The market rotates between rally phases and correction phases. Normally the rally phase is longer in time while corrections are shorter in duration. This can also be called Risk-on trades and Risk-off trades.

Risk-on trades would include Growth stocks, Crypto, most equity sectors like Bio-tech, Genomis, Semiconductors, and Emerging technologies suce as Cathie Wood’s ARK mutual finces. Risk-off trades would incorporate Precious metals (miners and physical metals) Consumer staples, Value stocks and high quality dividend paying stocks like Utilities and Pipeline companies. Ten-year and shorter Treasuries are also considered Risk-off trades.

If we select a Risk-off asset like Physical gold or Large Cap Gold miners, we can divide that ETF into any number of Risk-on vehicles (like the NASDAQ 100) and come up with a ratio as to which ETF is outperforming the other. This is important to track as “The Market” is likely to be more volatile and shift from rally to correction phases for shorter periods of time (three to six month cycles) than it has in the past. Each phase can be very volatile in its moves within short time periods. Currently Risk-on is in favor, see chart below, for the NASDAQ 100 and Biotech/Genomic areas, and risk-off in areas, like gold and silver, are out of favor. The ratio above the moving averages is positive for Risk-on vehicles (numerator) and a ratio print below the moving averages is positive to Risk-off vehicles (denominator). Continue reading →

Free Enterprise has given way to Crony Capitalism in the USA

Crony Capitalism – an economic system in which businesses thrive not as a result of free enterprise, but rather as a return on money amassed through collusion between a business class and the political class. This is often achieved by the manipulation of relationships with state power by business interests rather than unfettered competition in obtaining permits, government grants, tax breaks, or other forms of state intervention over resources where business interests exercise undue influence over the state’s deployment of public goods, for example, mining concessions for primary commodities or contracts for public works. Money is then made not merely by making a profit in the market, but through profiteering by rent seeking  using this monopoly or oligopoly. Entrepreneurship and innovative practices which seek to reward risk are stifled since the value-added is little by crony businesses, as hardly anything of significant value is created by them, with transactions taking the form of trading. Continue reading →

“Hard times create strong men. Strong men create good times. Good times create weak men, and, weak men create hard times.”
― G. Michael Hopf, “Those Who Remain”

Cynical:

1. Believing that people are motivated purely by self-interest; distrustful of human sincerity or integrity.

2. Concerned only with one’s own interests and typically disregarding accepted or appropriate standards in order to achieve them.

Inconvenient Truths:

Are you a diversified investor when you own the S&P 500?

• Apple (AAPL) and Microsoft (MSFT) are 14% of the price movement out of 500 stocks in the index. So goes Apple and Microsoft, so goes the S&P 500.

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Underlying guiding thoughts on buying stocks that can double.

1. The majority of stocks have a 100% swing range from Low price to High price or from High price to Low price within a twelve month period. Therefore, it is not so much what stock to buy for a double, but rather when to buy that stock. This enforces the buy low, sell high principal. Check out the last 52 week high to low or low to high range on a sampling of stocks.
2. One approach this is to look for the most out of favor industry in the public market space. Target the best two companies in the industry and perhaps one more speculative company. This is the George Soros method of buying low & sell higher. If the speculative company fails, the two industry leaders should cover the loss. If the speculative stock works out, then you really will have done well when the industry recovers.
3. Volatility or rapid sector rotation is a plus in this investment system.
4. Know have to your company well enough that you have little fear of buying shares when the price has fallen, and the news is bad. If you have concerns about the company don’t buy or get a knowledgeable third party opinion of the company. It is good if the third party in this situation has an accounting background in the particular industry the company is in.
5. Let the shares base in price using Stage analysis. Buy slowly based on fundamental value with multiple purchases and then become more aggressive a buyer as the stock price begins to rise above the Stage one stock pattern into Stage two stock pattern.

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April 19 price action for many of the Biotech and Genomic names in our watch list was strong. We are early in sharing this but want to get you acclimated to a potential opportunity.

LOTM has been watching this group for some time. They fell from a greatly over-valued price for the entire group in February 2021. Now we are about twenty-seven months later. The stocks have been through the stage four chart pattern. They are now in a stage one chart pattern.

We will use Cathie Wood’s ARK Genomic ETF as a measuring stick for the industry below. One reason we targeted the Genomic industry is that they are literally changing the healthcare world. They move great distances in price, up and down. They appear to have been washed out from their drop in price from Continue reading →

Bitcoin and Alt-coins are leaving a stage one base-building chart pattern and entering their stage two rising price stage. Link here to Investopedia for a discussion of Stage Analysis. Blockchain application companies are lagging slightly but also attracting money in-flows. See Mark Yusko’s comment on the generational shift of inheritance into Crypto instead of Gold or paper currencies, for “The biggest transfer of wealth in human history. IMHO, you want exposure to crypto and blockchain companies.

Example of Stage Analysis:

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Two things are happening that we would like to address today.

• The first is the loss of purchasing power of the US dollar. The United States, by “real” math, cannot repay our national debt. Our government is depreciating the purchasing power of the US$ to attempt to repay the debt with cheaper dollars. This shows up as letting inflation run hot . By this we mean, the “actual” inflation rate, not government numbers, will be higher than interest rates by design. Inflation will not go away because the government does not want it to go away. Watch what they do, not what they say.
• Second item we want to address is – other countries see this and want to move away from holding or transacting business in US dollars. Hence the movement to buy gold at central banks and oil no longer being bought and sold only in US dollars. There are other factors involved here. One is locking other countries out of the international SWIFT banking system. We have use this as a weapon too many times and countries are tired of it. The second is confiscating gold, investments and assets held on deposit in the USA or allied countries as punishment.

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