- We’d mock the “blood moon market meltdown”…
- … except for one little thing
- The 5 identifies two resilient sectors during this volatile time
- Surviving a 50% market drop with “equanimity”
- Mocking the China devaluation freakout… gold’s utility, even though “you can’t eat it” … reader tweaks The 5’s Googling skills… and more!
Now it’s the blood moon?!
On Day 2 of National Preparedness Month, one of the big headlines is about an end times prophecy for Sept. 27-28.
“To skywatchers,” CNN tells us, “it simply refers to the copper color the moon takes on during an eclipse, but to some Christian ministers, the fourth and final eclipse in a tetrad — four consecutive total lunar eclipses, each separated by six lunar months — fulfills biblical prophecy of the Apocalypse.”
Apparently, if the Shemitah doesn’t pan out on Sept. 13, there’s a rain date. Who knew?
Casual Googling turns up a site with an article headlined “Blood Moon Market Meltdown This Weekend?”
It is dated April 3 of this year.
(And to think Time magazine had the gall to lump in our humble little firm with “the Armageddon gang” back in 2007 — even as the housing-led market bust we’d forecast years earlier was underway in earnest.)
On the other hand… this upcoming blood moon does coincide with a Puetz window.
In the early 1990s, researcher Steve Puetz looked into eight epic market crashes — starting with Holland’s tulip mania of the 1630s, ending with Japan’s meltdown in 1989-90 and including the U.S. crashes of 1929 and 1987.
Turns out every one of them took place within a few days of a full moon/lunar eclipse. And each time, that lunar eclipse took place within six weeks of a solar eclipse. (Yes, there’s a solar eclipse on Sept. 13.)
Puetz ran the numbers and concluded the odds of these circumstances being sheer coincidence were 127,000-to-1.
He also hastened to point out that while epic crashes occur during Puetz windows, not every Puetz window results in a crash.
After yesterday’s 470-point drop, the Dow industrials have recovered about 100 of those points as we write. That’s nowhere near enough to climb out of “correction” territory — the index is still down 11.3% from its May 19 high.
The other major U.S. indexes are also up, but not as strongly. And the small-cap Russell 2000 is in the red.
Treasury yields sit roughly where they did 24 hours ago, the 10-year at 2.17%. Gold is likewise little moved at $1,133. Crude continues its retreat from Monday’s highs, back below $45.
Volatility, blood moons and National Preparedness Month notwithstanding… we’re going to stick our necks out this morning. With the help of our crack team of editors, we’re scouting out sectors where opportunity still abounds.
“There’s one sector that’s set to continue growing revenues even in the middle of a global slowdown, and that’s biotech,” says Ray Blanco.
“Things have been wild and wooly, but the volatility provides a great opportunity to buy biotech names with near-term catalysts for cheap. In fact, it’s a great time to nibble at shares when there’s a big market dip.”
That includes a company working on a “one-two punch” cancer cure. It’s slumped 14% over the last month… but that makes it only more attractive now.
Like many drugs, this treatment attacks VEGF — a molecule that can help diseased cells multiply. Unlike many drugs, it also attacks MET — another molecule that’s even more dangerous, because it can help diseased cells spread from one part of the body to another.
Recently, the FDA gave this drug Breakthrough status. “A drug that gets treated like a breakthrough from the FDA gets sped through the development and approval process by the FDA,” Ray explains, “so that patients can get it sooner.” And it comes to market faster, to the benefit of shareholders.
Meanwhile, another cancer drug the company’s working on still faces its “magic date” of Nov. 11. Under the Prescription Drug User Fee Act, a company developing a drug pays the FDA a fee for an accelerated review. In return, the FDA sets a date when it plans to approve or deny the drug.
Perhaps the thought crosses your mind: Nov. 11 is Veterans Day. Federal agencies will be closed. That is true. “FDA dates aren’t ironclad, and I’ve seen them come early,” Ray tells us. “I’ve also seen them come late, especially when they land near a holiday.”
In any event, the market slump has made shares a bargain — for the moment. And Nov. 11 isn’t the only “magic date” on Ray’s calendar right now. We see three others coming up even sooner. Give Ray’s calendar a look right here.
“China Set to Parade Its ‘Carrier-Killer’ Missile Through Beijing,” says a headline in today’s Financial Times.
Yes, China’s stock market is down 39% from its peak in June. Its factories are slowing down at a pace unseen since the depths of the 2008-09 financial crisis. Its credit markets are finally cracking under the strain of too much easy money for too long.
But Chinese leaders are taking time out from devaluing the currency, banning short selling and arresting journalists who write inconvenient truths about the country’s stock market to crow about the billions of yuan they spent building a shiny new weapon. It’ll be rolled out tomorrow during a parade marking 70 years since the end of World War II.
Western experts figure the missile can travel at 10 times the speed of sound — “faster than anything that could intercept it,” the FT points out.
Without saying so directly, the salmon-colored paper’s missile story points to another resilient opportunity during this time of volatility.
Stock markets might gyrate and oil might get cut in half in the space of months… “but it still costs $4 billion to build a nuclear submarine and $11.5 billion for an aircraft carrier,” says our military-tech specialist Byron King.
“That’s what they cost anymore,” is what Chief of Naval Operations Adm. Jonathan Greenert told Byron at a private luncheon earlier this summer.
The Navy’s “boss of bosses” meeting with Byron…
Not to mention whatever the U.S. government will spend to counter that “carrier-killer” missile of China’s.
“Defense plays are a different breed of animal in the market jungle,” says Byron. “They’re not immune to the broad economy, of course, but neither are they subject to many of the same value-destroying issues as your run-of-the-mill market plays.”
No doubt. Lockheed Martin (LMT) trades this morning at the same level it did in mid-July. But it’s down less than 6% from its mid-August peak. You can buy General Dynamics (GD) for the same price you could in mid-June. And it’s down only 8% from recent highs. Northrop Grumman (NOC) can be had for the same price as in early July. It’s off about 7% from its peak three weeks ago.
Compare that with the Dow — which, as noted above, is more than 11% below a high it set more than three months ago. Sounds as if Byron’s onto something in his Military-Tech Alert portfolio.
Before we get to the mailbag, we leave you with the words of Charlie Munger to chew on. Munger is best known as Warren Buffett’s partner at Berkshire Hathaway. And he knows a thing about volatility.
Our investment director Chris Mayer recently spotted a 2009 interview Munger did with the BBC. He was asked how much he worries when Berkshire’s stock falls. Remember, we’re talking 2009 here. Chris says Munger’s answer is something you might want to print out…
“Zero. This is the third time that Warren and I have seen our holdings in Berkshire Hathaway go down, top tick to bottom tick, by 50%. I think it’s in the nature of long-term shareholding of the normal vicissitudes, in worldly outcomes and in markets that the long-term holder has his quoted value of his stocks go down by, say, 50%.
“In fact, you can argue that if you’re not willing to react with equanimity to a market price decline of 50% two or three times a century, you’re not fit to be a common shareholder and you deserve the mediocre result you’re going to get compared with the people who do have the temperament, who can be more philosophical about these market fluctuations.”
Chris recommends picking up a copy of Poor Charlie’s Almanack — a collection of Munger speeches. “I guarantee your time spent with this book is a lot more worthwhile than trying to guess where the market will go or watching your stock prices all day.”
[Ed. note: Chris’ own book is still available too — 100 Baggers: Stocks That Return 100-to-1 and How to Find Them. Chris and his research team spent nearly $140,000 identifying stocks that returned 100-to-1 despite the 1970s oil shock… the “double dip” recession of the early ’80s… and even the “Great Recession.”
It’s excellent reading at a turbulent time like now. We’ll send you a copy FREE if you can spot us the shipping and handling. Get yours here.]
“I find it laughable,” a reader writes, “that Glenn Beck and the media (both conservative and liberal) are shocked and dismayed at China’s decision to devalue their currency.
“How pompous and clueless the American public is about its own currency. China is doing the exact same thing now as we have been doing since the 1930s when FDR devalued the dollar against gold. Americans and the politicians they elected had grown tired of being fiscally responsible. FDR confiscated the people’s gold.
“We’ve printed trillions of dollars out of thin air ever since, to pay for the ‘American dream lifestyle.’ Eighty years later, we now are paying the price but it’s China’s fault?
“China can, should and will do this, and there’s not a thing we can do about it. Why? Because they have been hoarding hundreds of tons of their own gold and importing even more gold for decades to back their currency with. The yuan… the new gold-backed currency!”
“About the reader’s comment on ‘not being able to eat gold’ yesterday,” writes one of our regulars…
“First, I do have gold (and I think platinum has even more upside). I will give up my ‘barbarous relic’ at the precisely same time people — and particularly the leftist cronies running the U.S. — stop acting to so barbarously. Until then, thank you… but I will retain my ‘relics’ — which have long outlasted the famed savant who coined that term.
“No, one cannot eat gold. Indeed, I am reminded of a story of a group of conquistadors who shipwrecked their riches-filled galleon on a reef in the Caribbean. Not wanting to abandon their booty, some of the more avaricious stayed behind to guard their gains, while the others rowed off in the lifeboats to summon help.
“On their return a number of days later, there was nothing to be found except a few rather satiated-looking sharks.
“So I will continue accumulating precious metals… but never forget there are other factors also at play. It is not for nothing that Jesus talked about money more than he did heaven and hell combined, including 11 of 39 parables talking about money and one out of every seven verses in the Gospel of Luke talking about money.”
“You probably need to do a new search,” a reader snipes after yesterday’s episode.“ Both Bear Grylls and National Preparedness Month are all over the Internet.”
The 5: But in the same article?
We looked again this morning. Nothing on Google News. Nothing on Google’s main page — except our own observations republished at The Daily Reckoning, heh. And it turns out the president used his TV shoot with Bear Grylls not to play up National Preparedness Month but to drone on about “climate change.” Snooze.
Makes us wonder what kind of search engine you’re using. Are you messing around on the “dark Web”?
Best regards,
Dave Gonigam
The 5 Min. Forecast
P.S. A major scandal has broken.
It has to do with what our research team believes to be a conspiracy between the U.S. government and some of the biggest food producers in America.
The topic of this story is so controversial, Fox banned a story on it from being aired… and fired the two reporters who covered it.
It’s so serious that many will look to impeach Obama for what he’s done. (Could this be the one that finally brings him down?)
CLICK HERE for the shocking story.
