Disclaimer: I am not a licensed securities dealer or adviser. The views here are solely my own and should not be considered or used for investment advice. As always, individuals should determine the suitability for their own situation and perform their own due diligence before making any investment.
In a previous post, I mentioned that I was looking to purchase gold, hopefully when it went falls below $1,000.00 per ounce. That has yet to happen, but I did purchase gold this past Friday (February 24, 2017). Perhaps this was a little premature, but I think the market fundamentals are screaming recession while the market keeps on ticking upward. On March 15th, the Fed will decide on a rate hike, which will likely happen, since by their Keynesian models,the Fed must raise interest rates. This may cause the gold to go down slightly as the dollar strengthens due to a shrinking supply; however, this will put a damper on the risky trading that has caused the stock market to keep rising, in hopes of Trump bringing better days. I think this will cause a recession worse than the “Great Recession,” since the market has risen based on “helicopter money” and the transfer of wealth from Main Street to Wall Street through the Bernanke-Yellen monetary policy. I’m not saying that will happen in March, but when second and third quarter earnings are reported, even first quarter too, that market will be rather surprised by the outcome.
There are a variety of resources that I use to make my trading decisions. For my commodities, I subscribe to the Commodity Research Bureau’s Fundamental Market Service, which is a weekly report on commodities, the dollar, and major news about the economy and stock market. This service also comes with a daily email giving the latest updates in commodities. The Commodity Research Bureau also produces The CRB Commodity Yearbook, which gives a particular year’s projection and the historical data and charts for the best information to make decisions. In addition, Commodity Research Bureau produces an encyclopedia, which gives historical data for approximately 100 years. These are great tools in my opinion, and they are some of the resources I use to make investment decisions.
Another great service is David Stockman’s website, which gives you a plethora of charts and daily data dumps that are extremely useful. The basic subscription is all one needs.
The following are a few books I could not invest without reading first:
- Economics in One Lesson: The Shortest and Surest Way to Understand Basic Economics
- How an Economy Grows and Why It Crashes
- Meltdown: A Free-Market Look at Why the Stock Market Collapsed, the Economy Tanked, and Government Bailouts Will Make Things Worse
- Hot Commodities: How Anyone Can Invest Profitably in the World’s Best Market
With these books, understanding the market and the economy becomes much easier. These books can help the reader spot problems in the market and economy by using basic logic. And finally, a priceless book that I use when pouring over financial statements to invest in public stocks is Wiley GAAP 2017 – Interpretation and Application of Generally Accepted Accounting Principles (Wiley Regulatory Reporting). This books gives the reader all the information needed to understanding how information is reported to the SEC, and what certain information means in financial statements, such as balance sheets, income statements, cash flows, and various reporting notes. However, in order to use this book properly, it is best to have a firm understanding of accounting.
I use the above resources in conjunction with reading the news from a variety of sources, such as MarketWatch, Wall Street Journal, Financial Times, New York Times, ZeroHedge, and Jim Roger’s blog, just to name a few. The news outlets that I generally stay away from are Fox News, CNBC, and CNN, which are almost valueless.
If my prediction is correct, gold, water, and other commodities will be a great investment while stock values fall. Come next year, there should be a nice profit from these commodities, and time may be ripe for investing in stocks as they bottom out. Perhaps purchasing some cattle for the pasture will be a good idea too. When the recession does occur, hopefully President Trump will take a page from history by not intervening as the market solves the capital misallocation.