Consumer Confidence Collapsing, Economy Sinking Investor Profit Bonanzas
Stock-Markets / Financial Markets 2010 Jul 19, 2010 - 08:06 AM GMTBy: Martin_D_Weiss
Rarely are the signs of an economic downturn as clear as they are today — collapsing consumer confidence, sinking retail sales, another round of housing market troubles, and much more.
And even more rarely do we see the stock market defy those signs like it did through Thursday of last week — finally succumbing, however, on Friday with the Dow’s 261-point decline.
This is why we’ve been issuing warning after warning about the stock market and the economy. And it’s also why we have done everything in our power to give you the opportunity to turn lemons into lemonade — to harness the massive power of this crisis for equally massive profit potential. Our recent online event is a case in point. Here’s the edited transcript …
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Jamie Holmes, network anchor: This is Weiss Research’s first-ever presentation dedicated exclusively to the company’s most loyal customers and experienced investors.
More so than most investors, you can see, with your own eyes, how the economic recovery was bought and paid for by Washington. You can see how the stock market rally was built upon by that false recovery. And now you can see how both are falling apart at the seams.
In this market, inexperienced investors are frozen, unable to take action, and they wind up losing a lot of money. But experienced investors like you have another choice. Instead of hiding in a corner, you can harness the great power of the crisis to harvest high-powered profits.
All you need is a modest amount of risk capital that you can earmark for speculation, while keeping the rest of your money safe.
Second, you should use investment vehicles that let you sleep at night in the knowledge that your risk is strictly limited.
And third, it’s always best to have a systematic approach with a history of success … which leads me to an announcement that we are making right here and now for the very first time:
A team of Weiss Research analysts has found — and thoroughly validated — the single best real-time track record among the countless track records reviewed since the company was founded 40 years ago.
This track record covers five and one-half years of investment recommendations published from December 2004 through June 2010, including the worst bear market since the Great Depression.
Since inception, investors could have acted on a total of 170 winning trades. And the average gain on the winning recommendations has been 149.1 percent.
There were also losing trades, but they had far less impact on the overall results for two important reasons: First, the number of losing trades was smaller than the number of winning trades. Second, the average loss on losing trades was far smaller than the average gain on winning trades.
Even after subtracting all the losers, investors following the real-time recommendations could have achieved overall growth of more than eleven times their initial capital.
So we believe this track record gives you the key missing link to help you make very substantial sums of money in these topsy-turvy times.
Now, the next question is: Where are you going to find the next big profit opportunities like these? Martin Weiss and his guests are here to give you that answer …
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Martin Weiss:Thank you, Jamie. Now that we’ve seen the numbers, let me introduce to you to the man behind the numbers. As you know, the highest performing professional traders in the world work quietly, behind the scenes. They have no time for the talk show circuit. But they make real money. And as you’ve seen from this track record, this analyst is one of them. His name is Jeff Manera, and I want you to meet him right now. Jeff, congratulations on your track record.
Jeff Manera:Thank you. I am absolutely delighted to be here.
Martin:I hope I don’t embarrass you if I tell you another reason why I invited you here.
Jeff:No, I don’t mind.
Martin:You remind me of my father. Before he passed away, he wrote:
“Forgive me if I seem impatient with my son Martin, but I am. Martin is so conservative, sometimes it drives me batty. He likes to play it safe and double his money every 5 to 7 years. I’m far more aggressive. I like to use leverage, take some risks, and double my money in 5 to 7 months, or even weeks.”
And that’s what you’ve done since 2005, through the biggest bubble and the worst bear market and recession since the Great Depression. That’s why you remind me of him.
Jeff:I take that as a true compliment.
Martin:Before you go any further, there are two caveats I would like to stress: Past performance is no guarantee of what can be done in the future. Plus, I think we can all recognize that the years ahead could be very different from the last five years, bringing not only new threats but also unusual, new opportunities.
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Jeff:Absolutely. And right now, I’m particularly excited about a situation that offers investors the greatest leverage you’ve ever seen — or are likely to see. For just $100, you can effectively control $1 million in assets. That’s 10,000-to-1 leverage! And since we’re talking about the simple purchase of options, even if we’re totally wrong, your loss is limited to your initial investment. If we’re right, you could start with $2,000 and, a year or two later, walk away with $168,000. It’s an investment that lets you sleep nights, yet can make you a genuine fortune.
Martin:That must be one of the largest profit opportunities available to individual investors in the world today.
Jeff:Yes, it is.
Martin:Then please save it for last. First, I’d like to zero in on what’s happening right now and what’s likely to happen in the days ahead. Plus, I’d also like to welcome Mike Larson, Weiss Research’s specialist on interest rates and everything they impact, especially the stock market.
Mike, our readers know you well — how right you’ve been and how much national recognition you’ve received. So I’ll skip the credits and ask you to cut straight to the chase.
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Mike Larson:Sure, Martin. The big picture is that most major countries were already up to their eyeballs in debt before the great credit crack-up struck two years ago. Now, after spending untold trillions to bail out their banks and stimulate their economies, they’re worse than broke.
Martin:You’re talking about Portugal, Italy, Ireland, Greece, Spain …
Mike:The PIIGS countries! But not only the PIIGS. I’m also talking about France and Germany, which are taking on all this debt. Plus, this crisis is even spreading to some of the biggest countries like the U.K. and the U.S. This is no mere forecast. This is happening now.
Jeff:And I think the pivotal, core opportunity generated by the sovereign debt crisis has been to play the crash in the euro. The euro has fallen sharply from its high, and this big move has opened up a whole series of large profit opportunities.
For example, just this past January, you could have placed a couple of simple bets on the euro’s decline and by mid-April, just three and a half months later, you could have walked away with gains of 250 percent and 274 percent. Or you could have placed even cheaper bets and walked off with gains of 524 and 529 percent at approximately the same time.
Martin:I assume you’re still talking strictly about options that limit your risk to the amount you invest.
Jeff:Yes, put options — to profit from a decline. The most you could lose is the small amount you invest, and never a penny more.
Martin:When investors hear these kinds of high triple-digit profit numbers, they’re often skeptical, and for good reason. But from your track record, it’s obvious that they’re within the actual range of percentage gains you’ve seen.
Jeff:Yes. No one can guarantee results, but I think these are the kinds of returns you could go for over and over again as long as this euro crisis lasts.
Martin:And when it ends?
Jeff:Then, we could have a whole other opportunity — when it’s the dollar’s turn to take a big hit.
Mike:We’re talking first about the euro plunging and then about the dollar plunging. But I want to remind you that gold has been going up regardless of which major currency is plunging.
Martin:Because …
Mike:Because the Federal Reserve has been printing money like there’s no tomorrow and everyone knows it. So they’re rushing into gold.
Martin:True, but not everyone knows why the Fed is doing it.
Mike:Actually, I think that’s pretty obvious too. It’s the Fed’s last- ditch, desperate attempt to hold interest rates down while the U.S. Treasury borrows over $1 trillion each year to finance the largest deficits of all time. Plus, on top of that, you now have high anxiety about the sovereign debt crisis. These fears are virtually nonstop. And they’re continually driving investor capital into gold bullion.
Jeff:Which is another opportunity with the right options.
Martin:Immediately?
Jeff:Just as soon as we get a good correction. That’s when we’re going to look seriously at some gold options. Right now, they’re going for about $400 for a single option. If gold simply rises at the pace it’s been rising this year, we estimate those options could hand you gains of from 300 to 600, or almost 700 percent. And if you buy these options after a temporary correction — a retracement in gold — your cost will be even smaller and your profit potential even greater.
Mike: The gold bull market is another major trend that is already in motion. But the very biggest opportunities we see ahead are with two new trends, which most investors are not ready for.
Martin:The stock market has got to be one of them.
Mike:Yes, it certainly is. And when stocks go down, you can make more money faster than when the stocks go up.
Martin:That’s what my father used to say. In fact, among all the speculators in the world, he was probably the only one who made a fortune in the bear market of the 1930s and then lived to do it again in the Crash of 1987.
Mike:I don’t know when we’re going to see another crash like in 1987, but I can easily see the market fall back to its lows of March 2009. Look. The entire stock market rally was based on the economic recovery … and now, the entire recovery is getting trashed. The recovery was bought and paid for by Washington — $2 trillion in stimulus and bailouts, not to mention the Fed’s money printing. But what did that buy us? One of the most feeble recoveries on record! And now where does it leave us? With massive deficits and an economy that’s crapping out again.
Now, mid-term elections are just a few months away. Now, voters are outraged over the deficits. And now, Congress is refusing to touch any new stimulus package with a ten-foot pole.
Meanwhile, you’ve got new home sales in their worst decline on record. You’ve got home values plunging another 10 percent. You’ve got cities and states cutting back drastically. You’ve got credit tighter than a drum. And you still have real unemployment and underemployment at 22 percent — nearly one in four Americans with little or no paycheck! Now, precisely when the economy is sinking under its own weight, the government is starting its exit?!
Jeff:Can I give you a concrete example of the opportunity here?
Look back at the bear market of 2008. Between May and October of 2008, the S&P 500 fell about 35 percent, which was not exactly a good-news event for most investors. But throughout that decline, instead of losing money in the stock market, you could have been making money hand over fist. If you just bought a simple put option on the S&P 500, your money could have grown 739 percent, thanks to the decline. If you started with, say, $2,500 you could have ended up with $20,975.
Plus, I screen thousands of stocks. And I can already see major cracks beginning to appear in key sectors.
Mike:Like housing stocks, transports, retailers, and more!
Jeff:Whenever any sector crashes and burns, where most investors see just trouble, we see a whole slew of profit opportunities. For example, just recently, you could have bought a series of put options on one of my favorite targets, Toll Brothers, and walked away with gains of 104, 180, 253, and 457 percent.
Or in approximately the same time period, you could have seen another whole series of big winners in PulteGroup — 150, 204, 285, 353, and 364 percent.
Martin:Similar to the kind of numbers we saw in your track record just a while ago.
Jeff:Similar size gains? Yes. Same stocks? No. Another example is Hovnanian Enterprises. Put options on this stock recently could have yielded gains of 137 percent, 286 percent, 325 percent — each in separate trades since April of this year.
Martin: We said you were going to leave the best opportunity for last.
Jeff: It’s in interest rates. Interest rates are at historic lows, just an eyelash above zero. They simply can’t go any lower. There’s only one direction they can move: Up.
Martin:That doesn’t make this a risk-free profit opportunity. There’s no such thing.
Jeff:No. But like I said earlier, the key is that right now, for just $100, you have the opportunity to control interest rate-related assets worth $1 million. That’s an amazing potential leverage of 10,000 to 1. Moreover, since we’re still talking about the simple purchase of options, there’s no risk whatsoever beyond your $100 plus a small commission.
Martin:Explain why these options are so cheap right now.
Jeff:Because they’re a bet on higher interest rates …
Mike:… and because most investors actually believe Bernanke when he says he has no intention of raising rates anytime soon. But what few people understand is that, at the end of the day, the Federal Reserve doesn’t control interest rates: Bond investors do!
The Obama administration is running up the largest deficits in history; and to finance those deficits, the U.S. Treasury is dumping avalanche after avalanche of Treasury bonds on the market.
Martin:You have this huge potential demand for money — and yet here is the Fed holding interest rates all the way down there. I have never seen such a big discrepancy in my life.
Mike:To offset the huge supplies of bonds, Bernanke has kept a lid on interest rates by printing trillions of dollars.
Martin:It’s a pressure cooker.
Mike:Absolutely!
Martin:But history proves that the Fed can’t keep rates low indefinitely. In fact, I remember vividly the last time the government tried to hold rates down while deficits were growing — under President Carter. The pressure cooker exploded and interest rates skyrocketed uncontrollably. Short-term rates jumped from 6 percent to 17 percent. The prime rate hit 21 percent!
Mike:And what most people seem to forget is that interest rates soared back then for the same basic reasons I think they’re going to soar now. The key difference being that some of the forces driving rates higher today are actually stronger than they were then. In 1980, for example, the federal budget deficit was $73.8 billion. Even translated into 2010 dollars, that would still be only $190 billion. Now, the most recent deficit is $1.4 trillion, or nearly seven times more.
Martin:You’re not saying you believe that interest rates are going to soar up to seven times higher than they did in the 1980s, are you?
Mike:No! But I am pointing out that the upward pressure on interest rates is enormous right now. Look at what happened in Greece just last month. Its rates surged from 2.5 to 18 percent in a matter of a few months.
Jeff: Rates don’t have to go that high to give us huge profit opportunities today. Even if they go up only half as much as they did in 1980, the profit opportunities are enormous. For example, on the interest-rate bets I’m looking at right now, you could bet $2,000 today. If we’re wrong about interest rates, you’d take a $2,000 loss and write it off.
Martin:And if you’re right …
Jeff:You could walk away with as much as $168,000. And since we’re talking only about buying options, you can sleep at night in the knowledge that you cannot lose a penny more than you invest.
Martin:Suppose we see a more modest rise in rates. Say, for example, two or three percentage points over the next 15 months or so.
Jeff:We estimate you could still end up with more than $20,000 in profits — a 10-for-1 play.
Martin:And you think this is very possible?
Jeff:I know it’s possible for two reasons: First, like Mike said, even with weaker upward pressures on interest rates, we’ve seen far bigger interest-rate moves in the past. And second, because I’ve seen those kinds of gains in options I’ve recommended in the past, as my track record shows. I just want to remind everyone that these are not events that happen every day or gains that you can expect regularly.
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