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gunnarthor

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If you own bitcoin, you might want to watch yesterday's Daily Market Commentary on learningmarkets.com. Sounds like the Chinese are trying to get out of Yuan into USD, but government limits on how much Yuan they can sell (despite what Trump says the People's Bank of China is trying to support the Yuan, not devalue it). Thing is, those limits expire at the end of the  year, so there is some speculation that in the new year a bunch of Yuan will be sold for Bitcoin. That speculation seems to be at least partly responsible for driving up the price before Jan 1.

Edited by Willihammer
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The Chineese try and keep the Yuan at a certain range with the USD.  The interesting dymanics on that side of the planet is that the BOJ has decided to radically devalue their currency since the election. It's droped something like 25% during that time. That is one of the reasons the dollar has been strengthening which forces the Chinese to sell US treasuries to defend the Yuan.  Add to it, that Trump hasn't exactly been friends there. I suspect a lot of that is talk, but in spite of that China could be in a bit of trouble in the near term.  If short term is your thing, the FXP ETF could likely net a nice a gain over the next couple of months.  That isn't a buy and hold stock though.

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One thing seems fairly certain IMO- if China is able to stabilize its currency or introduces controls that prevent a massive sell-off at the beginning of the year, you would have to think Bitcoin would take a hit as speculation of massive demand for it never materializes, or disappoints.

Edited by Willihammer
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Bitcoin is really fascinating. It is more or less a cumulative measure of forex fear globally.

 

Yeah, digital gold. I've been watching it for a while now. Haven't picked any up though. With the way countries are trying to fix this economic mess by inflation, it's one of many options to preserve wealth, especially should it backfire on them. 

 

One thing to pause that a bit though is that Bitcoin is up big while commodities are all at bottoms. That's one thing that doesn't quite make sense here. Bitcoin might be riding a popularity wave so to speak. I think with China they are just spreading out their assets so to speak. Then again, I could see a sharp move by metals upwards at some point too. They haven't really out performed the dollar. They have however outperformed other currencies.

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Yeah, digital gold. I've been watching it for a while now. Haven't picked any up though. With the way countries are trying to fix this economic mess by inflation, it's one of many options to preserve wealth, especially should it backfire on them. 

 

One thing to pause that a bit though is that Bitcoin is up big while commodities are all at bottoms. That's one thing that doesn't quite make sense here. Bitcoin might be riding a popularity wave so to speak. I think with China they are just spreading out their assets so to speak. Then again, I could see a sharp move by metals upwards at some point too. They haven't really out performed the dollar. They have however outperformed other currencies.

Yeah, for any non-yielding asset to be outperforming the dollar, handily, right now, bitcoin is pretty much alone in that respect. If I owned any I'd have my finger on the sell trigger. Just seems like too-pronounced of a diversion.

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I still don't understand why gold matters as some kind of safe haven......it's shiny metal, with no real intrinsic value (ok, that's not true, but we don't make MUCH with it other than decorations). The emotional attachment to gold, it just seems odd to me in 2017....

 

It isn't just gold, it's any commodity to be honest. Gold has industrial uses, but it has served as a medium of exchange for humanity since the invention of money. So yeah, that creates an emotional attachment.

 

The real safe haven though is due to inflation.  Every single currency on this planet is denominated in trust.  And I cannot speak for you, but I don't trust any human institution as far as I can throw it.  Governments are no different, and if anything worse.  Like it or not, the buying power of your dollar has decreased at a much higher rate than your income has increased. People can see that, and if you want to preserve wealth, you need to find a safe haven. That can be gold, silver, oil, copper, (apparently bitcoin), land, or whatever.  You just need to park it somewhere, or hope your investments in the market can outpace an inflation that is always underreported.

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Yeah, for any non-yielding asset to be outperforming the dollar, handily, right now, bitcoin is pretty much alone in that respect. If I owned any I'd have my finger on the sell trigger. Just seems like too-pronounced of a diversion.

 

I've been watching it now casually for about 6 months.  Wishing I had bought some obviously at the moment, but I have made way too many mistakes buying at the wrong end of a wave like that.  Perhaps it adds another 500 in value over the next year, but stocks never go up and up and up and up. The real problem is how volatile it has been over the last few years. It's had some pretty significant ups and downs, and I'm not banking on that suddenly being gone now that a few countries are reportedly using it for diversification. If I had it right now, I'd probably be cashing in my returns as well.

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It isn't just gold, it's any commodity to be honest. Gold has industrial uses, but it has served as a medium of exchange for humanity since the invention of money. So yeah, that creates an emotional attachment.

 

The real safe haven though is due to inflation.  Every single currency on this planet is denominated in trust.  And I cannot speak for you, but I don't trust any human institution as far as I can throw it.  Governments are no different, and if anything worse.  Like it or not, the buying power of your dollar has decreased at a much higher rate than your income has increased. People can see that, and if you want to preserve wealth, you need to find a safe haven. That can be gold, silver, oil, copper, (apparently bitcoin), land, or whatever.  You just need to park it somewhere, or hope your investments in the market can outpace an inflation that is always underreported.

 

But, again, why is gold a safe haven? Other than it is shiny? And, would you have felt that way when it plummeted? I just don't get it. I mean, it's not like gold held its value and just goes up all the time....

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But, again, why is gold a safe haven? Other than it is shiny? And, would you have felt that way when it plummeted? I just don't get it. I mean, it's not like gold held its value and just goes up all the time....

 

I get what you are saying there. Like it or not, it's the reserve currency of the world, and it will always be as long as currencies are denominated in trust.   But yeah, if you don't like Gold, by all means go buy something else.  There's plenty of ways to preserve wealth.

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Yeah the conservative/smart move would be to probably sell bitcoin at this stage, at least some, but I'm gonna let it ride I think.

I'm also a fan of that fact you can now use bitcoin in more and more places anyways.

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Not sure I'd buy WWE. 

 

First, entertainment is pretty fickle and what interests someone today might not hold them tomorrow. I know WWE is trying to grow (my kids bought a Scooby Doo/WWE video) but it seems limited. They've missed earnings three out of the last four quarters and have been downgraded by several stock watchers.  (Which could mean it's a good buy-low candidate).  And their 200m bond might hurt current investors in the future, as well.  Admittedly, I haven't looked into it much more than that.

 

http://www.barrons.com/articles/why-wwe-shares-are-on-the-ropes-today-1481647034?mod=yahoobarrons&ru=yahoo&yptr=yahoo

More of a "gut" feel for me, they invested heavily in the WWE network model and it now appears to be starting to pay off for them IMO, also the product has gotten very very good and I think you are going to see a bit of a resurgence in the "fandom" as well.

I think it's a solid buy low candidate with fairly limited risk.

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I am wondering whether a lot of people are waiting to realize gains in January based on the expectation that tax rates will be lower in 2017.

 

I think it will be for several reasons (taking profits, strong dollar, and an economy not as strong as the pundits say), but I think Jan 2017 is going to be a very similar month to Jan of 2016. If you have cash reserves, I'd consider something short term that goes against the market.

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  • 2 weeks later...

Anyone holding a big bet in healthcare?  A few years ago we sort of successfully bet on Obamacare and grabbed a nice bit of HCA before selling it.  We haven't grabbed anything in that sector since.  Not sure what the future holds there with Trump.   

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Anyone holding a big bet in healthcare?  A few years ago we sort of successfully bet on Obamacare and grabbed a nice bit of HCA before selling it.  We haven't grabbed anything in that sector since.  Not sure what the future holds there with Trump.   

 

I can't comment on my thoughts on this, given my job.....but there are some betting big on HC profits, and a smaller number of commentors I've read saying bad things....

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the dollar broke below it's moving average yesterday and is maintaining that today.  If you make short term plays, things like silver, gold, any commodity really, should all see a nice pop while the dollar loses a few points.  Might be an easy 10-20% short term ROI.  The market could correct down too. Really looks like a top is forming here. 

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It's always fun seeing that a stock you own miss expected earnings and you see it's stock price go up.  I guess that only missed by a little! 

To be fair, there are loads of other factors that go into a stock price.

 

For example, Netflix missed earnings estimates a few times but explained they had invested loads of money - more than expected - into international operations. While that hurt their bottom line for 1-2 quarters, their stock price stayed flat or even went up because of expected future profits from that investment.

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To be fair, there are loads of other factors that go into a stock price.

 

For example, Netflix missed earnings estimates a few times but explained they had invested loads of money - more than expected - into international operations. While that hurt their bottom line for 1-2 quarters, their stock price stayed flat or even went up because of expected future profits from that investment.

I understand that.  I've been investing for a long time so while I still know nothing, that phenomenon was something I learned about really quickly - esp the opposite.  My stock would exceed expected earnings and it's price would fall.  "What's wrong with you people!" But I still find it funny.  My stock only missed by 3%.  It's up today.  Woo-hoo!

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to me, it's the sign of an irrational market. Price to earning ratios are at historically bad levels and the market continues to rise. That's another sign that a correction is due. I think 10-20% drop across the board is pretty reasonable in the near future. It sucks, but stocks are always the last to get it and there are some pretty big problems right now that the market is largely ignoring.

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to me, it's the sign of an irrational market. Price to earning ratios are at historically bad levels and the market continues to rise. That's another sign that a correction is due. I think 10-20% drop across the board is pretty reasonable in the near future. It sucks, but stocks are always the last to get it and there are some pretty big problems right now that the market is largely ignoring.

Like what?

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Like what?

 

Well for one, the dollar strengthening has been a catalyst for these types of moves of late. This crushes the carry trade as well as all debt denominated in dollars (which makes up a huge chunk of foreign debt).  It destroys corporate profits overseas as well (if you look at the recent corrections, they correlate with a strengthening dollar).  It's already causing major problems for the Chinese, but it's not just them. It's already forcing a number of nations to start defending their currencies.

 

The fed has been trying hard to get inflation into the system, and in spite of that the dollar has risen due in large part to the BOJ. The problem with this approach is that once you get that inflation, it's much like trying to get ketchup out of a glass bottle.  You end up with far more of it than you wanted. That causes other issues, and you're about to see it.  As others have noted, the market is already moving more in line with an expectation of inflation.  Three of the four major inflation indicators (and we all know those numbers are already heavily massaged) are showing inflation above 2%.  That will force rates up, quite possibly faster than the 2-3 rate hikes being predicted (that's another big negative for the market). That is going to also cause plenty of other real problems, particular with countries that have too much debt because as a strengthening dollar makes it more expensive to pay them off, so do higher rates. 

 

As I mentioned as well, right now we are looking at historically bad P/E ratios. Stocks are going to figure this out at some point, and when they do, the market is going to correct.  I'd consider locking in some gains and potentially moving some cash into assets that will perform well in that scenario.  I guess most of that depends on your strategy. I'm not really a buy and hold guy anymore.  I trade options in my IRA and use the brokerage link in my 401K to make short to mid-term trades. I usually sell once I'm up between 10-20%. 

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Like, Ron Paul says to buy gold. I think I saw an ad about that somewhere.

 

Honestly, I think this a great short term play.  Whether you think inflation is good or not, the Fed does, and based on their policies, they have to bring that dollar down. The USD just broke below it's moving average and can move all the way down to the low to mid 90s while still remaining in a bull market.  That move is roughly 10%, so you should see a nice spike in most commodities during that time. Silver might be a better play given that it tends to out perform gold in that scenario. 

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While all of these things are legitimate concerns, I've gained 20% on my portfolio in the past year and nearly 10% in the past 3-4 weeks (not including dividend distribution, which boosts me another 5-7% on the year).

 

I can afford to take a hit at some point because I'm not sure when the market will adjust and had  bailed out a year ago, all those gains (even if they someday vanish/diminish) wouldn't have happened.

 

Basically, I'm not confident we know when we're going to stop "winning" and it's possible, maybe even likely, my recent gains will more than offset any market adjustment.

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