Editor’s Note: As Chief Investment Strategist of Total Wealth, Keith believes in making his track record of recommendations easily accessible to all readers within seconds – and that’s why he’s compiled an Archives page. Here you’ll find links to every Total Wealth article Keith has published since Total Wealth’s creation on October 2, 2014, posted in reverse chronological order.
Category: Featured Tactics
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Three successive Fed Chairs have denied its very existence – yet the numbers are too galling to ignore.
According to The Bank of International Settlements, there are now $692 trillion in global derivatives worldwide. Factor in credit default swaps and exotics, and the total notional value jumps to an even more jaw-dropping $1.5 quadrillion dollars. That’s a bubble 21 times greater than the value of the entire world’s economy.
All told, global derivatives are 20% more prevalent than they were in 2008… right before they helped cause the global financial crisis that still roils markets today. And, get this – despite a massive cleanup of big banks and financial reforms laid out to an anxious public keen to restore trust in the “system,” the numbers are still increasing.
Big banks are more opaque than ever and the Fed is either clueless or blind – perhaps deliberately both. They assume that the risks of trading all this (insert the four-letter word of your choice) is much smaller than it really is because the risks of one offset the risks of another.
What they’re really saying is that they don’t believe everything will fail at once. Ask anybody who worked at Lehman how that worked out. The risks are very real and the results potentially devastating.
Now, I’m not out to ruin your day. Seriously. I know that this is scary stuff.
But there’s actually a way out if you’re prepared ahead of time, and that’s exactly what we’re going to talk about today.
Here’s what you need to know now before this $1.5 quadrillion bubble disturbs the markets.
From the first moment it came to my attention, I’ve been as consistent as I have emphatic – EKSO Bionics Holdings Inc. (OTC:EKSO) is a “buy” despite volatility and price drift in recent months that have given many investors pause for two reasons:
- It’s entirely normal for a company Ekso’s size; and
- The company has continued to expand market share that will ultimately translate into higher earnings and share price.
Now there’s a third.
If you don’t get into the stock now, you could lose the “first mover” advantage that you’ve had so far. Worse, you could miss out on another double – Ekso’s second since I recommended it.
You see, EKSO’s just hit a landmark that tells me the incredible growth potential we’ve had to ourselves won’t be a secret for much longer.
We’ve spent a lot of time talking about how to identify great companies with huge upside potential. No doubt you’ve got the 3-Step Total Wealth Process down by now: 1) identify the trend, 2) pick your trade, and 3) control your risk.
So today I want to shift gears and talk about the one metric you can use to identify seemingly pristine companies that are ripe for a fall.
Our timing couldn’t be better. Janet Yellen has just taken off the blinders and the markets charged higher… at a time when corporate profit growth is about to go negative for the first time since the Financial Crisis began and QE started. Meanwhile, there are fears of another recession, flat wages, and even flatter consumer credit.
Obviously the stronger companies will survive and that’s in large part why we concentrate on them. But the weaker ones… whoa Nelly, they’re in for a wild ride.
How do you know which is which?
Fortunately, that’s not hard – there’s one number that can tell you which way to play it.
Learn to “read” it properly and you’ll have a tremendous advantage over most investors, for whom hope is unfortunately a viable investment strategy.
Here’s the indicator that makes the difference between a “buy” and a “short.”
The other day I saw an ad for a mattress store that offered financing, so you can “sleep in peace” on your brand-spanking-new $7,000 mattress set. (Talk about irony!)
Debt is the American way. It makes the impossible possible. It’s seen as benign or even good.
Personal consumer debt is one of the most dangerous financial products ever created.
Federal Reserve data show that Americans owe $11.74 trillion as of 2014. Some $882.6 billion of that is credit card debt, $1.13 trillion is student loans, and another $8.14 trillion is mortgages. An estimated 119.3 million indebted households carry an average of $15,257 each, or more than double the $7,117 carried (and paid off monthly) by non-indebted households.
The way I see things, debt is nothing more than “plastic prosperity” that makes you feel like you have more spending power. It’s a myth that’s been sold to the American public methodically and systematically for 30 years. And it wrecks lives.
Getting out of debt (or avoiding it entirely) is an absolute imperative when it comes to building Total Wealth.
But as an investor, there is one instance where you should consider taking on debt.
There’s one instance where debt can even be profitable.
Yesterday capped a miserable three-day streak for U.S. markets on fears that the Fed may accelerate a possible interest rate hike with the Dow, S&P 500, and NASDAQ shedding 1.09%, 1.79%, and 1.38% respectively.
Bring it on!
I’ve pointed out repeatedly since the Financial Crisis began that the “good is bad” meme followed by traders – which triggers market dips with every piece of significant good news thanks to paranoia the Fed will seize on it to raise rates – only creates buying opportunities for investors with the right tactics.
Today, that could be you.
Yesterday’s collapse creates three massive opportunities. I’m going to explain to you exactly what they are, why they exist, and most importantly why they’re being overlooked by insiders and mainstream investors alike.
Here’s what they’re all missing – and your opportunity.
Amazon, Apple, Cisco, Barnes & Noble, and hundreds of other companies are at fresh 52-week highs, leading many investors to question the wisdom of putting more money to work.
Yet that’s exactly what you should be doing.
I know it seems counter-intuitive – especially if you believe in buy low and sell high like I do – but here’s the thing…
…the markets are always making new highs.
It’s how you deal with them and how you pick the companies with the potential to go even higher that separates the winners from the losers.
I’m going to prove that to you right now.
And then I’m going to show you three tactical criteria you can use to judge for yourself whether something you want to buy “makes the grade.”
Here’s why market highs alone can’t be a deal-breaker for you.
Readers ask me all the time if I can recommend an investment that is 100% risk free.
I can’t do that. There is no such thing.
(If anyone tries to tell you otherwise, take your money and run!)
That said, there is one way you can make any investment risk “free” under the right set of circumstances, by using one of my favorite Total Wealth tactics: the free trade.
We’ve talked about this before, and many of you got a chance to put it into practice with our Human Augmentation target, Ekso Bionics Holdings Inc. (OTC:EKSO) – simultaneously doing three things in the process: capturing profits of at least 100%, paying for your initial investment and reducing the risk on your remaining position to almost nothing.
Now, with the markets at new record highs and Greece machinations threatening to cause major corrections in world markets, I want to revisit that tactic. That’s because many investors are sitting on solid profits and, in doing so, unwittingly taking on a lot more risk than they should.
Do this instead…
I’m getting dozens of questions about Greece right now and what it means for your money.
That’s fantastic for two reasons.
First, it means you’re totally on point and thinking clearly in the pursuit of profits.
Second, it’s a sign that you’re already fully engaged in the Total Wealth strategy and one of our core Total Wealth principles – namely that there’s always opportunity in chaos, if you have the right tactics.
Greece is the single most important thing happening in the markets right now. I know that the mainstream press is treating it as an afterthought and the temptation is to regard it as “over there.” But the financial markets have proven again and again that events taking place thousands of miles from our own shores clearly influence market behavior closer to home.
I’m going to lay out the three scenarios for what is about to happen and how it will affect you. Then I’m going to show you three trades you can make today.
And don’t wait to make your move.
Greece has only about 13 days to go before it runs out of cash, according to JPMorgan.
Here’s everything you need to know now…
There’s an old joke that’s made its way around financial circles over the years. It goes something like this:
An investment banker walks into a room where his cohorts are in a meeting. “I’ve got good news and bad news,” he announces. “The bad news is, we’ve just lost $100 million. The good news is, it wasn’t ours.” An associate raises his hand. “What was the bad news again?”
It’s humor, but there’s more than a grain of truth to the story. Whether we’re talking about brokers, bankers, or even your most trusted financial advisor, you cannot rely on anyone else to care about your money and keep it safe.
At the end of the day, the only thing standing between your portfolio and catastrophic loss is your own caution and proper risk management.
I know it’s not the most exciting part of investing. But there’s zero doubt in my mind it is the most important.
That’s why it’s the third part of my Total Wealth Strategy.
And one tool called position sizing stands out above all others as the most powerful, and not just for cutting risk either, but for boosting your profits, too.
To see what I mean, consider this anecdote from trading psychologist Dr. Van Tharp:
“We’ve done many simulated games in which everyone gets the same trades. At the end of the simulation, 100 different people will have 100 different final equities. And after 50 trades, we’ve seen final equities that range from bankrupt to $13 million – yet everyone started with $100,000, and they all got the same trades. Position sizing and individual psychology were the only two factors involved – which shows just how important position sizing really is.”
Here’s how I recommend you start using it right now…
What I am about to share with you today won’t win me any friends on Wall Street. But, that’s how it goes.
This is important information to you as an investor and that’s why you need to know what it’s telling you. So I’m happy to take my lumps and show it to you anyway…
Right now we’re in the midst of the first “earnings season” in 2015, with publicly traded companies reporting their latest quarterly results – in this case from Q4/2014.
Millions of investors are understandably anxious and confused. Companies take off like a rocket on good numbers or get a multi-billion-dollar haircut on bad ones.
Thing is… Wall Street likes it that way. The more confused you are, the more profitable they are because investors who chase innuendo tend to trade more (and generate bigger commissions).
That said, it’s NOT a waste of time if you know how to sort out the information that actually matters and what it says about your money.
Here’s what you need to know.
Most investors focus exclusively on buying stocks in an attempt to capture huge returns. That’s too bad, because it means they restrict themselves to half the opportunities available to them.
I bring this up because markets move up AND down, which means there is plenty of profit potential to be had in both directions.
George Soros, for instance, is reported to have made $1 billion in a single trade that famously almost broke the Bank of England in 1992.
John Paulson made billions from the housing crisis when it hit by betting against the grain.
Doug Kass of Seabreeze Partners fame is famous for bucking conventional wisdom on seemingly-mighty companies and laughing all the way to the bank.
That’s why shorting is one of the first Total Wealth tactics I shared with you.
Obviously, shorting stocks isn’t for everybody – it takes a lot of guts and more than a little conviction to do it profitably. Not to mention a whole lot of discipline. But done right, it can really boost your profits.
Here’s how to profit from the five scariest stocks on Wall Street… without owning them.
Last month I shared an indicator with you that’s so powerful I called it “The Secret about Market Timing I Wish Everyone Knew.” And I wasn’t kidding.
That’s because the tool I highlighted is the only one I’ve seen in more than 30 years of analyzing financial data that has worked consistently enough to have caught every single major market turning point.
I bring this up because that’s exactly where many investors believe we are right now – a turning point.
Seems a lot of people are convinced that this week’s trading action is a harbinger of the end of the financial universe as we know it. Others are less convinced but still shaken by falling oil prices, Russian troubles, and the potential for an unceremonious Greek “exit” from the eurozone that could make Lehman Bros. look like a cakewalk.
Either way, they’ve had their hand firmly on the sell button.
But should they?
That’s what we want to talk about today.
Believe it or not, you may have an ideal entry point on your hands.
Here’s what you need to know.
Welcome to 2015 – I’m thrilled you’re here!
I think this year is gonna be absolutely filled with opportunity for investors, perhaps more than ever before. But few of us are set up to take full advantage of it. That’s because most people’s portfolios are totally out of whack. (I’ll show you what I mean in a moment – and why it cramps your returns.)
But I’ve got great news for you.
There’s a stunningly simple tactic you can use to achieve significantly higher returns – 21.97% higher annually, on average, over the last 14 years, in fact. But that’s far from the only reason I want you to use this tactic today…
First, it is proven by study after study after study to be a foundational element on the path to higher profits.
Second, it is a way of injecting discipline into the investment process. That makes it an important risk-control mechanism.
And, third, what I’m about to share with you requires only about 20 minutes a year to do. Yes, a year. That means you can pick one day you won’t forget – like today, the first trading day of the year or perhaps your birthday – to make it happen.
… and immediately start building the kind of wealth you deserve.
Here’s how to start this year off right for your money.
We talked earlier this week about the three bad investing habits that kill returns, and I asked you to let go of them in 2015.
I can almost guarantee you’ll be better off for it – and so will your brokerage account.
Now I want to show you what to do instead.
This first tactic is absolutely priceless…
The latest research from DALBAR is very graphic…
Over the past 20 years, individual investors averaged a measly 2.53% a year, versus the S&P 500, which chalked up 9.02%. In other words, your average annual return was 6.49% less than what it could have been each year. Ouch.
So what’s going on?
When you look back over the last two decades, two things are readily apparent – a) that the markets have been rocky and b) that there’s plenty of blame to go around. The Fed, the big banks, bubbles, China, Washington, Wall Street, the ECB… it doesn’t matter. At some level, they’re all guilty.
But you know what? Those two factors are actually NOT the primary causes that doom millions of investors to poor performance.
THIS is the real culprit…