Bitcoin, this market and more!~ Update - please read!

 

Hello Money Fans,

Some market eh? Tune into my show Thursday January 18, 2018 where we will cover “Into 2018” and more. A brief interview with Big Brother/ Big Sisters will begin the show.

Check out my FACEBOOK page for our “Investing in Community” video series hangs out. If you have business, non-profit or event that you would like us to profile, contact me.

New portfolios: Self explanatory, just see photos! Contact me for a no cost, no obligation sit down with me. New things are popping and with this market as it is, having a plan for ups and downs is very important to protecting and gaining wealth. I am very conservative as my number one rule is “don’t lose money”.

Keep reading below for my take on the markets and we will see YOU on the air! I also comment on bitcoin for you! What a market that is! Be careful.

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Approved 217935

Ever since stock markets existed, people have tried to find the Holy Grail as to predicting what a particular stock or index would do, how much and in which direction it would go and when would it go there?

There are technical analysts who might steer at a chart of price movements over a particular period of time and draw from that a conclusion as to future movements. Some tout seasonal tendencies for movements such as stocks fall in the fall, or “sell stocks in May and go away” as the saying goes, then buy them back in November. There is one for presidential cycles, who wins the Super bowl and even one based on the length of women’s skirts. The various prognostications obviously run the gamut from highly technical to ludicrous. Heck, I knew a woman who would shake some wooded cubes with symbols on them that only she understood and depending on the shake, would then buy or sell a certain security. Talk about leaving your money to chance! Hey, that reminds me of another game called gambling.

Actually the Wall Street Journal gained notoriety for the “dart board’ test. It went along the lines that a monkey with box of darts tossing them at the Journals’ stock ticker pages could make more money than most professional money managers. The WSJ had their employees play the monkeys and hurl the darts. The contest has been held 100 times and the pro’s lead by a score of 61 to 39 (Investorhome.com).

The returns in percentages are higher than the numerical score so don’t hire a group of monkeys and go out and buy some darts. But the difference between the two groups is embarrassingly smaller than one would have thought.

Around this time of year, two more theories abound, the Santa Claus rally and the January effect. The bearded fat man in the red suit theory assumes people in the festive mood of holiday season would buy stocks based on how good they felt during this time of year. The time period affected would be the last week of December to the first two trading days of January of the New Year.

Another theory is the January effect. This is based on the idea that year end stock selling to harvest tax losses versus gains meant (Santa Claus effect put aside now) that more stocks than usual would be sold in December gain a better tax situation and then in January all that money would come flooding back into the markets.

Needless to say if any of these were foolproof the word would be out and the house would rig the game against such methods. Alas we see no such rules set by the authorities forbidding investors from betting their hard earned savings based on such silliness which tells us none of these theories hold much water. Sure, perhaps some statistics might lean one way or another as statistics are rarely in perfect balance but the bottom line is none of these or any other methods or systems, manmade or computer generated can predict the ups and downs of markets, although there are Charlatans’ out there that would try and convince you otherwise. 

The reason is the same as to why a degree in Economics is a Bachelor of Arts and not Bachelor of Sciences degree. It’s because the stock markets are said to be a study of human sociology and not a study of science. Science, like math, has definite truths, absolute cause and effect, and irrefutable conclusions given a certain set of circumstances. The movement of markets however, is just the sum of all the beliefs of all the millions of investors in it at any given time. And that my friend is sociology, not science.

Tell me what hundreds of millions of people will do at any given day in the market as a whole and the stock market will be your oyster. But then again, that’s not quite possible is it?

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Is this market fattening investors up for the slaughter?

 

217639  Approved

Since the Trump presidency there is little argument the stock markets of the world have been positive.

In 2017 some milestones are worth noting and although Trump himself might take credit for all of it, political rhetoric is far from truth.

The following statistics are taken from Bloomberg:

The Dow has reached new highs as well as most of the other indexes. Specifically the Dow cracked into new territory 69 times in 2017. With little looking back, the chart of various stock markets look like the trajectory of a ballistic missile. Common contrarian assets like fixed income have languished some and one could argue this is in keeping with how markets move: fixed income sometimes tends to move in opposite direction when investors are giddy with the stock market.

Chinese stocks had the most stocks considered as best performers. 

The so-called “fear index” VIX plummeted to new lows in a chart that looks much like the Dow but in the opposite direction, which means down followed by more down.

Global corporations broke the record for participating in bonds that emphasized green investments so the planet let out a sigh of relief in this year.

European corporations issued a record 96 billion Euros in high yield debt, commonly referred to as junk bonds in some circles. This was attributed to record low interest rates and a favorable business climate.

Global corporate bonds outpaced them all with 2.5 trillion issued out in 2017.

Unemployment eased to 15 year lows in the U.S., Japan, Hong Kong, Israel, the U.K. and Portugal.

Bitcoin’s market cap outpaced all but 12 companies in the S&P 500 with a 1,752 % gain in value reflecting at time of writing 277 billion worth of the digital asset.

Other 2017 notables include the largest equity buyout was accomplished by Apollo Global Management with a whopping 24.6 billion dollars in funds and Hong Kong residential property continued to hold the valuation record as the most expensive real estate market on the planet.

17 Atlantic storms which were big enough to be given names are reported to have caused the largest insurance losses on record.

And the U.S. student loan market exceeded the total amount of the high yield corporate market which boils down to a heck of a lot of money is owed by college grads and attendees. Some say this could be another crisis in the making along with sub-prime auto debt.

And 2017 also witnessed a world of excesses in the art world with Leonardo da Vinci’s Salvator Mundi fetching the highest price ever paid for a painting sold at auction with a price tag of 450.3 million dollars.

All in all there have been worse years in the markets and while 2017 doesn’t hold all the records, the year has certainly been exciting for investors and companies alike.

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Looks like a real estate chart of the mid 2000's! Will it end the same way? 

217648

 Approved

Has Bitcoin removed some of gold’s luster?

Gold has many functions, both industrially and monetarily. In industry gold has many unique properties, among them are extreme corrosion resistance, durability, malleability, conductivity and it obvious quality of beauty. Gold serves as an electronic component, has medicinal qualities, is used in jewelry and some even claim has magical qualities. As a monetary alternative, it has had few equals. Many paper currencies were backed by gold, based on gold, or tied to gold in some way or another. Even mighty governments including ours stockpile gold for monetary and economic reasons.

Many investors perceive gold as the only real money and it is said a gold coin in your hand is the ultimate in isolation from currency printing governments. Gold is bought in times of fear, both economically and otherwise and it has been considered a viable diversification in many portfolios.

Gold pays no interest in its physical form.  It is also no one’s promise to pay as is a paper currency. Gold is recognizable worldwide and can be said the only thing enemies will trade with each other. It can’t be printed at will by governments so it is immune from monetary inflation which is inflation brought on by the over printing of a currency. Think Mexican Peso.

Gold basically has filled a need for those who distrust governments and monetary authorities who can print up dollars at will and possibly destroy or at least erode the purchasing power of those holding such currencies. Not to say gold doesn’t have its risks. All investments can be said to bear some risks, whether they be from organic supply/demand initiated risks, the risk of government interference, interest rate or general market risks but to name but a few. Gold has had wild swings in price in its history and the U.S. government among others have even made its possession illegal in the past. But golds unique qualities as thought of by some to be the panacea of wealth preservation over the centuries have held the steadfast belief there is no substitute.

That was until cryptocurrency arrived. Since bitcoin and the other forms of cyber dollars have become a viable alternative, at least in its availability, some have begun to question whether gold will be superseded by the idea of cloud based wealth vehicles. Indeed the market for “cryptos” as I call them, have challenged gold in sheer size and popularity. More people I know own cyber dollars in one form or another then own gold, or at least in recent months it seems that way. Certainly the interest in cryptos has exploded and one could say into a mania like frenzy. Indeed the chart for certain cyrptos like Bitcoin have an eerie resemblance to other boom/bust trading patterns in the past.

The idea of the crypto is that no one government can control them. The mathematical algorithms that make up crypto creation (some call it mining as in the mining of precious metals) exists on millions of computers everywhere which means it is virtually indestructible. That may also mean trading it is virtually unstoppable but governments can and have put a stop to anything that threatens their ability to control economic structures. That is not to say it is a safe store of value, which is a critical quality of any monetary instrument of exchange. One only has to look at a price chart of the various cryptos to see their prices are anything but stable.

But the perception of a cyber dollar floating around that people think can’t be “shot down” has proved enough of a catalyst to garner millions of investors to trade in billions of dollars of sovereign currencies for a version of a crypto. No doubt massive profits have also contributed to their popularity but that in itself has proved fatal to many an investor who bought something because it was skyrocketing in price.

The idea remains however that cryptos may hold similar characteristics to gold in many an investors mind. The government conspiracy groups are an obvious customer of the crypto as well as those techies who finally have an investment that is right up their “alley” sort of speak. Cryptos indeed could steal some dollars away from gold market and how many dollars buy cyrptos instead of gold remains to be seen. But in its truest form, cryptos do offer an interesting alternative to the reasons people hold gold.

Whether the crypto market behaves itself, acts reasonably and truly offers a store of value in the long run however remains to be seen. Right now, its wild price swings should at least be cause for concern for those investors thinking this is as safe as it gets. The price charts certainly are likely saying something quite different, at least to this analyst.