How to DOUBLE your return with half the risk

This post is for the Investors amongst you rather than the traders, although it is something that you should ALL be aware of regardless of your stance.

If you have or plan to obtain a Stock Market Almanac – this strategy is in there and has been for a number of years!

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How to Invest Properly – the ONLY way

The vast majority of people Invest incorrectly – they only get away with it because the markets NATURAL movement is continual GROWTH.

This makes poor Investors think that they are good, it makes brokers look like they know what they’re doing and how the markets work – through in a decent bear market or decent market correction and they are quickly exposed as their funds/clients funds start reducing in value.

There is a right way to Invest though and it goes against EVERY piece of Investment advice out there – If you can TIME the market you will beat the masses big time

funds won’t tell you as they’re not allowed to do this, brokers won’t tell because they don’t know and that all leaves you to the moves of the markets.

Look at these charts that follow and tell me it’s not common sense or best to get in at the KEY turning points – ALL the key turns that follow were the RESULT of a key Time Cycle(s) – I have seen this too many times for it to be coincidental, too many times

1982-2000

2000-2017

1982-2017

To ENHANCE returns you can now buy 2 x ETF’s of an Index!

The NEXT cycle is UP – the general market action after 17 years WILL be very similar to that of 1982-2000 – not exactly but similar in form and it will rise on average at a faster rate than 2000-2017 rates.

The time to BE a buy and hold investor is fast approaching – compound up 50% growth annually over 17 years and you’ll see the power of buying and holding during the RIGHT and CORRECT market conditions

Good Luck

Time Cycles – Long Term Projections/Predictions

Right we’ve kicked into touch any theory that the markets are random, the previous Time Cycles just happen too often with precision to be coincidence – Now when you know what is used to calculate these cycles ALL doubt is removed, all makes sense. We’ve covered the major turning points of the past, what about the future? Well here we go, here’s the future for you: Look at the dates AFTER Dec 2016 (Blue Line)

2017-2034 cycle dates

Remember if markets are falling into a Time Cycle the expected result is a bounce upwards out of it and vice versa if a market is rising into it – this does not always occur, but it does NOT mean the Time Cycles are invalid, it just means something else happened – the TC still worked just not as we thought. Take 1929 in the Dow – the TC still worked but rather than it being a high it turned into a low – the TC was due to top in 1933! perfectly fine when you understand the cause. I’ll no doubt comment more on specific dates are time draws us closer, in the meantime, now lets move down to the short-medium term cycles that are in play in the markets and see what can be done with those!!!!!!!!! This IS where you make the big money

I’ve left the previous cycle dates on for your reference (these were previous shown in an earlier blog post!)

The only thing now left to do is watch, wait and see what actually happens – It is absolutely critical that you see how the bigger cycles form and play their part in moving the markets, if you don’t you need to revisit it all until it makes BECAUSE, if you don’t understand the big easy cycles its unlikely you’ll understand the smaller cycles – these smaller cycles can be used to trade off and beat the market – massively!

Right now on to the smaller cycles that we can trade………coming soon

Here’s the next Time Cycle addition

Taking this really slowly as you HAVE to understand each Cycle and step – there’s lots and lots of factors involved in all the cycles and it took me a long time (3 years) to get grips with them and I’m still far from being an expert.

You do know where this is going don’t you? – I’m eventually going to drill down to the lower Time Cycles and reveal the dates of those to you!  That’s a month or so away though, depending upon time.

Right chart below looks exactly as previous post? – Nope I’ve added the PINK Time Cycle line to this graph – LOOK

Time cycles2

so what?

Well the WHAT is that this is a senior Time Cycle, in the context of this chart and example it has coincided with 3 major stock market turning points – it’s heading into another key time!!!!!!

So whats so fancy about this and all the other cycles?

Well BOTH the BLUE and PINK Time Cycles have been projected from 12/12/1914 – 100 years ago and still working strongly!

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A GREAT Model to Understand Gold’s Price Swings

A GREAT Model to Understand Gold’s Price Swings
Starting with gold’s recent sell-off to a 3-YEAR low

By Elliott Wave International

What do the last three chairs of the U.S. Federal Reserve have in common?

Well, it’s not their taste in structured black blazers. It’s the fact that they all see gold as a kind of Winston Churchill-like nesting doll — a riddle wrapped in a mystery inside an enigma.

July 2013: Then Fed chairman Ben Bernanke told Congress he doesn’t “pretend to understand gold prices… nobody does.”

November 2013: At her confirmation hearing, Fed successor Janet Yellen concurred: “I don’t think anybody has a very good model of what makes gold prices go up or down.”

October 25, 2014: At the New Orleans Investment Conference, former Fed “The Maestro” Alan Greenspan explained that gold’s “value as a currency is outside of the policies conducted by governments.” (Wall Street Journal)

Translation: Folks, the highly revered institution I used to work for — the one whose policies are often cited by the mainstream as a “catalyst” for gold prices — doesn’t actually control the marketplace.

But wait! 4 days later, on October 29, Greenspan then told the Council of Foreign Relations that the Fed’s $4 trillion balance sheet is a “pile of tinder, but hasn’t been lit.” Once the central banks stop “sitting on” their reserves, said tinder will ignite, “inflation will eventually have to rise,” and in turn, “gold will move higher, measurably so.” (FXstreet.com)

Translation: Those policies actually do control the gold market — it just takes a while for their potency to kick in. Like, say, 5 years of quantitative easing, 10 rate cuts to 0%, and $4 trillion in “inflation”-producing stimulus.

It makes you think: For those supposedly at the helm of where gold prices are going, they sure don’t seem know how they got there.

But what if you could know? Not only how gold prices got to where they are, but also why and sometimes even where they are headed before they even turn?

Bernanke, Yellen, Greenspan, they’re half right: Gold prices are difficult to understand. And there is no such thing as a 100% fool-proof model to forecasting its price trends. But there is a “good model” — a great one, in fact: Elliott wave analysis.

Unlike conventional analysis, which looks outside the market for clues to future price action, Elliotticians look on the price charts themselves. There, when volatility doesn’t blur the lines, we can detect specific patterns that indicate where prices are likely moving next.

You can use gold’s 3-year-long sell-off as a prime example. Back in 2010-2011, gold’s bullish “fundamental” picture was allegedly in the bag. The U.S. Federal Reserve just launched its $1-trillion-a-year quantitative easing program, which was widely expected to fuel gold’s inflationary fire. An August 25, 2011 Gallup Poll confirmed:

“Americans Choose Gold as the Best Long-Term Investment.”

Also this May 10, 2011 Reuters: “Deutsche Bank Eyes $2000 Gold. We believe the main beneficiary of super low interest rates in the U.S., a weak US dollar … and ongoing questions over the stability of the financial system will be gold.”

Elliott Wave International, however, saw a different outcome for gold on the metal’s price chart: an impending decline. In theSeptember 2011 Elliott Wave Financial Forecast, our analysis included the following chart, which showed gold prices at or near the end of a decade-long, 5-wave advance.

“Gold’s wave structure is consistent with a terminating rise. [Elliott waves progress and therefore top out in 5 waves]. As this monthly chart shows, prices exceeded the upper line of the channel formed by the rally from the 1999 low in what Elliott terms a throw-over. A throw-over occurs at the end of a fifth wave, and represents a final burst of buying. The pattern is confirmed as complete once prices close back under the upper line, which currently crosses $1650.”

From its September 2011 peak of $1921.50, gold prices have plunged 30%-plus, hitting a 4-year low on November 3 — indeed confirming the Elliott set-up of a long-term tradable top the waves warned about three years ago.

An independent perspective like this gives you the opportunity to see financial markets in a radical new light; one that brings you closer to understanding the reason why prices move the way they do, and anticipating those moves before they take place.

Gold: The Big Picture and the Near-Term Outlook
You can better understand gold’s price swings when you know the big picture in this precious metal. In these two 5-minute video clips from his presentation at the San Francisco MoneyShow in August 2014, EWI’s Chief Market Analyst Steve Hochberg looks at a long-term chart of gold to demonstrate how extreme opinions cause most people, governments and central banks to act on a trend at just the wrong time. He then explains his current analysis, and he offers you his outlook for gold over the coming months. His forecast has already begun to take shape.

Watch his videos free now >>


This article was syndicated by Elliott Wave International and was originally published under the headline A GREAT Model to Understand Gold’s Price Swings. EWI is the world’s largest market forecasting firm. Its staff of full-time analysts led by Chartered Market Technician Robert Prechter provides 24-hour-a-day market analysis to institutional and private investors around the world.

What’s Bigger Than a $1.4 Billion Mortgage Ratings Scandal?

You just cannot find better Independent analysis of the markets – I’ve been an EWI subscriber for years and although I don’t fully subscribe to their Elliott Wave theory I still value their research and analysis of the markets very very highly – The Hovis Trader

What’s Bigger Than a $1.4 Billion Mortgage Ratings Scandal?

The great “inflated” expectations for gold, oil, commodities — and now stocks

By Elliott Wave International

Editor’s Note: You can read the text version of this story below the video.

On January 21, one of the biggest financial lawsuits in recent history came to a costly end. The accused, ratings behemoth Standard & Poor’s, agreed to a $1.4 billion settlement for “inflating credit ratings on toxic assets,” thus accelerating and exacerbating the 2008 subprime mortgage crisis.

Settlement aside, there is a far bigger issue here than business ethics or conflicts of interests, which is not likely to get a hearing in the court of mainstream finance.

Which is: The professionals who are supposed to assess investment risks are no better at it than you or I.

Case in point: Think back to November 30, 2001. The world’s largest seller of natural gas and electricity has gone from cash cow to dry bone. Its share price had plummeted 99%, from $90 to just under $1. YET– the company continued to enjoy an “INVESTMENT GRADE” rating.

The company’s name: Enron. Four days later, it filed for the largest bankruptcy in U.S. history.

Enron seems like a distant memory, but what about the subprime mortgage debacle? Moody’s rating service slashed the ratings of 131 subprime bonds due to higher than expected defaults, in July 2007 two years after the market for non-traditional mortgages had already turned.

Spot a trend here? The “experts” failure to anticipate huge trend changes in companies, and in the overall economy. In the first edition of his business best-seller Conquer the Crash, EWI president Bob Prechter wrote:

The most widely utilized ratings services are almost always woefully late in warning of problems within financial institutions. They often seem to get news about a company around the time everyone else does… In several cases, a company can collapse before the standard ratings services know what hit it.”

So here’s the question: What are the experts not seeing now that you and I need to prepare for?

What about gold? In 2012, with prices nearly reclaiming all-time high territory, the Federal Reserve’s quantitative easing campaign was supposed to keep the wind at gold’s back.

“Ben Bernanke has just offered gold investors a… gilded invitation to participate in the greatest secular bull market of our time.” (April 14, 2012, Motley Fool)

Then this happened:

The same goes for the 2008 peaks in oil and commodities — two more “safe-havens” that were supposed to benefit from the Fed’s money-printing campaign, but instead prices fell to lows not seen since the 2007 financial crisis.

So, that leaves the remaining outlier — equities, which have climbed to record highs. And, according to the experts, the path of least resistance remains up. A December 14, 2014 article in the New York Times:

“We don’t see a lot on the horizon that could derail the U.S stock market in particular.”

Our January 2015 Elliott Wave Theorist urges caution with this single chart of the S&P 500’s year-end valuations since 1927. Every major peak of the last 90 years landed well outside the normal range: 1929, 1987, 2000, and 2007.

We believe the precarious placement of 2014 sends a similar message: “The stock market and the economy are not in a new multi-decade recovery as economists believe, but very late in a transition phase from boom to bust.”


Deflation Rearing its Ugly Head report

Free online report from Elliott Wave International:
Deflation Rearing its Ugly Head in Subtle and Not-So-Subtle Ways Around the Globe.

You still have a small window of time to prepare for a scenario most investors don’t even know is possible — and now even more likely.

Get your free report now >>

This article was syndicated by Elliott Wave International and was originally published under the headline What’s Bigger Than a $1.4 Billion Mortgage Ratings Scandal?. EWI is the world’s largest market forecasting firm. Its staff of full-time analysts led by Chartered Market Technician Robert Prechter provides 24-hour-a-day market analysis to institutional and private investors around the world.

DEflation anyone?

If you are serious about understanding the monetary system PROPERLY or gaining a handle on how it affects your Investments – you need to understand the current Inflationary monetary system.

A very severe by-product of Inflation is Deflation, at some point in time Deflation will rear its ugly head.

The current system despises Deflation, because it puts into reverse the system manipulators ploys – the current ploy is to make money continually by/from Inflation.

You would be very wise to check out http://www.deflation.com

by doing so you’ll join a few rare % of the globe that understand the current con and the possible side-effects those in power fail to explain to you!

The choice is yours, its your money not mine (I’ve learnt more than enough to safeguard myself)

and if anyone is unsure, since 2000 we have been inside a Deflationary Depression – the stock markets and credit markets actions confirm and prove this – I’ve also discovered that the use of Time Cycles can predict these events pretty accurately and their sub-divisions

S&P500 Index – Update

OK, recent price action has forced me to update the commentary on the S&P500.

A potential TOP could be in, it is not certain (we need more price action), price taking out the Minor swing low is a potential game changer.  BUT, it ALL depends upon how price action forms and reacts  during the next few weeks.

Look at the chart below (I’ve used this in the last update), there is an equal chance that all is happening is a simple or complex correction from the highs OR that we are within the early stages of a bear market.  I know some traders are saying that’s it the tops in, but they were also saying that on MOST highs in the market!  Like I’ve said in the past, you throw enough predictions and one will hit, it does not mean you’re smart!

1737.92 is now the key and critical level, for me until key lows are taken out such as 1737.92 the odds still favour the upside, but as I’ve mentioned this could be the start of a major downtrend – it is just too early to know for sure.

When we trade, we are guessing, we now need to watch the bounces that will occur, if they are strong then I’d expect price to head higher to sideways, if the bounces are weak in terms of number of bars and price % then the downside might be here – keep an eye on the bounces as they will be critical.

Look at the “bounce” from the 5th Feb 2014 = STRONG

1

You could refine the quality of the analysis in the chart about by placing retracement levels, but I find it simpler to just watch price action and see what it actually does, because that is the most important indicator of all – PRICE action.

Remember I am looking for a +20% correction in the markets this year, I had a Time Cycle date of 29th March 2014 – the HIGH so far came in only 5 days later – the Time Cycle is still VALID.

If we are still within a Deflationary Depression (as I think we are) then 6 year Bull markets just do not happen, they NEVER have in 200+ years of stock market history.  Obviously if we are NOT in a DD then the market is perfectly fine with a 6 year bull market.

 

 

How to play the next market cycle

This is more strategy that anything else and it will appeal to the buy and hold investor more than the trader – the aim of the game is to make money, the easiest way to do so is by being a Buy and Hold investor.

STOP – don’t get me wrong, I’ve slated B&H Investors in the past, with good reason, because there’s the right time to be a B&H Investor and there’s a wrong time.

What could be easier than Investing, monitoring and doing very little whilst your money explodes higher? Nothing, it’s the easiest way to make massive money, It is the cycle that breeds the “I’m an expert Investor” types – let me enlighten you, “expert” investors don’t lose money during bear markets! That’s when you know if you’ve got it or your a sham that got lucky riding a wave that only went up.

Think back to 1999, I can name handfuls of experts, some of them bricklayers, window cleaners and call centre operators who were Investment experts, Until the market cycle changed, the very same market cycle that they did not have a clue existed.

Today, I read somewhere, on a book cover I think about a UK prominent Investor who advocates the buy and hold strategy, through extensive company research and selection, then I read that he started out with £120k in 1982, turned it into £1 million in 2000, lost 40% of it in 2008 and so on.  Very impressive, actually money, actual returns and management of portfolio, you cannot know the overall outcome because he’s achieved what many of us set out to do.  BUT, although impressive, we need to examine what he’s done, by complete accident and without knowledge of market cycles:

  • In 1982 £120k was a massive amount of money
  • 1982 the 18 year bull market cycle started
  • He’s taken a 40% hit on a multi-million pound Investment portfolio in 2008 and the other years since 2000 weren’t that fantastic (the market cycle changed in 2000!)
  • So £1 million in 2000, starting at £120k 18 years prior = approx. 735% = 40.83% average annual gain
  • Impressive returns

Let’s now take a look at what would have happened if we’d of just bought the Dow Jones Index unit trust/tracker/ETF of the time with £120k in 1982 and sold in 2000, because we HAD knowledge that a 18 year upwards BULL market cycle should be on the cards – no skill, just buy and hold for the entire length of the assumed market cycle:

  • Dow level in 1982 = approx. 1000 points
  • Dow level in 2000 = approx. 11000 points
  • Gain = 10000 points approx. (you’d of never bought the low and sold at the highs)
  • = 1000% gain in 18 years = 55.55% annually on average
  • Includes the “shock”1987 crash, the other crashes in the 90’s
  • So let’s keep the maths simple and apply 1000% to our £120k = £1.32 million over 18 years

So just by buying and holding at the right times, we’ve beaten a system that someone has spent hours per week researching, tweaking and monitoring AND probably fretting about.  Just by buying and holding the Index at the right time you can replicate results out there and in some instances beat them.

What would you of done since 2000, when the market cycle changed? NOTHING, you’d have stayed out of the market in CASH – in all reality you’d of probably risked a little in 2003 and 2009 but it’s not necessary

What returns should you expect from the next market bull cycle – I’ll be looking for very similar % returns of 1000%+

Before we all get excited, the next bull cycle is still a few years away as yet!  So you’ll have to be patient.

A very basic strategy would be to go long the S&P500, Dow or Nasdaq or a combination split at the right time and just leave until the right time to sell, but rather than calling yourself an Investment Expert, just acknowledge that all you’re doing is exploiting and riding the market cycle rather than having super star abilities of picking fantastic stocks.

I have a smallish pension fund that I plan to use this idea on, this will be the ultimate set and forget, as my retirement date is smack back at the predicted start of the next major down turn.  I plan to go long in the IUSA ETF and the LUK2 ETF, equal split 50% each of my fund  on any of the following conditions:

  1. A 30-50% fall in the S&P500 during 2014 or
  2. A 15% fall during 2016 or
  3. I’ll take a long position in December 2016 regardless (unless already invested)

I’ll be doing the same for my children’s invested funds too – It’s now time to start thinking about being long, long, long the stock markets.  I’m perfectly happy to just sit in cash until December 2016 if the market does not comply with my demands.  This is potentially a 3 year wait, but I have my plan in hand and it will executed once the market is in position or time runs out.

I realise that this goes 180 degrees against what I’ve previously said about risk/money management – I’ll still be trading but with another account and to be honest in that other account I’ll be employing buy the pullbacks once a definite bull trend is established.

The pension fund is planned just to set and forget, if after I buy it falls 80%, so what, I’m happy to accept that risk as I can’t get at the money for a few decades anyway so it does not matter if it lingers for years underwater, at some point it will come back and if I get it wrong I’ll have to scramble to build it up in the 2020’s.  If the USA markets follow 200 years of historic price action, the markets will at some point be flying upwards – I think that point will start late 2016

In the meantime it’s still a traders market.

ESSENTIAL/MUST read

It’s not often that I do this – it’s a Saturday afternoon and I’ve interrupted my day to post this.

You have to read the March 2014 issue of Elliott Wave Theorist – it does mean BUYING it, you don’t obtain this type of information for free I’m afraid.  You will need to subscribe to the Elliott Wave Theorist to obtain March 2014 issue

You are highly unlikely EVER to read the content of the report in the mainstream media and it also helps to confirm/back-up what I’ve been saying about the Fed and USA Government.  If you’re an American then the implications are massive not only for your Investments but your lives, If you’re not an American citizen then it’s bound to have an impact on your Investments/Life to some degree – better to be prepared, than “suddenly out of the blue” find out

In fact this report/months EWT applies to EVERYBODY in the world, it is that important, all I can do is alert you (you can lead a horse to water, but you can’t force it to drink) you’ve been alerted!

Here’s a link:

http://www.elliottwave.com/r.asp?rcn=statgrphc&url=/wave/022114aff&tcn=ag022114&acn=hvt1211