Don't Miss Out on Your Pot of Gold!

Uncategorized Jul 08, 2019

The markets have done something that I have never! It’s possible that it’s happened before, but I don’t recall a time in the 35 years I’ve studied the markets that I have seen it happen.

This week, everything went up! Stocks, bonds, oil and gold! What? It makes no sense, but then again very little has made sense in the past year. Over the last couple weeks I’ve written about the reverse correlation between stocks and bonds. Stocks are risky assets, and when investors don’t perceive risks in the economy they buy stocks and sell bonds. When risk in the market exists, investors will move out of risky assets like gold and into the safety of government bonds. Makes sense right? Well, for the last couple weeks, both stocks and bonds are rallying side by side.

Ok, now let’s introduce oil to the equation. Historically when oil rises, investors fear inflation and jump out of bonds. Inflation is the arch enemy of bonds for this reason. This...

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All Eyes Are on the FED

Uncategorized Jul 01, 2019

Who cares about a Trade War, Cold War or an Iranian War ?

It seems nobody will care as the markets attention is pulled toward Fed Chairman Jerome Powell. I personally, do not fully understand how the market expectations climbed so high in such a short amount of time. Yes, I have repeatedly said that the FED would regret the last two rate increases in 2018, and I even wagered that he would have to walk back the December increase. Just a couple of weeks ago the market was forecasting just one rate decrease, and that it would not happen until early 2020. It seems within days of the market deciding the FED will decrease in December of 2019 that the expectation moved to THREE rate reductions, and all of them coming this year. The first of which is anticipated to happen next month. This puts incredible pressure on Powell and his team because if he shows signs of not moving toward market expectations during this weeks rate decision speech, the market will crumble and likely force the FED...

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Why Do Bonds Go Up, When Stocks Go Down?

Uncategorized Jun 24, 2019

Investors view the world as either "Risk on" or Risk off."  When things look rosy in the economy, it's risk on and they jump into the stock market with both feet in search of higher returns. When things get scary and the economy shows signs of slowing, it's risk off and investors jump out of stocks and into the safety of government bonds. These bonds provide the worlds safest yields backed by the full faith and credit of Uncle Sam. The more Investors jump into bonds the higher the bond prices go which in turn drives down the yield of these bonds. This is why when the economy is at its worst, bond yields are historically at their lowest. So, why would Fed Chairman Powell talk about easing rates? Simple, because he fears bad things are coming for the economy! So, why are stock market investors happy and why are they jumping back into the stock market? Simple, because they are historically stupid and love to jump on the band wagon just as the wheels fall off, the music stops, and...

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A Breakdown of Trade Exporting

Uncategorized Jun 17, 2019

What Country is the Largest Exporter of Goods?

If you said China by looking at this chart, then you are actually more wrong than right.  Here's why...

Before I begin this article, there are two things you should know about me. First, I view most things in relative terms, and second, I view most things as gray. I believe my ability to see things as gray keeps me open minded on most topics. Some of you have wrongfully assumed that my recent writings are in support of China with regard to the trade issue. This could not be farther from the truth. I am simply opposed to trade barriers of any kind, and believe each country should do and provide what they do best. If Country A has cows but no crops and country B has crops but no cows, should we not freely trade what our respective countries need most? What happens when Country B (that has crops but no Cows) loves to eat steak, and has the largest meat eating population in the World?

The Butcher, the Baker and the Candlestick Maker

...

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The Trump "PUT"

Uncategorized Jun 10, 2019

A couple weeks ago I wrote about the TRUMP PUT and the impact it's having on the markets, but in case you don't subscribe to my newsletter, here is a brief explanation.

In options trading, a PUT gives an option buyer the ability to require that the option seller purchase their shares if the market drops below the agreed upon price (the strike price).  If the market drops below the strike price, the option seller must buy the shares from the option holder.

The Trump PUT is a new term on Wall Street and it refers to the belief that Trump will tweet his way out of a stock sell off.  I have NEVER seen a president so obsessed with market conditions.  A single tweet from Trump, and a comment by our Treasury, Secretary Mnuchin, reversed three market sell offs last week.

What happens when the market no longer buys into "The Trump Tweet"? The markets have a natural flow, and like water it will always seek its own level.  Sure, you can stop water for awhile and you can...

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Current Status of the Stock Market

Uncategorized Jun 03, 2019

I have been trading, investing and studying the financial markets since college, and I have never been so confused and baffled by the markets behavior.  In reading, listening, and talking with others (some more seasoned than I am, which is hard to imagine given my 40 year history), these folks are feeling much the same way. The market is ignoring the Iranian closure of the Hormuz straight, North Korea's missile firing, the confiscation of a North Korean ship that was violating a trade embargo, the talk of a Presidential impeachment, and of course the trade wars. In the past, any one of these things would have sent the markets into turmoil.

So, it's crucial to be prepared for anything. I recently opened a fortune cookie and the fortune read, "Hope for the best and prepare for the worst." Good advice. My goal is to help you along this path. Oddly enough, using moving averages, the markets are putting out a buy signal but I am not sure I trust it.

See the below chart:

Can you...

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Real Estate - What is Likely to Happen?

Uncategorized May 27, 2019
Real Estate is an interesting topic when discussing long economic downturns.  We all know what happened during the economic meltdown of 2008.  Real Estate tumbled and millions of people lost their homes. Logically, one would surmise that Real Estate prices will fall, if income drops and the economy slows.
Some Real Estate markets will fare far better than others depending on the following; the extent of the price increases prior to an economic slowing, the location (are people having to commute far), and the price range will all factor into how well the prices hold.  Last week I wrote that in previous housing price declines, rents held their own or increased. This time around, it's hard to imagine prices falling to the extent that they did in 2008.  Why?  Because this time around lenders are smarter and they are qualifying their borrowers.  Last time, people bought homes they could not afford and the moment the price fell below the mortgage amount,...
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Is it Time to Get High on Pot Stocks?

Uncategorized May 20, 2019

Let’s start with two facts; first of all, I grew up in the 70’s and second, I grew up in Northern California  Based on those things alone, I'd guess that I have been around pot more than many other people.  Additionally, I’ve studied the benefits of CBD for a long period of time, and have been fascinated by the recent discoveries.  The purpose of this article is not to sell you on whether you should support Marijuana because whether you are for it or against it, you must be living in a cave if you are not aware of the tremendously growing support that the Cannabis industry is garnering around the world.  Even if I wanted to see you on it, I don’t have to because as you can see from the chart below, that is happening without my help at an incredible pace!  

This support makes sense when you trade the billions upon billions of dollars spent fighting it for the $3 billion+ in tax collection by allowing it.  If you...

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