contrarian strategists perceive this scenario as an opportune moment to uncover value and potentially harvest remarkable rewards.

Decoding the Psychology Behind Streetwise Investment

Contrarian thinkers thrive on market pessimism, skillfully leveraging it to their advantage. They comprehend that emotional impulses often steer the markets, causing investors to hurriedly offload their holdings when prices plunge. However, contrarians take a divergent path. They acknowledge the cyclical nature of markets and recognize that downturns can serve as enticing entry points for long-term investments. By delving into the market psychology, contrarians position themselves to capitalize on the fear-driven actions of their counterparts.

Unraveling the Historical Triumph of Contrarian Tactics

History stands witness to the remarkable triumph of contrarian strategies, the very essence embodied in the “Who said buy when there’s blood in the streets” concept. Countless eminent investors have amassed their fortunes by adhering to this approach. A noteworthy exemplar is Warren Buffett, who famously remarked, “Embrace fear when others are insatiable and be shrewd when others are apprehensive.” By staying true to this principle, Buffett consistently identified opportunities during times of market distress, amassing vast wealth over the years.

Detecting Triggers of Market Distress

Effectively executing a contrarian strategy necessitates keenly identifying indicators of market distress. Some signals may encompass widespread negative news coverage, heightened volatility, intensified selling pressure, and a general sense of pessimism prevailing within the investment community. Nevertheless, conducting comprehensive research and analysis remains imperative to discern between temporary market fluctuations and long-term systemic issues.

Exercising Risk Management and Endurance

Contrarian investing demands patience and discipline. It is imperative to comprehend that procuring during the presence of blood in the streets does not guarantee instantaneous profits. Often, it takes time for markets to recuperate and for contrarian investments to yield positive returns. Risk management assumes paramount importance as there is always the possibility that market conditions may further deteriorate before showing signs of improvement. Diversification and discerning selection of undervalued assets constitute vital elements of a triumphant contrarian strategy.

Contrarian Investing in the Era of Digital Advancement

The advent of digital platforms and real-time information has streamlined the execution of contrarian investment strategies. Investors now possess an abundance of data, news, and analyses at their fingertips, empowering them to make informed decisions. However, it remains essential to remain level-headed and steer clear of getting swayed by market sentiment and noise. Diligent research and a long-term perspective continue to be fundamental to succeed in contrarian investing.

The Prospects of Rewards in Contrarian Investing

When flawlessly executed, contrarian investing can usher in substantial rewards. By procuring undervalued assets during periods of pessimism, investors position themselves for significant potential gains when markets recuperate and sentiments shift. Accomplished contrarian investors comprehend the significance of a comprehensive investment thesis and embrace a long-term outlook. By embracing this approach, they adroitly capitalize on the fear and uncertainty of others, ultimately reaping the bountiful benefits.

Conclusion

Contrarian investing, synonymous with the intriguing phrase “Who said buy when there’s blood in the streets,” encompasses a unique strategy that demands a contrarian mindset, meticulous research, and unwavering patience. By daring to deviate from the crowd during times of market distress, investors unveil hidden gems of undervalued assets, potentially reaping remarkable long-term rewards. Nevertheless, approaching this strategy with caution is paramount, given the inherent risks it carries. With adept risk management and a disciplined approach, contrarian investors skillfully navigate the tempestuous market waters, amplifying their chances of triumph.

In this digital era, where information flows freely at our fingertips, executing a contrarian investment strategy has been bestowed with newfound accessibility. Capitalizing on real-time data, news platforms, and sophisticated analytical tools is essential to making well-informed decisions while shrewdly avoiding the snares of short-term market gyrations and the cacophony of crowd sentiments. The crux lies in conducting comprehensive research and steadfastly adhering to a long-term perspective.

A primary allure of contrarian investing lies in the potential for substantial gains. Contrarian aficionados bask in the eventual resurgence of the market by astutely identifying undervalued assets when others flee in fear. As trepidation dissipates and market sentiments brighten, these once-overlooked investments witness noteworthy price surges, painting an enticing picture of returns for the patient and the steadfast.

However, it would be remiss not to acknowledge that contrarian investing is not without its share of risks. The markets can languish in distress for protracted periods, testing the resolve of investors to weather transient downturns or prolonged phases of subpar performance. Embracing diversification and prudently sizing up positions serve as vital risk-mitigating maneuvers to cushion potential losses.

Triumphant contrarian investors construct their decisions on the solid foundation of a comprehensive investment thesis. With unwavering commitment, they delve into fundamental analysis, meticulously weighing the intrinsic worth of an asset relative to its prevailing market price. Such a meticulous approach aids in identifying investments with steadfast long-term potential, unaffected by the mercurial tides of short-term market sentiments.

Moreover, the virtue of patience reigns supreme in the realm of contrarian investing. Weathering the passage of months or years, markets fully recover, and contrarian investments finally bear fruits of significant returns. Investors must brace themselves for an extended time horizon, resolute against the sways of short-term market volatility. Holding steadfast to the bedrock of underlying fundamentals and the initial investment thesis forms the crux of weathering the storms and reaping the bountiful rewards that lie ahead.

Contrarian investing, epitomized by the captivating phrase “Who said buy when there’s blood in the streets,” unveils a compelling and audacious strategy for investors seeking to capitalize on market distress. Embracing the path less traveled, conducting methodical research, and fostering an enduring approach, contrarian investors uncover hidden treasures of undervalued assets, opening the doors to a potential windfall of gains in the ever-evolving panorama of the financial markets.

Nevertheless, it remains crucial to approach this venture with vigilance, harnessing prudent risk management techniques, and unwaveringly holding onto a long-term investment vision. Contrarian investing may not guarantee an effortless journey to triumph, but for those brave enough to navigate the labyrinth of volatility and uncertainty, it unveils the prospect of substantial rewards in the enigmatic tapestry of the financial world.

 

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The Japanese Yen ETF: A Lucrative Opportunity for Long-Term Investors

Japanese currency

This article delves into a comprehensive analysis of the Japanese Yen ETF, highlighting its advantages, risks, and market performance. The Japanese Yen ETF is an exchange-traded fund that tracks the Japanese yen’s value against other currencies, offering investors a convenient means to broaden their portfolios and safeguard against currency risk.

This financial instrument allows investors to gain exposure to the Japanese yen without directly trading it, making it an essential investment tool. Its history dates back to 2006 when WisdomTree Investments launched the first Japanese Yen ETF, and since then, various providers have introduced a range of Yen ETFs with different investment objectives and strategies, gaining popularity among investors seeking yen exposure.

In this thorough analysis, we aim to provide readers with a profound understanding of the Japanese Yen ETF’s potential role in their investment portfolios, emphasizing the benefits of diversification and protection against currency risk. While investing in Yen ETFs comes with some risks, such as market volatility and liquidity concerns, the potential rewards outweigh these risks, making Yen ETFs a valuable investment alternative. Investors should carefully assess the advantages and risks before making any investment decisions.

What is a Japanese Yen ETF?

A Japanese Yen ETF is an investment fund designed to mirror the Japanese yen’s performance relative to other major currencies like the US dollar, euro, and pound. It achieves this by investing in yen-denominated assets, including stocks, bonds, and currency futures.

The value of the Japanese Yen ETF fluctuates with changes in the yen’s exchange rate. When the yen appreciates against other currencies, the ETF’s value rises, and vice versa. These ETFs offer investors exposure to the Japanese yen without directly trading currency pairs and are traded on stock exchanges. Different types of Japanese Yen ETFs focus on various currency pairs, and they typically have low management fees, offering liquidity and convenience for gaining currency exposure.

How Japanese Yen ETFs Function

  1. Investing in yen-denominated assets: Japanese Yen ETFs invest in assets like Japanese stocks, bonds, and currency futures denominated in yen. By holding a basket of yen-based assets, the ETF aims to track the yen’s performance.
  2. Asset performance influences ETF value: The value of the Japanese Yen ETF is tied to the underlying yen-denominated assets’ performance. If these assets increase in value, the ETF’s share price rises, and if they decline, the share price falls. Hence, the ETF seeks to reflect yen returns by investing in yen-denominated assets.
  3. Exposure to the yen: Investing in the Japanese Yen ETF grants investors exposure to the Japanese yen without directly purchasing yen or yen-denominated assets. The ETF’s value increases with yen appreciation against other currencies and decreases with yen depreciation, enabling investors to profit from yen price movements.
  4. Management fees apply: Like other ETFs, Japanese Yen ETFs charge management fees for operating the fund, covering expenses such as trading the underlying assets, administration, and marketing. Investors need to consider these fees while evaluating different Japanese Yen ETF options.
  5. Tradable like stocks: Japanese Yen ETFs are listed on stock exchanges, allowing easy buying and selling during trading, much like stocks. Investors can use market orders, limit orders, and other trading strategies to invest in Japanese Yen ETFs. Liquidity enables swift entry and exit from positions.

To sum up, Japanese Yen ETFs aim to provide investors exposure to the Japanese yen by investing in yen-denominated assets. By tracking the yen’s performance, the ETF facilitates profiting from yen price movements without directly trading the currency. Tradable like stocks, Japanese Yen ETFs offer investors convenience and liquidity.

Types of Japanese Yen ETFs

Japanese Yen ETFs come in various types, each with unique characteristics. Some track the yen’s performance against the US dollar, the world’s most widely traded currency, while others follow its performance against the euro, the second most widely traded currency. Additionally, Japanese Yen ETFs track the yen’s performance against other major currencies like the British pound, Swiss franc, and Australian dollar.

Advantages of Investing in Japanese Yen ETFs

  1. Diversification: Japanese Yen ETFs provide exposure to the Japanese yen, diversifying an investment portfolio heavily weighted towards US dollar assets. This diversification reduces risk and volatility.
  2. Currency risk hedge: Investing in Japanese Yen ETFs can hedge against currency risk for investors with exposure to Japanese stocks or bonds. Yen appreciation can offset losses from declining Japanese stock prices, reducing overall currency risk.
  3. Potential for higher returns: Japanese Yen ETFs can generate substantial returns if the yen appreciates significantly against other major currencies like the US dollar. While currency movements are challenging to predict, a strengthening yen can lead to robust ETF gains.
  4. Convenience and liquidity: Japanese Yen ETFs offer a convenient means to gain exposure to the Japanese yen without directly trading currency pairs or yen-denominated assets. Tradable on stock exchanges, they provide liquidity and flexibility for investors.
  5. Low costs: Japanese Yen ETFs have low management fees, as they are passively managed funds that track yen performance. Their affordability makes them an appealing option for gaining currency exposure.
  6. Transparency: Japanese Yen ETFs regularly disclose their holdings, enabling investors to understand the assets the ETF invests in to achieve its investment objective. Transparency clarifies ETF operations and return generation.

To conclude, the primary advantages of Japanese Yen ETFs are diversification benefits, currency risk hedging, potential for higher returns, convenience, low costs, and transparency. For investors seeking exposure to the Japanese yen, Japanese Yen ETFs present an attractive option to consider.

 

FAQs

Q: What is a Japanese Yen ETF? A: A Japanese Yen ETF is an exchange-traded fund that tracks the performance of the Japanese yen against other currencies, providing investors exposure to the yen’s value without trading it directly.

Q: How does a Japanese Yen ETF work? A: Japanese Yen ETFs invest in yen-denominated assets like stocks, bonds, and currency futures, aiming to mirror the yen’s performance. When the yen appreciates, the ETF’s value rises, and vice versa.

Q: Why invest in a Japanese Yen ETF? A: Investing in a Japanese Yen ETF offers diversification, a hedge against currency risk, potential for higher returns, convenience, low costs, and transparency.

Q: What are the advantages of a Japanese Yen ETF? A: The advantages include exposure to the Japanese yen, reduced risk and volatility through diversification, protection against currency risk, potential gains from yen appreciation, convenience, and affordability.

Q: How can I trade a Japanese Yen ETF? A: Japanese Yen ETFs are listed on stock exchanges and can be easily bought and sold like stocks, providing liquidity and flexibility for investors.

Q: Are there different types of Japanese Yen ETFs? A: Yes, Japanese Yen ETFs come in various types, tracking the yen’s performance against different major currencies like the US dollar, euro, pound, etc.

Q: What is the history of Japanese Yen ETFs? A: The first Japanese Yen ETF was launched in 2006 by WisdomTree Investments, and since then, several providers have introduced different Yen ETFs, gaining popularity among investors.

Q: What are the risks associated with Japanese Yen ETFs? A: Risks include market volatility, liquidity concerns, and uncertainty in currency movements. Investors should carefully assess these risks before making investment decisions.

Q: How can a Japanese Yen ETF diversify my portfolio? A: By providing exposure to the Japanese yen, a Yen ETF diversifies a portfolio primarily dominated by US dollar assets, reducing overall risk.

Q: Is a Japanese Yen ETF a good hedge against currency risk? A: Yes, investing in a Yen ETF can hedge against currency risk for investors with exposure to Japanese stocks or bonds, offsetting losses from declining Japanese stock prices.

Q: What role can a Japanese Yen ETF play in my investment strategy? A: A Japanese Yen ETF can offer portfolio diversification, a hedge against currency risk, and the potential for higher returns, depending on an investor’s specific investment objectives.

Q: How can I evaluate the performance of a Japanese Yen ETF? A: Investors can track the ETF’s performance by comparing its value with the yen’s exchange rate against other major currencies. Regularly reviewing the ETF’s holdings and analyzing its historical returns can also provide insights.

Q: Are Japanese Yen ETFs suitable for long-term investors? A: Yes, Japanese Yen ETFs can be suitable for long-term investors seeking to diversify their portfolios, hedge against currency risk, and potentially benefit from yen appreciation over time.

Q: What should I consider before investing in a Japanese Yen ETF? A: It is essential to carefully evaluate the advantages, risks, and costs associated with Japanese Yen ETFs, considering individual investment goals and risk tolerance before making any decisions.

 

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Wall Street Cheat Sheet: Psychology of a Market Cycle

hidden psychology of stock market cycle

The Dow Jones Utility Average (DJUA) functions as a crucial stock market index, monitoring the performance of 15 utility companies listed on the New York Stock Exchange (NYSE). These firms provide indispensable services like electricity, gas, and water, attracting conservative investors due to their steady and predictable revenues and profits. The DJUA serves as a benchmark for evaluating utility stocks.

The Wall Street Cheat Sheet unveils a Tactical Investor theory suggesting that the DJUA can serve as a timing indicator for the broader stock market. It leads the way both upwards and downwards, empowering investors to predict changes in the overall market. A rising DJUA foretells a period of market growth, while a decline indicates an impending market downturn.

Investors can utilize the DJUA as a contrarian indicator, capitalizing on market overreactions and identifying missed opportunities. If the DJUA peaks before the broader market, it’s a signal to reduce exposure and wait for a market correction before making fresh investments.

By coupling mass psychology and technical analysis, the DJUA becomes a formidable tool for investors. Understanding groupthink psychology and avoiding herd mentality can reveal long-term growth opportunities. Technical analysis identifies market trends and support/resistance levels.

Source: tradingview.com

 

Dow Jones Utility Average: What Can It Reveal?

Analyzing the above chart suggests the market is heading for another corrective wave, following historical patterns. Although markets may rally till the end of March, investors must brace for significant volatility. Our past predictions have proved accurate, forecasting a market rally in 2022 that extended into 2023.

To better comprehend this phenomenon, reference the Tactical Investor Alternative Dow theory.

 

Random Reflections: Navigating the Next Stock Market Crash

The MOAB (Mother of All Buys) Signal: An Unprecedented Occurrence

Recently, the MOAB signal reached a remarkable score of 99, a highly uncommon event unseen in decades. A score of 93 will confirm or mark the failure of the next market move, serving as an advanced warning of a potential head fake, possibly leading to a market breakdown.

Anticipate a rapid market decline, varying from moderate to severe, with a swift recovery expected. Instead of dwelling solely on the correction’s severity, focus on potential arising opportunities.

Market Activity and Bullish Bias

Over the past three weeks, the S&P 500 has shown minimal activity, with a net gain of less than 10 points by Sunday. While the market isn’t currently breaking out or breaking down, the bullish bias, persisting since the bottom established around July last year, suggests an eventual upside breakout.

Sentiment as an Uncertainty Gauge and a Long-Term Bullish Outlook

Sentiment has remained within an unprecedented significant trading range for 18 months, with bullish sentiment consistently trading below historical averages. This broad gauge of uncertainty hints at a long-term bullish outlook, implying the bull market may endure longer than anticipated, potentially exceeding the 2009 crash’s duration.

Market Behavior and the Expectations of Bears and Bulls

Typically, a strong rally followed by wide-ranging market trades entails a sharp pullback before a more robust rally. However, the current situation presents a notable deviation. The bears anticipate a strong pullback, while the bulls foresee a robust rally.

The best strategy is to mislead both groups, creating the illusion of a market breakout to new highs, followed by a sharp drop and an impression of a sell-off. However, the sell-off lacks traction, resulting in a medium sell-off, catching both groups by surprise. The projected roadmap outlines the expected market path until March 2024, incorporating support and resistance lines surpassing previous expectations.

Strategic Roadmap and Market Movements

Applying this roadmap suggests the SPX may reach new highs in 2023, surpassing 4200 and reaching the 4250 to 4300 range. Subsequently, expect a sharp reversal and drop to the 3600 to 3900 range, possibly with a low probability overshoot to 3450. This will be followed by a sharp upward reversal, a less sharp pullback, and the SPX gradually ascending to the 4400 to 4700 range.

Strong bullish signals will emerge during the aforementioned market actions, irrespective of their intensity.

Q: What is the Wall Street Cheat Sheet – Psychology of a Market Cycle? A: The Wall Street Cheat Sheet – Psychology of a Market Cycle refers to a comprehensive analysis of investor behavior and market trends to understand the dynamics of market cycles.

Q: How does the Dow Jones Utility Average (DJUA) function as a Timing Indicator for the Stock Market? A: The DJUA tracks the performance of 15 utility companies on the NYSE, which offer essential services. Its movements can predict changes in the overall market, indicating potential periods of growth or decline.

Q: Why are Utility Companies attractive to conservative investors? A: Utility companies have stable and predictable revenues, making them attractive to conservative investors seeking steady returns.

Q: How can investors use the DJUA as a Contrarian Indicator? A: Investors can exploit market overreactions by using the DJUA to identify opportunities that others might have missed. Peaks in the DJUA before the broader market can signal the need to reduce exposure and wait for corrections before making new investments.

Q: What is the Tactical Investor Alternative Dow theory? A: The Tactical Investor Alternative Dow theory is a unique approach to understanding market dynamics and making investment decisions based on a combination of market indicators and behavioral psychology.

Q: How can Mass Psychology and Technical Analysis be combined with the DJUA for better investments? A: Understanding groupthink psychology and avoiding herd mentality can help investors identify long-term growth opportunities. Technical analysis assists in identifying market trends and support/resistance levels.

Q: What does the MOAB Signal signify in the stock market context? A: The MOAB (Mother of All Buys) Signal is a significant indicator. A high score of 99 suggests an unprecedented occurrence, possibly leading to a market breakdown, indicating a rapid market decline followed by a swift recovery.

Q: Can market sentiment be used as a gauge for investment decisions? A: Yes, market sentiment can provide valuable insights into market uncertainty and investors’ outlook. It can influence long-term bullish or bearish trends.

Q: How can investors navigate market volatility and corrections effectively? A: Investors can navigate market volatility by staying informed about market indicators, conducting thorough analysis, and focusing on long-term investment opportunities.

Q: What are the expected market movements according to the Strategic Roadmap? A: The Strategic Roadmap suggests potential market highs in 2023, followed by sharp reversals and gradual upward momentum, with strong bullish signals emerging during market actions.

 

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Deceptive Tactics: Techniques of Psychological Manipulation

Deceptive Tactics

Perception plays a crucial role in how we interpret information and the data we are exposed to shapes our perception. It is important to question whether the information we receive is manipulated, as this can distort the picture we form in our minds. Wall Street and the media are experts at employing these deceptive tactics to create cycles of boom and bust and manipulate public perception.

The process of psychological manipulation begins as soon as a child enters the public education system, effectively brainwashing the majority of individuals. Only a small fraction, around 10%, manage to escape this influence, but their impact on effecting real change is limited since they lack positions of power. Media outlets, acting as mass manipulators, constantly bombard us with repeated stories to implant desired perceptions in unsuspecting minds.

This manipulation becomes ingrained in our psyche, leading us to believe that these thoughts are our own when, in reality, they have been planted. This is why there is a deliberate effort to suppress homeschooling, as it promotes independent thinking, while government schooling suppresses free thought. Germany even considers homeschooling a crime, and the general population accepts this without resistance.

Currently, there is a shift in perception, with the masses becoming more optimistic. If this trend continues, we can expect the markets to rally further. Although the market rally has been artificially induced, there is a genuine bullish signal with both the Dow and SPX trading at new highs. A true bull market occurs when old highs are surpassed, and historically, this has led to significant market rallies.

Truth and lies are subjective, based on individual perceptions. Manipulating perception allows for the creation of any desired reality or alternate reality.

The recent breakout to new market highs has indeed proven to be a bullish signal. It was a challenging call to make due to the rapid market rise, but focusing on the trend rather than distractions enabled accurate assessment.

Now that the Federal Reserve has realized how easily they can manipulate reality, expect the level of brainwashing to increase exponentially. Those who rely on common sense might feel like outsiders, as the majority will operate in an alternate reality.

Psychological manipulation techniques

Social influence is a form of persuasion that aims to alter behavior or perception through indirect and subtle tactics. While this can be used positively to encourage beneficial changes, it can also become manipulative and cunning when the influencer’s interests take precedence over others.

Psychological manipulation within education is recognized by the US Department of Education and various national organizations. The Common Core standards, for example, go beyond academics and encompass social-emotional learning and noncognitive skills.

Conclusion

Psychological manipulation techniques are a powerful tool that can shape perceptions and behaviours. It is prevalent in various domains, including education and media, where manipulators seek to influence individuals for their own gain. While social influence itself is not inherently negative, it is crucial to recognize manipulative tactics, exercise critical thinking, and make informed choices about the information we consume. By promoting awareness and understanding, we can strive for a balanced and independent perspective.

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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

 

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Fiat Money – The main driver behind boom & Bust Cycles

Fiat Currency

Fiat Money The Root Of All Things Bad

Fiat Money: 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

 

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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

Business investing: 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

 

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Long Term Trends: stock market bull vs bear

stock market bull vs bear

The monthly chart of the Dow going from 1985

Stock market bull vs bear: 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

 

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