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The Bond King Doesn't Like Bonds… "Real Assets Are the Better Bet"

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Posted by Steve Sjuggerrud's Daily Wealth

on Tuesday, 24 July 2012 09:03

Over the weekend, the Bond King "tweeted" twice…

His points were simple: You can't make money in bonds. Real assets are the better bet now. 

I agree with the Bond King. And I think one "real asset" looks like a great bet here.

Bill Gross is the "Bond King"… He earned this reputation from decades of outperforming his peers in bonds. And he runs the world's biggest bond fund. But he doesn't like bonds today.  

A key reason he doesn't like them is because after inflation, you're actually losing money in bonds. You're losing "purchasing power." 

The Bond King asked, "How will investors maintain purchasing power? Stocks maybe. Real assets are the better bet." 

"Real assets" typically means commodities and real estate. And between those two, there's one clear winner for me.  

Take a look at the chart below, from the latest issue of my True Wealth newsletter. It shows real estate versus gold. To me, real estate looks like the place to be.

Gold vs Shiller

The price of gold has gone up for 11 years straight. Meanwhile, real estate is dirt-cheap by any measure… It's more affordable than ever (thanks to record-low mortgage rates)… And the uptrend is just beginning.

When even the Bond King says you don't want bonds, you know it's time to lighten your load in bonds and other paper assets (like cash in the bank).

He says real assets are the better bet. Based on his track record, you should listen.

Of the real assets out there, I believe real estate is the one that offers the least downside risk and solid upside potential.

Listen to the Bond King.

Get rid of some of your bonds (and other paper assets) and replace them with real assets.

Real estate is my favorite real asset now… It's what I'm doing with my own money… You should consider doing the same.

Good investing, 

Steve

 

Further Reading:

Many DailyWealth editors agree real estate is a terrific value right now. Catch up on the "cheap housing" argument here…

Why the Government Pays Me $1,250 Every Month  
"It's no wonder some of the wealthiest people I know have been quietly doing this for years," Mark Ford explains.

How to Make $44,200 – Tax Free – While You Sleep 
To understand the true value in housing, you have to understand one thing…



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"This week could be a huge one for stocks and commodities"

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Posted by Chris Vermulen - The Gold & Oil Guy

on Monday, 23 July 2012 10:30

This week could be a huge one for stocks and commodities. This morning the dollar index is taking another run at our weekly chart resistance level. If it can break out and start to rally this week then a possible 4-6 week sell off in stocks and commodities may be just starting.

Watch the morning video or at least the last 4 minutes where I cover  the SP500 intraday and daily chart which shows the main cycles and what we should be expecting within the coming days and weeks.

July23Cycles

re- Market Analysis Points:
-    Dollar index is making new highs this morning and if it can hold up into the close today then I would expect it to keep running higher for a few weeks.
-    Oils has pulled back 5% from its high last Thursday and is now testing support and starting to bounce.
-    Natural gas is holding up well after Friday’s strong rally to new highs. It may be forming a bearish pattern with the three sharp surges to new highs pattern which I explain in the video.
-    Gold and silver trader trading down 1+% and are likely to find a little support today as they test support levels. They are at risk of a major breakdown but currently they are still holding up.
-    Bonds are reaching new highs this morning but looking ready for a 1-3 day pause. They are a little overbought.
-    SP500 charts have been the most interesting the past couple months which is why I keep focusing on it.

If you did not read my special report and wave counts then do so here: http://www.thegoldandoilguy.com/articles/put-your-seatbelts-on-its-about-to-get-bumpy/


Watch Video Now: http://www.thetechnicaltraders.com/ETF-trading-videos/
The video clearly explains where the market seems to be trading in terms of cycles and what we should expect this week and in the coming month.

Chris Vermeulen

 

Tags: Market Cycle, market forecast, Stock Market Cycles, Stock Market Predictions

This entry was posted on Monday, July 23rd, 2012 at 8:56 am     and is filed under Daily Market Trades, Market Forecast, Stock Market Predictions, Traders Buzz, Trading Videos. You can follow any responses to this entry through the RSS 2.0 feed. Both comments and pings are currently closed.



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Buy Oil Stocks Now!

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Posted by Don Vialoux Timing the Market - Joseph Schachter comment

on Friday, 20 July 2012 07:42

Don Vialoux, runs the ETF Seasonal Rotation fund which invests in certain sectors of the market at certain times of the year and over the last three years or so, there has been some appreciation in his fund. But more importantly, since the energy sector has been creamed in the last five months, his ETF has not been hurt...well, not too much. As Vialoux suggests that the season “to buy the oil stocks is from now until October.” - comment by David Pescod 
 
Here's Vialoux's case in Charts:
 
The Canadian energy sector is showing early technical signs of bottoming. Thackray’s 2012 Investor’s Guide notes that the energy sector has a period of seasonal strength from July 24th to October 3rd.
 
clip image011_thumb4
 

Ed Note: Josef Schachter has been suggesting since really early this year that oil was going down and that the markets in general are to take a hit. And oil will bottom some time in October.

He also suggests you buy the oil stocks, but unlike Vialoux wants to buy them 2 months later in October.  

 



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Marc Faber Warns: The Slowdown in China is Larger than Reported

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Posted by Administrator

on Thursday, 19 July 2012 08:02

I think first of all investors must realize that the impact of a slowdown in the Chinese economy, which in my view is much larger than what the government has been reporting, the government says GDP has been growing at 7.8%, in my view it's much lower because we have very reliable statistics.

The two countries where the exports were predominantly China-geared – Taiwan and South Korea and where the statistics are more reliable than what the Chinese announced in GDP growth, these countries have negative export growth on a year-on-year bases in the last month in June. If these countries have declining exports, it tells you something about the Chinese economy. 

We have other reliable statistics like gaming revenues in Macau and so forth. The overall revenues are still up but the junkit turnover is down. These are middle men who bring the gamblers to Macau. Their growth rate has slowed down, luxury consumption has slowed down and electricity consumption is basically flat. Steel and cement production is up maximum 2-4% year-on year and so we have some reliable statistics. 

Macdonalds just reported that their sales in Asia year-on-year is down more than 1%. Believe me if in a growth region, where markets are not yet saturated and where shops like MacDonalds are like prestige things for families to go and where their sales are down believe me – something is not quite right. I can see it with my own eyes. I don’t think that in Asia at the present time there is any economic growth.

When the Chinese economy was strong 2000-2008, it drove up commodity prices and that boosted growth rates in emerging economies such as Brazil, Argentina, and the oil-producing countries in the Middle East, and central Asia, Russia and of course also Africa and Australasia. 

When the Chinese economy slumps, then obviously the demand for commodities goes down and these countries have less money and so they buy less and so it has a very strong multiplier effect on the global economy. 

I think that the slowdown in the Chinese economy – and believe me, the Chinese economy did not grow in the second quarter by 7.8% - in my view, maximum 3%.

MARC FABER PORTFOLIO 30% IN CASH : Because I didn’t buy a lot of equities and I liquidated quite a bit in Asian equity in recent weeks, I think the cash is around 30%. Then I have a lot of bonds. I have some which are more cash-like and some with a more equity-like character. - in an interview today with citywire.co.uk

300x225xasian-Markets-China1-300x225.jpg.pagespeed.ic.Qv5Ahh1 p2

 



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Coming US Selling Bonanza Will Be Worse Than 2008

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Posted by Peter Schiff - Europacific Capital

on Wednesday, 18 July 2012 07:27

Schiff, who famously warned investors about the housing and financial crisis in his 2007 book Crash Proof, says the Fed's palliative efforts during the housing meltdown have made the next crisis inevitable.

The picture Mr Schiff paints is depressingly clear and plausible. It might be different this time, then again probably not. Holding real assets like gold and silver and staying out of the US dollar are his main recommendations… (Ed Note: scroll Down for his Top 3 Recommendations).

According to Euro Pacific Capital's CEO Schiff, the U.S. economy is heading for an economic crash that will make 2008 look like a walk in the park. Stimulus programs can delay this day of reckoning, but only for so long and only at the expense of making the eventual meltdown much, much worse.

"We've got a much bigger collapse coming, and not just of the markets but of the economy," Schiff says in the attached clip. "It's like what you're seeing in Europe right now, only worse."

In this nightmare scenario detailed in The Real Crash: America's Coming Bankruptcy, the current economic pause is actually the beginning of a material slowdown or recession into year end. At that point, the Federal Reserve will unleash a third round of Quantitative Easing — weakening the dollar without jump-starting the economy. As a result of dollar weakness, import prices rise, pressing the margins of corporate America. Lower margins lead to heavy layoffs, sending millions of workers into unemployment during a time when they can least afford it. Banks fail, housing collapses, and taxes are raised in a futile effort to give the tapped-out government the capital to try yet more futile stimulus.

"That's when it really is going to get interesting, because that's when we hit our real fiscal cliff, when we're going to have to slash — and I mean slash — government spending," says Schiff.

Those cuts will not be at all unlike the draconian austerity measures in Greece, with programs like Social Security and Medicare being dramatically cut or possibly disappearing entirely. The easiest way to put it, is that everything you don't think could possibly happen in America will come to be.

"Alternatively, we can bail everybody out, pretend we can print our way out of a crisis, and, instead, we have runaway inflation, or hyper-inflation, which is going to be far worse than the collapse we would have if we did the right thing and just let everything implode," he offers.

So what should investors do to protect themselves? Schiff has three suggestions:

1. Get Out of Treasuries

The U.S. dollar is going to get trashed in Schiff's scenario. Locking in a yield on a government 10-year bond of 1.5% is a paltry return in the first place. Should inflation tick up to even 5%, a level much lower than that seen in the early 1980s, bond owners would have 3.5% less buying power at the end of every year. If they go to sell the bond, they'll only find buyers at a much lower price than what they paid.

2. Own the Right Stocks

With bonds and the dollar bearing the brunt of the pain, Schiff says stocks will outperform dramatically, provided you own the right ones. Exporters and multi-national corporations will benefit from a weak dollar. Better still would be to buy foreign stocks and avoid the U.S. entirely.

3. Buy Silver and Gold

Schiff says the recent weakness in these precious metals is just a pause as we wait for the other shoe to drop. Most of those on Main Street haven't even taken positions yet in gold or silver. Once they start dropping bonds and looking for a place to hide, the price of these metals will soar.

Are you preparing for a major U.S. market and economic meltdown?

 

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FAIR USE NOTICE: This video may contain copyrighted material. Such material is made available for educational purposes only. This constitutes a 'fair use' of any such copyrighted material as provided for in Title 17 U.S.C. section 107 of the US Copyright Law.

 


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