Wealth Building Strategies

Ignoring Economic Reality: Ayn Rand Would Laugh

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Posted by Gary Christensen - The Deviant Investor

on Friday, 01 June 2018 07:23

“We can ignore reality, but we cannot ignore the consequences of ignoring reality.” Ayn Rand. Today Gary Christensen lays out the 3 comforting beliefs are incorrect and will be proven false in coming years and what asset will have more purchasing power in the next 10 years - R. Zurrer for Money Talks


The western world has ignored economic realities for decades. It’s not a Republican or Democratic problem. Banking, power, fiat currencies, dishonest money and transfers of wealth are the issues.

The consequences of ignoring reality are uncomfortable and dangerous. However, most people prefer palatable, easy to digest and believable stories.

In the United States, the U.K., Europe, and Japan it is comforting to believe:



Wealth Building Strategies

How the Experts Turn Small Investments Into Huge Winners

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Posted by Rick Pendergraft - Investing, Trading Strategies

on Friday, 20 April 2018 06:11

kingOne of the most common investing mistakes people make is in their trade allocations. This is especially true when they are going for home run type trades. Instead of investing a small amount and trying to turn it into a large amount, many investors invest a large amount, and it ends up turning into a small amount.

Just last week I got a call from an old high school friend named Brian. He was asking me about a penny stock that was rumored to be a takeover target.

He was talking about putting half of his trading account into this trade. I told him I would never put half of my account in one trade. I also told him I would look at it for him.

After I looked at the company and analyzed the trade, I told him that I personally wouldn’t make the trade in my own account. Brian said: “If you wouldn’t make the trade, I won’t make the trade.”

A few days after that conversation, I was talking with Paul Mampilly. We were talking about trade allocations, and how many hedge funds take small allocations and have them turn into a large part of the portfolio. On the other hand, many individual investors, like my friend Brian, take a large allocation and let it become a small part of the portfolio.

Which would you rather do: Take a big investment and have it become small, or take a small investment and have it become big?

Small Investments Can Make a Huge Difference

The obvious answer to the question above is the first option. No one wants one of their large investments to become a small one.

I can show you how an allocation of as little as 2% can still have a big impact on the total return of a portfolio. But you have to have patience and discipline. You also have to be willing to take some total losses if you are going to have really big winners.

I am not just talking about 100% and 200% winners. I am talking about investments that go up 10, 12, 15-fold and more.

To show you how this can work, I put together the following table. The table shows how you can take 2% allocations from a $50,000 portfolio and make a great return. You can even have three 100% losses and two 50% losses, and still enjoy great overall returns.

$10 Million Portfolio



Wealth Building Strategies

Visualizing The Extraordinary Power of Compound Interest

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Posted by Visual Capitalist

on Monday, 02 April 2018 05:33


With the Federal Reserves declared intent to drive interest rates back to normal to save pension funds, a rising interest rate scenario immediately reopens that 8th wonder of the world, compound interest, as an investment strategy to pursue. This grapic pounds home the incredible power of compound interest as a wealth building strategy - R. Zurrer for Money Talks

Double Click on image Below for Larger Version



Wealth Building Strategies

4 Gold Charts to Knock Your Socks Off

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Posted by Sean Broderick - The Edelson Institute

on Thursday, 29 March 2018 07:27

As the Dow reeled from its biggest one-day drop in six weeks Gold spiked higher by more than $20 last Friday morning on the news that President Trump picked a new national security adviser, John Bolton who believes strongly in regime change through war. So with the U.S. apparently gearing up for war on multiple fronts: the trade front and actual, physical conflict, investors appear to be piliing into that anchor in uncertain times, Gold! - R. Zurrer for Money Talks

In Saturday’s column, we talked about why President Trump’s decisions on trade tariffs and security are good for gold. You can read it here: “Cry Havoc! And Grab Gold.”

Last week, we saw gold post its biggest weekly gain since 2016. That’s what made me so bullish. My fear was I might be too early. That sometimes happens. I notice a trend develop and hop on it before the rest of the market wakes up and smells the coffee. We generally don’t want to hop on too soon. That can be just as painful as too late.

But gold surged to a five-week high on Monday. Sure, it will zig and zag. But I believe it’s likely heading higher.

Last week, we looked at the psychological reasons. To that, you can add the fundamental reasons of supply and demand. Indeed, here are two charts that show ETF investors are going long in a big way.

First, here is a chart of holdings in physical silver ETFs (white line) and physical gold ETFs (blue line).

wwe4003 1s


Larger Chart

You can see that investors are piling into both. Zeroing in on gold, the latest numbers from Thursday show that gold ETF holdings of the metal stood at 72.9 million ounces. That’s the highest since May 2013.

Second, we can see that gold holdings in ETFs went up right as hedge fund managers’ holdings of gold went down.



Wealth Building Strategies

Is The Fabulous Boom Complete?

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Posted by Bob Hoye - Institutional Advisors

on Friday, 23 March 2018 11:45

Screenshot 2018-03-23 11.38.26


Guys at the Fed still think that crude oil prices going up is bad for the stock market. Obviously, there is still little regard for empiricism at the Fed. The stock market goes up with crude and then it goes down when crude goes down. The establishment has a similar problem in thinking that rising interest rates are bad. No, short-dated rates, such as T- Bills, increasing confirm that the boom is on. Reversing and turning down indicates the boom is over.

Since the first of February, the Bill-rate has jumped from 1.40% to 1.77%.

Then there are solar cells that generate electricity from raindrops rolling down the matrix. Could be exciting in Vancouver, which is the city by the rainforest. The way we locals tell the weather is straightforward. If you can see the mountains, you know it is going to rain. If you can’t see them, you know it is raining.

And then if it rains after dark – solar cells would work! The presence of “Goldilocks” is noted.

That meteorology staffers are using super computers to mine cryptocurrencies may be as sound as their forecasts that the Earth is going to fry.

Stock Markets

On the bigger picture, financial markets have been enjoying a fabulous boom. Is it complete?

Our concern is that when it expires, the recession will start virtually with the bear market. During the usual cycle the stock market peaks some 9 to 12 months before the economy does. At the end of great financial bubbles, the record has been that the recession starts virtually as speculation blows out and collapses.

We used this in 2007 when the S&P peaked in October and the recession started in that fateful December. Fateful, because that was the month that Harvard economist, Greg Mankiw, boasted that nothing could go wrong. The Fed had a “dream team” of economists. Fateful, because it was the start of the worst contraction since the 1930s.

Our October 4th Pivot outlined that even the DJIA would be “bubbled”, which was a bold call. Also outlined was that there were previous examples of outstanding speculations completing in the December-January window. The Bitcoin phenomenon peaked in the middle of December and seems to be following the path following the climax of previous bubbles such as with gold and silver in January 1980, or the Nikkei in December 1989.

Another point was that the senior indexes would likely peak somewhat after the feverish speculations did. The high for the S&P was set on January 26th, which was also the high for the NYSE Comp (NYA).

Following the initial hit, the market was likely to churn around, building a base for a rally into May-June.

So far, so good, but to be prudent it is best to look to the threats that accompany magnificent frenzies. The real threat is that the markets have been hyper. The “threats” from credit markets or industrial commodities are actually catalysts.

Any change in the credit markets could place some big accounts offside. As with Bear Stearns in June 2007, Clarence Hatry in the summer of 1929 and Jay Cooke (“a savior of the nation”) in late September 1873. A decline in industrial commodities would be a negative.

As we have been noting, credit markets could enjoy some seasonal “sunshine” at around May. When financial conditions are speculative () there can be a turn to adversity later in the year (??).




E-MAIL bhoye.institutionaladvisors@telus.net

WEBSITE: www.institutionaladvisors.com 


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