Act NOW to Protect Your Wealth From PERMANENT Transitory Inflation
Stock-Markets / Inflation Dec 13, 2021 - 03:51 PM GMTBy: Nadeem_Walayat
Dear Reader
This is the concluding part 2 of 2 of my analysis that explains why 'Transitory' Inflation is about to become permanent and some pointers of what one should do to protect ones wealth from the stealth inflation theft of purchasing power. This analysis formed part of my in-depth housing market analysis in progress which has mushroomed beyond my original planned trend forecast for UK house prices which now encompasses an analysis of the state of play of most of world!. So in the interests's of timeliness my stocks analysis is being posted separately ahead of my housing market analysis as will be the case for future analysis form now on.
Part 2 of 2 of my recent extensive analysis (Part1) :
Protect Your Wealth From PERMANENT Transitory Inflation
- Best Real Terms Asset Price Growth Countries for the Next 10 Years
- Worst Real Terms Asset Price Growth Countries for the Next 10 Years
- The INFLATION MEGA-TREND
- Ripples of Deflation on an Ocean of Inflation!
- Stock Market Trend Forecast Current State
- US Dollar - Stocks Correlation
- US Dollar vs Yields vs Dow
- Stock Market Conclusion
- 34th Anniversary of the Greatest Crash in Stock Market History - 1987
- Key Lesson - How to REALLY Trade Markets
- AI Stocks Portfolio Current State
- October Investing Plan
- HIGH RISK STOCKS INVEST AND FORGET PORTFOLIO
- Can US Save Taiwan From China?
The whole of which was first made available to Patrons who support my work. So for immediate first access to ALL of my analysis and trend forecasts then do consider becoming a Patron by supporting my work for just $4 per month. https://www.patreon.com/Nadeem_Walayat.
And for access to my recent analysis extensive analysis of investing in the Metaverse.
Best Stocks To Profit From the $1+ Trillion Emerging Metaverse Mega-trend
Contents:
VR and Gaming Becomes the Metaverse
A Video Message from Your Metaverse Analyst
PRIMARY META-VERSE STOCKS
QUANTUM AI METAVERSE STOCKS
METAVERSE STOCKS UNIVERSE
Google Glass a Big Fat FAIL
META (Facebook) Dominating VR
APPLE AR Headset Coming 2022
ROBLOX - High Risk
TENCENT- Chinese High Risk GAMING
XXXXXX - CAD - $254 RISK - 3 OUT OF 10
XXXXXX - RISK 3 OUT OF 10.
XXXXXX NEW LIFE FOR AGEING GAMING GIANT? RISK 2 OUT OF 10
XXXXXX - DIGITIZING THE REAL WORLD - RISK 8 OUT OF 10
INTEL Black Friday Sale!
IBM The REAL Quantum Metaverse STOCK!
NVIDIA THE KING OF THE METAVERSE!
XXXXX
AI Stocks Portfolio Current State
AI Stocks - What's Cheap
AI Stocks - What's far value
AI Stocks - What's expensive?
Stock Market Trend Forecast Current State
Current State of Cathy Wood ARKK Garbage
RIVIAN IPO Illustrates We are in the Mother of all Stock Bubbles
DECENTRALAND
SANDBOX
How to Get Rich in the MetaVerse
Bitcoin Trend Analysis
Crypto Current Portfolio
Covid19 Winter Storm Fuel for Financial Crisis 2.0
OMICRON - The 'Oh Dear' Worst Ever Covid Strain?
Consequences for the Stock Markets?
Financial Crisis 2.0 Current State - TAPERING
Financial Crisis 2.0 Stock Market Bubble Investing Strategy
Why You Should Not Fear a 50% Draw down in Your Stocks Portfolio
What's driving asset price inflation?
Inflation Forecasting a Recession In 2022
UK Inflation Hits 30 year High of 6%
UK Energy Customers Falling into Energy Firms Fixed Rate Tariffs Trap
Fin tech Stock - NEW STOCK
And access to my recent analysis that acts as an early warning of the increasing risks of market panic event!
STOCK MARKET CRASH / BEAR INDICATOR TRIGGERED - 103.4% vs 100% = Switched ON!
What is the CI18?
CI18 Trigger Feb 2020
Existing Stock Market Trend Forecast
Stock Market VIX
Stock Market December Trend
OMICRON THE STRAW THAT BROKE THE CAMELS BACK!
MUTED SANTA RALLY
The Alibaba Stock Market
ARKK Garbage
Stocks Bear Market of 2022 May Have Started EARLY!
Facebook $301 Buying level achieved.
Recession 2022
Quantum AI Tech Stocks Portfolio
Crypto FLASH CRASH Early Christmas Present
Also access to my extensive analysis on the state of the AI tech stocks that highlighted several stocks trading at bargain basement levels - AI Tech Stocks Portfolio Updated Buying Levels and Zones as Financial Crisis 2.0 Continues Brewing
Contents:
Financial Crisis 2.0 Checklist
The China Syndrome
Stock Market Begins it's Year End Seasonal Santa Rally
Stock Market Trend Forecast Current State
INVESTING LESSON - BUYING VALUE
Peloton 35% CRASH a Lesson of What Happens When One Over Pays for a Loss Making Growth Stock
INVESTING LESSON - Give your Portfolio Some Breathing Space
INVESTING LESSON - Give your Portfolio Some Breathing Space
How Stagflation Effects Stocks
INTEL Bargain - 15.5% Discount Sale
Why Intel stock price dropped 15%?
FACEBOOK - 10% DIscount
IBM - 20% Discount
Amazon - 5% Discount
APPLE 4% Discount
AMD $136 on Route to $200
TSMC - $117
Microsoft $336
Google $2980, PE 28.7, EC 30.
Nvidia Leaves planet Earth - $299, PE of 106
Heads Up on NEW Potential Tech Stocks
AI Stocks Portfolio Updated Buying Levels
AI Stocks Buying Plan B
FREE TRADE the Perfect Stocks and Shares ISA?
FREE SHARE FROM FREETRADE
High Risk Stocks Brief
Crypto's 20% Discount Event
Bitcoin Trend
Palladium Brief
So for immediate first access to ALL of my analysis and trend forecasts then do consider becoming a Patron by supporting my work for just $4 per. https://www.patreon.com/Nadeem_Walayat.
Note: The information provided in this article is solely to enable you to make your own investment decisions and does not constitute a personal investment recommendation or personalised advice.
US Dollar vs Yields vs Dow
The first thesis is that when the dollar and yields are rising then stocks should be falling because it is seen as being deflationary, risk off. The actual correlation is basically 50/50, a coin flip. So a rising dollar and yields is a con flip for stock market weakness.
The second thesis is that rising interest rates are bearish for stocks and thus falling interest rates are bullish for stocks. In fact the opposite appears to be true, rising interest rates are bullish for stocks, whilst falling interest rates tend to be bearish for stocks. Which makes sense as the Fed raises interest rates to cool an overheating economy and cuts interest rates to stimulate a weak economy. So rising interest rates are definitely bullish for stocks. Whilst falling interest rates are usually eventually bullish for stocks (pattern since 2008).
So the sooner the Fed tapers and raises interest rates the better the outlook for the stock market.
Stock Market Conclusion
Stock market correction so far has been fairly mild with the tech stocks not reaching levels to offer enough of a discount to justify exposure to in the face of the coming inflation storm. Whilst October is not done with yet i.e. we could yet see a final leg down, especially given the potential for earnings surprises form the tech giants due over the next 10 days.. However with each passing day such an outcome diminishes, thus the stock market appears to be gearing up for another run to new all time highs which given the mild correction so far suggests that the Dow could trade nearer to 40k, than 37k by the end of this year.
However, my outlook for 2022 sees worsening conditions that will see transitory inflation become permanent, so there is going to come a time when investors will do the math of what high inflation means for future corporate earnings, i.e. lower earnings due to rising costs and less disposable incomes. Hence it remains highly probable that most stocks will trade to below their October 2021 lows during 2022.
34th Anniversary of the Greatest Crash in Stock Market History - 1987
It's that time of the year again when the stock market reaches the historic apex of the darkest month for stocks of the year, October the 19th, the 34th anniversary of the 1987 Black Monday stock market crash that few saw coming but ever since many expect to repeat. So regardless of what the stock market has actually done thus far, by this point of the year the perma bears can always be seen literally jumping up and down like demented rabbits proclaiming that a crash is once more imminent as they point to a myriad of harbingers of the stock market apocalypse. So it is no wonder that October tends to be an unusually irrational month for where stock market expectations are concerned. However note that EVERY crash in the general stock market indices such as the Dow, S&P and FTSE have always resolved in the mother of all buying opportunities.
Anyway here's how I successfully traded the 1987 Crash 34 years ago.
Key Lesson - How to REALLY Trade Markets
Reacting to price movements in real time as they approach, retreat and break Support and Resistance levels! That's how one actually successfully trades markets, sounds simple enough but you get out what you put in and what you need to put in is TIME watching the markets moving in real time.
It's what got me short on the Dow BEFORE it crashed in 1987. And it is not as easy as it sounds as it demands commitment in terms of time. To sit there every trading day watching maybe no more than 2 markets move between and through support and resistance levels for only then will one have the price imprinted onto ones neural net (brain), to become synchronised with that market.
Go long when prices break resistance, short when prices break support. counting the buy / sell triggers as one goes along which reinforce the direction of travel. Intra-day trading demands sitting there for a good 6 hours a day watching perhaps just 2 markets move, which I do not have the time for. So when trading my preference is for end of day trading i.e. utilising the daily charts instead of intraday.
One of the first trading books I read put me onto this track "How to Make Profits in Commodities" by WD Gann, tops and bottoms, highs and lows, and multiples thereof and that was basically how I viewed the markets mostly in terms of tops and bottoms, highs and lows. For instance the Dow bottomed at 18,213 in March 2020, the Low forecasts resistance at 150% and 200% at 27,319, and 36,425, and then you have percentages of ranges (1/8ths) and so on.
At that time I remember being skeptical of trend lines, perhaps they worked less well then than now with so many technical traders out there?
Today?
In addition to tops and bottoms I count moving averages as being of next importance and then trend lines.
This is what Facebook's trading chart looks like, and no I am not trading Facebook stock, just keeping a close eye on it as I aim to buy more given that it is less over valued than it's FAANG brethren.
The stock bounced from the 200 day moving average and cleared 2 minor resistance levels, that's as far as the trading would take it i.e. 3 minor buy triggers.
AI Stocks Portfolio Current State
Large Image - http://www.marketoracle.co.uk/images/2021/Oct/AI-stocks-portfolio-18th-Oct-big.jpg
Buying levels were achieved for Samsung, RHHBY and J&J. Facebook came close but not close enough. Whilst IBM and Intel mark time ahead of earnings on Wed and Thurs..
October Investing Plan
The stocks at the top of my October buy list are -
IBM - Buying level $118, I will be buying at or near $130 (Earnings 20th Oct).
Intel - Buying level $48, I will likely be buying at or near $50 (Earnings 21st Oct )
Facebook - Buying level $301, I will be buying at $309. (Earnings 25th Oct)
Google $2410 and then $2100 so likely somewhere between that range (Earnings 26th Oct)..
Apple - Buying level $123, I WILL likely be buying at or near $133 (Earnings 28th Oct).
Most of the rest are at or below buying levels i.e. Amazon $2933 vs $3020 (Earnings 28th Oct).
I don't think I will be buying any TSM, Nvidia or Microsoft given that they will need to sustain huge price falls for me to consider buying, but if they do fall to their buying levels then I will likely be buying these stocks. Microsoft is ridiculously over valued a negative earnings surprise on 26th October could easily send Microsoft significantly below it's October low.
I don't have any plans to buy any Samsung or J&J, Whilst Roche bounced strongly off its; 200 day MA.
HIGH RISK STOCKS INVEST AND FORGET PORTFOLIO
Invest and forget, literally means to INVEST AND FORGET else one will make huge blunders of selling out of all ones strongest stocks when they should be left to run. My legacy stocks portfolio are literally invest and forget stocks that are NEVER on my mind, I do not think about them or ponder what they are doing. In fact all I am aware of is that they fund my account with dividend income to buy more stocks with. I am not aware of their stock prices, trends or corporate earnings reports so they have no impact or effect on me whatsoever which is how it should be, not the frenzy frenetic activity of watching day to day gyrations in stock prices, that is just wasting ones time, energy and resources best put elsewhere. INVEST AND FORGET!
So I am not going to be updating the High risk stock prices on a regular basis or pondering what they are doing as I made clear when I first created the high risk stocks portfolio as I am now more or less fully invested in this portfolio for the long-run.
The only stock that I have an active limit order on is WDC at $51.5 (Earnings 28th Oct). Whilst I am monitoring COIN and Roblox.
Chinese Stocks - Rallying strongly of the lows, though it is way .too early to say the lows are in as Emperor Jinping could decide to steal some more tens of billions for his offshore bank accounts from the likes of Alibaba or worse! Then there is the risk of China property bear market fall out i.e. the tech giants likely have significant exposure to the chinese property market.
See previous article for Key.
So I will only be updating the state of play of the high risk stocks portfolio on a quarterly basis with the next update towards the end of DECEMBER.
Can US Save Taiwan From China?
China over the past few weeks has been ramping up it's incursions into Taiwanese air space culminating with Emperor Xi Jinping reiterating that Taiwan is a province of China and will reunify with the mainland either by peaceful means or by force. Whilst recently the US deployed 3 carrier groups accompanied by Britain's sole aircraft carrier near Taiwan though not in the Straits.
This war game simulation pits the Chinese PLA Navy against the US 7th Fleet that comprises 70 war ships including 2 air craft carriers, also deployed is a third carrier group with the objective of deterring the Chinese Navy from attacking Taiwan.
My analysis schedule includes:
- High RIsks Stocks Portfolio Quarterly Review
- UK House Prices Trend Analysis, including an update for the US and a quick look at Canada and China - 65% done
- How to Get Rich! - 90% done - This is a good 6 month work in progress nearing completion.
- US Dollar and British Pound analysis
- Gold Price Trend Analysis - 10%
Again for immediate access to all my work do consider becoming a Patron by supporting my work for just $4 per month. https://www.patreon.com/Nadeem_Walayat.
Your analyst battening down the hatches for 10%+ CPI Inflation, 20%+ REAL inflation.
Nadeem Walayat
Copyright © 2005-2021 Marketoracle.co.uk (Market Oracle Ltd). All rights reserved.
Nadeem Walayat has over 35 years experience of trading derivatives, portfolio management and analysing the financial markets, including one of few who both anticipated and Beat the 1987 Crash. Nadeem's forward looking analysis focuses on UK inflation, economy, interest rates and housing market. He is the author of five ebook's in the The Inflation Mega-Trend and Stocks Stealth Bull Market series that can be downloaded for Free.
Nadeem is the Editor of The Market Oracle, a FREE Daily Financial Markets Analysis & Forecasting online publication that presents in-depth analysis from over 1000 experienced analysts on a range of views of the probable direction of the financial markets, thus enabling our readers to arrive at an informed opinion on future market direction. http://www.marketoracle.co.uk
Disclaimer: The above is a matter of opinion provided for general information purposes only and is not intended as investment advice. Information and analysis above are derived from sources and utilising methods believed to be reliable, but we cannot accept responsibility for any trading losses you may incur as a result of this analysis. Individuals should consult with their personal financial advisors before engaging in any trading activities.
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