- Feds successfully forecast riots… but can’t outperform Wall Street
- How to trawl social media for trading tips (don’t do it alone)
- Two days till the Fed… Four days till tax reform?
- Bitcoin futures era begins in America… Japanese traders borrow to the hilt
- The problem with marijuana legalization, solved in Massachusetts?
- Reader explains how both Rickards and Altucher are right about bitcoin
“If you could do this accurately, you would then able to outperform Wall Street,” says Jason Matheny.
Mr. Matheny runs a federal agency called IARPA — Intelligence Advanced Research Projects Activity. Think of it as the NSA’s research and development arm.
The “this” he refers to is nothing less ambitious than predicting future events. We daresay his efforts to beat the Street are misdirected. But a similar effort of our own at Agora Financial is proceeding with far more success… and we’re only three days away from taking off the wraps.
IARPA has met with more success predicting phenomena like riots and disease outbreaks.
The agency partnered with Virginia Tech University for an undertaking called “Open Source Indicators.” A June 2013 Wall Street Journal story describes how the project “reviews a range of publicly available sources, such as tweets, web queries, oil prices and daily stock market activity, to gauge the likelihood of certain ‘significant societal events.’”
In early 2014, we told you about a confirmed hit by Open Source Indicators. Riots had broken out in Brazil. The injuries and arrests numbered in the dozens. “Our model did forecast several protests in Brazil for last week,” said Virginia Tech professor Naren Ramakrishnan.
At first, Open Source Indicators kept its focus on Latin America. In the years since, the lens has widened to include China and parts of Africa. The project has turned up some intriguing correlations so far. It seems a spike in canceled online dinner reservations is a reliable predictor of disease outbreaks.
But predicting economic and financial events has thus far proven elusive: The quotation with which we started today’s episode came during an October 2016 conference in Washington. Here’s the rest of the story: “Despite our best efforts, we have not been able to beat Wall Street.”
Well, what else did you expect from a government agency? Heh…
Without access to the algorithm Open Source Indicators uses, we’re hard-pressed to say why it can’t beat Wall Street.
All we can say is that Greg Guenthner of our trading research desk has helped develop an algorithm that does beat the street.
It analyzes social media in a very specific way: “When it comes to investing, people brag about wins and grumble about losses,” he explains. “They seek validation for their belief that a particular stock is a good or bad play. They report news and rumors about companies, their products and personnel. And very often, they ask others for opinions before they buy shares.”
Granted, that’s been the case for decades. “The difference,” says Greg, “is that now, instead of all this happening at the country club or the neighborhood poker game… it’s all happening online, in public forums that millions of people follow obsessively.
“Our new algorithm has the ability to collect vast amounts of data from the social media universe. We then filter and analyze those data in real time and detect currents of mass public sentiment that can generate incredibly accurate trading signals.”
Greg has subjected this process of “profit tapping” to rigorous testing. It’s turned up gains like 132% in 46 days and 192% in 43 days. It’s so reliable Greg says it’s entirely possible to pull down $1 million in total profits during 2018.
And he takes the wraps off this system barely 72 hours from now. He’s lined up a special event where he shows you exactly how it works — this coming Thursday at 1:00 p.m. EST. Access is free — all we ask is that you sign up in advance so we know how many people to expect. Here’s the signup link.
Aside from one very new asset class — you get one guess which it is — there’s not much to say about the markets today.
The major U.S. stock indexes are all slightly in the green. Gold languishes a little below $1,250. Crude is approaching $58.
Presumably the Federal Reserve will bump up the fed funds rate during its next meeting on Wednesday… so the only market uncertainty coming from Washington this week is the tax bill.
GOP leaders from the House and Senate will meet on Wednesday to hash out the significant differences between their two bills; they’re aiming to have a final bill drafted by Friday. Perhaps by then they can fix a few of the most ridiculous flubs that ended up in one or another version of the bill. We especially like the one featured in this morning’s Wall Street Journal, wherein certain high-income business owners would face a marginal tax rate of 105.45%.
Less than 24 hours into the brave new era of bitcoin futures trading, bitcoin is $16,627 — up a solid $1,430 from when we wrote you on Friday.
Last night at 6:00 p.m. EST, bitcoin futures began trading on the CBOE Futures Exchange. It’s been juuuust a little hectic…
Yep, the futures activity was so fast and furious, trading was halted not once but twice. There were ripple effects for plain-vanilla cryptocurrency: Coinbase, the popular trading platform, had to hit the pause button briefly as well. Coincidentally or not, Coinbase’s free app was the most-downloaded over the weekend from Apple’s App Store…
The fun continues next Monday, when bitcoin futures trading begins on the rival Chicago Mercantile Exchange.
Meanwhile, on the world’s leading platform for bitcoin buying and selling, traders are leveraging up — in some cases borrowing up to 15 times their cash deposit to buy.
That’s according to Yuzo Kano, the CEO of bitFlyer — which controls about 25% of the global market in bitcoin trading. “There are lots of traders but some buy-and-hold investors. Actually, they are buy-and-buy,” he tells the Financial Times.
About three-quarters of the trading on bitFlyer is not bitcoin itself but derivatives — the Japanese are way ahead of us Americans in that regard. The customers bet only with each other. “We don’t take any risk,” Kano is quick to point out. And bitFlyer immediately closes a client position when half their margin is gone.
[Ed. note: At this wild-and-wooly time in the crypto market, we urge you to watch James Altucher’s bitcoin briefing, exclusively for Agora Financial readers like you. This is information he has not shared on business TV channels like CNBC. You can watch it right here.
“The package store model is old-fashioned, and the consumer really wants an outlet, a place to consume cannabis and do it safely,” says Michael Latulippe, member of Massachusetts’ Cannabis Advisory Board.
Eight states have legalized the recreational use of marijuana, but none allows for the public consumption of weed. Even pot dispensaries aren’t safe havens for users — lighting up and ingesting in these spaces is prohibited by law.
Massachusetts is trying to resolve this quandary before the launch of its own recreational pot market next April. The state’s Cannabis Control Commission is eyeing existing alcohol and tobacco regulations to apply to the cannabis industry.
“The basic idea of onsite social consumption is to allow adults to purchase a marijuana product and use it in the same location, much like purchasing alcohol at a bar or a cigar at a cigar bar. Allowing on-site consumption,” says an article at the Telegram of Worcester, “would provide legal locations for tourists staying in hotels and renters who are prohibited from smoking in their apartments to consume marijuana. They could also give parents a place to smoke or consume marijuana without ever bringing it around their children.”
Lobbyists are pushing for “cannabis clubs” that require a state license; under this model, the state would need to determine an appropriate “serving size for social consumption, establish a maximum number of servings allowed… and set a maximum daily exposure limit at which point a budtender could decide to stop serving a consumer.” (Budtender?)
The Bay State needs to work out some kinks. The most glaring issue: How will cannabis clubs protect employees from contact highs? If not addressed, The 5 predicts high employee turnover… due to loss of motivation.
“Count me in with those who have lost a tremendous amount of respect for Jim Rickards,” a reader writes as our bitcoin debate stretches into a new week.
“He knows as well as anyone that there is nothing standing behind the U.S. dollar other than faith — how the hell is that any different from digital code?
“I would have to believe this bitcoin phenomenon has damaged his golden ideas and [he] is just completely p***ed off about it. (And I am a lifetime subscriber to all his work!)”
“Rickards is correct,” counters another reader.
“There is no doubt that blockchain technology is valuable and will succeed. But ‘currencies’ based on nothing but full faith and credit of ‘people’ — as one reader stated — will in the end be no more valuable than tulips.
“Altucher is obviously a very smart man, but I hope he has cashed out enough of his bitcoins to live happily ever after. Maybe 1 bitcoin will soon be worth $1 million, but eventually, unless backed by something concrete, it will eventually be worth almost nothing.
“My idea is a cryptocurrency backed by SDRs (the equivalent, since SDRs can only be owned by governments). It will not appreciate wildly, but then again, currencies of a stable economy — or anything stable — don’t appreciate wildly. Maybe someday there can be a completely independent currency, but that time is not today.”
The 5: You forget the power elite’s ultimate objective with SDRs — a stable currency the world’s governments and central banks can trade among themselves (a few megacorporations, too, perhaps) — while the rest of us are stuck with dollars, euros, pesos and such that steadily depreciate.
“I love and respect both Jims,” writes our final correspondent. “But they are both right and wrong. I love that you allow them to have their own take.
“James A. is correct that lots of money can be made. In the last three months, I am up over 500%. Gold did not make me that return in the last months.
“I think Jim R. is correct about bitcoin. As it grows, it is taking more computer time and electricity and slowing down. But one of the many cousins will replace it for actual use. Jim R. is correct that governments and banks do not like competition. Be nimble [enough] to shift. Profit is not profit till you take it and [invest in] real hard assets. JM Bullion takes bitcoin. So both are right here. Make money with Jim A. and use bitcoin to buy a monster box and some gold coins. Both right.
“I agree with James A that Amazon and others will start accepting bitcoin. People are buying cars and houses with bitcoin. So I will take James A.’s [advice] and make money and buy a beach house and a farm in Mexico with bitcoin. Both right.
“Crypto is here to stay. Both Jims are right, just be ready to shift and take profits. So I call it a draw between Jim R. and James A. if you take the best from both.
“But it does feel good sleeping with the Monster Box of silver and gold coins paid for with James A.’s advice. Proud of The 5. You allow different opinions, and in this case I think they are both right and wrong…
The 5: In a day and age when nuance is going increasingly unappreciated, we most appreciate your remarks!
The 5 Min. Forecast
Below, Greg Guenthner pulls back the veil a bit more on the powerful new algorithm he’s helped develop — trawling through mountains of social media posts to uncover lucrative new trading opportunities…
How to “Tap” Profits From This Strange Chart
By Greg Guenthner
I’m sure you’ve seen more than a few stock charts in your day.
You might even draw trendlines or use some fancy trade triggers if you’re the adventurous type. After all, there are countless generic, ready-to-use “indicators” available on the internet.
But I can promise that you’ve never seen a chart like this before.
Take a close look at the following graph:
This strange chart depicts actual personal data our latest project is collecting from the American public.
This data is the key to a new method of playing stocks we call “profit tapping.” I’ll explain how to read this chart in just a minute.
But first, I need to show you how this project was born.
“Profit tapping” all started with one simple question:
How can you know what the masses are going to invest in before they do it?
Fifteen years ago, we had no way of knowing what the public really believed about a company until after they invested in it — or didn’t.
That’s because a soaring or plunging share price was the only reliable indicator of what people thought of any given company at any given time.
But that’s all changed now because of social media.
People are social beings. It’s how we’ve evolved. Communication is in our DNA. And when it comes to investing, people brag about wins and grumble about losses. They seek validation for their belief that a particular stock is a good or bad play.
They report news and rumors about companies, their products and personnel. And very often, they ask others for opinions before they buy shares.
The difference is that now — instead of all this happening at the country club or the neighborhood poker game… it’s all happening online, in public forums that millions of people follow obsessively.
This makes the social media universe, which didn’t even exist 15 years ago, an incredibly powerful force for shaping — and revealing — public opinion today.
This is where our computing power comes into play. Our new algorithm has the ability to collect vast amounts of data from the social media universe. We then filter and analyze that data in real time and detect currents of mass public sentiment that can generate incredibly accurate trading signals.
Now that you have some background, I want to show you how our new way of collecting and analyzing the personal data of millions of Americans can point us toward a new way to profit from stock market moves.
It all starts with a specific kind of spike in the collected data — like this one.
Check out the data spike we’ve circled in our strange chart above. That’s a positive signal spike in blue. Negative signals show up in red.
Right now I want to show you the best example in our data so far of just how closely stock price action can mirror these spikes.
Check this out:
It’s a series of both positive and negative signals for AI superstar Nvidia Corp.:
You can clearly see both the positive and negative spikes in this “profit tapping” indicator — and how accurately it can correspond to major price swings.
Let’s break it down.
We’ve got a big, obvious, positive signal on Aug. 23 that kicks off a strong, sustained uptrend. Then we see several negative signals that knock shares down a bit in the Sept. 20–24 range.
Then the stock recovers after a noticeable positive signal on Sept. 25. Then it gets a turbo boost from another cluster of positive signals from the 23rd to the 26th of October.
As you can see, the overall net result of these mostly positive signals was a 105% win over nine weeks.
If you knew how to detect these signals. And if you had the ability to trade them quickly, you could’ve played each of these four price moves individually — both up AND down — and made a series of very successful trades.
The social media universe is quickly morphing into one of the most powerful sentiment tools we’ve ever seen. As our database grows, the potential trading power is almost immeasurable.
That’s how “profit tapping” could make you $1 million in gains in 2018. And up to $10 million in the next five years.
It’s time to take control of your financial future.
CLICK HERE NOW and sign up for my free, special online event:
At 1:00 p.m. Eastern on Thursday, Dec. 14, I’ll show you how you can start “profit tapping” the markets and deliver yourself huge gains over and over again.
It’s 100% free to attend.Click here to secure your spot.
For Tomorrow’s Trends Today,
The exodus from the big U.S. cities began well before anyone had ever heard of a coronavirus strain emerging in China’s Hubei province. Read More
Your editor is having weird ’80s flashbacks today, including the “Japanese miracle” of that decade. Read More
We received an avalanche of responses to Tuesday’s episode of The 5… So we devote today’s issue to our readers’ perspectives. Read More
It’s totally counterintuitive: Gold throws off no income stream, but in a world where central bankers keep their thumb on interest rates, you need gold. Read More
It’s taken prestige media — and public health officials — about a month to come to grips with a glaring contradiction. Read More
“One of the questions I’m getting,” says Zach Scheidt, “is how can the market be so strong when the economy is so weak?’” Read More
Call it harebrained or genius, Americans might be taking a TRIP courtesy of the federal government. Read More
“There’s a lot of frustration in our country,” says bestselling author Graham Summers, “because we’re seeing a severe breakdown in the social contract.” Read More
Warren Buffett’s empire is under siege in 2020… “but that doesn’t mean there aren’t good deals to be had,” says hedge fund veteran James Altucher. Read More
A large swath of corporate America is sitting out social media — with both economic and political implications — for enabling “hate speech” and “misinformation.” Read More