Month: December 2013

Last year, 2013, will likely go down as the beginning of the end for the bull market in stocks.

Since the market bottom in 2009, stocks have rallied over 170%. It’s been an incredible run, but I fear that we’re nearing the end.

From 2009-late 2012, most of the rally was driven by mutual funds and other large institutional investors. During this period, individual or “Mom and Pop” investors were largely investing in bonds.

This changed in late 2012. At that point, individual investors joined in and stocks entered a mania. You can see it clearly in the chart above.

You can also see this in fund flows movements: from 2009-early 2013, individual investors shunned stock-based mutual funds and poured their money into bonds instead.

This changed in early 2013, as investors suddenly found an appetite for stocks again, pouring a RECORD $324 BILLION into US stock mutual funds.

To put this into perspective, this means investors put more money into stocks this year than they did in 2000: at the very peak of the TECH BUBBLE!

Which brings us to today.

Today investors are more bullish than at any point in 20 years. In fact, they are so bullish they are borrowing money (called margin debt) to BUY stocks at fastest pace in history.

Companies like Twitter, which have never made a penny in profit, are valued at tens of billions of Dollars.

In short, the market, taken as a whole, is overbought, overvalued, and overextended.

Now, this doesn’t mean that stocks cannot go higher from here. After all, market manias always tend to last long than you expect.

However, it does mean that “the good times” are ending. And the likelihood of stocks posting another massive up year is very slim indeed.

In this environment, it’s wise to lighten up on ownership to the longside. It’s even wiser to look for beaten down undervalued companies that offer you good down side protection: companies that will weather any market environment, good or bad.

Companies like ones we single out in our premium value-investing newsletter, Cigar Butts & Moats.

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Phoenix Capital Research

 

 

Greetings from Peru!

When most investors think about South America, they think about Brazil: the single largest South American economy.

Indeed, even the famous acronym for the most important emerging markets “BRIC” features Brazil (the “B”) as the South American representative.

But Peru is a real gem you should know about.

Peru’s economy has grown at an average pace of 7% for the last 10 years. During that time the Peruvian middle class has literally DOUBLED in size.

I can attest to seeing this in action. When I first came here in 2009, the famous Jockey Plaza mall featured mainly Peruvian brands and stores with middle priced goods.

Today, the mall has completely been designed with luxury goods (I saw Versace, Hugo Boss and the like) and beautiful architecture:

Source: Consultora Metropolis

Everywhere you turn Peruvians are hustling, building new condominiums, selling hand crafted goods, and of course, eating the famed Peruvian cuisine (I’ve already packed on 5lbs in the last two weeks alone!).

And the work ethic is tremendous.

Peruvians don’t believe in sitting around waiting for handouts or hoping the Government will pay their bills. There’s a saying in Peru “you don’t work… you don’t eat.” And they live by it.

A friend of mine recently ordered a modern glass dining room table for his 7^th floor apartment. The store thought the table would fit in the elevator and so sent only two delivery men for the 100+lb table top to be delivered.

The table didn’t fit in the elevator.

Rather than rescheduling the delivery, the two guys (both of them shorter than 5’5”) hauled the table up the seven flights of stairs. The entire time they had to do so somewhat bent over to fit the table in the stairwell.

THAT’S SOME SERIOUS WORK.

I’ve come down here to scout around for investment opportunities for my Private Wealth Advisory newsletter. I’ll be detailing them in the coming weeks.

If you’re looking for actionable investment strategies on playing the markets, take a look at my monthly investment newsletter, Private Wealth Advisory.

Published on the third Wednesday of every month after the market closes, Private Wealth Advisory, shows individual investors how to beat the market with well-timed unique investments.

To whit Private Wealth Advisory is the only newsletter to have shown investors 72 straight winning trades and no losers during a 12-month period.

Indeed, in the last four months alone we’ve locked in gains of 8%, 12%, 21% and even 28%... with an average holding period of 3-4 weeks.

To find out more about Private Wealth Advisory and how it can help you beat the market with your investments…

Click Here Now!

Best Regards

Graham Summers

 

 

 

 

 

 

 

The markets are ramping higher today, with the S&P 500 having bounced of its 50-DMA in the overnight futures session.

As you can see, this has been THE line since stocks began rallying in early 2013. Any time we broke through this line, stocks rallied hard soon after.

With that in mind, it seems likely traders will try to affect a Santa Clause rally. If you’re unfamiliar with this term, the “Santa Clause Rally” refers to the fact that the markets tend to rally into the end of the year.

December is hands down the single best month for stocks: historically the Dow has rallied in December at least 70% of the time.

Moreover, the biggest push usually occurs in the last ten trading days of the year (this week and next). This is why they call it the Santa Clause rally (it happens around Christmas).

So barring any huge negative developments, the markets should rally over the next few weeks based on historical and seasonal patterns.

If you’re looking for actionable investment strategies on playing the markets, take a look at my monthly investment newsletter, Private Wealth Advisory.

Published on the third Wednesday of every month after the market closes, Private Wealth Advisory, shows individual investors how to beat the market with well-timed unique investments.

To whit Private Wealth Advisory is the only newsletter to have shown investors 72 straight winning trades and no losers during a 12-month period.

Indeed, in the last four months alone we’ve locked in gains of 8%, 12%, 21% and even 28%... with an average holding period of 3-4 weeks.

To find out more about Private Wealth Advisory and how it can help you beat the market with your investments…

Click Here Now!

Best Regards

Graham Summers

 

 

 

 

 

 

 

 

The markets are in a perilous condition today.

We’ve been noting for months that the markets were displaying signs of a top. Among other items, we recently noted:

1)   Margin debt (when investors borrow money to buy stocks) has hit new all time highs.

2)   The number of bearish investors has hit an all time low.

3)   Market leaders have peaked or are peaking.

4)   Market breadth (the number of stocks that are rallying) is falling.

5)   Earnings are falling at key economic bellweathers.

6)   Stocks have diverged dramatically from earnings and revenues.

Of course, market tops always take longer than one expects. The weakness of the S&P 500 over the last few weeks isn’t too promising.

A break below this line would open the door to a more serious correction, possibly to 1,700.

The key item to note would be if the market does correct in a big way while the Fed was engaged in its $85 billion per month QE plan. We’ve never had a correction greater than 5% since the Fed announced QE 3 and QE 4. A 5% correction from the most recent peak would bring us to 1,710.

That would be the key line to watch. I’ve drawn it in the chart below.

Is the market topping? It’s too early to tell. But for certain we are in a bubble. It’s just a question of when it bursts.

If you’re looking for actionable investment strategies on playing the markets, take a look at my monthly investment newsletter, Private Wealth Advisory.

Published on the third Wednesday of every month after the market closes, Private Wealth Advisory, shows individual investors how to beat the market with well-timed unique investments.

To whit Private Wealth Advisory is the only newsletter to have shown investors 72 straight winning trades and no losers during a 12-month period.

Indeed, in the last four months alone we’ve locked in gains of 8%, 12%, 21% and even 28%... with an average holding period of 3-4 weeks.

To find out more about Private Wealth Advisory and how it can help you beat the market with your investments…

Click Here Now!

Best Regards

Graham Summers

 

 

Perhaps the single most misunderstood item in the financial world is the Chicago Board Of Options Volatility Index, or VIX.

The VIX is a measure of how much investors are willing to pay for portfolio “insurance.” If they’re willing to pay a lot (the VIX is high), then it’s assumed investors are nervous. If they don’t want to pay much (the VIX is low), then it’s assumed investors are calm and expecting blue skies ahead

Because of this, most investors, including the majority of professional investors, believe the VIX provides a reliable barometer of market risk.

This is not true. The reason is because investors are usually greedy when they should be fearful and vice versa. If the VIX is up, it’s not because the market is “risky” or at risk of falling… it’s because the market already FELL!

As anyone knows, the time to buy stocks is when they’re “low” as in “buy low, sell high.” But as I just explained, stocks are usually “low” when they’ve already fallen  (which would mean the VIX is already spiking). Put another way, the VIX doesn’t really measure risk per se… instead it shows you when investors are panicked… and that’s when you should consider buying

Take a look at the above chart. Everytime the VIX spiked (the blue line below), the market had already dropped and was in the process of bottoming.

Now let’s look at a longer-term chart. Once again, the VIX spiked after the market had already plunged. In fact, buying stocks around the time the VIX spiked was a GREAT way to trade the market going back for years. If you had done this, you would have profited handsomely.

If you want to make a killing in the markets, you need to be willing to see the world the way it really is, NOT how you THINK it is. Most investors think the VIX measures the market’s risk, but really, it’s almost the opposite: the VIX almost always picks market bottoms!

With my weekly premium investment newsletter Global Alpha Trader, I show investors how to play the market using this and other proprietary “risk reward” metrics I’ve developed in over 25 years on Wall Street.

During that time I’ve built up an arsenal of how to find “out of the way” investment ideas that will make you money while always minimizing your risk.

For instance, in the last month alone I’ve alerted subscribers to:

1)   An extraordinary energy asset play that corporate insiders are loading up on. If the market even begins to sniff the value here, we could easily see gains of 400%.

2)   A back-door play on China and India’s ongoing infrastructure boom that Wall Street TOTALLY misunderstands. We could easily see a double-digit winner here within six months.

3)   The single most important theme for the global economy in the year 2014. I call this “the Great Game” but for you it will result in GREAT profits. Indeed, I’ve got three investments based on this theme which could return as much as 800% in the next 24 months.

And much, much more.

An annual subscription to Global Alpha Trader costs $499.99.

Considering these are the same insights my institutional clients used to pay me six figures for when I worked on Wall Street, this is an absolute steal.

Each subscription to Global Alpha Trader comes with:

1)   52 weekly issues of Global Alpha Trader (featuring at least 20 actionable investment ideas per year)

2)   The 400% Energy Opportunity Wall Street Won’t Tell You About Special Report

3)   The Global Alpha Trader investment manual.

4)   Real time trade alerts telling you when to buy or sell an investment.

5)   EVERY Special Report I write between now and December 2014.

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You can even keep the investment reports if you decide Global Alpha Trader is not for you and cancel during the first two months for a full refund.

How’s that for a low risk proposition?

To take out an annual subscription to Global Alpha Trader…

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Best Regards

Tom Langdon

 

 

 

 

 

 

 

 

 

The markets are entering a blow off top.

For five years, by keeping interest rates near zero, the Fed has been hoping to push investors into the stock market. The hope here was that as stock prices rose, investors would feel wealthier (the “wealth effect”) and would be more inclined to start spending more, thereby jump-starting the economy.

This has not been the case.

From 2007-early 2013, individual investors fled stocks for the perceived safety (and more consistent returns) of bonds. During that time, investors have pulled over $405 billion out of stock based mutual funds.

The pace did not slow throughout this period either with investors pulling $90 billion out of stock based mutual funds in 2012: the largest withdrawal since 2008.

In contrast, over the same time period, investors put over $1.14 trillion into bond funds. They brought in $317 billion in 2012, the most since 20008.

Throughout this period, the market rose, largely due to institutional buying. Every time the market started to collapse, “someone” stepped in and propped it up. Consequently, institutional traders were not committed to a collapse, and gradually the market moved higher.

At this point the “mom and pop” crowd was, for the most part, not participating in the rally.

That all changed in early 2013. Suddenly the “crowd” began to get religion about the Fed’s monetary madness and piled into stocks. We’ve now reached truly manic proportions: thus far in 2013, investors have put $277 billion into stock mutual funds.

This is the single largest allocation of investor capital to stock based mutual funds since 2000: at the height of the Tech bubble. That year, investors put $324 billion into stocks. We might actually match that inflow this year as we still have two months left in 2013.

Indeed, investors are reaching a type of mania for stocks. They put $45.5 billion into stock based mutual funds in the first five weeks of October. If they maintain even half of that pace ($22.75 billion) for the remainder of the year, we’ll virtually tie the all-time record for stock fund inflows in a single year.

As a result of this, the market has entered a blow off top from a rising wedge pattern.  You can clearly see the mania beginning to hit in the middle of 2013.

So, we have investor sentiment showing record bullishness, investors are piling into stocks at a pace not seen since 1999-2000: at the height of the Tech Bubble, earnings are generally falling, the global economy is contracting, and the Fed is already buying $85 billion worth of assets per month.

We all know how this bubble will burst: badly. It’s just a question of when. The smart money is either selling into this rally (Fortress and Apollo Group) or sitting on cash (Buffett). They know what’s coming and are waiting.

If you are not preparing yourself for this, NOW is the time to do so.

With that in mind, I’ve already urged my Private Wealth Advisoryclients to start prepping. We’re about to open our crisis trades: the very same trades we used to see triple digit returns in 2008 when the market collapsed.

We’ve also taken care to prepare our finances and our loved ones for what’s coming, by following simple easy to follow steps concerning our savings, portfolios, and personal security via my Protect Your Family, Protect Your Savings & Protect Your Portfolio reports.

You can access all of these reports AND receive my crisis trades when they go out with a subscription to All for the the small price of $179: the annual cost of a Private Wealth Advisory subscription.

To take action to prepare for what’s coming… and start taking steps to insure that when this bubble bursts you don’t lose your shirt.

Click Here Now!

Yours in Profits,

Graham Summers

 

Best Regards

Phoenix Capital Research