I believe we are seeing a major inflection point in history.These type of inflection points only happen once ever few generations it is a major shift in the power structure of society. In the thirties there was a shift from markets and financiers on wall street to government and politicians under the policies of FDR. In the seventies and eighties there was a shift to deregulation , globalisation and a Wall Street driven economy. I believe that with the Brexit vote and the election of trump we are moving towards a populist driven shift to more government power and less centralized power from Wall Street and the Central banks. This shift will begin to change the nature of markets and they will become more volatile. We have specific risk management trades that will profit from this change.
In the podcast below we talk about how you can make money after a stock collapses in what we call reflex trades. We also give examples of two such trades.
In the Video Below I discuss how to manage risk and use specific examples of how managing risk turned losing trades into winners for me. Most newsletter focus on hyping up stocks or are long only we use specific strategies to manage risk which maximizes profits over the long term.
We also own beaten up stocks that represent great value. If you sign up to our newsletter I will give you 5 beaten stocks for 2017 that we think can do well even in a down market.
One of our major themes for the coming years is Hypernormlisation.
Hypernormalisation was a term used to describe the Soviet Union in the late seventies. At that time most people in the country no longer believed in their system but just went along with it and its fakeness cause they did not know anything else and did not know what would happen if hte system collapsed. This is what has happened to us in the west, in the the financial markets. We now believe in QE, stock buybacks and a “fake stock market” pitted on cheap money rather than internal growth. However, the coming shift in policies is going to change this into a new normal and end the fakeness.
Here are some basic points on how we plan on profiting from the new normal:
1. In a overvalued stock market you must be careful in chasing everything. So we will buy cheap beat up companies that can rebound no matter how the market does in the short term. We have five such companies we recommend buying at the moment and a new IPO issue that we will feel will be a growth company as well (which is in a recession proof business).
2. We will short companies that are in industries that will have a tough time adjusting in this new normal and companies that have used financial leverage too growth through M and A or prop up earnings through buybacks as we feel that long term corporate interest rates are headed higher and companies using financial engineering will be punished.
3. We will use a put call option strategy with a roughly 70-30 put to call ratio in stocks that we feel have a chance to have a big move in either direction. Such a ratio will allow us to roughly break even or make money if the bull market continues or make a killing if there is a finally a bust.
4. The long term trend in rates is up. We have specific trades to profit from this trend (we put these trades on a few weeks ago).
What must be remembered is we will have clashing leadership some of the leaders of the old normal are still in power (the current fed Chairwoman, many leaders in Europe). However, it looks like the shift to populism and government power is now in motion and we must be aware of this. If this shift is happening there will be less inclination for the Fed and other central banks to prop up markets . This is also important when looking at a potential sharp decline in the stock market. In our video we also discuss the huge headwinds the market has against a significant move higher.
If you are interested in these theories and a unique view of both the political and economic world and how to profit in the new normal our newsletter might be for you.
In our letter we have video and podcast and email updates on trades . Our letter consists of
1. Email Alert Updates
2. Newsletters with our macro view
3. Podcast updates
4. Video Updates
5. Trade Alerts with specific securities and what we are buying or selling, along with option trades.
Thank you for your time and have a great weekend!