Not since The Great Depression have there been such Formidable Challenges to those who wish to Profit and Protect their Wealth.
If it were not clear before 2008, the Fall, 2008 Markets Crash, Credit Freeze, and Financial Institutions Collapse and subsequent unprecedented Central Bank Interventions, and ongoing Economic Difficulties all make it clear, that we have entered into a New High Risk Era in the Economy and Markets.
And the “Mixed” (at best) Fundamentals, and Key Technicals (e.g., repeated recent Hindenberg Omens) confirm that.
Submitted by Deepcaster:
Several Time-honored Investment Strategies and Techniques have been largely Discredited and Serious New Risks, including The Threats of another Market Meltdown and Hyperinflation — i.e., Major Central Banks’ ongoing Competitive Monetary Inflation leading eventually to Price Inflation — abound. In fact, we already see Price Inflation in Food, Housing and Medical Care Costs.
Indeed, given the ongoing, intensifying Economic Deflation (as we write in January, 2015), it increasingly appears that we are headed into a Stagflationary World — a Stagnant or Contracting Economy with eventual and increasing Price Inflation.
This Transition requires discarding some strategies, modifying others and adopting some new ones. For example, the formerly widely accepted “Rule” of “Buy and Hold” for the long Term is in the process of being discredited.
As we write, the Major Equities Markets are Trading around their all-time Nominal highs — but also have caused typical “Buy and Hold” for-the-long-term Investors to Lose Purchasing Power in the past decade, at least 30% for those in certain Sectors, when adjusted for Real Price Inflation (Official Statistics are often Bogus, see Shadowstats Note 1 below).
The 2000-2002 Internet Bubble Burst, and the Housing/Equities Bubble Burst of 2008-2009 should have provided Sufficient Remedial “Education” to “Buy and Hold” Devotees…. And they are about to get “educated” again in the next few months. The essential corollary to these object lessons is that you do not have profits unless you take them.
But such Challenges Provide Great Opportunities for Profit, while at the same time Require Great Vigilance to Avoid Wealth Destruction. In view of the aforementioned, consider the following Strategies
1) “Beta — the Tendency of a security’s return to respond to swings in the Market” Investopedia.
One Important Strategy is first to consider “Beta” (before buying a Security based on its Alpha Potential) by Investing or Speculating to achieve Profit from Broad Market or Sector Trends, not only from Uptrends but also from Downtrends. Consider Beta above all, because even the strongest individual Securities and their underlying businesses are often vulnerable to Equities Market Crashes. The Evidence indicates that Beta-Followers perform better than mere Alpha-Seekers. Virtually all Securities have some degree of Beta and those who disregard it do so at their peril.
Even so, of course, one should also seek Alpha (Potential Appreciation or Depreciation of Individual Securities) in addition to Beta with specific Selections which we expect to Rise or Fall more than the Rise or Fall of any particular Sector. And this applies to Commodities investing as well.
2) As well, we have periodically recommended seeking Profits via Short Positions mainly via Exchange Traded Fund including leveraged ETFs. Why not Profit when Markets Fall as well as when they rise? There are several Good Reasons to do so. Several of Deepcaster’s Recommendations did quite well in the 2008-2009 Crash, (Note 2 below re Mega-Bank Cartel) when “Buy and Hold” Investors were losing their shirts.
It is essential to invest and speculate on the short side (usually using ETFs or Options) as well as on the long side. We forecast that 2015 will once again prove this “rule.”
3) Divide Assets among Four Categories:
- i) Fortress Assets — meant to be held for several months or a few years only, with, however, a very few exceptions (e.g., Gold, Productive Farmland). We reiterate: Those who do not take Profit do not Profit;
- ii) High Yield Assets (but the Total Return must exceed Real Inflation [See Note 1]);
iii) Speculation both on the long and short side; and
- iv) Liquid Assetsg., Cash in Non-Devaluing Currencies (e.g., Swiss Francs).
Thus the Key to Profit and Wealth Protection is to trade in and out of any or all of these at the right time. For example, for our Fortress Assets Value Portfolio, we tend to favor (but not exclusively) Investments at the right time in Real Assets (such as Agricultural products in relatively inelastic Demand) as opposed to Financial Assets (See our “Opportunities to Profitably Escape Paper “Wealth” into 2011” (10/07/10) in the ‘Articles by Deepcaster’ Cache) which can suffer greatly in Market Crashes. But Financial Assets can perform quite well in Bull Markets.
4) The Caveat “at the right time,” is crucially important. Because as the 2012-2015 Bearish Commodities Period has shown, Real Assets (e.g., Commodities) can and do go through Bearish as well as Bullish Cycles. (Yet another reason that Investors who Buy and Hold for Many Years or Decades, can and do get wiped out.)
Indeed, as we write, in January 2015, the Markets are undergoing yet another Major Trend Transition in which several heretofore Bullish Sectors are moving into a Bearish Mode, and a Few from Bearish into Bullish Mode. The Crucial Key is to do ongoing Sector by Sector analysis as we do when we identify these in our Sector Forecasts and make Buy Recommendations as in our January Letter and Alerts recently posted at Deepcaster.com.
This “Major Trend Transition” is due in large part to the fact that the Economy is moving into Stagflation — Stagnant or Contracting (e.g., Eurozone and Japan) Economies coupled with ongoing and increasing Monetary Inflation (via the Central Banks, e.g., the ECB and Japan) — which will increasingly begin to result in Key Sector Price Inflation, and already has in some Sectors.
Indeed, Major Central Banks Massive Intensifying Printing of Fiat Currency increasingly heightens the Risk of Hyperinflation as well as Economic Stagnation, because it is Capital-Destructive — as Central Banks print more and more, they devalue what was heretofore a Store of Wealth in a Currency. This is the Great Defect of Fiat Currencies. Thus, the World of Financial Assets is increasingly fraught with Danger for Investors, as the Market Crash of the Fall, 2008, and the intensifying Economic and Financial Crises around the World attest.
5) Interventions — Stay apprised of ongoing and intensifying Central Bank and Governmental Market Interventions and Manipulations. As many of our Articles (and increasing numbers of Investment Analysts) demonstrate, the Private For-Profit Fed is the lead Actor of a Cartel (Note 2) of Central Bankers and Agents and Allies is engaged in Manipulation of a Variety of Markets, and especially in ongoing suppression of Gold and Silver Prices, because heightened Investor Interest in these Precious Monetary Metals would tend to devalue and delegitimize the Central Bankers Treasury Securities and Fiat Currencies. (See Note 2.)
These Interventions Require that, to the extent possible, Investors and Speculators track The Interventionals, as well as the Fundamentals and Technicals as Deepcaster does. Attention to all these has facilitated Recent Profits Taken (Note 3). And Attention to all three has also enabled our Forecasts for 2015 laid out in our January 2015 Letter in ‘Latest Letters and Archives’ at Deepcaster.com.
In order to adequately track the Interventionals, it is essential to consult Independent Information Sources since much of the Mainstream Media either Spin, or Distort, or entirely Black-out Information Crucial to both Investors and Traders.
In sum, success in 2015 will require that Speculators and Investors be well and broadly educated and nimble, very nimble.
Note 1: Shadowstats.com calculates Key Statistics the way they were calculated in the 1980s and 1990s before Official Data Manipulation began in earnest. Consider
Bogus Official Numbers vs. Real Numbers (per Shadowstats.com)
Annual U.S. Consumer Price Inflation reported January 16, 2015
1.32% / 9.02%
U.S. Unemployment reported January 9, 2015
5.56% / 23.0%
U.S. GDP Annual Growth/Decline reported December 23, 2014
2.70% / -1.73%
U.S. M3 reported January 23, 2015 (Month of December, Y.O.Y.)
No Official Report / 5.03% (i.e., total M3 Now at $16.303 Trillion!)
Note 2: We encourage those who doubt the scope and power of Overt and Covert Interventions by a Fed-led Cartel of Key Central Bankers and Favored Financial Institutions to read Deepcaster’s July, 2014 Letter entitled “Profit, Protection, Despite Cartel Intervention” in the ‘Latest Letter’ Cache at www.deepcaster.com. Also consider the substantial evidence collected by the Gold AntiTrust Action Committee at www.gata.org, including testimony before the CFTC, for information on precious metals price manipulation, and manipulation in other Markets. Virtually all of the evidence for Intervention has been gleaned from publicly available records. Deepcaster’s profitable recommendations displayed at www.deepcaster.com have been facilitated by attention to these “Interventionals.” Attention to The Interventionals facilitated Deepcaster’s recommending five short positions prior to the Fall, 2008 Market Crash all of which were subsequently liquidated profitably.
Note 3: Our attention to Key Timing Signals and Interventionals and accurate statistics has facilitated Recommendations which have performed well lately. Consider our profits taken in recent months in our Speculative and Fortress Assets Portfolios*
- 45% Profit on a Double Currency Short ETF on January 22, 2015 after just 9 months (i.e., about 59% Annualized)
- 23% Profit on a leveraged ETN on the Volatility Index on January 6, 2015 after just 119 days (i.e., about 70% Annualized)
- 85% Profit on a REIT on December 31, 2014 after just three years (i.e., about 25% Annualized)
- 105% Profit on a leveraged ETN on the Volatility Index on October 15, 2014 after just 36 days (i.e., about 1090% Annualized)
- 70% Profit on Russell 2000 Small Cap Sector Put on October 10, 2014 after just 2 days (i.e., about 12,275% Annualized)
- 70% Profit on Russell 2000 Small Cap Sector Put on October 1, 2014 after just 8 days (i.e., about 3215% Annualized)
- 55% Profit on Double Short Euro Call on August 6, 2014 after just 106 days (i.e., about 200% Annualized)
- 65% Profit on Energy Storage & Management Company on July7 15, 2014 after just 342 days (i.e., about 70% Annualized)
- 95% Profit on Crude Oil Call on June 11, 2014 after just 73 days (i.e., about 470% Annualized)
*Past Profitable Performance is no assurance of future Profitable Performance.