Global Market Comments
April 17, 2013
Fiat Lux
Featured Trade:
(AMERICA?S DEMOGRAPHIC TIME BOMB),
(TRIBUTE TO A GIANT OF JOURNALISM, ROY ESSOYAN)
You can never underestimate the importance of demographics in shaping long term investment trends, so I thought I?d pass on these two highly instructive maps.
The first shows a map of the world drawn in terms of the population of children, while the second illustrates the globe in terms of its 100 year olds. Notice that China and India dominate the children?s map. Kids turn into consumers in 20 years, stay healthy for a long time, and power economic growth. The US, Japan, and Europe shrink to a fraction of their actual size on the children?s map, so economic growth is in a long term secular downtrend there.
There is more bad news for the developed world on the centenarian?s map, which show these countries ballooning in size to grotesque, unnatural proportions. This means higher social security and medical costs, plunging productivity, and falling GDP growth.
The bottom line is that you want to own equities and local currencies of emerging market countries, and avoid developed countries like the plague. This is why we saw tenfold returns from SOME emerging markets (EEM) over the past ten, and why there is an irresistible force pushing their currencies upward (CYB). Use any major melt downs this year to increase your exposure to emerging markets, as I will.
Would You Rather Own Them?
Or Them?
Global Market Comments
April 16, 2013
Fiat Lux
Featured Trade:
(MAY 8 LAS VEGAS STRATEGY LUNCHEON),
(BIDDING FOR THE STARS), (DOW AVERAGE), (SPY),
(AN EVENING WITH TRAVEL GURU ARTHUR FROMMER),
(HAPPY BIRTHDAY IRS!)
SPDR S&P 500 ETF Trust (SPY)
Come join me for the lunch at the Mad Hedge Fund Trader's Global Strategy Update, which I will be conducting in Las Vegas, Nevada on Wednesday, May 8, 2013. An excellent meal will be followed by a wide-ranging discussion and an extended question and answer period.
I?ll be giving you my up to date view on stocks, bonds, currencies, commodities, precious metals, and real estate. I will also explain how I have been able to deliver a blowout 40% return since the November, 2012 market bottom. And to keep you in suspense, I?ll be throwing a few surprises out there too. Tickets are available for $179.
I?ll be arriving at 11:00 and leaving late in case anyone wants to have a one on one discussion, or just sit around and chew the fat about the financial markets. The PowerPoint presentation will be emailed to you three days before the event.
The lunch will be held at a major Las Vegas hotel on the Strip, the details will be emailed with your purchase confirmation. Please make your own hotel reservations, as business there is booming.
I look forward to meeting you, and thank you for supporting my research. To purchase tickets for the luncheons, please go to my online store.
A few years ago, I went to a charity fundraiser at San Francisco?s priciest jewelry store, Shreve & Co. The well-heeled masters of the universe bid for dates with the local high society beauties, dripping in diamonds and Channel No. 5. Well fueled with champagne, I jumped into a spirited bidding war over one of the Bay Area?s premier hotties, whom shall remain nameless. Suffice to say, she has a sports stadium named after her.
The bids soared to $12,000, $13,000, $14,000. After all, it was for a good cause, Pari Livermore?s California State Parks Foundation. But when it hit $12,400, I suddenly developed lockjaw. Later, the sheepish winner with a severe case of buyer?s remorse came to me and offered his date back to me for $14,000.? I said ?no thanks.? $13,000, $12,000, $11,000? I passed.
The current altitude of the stock market reminds me of that evening. If you rode gold (GLD) from $800 to $1,920, oil, from $35 to $149, and the (DIG) from $20 to $60, why sweat trying to eke out a few more basis points, especially when the risk/reward ratio sucks so badly, as it does now?
I realize that many of you are not hedge fund managers, and that running a prop desk, mutual fund, 401k, pension fund, or day trading account has its own demands. But let me quote what my favorite Chinese general, Deng Xiaoping, once told me: ?There is a time to fish, and a time to hang your nets out to dry.? That?s why my cash position has steadily been rising over the last few weeks.
At least then I?ll have plenty of dry powder for when the window of opportunity reopens for business. So while I?m mending my nets, I?ll be building new lists of trades for you to strap on when the sun, moon, and stars align once again.
As for that date? She eventually married one of California premier technology titans, an established billionaire in his own right, and now has two cute kids. It?s all part of life?s rich mosaic. And sorry, I?m not saying who because gentlemen don?t talk.
Travel guru, Arthur Frommer, says that now is the best time to travel in 20 years, thanks to a combination of a strong dollar and desperate price-cutting forced by the recession.
Three years after oil hit an historic peak at $148/barrel, when $500 fuel surcharges abounded, and the demise of the travel industry was widely predicted, costs in some countries, like Mexico and Costa Rica are 50% lower than a year ago. Talk about price elasticity with a turbocharger!
Frommer believes there are three sea change trends going on today. Business is moving away from the big three travel websites, Travelocity, Orbitz, and Priceline, who have more preferential side deals with airlines than can be counted, towards pure aggregator sites that almost always offer cheaper fares, like Kayak.com, Momondo.com, and farechase.yahoo.com.
There is a move away from traditional 48 person escorted bus tours towards small group adventures, like those offered by Gap Adventures, Intrepid Tours, and Adventure Center, that take parties of 12 or less on eye opening public transportation.
There has also been a huge surge in programs offered by universities that turn travelers into students for a week to study the liberal arts at Oxford, Cambridge, and UC Berkeley. His favorite was the Great Books programs offered by St. Johns University in Santa Fe, New Mexico. He says that the Internet has given a huge boost to international travel, but warns against user generated content, 70% of which is bogus and posted by the hotels and restaurants themselves.
The 79-year-old Frommer turned an army posting in Berlin in 1952 into a travel empire that publishes 340 books a year, or one out of every four travel books on the market. I met him on a swing through the San Francisco Bay Area (his ticket from New York was only $150), and he graciously signed my original 1968 copy of Europe on $5 a Day, which was crammed in my backpack for two years.
Which country has changed the most in his 60 years of travel writing? France, where the citizenry have become noticeably more civil since losing WWII. Bali is the only place where you can still travel for $5/day, although you can see Honduras for $10. Always looking for a deal, Arthur's next trip is to Chile, the only country hes has never visited, because the currency there has crashed.
Some taxpayers have been sending birthday cards in with their tax returns this year. That?s because the International Revenue Service, the collector of America?s tax revenues, is 100 years old this week.
Although the wealthy have been paying income taxes since the 1861-65 Civil War, they did not apply to the rest of us until the passage of the 16th Amendment. The original form 1040, of which I have included a copy below, was one page long and imposed a starting tax rate of 1% over incomes of $3,000. The maximum tax rate was 7%. It included a deduction for shipwrecks.
When WWI broke out, that rate was taken up to 77%. Only 3% of the population had tax liabilities, compared to 54% today. Since 1913, the pages of instructions and deductions have soared from one to over 77,000. Today, some 6.6 billion man hours are spent preparing US tax returns. Talk about a growth business!
According to the Pew Research Center, 56% of Americans dislike taxes, but 71% feel they have a moral responsibility to pay what they owe. Yet, 34% say they pay more than their fair share of taxes, while 60% believe they are paying the right amount.
In 1775, the American Revolution first started as a tax revolt, with American merchants protesting the special exemptions enjoyed by British ones. That led to the Boston Tea Party whereby Americans masquerading as Indians dumped competing duty free imports overboard. Fairness of the system has been a recurring theme ever since. That is why Mitt Romney?s 13.9% tax rate was such a big deal in the 2012 presidential election.
About 1% of taxpayers are audited each year, with the wealthiest 12 times more likely to get audited than the middle class. Where are the residents least likely to be audited by the IRS? The Aleutian Islands in Alaska. And the most likely? Beverly Hills, California. Small businesses top the list, with those in the real estate and construction industries dominating.
The Justice Department brings about 1,000 criminal tax evasion cases a year. Jail times have only been required since 1987. That works out to one return out of every 150,000, so play audit roulette if you will. Their success rate in obtaining convictions is a mathematically impossible 98.5%.
What is the most common error committed on tax returns? Divorced parents both claiming the same children as dependents. The mistake is automatically caught by electronic filing with the earliest filer getting the tax savings. So don?t bother.
Now how much did I lose on that shipwreck last year?
Equalizing the Tax System
Now What Line Does This Go On?
Global Market Comments
April 15, 2013
Fiat Lux
Featured Trade:
(GOLD: NEXT STOP $1,250!),
(GLD), (GDX), (SLV), (PPLT), (PALL), (USO), (CU), (FXY),
(APRIL 17 GLOBAL STRATEGY WEBINAR),
(APRIL 19 CHICAGO STRATEGY LUNCHEON),
(SIGN UP NOW FOR TEXT MESSAGING OF TRADE ALERTS)
SPDR Gold Shares (GLD)
Market Vectors Gold Miners ETF (GDX)
iShares Silver Trust (SLV)
ETFS Physical Platinum Shares (PPLT)
ETFS Physical Palladium Shares (PALL)
United States Oil (USO)
First Trust ISE Global Copper Index (CU)
CurrencyShares Japanese Yen Trust (FXY)
Come join me for lunch for the Mad Hedge Fund Trader?s Global Strategy Update, which I will be conducting in Chicago on Friday, April 19. A three-course lunch will be followed by a PowerPoint presentation and an extended question and answer period.
I?ll be giving you my up to date view on stocks, bonds, foreign currencies, commodities, precious metals, and real estate. And to keep you in suspense, I?ll be throwing a few surprises out there too. Enough charts, tables, graphs, and statistics will be thrown at you to keep your ears ringing for a week. Tickets are available for $199.
I?ll be arriving an hour early and leaving late in case anyone wants to have a one on one discussion, or just sit around and chew the fat about the financial markets.
The lunch will be held at a downtown Chicago venue on Monroe Street that will be emailed with your purchase confirmation.
I look forward to meeting you, and thank you for supporting my research. To purchase tickets for the luncheons, please go to my online store.
Global Market Comments
April 12, 2013
Fiat Lux
Featured Trade:
(NOT YOUR FATHER?S RAILROADS),
(UNP), (CSX), (NSC), (CP),
(THE WORST TRADE OF ALL TIME), (GLD)
Union Pacific Corporation (UNP)
CSX Corp. (CSX)
Norfolk Southern Corp. (NSC)
Canadian Pacific Railway Limited (CP)
SPDR Gold Shares (GLD)