Home » Posts tagged 'investing' (Page 3)

Tag Archives: investing

Olduvai
Click on image to purchase

Olduvai III: Catacylsm
Click on image to purchase

Post categories

Post Archives by Category

The Cardinal Sin Of Investing: Permanent Impairment Of Capital

Victor Moussa/Shutterstock

The Cardinal Sin Of Investing: Permanent Impairment Of Capital

How to avoid making it
Last week we presented a parade of indicators published by Grant Williams and Lance Roberts that warned of an approaching market correction as well as a coming economic recession.

The key message was: When smart analysts independently find the same patterns in the data, it’s time to take notice.

Well, many of you did, by participating in this week’s Dangerous Markets webinar, which featured Grant and Lance.

In it, both went much deeper into the structural fragility of today’s financial markets and the many reasons why economic growth will remain constrained for years to come.

The excessive build-up of debt in the system — and the absolute dependence on its continued expansion to keep the economy from imploding — is, of course, seen as the prime risk to future growth.

As Lance demonstrates here with several of his excellent charts, so much leverage has been taken on that its servicing is increasingly stealing capital that would otherwise go to savings, consumption and productive investment. Going forward, the demands of the debt service will simply result in less and less capital available left over to grow the economy:

As financial assets are (supposed to be) valued on future growth prospects, lower forecasted growth demands lower valuations. Grant calculates that, should the US see another decade of 2% average annual GDP growth (and it has averaged less than that over the past decade), stock prices should be roughly half of what they are today to be considered fairly valued:

And Lance builds further on this, explaining how this moribund growth, coupled with America’s aging demographic trend, will simply savage the nation’s (already troublesomely underfunded) pension and entitlement systems:

…click on the above link to read the rest of the article…

The Price Of Gold Spikes As Investors Get Spooked By Talk Of World War III And Nuclear Conflict

The Price Of Gold Spikes As Investors Get Spooked By Talk Of World War III And Nuclear Conflict

Whenever the world starts going crazy, investors instinctively begin flocking to precious metals.  So it wasn’t exactly a surprise when gold and silver prices started to move upward aggressively as global leaders continued to talk about the possibility of World War III and nuclear conflict.  The price of gold spiked to a five month high on Tuesday, and as I write this article gold is currently sitting at $1277.10 an ounce.  Right now silver is at $18.35 an ounce, and many analysts believe that it is poised for a dramatic jump in the weeks and months to come as global tensions continue to rise.  Google searches for the phrase “going to war” are the highest that they have been at any point in recent years, and many people out there are starting to understand that the U.S. could soon be facing military conflicts in Syria and in North Korea simultaneously.

In response to persistent threats from the Trump administration, the North Koreans are promising that they will not hesitate to use nuclear weapons if they are attacked by the U.S. military.

In particular, an article that was just published in North Korea’s official state newspaper says that U.S bases in South Korea and the Pacific operation theater but also in the U.S. mainland would be targeted.

Most analysts do not believe that North Korea has any missiles that can reach the U.S. mainland, so that is probably an empty threat, but they can definitely hit Seoul, Tokyo and all U.S. military bases in South Korea and Japan.

And even if the U.S. was able to locate and take out all North Korean nukes in an overwhelming first strike, the North Koreans would still have thousands of artillery guns and rockets aimed at Seoul.

…click on the above link to read the rest of the article…

The Price Of Silver Explodes Past 20 Dollars An Ounce As The European Banking Crisis Deepens

The Price Of Silver Explodes Past 20 Dollars An Ounce As The European Banking Crisis Deepens

Silver Coins 2 - Public DomainHave you seen what the price of silver has been doing?  On Monday, it exploded past 20 dollars an ounce, and as I write this article it is sitting at $20.48.  Earlier today it actually surged above 21 dollars an ounce for a short time before moving back just a bit.  In late March, I told my readers that silver was “ridiculously undervalued” when it was sitting at $15.81 an ounce, and that call has turned out to be quite prescient.  The Friday before last, silver started the day at $17.25 an ounce, and it is up more than 18 percent since that time.  Overall, silver is up more than 30 percent for the year, and that makes it one of the best performing investments of 2016.  So what is causing this sudden surge in the price of silver?  This is something that we will discuss below…

This sudden spike in the price of silver has definitely caught a lot of analysts off guard.  Some are suggesting that the fact that the Fed is now less likely to raise rates after the Brexit and the fact that the dollar has been slipping a bit lately are the primary reasons for silver’s rise

This isn’t a gradual increase either. It’s an explosive growth spurt. Just three months ago silver had reached an 11 month high. Now silver prices have reached a 23 month high. Several factors appear to be influencing these gains, including a weakening dollar, and the fact that the Fed may cut interest rates in light of the Brexit vote.

Personally, I don’t buy those explanations.

To me, the continuing implosion of major banks over in Europe is the main factor that is driving investors to safe haven assets such as silver.

 

 

…click on the above link to read the rest of the article…

The Stock Market Crash Of 2016: Stocks Have Already Crashed In 6 Of The World’s 8 Largest Economies

The Stock Market Crash Of 2016: Stocks Have Already Crashed In 6 Of The World’s 8 Largest Economies

Network Earth Continents - Public DomainOver the past 12 months, stock market investors around the planet have lost trillions of dollars.  Since this time last June, stocks have crashed in 6 of the world’s 8 largest economies, and stocks in the other two are down as well.  The charts that you are about to see are absolutely stunning, and they are clear evidence that a new global financial crisis has already begun.  Of course it is true that we are still in the early chapters of this new crisis and that there is much, much more damage to be done, but let us not minimize the carnage that we have already witnessed.

In general, there have been three major waves of financial panic over the past 12 months.  Late last August we saw the biggest financial shaking since the financial crisis of 2008, then in January and February there was an even bigger shaking, and now a third “wave” has begun in June.  Not all areas around the globe have been affected equally by each wave, but without a doubt this new financial crisis is a global phenomenon.

The charts that I am about to show you come from Trading Economics.  It is an absolutely indispensable website that is packed full of useful data, and I encourage everyone to check it out.

Let’s talk about China first.  The Chinese economy is the second largest on the entire planet, and since this time last year Chinese stocks are down an astounding 40 percent

Chinese Stocks

As things have started to unravel in China, the Chinese have been selling off U.S. debt and U.S. stocks like crazy.  The following comes from Bloomberg

…click on the above link to read the rest of the article…

Why Investing In Silver Is Vastly Superior To Investing In Gold Right Now

Why Investing In Silver Is Vastly Superior To Investing In Gold Right Now

Silver Coins - Public DomainWhen panic and fear dominate financial markets, gold and silver both tend to rapidly rise in price.  We witnessed this during the last financial crisis, and it is starting to happen again.  Because I am the publisher of a website called The Economic Collapse Blog, I am often asked about gold and silver when I do interviews.  In fact, just a few days ago I was sitting right next to Jim Rickards during the taping of a television show when this topic came up.  Jim expressed his belief that investing in gold is superior to investing in silver, but I had the exact opposite viewpoint.  In this article, I would like to elaborate on why I believe that silver represents a historic investment opportunity right now.

I should start out by disclosing that my wife and I have been able to put away a little bit of silver over the years.  I wish that it could have been a lot more, but so often there are other priorities that need to be addressed.  For example, I have always said that people need to take care of their emergency food storage first before even thinking about any kind of investments.

But if you have money left over after taking care of the basics, I am fully convinced that silver is a wonderful investment for the mid to long term.  In this article, I am going to explain why this is the case.  However, I have always warned that you have got to be ready for a rollercoaster ride if you get into precious metals.  So if you can’t handle the ups and downs, you should probably avoid them altogether.

As I write this article, the price of gold is sitting at $1254.30 an ounce.

…click on the above link to read the rest of the article…

New Harbor: A Time For Staying Out Of Harms Way

New Harbor: A Time For Staying Out Of Harms Way

Preserving your financial capital

Given the brutal start to the markets in the first three weeks of 2016, we thought it a good time to check in with the team at New Harbor Financial. We have had them on our podcast periodically over the past years as the market churned to ever new highs, and have always appreciated their skepticism of these liquidity-driven “”markets”” as well as their unwavering commitment to risk management should the party in stocks end suddenly.

So, how is their risk-managed approach faring now that the S&P 500 has suddenly dropped 8% since Christmas? Quite well. Their general portfolio is flat for the year so far — evidence that caution, prudence and hedging can indeed preserve capital during market downdrafts.

We’ve invited the New Harbor team back on this week to hear their latest assessment on the markets, as well as how they’re approaching their portfolio positioning moving forward:

We spend a lot of time talking about position sizing. Right now we have very little in the stock market. We never cheer for a crash in the sense that we know a lot of people would likely get harmed in such a scenario, but we also spend our time assessing reality and probability. The likelihood of probability for a crash certainly has never been non-zero, but it has developed a greater likelihood than it had even just a few weeks ago. There has been a notable sentiment change.

I’d like to point out: we’re not even a month into the year and we have already clawed back over two years’ worth of gains in the stock market. Even if you look at the S&P 500, which has been the most lofty because of its capitalization-weighted nature, where we are at right now takes us all the way back near the end of 2013.

…click on the above link to read the rest of the article…

The Margin Debt Time-Bomb

The Margin Debt Time-Bomb

A terrible threat created by terrible decision-making

What is perhaps the greatest risk to individual investors these days?

Is it the potential for a decline in corporate earnings based on a slowing global economy?  Is it that current valuation levels in both equities and fixed income instruments are much nearer historic highs than not? Is the biggest risk a US Fed that will soon raise interest rates for the first time in close to a decade?

Although all of these are specific investment risks we face in the current cycle, my contention is that the single largest risk to investors is a risk that has been present since the beginning of what we have come to know as modern financial markets.  The single largest risk to investors is themselves.  By that, I mean the influence of human emotion and psychology in decision making.

We Are Our Own Worst Enemies

After many years of managing through market cycles, it seems pretty clear to me that humans are uniquely wired incorrectly for long-term investment success.  When asset prices double, we want those assets twice as bad. When asset prices drop in half, we want nothing to do with them. Isn’t this exactly what we saw in US residential real estate markets a decade ago?  Isn’t this what we experienced with the rise in dot-com stocks in 1999 and their demise over the three following years?  Human decision making shapes the rhythmic bull and bear market character of asset prices. We know the two most prominent emotions that drive markets higher and lower are those of fear and greed.

 

If we turn the clock back far enough in early human history, we know that humans ran in packs.  Strength and protection was found in a pack or herd.  It was when humans ventured away from the protection of the herd (consensus thinking) that they were physically vulnerable.  The fight or flight mechanism has been an integral part of human development over time.

…click on the above link to read the rest of the article…

Low interest rates prompt savers to borrow to invest

Low interest rates prompt savers to borrow to invest

Kevin Stone plans to borrow $20K this year to invest in various stocks

Kevin Stone is 28 years old and already has over half a million dollars of debt, including a mortgage and a loan to purchase farmland. But he’s not concerned, because that apparent burden is actually helping fuel his roughly $400,000 net worth.

He’s one of a number of Canadians taking a gamble and borrowing money at historically low rates not to fuel an excessive lifestyle, but to invest in the stock market. It’s a strategy one financial planner warns isn’t for everyone, and even seasoned investors can see things go wrong.

The Bank of Canada recently lowered its benchmark lending rate by 25 basis points for the second time this year. Canada’s major banks partially followed suit and lowered their prime lending rates to 2.7 per cent.

These changes caused the rates for already low variable-rate mortgages, as well as home equity and personal lines of credit, to fall.

The low rates prompted Harry, an Albertan in his 40s who requested his last name not be used for privacy reasons, to look at his $100,000 home equity line of credit, or HELOC, a different way.

He plans to use that money over the next several years to maximize his unused RRSP contribution room. He’s withdrawn funds from his HELOCbefore to pay for a few vacations, but this will be his first time borrowing the money for investments.

Harry plans to use his annual tax returns as large, lump-sum payments against the loan, while paying down the remaining balance at a low 2.2 per cent interest rate.

“I think the bigger risk is not using other people’s money to invest,” says Stone, who blogs about his money maneuvers at Freedom Thirty Five, where he doesn’t shy away from aiming to join Canada’s one per cent. “By taking on these debts today, I can have a longer time to build up my assets.”

 

…click on the above link to read the rest of the article…

Why the Fossil Fuel Divestment Movement May Ultimately Win

Why the Fossil Fuel Divestment Movement May Ultimately Win

The fossil fuel divestment campaign has so far persuaded only a handful of universities and investment funds to change their policies. But if the movement can help shift public opinion about climate change, its organizers say, it will have achieved its primary goal.

Nestled in Vermont’s bucolic Champlain valley, Middlebury College is a seedbed of environmental activism. Middlebury students started 350.org, the environmental organization that is fighting climate change and coordinating the global campaign for fossil-fuel divestment. Bill McKibben, the writer and environmentalist who is spearheading the campaign, has taught there since 2001. Yet Middlebury has declined to sell the oil, gas, and coal company holdings in its $1 billion endowment.

McKibben’s alma mater, Harvard University — which has a $36 billion endowment, the largest of any university — also has decided not to divest its holdings in fossil fuel companies. Indeed, virtually all of the United States’ wealthiest universities, foundations, and public pension funds have resisted pressures to sell their stakes in fossil fuel companies. And while a handful of big institutional investors — Norway’s sovereign wealth fund, Stanford University, and AXA, a French insurance company — have pledged to sell some of their coal investments, coal companies account for less than 1 percent of the value of publicly traded stocks and an even smaller sliver of endowments. 

UC Regents meeting divestment rally

Mauricio D. Castillo via 350.org
University of California students rallied for divestment at the UC Board of Regents meeting.

Put simply, the divestment movement is not even a blip on the world’s capital markets.

Yet McKibben says the campaign is succeeding “beyond our wildest possible dreams.” By email, he tells Yale Environment 360:

…click on the above link to read the rest of the article…

 

 

The China Syndrome

The China Syndrome

Getting Ugly

I am sure that you have all been watching the meltdown in the Chinese stock markets.  I posted a blog (in the China Ad Nauseam section) on May 6 about the Chinese stock market, finishing up with the statement that “this is going to get really ugly.”  It looks like the ugliness is here.

I claim no particular prescience here and I certainly wouldn’t want anyone to mistake my writings for investment advice.  With this one, the only question was when it would blow, not if.  My own investment abilities are largely encapsulated in the famous saying that “the graveyards of Wall Street are filled with the bodies of men who were right too soon.”  But this is still better than being right too late.

600x600

I won’t bother to repeat all the statistics about the meltdown, which are readily available elsewhere.  I just want to make two points.

SSECIn the meantime, the Shanghai Composite has bounced a bit, but only after China’s authorities had thrown everything and then some at the situation, including bans on short selling an banning large domestic institutional investors from selling at all, via StockCharts, click to enlarge.

No “Yellen Put”

The first is the implication of what is happening in China for asset prices around the world.  The Chinese government is doing everything possible to prop up the market at this point: cutting interest rates, reducing reserve requirements, providing central bank liquidity to brokers, directing government entities to buy shares, organizing “private sector” (as if that phrase means anything in China) stabilization funds, restricting IPOs, loosening margin requirements, restricting short selling, and suspending share trading.

…click on the above link to read the rest of the article…

 

 

 

Jim Rogers: Turmoil Is Coming

Jim Rogers: Turmoil Is Coming

Predictions on the markets, gold, Greece & more

Two years since his last interview with us, investor Jim Rogers returns and notes that the risks he warned of last time have only gotten worse. In this week’s podcast, Jim shares his rational for predicting:

  • increased wealth confiscation by the central planners
  • a pending major financial market collapse
  • gold’s return as the preferred safe haven investment
  • more oil price weakness, followed by a trend reversal
  • Russia’s rebound
  • a China bubble reckoning
  • agriculture’s long-term value

I suspect in the next year or two we will see some kind of major, major problems in the world financial markets.

I would suspect when we have this correction, it’s going to cause central banks to panic. There’s going to come a time when there is not much the central banks can do when they have lost all credibility. When governments have lost all credibility. They will print and spend and borrow, but there comes a time when people are just going to say We don’t want to play this game anymore. And at that point, the world has serious, serious problems because there’s nothing to rescue us.

I suspect the next economic/financial collapse will be the one they can’t deal with. But, if somehow they are miracle workers, be very, very careful. I would be worried about 2022 – 2023 then. The game will definitely be up if it’s not up this time around.

…click on the above link to read the rest of the article…

 

 

Indeed This Time Is Different: Because It’s Far Worse

Indeed This Time Is Different: Because It’s Far Worse

Suddenly the narrative that “everything is awesome” is showing to not be as “awesome” as it was first proclaimed. Merely a few months have passed since the ending of QE and praises of awesomeness everywhere are morphing into questions more akin to “Oh no: not again!” And with that we are now watching those who pushed, pulled, and levitated that narrative scramble desperately to push another narrative back onto the stage that worked so many times before: “Every sell off over the last 6 years has shown to be a profitable buying opportunity.” i.e., Just buy the dip (JBTFD). Yet it would seem these dips; are far different.

Just for context, over the past week, if you were one of the few remaining “home-gamers” still watching CNBC™, you would have been delighted to see once again their host Jim Cramer go through great pains to explain why he discounts the idea that we’re in a bubble to once again like ringing a bell (he uses buzzers and gongs I believe) the indexes sell off in dramatic fashion bringing back memories of Bear Sterns. As of today any gains for the year have been quelled. But not too worry, for he also contends you should have “dry powder” at the ready. i.e., Be ready to “JBTFD.”

My thoughts? “Investing” isn’t going to be so easy this time. Why? Let me be so bold to use the same meme touted by the likes of those who sold it: Because, it truly is – different this time. Without QE, not only is there no one buying. What’s far, far, far, (did I say far?) worse is: There’s no one to sell too!

 

…click on the above link to read the rest of the article…

Olduvai IV: Courage
Click on image to read excerpts

Olduvai II: Exodus
Click on image to purchase

Click on image to purchase @ FriesenPress