The biggest problem with investing the markets today, is that we’ve entered a period in which not one country, but most of the developed world is entering a currency Crisis.
Of the countries that back major currencies the Europe, the US, and Japan all face major debt restructuring issues. In different terms, we are witnessing the slow-motion collapse of the entire paper-money based financial system, as well as the unbridled credit growth such a system fosters.
What this means is that we will be witnessing extreme volatility both to the downside and the upside as these currencies “race to the bottom.” The reason for this is currencies all move in relation to one another. So if the Dollar takes a hit, the Euro will rally regardless of the latter currencies problems. The same situation applies across most asset classes as every major currency move is tightly correlated to stocks, commodities, and bonds.
Tip #1: So the primary attitude to take in trading these markets is to stay alert and be nimble. Follow the trend, but when it changes, get out. And don’t be too married to a particular forecast.
However, be aware that maintaining this attitude will result in a lot of accusations from others. Case in point, I have forecast that the Fed will be unveiling QE 3 or some other liquidity program in the future.
However, my timeline changed on this when Bernanke and the Fed failed to hint at this in his recent speeches and FOMC meetings. In fact, I warned that we may indeed see another round of deflation before the Fed unleashes another round of QE.
I took a lot of flak for this because many people believed that I had completely betrayed my earlier forecast and was flip-flopping. However, it was clear based on the Fed’s statements (and the lack of hints of additional liquidity) that the Fed was going to ease back on the money printing at least temporarily.
With those market props out of the way, the stage is set for a sharp correction in stocks and commodities. We’ve already seen some major drops in the latter group. However, stocks still have plenty of room to “catch up.”
So if you’re not prepared to profit from the market’s correction, you NEED To download my FREE report devoted to showing in painstaking detail how to make SERIOUS money from a stock market collapse.
I call it The Financial Crisis “Round Two” Survival Kit. And its 17 pages contain a wealth of information about portfolio protection, which investments to own and how to take out Catastrophe Insurance on the stock market (this “insurance” paid out triple digit gains in the Autumn of 2008).
Again, this is all 100% FREE. To pick up your copy today, go to http://www.gainspainscapital.comand click on FREE REPORTS.
Good Investing!
Graham Summers
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