Has The U.S. Economy Plunged Into A Depression?

Has The U.S. Economy Plunged Into A Depression?

“Face reality, and that means admitting that “the U.S. economy has plunged into a depression.”

This is already the worst economic downturn that America has experienced since the Great Depression of the 1930s, and we are right in the middle of the largest spike in unemployment in all of U.S. history by a very wide margin.

Of course, it was fear of COVID-19 that burst our economic bubble, and fear of this virus is going to be with us for a very long time to come.  So we need to brace ourselves for an extended economic crisis, and at this point, even Time Magazine is openly referring to this new downturn as an “economic depression”.

Needless to say, there will be a tremendous amount of debate about how deep it will eventually become, but everyone should be able to agree that our nation hasn’t seen anything like this since before World War II.

In order to prove my point, let me share the following 10 numbers with you…

#1 According to a study that was just released by the National Bureau of Economic Research, more than 100,000 U.S. businesses have already permanently shut down during this pandemic, and that represents millions of jobs that are never coming back.

#2 The Federal Reserve Bank of Atlanta is now projecting that U.S. GDP will shrink by 42.8 percent during the second quarter…

“A new GDP forecast from the Federal Reserve Bank of Atlanta for the three months through June estimates an unprecedented drop of 42.8 percent. The bank describes the data as a “nowcast” or real-time, compared with the official government report of GDP, which is dated. The first-quarter preliminary data, which showed a 4.8 percent dip, included a limited period of impact from COVID-19.”

#3 On Friday we learned that U.S. retail sales were down 16.4 percent during the month of April, and that is a new all-time record.

#4 U.S. factory output was down 13.7 percent last month, and that was the worst number ever recorded for that category.

#5 U.S. industrial production fell 11.2 percent last month, and that represented the worst number in 101 years.

#6 On Thursday, we learned that the number of Americans that have filed initial claims for unemployment benefits during this pandemic has risen by another 2.9 million, and that brings the grand total for this entire crisis to 36.5 million.  To put that number in perspective, at the lowest point of the Great Depression of the 1930s only about 15 million Americans were unemployed.

#7 According to the Federal Reserve Bank of Chicago, the real rate of unemployment in the U.S. is now 30.7 percent.

#8 According to a survey Fed officials just conducted, almost 40 percent of Americans with a household income of less than $40,000 a year say that they have lost a job during this crisis.

#9 One study has concluded that 42 percent of the job losses during this pandemic will end up being permanent.

#10 According to a professor of economics at Columbia University, the U.S. homeless population could rise by up to 45 percent by the end of this calendar year.

We have never seen economic numbers this horrifying, and more awful economic numbers are coming in the months ahead.

At this point, things are so bad that even Fed Chair Jerome Powell is openly admitting that he doesn’t really know how long this new economic downturn will last…

“This economy will recover…We’ll get through this. It may take a while. It may take a period of time. It could stretch through the end of next year,” Powell said during a rare televised interview that aired on “60 Minutes” Sunday night. “We really don’t know. We hope that it will be shorter than that, but no one really knows.”

In the months ahead, there are a few sectors that you will want to keep a particularly close eye on, and one of them is the commercial real estate market.  The following comes from Zero Hedge

“Fast forward to today, coronavirus outbreak, and the ensuing lockdown, has essentially frozen the commercial real estate market. Buildings that were once used for restaurants, offices, hotels, spas, and or anything else that is classified non-essential have seen soaring vacancies.

This is single handily sending the commercial property market into chaos. As vacancies soar, tremendous downward pressure is being put on almost every asset class tied to commercial real estate.

The latest TREPP remittance data compiled by Morgan Stanley showed a quarter of all commercial mortgage-backed securities (CMBS) could be on the verge of default.”

I am personally convinced that we are on the precipice of the greatest commercial real estate implosion in American history.

As the dominoes tumble, it is going to send wave after wave of devastation through the financial industry, and it is going to make the subprime mortgage meltdown of 2008 look like child’s play.

But at least bankruptcy lawyers will have plenty of work.  Last week we learned that J.C. Penney filed for Chapter 11 bankruptcy protection, and of course the bankruptcies that we have seen so far will just be the tip of the iceberg.

I think that politicians all over America are going to deeply regret overreacting to COVID-19, because nobody is going to be able to put the pieces back together now that our economic bubble has burst.

Sadly, very few people understood how shaky our debt-fueled economic “boom” was, and ultimately it didn’t take that much to push us into a new economic depression.

And now every additional crisis that comes along is just going to escalate our economic troubles.  This is going to be one very long nightmare, and there will be no waking up from it any time soon.

Even before COVID-19 came along, homelessness had become a massive problem in many of our major cities, and now tent cities are rapidly multiplying in size.

There is going to be so much economic pain in the months ahead, and it could have all been avoided if we had made much different choices as a nation.

But we didn’t, and so now we all get to pay the price.

Mr. Snyder wrote this article and I respect his opinion. I am not taking issue with his story, but he is a respected conservative voice in a world of noise.

So, I ask you, what if he is correct in his judgment and collapse is coming sooner than later?

Are you prepared for what is going to happen to your retirement and investment account values?

Are you sheltered from those accounts declining 40%? 50%, 60%, or more.

The Wealth Preserver Membership can protect your account from any stock market collapse. Please know that until it does collapse, your investments continue to grow as usual. 

A 100% Legal Insider Trading System

A 100% Legal Insider Trading System

A 100% Legal Insider Trading System is legal is because directors are allowed to purchase and sell shares in their companies provided they do so in a timely manner and disclose their transactions with the SEC. It would make sense that company directors are best placed to evaluate the value of their businesses so the insider trading anomaly has been a fruitful line of inquiry for many researchers over the years.

In 1976, a paper from Finnerty concluded that increased insider purchases led to excess returns of 4.6% in the first six months while insider sales led to excess returns of -2.4%.

In more recent research from Jeng, the authors found that sales did not produce any meaningful results but insider purchases led to annual excess returns of as much as 11.2% over the S&P 500.

However, subsequent research from the Handbook of Equity Anomalies used the same methodology and produced annual returns that were nearly 7% lower between 1978-2005.

Nevertheless, the anomaly still shows grounds for development particularly in smaller cap stocks that are out of the realm of big firms.

In one study from the same book mentioned above, small cap stocks that had seen intensive insider purchases produced excess returns of around 5% in the first month, with most of those coming in the first 10 days.

This is illustrated in the following chart taken from the book:

The Insider Trading Trading Strategy

Most of the return from insider trading comes in the first 10 days. Src: The Handbook of Equity Anomalies. Wiley.

The Insider Trading Trading System & Strategy

There are a number of online resources you can use to track insider trading such as Insider Monkey and SEC filings. You can then go long small cap stocks with strong insider purchases. You need to be quick as most of the return comes in the first few days.

Have fun.

Eye-Opening Spoiled Fish Trading

Eye-Opening Spoiled Fish Trading

I was watching YouTube and my feed was taken over by Eye-Opening Spoiled Fish Trading videos and in between were advertisements for trading services and trading chat rooms promising quick and easy profits.

YouTube has become a cesspit of snake oil salesmen and fake trading gurus.

Fish (Noun): An inexperienced or unskilled player, especially such a player who loses significant amounts of money; a live one.

YouTube Spoiled Fish Trading Alert: Trading is not easy and you cannot make millions of dollars in your pajamas, on your iPhone, whilst simultaneously travelling the globe.

I know it’s hard to believe but it’s true.

The only explanation for all this hustle is that YouTube must have become a fertile breeding ground for fish.

So how can you avoid becoming one?

Let’s start by highlighting some of the shady characters currently doing the rounds on YouTube so you know who and what it is you have to look out for.

1. The Spoiled Fish Trading Smooth Operator

Top of the list is the smooth operator who knows all about internet marketing. These guys usually broadcast themselves from a beach or New York penthouse with wads of cash spread out on the bed.

A good way to lure fish is to show wads of cash spread out on a bed.

They claim that trading is so easy, all you have to do is follow their signals and take their courses and you will become their next millionaire student.

Some of the videos these guys make are so laughable that you think it must be a spoof. You keep waiting for the big ‘reveal’ but it never comes.

Without doubt, the smooth operator is the most dangerous character on YouTube.

Many run illegal practices like front running and demo trading.

And they get away with it by using clauses that tell you not to bad mouth their services. Top prize goes to the guy who pretends to have spoken at Harvard University when in fact the whole thing is a ruse set up by actors and other con artists.

2. The Clueless Millennial

Next on the list is the clueless millennial. These guys mean well but they don’t have enough experience to be talking markets.

The last time the market went down these guys were in kindergarten.

They don’t realize that their strategy (aggressive averaging in) is a ticking time bomb.

Ironically, being born in an era of online means most of these guys got their trading knowledge from, you guessed it, YouTube.

The result is a cyclical regurgitation of stale trading info.

Top prize in this category goes to the guys and gals buying leveraged ETFs and cryptocurrencies on every dip. Because everything goes up eventually, right?

3. The (So-Called) Live Trader

This trader broadcasts his impressive trading abilities for everyone to see via YouTube live stream. He is therefore a shining beacon of transparency and skill. Or is he?

Apart from being incredibly boring to watch, these traders cause a lot of harm since many of these charlatans are actually operating demo accounts. New traders (aka fish) see the profits being made on these demo accounts and think that trading is easy and viable.

They come to believe that good trading is about watching the market and acting on impulse.

Buying options or futures contracts because…

“Hey, I was doing so well for the last 6 weeks! I can do this.”

All the while they were utilizing a system that has no correlative alignment proven reliable. Thus, should not have worked from the start.

Sadly, they blamed an intermediate term signalling system because it was not designed to function within their “own short term” option or futures trading.

They hope, dream and think their own system can be tamed inside a historically proven trading system.

Sorry, Taming is not how it works.

4. The Clueless Chartist

There are literally thousands of videos on YouTube that show you how to trade particular indicators and chart formations.

They never give you concrete rules or tell you how profitable a chart pattern is.

Why?

Because as time passes charts change with market winds just like the clouds.

Shhh,,, please do not tell anyone this secret; but “the wind is unpredictable.”

Have you ever seen the clouds move and change shapes? This is precisely what charting is. Guessing which way the winds blow in 1 minute, 5 minutes, 1 hour, 8 hours, 1 day, 5 days, 1 month, and 1 year from now.

Which begs the question, do any of these YouTube guys really know what they are talking about?

5. The Copycat Merchant

Lastly, there is the copycat merchant. This is the guy who manages to piggyback off other people’s content, making themselves look good when really they don’t have a clue.

Top prize in this category goes to the guys who take down a video following a DMCA complaint only to upload another exact copy under a different username days later.

copy-catI hadn’t realized the situation on YouTube had become so bad. Good trading content is out there but it’s being swamped by hours of garbage.

These characters waste your time, send you down the wrong path and cause you to lose money and they don’t seem to care about it. A lot of the time they get away with it through the use of disclaimers.

Here is one such paragraph buried deep in a disclaimer of a well known YouTube trader:

This disclaimer was taken from a well known trading website.

In others words, these guys are going to show you trades in their chat room but they’re not going to tell you which are real and which are fake.

Even a fool knows this is a bad deal.

Unfortunately, fish don’t read disclaimers.

 

So what can you do?

The best thing you can do to avoid being conned is to seek out trading content that is science based, not based on squiggly lines or emotional appeal. But they are hardly ever backed up by data and statistics, analytics, and decades of time tested Nobel laureate supported scientific proof.

Don’t base your preference on popularity or number of views because there is a clear negative correlation between these things.

There is a negative correlation between trustworthiness/trading ability and number of views on YouTube. Before going on YouTube be aware that a lot of the content is poor and ask yourself whether it’s worth your time.

Instead, look for content that is backed up by data. For example:

  • Does it show historically back-tested performance results?
  • Does it show win rate and maximum loss?
  • Is the sample size large enough or historically long enough?
  • Can you replicate the results yourself with time?

Good trading is not easy, you need a proven system. Good trading is statistics, process and discipline, and a long history of proven performance.

Coronavirus, How it Kills & Statistics

Coronavirus, How it Kills & Statistics

How it Kills & The Statistics

This virus can affect the markets whether it becomes a global epidemic or it is simply psychological.  In either case, keeping up with it could be healthy physically and financially. 

If interested, you can subscribe to their channels and they can keep you posted regarding this epidemic.

Or you can go here.

GAPS:  The 99 Year Old – 91% Winning Trading Strategy

GAPS: The 99 Year Old – 91% Winning Trading Strategy

Do you want a 91% Winning Trading Strategy

If you could win 91% of your bets in Baseball, Basketball, Football, Poker, or the Horses, would you consider placing a bet or two?

Or, would you prefer to just blindly buy a virtually 99.999999% guaranteed losing lottery ticket?

Now, let me add to the reality.  What I am talking about is not gambling. It’s a simple to learn and easy to execute trading system that uses the Wealth Maximizer Pro trade signals built on pre-screened and optimized investments. A system with up to 99 years of history.

It is 100% real, honest, and can be a proven winning trade machine for you.

You can download and read the free PDF below right now.

GAPS:  The 99 Year Old - 91% Winning Trading Strategy

A 100% Legal Insider Trading System

Dogs Of The Dow Trading System & Strategy

The Dogs Of The Dow Trading System & Strategy has been around since at least the early 90s and exists in a couple of different forms. The strategy involves tracking the 30 stocks in the DJIA and each year selecting the 10 stocks with the highest dividend yield. Each year the portfolio is rebalanced so that you always hold the 10 stocks with the highest yield.

Since dividend yield often moves inversely to price, this is essentially a contrarian strategy where you are selecting some of the weakest performers from the index.

According to this analysis from Steve Auger, the Dogs of the Dow strategy has been an effective one, outpacing the Dow index by a decent margin since 1999:

Dogs Of The Dow Trading Strategy

Dogs Of The Dow Trading Alternative Trading Strategy

Another variation of this strategy is to go long stocks that have been removed from market indexes.

For example, when the S&P 500 announces constituent changes, go long the stocks that have been removed.

These ‘dogs’ often see compulsory selling by fund managers who track the market indexes and this heavy selling leaves them technically oversold and potentially undervalued.

This anomaly has been documented in the UK market with success. Research from Jay Dahya in 2006 found that “deletions to the index are associated with a negative price response, which is fully reversed over a 120-day period after news of the removal from the index.”

Dogs Of The Dow Trading System & Strategy:

Go long the 10 highest dividend yield stocks in the DJIA and rebalance each year.

Alternatively, track stocks that have been removed from major indices like the S&P 500 or FTSE 100 and go long after heavy selling pressure around the announcement. Hold for up to four months to capture the full reversal.

A 100% Legal Insider Trading System

Quadruple Witching Effect Trading System & Strategy

Quadruple Witching Effect Trading System & Strategy is the peculiar name given to the third Friday of every March, June, September and December, where index futures, index options, stock options and stock futures all expire.

The expiration of these contracts forces many investors to roll their positions which essentially means they sell their positions in the current contract and buy it back in the next.

This creates movement and volatility and can be a particularly interesting day for day traders.

Since quadruple witching leads to selling in the current contract it would make some sense for this to be a negative day for markets and analysis does back this up.

Research shows that shorting SPY, the S&P 500 ETF, on quadruple witching day has been a net profitable strategy with a win rate of 70% and an average profit per trade of 0.28% over the last 69 trades.

Although this is a small sample size there is some evidence of a profitable edge as illustrated in this equity curve:

Quadruple Witching Effect Trading System & Strategy

Equity curve for the Quadruple Witching Effect Trading System & Strategy.

Quadruple Witching Effect Trading System & Strategy:

Short SPY on the open of quadruple witching day and exit on the same day close.

A 100% Legal Insider Trading System

FOMC Drift Trading System & Strategy

FOMC Drift Trading System & Strategy completed a 2011 study commissioned by the Federal Reserve Bank of New York found that large excess returns could be found trading US equities in the run up to scheduled FOMC monetary policy meetings. This effect was shown to go back to 1980 and has increased over time.

The paper, which won first place in the 2015 Amundi Pioneer Prize, shows how US stock indices generally drift higher in anticipation of FOMC meetings.

Since 1994, the S&P 500 index has gained an average of 49 basis points in the 24 hours before scheduled FOMC meetings with a high statistical significance and high Sharpe ratio.

The FOMC drift effect is shown to be robust across other international indices but no effect was found in Treasuries.

The authors also found that the drift is stronger when the slope of the yield curve is low and the VIX is higher indicating higher equity market volatility.

The following graphic is taken from the paper and shows clearly how stock returns have gravitated upwards on FOMC days as compared to non-FOMC days. The grey ‘clouds’ in the diagram represent confidence bands:

FOMC Drift Trading Strategy

The S&P 500 was shown to drift upwards in the run up to FOMC meetings. Src: Fed Bank of New York

FOMC Drift Trading System & Strategy Explanation

The FOMC drift seems to contradict the efficient market hypothesis but it is easy to form a rational explanation for this anomaly.

Since a primary goal of the Federal Reserve is to maintain market stability, FOMC policy announcements often act to suppress market volatility or give assurance to market participants. In recent years there has also been a trend of lower interest rates and accommodative monetary policy.

It’s possible, therefore, that traders and investors anticipate this soothing presence from the Federal Reserve particularly during volatile periods.

Short sellers may also refrain from entering short positions in the run up to FOMC announcements knowing that an accommodative decision may be coming up.

A possible criticism of this anomaly is that it shows strongest performance between 1980 – 2011, roughly the same amount of time that interest rates have been declining in the US.

It will be interesting to see how this pattern holds as interest rates rise.

FOMC Drift Trading System & Strategy:

An easy way to implement this strategy is to go long index futures in the 24 hours before FOMC meetings and exit trades just before the meeting gets underway.

A 100% Legal Insider Trading System

Tax Day Trading System & Strategy

Tax Day Trading System & Strategy is the tendency for the US stock market to go up on the day after tax day.

This edge was written about by Stephen Moffit who showed that if you had bought S&P 500 futures on the close of the tax day and exited the trade on the close one day later, you would have made an average gain per trade of 0.5% since 1980.

The explanation for this stock market anomaly is that many people wait until the very last minute to pay their taxes and there is then a simultaneous rush to get their money into an IRA on the final day. Brokers then end up overwhelmed and lodge a number of the trades on the next day open.

The interesting thing about this anomaly is that it doesn’t exist prior to 1980 when the rules regarding IRA contributions were changed.Tax Day Trading Strategy

Tax Day Trading System & Strategy:

You can go long S&P 500 futures on the close of tax day and hold for ONE full trading day.

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