~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~ Financial Intelligence ReportThe Newsletter for people willing to take control of their financial future
This is today's issue of the Financial Intelligence Report
Contributing Editors: Bob Rinear, Robert Foster, Ted, Chuck and the gang!
Wall Street Lunacy donated by Janet Yellen, and Central Bankers the world over!
Part 1: General Commentary
Part 2: Market Commentary
****************************************************************** General Commentary...
What's Your Plan?
What is it? What's your plan for getting through the next 20 years? Do you have one? Have you ever thought of one? Do you think the madness that we're witness to every day is normal and somehow it all just sort of works out? If things get really ugly, do you have any plan of action?
Consider something for a moment. The ultra rich are divesting out of "dollars" as fast as they can and the price appreciation in "things' has been astronomical. Some guy takes a blank canvas, paints half of it black and it sells for 48 million at Sotheby's. New York apartments that were 10 million a few years ago are being bought up like candy for 100 million. Down here in Florida, the more outrageous the price for a mansion on the water, the more bidders there are for it. Every where we look, the rich are buying "things". Yet interestingly the only two commodities that have always been a form of safety and "money"; that being gold and silver, are capped. Beaten lower. Does that make any sense?
It does if you understand what's going on in the world. It doesn't to the average person, but it's completely "normal" if you ask the idiots on financial TV. I assure you that what's happening is not even remotely connected to normal.
In the past few weeks, consider the insane things we've heard from the worlds central banks. Japan announces an 80 trillion dollar QE program, complete with buying stocks around the world. China cuts its interest rates. Draghi says "enough jawboning" and actually starts a QE program in Europe. In other words the world is spiraling out of control, headlong to a complete depression and the Central banks are doing all they know to do...print money and pray. This does not instill confidence in anyone with a firing brain cell.
It shouldn't. The world is a disaster and you are front and center witness to a coordinated global deflation and ultimately a depression. This isn't going to work, but they've decided they have no other choice. It's print and pray, or simply let things implode, something no Central banker or politician wants the blame for. So the "show must go on".
The actions they are taking will NOT help the 90%. It will however keep the 10% in good shape. Think of it like this folks. What happens when you toss a rock in a pond of water? Well waves are formed around the splash and then they expand outward, ever further from the initial splash. But the waves get smaller and smaller to the point that on the other side of the pond they are mere ripples if that. Well it's the same way with infusions of money.
When they dump a load of cash into the system, it makes waves. But the first people to feel those waves are the ones closest to the money drop. These are the bankers. Next the waves of liquidity splash up upon the financial sector, including Wall Street. As the bankers take their new cash and fling it around, the folks that move it, manage it, invest it, etc, all get their piece. By the time that what ever is left reaches the masses, it's a mere ripple. But worse, not only doesn't he get much if any of the money, he's blasted with Inflation.
See what happens is this...when the people closest to the waves of free money get it, they go spend it. They buy up any and everything they want. That pushes the prices through the roof. This is exactly why absolutely worthless pieces of so called "art" are fetching tens of millions of dollars. That's why they can't supply enough luxury pent houses. The folks closest to the monetary wave are out there spending that stuff like no tomorrow. Naturally the prices of these things soars.
So the folks that were once very close to buying their dream condo on the beach, now can't afford it. The prices have soared out of reach. That sends them scurrying to buy the "next best thing" and they buy all the units that are "close to the beach, but not on it". Soon the prices for those is soaring. Ripple after ripple continues outward, until the last ripple ring. The poor guy on Main Street, trying to hold down two jobs and feed his family. By then all the money is gone, and the only thing he's got is higher prices for everything he wanted.
He didn't get the Central bank money. JPM, Goldman, Citi and the rest got that. They sent it to their criminal buddies in Wall Street. They used it to send stocks to absurd heights, enriching themselves along the way. But poor Larry Lunchbucket doesn't really have any stocks. He's got 25 grand in a 401K and while it went up, it is a pittance. He wasn't loaded to the gills with millions of dollars worth of stock like the 1 - 10%'rs had. If you own 10 million in stocks and they go up 100% you're sitting pretty. If you own 25K in a 401K and they go up 100% you lose a third to fee's, and big wow...maybe you now have 35K. It's not your ticket to freedom. Why? Again, don't forget that the 10%'rs have been buying up any and everything. Inflation has soared. Larry's 401K increase didn't even cover the cost of rising prices.
Now don't take this wrong, but a big percentage of you are not 1%'rs. Most aren't in the 10%'rs club either. No, most of you are upper middle class folks, desperately trying to increase your wealth while navigating a very crazy time. A time where food inflation is killing you. A time where healthcare is killing you. A time where taking your kids to the amusement park is costing you 400 bucks. Where just a movie sets you back 50 bucks if you pass on the lousy popcorn.
In other words, MOST of you are losing, not gaining. No matter where you cut, or how frugal you try and be, at the end of the year, you're worth less than you started with. Student loans, credit card debts, auto loans, and cost of living are killing you.
So I ask again, what's your plan? Do you have anything working for you that will get you through this nightmare they've created, or are you just limping by, and praying something changes for the good? If this market and/or economy crashes and there's no doubt it will eventually, then what? Is there anything you can do to not only protect yourself, but to benefit from the situation we find ourselves in?
Most people are pretty much similar. We all hope and pray that our ship comes in one day. Maybe one day I'll hit that lottery, maybe one day I'll discover the next big thing in tech, maybe one day I'll hit it big in Las Vegas. But more times than not that doesn't happen and what does happen is that you go to work every day hoping you don't get laid off, while accepting pay cuts so the company doesn't move to China. That's more like the reality of the situation.
Frankly it's hard. I am not about to lie to you and tell you that it's easy to climb the ladder, and get rich and all your troubles are behind you. It's hard because the entire system since the late 70's has been against you. When they moved our manufacturing off shore, it ended a lot of opportunity for the average person who just applied himself with a lot of gusto, to climb the company ladder and "be somebody". You might not have been classically rich, but you were really well off. Today, those opportunities are much harder to come by, and that 80K dollar salary you drooled over in 1980, doesn't buy half of what it did, here in 2014.
So what can you do? I've got a three pronged approach I want to share with you all that is doable and safe. One of the most wealthy men I ever met as a young man, had no college education. He was your typical self made millionaire. His family was poor, he was just an average student in school. But he figured on two things. One was that there'd always be poor folks that needed a place to live, and two...that the best way he could think of to ever retire was to own a lot of rental homes, and have someone else pay the mortgages. So he did just that. He didn't want the nicest homes in the best parts of town. He wanted homes that the average laborer could afford to rent. Stick with me here, the punchline is coming...
He ended up with 114 homes that he rented out. It was hard work, very hard. He was working a job, and literally changing hot water heaters, and painting, and what have you every night and weekend. His wife kept up with all the paper work. They struggled at times. But it certainly paid off. Of course it did, because here's his secret...he wasn't renting them for INCOME. It was his long term retirement plan. All he wanted to do was have someone else pay his mortgage, not make money every year. He held a normal job through almost all of that. That way when the 30 year mortgage was up, it didn't matter to him if the price of housing was up or down, if he sold it, it was all profit. He couldn't lose because he hadn't paid for it. Strangers bought that house FOR him.
Down here in the Sun coast I see it all the time. People had come down from "up north" and bought beachfront condo's, not to live in for a few months a year, but to rent out. They knew that if they could break even on the place, 25 years later they could retire and have no mortgage. It's very smart thinking folks. Even if it is just ONE unit, if you can keep it rented and paying the mortgage, don't worry about the income. Forget that. That's for the house flippers who want to try and make a living on it. Instead do what Tony did, get the home, and rent it out for the life of the mortgage. 20 - 30 years from now you will have either a great place to live in "mortgage free" or you will have a nice asset to sell and make nice money on.
Think about this. A fifteen year fixed mortgage right now is about 3.5%. A 125K dollar house with a fifteen year fixed will run about 1000 a month in mortgage, insurance, etc. Find the right place in the right area, and you'll have no shortage of folks that can't buy a house because of low credit or no down payment. Good folks, that just can't get the loan. If you screen them right, and do your own work, 15 years from now that house is YOURS. You can live in it, or sell it. So what's your return for retirement? Let's say you put 8K down to buy it. All told, lets say you have 10 grand in it. Now 15 years later there's been a depression and what have you and the house is only worth 85K. Do you care? You have 10 out of pocket and renters financed you.
No it isn't "easy" and there will be months where there's no renters. I get that. But all in all, buying real estate and letting someone else pay for it is about as good as it gets.
I have always said that there are very few places for the average folks to make good money for themselves and real estate has always been one of them. But it was the way people approached it that I knew was faulty. They were buying to make the fast buck. Flipping. Well what happens if prices go down? You're screwed. We saw that in the 2007 housing crash. Many many "flippers" went belly up. But a long term retirement plan like Tony figured out, is almost perfect. If I was in my 30's - 40's with this kind of interest rates, I'd be very active in this.
Just remember the rule...its NOT for income, it's for Retirement. Long term. This isn't for income and you keep your present job and other streams of income. Think like that and I'm okay with it. Because even if we have a depression, recession, money reset, etc, people need a place to live. So, one of the prongs in this "investing" fork is for you to consider the idea of good real estate that you can buy right, and rent continuously. Two would be even better of course, but start small. We'll talk about other things that make sense in the next letter. The Market...
You guys know that this letter is free. Look around, do you see any advertisements? Nope. Not a one. But let's face facts for a second...I try my best to put out really good info, that you can act on in these letters. But let me ask a question.
If I told you three weeks ago that I was going to flip from being short for the big pull back we had, and instead would buy the QQQ's for the screaming bounce, that's great and you'd have made a lot of money with us. But would you have sent me a dime? If you bought 500 Q's at 93 and two weeks later it's 103, would you have pay-pal'd me a few hundred for the nice play? Let's be honest... the answer is NO. You'd simply look for the next letter, waiting for the next home run. Hey I get that.
But I have to stay in business too. It costs thousands to send this letter out, as Email at the commercial level isn't free folks, it costs dearly. So instead of putting out the exact stocks, I will say something like "I think we've got a buyable bounce here folks" and most will understand that and act accordingly. I have to save the "exact specifics" for paying members.
So yes, I have a members area we call the "Insiders Club". It's a mere 199.95 for a whole year. That is where I put out the exact stocks and the exact prices that we're looking at to buy or sell. What's the nut on that? About 16 bucks a month? Do you think that in a year of Insiders Club membership you won't make that and a bunch more? Please folks. We've been doing this for almost 20 years.
Two days ago we liked the looks of AMZN. We told our members we'd buy it on a move over 329.90. It did that, and we filled at 329.91. Well we sold it on the big pop Friday morning for 337.65. That's 7.75 a share in two days. If you'd bought just 26 shares of AMZN it paid for a whole year of Insiders Club in two days.
I'm not saying they all go like that. But we win a heck of a lot more than we lose because frankly I hate losing money and I manage risk really tight. So what I'm saying is that if you want to follow along with someone that shows you exactly what I'm buying, the price I want to buy it at, the stop I'll affix and when I sell, then join up.
Here's how... Go to Philsgang.com and hit the "Register" button. Then simply fill in your info, and when you get to "products" select a one time charge of Insiders Club for a year. By the way what ever username and password you chose will be the one you use for the InvestYourself.com website too. You'll then be "in" and get our 3 updates a day emailed to you.
Is it worth it? For 200 bucks? Please. It is very worth it. You spend that on groceries for a week. I'll give you plays every day that there's an attractive one out there. Yeah, it's worth it.
Okay so the Chinese cut rates, Draghi went "all in" on QE, and Obama short cutted the Constitution and now has to print up more trillions to take care of 5 million illegals. All that was enough to send the market soaring higher Friday morning. But then some weakness crept in. After being up over 145 points at the open, we were in danger of going red at about 1pm, mostly over a Dow Jones headline that Fed head Dullard ( sorry, Bullard) says he was misquoted back in October and really was glad the Fed's were going to end QE.
What a crock of poop that is. He said what he said to jawbone the market, he wasn't "misquoted" at all. But it did take some of the air out of things.
The Thanksgiving week is usually a decent time for the markets. History shows we generally levitate up through the Holiday and I could easily see them doing that again. But as you can tell it's a bit of a struggle. When you have China cutting rates AND Draghi starting QE and we can't even hold a 100 point day, you know things are desperate. The market is tired and heavy.
I said last week we were leaning long and keeping a finger near the sell button. I think that's how I'm going to approach this week too. I'll be more than happy to take a ride higher with them, but I'll be quick to take profits if things start fading. Currently we're carrying ORCL, CSX, and QQQ in our short term trading account. We sold our AMZN for an almost 8 dollar a share gain on Friday morning.
I do want to wish each and every one of you a really happy Thanksgiving. Thanksgiving is my favorite Holiday of the entire year, and I love spending it with friends and family. I hope you all do too. I'll see you Wednesday for an interesting look at Thanksgivings past.
PS.. If you'd like to see the exact stocks/options/metals/ETF's and 401K moves we will be looking at for this week, please consider becoming a member of the "Insiders Club" located here: www.investyourself.com