The Magic Of Markets

Hello everyone,

I really do hope you have noticed how markets are turning just as we said they would. It is not often we get such tremendous opportunities.

Have you noticed Caterpillar. We said this would be over-sold on trade war fears to create an absolutely stunning buying opportunity for well into the future. That is exactly what has happened. And now, is the moment to seize the day as they say. Tesla too, is turning up against another wave of fear that simply cannot match the underlying true fundamentals of being a first mover. In many ways, just as Apple was.

The world is a wondrous place indeed, and with global growth being driven from the ground up through the empowerment of people everywhere to truly compete, no fool should try to call the end too soon. We did set a 30,000 target for the Dow Jones, at 12,000. Looking at the market today, how prices are beginning to climb sharply in the face of never ending negative financial media hype, it is quite possible we will see 30,000 within just the next 12 months.

The world is a daring and exciting place, more informed, and admittedly mis-informed than ever before. All those bears and fear based newsletters that so easily distract because a fear headline has a ten times bigger adrenaline rush than a positive one. That’s right, most investors are addicted to adrenaline rushes created by fearful market collapse type stories. They are addicted to fear and don’t even know it. The truly brave among us, stand strong against the fearful herd.

These negative swings to the downside we have seen time and time again, evaporate into nothingness. This latest trade wars driven headlined sentiment swing to the downside, now looks to be totally exhausted. Defeated is most probably the correct word.

 

Markets are looking strong everywhere.

From iron ore to Google. It is indeed a prosperous time.

We are now entering a phase where the market will be able to rally even if there is real negative news. This is because so much negativity has already been pre-loaded. Much of it un-necessarily. Then this negative sentiment bias has been leveraged to the hilt with option short positions and complete unwinding of what would be great portfolios if they were simply held. The fear based media industry loves pushing you out of your investments, but never do they apologise for doing so when the market is again at yet another all time record high.

A lot of investors don’t understand that being out of a rising market, means their relative wealth is collapsing. Collapsed relative wealth is what many investors have experienced in this, the greatest bull market of all time.

Where we are now, is a place where there is not much selling left to come from any quarter. Meanwhile, the ‘need to buy’ buyers, are completely wrong footed. As in, they are actually caught short. They have been scared off of late, getting out of good stocks at the bottom, and waiting for the storm to pass. As with many weather forecasts these days, the storms are often not as bad as originally feared. This one of trade wars, may already, in terms of market pricing, be ancient history.

No sellers left. Buyers have been slow to get back in. And the event itself is probably not as bad as first feared. There can only be one result. The imbalance is extreme. Has been for some time. What is changing however, is the complete exhaustion of sellers which is allowing any buying at all to now drive markets considerably higher. This strong price action then encourages other buyers, who are still sitting on the sidelines to come to the party. The result will be upward acceleration. We are talking of a very fast market for quite some time.

What we are witnessing right now, is the resumption of the Grand Bull Market! Already 10 years old and 300% gains under its belt. With more to run. Opportunities are rarely this Grand. You know those people who tell you the market is too high, has come too far? Well, they are the very same people who said this could not happen all the way up. They still haven’t learned. Except they know that fear sells.

Forget the fear based adrenaline rush, and jump aboard the train of participation and reward. The train of profits. We all have the right to participate in the most prosperous period in history. It is quite the journey to see the world as constantly evolving to deal with challenges and move ahead. Rather than some form of stiff can’t change to solve problems world, as depicted by backward looking statisticians. We are better than that. All of us.

There will be down days to be sure, but the trend now looks increasingly, reliably, to be to the upside.

Clifford Bennett

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DOUBLE STOCK SPOTLIGHT
Seen a good movie lately?

I don’t know about you, but the plots seem to be a little repetitive as you get older. Which is why I tend to watch ‘true story based’ movies where I can, and a good documentary too from time to time.

Then, there are these increasingly interesting artistically styled short biographies that reveal a great business story. One of these I watched recently, as part of the “Abstract” series on Netflix, was about Nike and specifically Justin Hatfield. I highly recommend this to you. It brings us however, to the winning double for this week, both start with N, and both are great stories, Netflix and Nike.

In recent weeks, one has set itself at breaking to a new high, while the other has pulled back a little more deeply and not quite taken off as yet. As the world changes rapidly some companies have hit a sustainable sweet spot. Nike has already proven this, and Netflix is showing every sign of doing so too. Today’s markets are very much about efficient companies that are in the psyche of the modern consumer and have a global marketability.

We look for both to do well.

 

Regards,

Clifford Bennett

Nike was here first

Now comes Netflix