Thursday, December 31, 2015

How To Make 8% Every Year With Zero Risk

12/30/15

Is it possible to make 8% investing money in stocks every year with zero risk?

Yes.

How?

Well, by now, all investors should know that there are no longer stock ‘markets’. They have been replaced by stock ‘carnivals’. Carnivals are collections of games that are rigged by the owner of the carnival. Think of it this way. We could bet money on basketball games but surely we would not be correct all the time. In a fair game, our team would lose sometimes. But what if we bet our money on a game that was rigged? The winner was selected before the game started. So instead of betting money on an NBA game, what if we bet our money on the Harlem Globetrotters? They have only lost a couple of games in the last 50 years and will lose even fewer in the next 50 years. Why? Of course the game is rigged. The game is for our entertainment and not a true competition of basketball skills. It is an exhibition or sorts.

Since the Federal Reserve Bank seized ultimate power in their August of 2007 coup, they have been controlling stock prices for our entertainment and control. And, since we know the game is rigged to be a perpetual bull, all we have to do is wait until the fourth quarter and then place our bets. Of course, we know stocks simply have to move higher every single year from now until the end of time or the dopey citizens might suspect something is wrong. How can this be achieved?

We all know that the Fed runs the stock carnival and we all know about the PPT. Their only mandate in reality is to rig stock prices to the moon. Yes, I know. All that other stuff is just noise for the dumb folks. The only question is this. How can we use the Fed’s manipulative practices to our advantage?

There are indeed gyrations in stock prices along the way and when prices dip, it is hard to hold long positions in stocks that are now in a bubble and more over-valued than ever before. When stocks start to fall in price, our natural inclination is to sell out. But what if the risk of capital loss was removed?

As it works out, we can invest without risk if we examine the chart that I have included below. It is very simple. 

The chart is the Dow Jones Industrial average on a weekly basis for the last eight years. This is the gold line. I have traced the first three quarters of each year in blue and the last quarter of each year in green. Since 2009, the Dow has now had seven consecutive positive years. (Yes, I am writing this with only a few more trading days in the year and the Fed is fighting like mad to make 2015 positive as well by injecting stocks with fresh capital at the Yellen preferred time of 10:30 am. I’m betting they do so. Weeeeeeeeeeee!!!!!) So again, the question is how do we reduce risk to zero and still get carnival gains?

Pay attention to the green lines. Since the Fed wants us to feel richer as we keep digging our debt holes deeper and deeper, they goose stock prices every year in the fourth quarter. What if we only invested money starting at the beginning of every October and sold at the end of every December? Have we found the Harlem Globetrotter team of investing/ betting?

Okay. In the chart below, we can see that the Dow has climbed from 9000 to 18000. A double in seven years is a ten percent annual return. But, there were some nasty declines along the way that could shake even a CNBC devotee out at some point. Those are along the blue lines. Now take a look at the green lines. By my rough calculations, the Dow has gained about 9000 points since 2009 with risk mostly in the blue lines. Just following the green lines, the Dow gained some 7000 points of that 9000 with zero risk (except for a ever so slight loss in 2012 because the Fed was about to stop QE). Or, about 8% per year risk free! 

Thus, we can bet on the Harlem Globetrotters to win every game as long as we only put our money to work in the fourth quarter. 

In fact, if we go all the way back to year 2000, the same strategy would have worked every year except 2007 and 2008. Now the Fed is completely in charge and it looks like the Dow will climb to the sky! Nothing can stop it. The Fed has a printing press and no laws or morality to constrain it. We just have to remember that risk-free investing is only available in the fourth quarter. See the chart below for the truth.


Oh, one more thing. I drew a red line at the top of the chart noting the declining RSI since 2013. Normally, that would be a red flag indicating that the rally over the last few years is a fake. I also drew a red line at the bottom along the falling trading volume. Stock prices have risen as volume has been falling. That would also be a red flag warning that something was wrong. But nevermind. We aren’t in reality anymore. We are at a carnival and we are all winners. Weeeeeeeeee!!!!


8 years weekly DJIA
Chart courtesy StockCharts.com

Disclaimer: The views discussed in this article are solely the opinion of the writer and have been presented for educational purposes. They are not meant to serve as individual investment advice and should not be taken as such. This is not a solicitation to buy or sell anything. Readers should consult their registered financial representative to determine the suitability of any investment strategies undertaken or implemented. BMF Investments, Inc. assumes no liability nor credit for any actions taken based on this article. 

Thursday, December 24, 2015

’Twas The Night Before The Fed Meeting

12/24/15

Since we now live in an entirely different world in which stock prices are manipulated every minute of every day by central bankers, we should put our efforts into updating our literature to reflect the new ‘nanny-state’ of our existence. I have begun updating nursery rhymes. In keeping with Christmas spirit, I have now updated the poem commonly known as ‘The Night Before Christmas’ to more accurately reflect the true Santa Claus - the Federal Reserve Bank. 


’Twas the hours before the Fed announcement
and throughout the NYSE
Not a trader was trading
Not even the propagandist, shill, cheerleaders on CNBC

With hope in our hearts 
And ‘buy’ orders in hand
Investors waited anxiously
For Janet to announce that the bubble would indeed expand!

With me and my data
So different from government lies
I knew stocks should fall
But I knew Janet felt otherwise

Our hearts beat faster
As the two o’clock hour neared
What would Janet say?
Would there be anything to fear?

And suddenly there she was
Lift off was here
Higher rates were coming
Wall Street let out a cheer!

They knew as I did
Janet would not fail
She has a printing press
And no reluctance to tell a tall tale

At first the Dow staggered
Realizing the end could be near
The bull market rally
Zoomed higher as a wall of money suddenly appeared

Up Amazon, up Google
Up banking, utilities, nothing could fall
Every sector was in the green
The PPT bought it all

With price fixing in
the bubble could grow and grow
The Fed won’t let us down
All stocks are green no matter what we sow

So twenty trillion is debt 
is nothing to fret
Neither is a bubble in stocks
Against the fed we don’t want to bet.



Enjoy the Fed’s bubble and Merry Christmas to all!


Disclaimer: The views discussed in this article are solely the opinion of the writer and have been presented for educational purposes. They are not meant to serve as individual investment advice and should not be taken as such. This is not a solicitation to buy or sell anything. Readers should consult their registered financial representative to determine the suitability of any investment strategies undertaken or implemented. BMF Investments, Inc. assumes no liability nor credit for any actions taken based on this article. 

Tuesday, December 15, 2015

Expanding Bubbles

12/16/2015

Thursday, 12/10/15, stock indices rose because (so all the pundits reckon) Fed Chair Yellen made a speech reinforcing her determination to begin raising interest rates on December 16. Friday, 12/11/15, the next day, stock indices plummeted because, well, for the same reason. In bubbles, indices can rise or fall for exactly the same reason. 

Monday, 12/14/15, stock indices see-sawed back and forth between positive and negative like a ping-pong ball in a lottery machine. Up a hundred. Down a hundred. Up a hundred. Back to zero. Then, in the last 45 minutes, the Dow burst higher some 130 points because, well, the PPT wanted the index higher. What brings me to this conclusion? On a day which the Dow rose some 130 points, declining stocks led gaining stocks by a ratio of 4 to 1 on the NYSE. Yet, the reverse was true of the Dow. Gainers led decliners 23 to 7. The Fed has obviously become better at ‘precision’ buying geared toward manipulating our psychology. Bubbles are driven by insanity.

Tuesday, 12/15/15, stock indices immediately burst higher with the Dow up some 200-plus points late in the day. Why? Because higher rates are surely on the way! Ain’t it great! Bubbles ignore reality.

Only in a bubble does this happen. Stocks continue to rise. Okay. That’s fine. However, median PE ratios are now higher than they were in either 2000  or 2007. Stock indices are driven by companies that sport PE ratios that now require exponents. AMZN now has a PE of some 10 cubed. Netflix has a PE of 10 squared. Consumer spending is supposedly up in November and yet retailers reported ‘Black Friday’ sales as being down some 10% from last year. Consumer confidence supposedly rose last month yet the Fed said americans lost some $1.2 trillion dollars in net worth in the third quarter. Bubbles embrace the lie.

Food for thought. Ford’s sales are up and McDonald’s sales are not. For the year, Ford is down and McDonalds is up. Why? McDonalds is a member of the Dow and  Ford is not. Stock prices are for our manipulation. They have nothing to do with financial fundamentals. Bubbles are artificial.

So what should we expect when the Fed raises interest rates on 12/16/15 for the first time in 8 years? Really? Doesn’t everyone know that the Fed stands ready with trillions of dollars to manipulate the Dow higher for our prolonged hypnosis? 

The chart below shows us a good example of resistance turning into support. Dow 17200 (the blue line) looks to be the Fed’s ‘line in the sand’. Use this line as the new bottom courtesy the Federal Reserve. Enjoy the bubble!



DJIA - 2 year, December 15, 2015
Chart courtesy StockCharts.com


Disclaimer: The views discussed in this article are solely the opinion of the writer and have been presented for educational purposes. They are not meant to serve as individual investment advice and should not be taken as such. This is not a solicitation to buy or sell anything. Readers should consult their registered financial representative to determine the suitability of any investment strategies undertaken or implemented. BMF Investments, Inc. assumes no liability nor credit for any actions taken based on this article.