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Merk 2018 Outlook

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Posted by Axel Merk

on Thursday, 07 December 2017 06:32

With the stock market and Bitcoin reaching all-time highs, what can possible go wrong? In offering my thoughts on 2018, I see my role in reminding investors to stress test their portfolios. Is your portfolio built of straw, sticks or brick? 

2017-12-07-pigs

First, let me allege many investors have portfolios built of straw and sticks rather than brick. How do I know this? Here’s a brief check:

 

  • If a robust portfolio is a diversified one (the only free lunch on Wall Street), then please check whether you have rebalanced your portfolio of late. If not, odds are equities have taken on an oversized portion in your portfolio, thus making it more vulnerable than you might have intended in a downturn.
  • Equities are part of the so-called risk assets in a portfolio. But what about the rest of the portfolio? Have you been chasing yield by extending duration of your fixed income portfolio? Have you accepted less creditworthy issuers? Have you been lured by the promise of higher yields by financing something in a private placement? I have news for you: without judging the merits of those investments, odds are high that the value of these investments are more correlated with risk assets than you might be aware. Read: just because the label says fixed income doesn’t mean you are diversified.  

 

Without a doubt, equities have had an extra-ordinary run. There is the view that, without a recession, you cannot have a bear market. In our analysis, that’s true for the most part – but is “for the most part” good enough? The notable exception is the Crash of 1987 where a bear market was not accompanied by a recession. In today’s context, the buy-the-dip crowd will remind you that the ’87 crash was, well, a buying opportunity. As such, if you are an asset manager interested in keeping your job, you buy. It reminds of the 1980s where buying IBM office equipment was the sure way to keep your job, as no one would question your choice. Here’s a chart that shows the S&P 500 with the percent drawdown from any peak, with recessions shaded:



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Stocks & Equities

Todd Market Forecast: The NASDAQ is Curling Up From Oversold

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Posted by Stephen Todd - Todd Market Forecast

on Wednesday, 06 December 2017 15:07

Wednesday December 6, 2017 Available Mon- Friday after 3:00 Pacific.

DOW - 40 on 443 net declines

NASDAQ COMP + 14 on 920 net declines

SHORT TERM TREND Bullish

INTERMEDIATE TERM Bullish

STOCKS: Stocks meandered on Wednesday in a seemingly confused manner. We liked the fact that the high techs and the NASDAQ showed signs of life but the listed market couldn't get out of its own way.

Breadth was still not encouraging and the put call ratio remains low. Given the seasonality, it's tempting to put on a trading position, but let's hold off for now.

GOLD: Gold was up $2. Just an anemic bounce within a downtrend.

CHART: The NASDAQ Composite is just curling up from an oversold condition. This has a decent chance of projecting further strength. If this market rallies, it's unlikely that the Dow and S&P 500 will sit around.  

Screen Shot 2017-12-06 at 3.15.35 PM

BOTTOM LINE:  (Trading)



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Stocks & Equities

GDX And GDXJ Targets

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Posted by Rambus Chartology

on Wednesday, 06 December 2017 05:35

I’m going to use the GDX and GDXJ as a proxy for the rest of the PM stock indexes which are very similar to these two. Last Wednesday we looked at the short term daily charts to the longer term weekly charts to see how things were setting in the PM complex.

We first looked at the short term daily chart which was showing the H&S top and the smaller blue consolidation pattern that was building out below the neckline. The smaller blue patterns were kind of morphing, but were giving us a hint of what they would eventually look like when they competed.

Below is the short term daily chart for the GDX which shows the H&S top with the completed bearish rising flag. The breakout was a little sloppy, but today we are getting some follow through to the downside.

gdx-dayshor

This short term daily chart for the GDXJ shows it broke out below the bottom rail of its bearish falling wedge this morning with a breakout gap.



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Stocks & Equities

Fully Invested Bear

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Posted by Jeffrey Saut - Raymond James

on Tuesday, 05 December 2017 08:34

So, we are now in the ebullient month of December and as often stated, “It is tough to put stocks away to the downside in December. It can happen, but it’s pretty rare.” In fact, there were only two years that saw negative returns for the S&P 500 (SPX/2642.22) in December. They were 1936 and 1955, but even then the declines were small.

To be sure, over the last 100 years the average December gain has been 1.55% with a “win rate” of 74% of the time (Chart 1).

810ef4de15f6694047d5a4083724186d

Moreover, ten of the S&P’s macro sectors have experienced positive returns in December. As Bespoke Investment Group notes, “Surprisingly, it has been the high yielding dividend paying sectors that have seen the largest gains with Real Estate, Telecom Services, and Utilities all posting gains of more than 2%.” Worth mention is that last December ALL the macro sectors rallied! Parsing a list of some of the historically best performing stocks in the S&P 500 during the month of December we find the following names from the Raymond James research universe. Each stock screens well on our models and carries a favorable rating from our fundamental analysts: Broadcom (AVGO/$271.56/Strong Buy), Oracle (ORCL/$49.61/Outperform), Valero (VLO/$84.17/Outperform), Red Hat (RHT/$125.26/Outperform), Nvidia (NVDA/$197.68/Outperform), and Mohawk (MHK/$284.82/Strong Buy).

....continue reading HERE



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The Real Reason Why Amazon is Packaging Up Profits

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Posted by Jon Markman - Pivotal Point

on Thursday, 30 November 2017 07:28

It’s that time of the year again. Every holiday shopping season, the “retail apocalypse” discussion moves front and center.

In reality, it’s not so much an apocalypse as it is a rethinking of the way we shop. Online is definitely growing. Physical storefronts are hit-and-miss.

Forget all that. I want you to think about packaging.

If you do, you will see a gigantic opportunity that most other investors are missing.

Recently, Jeff Bezos, the founder of Amazon (AMZN) sat down for a wide-ranging interviewwith Michael Beckerman, the CEO of the Internet Association. That’s a trade group that bills itself as the “unified voice of the internet economy.”

In this interview, Bezos shared the principles behind how Amazon dominates its markets. These principles have organically inspired many of the company’s winning products, services and programs.

Bezos presented highlights of these success stories. And one of these achievements attracted my attention as an investor. But first, here’s how Amazon fosters excellence.

 

  • Become obsessed with customers. Not products. Not technology. Not your competitors. Amazon always puts customers first. The company strives to know its customers so well that it can invent what they want before they even know they want it.
  • Focus on long-term planning. Too many companies focus on the bottom line from year-to-year or quarter-to-quarter. At Amazon, they plan five to seven years ahead.
  • Identify your big ideas. This will help your company focus on what’s important. You should only have two or three big ideas. But they should reflect values that will hold up for 10 to 20 years. Amazon has three big ideas: low prices, fast delivery and vast selection.
  • Accept failure as a path to success. You can’t invent or pioneer without making experiments, says Bezos. And by their nature, experiments fail more often than they succeed.

 

I believe investors should pay close attention to one of Amazon’s experiments … because it offers a big key to the company’s success.

Consider this: You can’t shop anywhere without confronting clear plastic, clamshell packages. They’re used by most toy- and consumer electronics-makers. And consumers hate them. During the interview, Bezos described them as indestructible and frustrating.  He has a point.

Merchants turned to clamshells in the 1980s to combat shoplifting.  Without a sharp knife, it’s almost impossible to free the product.  And the packaging is too bulky to hide under clothing.

Plus, there are other advantages. Clamshell packages look good on display. Customers can see the entire product through the clear plastic.

The downfall is that clamshells are very expensive, bulky to ship and hard to recycle.  And yes, consumers hate them.

They’re also dangerous.

In 2006, the U.S. Consumer Product Safety Commission estimated that clamshell packages led to 6,000 emergency-room visits.

You see, it’s impossible for customers to open clamshells with their bare hands. So, they use dangerous tools like scissors, knives, box cutters, razor blades and combat knives.

Screen Shot 2017-11-30 at 7.35.34 AMAnd, bad things happen when frustrated people hack and slash at the plastic packages. The list of injuries ranged from severe cuts to severed tendons and injured eyes.

Bezos says Amazon.com has been working on a program called Frustration Free Packaging for the past 10 years.  To put that in perspective, the only older programs are Prime, its membership service, and Amazon Web Services, the web-hosting behemoth.

For Amazon, packaging is a very big deal.

The reasons should be obvious.  Shoplifting and product displays don’t matter to the online giant.  Its products get housed in giant warehouses all over the world. Pieces get scanned and counted.

That bulky clamshell packaging hurts Amazon in two important ways.  It costs more to get products because there are fewer pieces per wholesale crate. And it requires larger boxes to send items to retail customers.

Amazon has made progress by working with vendors to create internet-friendly packaging. Easy to open. Easy to dispose of. Today 80,000 products are available under FFP. And in the past year alone, Amazon has saved 55 tons of waste.



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