2008 was a rough year, no doubt. But don't start to think that you can revert back to your old tactics to make money in 2009.
Folks, the 90's are over. Done. And don't start to think this year is going to be the year we revert back to the 90's.
What you ACTUALLY need to do is the exact opposite of what you did in the 90's. The 80's and 90's saw interest rates fall rapidly, but conditions from the awful 60's and 70's were beginning to improve. We had smart political discussions, making business easier. Now that we have the exact opposite scenario, your strategy needs to flip as well.
Look, no stock market in the world is going up right now. Right now the bond market (which people aren't used to and nobody knows anything about) is where all the money is being made right now. As interest rates go down, bond prices go up. The government is POURING money into the bond market right now, buying treasuries and more corporate bonds. As people start to feel safer in the economy, corporate bonds will appreciate in price, making you money.
The reality is that the stock market will probably continue to move sideways for several more years. That's not exactly heartening since we've been moving sideways for almost a decade now, but it's the truth.
We in the United States have a surplus in our 401k's, our savings, etc. The rest of the world is going to be developing and joining us in the middle class in the coming years. In order to do that they're going to need capital, which we have. THAT is the opportunity, right there. I'm sad to say that you won't be able to buy and hold mutual funds like you used to. You'll have to get in and get out where the assets are appreciating, so you need to get educated.
When everything goes up, everyone's a genius. But the difficult times like now separate the people who know what they're doing from the others, so you better get educated and be on the side that actually makes money.
If you're willing to let me teach you about the bond market and get you ready for these times, click here.
Showing posts with label economy. Show all posts
Showing posts with label economy. Show all posts
Friday, January 2, 2009
Friday, December 12, 2008
The New Global Environment
First things first.
I want you to get used to the idea that there really is no U.S. economy that means anything anymore. For that matter, get it through your head that there isn't a U.S. stock stock market or a U.S. currency either.
Whether you're feeling inspired or discouraged, right now, I can tell you with complete certainty, the world economy is going to be vital, and it's going to grow.
Billions of people are going to learn to live like Americans over the next 5 or ten years, and this is gonna be BIG BUSINESS! You don't want to limit your thinking to one country, even ours. You can take this to the bank: the vitality, the ambition, the courage, and the ingenuity of people around the world who want a good, educated, safe comfortable electronic life for their families will not be denied.
The growth is gonna be there, and the people around the world will pay a lot to use our capital. So from now on you can afford to be very, very choosy.
Starting right now, You don't have to invest in uncertain situations. You don't have to try to guess the bottom of anything. Money's already becoming VERY scarce, and you can pick and choose your investments.
I know this isn't the way most of us think. But this is the new world and you can afford to think like this. You can demand that everything be right before you commit.
There's no excuses anymore, you better take the responsibility to evaluate each deal carefully.
You can know the real story about every single thing you invest in, and everybody you loan money to. You can demand only good deals. It's a buyers market for investments now, and it's going to be that way maybe for the rest of your life.
That's why I want to help give you a whole new set of skills.
I want you to get used to the idea that there really is no U.S. economy that means anything anymore. For that matter, get it through your head that there isn't a U.S. stock stock market or a U.S. currency either.
Whether you're feeling inspired or discouraged, right now, I can tell you with complete certainty, the world economy is going to be vital, and it's going to grow.
Billions of people are going to learn to live like Americans over the next 5 or ten years, and this is gonna be BIG BUSINESS! You don't want to limit your thinking to one country, even ours. You can take this to the bank: the vitality, the ambition, the courage, and the ingenuity of people around the world who want a good, educated, safe comfortable electronic life for their families will not be denied.
The growth is gonna be there, and the people around the world will pay a lot to use our capital. So from now on you can afford to be very, very choosy.
Starting right now, You don't have to invest in uncertain situations. You don't have to try to guess the bottom of anything. Money's already becoming VERY scarce, and you can pick and choose your investments.
I know this isn't the way most of us think. But this is the new world and you can afford to think like this. You can demand that everything be right before you commit.
There's no excuses anymore, you better take the responsibility to evaluate each deal carefully.
You can know the real story about every single thing you invest in, and everybody you loan money to. You can demand only good deals. It's a buyers market for investments now, and it's going to be that way maybe for the rest of your life.
That's why I want to help give you a whole new set of skills.
Wednesday, December 3, 2008
An Unbelievable Fed
Did you know that the down volume on the NYSE on Monday, after accounting for foreign stocks and REITs and closed end bond funds, was 98.6%? That's one of the most lopsided days that history has ever seen. So do you still think selling pressure is used up?
Investors have no reason to buy stocks, and every time the government acts isn't giving them new hope, it's giving them another reason NOT to buy stocks.
The Paulson effect I told you all about a while back (and is now being used all over TV and all over the place) is still working and hasn't failed once. As soon as that man gets on TV the market holds for the first 5 minutes. But then he keeps going and you can watch as the market starts dropping. It's the only reliable options trade on the CME right now.
Now the government is guaranteeing mortgage bonds but you're not seeing any action on that front. Why do you think that is? It's because for the past 7 weeks foreign central banks have been selling agency securities, bringing the Fed's holdings down $93 billion. Now, the Fed has announced they're going to buy $100 billion of the agency securities (I learned that from Art’s article). I've already started buying agency securities in expectation of the move.
So the Fed is literally printing $550 billion to finance the buying of mortgage bonds. Mortgage bond rates are going to continue to go down because nobody wants to buy the houses right now. By buying the bonds now people know that in the future they're going to have to raise taxes later to pay for it. In this situation the herd is knowledgeable enough to know they're going to have to pay for this eventually. It's the biggest lack of confidence in our leadership that we've seen.
The Fed's also began the process of printing $540 billion to special purchase vehicles to buy money market assets from mutual funds. They think that doing this will improve money market investors' liquidity positions and make them willing to buy commercial paper. And don't think they're done yet. They’re going to do T bill redemptions. They're planning on expanding their balance sheet without borrowing money from the treasury.
How do they do that?
They print money and the monetary base goes up.
The only reaction Art and I have is shock.
Investors have no reason to buy stocks, and every time the government acts isn't giving them new hope, it's giving them another reason NOT to buy stocks.
The Paulson effect I told you all about a while back (and is now being used all over TV and all over the place) is still working and hasn't failed once. As soon as that man gets on TV the market holds for the first 5 minutes. But then he keeps going and you can watch as the market starts dropping. It's the only reliable options trade on the CME right now.
Now the government is guaranteeing mortgage bonds but you're not seeing any action on that front. Why do you think that is? It's because for the past 7 weeks foreign central banks have been selling agency securities, bringing the Fed's holdings down $93 billion. Now, the Fed has announced they're going to buy $100 billion of the agency securities (I learned that from Art’s article). I've already started buying agency securities in expectation of the move.
So the Fed is literally printing $550 billion to finance the buying of mortgage bonds. Mortgage bond rates are going to continue to go down because nobody wants to buy the houses right now. By buying the bonds now people know that in the future they're going to have to raise taxes later to pay for it. In this situation the herd is knowledgeable enough to know they're going to have to pay for this eventually. It's the biggest lack of confidence in our leadership that we've seen.
The Fed's also began the process of printing $540 billion to special purchase vehicles to buy money market assets from mutual funds. They think that doing this will improve money market investors' liquidity positions and make them willing to buy commercial paper. And don't think they're done yet. They’re going to do T bill redemptions. They're planning on expanding their balance sheet without borrowing money from the treasury.
How do they do that?
They print money and the monetary base goes up.
The only reaction Art and I have is shock.
Wednesday, November 26, 2008
It's a Lot Easier to Play the Short Side
I keep getting asked if the market's turning around right now. Yes we've bounced a bit over the recent week, but don't think we're out of the woods yet.
Remember, there are such things as bear market rallies and I believe we're staring straight in the face of one right now. It's a whole lot easier to play the short side right now. Every time the market's going up the volume decreases, which makes betting on the market going down is a lot easier.
So how do you make money on the short side without taking on unnecessary risk? It's a lot easier now with the ETFs they have out there to eliminate the unlimited risk.
I guess if I HAD to make an argument for equities right now it would be that you can sell happiness and buy fear right now. But you have to be nimble, VERY nimble. Investors are getting happy very quickly right now, even though we're only getting relief rallies. I know this because all that's driving the market right now is stories of global growth, which isn't what you'd be seeing if serious investors were getting in the market. So all we're seeing is people covering profitable short positions, which definitely does not mean we're in a new bull market.
Remember, there are such things as bear market rallies and I believe we're staring straight in the face of one right now. It's a whole lot easier to play the short side right now. Every time the market's going up the volume decreases, which makes betting on the market going down is a lot easier.
So how do you make money on the short side without taking on unnecessary risk? It's a lot easier now with the ETFs they have out there to eliminate the unlimited risk.
I guess if I HAD to make an argument for equities right now it would be that you can sell happiness and buy fear right now. But you have to be nimble, VERY nimble. Investors are getting happy very quickly right now, even though we're only getting relief rallies. I know this because all that's driving the market right now is stories of global growth, which isn't what you'd be seeing if serious investors were getting in the market. So all we're seeing is people covering profitable short positions, which definitely does not mean we're in a new bull market.
Monday, November 24, 2008
Private Mentoring
I’ve got another really interesting thought for you about how we believe in investing and the truth if you just look at results. I warn you, this isn’t going to sound right to you. That’s because it is right.
Let’s take the global stock market for now. Not your country, but the whole world.
The world economy is going to be vital and it's going to grow. You don’t want to just think in terms of one country, even ours, just because economic, business, and tax policy affects how successful you’re going to be in that one country. Believe me, the vitality, the ambition, the courage, and the ingenuity of people around the world who want a good, educated, safe comfortable electronic life for their families will not be denied.
The growth will be there, and they will need our capital. So from now on you can afford to be very, very choosy. You don’t have to invest in uncertain situations. Money will be scarce, and you can pick and choose.
I know this isn’t the way most of us think. But this is the new world. You can afford to think like this. You can demand that everything be right before you commit, and you better take the responsibility to evaluate each deal carefully.
You can know the real story about every company you invest in, and everybody you loan money to. You can demand only good deals. It is a buyers market for investments now, and it’s going to be forever.
Let’s take the global stock market for now. Not your country, but the whole world.
The world economy is going to be vital and it's going to grow. You don’t want to just think in terms of one country, even ours, just because economic, business, and tax policy affects how successful you’re going to be in that one country. Believe me, the vitality, the ambition, the courage, and the ingenuity of people around the world who want a good, educated, safe comfortable electronic life for their families will not be denied.
The growth will be there, and they will need our capital. So from now on you can afford to be very, very choosy. You don’t have to invest in uncertain situations. Money will be scarce, and you can pick and choose.
I know this isn’t the way most of us think. But this is the new world. You can afford to think like this. You can demand that everything be right before you commit, and you better take the responsibility to evaluate each deal carefully.
You can know the real story about every company you invest in, and everybody you loan money to. You can demand only good deals. It is a buyers market for investments now, and it’s going to be forever.
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