Get-rich-quick investment advice is a fantasy. Get-rich-slow is a validated strategy for real wealth.
Today, it is more important than ever to keep the long-run perspective firmly in mind...
Lest you’ve forgotten, world financial markets are in a state of unparalleled disorder. More capital has been drained from markets, thanks to the irresponsibility of politicians and the acquiescence of naive citizens, than at any time in modern history. The damage done by bombers and tanks in world wars has been matched by the unintended consequences of central planning and bureaucracies.
Fortunately, however, the political and philosophical trend lines are all pointing to true long-term reform. The pendulum’s swing cannot be stopped, and the coming decades will be unmatched in terms of technological progress and wealth creation.
This is exactly the time to be investing in the future. Metaphorically, and sometimes actually, there is blood in the streets. You’ve probably heard that Baron Rothschild, the famously successful 18th-century British investor, said, “The time to buy is when there’s blood in the streets.” In fact, some believe the original quote was, “Buy when there’s blood in the street, even if the blood is your own.”
Remember, investors who bought and held a diversified portfolio of disruptive technologies before and during the Great Depression got rich. Those who lost confidence because they weren’t seeing the quarterly gains typical in bull markets missed their golden opportunity to “buy low.”
In my market comments last year I frequently referred to the KEY turn dates of May 2 and Oct 4...when the directional trends of a number of important markets changed. For instance, the S+P 500 and Crude Oil both made important highs on May 2 (and the US Dollar made an important low) while on Oct 4 the S+P 500 and Crude Oil both made important lows (and the US Dollar made an interim high.)
Last year, as markets approached the KEY HIGH turn date of May 2, 2011, bullish enthusiasm was very strong across asset classes....silver was charging to $50 an ounce and the VIX traded down to a 4 year low...the COT data indicated that speculators were very aggressive buyers. I was anticipating that the (bear market) rally from the March 2009 lows was reaching a crescendo...but I was waiting for a confirmation that a top had been made.
May 2, 2011 turned out to be a significant high in a number of markets and prices declined into late June. There was a "bounce back" rally into July (which took a few markets like AUD, CAD, Copper to marginal new highs) but then most asset prices (except for gold) fell sharply through the August/September period into the KEY Oct 4 lows. During that break the VIX rose sharply and by Oct 4 it hit 46%...three times what it had been at the May 2 highs...a great indicator of a bearish extreme. Since the Oct 4 lows in stocks and commodities the VIX has tumbled to 17% this Friday....its lowest level since July of last year....as rising asset prices have dampened the market's anxiety.
Over the past several weeks asset markets have "wanted" to go higher...a "risk on" environment....especially since the Euro joined the party and turned higher in mid-January.
U.S. stock markets just keep going higher and higher! How much higher will they go? I am forecasting another 25% higher for U.S. stocks! The ‘bullish trend’ from the breakout continues, as expected. Breadth has become strong, once again, including a new all-time high on the SPX Advance/Decline line to match the new all-time high for the SPX. My breath thrust index reissued another buy for the SPX on May 31st, 2017. Once the markets wake up and realize that there will be no U.S. tradewars, they will then begin their assent.
THE BIG PICTURE