Agile Trading Needed for More Market Shaking Events!
So far, 2022 has been nothing short of both breathtaking and shocking. You are seeing the world experience what would typically happen in a matter of decades.
Monumental events are happening in a blur.
Let’s go through the list…
The world is watching inflation spiral out of control. The markets could be up for a hard landing as central banks around the world indicate they would raise rates, and it won’t be in small bites either.
Oil has moved almost 50% since the start of the year, off the back of supply chain shortages AND armed conflict between two nations (Russia and Ukraine).
Russia is looking to topple the petrodollar system by demanding hostile nations pay for oil with Russian rubles instead of US dollars.
The Biden administration is getting hit hard as the media’s attempted cover-up of the Clinton-Russian collusion scandal and the Hunter Biden laptop scandal unravel.
This leaves the administration vulnerable to accusations that it is an illegitimate government, which is still something that many consider as ‘debunked’ and a ‘conspiracy theory’. But with the latest scandals, it seems like the tables are turning against them.
It seems that the things that made Western civilisation the trailblazer and shining light on the hill for humanity — democratically-elected governments, open and free markets, and a press that is meant to keep the authorities accountable — are falling apart.
Not only is it falling apart, but it is now stripped bare and laid out in its shame for the world to see.
Turn hidden traps into your opportunities in the market
Depending on where you source your news from and how you interpret it to help you make decisions, this can mean the difference between being a winner and a victim.
Follow the fake news and misleading information, and you could get hurt badly. Nowadays, can you trust institutions that may release information designed to benefit themselves at the expense of others? They may not be lying (though sometimes they do, as you’ve seen in recent times), but they selectively release what could lead their readers to respond in a particular way.
It’s important that you exercise much discernment.
Here’s an example…
The Federal Reserve said last June that inflation was going to be transitory. It would go away by the end of the year. It then moved the goalposts and said inflation will remain around for longer.
Their changing narrative helped put a lid on any rally by gold, which is the nemesis of the US dollar. It also meant that markets continued its relentless rally, setting up for a bubble to pop. When the bubble pops, the financial institutions get the government bailouts and you are left holding the bag.
All part of ‘The Great Reset’ — you will own nothing and be happy.
If you knew the Federal Reserve’s track record on predicting the future, you wouldn’t have let them take you on a ride.
Here are some gems:
‘U.S. house prices have risen by nearly 25 percent over the past two years. But these increases, reflect strong economic fundamentals, such as strong growth in jobs, incomes and the number of new households.’
Ben Bernanke, 2005 (at his confirmation hearing to join the Federal Reserve)
‘Would I say there will never, ever be another financial crisis? You know probably that would be going too far but I do think we’re much safer and I hope that it will not be in our lifetimes and I don’t believe it will be.’
Janet Yellen, June 2017 (eight months before the first major market decline in 2018, followed by another at the end of the year)
If you believed in these experts, you would have suffered some painful losses.
It would be better to take a different position to the crowd who trust these experts.
This is what a contrarian would do.
You could be wrong for some time for doing that. After all, the majority of the population line up for the fleecing. And it takes a while before the panic sets in.
How do you increase your chances of success as a contrarian investor? It is a game where the odds are stacked against you.
Timing is of the essence
Most who know me would know that I’m not great at timing the market. I adopt the style of Seth Klarman, author of The Margin of Safety, preferring to buy undervalued assets and camp out waiting for the speculators and investors to jump in and drive prices up.
However, there is someone who is good at anticipating market trends before they happen and takes his positions in a timely manner.
You may know him already. He is my friend and colleague Callum Newman, Editor of Catalyst Trader and Cycles, Trends & Forecasts.
He was trading iron ore stocks last year even as they behaved like a roller coaster, notching up some handsome wins for his subscribers.
But did you know one of his biggest winners was tipping platinum group explorer Chalice Mining [ASX:CHN] when it was still a penny stock back in 2018? He managed to help his subscribers net a four-digit percentage gain.
My wife alerted me to this company a few years ago, but it didn’t align with my style, so I let it slip.
Well, Callum is not one to let these opportunities go.
He’s on top of the latest market trends and is an agile trader, an admirable skill in times of uncertainty and sudden changes as we experience nowadays.
Perhaps you may want to give your portfolio a boost and also notch up some wins buying investments before they become hot stocks.
Check out his work here.
You will hear from me again on Monday…stay tuned.
Editor, The Daily Reckoning Australia