Fat Tail Investment Insider: Recent Episodes
Fat Tail Investment Research
When you first invest in shares, it’s exciting. When your shares go up, there’s no better feeling. It’s better than any thrill ride. But there’s one very important fact to remember: Shares you’ve bought with your hard-earned cash can go down as well as up. No matter how exciting the ride, you can lose everything you’ve invested. In this report, you’ll learn three easy risk management techniques that can reduce your exposure every time you invest. These three risk management methods won’t eliminate the risk of losing money altogether. But they’ll help. If you own shares, having a clear idea about how to manage your risk will make you a better, more educated, and hopefully a more profitable investor.
A True Look at the Inside
Just bear in mind that this was an internal discussion. It’s not edited or scripted. It wasn’t intended for outside audiences. Greg didn’t even know it would be published.
But that’s what I’m going to do.
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LINKS & RESOURCES
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Exponential Stock Investor is not your average stock-tipping service. Editors Ryan Dinse and Izaac Ronay don’t make stock recommendations lightly. Every play is operating in a field or industry that’s going through an evolutionary or disruptive step change.
This is ‘change-the-world’ investing, at the ground level.
https://pro.portphillippublishing.com.au/m/1560121
You’d know exactly the right time to buy a house, apartment, or investment property…you’d know the ideal time to profit from a stock market sell-off…and you’d have the confidence to invest in assets when most people are running scared.
That’s what Cycles, Trends & Forecasts aims to provide based on the power of understanding the 18.6-year real estate cycle.
https://pro.agorafinancial.com.au/m/1770170
Jim Rickards’ Strategic Intelligence Australia is a monthly communique that connects private investors from around the world…as part of Jim Rickards’ global network.
Jim Rickards is no ordinary financial newsletter writer…and Strategic Intelligence Australia is no ordinary financial newsletter.
https://pro.fattailir.com.au/m/1866862
New Energy Investor shows you how to grab your stake in the great energy switchover, as the world transitions out of fossil fuels and into cleaner, greener renewable energy.
Over the next three decades, US$95 trillion is going to be spent on turning the world’s energy system green.
The companies driving that change could offer early investors incredible upside.
https://pro.portphillippublishing.com.au/m/1776718
New Money Investor is a first-of-its-kind advisory in Australia.
It’s dedicated to chronicling, explaining and navigating the transition from our current fiat money system — based on the centralised control of the US dollar — to an emerging decentralised system of money.
https://pro.portphillippublishing.com.au/m/1784910
Rock Stock Insider : Why would anyone buy gold?
Isn’t it just a metal for old-timers who don’t get the modern financial system?
After all, gold is nothing more than a hunk of metal that does nothing.
I bet you’ve heard that argument before.
Then there’s the idea that gold no longer has a place in the monetary system.
https://pro.agorafinancial.com.au/m/1807282
Australian Small-Cap Investigator is simple: find and recommend the tiny hidden gems trading on the ASX.
Chances are you might not have heard of any of the small companies which Ryan Clarkson-Ledward and Murray Dawes will write to you about. But don’t be surprised if these companies start attracting headlines soon.
https://pro.fattail.com.au/m/1909670
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Financial Services Guide
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Please keep this guide for future reference. A copy is available from us on request or can be downloaded from our website at fattail.com.au/financial-services-guide/. If you do not understand anything in it, or require more information, please feel free to contact us
IMPORTANT
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We provide general financial product advice only. The advice published by Fat Tail Investment Research has been prepared without taking into account your objectives, financial situations or needs. Before acting on our recommendations, you should consider their appropriateness to your specific investment objectives, financial situation and needs. If you are uncertain as to what your objectives and needs are, you should contact a financial adviser or stockbroker who is licensed to provide you with personal financial product advice.
Investing #Finance #bitcoin #ASX News
Producer:Jason Swifte
Yesterday, I caught up with Murray Dawes.
This week he’s been holed up working from a mate’s pad up in Hawks Nest in New South Wales.
And there was a lot to ponder this week, as Muzza wrote to Pivot Trader readers:
‘The story of the week is the sharp move higher in the US dollar and the spike in yields across the US yield curve.
‘We are seeing other markets affected by the jump in the US dollar with gold suffering a large fall last night. Bitcoin [BTC] also looks dangerous to me with a weekly sell pivot confirmed last week.
‘Oil prices are also retreating after a strong run over the last few months.
‘Stocks haven’t been affected by the jump in the US yield curve yet, but I reckon we aren’t far off seeing the US 10-year yield shooting through 1.8% and heading towards 2.2%.’
In short…inflation risk up. Threat of higher rates up. US dollar up. Gold down. Bitcoin down. Oil price cooling. US bond yields up. And, in turn, bond prices down.
Hence why Muzz has advised readers it’s a good bet to place some short trades on US bonds.
Anyway, we discuss all of the above in our chat, and it made for a fascinating conversation.
Yesterday, I caught up with Murray Dawes.
This week he’s been holed up working from a mate’s pad up in Hawks Nest in New South Wales.
And there was a lot to ponder this week, as Muzza wrote to Pivot Trader readers:
‘The story of the week is the sharp move higher in the US dollar and the spike in yields across the US yield curve.
‘We are seeing other markets affected by the jump in the US dollar with gold suffering a large fall last night. Bitcoin [BTC] also looks dangerous to me with a weekly sell pivot confirmed last week.
‘Oil prices are also retreating after a strong run over the last few months.
‘Stocks haven’t been affected by the jump in the US yield curve yet, but I reckon we aren’t far off seeing the US 10-year yield shooting through 1.8% and heading towards 2.2%.’
In short…inflation risk up. Threat of higher rates up. US dollar up. Gold down. Bitcoin down. Oil price cooling. US bond yields up. And, in turn, bond prices down.
Hence why Muzz has advised readers it’s a good bet to place some short trades on US bonds.
Anyway, we discuss all of the above in our chat, and it made for a fascinating conversation.
On Wednesday, I told you that today we’d be chatting with Fat Tail’s resident gold hound, Brian Chu.
Gold stocks offer great value right now…and the gold price is beginning to rumble.
Grab a cup of tea and get ready to hear Brian’s read on the gold market at present…then press play!
On Wednesday, I told you that today we’d be chatting with Fat Tail’s resident gold hound, Brian Chu.
Gold stocks offer great value right now…and the gold price is beginning to rumble.
Grab a cup of tea and get ready to hear Brian’s read on the gold market at present…then press play!
Chances are you’ve heard a hundred warnings about the state of the Australian economy today…
ABC News recently warned we face a ‘profound downturn’ triggered by COVID lockdowns.
Earlier this year The Guardian dubbed the rapidly rising property market ‘insane’.
And even the IMF has taken aim at Australia, claiming at the start of 2021 that property prices could ‘unwind in a disorderly manner’.
In short, though our stock market recently hit all-time highs and property prices across our biggest five cities soared 15% in the last year (and are still rising), there’s no lack of doomsayers claiming we’re on the verge of economic Armageddon.
I spoke to one of them in our own ranks last week (see my chat with Vern Gowdie here).
That’s not to say there’s no gloom on the horizon. It’s just that it’s still a fair way off. That’s according to Catherine Cashmore, co-editor of Cycles, Trends & Forecasts.
She views the markets via the land price cycle, which turns every 18 years — with 14 years up, four years down, and a mid-cycle slowdown in between.
If she’s right, we’re just coming out of a harsh mid-cycle (lockdown-induced) slowdown right now. And there are a few heady years ahead.
An end-of-cycle crash will come…but before that an extraordinary amount of wealth can be made.
What few people know is that it’s all down to the land. Check it out:
Chances are you’ve heard a hundred warnings about the state of the Australian economy today…
ABC News recently warned we face a ‘profound downturn’ triggered by COVID lockdowns.
Earlier this year The Guardian dubbed the rapidly rising property market ‘insane’.
And even the IMF has taken aim at Australia, claiming at the start of 2021 that property prices could ‘unwind in a disorderly manner’.
In short, though our stock market recently hit all-time highs and property prices across our biggest five cities soared 15% in the last year (and are still rising), there’s no lack of doomsayers claiming we’re on the verge of economic Armageddon.
I spoke to one of them in our own ranks last week (see my chat with Vern Gowdie here).
But today, you’re going to get a VERY different view on the Australian economy — one that flies in the face of those gloomy forecasts.
That’s not to say there’s no gloom on the horizon. It’s just that it’s still a fair way off. That’s according to Catherine Cashmore, co-editor of Cycles, Trends & Forecasts.
She views the markets via the land price cycle, which turns every 18 years — with 14 years up, four years down, and a mid-cycle slowdown in between.
If she’s right, we’re just coming out of a harsh mid-cycle (lockdown-induced) slowdown right now. And there are a few heady years ahead.
An end-of-cycle crash will come…but before that an extraordinary amount of wealth can be made.
What few people know is that it’s all down to the land. Check it out:
It’s longer than usual, though I hope it doesn’t feel like it. It certainly didn’t to me. But really it needed to be, because I had so many things to ask him.
By now, you’ve probably seen Vern’s latest report on the four ‘Code Red’ investment risks he sees flashing right now.
In a nutshell, they are:
Tech stocks
Crypto (more specifically, stablecoins…and even more specifically, Tether [USDT])
Bonds
China
No one risk is more pressing than the other — each one weaves into the next. But using these four ‘pillars of risk’ allows Vern to navigate and give us a sense of the interconnectedness of the great bubble in everything.
I begin with a question about inflation. I started here because it’s no secret that Vern advocates a high-cash position.
On the face of it, it seems like a position guaranteed to lose money (or purchasing power, I should say).
The reasons seem obvious...
Central banks are flooding the world with cash (via billions and billions of bond purchases), while interest rates are at near-zero levels.
All this easy money is flooding into assets, and prices of everything from timber, to food, to energy, are going up.
Twitter founder Jack Dorsey went so far as to say ‘Hyperinflation is going to change everything. It’s happening.’
Well, in that situation the last thing you want is a boatload of cash.
So I put this to Vern to kick-off our conversation.
It’s longer than usual, though I hope it doesn’t feel like it. It certainly didn’t to me. But really it needed to be, because I had so many things to ask him.
By now, you’ve probably seen Vern’s latest report on the four ‘Code Red’ investment risks he sees flashing right now.
In a nutshell, they are:
Tech stocks
Crypto (more specifically, stablecoins…and even more specifically, Tether [USDT])
Bonds
China
No one risk is more pressing than the other — each one weaves into the next. But using these four ‘pillars of risk’ allows Vern to navigate and give us a sense of the interconnectedness of the great bubble in everything.
I begin with a question about inflation. I started here because it’s no secret that Vern advocates a high-cash position.
On the face of it, it seems like a position guaranteed to lose money (or purchasing power, I should say).
The reasons seem obvious...
Central banks are flooding the world with cash (via billions and billions of bond purchases), while interest rates are at near-zero levels.
All this easy money is flooding into assets, and prices of everything from timber, to food, to energy, are going up.
Twitter founder Jack Dorsey went so far as to say ‘Hyperinflation is going to change everything. It’s happening.’
Well, in that situation the last thing you want is a boatload of cash.
So I put this to Vern to kick-off our conversation.
In Monday’s Insider, I said I’d come back to you with more on the Square Inc [NYSE:SQ] takeover of Afterpay Ltd [ASX:APT].
Given I’ve written about the company (APT) on less than glowing terms here before, I thought I probably wasn’t the best person to give you a rundown on it.
So I called on our resident young gun Lachlann Tierney, co-editor of our Exponential Stock Investor service, to make sense of it all.
That’s because this is a classic ‘exponential’ transaction. That is one that makes no sense to me, but does to seemingly everyone else following the story.
The day after the shock announcement, the business media was saturated with glowing reviews about the deal and how it made ‘absolute sense’. This is an interesting take because no one really contemplated the deal the day before.
Nearly everything, however, makes sense in hindsight. And it is no different in this case. As Lachy and I discuss, the tie-up between the two companies will provide a scale that will benefit both businesses.
Square Inc is one of these new fintech companies that provide simple banking/payment/transaction services that appeal to an emerging demographic that have rejected the traditional banking model.
As Lachy points out, its market capitalisation is now approaching the size of some of the largest banks in the US. And Square is much larger than all the Big Four banks except the Commonwealth Bank. But it generates a fraction of the earnings, I would add.
And here lies the problem, as far as this ‘old paradigm’ thinker is concerned.
Square Inc, which trades on an FY22 price-to-earnings (P/E) multiple of 309 times, just bought a company trading on a P/E of 428 times.
Or, if you want to be generous and factor in another year of earnings growth, you’re looking at a respective P/E of 182 and 166 times.
Such a deal looks very much like ‘new paradigm’ thinking to me.
It used to be that high-growth companies would trade on P/Es of around 50 times. THAT was expensive. But triple-digit? What am I missing that the market sees?
Well, this is where it is useful to listen to someone like Lachy. As he points out, there is huge GLOBAL growth possible here, as a new demographic, familiar with app-based technology, move into the banking system.
They’re not taking out mortgages yet. But when they do, perhaps Square will provide that service too?
What do Bitcoin [BTC] and China have in common?
Perhaps nothing.
Perhaps it’s just coincidental that at the same time bitcoin prices soared earlier this week, Chinese authorities continued their regulatory crackdown on a range of industries.
From Forbes:
‘China’s internet billionaires suffered the biggest losses on the list of the world’s richest people on Monday, as spooked investors continued to dump stocks targeted in Beijing’s widening regulatory crackdown.
‘Meituan founder Wang Xing, NetEase Chief Executive Williang Ding, Pinduoduo founder Colin Zheng Huang and Tencent Chairman Pony Ma racked up a combined $13.6 billion plunge in their wealth in just one day, according to the World’s Real-Time Billionaires List. The hits to their fortunes come as a sell-off in Chinese education and technology stocks continued to spread to other sectors, with investors pondering which companies could fall under Beijing’s scrutiny next.
‘“[The crackdown] is a continuation of previous policies of anti-monopoly and stop the disorderly expansion of capital,” says Shen Meng, director of Beijing-based boutique investment bank Chanson and Co. “China also wants to reduce discontent among different factions of the society, and alleviate overall pressure.”’
Why would China want to crack down on their tech companies? Don’t you need scale and network effects (a fancy word for a monopoly) to compete at this level?
Yes, you do.
But do you think China’s Dictator Xi Jinping isn’t looking at the dominance of the US tech companies and saying, ‘That’s not going to happen here!’?
This week, we launch two big ideas. In fact, today is the big day for both.
The first is Vern Gowdie’s long-awaited report on the four biggest risks in the market today.
Vern calls them ‘Code Reds’.
What is a code red?
The official definition is this: A condition of heightened alertness or preparedness, especially to guard against imminent danger.
The term is used in various ways by the military, medical professionals, emergency services, and even climate scientists.
Today, with bubbles blowing in almost every market and asset you can think of, thanks to the endless intervention of central bank stimulus and low rates, Vern’s speaking out.
I will warn you, much of what Vern says is at odds with what you will hear from other financial sources in the mainstream.
In fact, some of his conclusions are diametrically opposed to some of his fellow editors here on the inside.
But that’s not only OK…we welcome it!
Not only does it make for great discussions…it makes everyone think harder.
(In fact, we’re planning an in-house debate between Vern and Lachy very soon, which will be moderated by either myself or Greg, and we’ll film it live too — watch out for that in the coming weeks.)
But why is it important to publish Vern’s idea NOW, when everything seems to just keep going up, up, and up?
Well…Vern says it best:
‘Loss of perspective always happens right before a big downturn.
‘I saw it in the mid-‘80s…when I joined the ranks of the fledging investment advisory industry. That was ‘peak entrepreneur’ — when the likes of Alan Bond, Christopher Skase, and John Spalvins ruled the business pages. And the ASX’s ‘entrepreneurial index’ could only go higher.
‘Until it didn’t.
‘That was my first lesson in ignoring Code Reds: People love buying high. But are far less inclined when the markets offer better value.’
At the very least, Vern will provide some much-needed perspective. Check it out here:
‘Four CODE RED Investments to Sell Now’
Now, our second idea pairs nicely with the first.
You see, it involves risk, too. But specifically, how you can gain an edge by how market-makers are pricing risk.
This measure, combined with another commonly overlooked economic ratio between copper and gold, can help you make allocation decisions with the bulk of your capital that you really don’t want to put in unnecessary danger.
I’ll quickly explain.
Like all good stories, it starts in the pub…
Back in December 2018, at my CrossFit gym’s Christmas party, I first met Peter Bakker.
On the surface, he was a normal, stay-at-home dad.
But there was another side to Peter.
By night he became ‘Chewbakker’…
I know, that sounds weird!
But ‘Chewbakker’ is what Peter is known as on various global trading platforms. It’s a play on his Dutch surname Bakker.
The reason he started using it was to stay anonymous while he shared various trading signals and tests on platforms used by hedge funds and other traders.
As Chewbakker (or Chewie), while the kids were asleep, he would trade the options and futures markets.
His experience spans many decades…building systems, testing, trading, failing, winning, being ripped off hundreds of thousands of dollars, getting it all back with a new system…
His story is pretty fascinating. And he’s an extremely smart guy, having built and sold two businesses and working for a time at Google on the technical side, amongst many other things.
Well…it’s been more than a year in the planning, but finally this week your brand new website went live.
If you haven’t had a chance yet, check it out here:
www.fattail.com.au
From now on, this is where you can access your subscription content — monthly issues, trades and market updates, special reports and anything else.
There are some cool new features built-in, too, like a favourites function, which allows you to bookmark articles that you’d like to save and easily come back to later…colour-coded listings for different types of updates…and also a ‘Twitter-like’ info feed so the editors can post timely content and any urgent messages.
Anyway, we figured a video to walk you through the site and help navigate it would be useful. So that’s what we’ve done today.
It’s been a massive operation, and the team have been working immensely hard behind the scenes. It’s not just a website. It’s all the data that goes with it. Just think…we’ve been in business for 15 years and have more than 25 publications…so that’s a lot of content to migrate over.
Of course, judging by the minimal calls our customer service team received, from your point of view, it should have been nice and seamless.
We are all extremely proud of the work we publish. And now we have a subscriber website to be proud of too. Most importantly, I hope it improves your experience as a valued Fat Tail Investment Research subscriber.
Without further ado, here’s Natalie (the brains behind the operation) to give you a detailed tour of the site. I hope you find it helpful.
All week you’ve been hearing about Callum Newman and his service Catalyst Trader.
Today I have the man on video!
That’s below…but before we get to that, I want to share with you a couple of recent trade examples from the Catalyst Trader service.
There’s no better way to show Cal’s distinct style than from direct market action.
Here’s a point on that…
Cal is the only one of our analysts that’s been talking about opportunities in iron ore lately.
Iron ore? Really?
I’m as bemused as you are.
But so far, he’s been proven correct.
The good news is he thinks there are plenty more opportunities coming up.
Now, Catalyst Trader is not like most of our other services.
The recommendations are not designed to hold for the long term like, say, something from Greg Canavan’s advisory.
Cal hunts for immediate and short-term catalysts that can rerate a stock…then looks to bank the profit quickly.
Here’s what Cal wrote to his subscribers back in April on the iron ore theme…
‘The steel trade is booming currently in China. Iron ore could continue to surprise by how high it goes, or how high it stays.’
Iron ore was around US$160 then. It went to US$200 in May…and is still US$222 now.
In March, Callum recommended a stock called Fenix Resources Ltd [ASX:FEX]. FEX is a junior iron ore miner. It was 23 cents when he sent out the alert on 5 March.
New website launches next week
The New Game Trader closes at midnight, TONIGHT…
Gold: Seize on the sell-off, says Brian…
Today I have an in-depth conversation on the state of the gold market with our man Brian Chu.
More on that in just a moment. First, a couple of important points.
New website launches next week
We’ve got a big development coming next week, which will hopefully improve the service of all your subscriptions.
As you should know by now, in the next couple of weeks, we are officially merging under one new brand: Fat Tail Investment Research.
(If this IS news to you, below I’ve republished my original explanation that we published at the start of this month.)
As you’ll see, part of the merge is a brand new and interactive website. I’m delighted to say that we are now one week away from the launch of that!
The team has been doing an immense amount of work behind the scenes to get it all ready. As you can imagine, after 15 years in business and the last four of those with an entirely separate business to migrate over, it’s a lot of data we’re dealing with. But it’s all coming together. We had a run-through of the website internally this morning, and it is looking great. Most importantly, the useability for you, our subscribers, is top-notch, as it should be.
There’ll also be some new capabilities for our editors to post live and up-to-date messages to highlight any pertinent news or info you need to know about. But we’ll explain more on that, and other features, soon enough. We’ll be preparing a step-by-step navigational video guide that should help you familiarise yourself with the new site.
Put it this way, if you manage to navigate the current one, this one will be a doddle. More to come on that!
The New Game Trader closes at midnight, TONIGHT…
Now one final thing before I get to my video with Brian. A quick reminder that the amazing crypto event Natalie Wood and Ryan Dinse hosted on Thursday night is going offline tonight, at the stroke of midnight. And with it, an unbeatable offer to subscribe to Ryan’s preeminent crypto trading service.
When the big hand hits 12, then the base price for a Crypto Flip Trader subscription goes up to a shade under $3,000.
As Ryan said to priority list members earlier today:
‘I can’t offer memberships this cheaply for very long. Not even to readers of New Money Investor, as much as I’d love to.
‘I’ve held it open for four days to give my readers the chance to review my trading track record, let me explain how my strategy works, and hear from some of the people who have had success from using it.
‘There’s not much more I can do at this point, except to encourage you to act today if you’ve been on the fence about this. There’s really only one way to see if something’s for you and that’s to try it out.
‘In the mainstream financial world, you don’t get this kind of opportunity. The funds management industry survives because of the fees you pay.
‘There’s no way they’d offer you a money back guarantee on your joining fee (remember, I worked in that industry for many years — I know how it operates).’
All new members get access to a 10-part onboarding series that walks you through everything from how to set up your crypto trade station, your wallet, purchasing your bitcoin and everything else you need to feel comfortable making a flip trade.
And like Ryan says, you can check all this out while being covered by a money-back guarantee of your joining fee. Check it out here.
Now, from bitcoin, so-called ‘digital gold’, to actual gold…
Gold: Seize on the sell-off, says Brian…
Between March and May, gold picked up and broke out.
Our gold man Brian Chu expected another quick sell-off before any uptrend continued.
That’s now happened.
The gold price slumped heavily last week, going as low as US$1,760 per ounce, and $2,350 in Aussie dollar terms.
Regardless of the fall, Brian’s portfolio is holding up well. Subscribers to his services have also seen their portfolio withstand the brutal sell-down.
And he had a clear message for his readers: SEIZE ON THIS WEAKNESS TO ACCUMULATE. He will be updating readers in the next two weeks about which companies should be best positioned to bounce. So have your finger on the trigger!
One of the things Brian has been studying closely is the seasonal trends in the gold market and its impact on related stocks. I say ‘one of the things’ because there are short-term cycle and longer-term cycles at play. But the short-term cycles are interesting to watch because they can give you a good idea of ideal times to buy.
Here’s a very quick conclusion he made in an extensive email thread between a few of our editors:
‘Overall conclusion:
‘Best months for gold — January, February and August hands down.
‘Worst months for gold — March, April and October hands down.
‘Basically, speculators should buy gold and gold stocks in late December and sell by late February. Come back in late May and sell by mid-September. Long-term investors, seize on this weakness.’
This week, we launch two big ideas. In fact, today is the big day for both.
The first is Vern Gowdie’s long-awaited report on the four biggest risks in the market today.
Vern calls them ‘Code Reds’.
What is a code red?
The official definition is this: A condition of heightened alertness or preparedness, especially to guard against imminent danger.
The term is used in various ways by the military, medical professionals, emergency services, and even climate scientists.
Today, with bubbles blowing in almost every market and asset you can think of, thanks to the endless intervention of central bank stimulus and low rates, Vern’s speaking out.
I will warn you, much of what Vern says is at odds with what you will hear from other financial sources in the mainstream.
In fact, some of his conclusions are diametrically opposed to some of his fellow editors here on the inside.
But that’s not only OK…we welcome it!
Not only does it make for great discussions…it makes everyone think harder.
(In fact, we’re planning an in-house debate between Vern and Lachy very soon, which will be moderated by either myself or Greg, and we’ll film it live too — watch out for that in the coming weeks.)
But why is it important to publish Vern’s idea NOW, when everything seems to just keep going up, up, and up?
Well…Vern says it best:
‘Loss of perspective always happens right before a big downturn.
‘I saw it in the mid-‘80s…when I joined the ranks of the fledging investment advisory industry. That was ‘peak entrepreneur’ — when the likes of Alan Bond, Christopher Skase, and John Spalvins ruled the business pages. And the ASX’s ‘entrepreneurial index’ could only go higher.
‘Until it didn’t.
‘That was my first lesson in ignoring Code Reds: People love buying high. But are far less inclined when the markets offer better value.’
At the very least, Vern will provide some much-needed perspective. Check it out here:
‘Four CODE RED Investments to Sell Now’
Now, our second idea pairs nicely with the first.
You see, it involves risk, too. But specifically, how you can gain an edge by how market-makers are pricing risk.
This measure, combined with another commonly overlooked economic ratio between copper and gold, can help you make allocation decisions with the bulk of your capital that you really don’t want to put in unnecessary danger.
I’ll quickly explain.
Like all good stories, it starts in the pub…
Back in December 2018, at my CrossFit gym’s Christmas party, I first met Peter Bakker.
On the surface, he was a normal, stay-at-home dad.
But there was another side to Peter.
By night he became ‘Chewbakker’…
I know, that sounds weird!
But ‘Chewbakker’ is what Peter is known as on various global trading platforms. It’s a play on his Dutch surname Bakker.
The reason he started using it was to stay anonymous while he shared various trading signals and tests on platforms used by hedge funds and other traders.
As Chewbakker (or Chewie), while the kids were asleep, he would trade the options and futures markets.
His experience spans many decades…building systems, testing, trading, failing, winning, being ripped off hundreds of thousands of dollars, getting it all back with a new system…
His story is pretty fascinating. And he’s an extremely smart guy, having built and sold two businesses and working for a time at Google on the technical side, amongst many other things.
New website launches next week
The New Game Trader closes at midnight, TONIGHT…
Gold: Seize on the sell-off, says Brian…
Today I have an in-depth conversation on the state of the gold market with our man Brian Chu.
More on that in just a moment. First, a couple of important points.
New website launches next week
We’ve got a big development coming next week, which will hopefully improve the service of all your subscriptions.
As you should know by now, in the next couple of weeks, we are officially merging under one new brand: Fat Tail Investment Research.
(If this IS news to you, below I’ve republished my original explanation that we published at the start of this month.)
As you’ll see, part of the merge is a brand new and interactive website. I’m delighted to say that we are now one week away from the launch of that!
The team has been doing an immense amount of work behind the scenes to get it all ready. As you can imagine, after 15 years in business and the last four of those with an entirely separate business to migrate over, it’s a lot of data we’re dealing with. But it’s all coming together. We had a run-through of the website internally this morning, and it is looking great. Most importantly, the useability for you, our subscribers, is top-notch, as it should be.
There’ll also be some new capabilities for our editors to post live and up-to-date messages to highlight any pertinent news or info you need to know about. But we’ll explain more on that, and other features, soon enough. We’ll be preparing a step-by-step navigational video guide that should help you familiarise yourself with the new site.
Put it this way, if you manage to navigate the current one, this one will be a doddle. More to come on that!
The New Game Trader closes at midnight, TONIGHT…
Now one final thing before I get to my video with Brian. A quick reminder that the amazing crypto event Natalie Wood and Ryan Dinse hosted on Thursday night is going offline tonight, at the stroke of midnight. And with it, an unbeatable offer to subscribe to Ryan’s preeminent crypto trading service.
When the big hand hits 12, then the base price for a Crypto Flip Trader subscription goes up to a shade under $3,000.
As Ryan said to priority list members earlier today:
‘I can’t offer memberships this cheaply for very long. Not even to readers of New Money Investor, as much as I’d love to.
‘I’ve held it open for four days to give my readers the chance to review my trading track record, let me explain how my strategy works, and hear from some of the people who have had success from using it.
‘There’s not much more I can do at this point, except to encourage you to act today if you’ve been on the fence about this. There’s really only one way to see if something’s for you and that’s to try it out.
‘In the mainstream financial world, you don’t get this kind of opportunity. The funds management industry survives because of the fees you pay.
‘There’s no way they’d offer you a money back guarantee on your joining fee (remember, I worked in that industry for many years — I know how it operates).’
All new members get access to a 10-part onboarding series that walks you through everything from how to set up your crypto trade station, your wallet, purchasing your bitcoin and everything else you need to feel comfortable making a flip trade.
And like Ryan says, you can check all this out while being covered by a money-back guarantee of your joining fee. Check it out here.
Now, from bitcoin, so-called ‘digital gold’, to actual gold…
Gold: Seize on the sell-off, says Brian…
Between March and May, gold picked up and broke out.
Our gold man Brian Chu expected another quick sell-off before any uptrend continued.
That’s now happened.
The gold price slumped heavily last week, going as low as US$1,760 per ounce, and $2,350 in Aussie dollar terms.
Regardless of the fall, Brian’s portfolio is holding up well. Subscribers to his services have also seen their portfolio withstand the brutal sell-down.
And he had a clear message for his readers: SEIZE ON THIS WEAKNESS TO ACCUMULATE. He will be updating readers in the next two weeks about which companies should be best positioned to bounce. So have your finger on the trigger!
One of the things Brian has been studying closely is the seasonal trends in the gold market and its impact on related stocks. I say ‘one of the things’ because there are short-term cycle and longer-term cycles at play. But the short-term cycles are interesting to watch because they can give you a good idea of ideal times to buy.
Here’s a very quick conclusion he made in an extensive email thread between a few of our editors:
‘Overall conclusion:
‘Best months for gold — January, February and August hands down.
‘Worst months for gold — March, April and October hands down.
‘Basically, speculators should buy gold and gold stocks in late December and sell by late February. Come back in late May and sell by mid-September. Long-term investors, seize on this weakness.’
‘If the government set the price of orange juice and the orange juice industry had a crisis, who would you blame? Well, central banks set the interest rate and banks, houses, and sovereign debt had a crisis in 2009 and 2010. Who do you blame?’
I was looking for a neat way to introduce today’s idea. And at 5:00am this morning, while casually scanning through Twitter, my good friend and colleague @NickolaiHubble handed it to me with the above question.
No need to answer it. I think the answer is implied well enough.
It’s all about incentives.
I don’t care what anybody says; incentives ultimately drive and direct individual action.
Anybody that’s run a business, or any kind of meaningful organisation with many different people all with different goals, desires and motivations, will tell you…
Get the incentives wrong...and the outcomes will be undesirable.
In the worst case, disastrous.
So what happens when you purposefully suppress to near-zero one of the most influential drivers of human behaviour in the current financial system…interest rates?
‘You just couldn’t predict what happened in the last six months. To think this time last year the [real estate] market was dead. Literally dead. Now it’s hotter than I’ve seen it in the last three decades. You just couldn’t predict it…’
Lucy and I had a real estate agent come over the Saturday before the latest Victorian lockdown kicked in.
We have a growing family. We need more space. It’s either extend or move. So we thought we’d start with an appraisal.
Rosemary was a lovely lady. Not your typical ‘estatey’. She ended up spending the best part of an hour chatting over a cup of tea.
Newport and Williamstown has been her patch for years. It’s where she grew up, had her family and started her business. In that time, she said, she’s never known prices to go down.
‘There was a slight wobble year in 2008, where if you were forced to sell it would have been tricky, but other than that, prices just edge up. Of course, we all thought that was going to change last year. It’s astonishing what’s happened since. It’s taken everyone by surprise.’
Well, I knew that wasn’t true (Catherine Cashmore, the expert you’re about to meet, knew exactly what was coming). Still, I didn’t have the heart to correct Rosemary.
I did, however, ask if she’s ever heard of the 18-year property cycle.
I could tell by her facial expression she hadn’t.
I explained what I knew from Catherine. Studies, including some that go back to the 1600s, have shown that land and property cycles follow a distinct, reoccurring pattern:
7 good years
1 bad year
7 good years
3 bad years
‘Hmmm,’ replied Rosemary.
She had a look that told me she didn’t believe it.
‘When is the end of this cycle due then, so I know when to retire?’ she asked with a chuckle.
‘2026’, I said.
‘Hmmm,’ she said again…
After that the conversation moved on to other things; we finished our teas and said goodbye.
But it did make me reflect on how little-known this idea really is.
‘I’m in heaven. I had to kill myself to end the pain…’
That was the first text I ever received from Murray Dawes, the day after the night before.
It was October 2011. I was Port Phillip Publishing’s newest recruit. And I was sent by the publisher at the time to attend a two-day ‘Mining and Metals’ conference at the convention centre on Sydney Harbour.
It just so happened Greg Canavan was there too. It was before he’d moved to Melbourne.
Murray, Greg, and a guy called Alex, all arrived at the conference separately. And as we all worked at the same place, we decided to catch up at a local pub at the end of the first day.
And so began one of those legendary spontaneous nights out that you can never plan…but always talk about.
Ever since then we still refer to our collective selves as ‘The Four Horsemen of the Sydney Apocalypse’.
And it felt like an apocalypse the next day…
A couple of beers at the pub turned into a steak and foie gras dinner at a delightful Paddington French bistro, which turned into five bottles of Bordeaux, which turned into after dinner drinks in Kings Cross, which turned into the first nightclub, which turned into the second dinner at a souvlaki stall, which turned into the second nightclub, which turned into Alex raiding his hotel’s minibar and watching the sun rise at the front of the hotel…with day two of the conference starting in a couple of hours.
Somehow I made it. Greg scarpered back to Wollongong. Alex managed to get through his scheduled appointment with mining execs.
And Murray…well, his text message said it all!
But it was a great way to get to know your new colleagues and new country.
To this day we all say it was a night we’ll never forget.
But it was also the night I first heard about another event — a trading event — that Murray experienced a few years earlier.
In fact, if it wasn’t for this experience, Murray may never have been there that night…or doing what he does today.
It was a hard-won lesson that ultimately changed the course of Murray’s professional life…and led to the creation of the trading strategy he uses today, which hundreds of his subscribers now rely on.
Now, over the next few days we are exploring this strategy in a unique event with the man himself. And you’ll see the remarkable results he’s helping readers generate.
You can see just a snippet of the many reports we’ve received from those readers on the free sign-up page to this event. It went live this morning, and you can get your name down here.
But now I want to hand over to Murray to tell the story of the trade that changed everything…
Over to Murray…
Well…it’s been more than a year in the planning, but finally this week your brand new website went live.
If you haven’t had a chance yet, check it out here:
www.fattail.com.au
From now on, this is where you can access your subscription content — monthly issues, trades and market updates, special reports and anything else.
There are some cool new features built-in, too, like a favourites function, which allows you to bookmark articles that you’d like to save and easily come back to later…colour-coded listings for different types of updates…and also a ‘Twitter-like’ info feed so the editors can post timely content and any urgent messages.
Anyway, we figured a video to walk you through the site and help navigate it would be useful. So that’s what we’ve done today.
It’s been a massive operation, and the team have been working immensely hard behind the scenes. It’s not just a website. It’s all the data that goes with it. Just think…we’ve been in business for 15 years and have more than 25 publications…so that’s a lot of content to migrate over.
Of course, judging by the minimal calls our customer service team received, from your point of view, it should have been nice and seamless.
We are all extremely proud of the work we publish. And now we have a subscriber website to be proud of too. Most importantly, I hope it improves your experience as a valued Fat Tail Investment Research subscriber.
Without further ado, here’s Natalie (the brains behind the operation) to give you a detailed tour of the site. I hope you find it helpful.
With volatility increasing across a range of markets, and the recent correction being a bit more than your regular ‘buy-the-dip’ scenario, I thought it would be useful to catch up with Murray Dawes and discuss the outlook for the most important markets in the world right now.
If you’ve been following Murray’s ‘Week Ahead’ videos in The Insider on Mondays, you’ll know he’s been calling these markets very well lately.
In the video below (recorded yesterday), we discuss:
The S&P 500
The NASDAQ
US 10-year Treasury yields
The ASX 200
Oil
Gold
The Aussie dollar
All week you’ve been hearing about Callum Newman and his service Catalyst Trader.
Today I have the man on video!
That’s below…but before we get to that, I want to share with you a couple of recent trade examples from the Catalyst Trader service.
There’s no better way to show Cal’s distinct style than from direct market action.
Here’s a point on that…
Cal is the only one of our analysts that’s been talking about opportunities in iron ore lately.
Iron ore? Really?
I’m as bemused as you are.
But so far, he’s been proven correct.
The good news is he thinks there are plenty more opportunities coming up.
Now, Catalyst Trader is not like most of our other services.
The recommendations are not designed to hold for the long term like, say, something from Greg Canavan’s advisory.
Cal hunts for immediate and short-term catalysts that can rerate a stock…then looks to bank the profit quickly.
Here’s what Cal wrote to his subscribers back in April on the iron ore theme…
‘The steel trade is booming currently in China. Iron ore could continue to surprise by how high it goes, or how high it stays.’
Iron ore was around US$160 then. It went to US$200 in May…and is still US$222 now.
In March, Callum recommended a stock called Fenix Resources Ltd [ASX:FEX]. FEX is a junior iron ore miner. It was 23 cents when he sent out the alert on 5 March.
What do Bitcoin [BTC] and China have in common?
Perhaps nothing.
Perhaps it’s just coincidental that at the same time bitcoin prices soared earlier this week, Chinese authorities continued their regulatory crackdown on a range of industries.
From Forbes:
‘China’s internet billionaires suffered the biggest losses on the list of the world’s richest people on Monday, as spooked investors continued to dump stocks targeted in Beijing’s widening regulatory crackdown.
‘Meituan founder Wang Xing, NetEase Chief Executive Williang Ding, Pinduoduo founder Colin Zheng Huang and Tencent Chairman Pony Ma racked up a combined $13.6 billion plunge in their wealth in just one day, according to the World’s Real-Time Billionaires List. The hits to their fortunes come as a sell-off in Chinese education and technology stocks continued to spread to other sectors, with investors pondering which companies could fall under Beijing’s scrutiny next.
‘“[The crackdown] is a continuation of previous policies of anti-monopoly and stop the disorderly expansion of capital,” says Shen Meng, director of Beijing-based boutique investment bank Chanson and Co. “China also wants to reduce discontent among different factions of the society, and alleviate overall pressure.”’
Why would China want to crack down on their tech companies? Don’t you need scale and network effects (a fancy word for a monopoly) to compete at this level?
Yes, you do.
But do you think China’s Dictator Xi Jinping isn’t looking at the dominance of the US tech companies and saying, ‘That’s not going to happen here!’?
In Monday’s Insider, I said I’d come back to you with more on the Square Inc [NYSE:SQ] takeover of Afterpay Ltd [ASX:APT].
Given I’ve written about the company (APT) on less than glowing terms here before, I thought I probably wasn’t the best person to give you a rundown on it.
So I called on our resident young gun Lachlann Tierney, co-editor of our Exponential Stock Investor service, to make sense of it all.
That’s because this is a classic ‘exponential’ transaction. That is one that makes no sense to me, but does to seemingly everyone else following the story.
The day after the shock announcement, the business media was saturated with glowing reviews about the deal and how it made ‘absolute sense’. This is an interesting take because no one really contemplated the deal the day before.
Nearly everything, however, makes sense in hindsight. And it is no different in this case. As Lachy and I discuss, the tie-up between the two companies will provide a scale that will benefit both businesses.
Square Inc is one of these new fintech companies that provide simple banking/payment/transaction services that appeal to an emerging demographic that have rejected the traditional banking model.
As Lachy points out, its market capitalisation is now approaching the size of some of the largest banks in the US. And Square is much larger than all the Big Four banks except the Commonwealth Bank. But it generates a fraction of the earnings, I would add.
And here lies the problem, as far as this ‘old paradigm’ thinker is concerned.
Square Inc, which trades on an FY22 price-to-earnings (P/E) multiple of 309 times, just bought a company trading on a P/E of 428 times.
Or, if you want to be generous and factor in another year of earnings growth, you’re looking at a respective P/E of 182 and 166 times.
Such a deal looks very much like ‘new paradigm’ thinking to me.
It used to be that high-growth companies would trade on P/Es of around 50 times. THAT was expensive. But triple-digit? What am I missing that the market sees?
Well, this is where it is useful to listen to someone like Lachy. As he points out, there is huge GLOBAL growth possible here, as a new demographic, familiar with app-based technology, move into the banking system.
They’re not taking out mortgages yet. But when they do, perhaps Square will provide that service too?
So is that it?
Is the gold bull market over?
Or is this the buying opportunity of the decade?
It depends on who you ask and how you think…
If you think the Federal Reserve and their global counterparts have ‘got this’…then you probably aren’t interested in gold…
If you think they’ve done enough to create a real, self-sustaining recovery, which will see bond yields — the interest investors get paid to lend their money to the government — rise from near zero…then you probably aren’t interested in gold…
If you think markets can remain at these high levels without the support of trillions and trillions in collective global government spending and stimulus...then you probably aren’t interested in gold…
If you think businesses forced to shut down and survive on government handouts will be able pick right back up where they left off and the economy will recover with no ongoing support…then you probably aren’t interested in gold…
If you think we’re in great enough shape that central banks can begin winding down QE, taper all bond purchases, raise interest rates even one point above zero without crashing the entire economy...then you probably aren’t interested in gold!
But it’s time to get real…
We are in a debt trap the likes of which we’ve never seen in civilised history.
It’s not going to unwind overnight.
But it could be sooner than many in the mainstream think.
Our friend and colleague Jim Rickards has an idea as to why, which he’ll explain in Monday’s Insider:
But here’s a snippet…
‘We may be in the early stages of a financial panic caused by a global shortage of high-quality dollar collateral (mostly in the form of Treasury bills), and a resulting contraction in large bank balance sheets (because they don’t have good collateral they can leverage for cash).
‘Such panics can unfold slowly and out of the view of the mainstream media for a year or more before they burst into view.
‘The Russia-LTCM panic of September 1998 started in Thailand in June 1997. The collapse of Lehman Brothers and AIG in September 2008 started with mortgage delinquencies in late 2006 and early 2007.
‘It took a year for both panics to erupt.
‘Only professionals and experts see the signs. Most investors realise there’s a panic when it’s already too late to protect themselves.
‘If a new liquidity crisis is underway (and there are signs that this is the case), then we should not be surprised to see it turn into a full-scale panic and possible market collapse late this year.’
This idea of a shortage of collateral to underpin the balance sheets of the world’s largest banks is something Greg touches on in our conversation today.
Today’s Insider will be super-short, but — I hope — no less interesting.
You see, for the last few weeks, we’ve been gearing up to a big event.
That event, which we’ve called The Gold Digger Summit, takes place tomorrow evening at 7:00pm sharp.
I’ll be joined via the wonders of the internet by Brian Chu, our Sydney-based gold expert, investor, and fund manager. And we’ll be discussing an extremely timely opportunity he sees shaping up in the gold market.
As you can imagine, there is lots still to prepare before we go live. It’s made even harder with all the team working from home.
But we’re getting there, we are all very excited, and it’s looking like it will be an awesome and hugely informative hour.
If you haven’t signed up yet, check it out and get your name down by clicking on the hyperlink above.
Now, in the run-up to the event, I got Brian on a Zoom call, along with Nick Hubble, the Co-Editor and Investment Director of Jim Rickards’ Strategic Intelligence Australia.
As you’ll see, it looks like we’ve timed this event perfectly, too. On Sunday, gold started a big rebound. It’s now back above $1,800.
Gold stocks, on the other hand, are yet to follow.
This presents a unique situation for investors and speculators.
Hit the play button below to see what Brian and Nick have to say about it…
This week we get to eavesdrop on a fascinating conversation between Vern Gowdie, Editor of The Gowdie Letter and Gowdie Advisory, and Catherine Cashmore, Co-Editor of Cycles, Trends & Forecasts.
This month’s issue of Cycles, Trends & Forecasts dropped this week. It’s titled ‘The Delta Dominator’ (and we’ve just posted a free-glimpse edition of it on our website — there’s a link at the end of this letter).
Last month’s edition was titled ‘Timing the Brisbane 2032 Olympic Windfall’.
Being a resident of South East Queensland (SEQ), this piqued Vern’s interest.
While Sydney and Melbourne were booming, SEQ was idling along.
But that’s now changed.
Brisbane, Perth, and Darwin are catching up.
Catherine provides us with a general overview of the Australian property market.
She maintains her view that the 18-year real estate cycle is still driving the market into a huge second-half peak…and it will so do in 2026.
Vern asks her if there was anything that could disrupt the cycle…and yes there is.
Also, what about housing affordability? Surely households can only afford to borrow so much, even with the lowest rates in history…
Each month I get together with Jim Rickards via Zoom to discuss the ideas in his latest monthly issue of Strategic Intelligence Australia.
This time I had enough questions that would fill three weeks of replies! (For those that know Jim, he’s extremely generous with his answers.)
This was also partly because the latest monthly was all about connecting the dots to create and understand the bigger picture at play.
Usually, Jim’s issues take a deep dive on a range of topics that affect markets and your portfolio — economic growth, central bank policy, inflation, deflation, currencies, gold, stocks, bonds, demographics, geopolitics, and a lot more.
But this month he did something different…
He took two steps back, looking at all of these topics from a broader perspective. Instead of picking one and diving in, he took the major factors that drive markets and synthesised them into a big picture.
It’s like when you go to the theatre to watch a play…
In Monday’s Insider, I wrote how the bond market yield curve pointed to an economic slowdown and potential stock market correction playing out in the months to come.
As far as some of Australia’s large-caps go, the correction is already underway. BHP, for example, is already down around 25% from its peak. Iron ore prices are off 45% from the highs of May. And as I explain in my brand-new report to readers of my advisory service, they’ve still got a long way to fall.
But interestingly, the small-cap sector is holding up nicely. That’s probably a reflection of ongoing ample liquidity and the fact that macro factors (like China and iron ore demand) don’t affect the sector as much as it does the large-caps.
Where is the biggest risk in the market today?
According to Bill Bonner and Dan Denning, there are three broad areas that you need to be very careful about.
The reasons why are clear, as Bill said in the introduction to his and Dan’s excellent ‘big picture’ newsletter:
‘When you are young, you can even afford a loss from time to time. In fact, you should expect it.
‘The general rule is that you should take more chances when you are young — on your career as well as your investments.
‘That is when you have the most to gain and the least to lose. But as you get older, the calculation shifts in the other direction.
‘Take a Big Loss and you may never recover.
So, where’s the ‘Big Loss’ likely to come from in the months and years ahead?
Well…as we sit back and enjoy a day off here in Victoria for the AFL Grand Final, I thought it was an ideal time to keep this note short and get straight to the conversation I recorded with Dan earlier this week.
We started with the question everyone is asking this week: Is the escalating debt crisis in Evergrande, one of China’s largest property developers, the biggest risk to global and Australian asset values today?
I caught up with Nick Hubble, editor and investment director of Jim Rickards’ Strategic Intelligence Australia.
Just before we hit record, he told me about how his daughter attended her first day of childcare. My daughter is 18 months or so older than his, so we were swapping experiences.
He told me about the usual dramas…including a fever the next day.
Ahh…the germ pool that is childcare.
Thing is, it’s good for them.
My daughter got sick every other week. Now, she’s come through. Her immune system is strong thanks to those early exposures.
But it served as a good analogy for our discussion on the global financial markets and central bankers meddling of it.
Question: Do you suppress a toddler’s fever by putting them in an ice bath to cool them down?
It’s the mid-‘90s...
A new thing called ‘the Internet’, created by scientists to share information, is taking hold everywhere.
As it spreads, a new term is being banded around.
The search engine.
There are many of them. Yahoo!. AOL. Ask Jeeves. And a funky sounding one called Google, run by two tech nerds out of their parents’ garage.
All these different search engines seem to have the same goal. To sort out and arrange the vast, ever-expanding raw information on this World Wide Web for those looking for it.
It seems like an obvious but rudimentary task. Complex too.
But it won’t be for another two decades that you are able to look back and see how fundamental the search engine was for the mass adoption of the Internet…and how integral it is for your own life.
An ‘Ah-ha!’ moment
Today, the Google search engine is one of the biggest companies in the world. But it was incredibly hard to see that back then.
There were around 14 leading search engines.
You had Microsoft, which was already a huge company. And you had Yahoo!, which for a while, looked like it would turn into the market leader.
So, to try and pick out Google amongst all that noise as the winner would have been extremely hard.
But what if you could have just invested in the concept of the search engine?
Well, then you would have landed on Google anyway…and reaped the benefits of its exponential growth in value, without having to specifically pick it.
I’m pointing this out because it was an ‘ah-ha moment’ for me this week as I listened to Ryan Dinse explain to Greg Canavan about a new exponential trend emerging right now.
It’s an aspect of the rise and adoption of blockchain technology and how it’s changing and disrupting perhaps the single biggest legacy market of all…the banking system.
Now, this discussion was for subscribers of their fascinating service that launched this year called New Money Investor. And they were discussing the recommendation in their latest monthly report. But I believe it’s a discussion everybody should hear, so I’m making it available for all Insider readers below.
So, what is this fast-emerging trend…and how big is it really?
Like Amazon in 1994…only bigger
I’m talking about the emergence of decentralised finance, or ‘DeFi’.
Now, we started with a trip back to the mid-‘90s with the rise of the search engine. And by now everyone gets the immense impact of this thing called the Internet.
As the Internet developed and grew, a few people saw the potential beyond simply a place to find and store information.
Step in Amazon…
When it emerged in the late ‘90s and early 2000s as an ‘online retailer’, it was hard to see how it was really going to change anything.
But it’s obvious now.
Why go to the effort of going out to the shops, when you can cut out the middle bit and get anything you want delivered straight to your door?
Like Google, we’ve seen Amazon grow to become one of the biggest companies in the world through disrupting bricks-and-mortar retail.
But it is nowhere near as big as disrupting the US$22.5 trillion banking system.
And that is exactly what DeFi is disrupting.
This is an industry that sprang from nowhere a few years ago…to an US$80 billion a year industry already. Some say it is poised to explode 10 times from here, to an US$800 billion a year industry.
That, according to Ryan, is an exponential trend akin to the search engines of the early internet…and the rise of e-commerce retail.
Only this is bigger, more profound, and consequentially MORE disruptive (and potentially profitable).
Why?
Because decentralised finance, for the first time in history, brings the need for trusted middlemen to facilitate transactions under question.
Again, why is this such a big deal?
Well, Ryan explains in the video below, but as he told subscribers in his latest monthly, just as with all exponential trends and disruptions, it begins with a very simple value proposition…
‘Due to the limitations of our technology, we needed middlemen to act as honest brokers between parties that didn’t know each other.
‘To basically keep track of the ledger over time.
‘So the world of bankers and brokers, exchanges and custodians we operate in today evolved to bridge that “trust gap”.
‘As the size and importance of the finance industry grew, so did the power of these middlemen.
‘The key point to understand is this…
‘The financial world you live in today wasn’t created because it was the “ideal” way to do things. It just came about through sheer necessity.
‘You needed banks and brokers to safeguard your assets in case someone tried to steal them.
‘But you couldn’t always trust them, so you needed custodians and accountants to keep an eye on things.
‘But they weren’t always trustworthy either, so you needed auditors and regulators to provide further checks and balances.
‘Even those sometimes failed, so insurance companies created products to hedge some risks.
‘Then behind it all, the government stood as underwriter of last resort.
‘This might sound all well and good to you, but in reality, it’s a hugely inefficient system.
‘It needlessly wastes billions of dollars a year just to make sure we know who owns what and when.
‘Even worse, this system has become corrupted by that implicit government backstop.
‘Economists call this moral hazard. The fact that people will get away with a free ride if they can.
‘Last time we looked, Wall Street wasn’t the most moral of places…so naturally enough, they’ve milked the golden goose of government protection as much as they can.’
Check out Ryan and Greg’s conversation below. It looks like we are at the early stages of the next evolution in money and finance, whether the defenders of the current system like it or not.
Cryptocurrencies and blockchain are making this possible.
Just one more thing…
Earlier, I asked the question: what if there was a way you could have invested in the concept of the search engine?
Well, Ryan has found a way to invest in the concept of DeFi. And that’s the fund he and Greg refer to in the video.
He doesn’t reveal the specific recommendation in this video (and if he did, I’d have dubbed it out, out of respect for his paying subscribers. You can get those details here if you are interested).
But this conversation below is a fascinating 30-minute watch regardless, and well worth your time.
The ice hockey legend Wayne Gretzky is famous for his quote ‘I skate to where the puck is going to be, not where it has been.’
Well, this will help you skate to where the future of finance may be.
I suspect you’ll like today’s Insider…
If you’ve been confused, intrigued, repulsed, annoyed, or just plain excited by all the hype around the rise of cryptocurrencies, you need to watch the video below.
I should also say that if you’ve been bewildered by the performance of global stocks this year, you really need to watch the video below.
Because to understand the rise of cryptocurrencies you need to understand the fragile nature of the existing financial system.
Make no mistake. It is broken. It works very well for the 1%, but fails the rest of us.
This is the context you need to understand behind the rise of cryptocurrencies. It is the free market’s reaction to a broken and corrupt system. It is a new technology-based financial system that overcomes the problems of the old system. And it is growing fast.
The mainstream media don’t cover the rise of this system adequately. They focus on the price of cryptos, and have establishment figures telling us it’s a bubble.
There is so much more to it than that. The focus should be on the underlying technology and what it can do. That is what gives rise to the price.
What’s happening is a silent revolution. It’s bigger than Bretton Woods. It’s so important, I’ve decided to join forces with our crypto and blockchain technology expert Ryan Dinse in our brand new service: New Money Investor.
So the budget was ‘handed down’ last night.
Really though, it was just a confirmation of what had been leaked in the prior few weeks.
It sure is an election budget. Everyone gets a handout, it seems.
This year’s budget deficit (FY21) is now expected to come in at $161 billion. That’s better than the original expectation of $213.7 billion. I guess that’s good news?
The stronger than expected recovery from the government-mandated shutdowns is behind the improvement. Still, it’s not strong enough. The government is spending more of your kids’ money to ‘secure the recovery’.
The FY22 budget deficit is expected to come in over $100 billion.
Thank goodness for the government. What would we do without them?
Don’t get me wrong. I believe there is a role for government to play. That includes providing assistance to the most vulnerable groups in our society. But that shouldn’t come at such a huge cost to future generations.
Nor should it be the result of huge taxation of labour (incomes). If the government can’t get their house in order via minimal taxation, then we as a country have very big problems.
Which is exactly the case.
Good luck seeing the budget deficit drop as quickly as hoped. And good luck seeing it back in surplus for years to come.
There are no fiscal conservatives left in government anymore. The power of monetary debasement is too great to resist. Especially with an election around the corner.
What I find really hilarious is that government creates a problem, then rains cash on it to try and fix it. Just look at the housing market. It’s providing more and more support to those locked out of the housing market, when they (and the RBA) are the ones that closed the doors!
Who would’ve thought that the housing market would be back to boom times so soon after the pandemic shutdown?
Not many, that’s for sure.
We humans are emotional creatures.
We like to think we’re rational…but we’re not.
If we were, stock markets probably wouldn’t boom and then bust. At least, not nearly as wildly.
Thing is…stocks are bought and sold by us humans. And so our emotions are reflected in prices.
Even if you accept that objective fact, it doesn’t change anything.
This fact also explains why investors tend to hold on to their losers a lot longer than they do their winners.
That doesn’t sound like it makes sense.
Any rational person would say they would cut a loser and hold a winner.
On paper, that makes perfect sense.
But, as Greg has written an entire book on (You, Your Brain, and the Stock Market available to all subscribers of Greg Canavan’s Investment Advisory), our human brains are emotional…and rarely sticks to what is perfectly logical.
We’re not walking, talking spreadsheets that can weigh all the evidence piece by piece, consider all possible risks and rewards, and do a cost-benefit analysis down to the last decimal point.
We’re human beings, each with unique experiences and emotions.
I’ve showed this graph before, but I’ll bring it up again…
Chewbakker’s algo kicks into gear
‘Operation Turtle’ is now live
Dear Jason,
This week was all about the power of trends. And so I figured what better way to end it than a call with Tom Meyer, our trend expert and algorithm builder.
It was pretty last minute. I sent Tom at text at 7:00pm his time last night. He had his feet up, watching the basketball.
‘Give me two hours,’ he said, so he could prepare something.
As always, he delivered the goods!
And straight away — I’m talking in the first six minutes — he gives a valuable takeaway that every investor needs to understand.
In fact, if all you do is takeaway and consider this piece of advice and do nothing else today…this video is a success.
I won’t tell you what it is here. You’ll have to watch it!
The video is below, and it gives you a taste of what you can expect if you’d like to take up my invitation to try Tom’s system yourself. (That invite was officially released today and you can check ‘Operation Turtle’ out by clicking here.)
But first, a quick detour to another trend that came to an end this week…
Chewbakker’s algo kicks into gear
Late last November we launched a new algo designed to help guide the allocation of the bulk of your money.
The system gets its signal from the interplay of two indicators:
The ratio between copper and gold
And the price of risk, which determines what market makers are willing to pay to hedge their positions
The unique thing about this system is that it gives you a single simple instruction, which can be any one of the following:
100% stocks
100% bonds
60%/40% stocks and bonds
40%/60% stocks and bonds
100% cash
And the way to position for the above is buy a simple ETF pair — either one for the Aussie market, one for the US markets, or a leveraged pair for those who want to ‘spice up’ the returns (and are willing to accept the extra risk too).
I’ve been following this algo to the letter via the US ETF pair since 10 August.
For the first five months it gained 10%. Then, as luck would have it, soon after we officially went live with the algo, we went into a slight (but perfectly normal) drawdown. (In the research business we call it the curse of the launch!)
But those subscribers of First-Mover Algo Alert who stuck with it, like I have, are now being rewarded.
My account is now at US$7,823.90.
I initially funded it in two parts — once in August with US$3,522 and again in November with US$3,585. So US$7,107 in total.
By my calculations that’s back at 10% account growth.
So what led the turnaround from a slight drawdown?
Hi, Callum Newman here again. I’m filling in for Greg Canavan.
Here’s why…
I have a special treat for you today.
Below is a short interview with Australia’s premier real estate expert Catherine Cashmore.
I’m sure you’ve noticed that house prices are starting to rip all over the country.
Just this week we found out that Melbourne’s median dwelling values are hitting a record high.
That’s not all…
Shares in Mortgage Choice Ltd [ASX:MOC] flew up 60% on Monday after REA Group Ltd [ASX:REA] revealed they want to buy the company and are prepared to pay $1.95 per share to make it happen.
I expect much more stock opportunities to present around this boom in the coming years.
But you may be sceptical the property party can keep going or curious to know more.
So Catherine and I jumped on Zoom yesterday to discuss what we’re seeing.
It’s a short but punchy discussion. Enjoy! (Feedback welcome too).
Today I’d like to properly introduce you to our newest editor on the team, Brian Chu.
Brian recently took the reins of Rock Stock Insider and Hard Money Trader.
He’s had a busy first month assessing each one of the stocks on the respective buy lists. He still has a bit to go on that front, running each of the companies through his unique way of determining the likely value of each stock.
For those that don’t know, Rock Stock Insider focuses on building a portfolio of longer-term, steady gold producers, whereas Hard Money Trader is about finding and trading all-out shorter-term speculative gold stocks. These are mostly explorers yet to produce anything, but where high-risk, high-reward trade-offs can be found, especially in a wider gold bull market.
Brian likes what he sees so far in both buy lists. And we like what we see so far from Brian. He’s had firsthand experience managing his family’s wealth through his 100% gold-focused investment fund. I believe it’s the only one of its kind in Australia.
But it’s through that fund, with his own money at stake, that enabled him to develop his unique valuation methodology for assessing the future potential of gold stocks at every stage in the mining life cycle.
As he told his Hard Money Trader readers last week…
‘As a gold stock speculator, you may think valuation is unimportant. I would agree to some extent. After all, in searching for big gains at this end of the market, if you are too focused on value, you could miss out on a big winner.
Good value is often only apparent AFTER the fact. So I am certainly not suggesting too great a focus on it.
‘However, the gold market goes through cycles. It performed very strongly in the first half of 2020, and then spent the second half and into 2021 giving some gains back.
‘To make the most of these cycles, you want to be able to trade them. That is, take some money off the table when things are hot, and buy back in when prices fall back to attractive levels.
‘To do that more effectively, you need a valuation framework.’
Investing through the brutal gold bear market of 2015…and successfully coming out of it…allowed him to stress test his own framework.
We sent some notices out this week detailing a slight change to the way we’ll be communicating with you via some of our services.
As you may know, up until now all our services had a fixed weekly update. Well, we’ve decided to change that and leave it up to the relevant editor to decide when they send through any weekly updates.
The reason being is that we want the information we send you to be based on quality, need and importance, rather than a fixed weekly update for the sake of meeting a schedule.
On the whole, this was appreciated, and was taken in the way we intended it to be. As this reader emailed:
‘Hi, Please pass on I was soooo happy to hear from Greg that only relevant information will be emailed in future. Great. Another suggestion would be an SMS when there is an alert for a buy or sell order to services subscribed to.’
However, we did have a bit of concern from some readers, too…
For example, one writes…
‘I’m a dissenter to the idea there is too much info is coming from your end! I’m very happy with the amount and will be very disappointed if it dries up.’
I can assure you this decision will not mean that the info coming your way will dry up.
Rather, the aim is that the info you do get is pertinent, important and highly relevant.
Still, it’s a concern shared by another reader...
‘I am hugely disappointed in the email I have received about reducing the weekly emails on services we pay for, in this case The Gowdie Letter.
‘I look forward to emails from Vern, including his weekly emails, and find his approach refreshing compared to some. Even in the weekly emails I find his analysis very in depth and interesting and I enjoy them. Vern’s emails are anything but an “intrusion in my inbox”.
‘It is quite true that I get tired of the clutter in my inbox, but the clutter that I get tired of is constant never ending promotions for new services…
‘I am so tired of these constant marketing promotions that I would, if I could, consign them to junk mail. I certainly hit delete as soon as I see them.
‘So perhaps can I suggest that the promotional emails be discontinued other than on a monthly basis and that we continue to receive Vern’s weekly emails that we signed up for and pay for.’
First of all, again, let me reassure you that you will not be disappointed. (And if you are, we’ll change it back.) But see how it goes for the next month or so. I’m confident you’ll see that just because we won’t ‘fix’ the weekly update, that doesn’t mean you won’t be contacted.
This is especially true of Vern’s service, where a big part of the value proposition is Vern’s view and take on the world. That won’t change at all. Our hope that taking away a fixed schedule means our experts are able to think more, and provide MORE quality and value, not less.
As for the marketing emails, I get it. We know we send a lot, but I hope you can see that we only market our OWN ideas and services. We don’t advertise or are beholden to third parties and vested interests.
That’s how we remain independent and are able to publish ideas, provide honest opinions and predictions…and make recommendations that you will unlikely get from other sources or institutions.
So we have to (and are proud to!) market our own services. But we do try to make those efforts valuable, entertaining and useful.
Right on cue…
It’s almost as if last Friday’s conversation with Brian Chu, our new expert on everything gold, caused the metal to rebound.
Of course, it didn’t.
Employment data coming out of the US that day was weak. The market didn’t like it. Stocks fell. Promises of more stimulus followed. Inflation readings went up. And so did gold.
Your other Insider Editor Greg Canavan said on Wednesday that it looks increasingly like the cyclical bear market in gold is over. The charts he showed looked convincing. I won’t repeat them today. You can see them here if you’re a Port Phillip Publishing subscriber, or here if you’re a Fat Tail Media subscriber.
But Brian is expecting another correction before the longer-term boom takes hold. Before I get to that, though, let me break here quickly to address another massive correction…
Crypto crash: Correction or a new winter?
Ryan Dinse — the man we go to for all things crypto — had a lot to cover in his update to Crypto Flip Trader subscribers yesterday.
That’s because over the last few days the crypto markets have been, in Ryan’s words, brutal.
The falls started with random tweets from Elon Musk…accelerated with the news about bitcoin’s environment credentials…and capitulated when China further stressed their ban on businesses accepting crypto as payment.
Now, this isn’t new from China. And falls like this aren’t new for cryptocurrencies.
The question is…is this a healthy correction in a wider bull market? Or the END of the bull market?
Here’s what Ryan told his readers:
‘It’s probably too early to say definitively on that front. But I’m going to share a few charts so you can see why I think this is a correction to take advantage of.
‘Though, before I do, I will say to long-time subscribers that are in huge profits, never be afraid to take some money off the table if it makes you sleep at night.
‘That way you can enjoy the rest of the ride a bit easier.
‘For new subscribers, though, I think there’s opportunity to top up here, yet you don’t need to be in a rush.