You make the most money in opportunities where perception differs from reality.
We have that situation in the U.S. housing market today.
Last year delivered a near-perfect storm of events to scare folks about the future of the property market...
Home prices soared again in 2018. It was the seventh straight year of gains based on the Case-Shiller 20-City Composite Home Price Index. Interest rates rose as well, which caused mortgage rates to jump... And that really spooked investors.
Rising rates, combined with higher home prices, put the affordability of homes further out of reach...
That's the narrative, at least. That's the perception folks have right now. But the reality is much different. Housing is healthier than almost anyone believes.
Let me explain...
A crucial theme from last year is continuing into this year — stock buybacks. Last year was a banner year for companies buying back their own shares. A month into 2019, it appears that Wall Street is set to continue that trend.
Last year, U.S. companies announced a whopping $1.1 trillion worth of buyback plans. Armed with extra cash from favorable corporate tax policy enacted in 2017, they enthusiastically bought back their own shares.
But as of mid-December, only about $800 billion of those buybacks had actually occurred. That means there could be another $300 billion of the total 2018 target still waiting to hit the market.
In fact, Wall Street is already gearing up for another banner buyback year. In a recent report, J.P. Morgan strategist Dubravko Lakos-Bujas wrote, “It’s expected that S&P 500 companies will execute some $800 billion in buybacks… in 2019.”
Justin’s note: If you haven’t heard yet, Strategic Investor editor E.B. Tucker’s working on a new venture. He plans to share all the details about this product at the end of this month. Leading up to that big announcement, we’re featuring his best insights and money-making opportunities.
But you should first get to know E.B., if you don’t already. He’s one of the best big picture thinkers in our business. And his track record shows it. Just look at some of the big calls he’s nailed…
The renter trend – E.B. sold his largest stock at the peak in 2008. That gave him the “dry powder” to buy six rental properties. A decade later, he still has a passive income stream that yields around 20% per year.
The blockchain wave – E.B. was able to exploit this massive trend and made 15,000% in profits on a blockchain mining deal.
The Bitcoin bubble – On December 14, 2017, E.B. pleaded with his readers who owned bitcoin to sell enough of their coins to recoup their initial investment. That was four days before bitcoin reached its all-time high of $19,783. Folks thought he was crazy. Bitcoin’s at $3,370 today.
Today we bring you a fresh episode of the Sovereign Man Podcast, where Simon Black unpacks why the people in charge have no idea what they’re talking about… and how you can protect yourself from their policies.
Freshman politicians want to nationalize entire industries. They want to increase the marginal tax rate to 70% or more. They want to ban corporations from buying back their own stocks unless those companies meet stringent requirements. They want to raise capital gains taxes.
In short, they want your money.
In this episode, Simon gives you a roundup of bad policies, why they don’t/won’t work… and the one big thing you should do if you don’t want the Socialist train to run you over.
The CEO of the Intercontinental Exchange (ICE) expects the firm’s digital asset platform Bakkt to launch later in 2019. The comment was made by ICE CEO Jeff Sprecher during an earnings callThursday, Feb. 7.
The call was dedicated to ICE’s financial results for Q4 and the full year of 2018. Sprecher explained that the company spent over $1 billion on strategic initiatives, including on the launch of the digital asset platform.
ICE operates 23 leading global exchanges, along with the New York Stock Exchange.
The company’s CFO, Scott Hill, further revealed his expectations on the expenses Bakkt is set to bring, based on its current financial performance:
“And finally, our investment in Bakkt will generate $20 million to $25 million of expense based upon the run rate in the first quarter. We will update you on progress at Bakkt and the level of investment as we move through the year.”
Consumers are doing their job only in a lackadaisical manner. But the student-loan scheme is hot.
It’s a tough job, but someone’s got to do it: Propping up the massive US economy. And consumers are doing it, but in a somewhat lackadaisical manner when it comes to spending money they don’t have. Consumer debt – more enticingly, “consumer credit” similar to “extra credit” – rose 4.7% in the fourth quarter 2018 compared to the fourth quarter last year. In the year 2018, Americans added $179 billion to their balances on their credit cards, auto loans, and student loans. Every dime was spent and added to GDP. It amounted to nearly 1% of GDP. If GDP grew 3.1% in 2018, just under one third of the growth was generated by that additional consumer debt.
Without this additional consumer borrowing, if consumers had just maintained their debt levels, GDP growth might only have been 2.2% in 2018, instead of 3.1%. So, a huge round of applause is due our debt slaves that now owe over $4 trillion for the first time ever, according to the Federal ReserveThursday afternoon:
Certain people just have “IT”.
They are rare, but when you meet one, you know it.
Ross Beaty is one. He just has “IT”. He is a winner.
Of all the people with “IT” in the resource sector I have gotten to know, none have the style and gravitas of Pierre Lassonde.
If he didn’t choose to conquer the mining sector, Pierre has the grace and style of a movie star who could have played James Bond.
He once made a comment to me at a dinner that resonated with me: “Stay hungry my friends”.
It was like I was having a conversation with the real-world version of ‘The Most Interesting Man in the World’.
But rather than watching the bearded debonair gentleman pitching Dos Equis beer… I’m looking across the table at a living legend who is sharing the secrets to his success.
Over an amazing 40+ career in the mining industry, Pierre has pulled off a lot of incredible deals.
Last week, investment management firm Fidelity announced it would begin offering bitcoin custody and other products in March 2019.
The products will include storage (custody) for large clients such as hedge funds and family offices. This service will help large institutional investors ease into the crypto space—and bring trillions of dollars along with them.
Fidelity—one of the world’s largest financial firms with $7.2 trillion in assets under management—won’t make its new crypto products available to retail investors like you and me right away… But they’re coming soon.
This shouldn’t be surprising… Wall Street always gives its favored clients first access to the good investments.
Don’t believe me? Try getting an allocation in the next hot initial public offering (IPO). If you’re not in the “know,” chances are you’ll be left out.
But I’m not writing today to tell you about the tidal wave of institutional money headed into the crypto space.
The numbers: For the first time ever, consumer credit has risen above $4 trillion, the Federal Reserve said Thursday.
In December, the growth in consumer borrowing decelerated, but only slightly, to $16.6 billion, the Fed said. That’s an annual growth rate of 5%, which is down from a 6.8% rate in November.
Economists has been expecting a $17.5 billion gain, according to Econoday.
What happened: Revolving credit, like credit cards, rose 2% in December, after increasing by 5.6% in November and 11.7% in October. Nonrevolving credit, typically auto and student loans, rose 6% in December. For the year, credit card debt was up at a 2.75% pace while nonrevolving credit was up at a 5.5% pace. The data does not include mortgage loans.
Big picture: With low unemployment and steady income growth, consumers have been tapping into credit lines, economists said. The Fed reported earlier this week that banks are starting to tighten standards on credit cards.
What's the biggest thing investors screw up?
I've thought a LOT about that question. And I know that the answer will help a lot of folks avoid big losses.
Investing is full of pitfalls. Even if you buy the right investment, your trade can go south in plenty of different ways. And after years of writing and talking to my readers, I think I've uncovered the most obvious issue...
Most investors have no idea when to sell.
This is a tough realization for many. When you're clicking "buy," you don't want to stop and think through what would cause you to sell. It's exciting to make an investment... No one wants to kill the thrill with the homework of selling.
The problem is that a great trade is made up of two things... a great buy and a great sell.
In fact, the very first Notes from the Field I ever wrote, in June 2009, was about how broke the US was… and the severe consequences that eventually face a nation that recklessly spends money it doesn’t have.
And debt has been a major theme in this publication ever since.
As you know, since the Great Financial Crisis in 2008, debt levels have only gotten worse. But not just for governments.
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Sovereign debt, corporate debt and consumer debt are all at all-time highs.
The US government has $22 trillion of debt and is running $1 trillion+ deficits every year. There’s a record $15 trillion of corporate debt. And the US consumer has racked up around $4 trillion of debt (not including mortgages).
And you don’t have to take my word for it that this is all going to end badly…
Last week, one of the most respected hedge fund managers in the world came out with a warning scarier than anything we could have dreamed of.
By David Forest, editor, International Speculator
It’s the most important chart in the resource space today…
And it’s telling us that commodities are primed for their biggest rally of the last 50 years.
Why is this the best setup for commodities in half a century?
• Take a look below…
The chart I’m referring to tracks the S&P GSCI – which tracks prices for 24 commonly traded commodities – relative to the S&P 500. We’ve labeled a few important events on it…
When the blue line on the chart is rising, commodities are getting more expensive relative to the S&P 500 – a good proxy for the U.S. stock market. When the line is falling, commodities are getting cheaper relative to stocks.
As you can see, when commodities are at historic lows relative to stocks [green circles on the chart], it’s been a great time to buy.
For instance, two entry points for investors in the past were in 1971 – after we went off the gold standard – and in 1999, at the peak of the dot-com bubble. Between 1971 and 1974, the S&P GSCI rocketed 371% higher. And from 1999 to 2008, it shot up 454%.