Global: Strategy update
Summary
Readers know that we identified stagflation in America back in Spring, 2006. We also have suggested which sectors merit your attention - and what the single riskiest investment probably is for your money. We added a note on what your banker has neglected to tell you about your monies with him/her. We also have suggested that with the chickens of irresponsibility coming home to roost, there are two instruments definitely worth looking at. More recently, we also suggested the shape of things to come. We are pleased to report that as of today (the one that you are clicking on is per last Friday, New York closing), our Advice Tracker has returned its subscribers 60%+ over the past year. Today we update these thoughts to guide you through coming turbulence.Topics Covered
- Nearing the bottom?
- Who wants more downside?
- How to make money off these ideas
Background
1. Nearing the bottom?
Some time ago we suggested that things were going to "L": the excess demand for money is intensifying an excess supply of goods, so auf Wiedersehen, consumption and thus imports, exports as well as capital expenditure. And, by the way, profits.
We put a time frame on this, suggesting that we are still glued to the perpendicular bit of the L, but that by the first half of 2009, we will be firmly ensconced in the horizontal bit. Expect markets to then bounce around like fish out of water.
So my sense is that with Asian markets rebounding today, that road map remains intact. Just remember: if the sub prime crises were built on air, then the coming credit card crises are built on hot air, as in: "trust me, I can pay you the credit card bill - by using my other 14 credit cards."
Nonetheless, Asian markets rose today,
2. Who wants more downside?
Simple: those well-paid "mature executives" at some investment banks who hitherto had told their chief economists and strategists to lie, to talk markets up - so that, amongst others, their own props books could unload their "long" positions profitably. We wrote this realistic cynicism up for you some time ago.
Now, the opposite is starting to happen. These very same folks playing liar's poker now have short positions on their books - so, of course, they will tell their institutional clients how terrible things will be.... Thus, there are plenty of institutions with a vested interest in a falling market. Well, we'll go with the flow, hence our Advice Tracker's performance was nearly twice that of last week's, in other words, by closing bell in Asia today, profits have increased by 60% - vs +29% last week.
3. How to Make Money Off This Idea
- Always consult your financial adviser first.
- We own the ETF, SDS:US, which shorts the S&P 500.
- We also own the ETF, SKF:US, which shorts the U.S. Financials.
