Remember this time last year? The markets opened with a nosedive in Chinese stocks. By the time New York came in for trading, China was already down 7% and trading had been halted. That started, what turned out to be, the worst opening stretch of a New Year in the history of the U.S. stock market.
The sirens were sounding and people were gripping for what they thought was going to be a disastrous year. And then, later that month, oil slid from the mid $30s to the mid $20s and finally people began to realize it wasn’t China they should be worried about, it was oil. The oil price crash was a ticking time bomb, about to unleash mass bankruptcies on the energy industry and threaten a “round two” of global financial crisis.
What happened? Central banks stepped in. On February 11th, the Bank of Japan intervened in the currency markets, buying dollars/selling yen. What did they do with those dollars? They must have bought oil, in one form or another. Oil bottomed that day. China soon followed with a move to boost bank lending, relieving some fears of a global liquidity crunch. The ECB upped its QE program and cut rates. And then the Fed followed up by taking two of their projected four rate hikes off of the table (of which they ended up moving just once on the year).
What a difference a year makes.
There’s a clear shift in the environment, away from a world on liquidity-driven life support/ and toward structural, growth-oriented change.
With that, there’s a growing sense of optimism in the air that we haven’t seenin ten years. Even many of the pros that have constantly been waiting for the next “shoe to drop” (for years) have gone quiet.
Global markets have started the year behaving very well. And despite the near tripling from the 2009 bottom in the stock market, money is just in the early stages of moving out of bonds and cash, and back into stocks. Following the election in November, we are coming into the year with TWO consecutive record monthly inflows into the U.S. stock market based on ETF flows from November and December.
The tone has been set by U.S. markets, and we should see the rest of the world start to play catch up (including emerging markets). But this development was already underway before the election.
Remember, I talked about European stocks quite a bit back in October. While U.S. stocks have soared to new record highs, German stocks have lagged dramatically and have offered one of the more compelling opportunities.
Here’s the chart we looked at back in October, where I said “after being down more than 20% earlier this year, German stocks are within 1.5% of turning green on the year, and technically breaking to the upside“…
And here’s the latest chart…
You can see, as you look to the far right of the chart, it’s been on a tear. Adding fuel to that fire, the eurozone economic data is beginning to show signs that a big bounce may be coming. A pop in U.S. growth would only bolster that.
And a big bounce back in euro zone growth this year would be a very valuabledefense against another populist backlash against the establishment (first Grexit, then Brexit, then Trump). Nationalist movements in Germany and France are huge threats to the EU and euro (the common currency). Another round of potential break-up of the euro would be destabilizing for the global economy.
With that, as we enter the year with the ammunition to end the decade long economy rut, there are still hurdles to overcome. Along with Trump/China frictions, the French and German elections are the other clear and present dangers ahead that could dull the efficacy of Trumponomics.
For help building a high potential portfolio, follow me in our Billionaire’s Portfolio, where you look over my shoulder as I follow the world’s best investors into their best stocks. Our portfolio more than doubled the return of the S&P 500 in 2017. You can join me here and get positioned for a big 2017.
As we’ve discussed the Trump administration has been very good for the broad stock market. It’s been even better for certain industries, and certain stocks that have been drawn into the periphery of the administration.
Goldman Sachs has been well represented in the auditions for cabinet members. And now we have an incoming Treasury Secretary with a Wall Street background as a partner at Goldman. That stock is up 27% since November 8th.
Today, the President-elect met with the Japanese billionaire investor Masayoshi Son. Over the past 35 years, Son has built one the largest and most powerful technology conglomerates in the world, a company called Softbank. He told the new incoming President that he planned to invest $50 billion into U.S. companies behind Trump’s economic plan.
So what does Son own that could benefit from a good relationship with the Trump administration? He owns the wireless carrier Sprint. In fact, he (Softbank) owns more than 80% of the company. No coincidence, Sprint was up 4% today on the news of his successful meeting.
Son is likely posturing put a Sprint/T-Nobile merger back on the table. Sprint walked away from efforts to acquire T-Mobile in 2014 after it was clear it would be blocked under increased antitrust enforcement under the Obama administration.
The combined entity would slingshot a “Sprint/T-Mobile” into a three way horse race for first place in the wireless carrier industry. Though the market is only valuing the combined entity at 15%, rather than one-third of the market. That makes both stocks potential doubles. We own Sprint in our Billionaire’s Portfolio.
Source: Statista.com
The Obama administration had its winners and losers (among the winners, outright funding to Tesla, Solarcity … partnerships with Uber and Facebook). Trump will as well. Keeping an eye on who walks into Trump Tower seems to be a good clue.
Follow me in our Billionaire’s Portfolio, where you look over my shoulder as I follow the world’s best investors into their best stocks. Our portfolio is up more than 24% this year. Join me here.
As we discussed earlier in the week, market participants are trained to be fixated on the monthly jobs data. That was evident in today’s market reaction, as it always is. The payroll number, the number professional investors have been trained to trade, was weak this morning. The unemployment number, on the other hand, was at best levels since November 2007.
In normal times, the jobs data is probably the single most informative data point, where you can see signals of heating up or cooling down in the economy. But of course, we haven’t been in a “normal” economy in a long time.
Still, in recent years, the U.S. jobs data has remained, bar none, the biggest single data point in the world. Why? Because the Fed explicitly told us that they wanted to see the unemployment rate at 6% before they would consider the first steps of removing emergency policies. And because the Fed was the Captain of the globally concerted policies that saved the global economy from an apocalypse, the Fed was also broadly depended upon to lead the world OUT of emergency policies.
But even after seeing dramatic improvements in the key jobs data that the Fed was targeting, meeting the target and then exceeded the target, they have still been very slow on the path of “normalization.”
Now they’ve told us the jobs data are in a good place, relative to their current policy position (i.e. rates should be, not normal, but quite a bit higher by now). But the Fed has run into other obstacles they didn’t foresee when they began their “jobs targeting” campaign: 1) they underestimated the deflationary impact of the global debt crisis, 2) somewhat related, they underestimated the lack of leverage on wages employees would have in dramatically improved job market, and 2) they underestimated the weakness in the global economy and the vulnerability of the U.S. economy to shocks outside of the U.S.
Broadly speaking, the Fed’s rate decision and, consequently, their message to the world about their confidence in the economy going forward, hasn’t been about jobs for a while. With that, the hyper-focus that market participants continue to give to the data every month seems to be wildly misplaced (for now).
So when we see a weak payroll number, as we did this morning, and the knee-jerk selling from the professional trading community sends stocks lower, Treasuries higher and the dollar lower, it’s probably a good idea to use those moves as opportunities to enter at better levels (i.e. buy stocks, buy the dollar, sell Treasuries).
If we step back a bit and think about the bigger picture, we have a Fed that is considering rate hikes because the economy is doing better (emerging from crisis and robust enough to withstand the removal of emergency policies).
And, as we said, the Fed is leading the way, globally. That is a very positive message for stocks and a very negative message for Treasuries (i.e. rates are going higher, prices will be going lower). As for the dollar, we have a Fed going one way, and Europe and Japan going a distinctly opposite direction (full-throttle QE). That’s squarely positive for the dollar as capital flows away from easing policies (Europe and Japan) and toward yield (U.S. assets).
In the middle of June we have perhaps the two biggest events of the year. On June 15 the Fed will decide on rates. And hours later, that Wednesday night, the Bank of Japan will follow with its decision on policy.
This is really the perfect scenario for the Fed. The biggest impediment in its hiking cycle/”rate normalization process” is instability in global financial markets. Market reactions can lead to damage to consumer sentiment, capital flight and tightening in credit—all the things that can spawn the threat of a global economic shock, which can derail global recovery. Clearly, they are very sensitive to that. On that note, the Brexit risk, while a hot topic in the news, is priced by experts as a low probability.
So, the Fed has been setting expectations that a second hike in its tightening cycle could be coming this month. But the market isn’t listening. The market is pricing in just a 23% chance of a hike in June. But as we’ve said, markets can get it wrong, sometimes very wrong. We think they have it wrong this time. We think there is a much better chance. Why? Because they know the BOJ is right behind them. If they do hike, any knee jerk hit to financial markets can be quelled by more easing from the BOJ.
Remember, as we’ve discussed quite a bit in our daily notes, central banks remain in control. The recovery was paid for by a highly concerted effort by the world’s top economic powers and central banks. And despite the perceived hostility over currency manipulation, the powers of the world understand that the U.S. is leading the way out of recovery, and that Europe and Japan are critical pieces in the global recovery. The ECB and BOJ have been passed the QE torch from the Fed to both fuel recovery and promote global economic stability. And playing a major role in that effort is a weaker euro and a weaker yen.
The Bank of Japan is operating with one target in mind, create inflation. Now three years into their massive program, they haven’t posted a positive monthly inflation number since December. Inflation is still dead, just as it has been for the past two decades. So, not only do they have the appetite and global support to do more, but the data more than justifies more action.
Don’t Miss Out On This Stock
In our Billionaire’s Portfolio we followed the number one performing hedge fund on the planet into a stock that has the potential to triple by the end of next month.
This fund returned an incredible 52% last year, while the S&P 500 was flat. And since 1999, they’ve done 40% a year. And they’ve done it without one losing year. For perspective, that takes every $100,000 to $30 million.
We want you on board. To find out the name of this hedge fund, the stock we followed them into, and the catalyst that could cause the stock to triple by the end of the month, click here and join us in our Billionaire’s Portfolio.
We make investing easy. We follow the guys with the power and the influence to control their own destiny – and a record of unmatchable success. And you come along for the ride.
As we head into the Memorial Day weekend, we want to talk today about the G7 meeting that took place this week Japan, and how these meetings tend to effect financial markets (namely the key barometer for global markets in this environment, U.S. stocks). It’s a big effect.
If we look back at the past seven annual meetings of world leaders, there is clearly a direct correlation between their messaging and the resulting performance of stocks.
For context, we’re talking about a period, from 2009-present, that has been driven by intervention and careful confidence massaging by global policymakers. So it shouldn’t be surprising that coming out of these meetings, post-Lehman, things happen.
Let’s take a look at the chart of the S&P 500 and highlight the spots where a G7 meeting wrapped up (note: this was actually the G8 prior to 2014, when Russia was ousted from the group).
If you bought stocks following the meeting in Italy, in 2009, you’ve made a lot of money. The next year, in Canada, same result. Of course, the world was in very bad shape at the time, and the messaging from both meetings was unambiguously focused on the economy, restoring stability and growth.
By May of 2011, the message was that the recovery was becoming “self sustaining” (a positive tone). Stocks didn’t push higher, and then fell back later in the year when the European debt crisis spread to Italy, Spain and France.
In 2012, the meeting was hosted in the Washington D.C. The European debt crisis was at peak crisis. Greece exiting the euro was on the table and it was stoking fear that Italy and Spain were next to crumble and destroy the European Monetary Union. The first line of the communiqué was about Europe and the need for economic stimulus. Stocks went higher and two months later, ECB head Mario Draghi further fueled stocks by stepping in and averting disaster in Europe by saying they would do “whatever it takes” to save the euro.
In 2013, G7 leaders, plus Russia met in the UK. The second statement in the 33 page communiqué focused on economic uncertainty and promoting growth and jobs. Stocks went higher.
In 2014, the meeting was hosted by the European Union. Russia had been ousted earlier in the year from the G8 for break of international law for its actions in Ukraine. The primary focus was on Russia and promoting freedom and democracy. The tone on the economy was somewhat upbeat. Stocks went up for a few weeks and then ultimately fell back later in the year in a sharp correction/then sharp recovery.
In 2015, Germany hosted. The communiqué led with a focus on the refugee crisis. Stocks followed a similar path to 2014.
Finally, today the 2016 meetings concluded in Japan. The focus was on the economy. “Global growth remains moderate and below potential, while risks of weak growth persist.” And they discuss rising geo-political conflicts as a further burden on the global economy.
So if we look back at these meetings, clearly there is a G7 (G8) effect. If the headline focus is the economy, it tends to be very good for stocks.
Don’t Miss Out On This Stock
In our Billionaire’s Portfolio we followed the number one performing hedge fund on the planet into a stock that has the potential to triple by the end of next month.
This fund returned an incredible 52% last year, while the S&P 500 was flat. And since 1999, they’ve done 40% a year. And they’ve done it without one losing year. For perspective, that takes every $100,000 to $30 million.
We want you on board. To find out the name of this hedge fund, the stock we followed them into, and the catalyst that could cause the stock to triple by the end of the month, click here and join us in our Billionaire’s Portfolio.
We make investing easy. We follow the guys with the power and the influence to control their own destiny – and a record of unmatchable success. And you come along for the ride.
We charted very closely the risks of the oil price bust. We thought central banks would step in and remove the risk. They did. From there, we thought stocks would track the path of oil. As long as oil continued higher, stocks would follow and slowly global sentiment would mend. It’s happened.
When oil sustained above $40, we turned focus to the extremely negative sentiment that was weighing on markets and economies. But given the extreme views on the world, we thought things were set up for positive surprises. We said this surprise element creates opportunities for asymmetric outcomes (bad is priced-in, good … not at all). That sets up for the potential of “good times” ahead for both markets and broader sentiment.
Fast forward: Earnings expectations were ratcheted down and broadly surprised on the positive side. Global economic data has been ratcheted down and is positively surprising. It’s happening in Germany, which is a very important indicator for a bottoming of the euro zone economy. If the threat of further spiral in Europe has lifted, that’s a huge catalyst for global sentiment. When global sentiment has officially moved out of the doom and gloom camp and back to optimism the horse will have already had plenty of steps out of the barn. And we think we are seeing it reflected in stocks, especially small caps.
With this backdrop, we think everyone could benefit by having a healthy dose of “fear of missing out.” Stock returns tend to be lumpy over the long run. When we you wait to buy strength, you miss out on A LOT of the punch that contributes to the long run return for stocks.
Consider what we said on February 11th (stocks bottomed that day and are up 16% since): “We often hear interviews of money managers during periods like this, and the question is asked “are you getting defensive?”
That’s the exact opposite of what they should be asking. When stocks areup 15–20%, and acknowledging that the long–run average return for stocksis 8%, that’s the time to play Defense. When stocks are down 15–20%, that’s the time to play Offense.
The reality is most investors should see declines in the U.S. stock market as an exciting opportunity. The best investors in the world do. The same can be said for average investors.
Here’s why: Most average investors in stocks are NOT leveraged. And with that, they should have no concern about stock market declines, other than saying to themselves, “what a gift,” and asking themselves these questions: “Do I have cash I can put to work at these cheaper prices?” And, “where should I put that cash to work?”
As Warren Buffett says, bad news is an investor’s best friend. And as his billionaire counterpart says, and head of the biggest hedge fund in the world, ‘stocks go up over time.’ With these two basic, plain-spoken, tenets you should buy dips and look for value.
Broader stocks have just gone positive for the year. Small caps are still down small. Remember, when the macro fog cleared in 2010, small caps went on a tear, from down 6% through the first seven months of the year, to finish UP 27%. Don’t miss out!
Don’t Miss Out On This Stock
In our Billionaire’s Portfolio we followed the number one performing hedge fund on the planet into a stock that has the potential to triple by the end of the month.
This fund returned an incredible 52% last year, while the S&P 500 was flat. And since 1999, they’ve done 40% a year. And they’ve done it without one losing year. For perspective, that takes every $100,000 to $30 million.
We want you on board. To find out the name of this hedge fund, the stock we followed them into, and the catalyst that could cause the stock to triple by the end of the month, click here and join us in our Billionaire’s Portfolio.
We make investing easy. We follow the guys with the power and the influence to control their own destiny – and a record of unmatchable success. And you come along for the ride.
This past week we’ve talked about the recent public disclosures made about the investments of some of the world’s best investors.
The biggest news was Warren Buffett’s new $1 billion plus stake in Apple.
Apple’s stock price peaked in April of last year (following a 65% rolling 12-month return). Much of that run up was driven by activist efforts of Carl Icahn. Icahn influenced sentiment in the stock, but also influenced value creation for shareholders by pressuring Apple management to buy back stock.
But since peaking last April (2015), Apple shares had lost nearly 34% as of earlier this month. Icahn dumped his stake and made it public in late April.
And then we find this past week that Buffett is now long (he’s in).
So should you follow Buffett? Is it the bottom for Apple? And what makes Apple a classic Buffett stock?
First, Buffett has compounded money at 19.2% annualized over a 50 year period. That’s made him the second wealthiest man in the world.
Buffett loves to buy low. He has a long and successful record of buying when everyone else is selling. Buffett purchased his Apple stake last quarter when Apple was near its 52-week low.
But he famously stays away from technology. Why Apple? For Buffett, Apple is a global, dominant brand. That trumps sector. He loves brand name companies with a loyal customer base, and there is probably no company on the planet with a more loyal customer base then Apple. Plus, one could argue that Apple is a consumer services company (with 700 million credit cards on file, charging customers for movies, songs, apps …).
Generally Buffett pays less than 12 times earnings for a company. Of course there are exceptions, but Apple fits this criterion perfectly with a P/E of 10.
Buffett loves companies that have a high return-on-invested-capital (ROIC) and low debt. Apple has an ROIC of 28%, extremely high. Companies with a high ROIC usually have a “wide moat” or a competitive advantage over the rest of the world. That gives them pricing power to drive wide margins.
Apple really is the classic Buffett stock. And now that Buffett has put his stamp of approval on Apple, we believe the stock has bottomed, especially since it’s so cheap compared to the overall stock market. And he’s not the only billionaire value investor who loves Apple. Billionaire hedge fund manager David Einhorn also loves Apple. He increased his Apple stake last quarter to 15% of his entire hedge fund, almost $900 million dollars worth.
Don’t Miss Out On This Stock
In our Billionaire’s Portfolio we followed the number one performing hedge fund on the planet into a stock that has the potential to triple by the end of the month.
This fund returned an incredible 52% last year, while the S&P 500 was flat. And since 1999, they’ve done 40% a year. And they’ve done it without one losing year. For perspective, that takes every $100,000 to $30 million.
We want you on board. To find out the name of this hedge fund, the stock we followed them into, and the catalyst that could cause the stock to triple by the end of the month, click here and join us in our Billionaire’s Portfolio.
We make investing easy. We follow the guys with the power and the influence to control their own destiny – and a record of unmatchable success. And you come along for the ride.
As we’ve discussed over the past few months, markets can be wrong—sometimes very wrong.
On that note, consider that the yield on the U.S. ten–year Treasury was trading closer to 2.30% after the Fed’s first rate hike last December—the first hike in nearly ten years and the symbolic move away from the emergency zero interest rate policy. The ten–year yield has, incredulously, traded as low as 1.53% since. One end of that spectrum is wrong, very wrong.
Remember, as we headed into the last Fed meeting, the ten–year yield was trading just shy of 2% (after a wild ride down from the December hike date). And the communication to that point from the Fed was to expect FOUR rate hikes in 2016.
Of course, in the face of another global economic crisis threat, which was driven by the oil price bust, the Fed did their part and backed off of that forecast—taking two of those hikes off of the table. Still, yields under 2% with even two hikes projected seemed mispriced.
So following a dramatic 85% bounce in oil prices and the threat of cheap oil now behind us (seemingly), as of yesterday afternoon yields still stood around just 1.79%. That’s more than a 1/2 percentage point lower than the levels immediately following the December hike. And that’s AFTER two voting Fed members just said on Tuesday that they should go two or threetimes this year. So with global risks abating, the Fed is beginning to walk back up expectations for Fed hikes.
Confirming that, as of yesterday afternoon, the minutes from the most recent Fed meeting have been disclosed, which now indicate that a June hike is likely assuming things continue along the current path (i.e. no global shock risks emerge).
Still, the yield on the ten–year Treasury is just 1.84%, 5 basis points higher than it was yesterday morning, prior to the Fed minutes.
Why?
The bet is that the Fed is making a mistake raising rates (at all). But at these levels for the ten–year yield, it’s a very asymmetric bet. The downside for yields here is very limited (short of a global apocalypse), the upside is very big. That makes betting on lower yields a very dangerous one, if not a dumb one. When people are positioned the wrong way in asymmetric trades, the adverse moves tend to be violent. I wouldn’t be surprised to see 2.50% on the U.S. ten–year Treasury by the year end.
Don’t Miss Out On This Stock
In our Billionaire’s Portfolio we followed the number one performing hedge fund on the planet into a stock that has the potential to triple by the end of the month.
This fund returned an incredible 52% last year, while the S&P 500 was flat. And since 1999, they’ve done 40% a year. And they’ve done it without one losing year. For perspective, that takes every $100,000 to $30 million.
We want you on board. To find out the name of this hedge fund, the stock we followed them into, and the catalyst that could cause the stock to triple by the end of the month, click here and join us in our Billionaires Portfolio.
We make investing easy. We follow the guys with the power and the influence to control their own destiny – and a record of unmatchable success. And you come along for the ride.
We’ve talked a lot about oil, the rebound of which has probably led to the trade of the year. If you recall back on February 8th, we said policymakers finally got the wake up call on the systemic threat of the oil price bust when Chesapeake Energy, the second largest oil and gas producer, was rumored to be pursuing bankruptcy.
This is what we said:
“The early signal for the 2007-2008 financial crisis was the bankruptcy of New Century Financial, the second largest subprime mortgage originator. Just a few months prior the company was valued at around $2 billion.
On an eerily similar note, a news report hit this morning that Chesapeake Energy, the second largest producer of natural gas and the 12th largest producer of oil and natural gas liquids in the U.S., had hired counsel to advise the company on restructuring its debt (i.e. bankruptcy). The company denied that they had any plans to pursue bankruptcy and said they continue to aggressively seek to maximize the value for all shareholders. However, the market is now pricing bankruptcy risk over the next five years at 50% (the CDS market).
Still, while the systemic threat looks similar, the environment is very different than it was in 2008. Central banks are already all-in. We know, and they know, where they stand (all-in and willing to do whatever it takes). With QE well underway in Japan and Europe, they have the tools in place to put a floor under oil prices.
In recent weeks, both the heads of the BOJ and the ECB have said, unprompted, that there is “no limit” to what they can buy as part of their asset purchase program. Let’s hope they find buying up dirt-cheap oil and commodities, to neutralize OPEC, an easier solution than trying to respond to a “part two” of the global financial crisis.”
Chesapeake bounced aggressively, nearly 50% in 10 business days.
And on February 22nd, we said, “persistently cheap oil (at these prices) has become the new “too big to fail.” It’s hard to imagine central banks will sit back and watch an OPEC rigged price war put the global economy back into an ugly downward spiral. And time is the worst enemy to those vulnerable first dominos (the energy industry and weak oil producing countries).”
As we’ve discussed, central banks did indeed respond. The BOJ intervened in the currency markets on February 11, and that (not so) coincidently put the bottom in oil and global stocks. China followed on February 29, with a cut on bank reserve requirements, then ECB cut rates and ramped up their QE and the Fed joined the effort by taking two projected rate cuts off of the table (we would argue maybe the most aggressive response in the concerted central bank effort).
From the bottom on February 8th, Chesapeake shares have gone up five-fold, from $1.50 to over $7. Oil bottomed February 11 and is up 77%. This is the trade of the year that everyone should have loved. If you’re wrong, the world gets very ugly and you and everyone have much bigger things to worry about that a bet on oil and/or Chesapeake. If you’re right, and central banks step in to divert another big disaster (a disaster that could kill the patient) you make many multiples of your risk.
We think it was the trade of the year. The trade of the decade, we think is buying Japanese stocks.
Overnight the BOJ made no changes to policy. And the dollar-denominated Nikkei fell over 1,200 points (more than 7%).
As we said yesterday, two explicit tools in the Bank of Japan’s tool box are: 1) a weaker yen, and 2) higher stocks. I say “explicit” because they routinely have said in their minutes that they expect both to contribute heavily to their efforts. So now Japanese stocks and the yen have returned near the levels we saw before the Bank of Japan surprised the world with a second dose of QE back in October of 2014. So their efforts have been undone. And they’ve barely moved the needle on their objective of 2% inflation during the period. In fact, the head of the BOJ, Kuroda, has recently said they are still only “halfway there” on reaching their goals.
So they have a lot of work left. And if we take them at their word, a weak yen and higher stocks will play a big role in that work. That makes today’s knee-jerk retreat in yen-hedged Japanese stocks a gift to buy.
U.S. stocks have well surpassed pre-crisis, record highs. German stocks have well surpassed pre-crisis, record highs. Japanese stocks have a long way to go. In fact, they are less than “halfway there.”
Join us here to get all of our in-depth analysis on the bigger picture, and our carefully curated stock portfolio of the best stocks that are owned by the world’s best investors.
Heading into today’s inflation data, the prospects of German 10-year government interest rates going negative had added to the heightened risk aversion in global markets. And we’ve been talking this week about how markets are set up for a positive surprise on the inflation front, which could further support the mending of global confidence.
On cue, the euro zone inflation data this morning (the most important data point on inflation in the world right now) came in better than expected. We know Europe, like Japan, is throwing the kitchen sink of extraordinary monetary policies at the economy in an effort to reverse economic stagnation and another steep fall into deflation. And we know that the path forward in Europe, at this stage, will directly affect that path forward in the U.S. and global economy. So, as we said in one of our notes last week, the world needs to see “green shoots” in Europe.
With the better euro zone inflation data today, we may be seeing the early signs of a bottom in this cycle of global pessimism and uncertainty. German yields are now trading double the levels of Monday. And with that, U.S. yields have broken the downtrend of the month, as you can see in the chart below.
Source: Billionaire’s Portfolio, Reuters
With that in mind, today we want to talk about how we can increase certainty in an uncertain world. Aside from the all-important macro influences, even when you get the macro right, when your investing in stocks, you also have to get a lot of other things right, to avoid the landmines and extract something more than what the broad tide of the stock market gives you (which is about 8% annualized over the long term, and it comes with big drawdowns and a very bumpy road).
In our Billionaire’s Portfolio, we like to put the odds on our side as much as possible. We do so by following big, influential investors into stocks where they’ve already taken a huge stake in a company, and are wielding their influence and power to maximize the probability that they will exit with a nice profit.
This is the perfect time to join us in our Billionaire’s Portfolio. We’ve discussed our simple analysis on why broader stocks can and should go much higher from here. You can revisit some of that analysis here. In our current portfolio, we have stocks that are up. We have stocks that are down. We have stocks that are relatively flat. But they all have the potential to do multiples of what the broad market does. And for depressed billionaire-owned stocks, a broad market rally and shift in economic sentiment should make these stocks perform like leveraged call options – importantly, without the time decay. Join us hereto get your portfolio in line with ours.
