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Wealth Building Strategies

Join the Few Who Gain from Economic Armageddon

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Posted by Marc Faber - Gloom Boom & Doom Report

on Thursday, 18 January 2018 06:44

Market CollapseThe warning signs that a market crash is looming are becoming louder and more frequent. Despite this, most market participants are behaving like it can never happen. In fact, bullish trading is pushing the markets to new highs on an almost daily basis. The warnings are seen, heard and then ignored.

Join the few who will take advantage of what's about to happen. The same few who profited handsomely when billions were lost in the last global economic crisis almost a decade ago rather than those who simply follow the herd.

For most people these warnings are like the graphic images printed on today's packets of cigarettes, they spell out the dangers and yet all the same people are still smoking.

Warnings about an impending market crash are being made by people who predicted with considerable accuracy in 2006 and 2007 what was ahead when the US sub-prime mortgage market collapsed and triggered the global financial crisis.

The one thing these analysts can't predict is an exact time and place for when the crash will happen. It's the same reason people continue to smoke; nobody can say with certainty the number of cigarettes required to kill a person.

So, trading continues regardless until the day the sudden dramatic drop in prices exceeds the 10 per cent threshold that officially marks the point that the crash has arrived.

Just as smokers only decide to stop when the physician says: "Mr Smith, I regret to inform you that you have lung cancer."

Swiss investor Marc Faber, also known as "Dr Doom", predicts that stocks are set to plunge by 40 per cent or more. Mr Faber, the editor of 'The Gloom, Boom & Doom Report' recently told CNBC: "We have a bubble in everything."

His caution is echoed by Nobel Prize-winning economist Robert Professor Shiller who has urged investors to tread cautiously because market valuations are at "unusual highs".

In a recent interview with CNBC, he said: "We are at a high level, and it's concerning," highlighting that the only times valuations have been higher were in 1929 and 2000.

Mark Zandi is chief economist at Moody's Analytics. In August he joined the chorus of analysts preaching caution after determining that the stock market is overvalued.

In an article in Fortune he said: "The stock market is due for a significant correction" adding, "stock returns in the next several years will be very pedestrian if they increase at all."

Last month HSBC issued a Red alert warning. They're looking at two key levels: 17,992 in the Dow Jones Industrial Average and 2,116 in the S&P 500.

"As long as those levels remain intact, the bulls still have a slight hope. But should those levels break and the markets close below, which now seems more likely, it would be a clear sign that the bears have taken over and are starting to feast," said head of technical analysis Murray Gunn. "The possibility of a severe fall in the stock market is now very high," he added.

However, according to Bill Blain, a strategist at Mint Partners, this time bond markets will trigger the mayhem.



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Wealth Building Strategies

Don't Be Afraid of Volatility; It's an Extremely Profitable Ace in the Hole

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Posted by Chris Johnson - Money Morning

on Monday, 08 January 2018 06:48

MarketVolatilitysignTraders and investors everywhere are spooked by volatility whenever it rears its head. We hear about it every time stocks take a tumble, even if that doesn't happen so much these days. So the Investopedia definition I'll show you is probably the last thing they're thinking of.

"Volatility: A statistical measure of the dispersion of returns for a given security or market index. Commonly, [emphasis mine] the higher the volatility, the riskier the security."

Now, that doesn't sound so scary, does it?

Volatility is nothing more than a statistical tool that shows how much a stock goes up or down. Yet many see volatility as a bad thing, because they equate it to risk. And risk is bad for us, right?

Well, sometimes risk is bad. But to the smart investor, volatility is a difference maker. Because without it, you might as well just buy a CD. More importantly, you have zero chance of beating the market. And where's the fun in that?

That's right: Without volatility, you don't beat the market.

That's why one of my 10 Trading Commandments is "Volatility is a trader's best friend!"

Now, let me prove it to you…

Directional Volatility Takes You "FAR" as a Trader

Think about volatility as merely the distribution of a stock's returns. The wider the distribution, the higher the volatility.

And the higher the volatility, the more the stock is moving, and that means we're getting paid if it's moving in our direction.

To beat the market, especially using options, we want volatility on our side. I call it the "FAR Principle" – fast, aggressive, and right.

I want a fast move to happen before my option expires. I need an aggressivemove that I can leverage with an option. And I need the move to be in the right direction to agree with my call or put.

Having volatility in my corner, along with picking the right direction, is how I (and you) get paid as an investor.

How to Find Volatility Before It Happens



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Wealth Building Strategies

2017 Market Lessons

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Posted by NorthmanTrader

on Wednesday, 03 January 2018 06:27

Before I publish my market outlook for 2018 in the days ahead I thought it might be useful to recap some lessons learned from 2017. While I want to focus on technical considerations some larger market context first is equally important.

The biggest mistake bears always make, myself included, is underestimate the sheer recklessness of bulls. They keep raising the bar higher and higher, get everyone positioned long and when the construct ultimately fails they beg for bailouts and artificial liquidity comes in to save an industry that is 100% reliant on convincing retail to put money into the system. This may seem a harsh assessment, but this has been the script for the last 30 years as we’ve transitioned from one market bubble to the next.

Bubbles are notorious for getting people sucked into believing things that are absolutely unrealistic. Multiples get expanded to high heaven on projections that never pan out. Every. single. time.

In this context it’s actually quite easy to be a bull. Keep raising targets, always be optimistic, and when something breaks shrug your shoulders and say: Hey what are you gonna do? Stuff happens, but the Fed will bail us out. And the cycle begins anew.

It’s a dangerous game for investors as Wall Street will look right for years and complacency breeds more complacency as bearish voices are ignored as they look wrong precisely at the time when they are the most right.

Take 1999. Bears were completely wrong, but also entirely correct. The bubble run-up was pure fantasy, but it kept going and going until the rug got pulled:

NDX

 

Similarly in 2007 nobody gave you warnings, and Wall Street kept pushing price targets higher for 2008:


And people got hurt big time every time.

The then predictable response: We need bailouts, must get rid of mark to market and the Fed obliged with QE 1, 2, 3 and global central banks joined the foray. And this has been the running game for over 8 years now:

.....continue reading more charts and analysis HERE



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Wealth Building Strategies

Technically Speaking: Revisiting Bob Farrell’s 10-Rules

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Posted by Lance Roberts - Real Investment Advice

on Tuesday, 02 January 2018 06:41

As I noted this past weekend, 2017 was a year for the record books. Not surprisingly, the strong advance fostered a surge in investor optimism which pushed allocations to equities to the second highest level on record.

sdf

And leveraged to boot.



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Wealth Building Strategies

Gold And Silver Futures Swing From Bearish To Bullish In Just Two Weeks

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Posted by John Rubino - Dollarcollapse.com

on Tuesday, 19 December 2017 06:37

After holding onto huge, unprofitable long positions for months, gold and silver futures speculators are finally giving up and bailing out, while commercial traders (who take the opposite side of these trades, since every long requires an offsetting short) are closing out their shorts at a near-record pace. 

Here’s the gold data for last week, courtesy ofGoldSeek. Note the massive shift by speculators from long to short. They’re not in balance yet (where longs and shorts are equal) but they’re heading that way fast. 

Gold-COT-Dec-17-17

In silver, they’re just about in balance, which is historically about as far they usually go:


Here’s the same data for gold in graphical form with the silver bars representing speculator longs and the red showing commercial shorts. Note the long plateau followed by a rush to the middle, which is where rallies tend to begin. 



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