Market Forecast

  • 16 Aug
    Why You Need To Prepare For All Hell To Break Loose

    Why You Need To Prepare For All Hell To Break Loose

    • The last stock bull market was influenced by central bank activity, that’s clear. What’s next is the question.
    • I’ll describe three potential scenarios that could impact our financial system.
    • One is good, the second is interesting, while the third is ugly.

    Introduction

    The general expectation is that the FED will start selling securities in order to tighten monetary policy, that the ECB will slowly stop buying, and that nothing will change in Japan. Nevertheless, such a situation would lead to an environment where the additional liquidity created by central banks finally dries up. As the liquidity provided by central banks is the main reason behind this bull market, should investors begin to cut their positions?

    In order to elaborate on this question, we’ll first analyze the situation, the expected situation, and then possible scenarios in order to give you the best answer on how to prepare yourself for what might happen. It’s extremely important to do so and, as you will see, it isn’t that difficult. More →

  • 24 Jul
    It’s Feeling A Lot Like 2007 – Are You Prepared For The Next Crash?

    It’s Feeling A Lot Like 2007 – Are You Prepared For The Next Crash?

    • There’s nothing to worry about. Everything looks exactly the same as it did in July 2007 when no one was worried because the S&P 500 was breaking new highs.
    • Even the statements from the FED’s 2007 chair and the chair of it today look alike.
    • This doesn’t mean there will be a crisis in 2018, but it sure means you have to be prepared for anything.

    Introduction

    Last week I published an article describing how strong the trend is that is pushing the S&P 500 higher. There is plenty of liquidity, corporations are doing big buybacks, and most investors are putting their money into passively managed investment vehicles. More →

  • 17 Jul
    How The Economic Machine Works & Why You Need To Prepare Your Portfolio For It

    How The Economic Machine Works & Why You Need To Prepare Your Portfolio For It

    • Productivity growth is the long-term key, make sure your portfolio follows it.
    • The global distribution of wealth is shifting very quickly.
    • Preparing your portfolio for what’s going to happen doesn’t even cost that much. On the contrary, it is even more profitable.

    Introduction

    Ray Dalio is famous for many things. One of them is his explanation of how the economic machine works where he describes how productivity growth, the long-term debt cycle, and the short-term debt cycle affect an economy.

    Today, I’ll briefly summarize his findings as they are reported in a 300-page document and, most importantly, see how Dalio’s economic philosophy can affect our investing strategies. More →

  • 16 Jun
    Back From The Future – An Article From June 16, 2020

    Back From The Future – An Article From June 16, 2020

    • Central banks didn’t manage to tighten at all up to 2020 and this led to high inflation and economic stagnation.
    • Developed countries’ currencies significantly depreciated while emerging markets gained in strength due to their high productivity levels.
    • In 2020, financial markets became rational again as eventually, fundamentals have to come first.

    Introduction

    I somehow managed to go to the future to the 16th of June 2020. However, I was only there for a few seconds and only managed to check on Investiv Daily.

    I found an article that explains with perfect 20/20 hindsight what has happened in this decade and how everybody was blind to what was going on. I’ve copied the article here in order to give you a look at how the next few years will play out. More →

  • 15 Jun
    Is Zinc Still A Good Investment?

    Is Zinc Still A Good Investment?

    • Zinc is up 20% in the last 12 months.
    • Global zinc inventories and supply deficits might make zinc not just a good investment, but a great investment.
    • The problem is that it’s very difficult to find pure zinc plays.

    Introduction

    Exactly a year ago, I wrote about how between mine closures with limited mine openings and increasing demand, a supply gap in the zinc market was about to be created (article available here). Since then, zinc prices are up about 20% and were up 46% for a moment in November 2016. More →

  • 15 Mar
    There’s Only One Reason The Markets Are Rising & Nothing Can Be Done About It

    There’s Only One Reason The Markets Are Rising & Nothing Can Be Done About It

    • Everybody knows the market is extremely overvalued and risky, but nobody cares as long as it goes up.
    • Funds keep flowing into U.S. equities despite the fundamentals. This will be very painful when the trend reverses.

    Introduction

    We all know that in the long run, our investment returns are perfectly correlated to the underlying performance of the businesses we own in relation to the price we pay for ownership. If the price is high, our returns will be weak. If what we buy is cheap in relation to underlying earnings, our returns will be great or even amazing. This is a universal truth. However, there are some issues with it.

    The first is that even if most agree on the strong correlation between earnings and stock returns, very few like to think about the long term and instead prefer to only think about the short term. In the short term, stock returns are driven by equity flows and there is nothing that we can do about it even if it has been statistically proven that long term returns are perfectly correlated to underlying earnings and the greatest investors, like Ray Dalio and Warren Buffett, keep reminding us of this fact. More →

  • 24 Feb
    Goldman Sachs Is Probably Right But Is It Worth The Risk?

    Goldman Sachs Is Probably Right But Is It Worth The Risk?

    • Goldman Sachs recommends being overweight U.S. equities because of expected loose fiscal policies and because, as they have stated, valuations don’t matter.
    • Goldman expects a 3% yearly return on a moderate risk portfolio.
    • I’ll touch on what the average Goldman client is risking for their 3% yearly return.

    Introduction

    Goldman Sachs (NYSE: GS) recently released its 2017 market outlook. It shouldn’t be a surprise that the outlook is positive. It’s in their interest for stocks and the economy to continue to thrive as GS makes its money from IPO commissions, asset management fees, etc.

    Despite the conflict of interest, their positive outlook will most probably be correct at the end of 2017, but there is something more important than being right or wrong on a yearly forecast.

    Today we’ll discuss Goldman’s view and analyze the possible impacts on our portfolios. More →

  • 09 Feb
    Europe Is A Long Term Ticking Time Bomb

    Europe Is A Long Term Ticking Time Bomb

    • Europe is made up of many countries, which means there are even more politicians that just want to get reelected creating an immense short term attitude.
    • Don’t buy Europe just because it underperformed the S&P 500, and don’t buy European debt at single digit yields.
    • Tightening won’t work as many countries have an average debt to GDP ratio above 85%, therefore there is a high chance that the Euro remains weak for longer.

    Introduction

    The IMF just reported that the situation in Greece is getting better, but the debt is unsustainable. This contradictory as it implies a long term catastrophe and short term positivity. I’m flabbergasted on a daily basis by the incapacity or unwillingness of the financial world and monetary institutions to look at the long term.

    That’s why I’m here. To warn you about impending catastrophes and perhaps even increase your returns in the process. More →

  • 08 Feb
    Dow 60,000 In The Next 10 Years?!?

    Dow 60,000 In The Next 10 Years?!?

    • Earnings estimations tell us that the S&P 500 will reach 6,471 and the Dow 59,000 points in 10 years.
    • A bad case scenario with current earnings growth would see the S&P 500 at 3,589 points while the Dow, which just passed 20,000 points, would be at 31,415 points.
    • We’ll compare a short-term and a long-term perspective on earnings.
    • Only two times in history have valuations grown alongside earnings, and the results are extremely indicative.

    Introduction

    Earnings are the oxygen of our investments. Therefore, it’s extremely important to keep an eye on what is going on.

    A short-term and long-term perspective on recent earnings reports is going to tell us how to position ourselves for 2017 and beyond. More →

  • 06 Feb
    Sven Sees Recession On The Horizon

    Sven Sees Recession On The Horizon

    • An analysis of employment, interest rates, currency, and inflation suggests a recession is inevitable in the next few years.
    • The FED can’t change economic laws nor protect us from ourselves. On the contrary, the FED will lead us into a recession in order to prevent a future depression.

    Introduction

    The FED didn’t raise rates last Wednesday but they are still on track to raise rates two to three times in 2017. The FED’s goal is to “foster maximum employment and price stability” through economic activity expanding at a moderate pace and inflation rising to, and stabilizing at 2%.

    What we know is that inflation has been slowly rising and will reach 2% relatively soon. The labor market is strong and yields have been increasing in the expectation of higher interest rates.

    A concept that always eludes economists, consequently also members of the FED, is stability. By looking at a model, an economist is trained to think that the economy can be controlled. But history shows that a stable scenario is never the case. In today’s article, I’ll forecast what lies ahead of us by looking at how the last two economic cycles developed. More →

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