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Buffett On Interest Rates And How He Got Started

Warren Buffett believes raising interest rates in today’s environment would be a really bad idea. So do I.

If Europe’s got them at zero, and you get higher rates in the United States, that would exacerbate a problem with the stronger dollar and funds flow.

With that in mind, the FED might have to do it anyway. They have to re-load their toolkit, whatever the cost. We have discussed this complex backdrop and why the FED finds itself between a rock and a hard place in our weekly podcast….click here to listen

Finally, a fascinating look at how Mr. Buffett got started and how he grew a $10,000 investment into $170+ Million. It appears all you need is patience and time. Well, that and a brain. Click Here To Watch.

Z31

Buffett On Interest Rates And How He Got Started  Google

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Is King Dollar About To Die?

Daily Chart February 4th

2/4/2015 – A mixed day with the Dow Jones up 8 points (+0.04%) and the Nasdaq down 11 points (-0.23%). 

George Soros likes to look for mass delusions, ride the trend up until it runs out of steam and then take the other side of the trade. When we look at the stock market today, perhaps there is no greater delusion than the FED and its overwhelming believe in the stimulus. Paul Singer states….

Stimulus is an uncertain experiment in market manipulation that, like some cult religion, has otherwise intelligent people believing “mass delusions” After six years of “monetary debasement,” also known as QE, central bankers are trapped.  Stimulus has “not lit the economy on fire,” except among assets that are held by those who have significant equity exposure: high end real estate, luxury goods, artwork and the like.

 

I couldn’t agree more. With that in mind, I don’t believe in the utter destruction of the dollar. If anything, I have been a dollar bull over the last 24 months. As evident here King Dollar.

The tide is now shifting. I have shown the chart below before. The dollar is approaching a powerful resistance line. Give today’s currency war, overall macro economic picture, significantly overvalued stock market, FED’s eventual rate hike reversal and possible additional QE,…….it is highly probable that the dollar is topping out and is getting ready to head lower. To test 2011 lows. Another overcrowded trade that is about to blow up.

dollar-chart

This conclusion is further supported by my mathematical and timing work. It clearly shows a severe bear market between 2014/15-2017. In fact, when it starts it will very quickly retrace most of the gains accrued over the last few years.  If you would be interested in learning when the bear market of 2014/15-2017 will start (to the day) and its internal composition, please CLICK HERE.

(***Please Note: A bear market might have started already, I am simply not disclosing this information. Due to my obligations to my Subscribers I am unable to provide you with more exact forecasts. In fact, I am being “Wishy Washy” at best with my FREE daily updates here. If you would be interested in exact forecasts, dates, times and precise daily coverage, please Click Here). Daily Stock Market Update. February 4th, 2015  InvestWithAlex.com

Did you enjoy this article? If so, please share our blog with your friends as we try to get traction. Gratitude!!!

Is King Dollar About To Die Google

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Is It Time To Short Chipotle (CMG)?

cmg

I did a detailed case study on Chipotle Mexican Grill (CMG) in my recently published book “The Hunt For 10 Baggers”. Click Here to get the book for free. One of the things the case study reveals is that this stock doesn’t do very well in bear markets. A haircut of 50% or more is not out of the question. Especially if you consider this stock’s astronomical valuation levels.

Here is the bottom line. The stock is massively overpriced, it doesn’t do well in bear markets (and we are on the verge of one) and we are now sitting on an important support line. Should the stock break it, there is a lot more downside ahead.

Conclusion: I wouldn’t be a buyer or a holder here. In fact, I would sell the stock short if it breaks below critically important support line located at around $665-660. If Chipotle breaks below this level it would signal that it wants to go much lower. So much so that I wouldn’t be at all surprised to see $450 print at some point in 2015.

Z31

Is It Time To Short Chipotle (CMG)?  Google

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BlackRock: Most Of Corporate Earnings Growth (If Any) Is Accounting Driven

s&p ratio

I have long argued that most of corporate earnings growth over the last five years came as a result of 3 primary drivers….

  1. Zero interest rates.
  2. QE.
  3. Share buybacks.

Making today’s stock market one of the most expensive ever. In net historical terms. Unbeknownst to me, I left another driver out. BlackRock brings it home.  BLACKROCK: Accounting Trickery Has Boosted S&P 500 Profits By 86% 

It becomes tempting to take on too much leverage, use financial wizardry to reward shareholders or even stretch accounting principles. S&P 500 profits are 86% higher than they would be if accounting standards of the national accounts were used, Pelham Smithers Associates notes. And the gap between the two measures is widening, the research firm finds.

In other words, it is not enough to borrow money at zero interest rates to institute share buybacks in order to drive earnings higher. By the way, the overall US economy now operates on the same principal. Companies must now stretch their accounting principals in order to show some sort of a earnings growth. Propelling today’s overall valuation and stock market levels from “crazy” to “it doesn’t matter anymore”.

Z31

BlackRock: Most Of Corporate Earnings Growth (If Any) Is Accounting Driven Google

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What You Ought To Know About This Rally

Daily Chart February 3rd2/3/2015 – An up day with the Dow Jones up 305 points (+1.76%) and the Nasdaq up 51 points (1.09%).

Most people are scratching their heads while trying to figure out what had caused this massive 600+ point rally on the Dow over the last two days. ECB, FED, Oil, Greece, Australia, The Pope, etc…….no one knows. Well, except for my subscribers. This was posted in my weekly update on Saturday….

If February 3rd (+/- 1 trading day) at 17,050 TIME/PRICE point mentioned above is able to turn this market around, we might have a substantial advance.

If you are paying attention, the Dow bottomed at 17,038. Yet, the primary question remains. Is this yet another “dead cat bounce” or is this a “buying opportunity of a lifetime”. Please Click Here to find out.

In the meantime and as per chart below, market internals continue to deteriorate. While one of many indicators flashing a red light, the chart below suggests that the overall market must eventually catch up to individual stocks below their 200 day moving average. Just as it did after 2000 and 2007 tops. That’s quite a drop from here.

market internals

This conclusion is further supported by my mathematical and timing work. It clearly shows a severe bear market between 2014/15-2017. In fact, when it starts it will very quickly retrace most of the gains accrued over the last few years.  If you would be interested in learning when the bear market of 2014/15-2017 will start (to the day) and its internal composition, please CLICK HERE.

(***Please Note: A bear market might have started already, I am simply not disclosing this information. Due to my obligations to my Subscribers I am unable to provide you with more exact forecasts. In fact, I am being “Wishy Washy” at best with my FREE daily updates here. If you would be interested in exact forecasts, dates, times and precise daily coverage, please Click Here). Daily Stock Market Update. February 3rd, 2015  InvestWithAlex.com

Did you enjoy this article? If so, please share our blog with your friends as we try to get traction. Gratitude!!!

What You Ought To Know About This Rally  Google

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Is Warren Buffett Right…..Is Active Money Management Worthless?

warren-buffett-investwithalexThus far, Warren Buffett is beating the pants off his rival in now infamous 10 year performance wager. Warren Buffett adds to his lead in $1 million hedge-fund bet

The wager is simple. According to Mr. Buffett, the S&P Index will beat a hand selected portfolio of hedge fund and fund of fund managers. The creme de la creme if you will. And the results thus far?

The S&P is up 63% Vs. Hedge Funds +20%.

This brings out an important question. Is active money management even worth your time? 

My opinion remains the same. If you NOT an active investor, pick the least expensive index ETF and keep putting money into it month after month.  Long-term, you will come out way ahead of 99.5% of money managers out there.

Otherwise, active money management does make sense. There are thousands of different ways to consistently outperform the market. Sometimes by a large margin. For as long as active investors dedicate their time and continue to improve their skill set, it is the only logical outcome. Someone will outperform this market and get rich, it might as well be you.

At the end of the day Warren Buffett himself is a perfect illustration on that.

z32

Is Warren Buffett Right…..Is Active Money Management Worthless?   Google

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Have They Completely Lost Their Minds?

einstein quote

Yes, I am talking about the US Government. U.S. taking new look at giving arms to Ukraine forces: NYT  We have covered the conflict in Ukraine in great detail since it first started. Fairly accurately I might add. One of the things I have maintained since 2013 is that Russia will never let Ukraine go or fall into Western/NATO’s hands. In fact, I have maintained the following view.

Russia WILL go to war against NATO or anyone else in order to prevent Ukraine from falling into Western hands. If you understand that region and Putin’s mindset, its a forgone conclusion.

An undeniable truth that even the lowest level CIA operative should be able to understand. They either don’t or Washington wants/needs this clear path to war with Russia. Make no mistake, supplying Ukraine with arms will get us there is a hurry. Stupidity at its best. Unless that is exactly what they want.

Who is right or wrong is outside the scope of this discussion. It doesn’t really matter. What matters is, if the US supplies Ukraine with weapons, we will be on the verge of a massive war in the region. With a real possibility of NATO being dragged into a direct confrontation with nuclear Russia. I wonder what that will do to the stock market.

In the meantime, no one has been able to provide me with a legitimate answer to the following question………………. What is the US and NATO doing in Ukraine? 

Z31

Have They Completely Lost Their Minds?  Google

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What You Ought To Know About January’s Sell-Off

Daily Chart Feb 2nd

2/2/2015 – An up day with the Dow Jones up 196 points (+1.14%) and the Nasdaq up 41 points (+0.89%). 

After our December 26th top call, the stock market continues to perform just as forecated. If you would like to find out what happens next, a bounce or a big sell-off, please Click Here. 

It is a well known Wall Street adage, “As goes the January so goes the rest of the year”. And while it didn’t work last year, 2015 might just do the trick. After all, it was a significant down month and the volatility is certainly back. Consider the following…..

So, should you be concerned? I believe so. Despite January’s tribulations and bad “omens”, the majority of investors out there remain overwhelmingly bullish. Despite recent evidence to the contrary they continue to believe that we are in a long-term secular bull market and that every dip should be bought.

As I have suggested here so many times before, nothing could be further from the truth. First, a secular bear market that started in 2000 will not complete until 2017. And at a much lower print. Second, the weaknesses we are seeing on multiple levels should not be dismissed as a “buying opportunity”. Finally, the volatility is back. And as I have said so many times before, it will drive both bulls and bears up the wall. January is a good example of what to expect over the next 2-3 years.

This conclusion is further supported by my mathematical and timing work. It clearly shows a severe bear market between 2014/15-2017. In fact, when it starts it will very quickly retrace most of the gains accrued over the last few years.  If you would be interested in learning when the bear market of 2014/15-2017 will start (to the day) and its internal composition, please CLICK HERE.

(***Please Note: A bear market might have started already, I am simply not disclosing this information. Due to my obligations to my Subscribers I am unable to provide you with more exact forecasts. In fact, I am being “Wishy Washy” at best with my FREE daily updates here. If you would be interested in exact forecasts, dates, times and precise daily coverage, please Click Here). Daily Stock Market Update. February 2nd, 2015  InvestWithAlex.com

Did you enjoy this article? If so, please share our blog with your friends as we try to get traction. Gratitude!!!

What You Ought To Know About January’s Sell-Off Google