I have just read this letter over and while I hope it helps to clear up some of the confusion a lot of investors and analysts are experiencing, it may also be the lamest promotion piece ever written.
I’m getting a ton of questions about the investment markets these days. In a nutshell, much of the confusion can be distilled down to the disconnect between the up move in the market and the major economic stories of the day.
On the wall of the New York Stock Exchange there is a plaque with the statement: “Now is always the most difficult time to invest.” To borrow from Bart Simpson – “Well Duh.”
- In February Italy needs to come up with 53 billion euros to finance maturing debt.
- France needs to come up with 36 billion euros.
- Greece is currently negotiating with its bondholders in order to get them to take a 65% to 70% loss on their holdings and not get repaid the remainder for another 30 years.
- $8 trillion in government debt must be refinanced in 2012
All of this creates uncertainty and is deflationary, but that’s not all.
- In the last six months Europe experienced zero growth with many analysts calling for recession in 2012.
- China’s economy is growing at its slowest rate in 2 ½ years while the Shanghai index is down 31% since April.
- The World Bank has slashed global growth estimates by 30%.
- US oil demand fell last year by 1.2% – the second largest drop in 10 years
Now contrast that to the action in the markets: The Canadian dollar has rallied back to a critical juncture above 99 cents, gold and silver have both rebounded after holding their September lows, which sets up a bullish double bottom formation. Copper has broken its downtrend line, palladium has also reversed and the TSX has broken its 100 day exponential downtrend line in place since last spring.
Is the market signalling that we are about to enter the next wave of the commodity boom? Is the major correction in the commodity sector behind us?
While the market is starting to hint that may be the case, the underlying macro economic problems in Europe are not even close to being solved which would reduce demand for commodities. Japan is in deep trouble because of its aging population and China’s economy is slowing, which would lower their demand for many commodities. And let’s not even get started with the US financial problems.
I can’t think of a good analyst I know that doesn’t think that the next couple of months are pivotal. Any bullish scenario could be derailed by banking problems in Europe and China or sovereign debt problems in Japan. Or propelled by massive central bank, IMF and government monetary intervention.
Over hanging the short to mid term is the fundamental problem of excess government debt and unfunded liabilities, which are exacerbated by the demographic shift and slow economic growth. The last half of 2011 was only the opening act in what I think will be a long running drama centered on the profound restructuring of the welfare state. In other words there are many more shoes to drop.
In the meantime we can experience many bull and bear markets as central banks intervene aggressively to stave off deflation. The US Federal Reserve’s quantitative easing (printing of money) starting in August, 2010 was directly correlated with the ensuing commodity boom that lasted until early May, 2011. There was a ton of money to be made riding that wave. Clearly the central bank action in Europe has for at least the short term staved off a panic liquidation and helped put a bottom to the fourth quarter decline in the markets.
So Where to Now?
Clearly we are in a high risk environment but just like the last couple of years, it is one that will yield many significant money making opportunities. On MoneyTalks we did very well riding the market highs into the first week in May and took significant money off the table in gold in the August run-up. While we also did very well buying the banks in mid November, for the most we stayed out of the market in the fall. Probably the easiest trade, which Jack Crooks and Victor Adair both outlined was to short the Euro and buy the US dollar against it. I’m interested to hear what they think now.
Personally, my key will be to consult with the best analysts I know to help determine the best opportunities to make money in the coming year, which brings me to the promotional part of this letter.
I am gathering together some of the top analysts in North America for the World Outlook Conference on February 10th and 11th and I think you should make plans to come. I appreciate for many it is not one of those things that tops the “to do” list but at some point every one of us will have to take a far more active role in our personal finances. That’s the unequivocal lesson of the last four years.
Personally I am really looking forward to the return of Martin Armstrong, THE most interesting analyst I have ever known. He will be joined by stock market timer and gold market timer of the year, Mark Leibovit and legendary analyst, Jim Dines will join us by satellite.
But that’s not all. Martin Murenbeeld, one of the top economists in the English speaking world and the analyst of choice for gold companies is coming to share his take on what coming next. With so much money to be made in the currency markets I have once again asked one of North America’s top traders, Black Swan Capital’s Jack Crooks to share his favourite trade for the coming year.
Personally I know that oil and gas is going to be an essential part of my portfolio going forward so I have asked Josef Schachter, Canada’s leading oil and gas analyst to share his latest research and picks. If real estate is your thing then you’ll enjoy Ozzie Jurock’s top buys in the US and Canada.
Last year the audience loved Don Vialoux so I have asked him back again. Don can dramatically improve your ability to buy and sell at the right time through his understanding of seasonality, cycles and other technical tools. Last year he told the audience that his favourite short term trade was wholesale gasoline and six weeks later it had gone up over 20%.
And of course Ryan Irvine of Keystocks Financial will be there with his 2012 World Outlook Small Cap portfolio. The portfolio’s consistent double digit returns since its introduction in 2009 has literally made back the price of a ticket back many times over.
Last year we introduced a series of personal finance workshops and other opportunities to get your personal questions answered. The workshops were a great success so we will be doing it again this year with emphasis building a bullet proof portfolio, reorganizing your mortgage to your best advantage, the top ETFs for 2012 and investing in private companies.
A Final Word
There are a ton of analysts out there – but some are definitely better than others. I want to get you access to professionals with proven track records. People who can help you not only survive but thrive over the next year. Our goal is to make a very positive difference in your financial life at this pivotal time in history and I have brought the people together to do it.
I am hugely interested in educating our younger generation and to that end we have a special offer for students. If you buy a ticket – you can bring a student for only $20 more.
CLICK HERE to get your tickets