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1.844.SNO.BIRD

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Posted by MoneyTalks Editor

on Wednesday, 22 October 2014 16:37

weatherWe’ve all heard horror stories of Canadians in the US without travel or medical insurance.

What you may not know about are losses by Canadians who own US recreation or investment properties. Flash floods in Palm Springs and Arizona, wild fire and windstorm damage to name a few. 

If you have questions about your US home, auto, travel or medical protection – we can help.

Call HUB's toll free line 1-844-SNO-BIRD that’s 1-844-766-2473

Or CLICK HERE to email us with a suggested time you would like to be contacted by a HUB cross-border representative. Please include your phone # and hometown.

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The Most Ruinous Mistakes an Investor Makes!

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Posted by Larry Edelson - Commodities, Stocks, Technical Analysis

on Wednesday, 22 October 2014 06:03

When I coach investors and traders, I’m often asked what I think are the most common, most ruinous mistakes that investors make. Unfortunately, there are a lot of them.

There are mistakes like risking too much money on a single trade or investment … not using protective stops … not using disciplined money management … trading too often … not doing your homework … taking on too big a position in any market … not diversifying enough … and on and on.

Over time, I will explore each and every one of the above in greater detail, and more, to help you learn how to become a better investor and trader.

But in today’s column, I want to cover what I think is the most dangerous mistake investors make, bar none.

It’s what I call getting caught up in all the “market myths” that are always out there. Or put another way …

It’s having a set of preconceived notions

about what markets can and can’t do.

The fact of the matter is that markets can do whatever they want to do.

Markets are never wrong. Markets are never irrational.

Screen Shot 2014-10-22 at 5.41.42 AMThey are what they are and if you don’t understand a market, it’s not the market’s fault; the fault lies instead with your analysis.

For instance, have you ever heard someone say “a market is defying all logic?”

Or that a market is “disconnected from its underlying fundamentals?”

I’m sure you have. I hear those kinds of phrases all the time on shows on Bloomberg and CNBC.

But the fact of the matter is that …

Markets NEVER defy logic.

And they never defy the fundamentals.

Only people defy logic. Only people can make such statements about fundamental forces as well, because when a market is allegedly defying fundamentals, what it’s really doing is operating on fundamental forces that the analyst or investor simply hasn’t figured out yet.

I fully realize that what I’m talking about here is hard to grasp at first. But if you take the time to think deep and hard about what I’m saying, you will elevate your trading and investing to a whole new level. Markets are never wrong. Only people are.

Especially dangerous for most traders and investors is getting caught up in the various “market myths” that are out there.

For instance, how many times have you heard that rising interest rates are bad for the stock market, and that declining rates are good for stocks?

If you’re like any average investor, you’ve heard that theory literally hundreds, if not thousands, of times. Tune into any media show today, and I’m sure you’ll hear it at least once, if not more.

Most stock brokers, and the majority of analysts and newsletter editors, espouse the same causal relationship between interest rates and stock prices.

But the fact of the matter, the plain truth, is that there is no “standard relationship” between interest rates and stock prices. Period.

Consider the period from March 2000 to October 2002, where the Federal Funds rate declined from 5.85 percent to 1.75 percent, and the Nasdaq plunged 78 percent. Put simply, stocks and interest rates went down together! Exactly the opposite of what most would expect.

Or the period from March 2003 to October 2007, where the Federal Funds rate more than tripled and rose from 1.25 percent to 4.75 percent …

And the Dow exploded higher, launching from 7,992 to 13,930 — a 74 percent gain! Stocks and interest rates went higher together!

The fact is that the relationship between interest rates and stock prices varies considerably depending upon a host of factors, including the value of the dollar, inflation and where the economy is in terms of the economic cycle.

But the bottom line is this: Never assume anything and never, ever get caught in conventional thought about a market or you will most likely lose your shirt.

Let’s consider another myth that rising oil prices are bearish for stocks. That’s a bunch of baloney, too.

The fact is that there have been plenty of times when rising oil prices were bullish for stocks … and where falling oil and energy prices were bearish. Exactly the opposite of what most conventional thought tells you.

Or consider the normal view about a country’s widening trade deficit. The common theory is that a widening trade deficit is bad for stock prices and a narrowing deficit is good.

But history proves that it is entirely wrong, and nothing more than a myth.

Fact: From 1976 to 1998, the U.S. trade deficit ballooned from $6.08 billion to $166.14 billion, and guess what? The Dow Jones Industrials went from 848 to 9,343!

In truth, the relationship between the trade deficit or surplus and stock prices is exactly the opposite of what most pundits claim.

Or consider the myth about corporate earnings that says they have to rise for stock prices to continue higher. But from 1973 to 1975, the combined earnings of the S&P 500 companies rose strongly for six consecutive quarters, yet the S&P 500 Index fell more than 24 percent.

Moreover, according to research conducted by analyst Paul Kedrosky, since 1960, the average annual return on the S&P 500 was greatest when earnings were falling at a clip of 10 percent or more … while the smallest returns on the S&P 500 occurred when earnings were growing at up to 10 percent per annum!

In other words, rising corporate earnings does not guarantee rising stock prices, by any means. Nor do falling corporate earnings guarantee falling stock prices!

There are lots of myths or biases out there about relationships between economic fundamentals and markets, or between markets and other markets.

But the fact of the matter is that almost all of them are exactly that: Myths, and nothing more.

The bottom line: To avoid making the biggest investing and trading blunders …

1. Never assume anything when it comes to the markets …

2. Question everything, and most of all …

3. Think independently!

Right now, gold is trying to bounce a bit. But it won’t get far. It’s headed lower overall. So I hope you took me up on my recommendation to hedge any holdings you have via the inverse ETFs I recommended in my past few columns.

The stock market, meanwhile, is also bouncing. But don’t be deceived: It’s headed lower for a while. So here, too, I strongly recommended hedging any positions you can’t exit, for whatever reason, via the inverse ETFs I recommended in my last column.

Stay tuned and best wishes,

Larry

...related:

OFFICIALS LOSING CONTROL AS MARKETS GYRATE WILDLY!



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Asset protection

Tips for Escaping the Resource Sector Swamp Alive

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Posted by John Kaiser via The Mining Report

on Wednesday, 15 October 2014 07:23

Crocodile580by John Kaiser: What if the goldbugs are wrong and fiat currency isn't going to throw the world into hyperinflation? What if, instead, a steadily growing economy and a new awareness of the importance of having security of supply for critical metals, along with a big exciting discovery that heats up the resource sector, are what pull sinking gold and silver prices and their related mining companies out of the muck? If so, John Kaiser tells The Mining Report that he has set his sights on the dozen companies that would star in this horror-turned-romantic epic adventure.

The Mining Report: At the Cambridge House Canadian Investment Conference in Toronto, you talked about escaping the resource sector swamp. Why do you call the current market a swamp?

John Kaiser: There are four key narratives that dominate the resource sector, in particular the junior resource sector. One is the supercycle narrative where a growing global economy catches the mining industry off guard with the result that higher-than-expected demand results in higher real metal prices. That then unleashes a scramble to find deposits that work at these higher, new prices and put them into production. The juniors played an extraordinary role during that cycle in the last decade; however, global economic growth has slowed. Therefore, we are looking at a period of sideways, possibly weaker, metal prices for a number of years, which puts the supercycle narrative on hold. That is one factor keeping the sector in a swamp.

Another important narrative is the goldbug narrative, where a soaring gold price is going to make deposits much more valuable. We did see that play out. Gold reached $1,950/ounce ($1,950/oz) briefly, but has since retreated 40%. Even though that's still 400% off the low from just over a decade ago, it has turned out to be a wash in real prices. Now, growth projections in the U.S. are having negative implications for the prevailing apocalyptic goldbug narrative. That does not bode well for an escape from the quagmire.



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Asset protection

Don't Get Ruined by These 10 Popular Investment Myths (Part VI)

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Posted by Elliott Wave International

on Tuesday, 14 October 2014 05:13

Interest rates, oil prices, earnings, GDP, wars, peace, terrorism, inflation, monetary policy, etc. -- NONE have a reliable effect on the stock market

You may remember that after the 2008-2009 crash, many called into question traditional economic models. Why did they fail?

And more importantly, will they warn us of a new approaching doomsday, should there be one?

This series gives you a well-researched answer. Here is Part VI; come back soon for Part VII.


Myth #6: "Wars are bullish/bearish for stocks."
By Robert Prechter (excerpted from the monthly Elliott Wave Theorist; published since 1979)

... If the stock market is not reflecting macroeconomic realities, what else could it possibly be doing? Well, how about political news? Maybe political events trump macroeconomic events.

It is common for economists to offer a forecast for the stock market yet add a caveat to the effect that "If a war shock or terrorist attack occurs, then I would have to modify my outlook."

For such statements to have any validity, there must be a relationship between war, peace and terrorist attacks on the one hand and the stock market on the other. Surely, since economists say these things, we can assume that they must have access to a study showing that such events affect the stock market, right?

The answer is no, for the same reason that they do not check relationships between interest rates, oil prices or the trade balance and the stock market. The causality just seems too sensible to doubt.

Claim #6: "Wars are bullish/bearish for stock prices."

Observe in the form of this claim that you have a choice for the outcome of the event. Economists have in fact argued both sides of this one. Some have held that war stimulates the economy, because the government spends money furiously and induces companies to gear up for production of war materials. Makes sense.

Others have argued that war hurts the economy because it diverts resources from productive enterprise, not to mention that is usually ends up destroying cities, factories and capital goods. Hmm; that makes sense, too.

I will not take sides here. We can negate both cases just by looking at a few charts.

Figure 11 shows a time of war when stock values rose, then fell.

35458 a

 



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Asset protection

“Unimaginable Consequences” for Hong Kong

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Posted by Martin Weiss PH.D - Money & Markets

on Sunday, 12 October 2014 14:17

Unimaginable consequences?

These are not my words. They’re the words of the People’s Daily, the leading voice of the Chinese Communist Party. And they’re not a forecast or a speculation.

They’re a thinly-veiled threat!

In a moment, I’ll explain what I think those consequences might be — for the world and for you. But first let me give you a sense of how important this is and why I’m qualified to opine.

Hong Kong is the biggest financial center of the largest, most populous, fastest growing continent on the planet — Asia.

Only two other centers eclipse Hong Kong in power and size — New York, the financial capital of the world’s dominant superpower; and London, the center of the greatest empire in history.

Hong Kong’s banking, stock market, bond market and derivatives market are bigger than those of Frankfurt (the largest financial center of continental Europe) and of Tokyo (despite a national GDP that’s 22 times larger).

Tens of thousands of corporations, operating all over Asia, are incorporated in Hong Kong.

Over 1,600 companies, half based in mainland China, are listed on the Hong Kong Exchange.

And no matter what, if you want to do business in Asia, you almost invariably must go through Hong Kong.

I know from personal experience.

Screen Shot 2014-10-12 at 1.58.18 PMIn the early 1980s, I was working in Tokyo as a stock analyst for Wako Sh?ken, one of Japan’s larger brokerage firms.

And soon after I began there, my boss sent me off to Hong Kong for a project with their local subsidiary.

My task was to develop presentations about Japanese stocks, while interpreting from Japanese to English and to Cantonese. (They overestimated my linguistic abilities.)

Even back then, business at their Hong Kong subsidiary was a big deal for them — bigger than their subsidiaries or branch offices in New York, London, Dubai and a half dozen other centers. And that was 35 years ago, before Hong Kong’s meteoric expansion!

Why? Because of one single, powerful force that has propelled Hong Kong’s growth:

Freedom.

Freedom to trade, freedom from taxes, freedom from regulations, and above all, freedom from political interference or manipulation.

The authorities in Beijing seem to understand this — so much so that they’ve pursued something similar for Shanghai and other Chinese cities (within strict limits, of course).

What they don’t yet seem to understand is this: Economic and financial freedom cannot forever co-exist with political and social repression.

The Rise and Fall of

“Peaceful Co-Existence”

This is also an extremely important issue. So let me give you a quick overview.



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