- Bears, bears and bears, oh, my!
- The “income index” spikes
- In search of natural resource 100-baggers
- 2015 as a rerun of 2014… jury duty and civilizational decline… the “ultimate retirement loophole” about to close… and more!
Cue the magazine-cover indicator…
It’s become received wisdom that when a mainstream magazine is bearish on an asset class — stocks, housing, gold, you name it — it’s your cue to buy that asset class with both hands. Conversely, if the magazine is bullish, it’s your cue to get out.
“I know a bear on the cover is bullish, but what about 37 bears?” quips money manager Barry Ritholtz on his blog today. (It’s on his Big Picture blog, not the other blog he keeps on Bloomberg’s website — heh.)
And why are they all grizzlies?
Events are rapidly overtaking the magazine cover: As we write this morning, the Dow has added 300 points to the 619 points it gained yesterday.
That said, it’s still substantially lower than it was at the start of trading last Friday…
Meanwhile, the VIX has retreated 15% this morning and sits near 26 — still elevated, but only half of the peak reached on Monday.
“The VIX (pronounced ‘Vicks’) measures how much volatility traders expect from the stock market,” our income specialist Zach Scheidt reminds us. “When traders expect wild price swings, the VIX goes up. And when markets are calm, the VIX trades lower.
“Many traders refer to the VIX as a ‘fear index.’ In other words, this indicator spikes higher when traders are fearful the market’s falling.
“While the ‘fear index’ nickname is probably accurate, I actually consider the VIX to be an ‘income index,’” Zach goes on. “That’s because when the VIX trades higher, our income opportunities become all the more lucrative.”
As Zach explained here on Tuesday, aggressive traders place speculative bets on how far a particular stock could move… and they must place a “deposit” to secure those bets. Zach shows his premium subscribers how to collect those “deposits” in the form of instant cash payments in their brokerage account.
When volatility spikes, the size of those deposits grows. In many cases, they double. Thus, his readers have had a chance to collect more than $1,000 this week alone — $1,060, to be precise. That’s usually how much he aims for in a month.
So while professional traders go bonkers and CNBC goes into full-on meltdown/snapback coverage… you can collect instant payments using what Zach calls his “ultimate retirement loophole.”
Two caveats: First, Zach recommends you have at least $20,000 in capital so you can use this loophole to maximum advantage. And second, our offer of discounted access to Zach’s premium advisory, Income on Demand, expires at midnight tonight. If you’ve given any thought in recent weeks to seizing on this offer, now’s the time to act.
As the morning wears on, both the Dow and the Nasdaq have climbed out of correction territory — meaning they’re no longer down 10% from their recent highs.
Hot money flowing into stocks is exiting bonds and gold. The 10-year Treasury yield sits a shade below 2.2%. Gold has drifted down to $1,121 as the dollar index has strengthened to 95.7.
But the big mover of the day is crude — up nearly 7% as we write, to $41.24. And you think stocks have been volatile as of late…
The big economic number of the morning surprised to the upside. The Commerce Department’s latest guess at second-quarter GDP rang in at an annualized increase of 3.7%.
That’s way ahead of the previous 2.3% estimate. “Consumer demand was strong,” says a summary from Econoday, “with personal consumption expenditures at a 3.1% rate led by an 8.2% rate for durables, a gain that was tied to vehicle spending.”
All of a sudden, 2015 is starting to look like 2014 — a weak first quarter and a very strong middle of the year.
[Ed. note: Our usual caveat about GDP being a flawed statistical abstraction that has no bearing on your life or your job still applies. But we pass it along because traders pay attention to it. It might even be fueling some of today’s rally for all we know…]
“The question is how to pick your way through this sector,” says our investment director Chris Mayer of natural resources.
As you perhaps know by now, Chris’ focus these days is on 100x stocks — companies with the potential to turn a $10,000 investment into $1 million.
“Resource stocks would seem a good place to fish,” he says. “Cheap stocks appear plentiful. Stocks linger near lows not seen since the 2008 crisis.”
Chris couldn’t care less what commodity prices might do. He doesn’t know what they’ll do, and he casts a side-eye at anyone who claims they do know.
“I want to make money even if the commodity goes nowhere,” Chris explains — which means focusing on the economics of the assets in question.
That gets to a familiar theme in Chris’ book 100 Baggers — return on invested capital, and the ability to reinvest profits at a high rate of return.
“If a business has $100 invested in it and earns a $20 profit in a year, that’s a 20% return. That’s great. Even better if it can take that $20 profit and reinvest it along with the $100 and earn another 20% next year… and the year after that and the year after that, for as long as the eye can see.
“In the resource sector, such birds are rare. But there are some.” One that’s caught his eye is Peyto — a low-cost natural gas producer in Alberta’s Deep Basin.
“Our sole focus is about maximizing the return on capital for shareholders,” CEO Darren Gee writes in his August shareholder letter.
Says Chris, “I cannot emphasize enough how rare it is to find this commitment in a resource name. Most oil and gas companies are terrible about spending their profits (assuming they have any). Gee is not.”
Chris isn’t making an official recommendation in Mayer’s 100x Club, not right now… but Peyto is a pleasant surprise. It trades in Toronto as PEY and over-the-counter in the United States under PEYUF.
And if you haven’t snagged a copy of 100 Baggers yet, what are you waiting for? We’ll ship it free to your door, as long as you can spot us shipping and handling.
“No, we don’t have Wi-Fi here anymore,” said the man in the crisply pressed uniform.
Your editor’s jury duty passed uneventfully yesterday — save for one hiccup. (Thanks again to Brian Maher for standing in.)
The last time I got a summons was five years ago. As fortune had it, our fearless leader Addison Wiggin got a summons for the same day. We both hung out in the “quiet room” — where they didn’t have some inane movie blaring over the TV — and we kept in touch with the office via laptops until we were called to a courtroom.
So I settle in yesterday and start scanning the walls for a sign with the Wi-Fi password. Nothing. I start to pace the hallway, but the search is equally fruitless. The man in the crisply pressed uniform asks if he can help and I ask him for the Wi-Fi password. “No, we don’t have Wi-Fi here anymore.”
Understand, I’m a cheapskate… so I don’t have a smartphone with a data plan that allows for tethering. Heck, I don’t have a smartphone, unless you count a 2007-vintage HTC Shadow running Windows Mobile. It might as well be a flip phone.
So I settled in with a copy of Michael Covel’s The Little Book of Trading, as we at Agora Financial prepare to amp up our commitment to trend-following — or chart-chimping, as one of our perpetually aggrieved readers calls it. (Stay tuned.)
The advance of civilization does not proceed in a straight line. It comes in fits and starts, with advances and setbacks.
Richard Maybury — one of the eminences grises of the newsletter biz — made the point many years ago with a handful of line drawings showing how the typical Englander lived at different points in time.
Around 500 BCE, he lived in a log hut with a dirt floor. No windows, no sanitation. But by 200 CE, the Roman Empire’s reach extended to England. Many people lived in large tile-roofed buildings with glass windows and primitive but serviceable plumbing and central heating.
“Then the Roman government’s taxes, inflation, regulations and wars demolished the economy,” explained Mr. Maybury. By 500 CE, the Dark Ages were in full swing and the typical Englander was living in the same type of log hut his forbears occupied a millennium earlier.
All of this is a roundabout way of saying the disappearance of Wi-Fi from the Baltimore courthouse is a marker of incipient civilizational decline. Count on it.
“I work in the oil and gas industry,” writes a reader with some insight into the trouble at BP’s refinery in Whiting, Indiana — which spiked gasoline prices this month in the Great Lakes states.
“Whiting experienced an upset a few weeks ago due to some structural issues. I believe that some of the pipes from their most recent expansion were corroding. Evidently, they discovered that the pipes were coated with an anti-flame suppressant or some other compound that is causing the corrosion. Further, they are planning on suing the manufacturer and/or general contractor over the issue. Given the high probability of a lawsuit, they are likely staying as quiet as possible.
“Consumers will always fight major oil companies and accuse them of nefarious activities to line their pockets. Generally speaking, though, nothing could be further from the truth. Sure, there are some instances where these companies can manipulate the markets in their favor, but gasoline sales are a loss leader for most convenience stores (get you on the lot so you head inside and buy big-margin items, like fountain sugar water).
“Keep up the great work!”
“I love the reader comments you guys share,” a reader writes — to wit, the fellow who remarked a few days ago about gas prices falling at a slower pace than oil prices: “Now is the time for the state governments to step in for once to help.”
“Lord help us all,” today’s reader reacts. “This is the idiotic public response that has the government (state & fed) practically running our lives today!
“Keep up the good and entertaining work!”
“The 5 is one of my few must-reads,” writes one of our regulars — sparing us the usual “but” that follows. Instead, he carries on the previous reader’s line of thought. “Reader comments (and some from the editors) are amazing, not to mention scary.
“In 2005, I left the country because I didn’t (and still don’t) think that there are enough
intelligent votes left to make a difference anymore. I see many great suggestions that have no prayer of implementation because there are no longer enough intelligent votes to make a difference.
“So of course, I’ll add one more: In order to qualify to vote, every prospective voter should have to pass the same citizenship test as required of foreigners to become a U.S. citizen. Those who can’t or won’t pass the citizenship test shouldn’t vote… Heh. I ain’t holdin’ my breath.”
“Showing Zach’s ‘Ultimate Retirement Loophole’ strategy results by only telling what the ‘income’ results are is like saying I can lose weight by eating [fill in your favorite dietary food],” writes a reader, carrying on a topic from yesterday.
“There isn’t only one factor involved. If you only eat [whatever] but you eat enough for 10 people, you are not going to lose weight.
“Likewise, telling us how much money Zach made his readers in July alone, ($3,166) is fine, but you never mention the amount he had at risk during his trades. Did he achieve that by only selling one lot, or did he need to sell 25 lots on each of those stocks to reach that monthly income? What was the minimum size account required in order to sell the lots that produced that income?
“Your story is just a little short on information to really evaluate his strategies.”
The 5: As noted above, Zach recommends you have a minimum of $20,000 at the ready to make the most of this strategy. That’s enough to lay on two trades at any one time.
And you don’t need to worry about choosing the “wrong” trade among Zach’s recommendations. “None of our readers has lost money on our series of recommendations since Zach started sharing the Ultimate Retirement Loophole with them,” says our publisher Joe Schriefer.
In fact, Joe is so confident you can make at least $1,000 a month if you follow the strategy outlined on this page… that he’ll guarantee it.
To clarify, we’re guaranteeing you will be shown how to make a minimum of $1,000 a month using this strategy.
And as we’ve said for months now, seeing is believing.
Best regards,
Dave Gonigam
The 5 Min. Forecast
P.S. Joe can’t keep this offer open forever. That’s why we’ve been telling you for several days that its shelf life is almost up.
The video comes offline tonight at midnight. Click here for your last chance.
