Why Brexit (and a Trump Presidency) Are Not Happening

 
"So… do you think Brexit is going to happen?" I asked while driving in Colorado last week.
 
"Not a chance!" the two guys in the car with me both replied, in unison.
 
Their reply wasn't scripted.
 
"But the polls say there's a double-digit lead for the Brits to EXIT the European Union," I said.
 
"It isn't going to happen!" the two guys said – even louder this time.
 
Their reasoning was simple but powerful. And the same logic tells us why Donald Trump has little chance to win the presidency in November, as I'll show.
 
So, who are these two guys? Why do they feel so strongly? And what is Brexit?
 
I will answer these questions today…
 
As a full rainbow shined brightly in front of us on I-70 at sunset, I asked Eric Fry and Chris Gaffney the Brexit question. You'd be hard-pressed to find two more experienced guys to answer this question…
 
Eric is a brilliant guy with great investing ideas. He's a former hedge-fund manager who has worked closely for years with newsletter legends including Jim Grant and Bill Bonner. Today, Eric writes The Non-Dollar Report.
 
Chris is the president of EverBank World Markets. He and I have talked for more than 20 years about currencies and international investing.
 
Brexit, by the way, is a big deal…
 
It's the term people have coined for Britain's potential EXIT from the European Union…
 
Next week, Brits vote on whether they should stay in the European Union. (The BBC put together a simple guide explaining the situation here.)
 
Last week, while I was in Colorado, the polls said Brits in favor of EXITING the European Union had a double-digit-point lead over Brits who wanted to stay.
 
So why do Eric and Chris feel so strongly that Britain will stay in the EU… even when the polls say the opposite?
 
It comes down the real money – the betting odds, instead of the polls.
 
"Look at the odds at Ladbrokes," Eric said. Ladbrokes is Britain's largest bookmaker, and calls itself "the world's sports betting and gaming company."
 
"While the polls say Britain will go, the real-money bets say that Britain will stay," he said. "My money is on the real money."
 
I asked Chris what he saw.
 
"It's obvious that investors don't believe that Great Britain will exit the EU," he said. "Like Eric said, money is not being laid down on the side of an exit."
 
"But what if the polls are right?" I asked. "What if Brits vote to get out of the EU?"
 
"Then so much volatility would hit the markets," Chris explained. "Britain's exit would lead to others wanting to do the same, like Ireland for example. If Britain decides to exit, then you would want to own the U.S. dollar and precious metals for the short term."
 
I actually agree with them… I believe that REAL MONEY trumps the polls.
 
Speaking of the real-money bets… Right now, bets on the election lean heavily in Hillary Clinton's favor.
 
Traders are willing to put up 65 cents today to get paid out $1 if Hillary wins. But traders are only willing to put up 35 cents today to get paid out $1 if Trump wins.
 
Summing up… Pay attention to real-money bets. They suggest that Britain will stay in the EU and that Trump has a big mountain to climb between now and November.
 
Good investing,
 
Steve
 
P.S. For more on EverBank's unique international offerings, click here. For more on Eric Fry, click here.
 

Source: DailyWealth

Stop Procrastinating and Start Doing… Here's How

 
When you agreed to do it, it seemed like a wonderful challenge.
 
Now, your deadline is fast approaching and you haven't even started. Getting the job done is a priority, yet it somehow doesn't happen.
 
Instead, it stays there on your daily task list – highlighted for attention but never attended to.
 
What causes this pernicious process? Why does a great opportunity turn into a very big chore that turns into an overwhelming enigma that threatens to turn into The Big Job You Never Even Started?
 
There are all sorts of causes – but only one solution that consistently works for me…
 
Here it is:
 
1.   If you have been stuck for more than three days, you are stuck. Admit it. Stand in front of the mirror and repeat: "I shot my mouth off. I'm stuck." You have been waiting for inspiration to save you, but it hasn't appeared. Stop waiting.
   
2.   Change the status of the job. It was one priority among many. Now, make it No. 1 on your daily task list.
   
3.   Don't even think of attacking the whole mess at once. Break it up into small pieces. If it's a 40-page report you have to write, break it up into pages. If it's a bunch of people you have to talk to, think of each conversation as a separate task.
    
4.   Working back from your deadline, figure how many discrete units (pages, calls, etc.) you need to do each day. Then figure out how long it will take you to do that many units.
    
5.   If each unit can be done in less than 15 minutes, you are in luck. Give yourself the job of doing just one 15-minute task each day. If you will have to spend more than 15 minutes a day to finish, then begin – still – with 15 minutes and gradually increase your daily time commitment as you get rolling.
    
6.   Start immediately. Do your first 15 minutes even if you feel that what you are doing is not very good.
    
7.   Keep going until you break through the psychological barrier you've been up against.
The secret here is to reduce each day's work to 15 minutes. It is such a small amount of time that you won't have any trouble doing it. This will get the ball rolling, even if it doesn't seem to be rolling in the right direction.
 
Sooner or later – and this is guaranteed – you will get that inspiration you had been waiting for while you were stuck. And when it happens, you'll find that you've already done a good deal of the grunt work (thinking, planning, researching, whatever).
 
This is particularly useful when you get to the point where you don't actually like a project anymore. In that case, unless you have the discipline to hack away at it every day, you will avoid it and it will never get done.
 
Some days, you will want to work more than 15 minutes. That's fine. In fact, that's the idea. It means your creative mind is starting to kick in. One day – and this can happen at almost any time – you'll suddenly see the big picture and will be able to get the whole project done right. You may decide to scrap some of what you've been doing and change some of it. But from that point on, you'll work quickly and easily.
 
What are you waiting for? Get to it.
 
Regards,
 
Mark Ford
 
Editor's note: Mark and his team just released a brand-new product called the Extra Income Project. In it, they share nearly three dozen ways to start earning more income outside of the stock market right away. Mark shares the lessons he learned personally over the years to help himself and others make millions of dollars in additional income. Learn more about the Extra Income Project right here.

Source: DailyWealth

Bearish Bets Reach a Five-Year Extreme… Here's What to Do

 
Investors are betting BIG against U.S. stocks…
 
Should you be betting against U.S. stocks, too?
 
Do they know something you don't know?
 
No, and no!
 
Here's why…
 
Huge bets against the stock market are a classic contrarian buy signal… In plain English, when EVERYONE is doing one thing in the markets, you should consider doing the opposite.
 
Let me show you today's bearish extreme – and show you what happened the last time we saw the exact same bearish extreme in 2011.
 
Here are the details:
 
Investors have added more than $1 billion to one particular trade this year… Specifically, assets in the most popular inverse exchange-traded fund (ETF) in the stock market are up more than $1 billion this year.
 
Investors haven't been this bearish since October 2011, according to this extreme.
 
Importantly, after that October 2011 extreme, the S&P 500 soared 51% over the following two years.
 
We might not see 51% gains over the next two years. But this extreme shows that investors are extremely bearish on U.S. stocks. And history tells us this is a pretty good contrarian buy signal.
 
The simplest way investors can bet against the stock market is by using ETFs that return the inverse of the overall market. That means the funds return the opposite of the daily change in the S&P 500. So if stocks fall 1% in a day, these funds should rise 1%.
 
The largest of these inverse stock market funds is the ProShares Short S&P 500 Fund (SH).
 
This fund has fallen dramatically in value – by more than 50% – in just the past five years.
 
You might think that after a 50% fall, investors would start to flee from a fund like this. The reality is, the opposite has happened… Investor money in SH is now bumping up against all-time highs, last seen in 2011.
 
This chart tells the story…
 
It's the overall stock market versus the total assets of SH. (Total assets are the share price multiplied by the total share count. ETFs create and liquidate shares based on demand. An increasing share count shows investors are putting new money into an idea. In this case, they're betting against the S&P 500 by buying SH, which increases the fund's total assets.) In 2011, the stock market fell by 19%, and assets in SH soared. After that, stocks rose 51% over the next five years.
Interestingly, as you can see today, bearish bets in SH have reached levels not seen since 2011 – even without a preceding fall in stock prices.
 
We can't promise a repeat of the 51% gain in two years that we saw last time around. But this extreme shows us the degree of negativity in the markets today.
 
Investors aren't euphoric. They don't expect to make money. Instead, they're betting against stocks at an extreme level.
 
This type of action doesn't happen at market peaks. It's yet another sign the market has plenty of room to run higher.
 
Just because everyone is scared of stocks doesn't mean you need to get out, too. If anything, it means the opposite. Now is a great contrarian "buy" moment.
 
Good investing,
 
Steve
 

Source: DailyWealth

The Pros Are Delusional… Are You?

 
"Have you lost your @!$%X# mind?" my friend Meb Faber wrote last week.
 
He was talking about professional money managers…
 
"Institutions are expecting their hedge funds to return 13% per year," Meb writes. Keep in mind, "a 13% NET return means you need to average GROSS returns of almost 20% [due to hedge-fund fees]. Good luck with that."
 
I can understand novice investors HOPING for big gains… but institutional investors EXPECTING big gains? They should know better!
 
Why should they know better? Why is it wrong to expect 13% gains these days?
 
Let's go back to the basics… to educate these pros – and to help you understand the reality today…
 
Here's what you need to know: Over the long run, the cost of money EQUALS the return on money.
 
This is a simple idea. But it is big, and it has powerful implications. Let me explain…
 
If you own a business that makes T-shirts, and your profit margin is 10%, then you might be happy to borrow money at 5%. You can make a 5% profit margin on that borrowed money.
 
If your T-shirt business can also make socks at a 5% profit margin, then you wouldn't borrow money at 5% interest. But if interest rates fell to 2%, you might consider it.
 
Based on this, it looks like the return on money is always higher than the cost of money…
 
The problem is, things don't always work out in business… You might have forecast a 10% profit margin, but if your costs went up 10%, then all your profit would be gone.
 
This is the way it goes in markets: Some people make money, some lose money.
 
This is the basic push and pull of capitalism. The market creates an equilibrium level of return – it's the equilibrium point where risk takers and money lenders meet. And that equilibrium point is the price of money – the interest rate.
 
Again, some businesses succeed. Some fail. And over the long run, the cost of money ends up roughly equaling the return on money.
 
This same push and pull between risk takers and lenders is very much alive in the financial markets…
 
In the simplest example, investors have to choose between bonds and stocks.
 
If bonds are paying 10% interest, then money will flow out of stocks and into bonds. But as stocks fall, this flow will make stocks attractive relative to bonds over time. In a free market, we will reach an equilibrium between stocks and bonds – and that is typically the long-term rate of return on money.
 
Here's the problem…
 
Today, the world's long-term interest rate is less than 1%. (That's the average interest rate on 10-year government bonds in the four major developed countries.)
 
So if I'm right… and the return on money roughly equals the price of money over the long run, what kinds of returns are we looking at going forward?
 
I suspect it will be somewhere around 1%.
 
The truth hurts.
 
We live in a world of 1% returns. (I realize that it's hard for me to sell investing advice based on that reality… but it is the reality.)
 
Meanwhile, Meb says that institutional investors expect to earn 13% net in their hedge funds. Can you see why that is delusional now?!?
 
Meb's 13% number comes from a survey of more than 400 money managers. Here's a breakdown of their expectations:
 
•   1% said they expect returns of 6% to 8%
•   94% said they expect returns of 9% to 17%
•   5% said they expect returns of 18% or more
Meb summed up these survey results simply: "I would love to know the 1% of chief investment officers that responded 6%-8% returns, as most of the rest should be fired."
 
Reality today is tough to accept. Even the pros aren't accepting it.
 
I will guide you the best I can through these challenging years…
 
Good investing,
 
Steve
 

Source: DailyWealth

You Probably Won't Listen to This Unpopular – but Important – Advice

 
It's perhaps the most unpopular advice we give at Stansberry Research. It sparks as much angry feedback as anything we write.
 
I'm talking about short-selling.
 
For the uninitiated, short-selling means you profit when a company's share price falls. To open the trade, you borrow shares and sell them into the market. To close the trade, you buy back shares. (It may sound complicated, but in reality it's just as easy to do in your brokerage account as buying shares.)
 
Today, I want to take a step back and remind readers why we short… and why we don't worry about taking losses along the way…
 
We've been advocating shorting stocks as a form of "portfolio insurance" for years. Back in December 2006, Porter Stansberry explained…
 
Short-sell recommendations do not perform as well, on average, as "buys," so having short sells in your portfolio will typically reduce your average return. I like to have some short positions in my portfolio at all times, to hedge against a market-wide fall in share prices. And, if you're good at shorting, you can turn a small profit doing it. This makes it "free" to hedge your portfolio.
As you can see, we do not use short-selling to make big money… but rather, to guard against broad market downturns. That's why we call it portfolio insurance. We measure success as managing to break even (or make a little money) with our short recommendations.
 
Think about it: If you can break even on a series of trades that protect your overall portfolio from a broad market selloff, why wouldn't you? "But does it really work out that way?" you might be wondering. "Does the 'short-selling is portfolio insurance' strategy actually hold up?"
 
To answer these questions, let's take a look at how the overall market has performed since we launched our flagship product – Stansberry's Investment Advisory – back in 1999…
 
There are two things to note here. First, there have been five broad market trends over the period we're evaluating: three bull markets and two bear markets. It's difficult to make money short-selling during bull markets… But when the market drops, you'll be glad you have that short exposure.
 
Think of bull markets as periods when we're "paying premiums" on this portfolio insurance, while bear markets are when we "collect" on our insurance policies and reap the benefits of our short exposure.
 
Second, note that over this period, Porter's market calls tended to be early. In the current bull market, his June 2013 call was extremely early.
 
But when we turn bearish on the market, we don't sell everything and run for the hills. We simply pepper our portfolio with more short exposure than normal. Again, this protects our overall portfolio from a downturn.
 
The table below compares the annualized returns of our "hedged" portfolio (which includes long and short recommendations) to a hypothetical "long only" over each of these broad market cycles…
 
Type
Start
Date
Close
Date
Avg.
Return
(Hedged)*
Avg.
Return
(Long Only)*
Insurance
Benefit /
Cost
Bull
Sept. '99
Sept. '00
-8.9%
-9.2%
0.4%
Bear
Oct. '00
March '03
-4.8%
-10.0%
5.2%
Bull
April '03
Sept. '07
15.2%
16.5%
-1.3%
Bear
Oct. '07
March '09
17.7%
10.2%
7.5%
Bull
April '09
May '16
13.1%
14.9%
-1.8%
Total
Sept. '99
May '16
11.0%
11.6%
-0.6%
* Annualized figures
In total, our "insurance" is costing us less than one percentage point of annualized performance over the last 16-plus years, while drastically reducing our exposure to a broad market downturn.
 
And you can see that having an active short portfolio as the market peaked in 2000 and again in 2007 boosted our overall gains.
 
Hopefully, you can see why we recommend short-selling as part of a broader strategy to protect yourself. And as the market continues to flash warning signs today (which you can read more about here and here), we believe that advice is more important than ever.
 
Regards,
 
Bryan Beach
 
Editor's note: In the June issue of Stansberry's Investment Advisory, Porter and his research team recommended selling short two Wall Street darlings. Neither confidence nor financial genius will save these two businesses. When confidence leaves the market, these two stocks will get crushed.
 
Right now, you can get LIFETIME access to Stansberry's Investment Advisory – and all of Porter's publications – for barely more than it costs for one year. Learn more here.

Source: DailyWealth

The Two Elements of a Great Trade

 
"Picture this for a moment…" I wrote in the latest issue of my True Wealth newsletter…
 
Picture me at a cocktail party, trying to tell people… "I'm so excited! I'm buying grains! You know – soybeans, wheat, and corn? They're SOOO cheap! The timing is great!"
 

Sounds ridiculous to say that, right? It's all true about the opportunity in grains… but nobody cares.

Yes, it sounds silly to talk about buying grains as an investment at a cocktail party these days…
 
But that is the point…
 
For the biggest gains, you MUST consider buying what nobody else is interested in. But that's not all you need. Today, I'll show you the two elements you want to see as the perfect setup for a great trade
 
My issue of True Wealth published on May 20. Grains are up more than 10% in the 12 trading days since that issue came out.
 
My True Wealth subscribers are up much more than that…
 
I actually recommended buying the iPath Bloomberg Grains Total Return Fund (JJG) in February. JJG is basically a fund that holds three grains: wheat, soybeans, and corn.
 
We timed the bottom pretty darn well… JJG fell from more than $60 in late 2012 to less than $30 this past March. Take a look:
 
JJG was in free fall… So what did we see back then to make us buy?
 
What I wrote in the February issue summarized it…
 
Prices for agricultural crops have been falling fast. The price of wheat, for example, is down roughly 50% since 2012. The other big "grains" – corn and soybeans – have fallen even farther.
 
Speculators have been piling on this downtrend… The bets against the price of wheat have hit all-time record levels among commodity traders.
 
U.S. farmers are so paralyzed by these lower prices, they are afraid to plant. Why plant something that you will lose money on when you harvest it?
 
We have record fear in wheat – with no supply coming from U.S. farmers, and record bets against the price of wheat. Corn and soybeans are in similar positions, though not as extreme.
 
Ah, but what's this? We are starting to see a divergence between sentiment and price action.
 
Even though fear is high in the "grains," prices are actually up since the start of this year – in a world where everything else is down.
 

The outlook is bad… and yet prices are up this year. This is exactly what we want to see.

There you have it: The outlook was bad, yet prices were up.
 
That's what you want to see.
 
When the divergence between sentiment and price action appears… bingo! You have the two elements together that you want to see in a perfect trade setup.
 
Our grains trade is just one example…
 
We bought JJG at around $30 in True Wealth. And we'll sell at around $40. We've only been in the trade a couple of months, but JJG is already up to $37… So it has been a great trade.
 
The grains trade is just one example of using this simple little "system." In short, you want to buy what's uncomfortable to buy. You want to buy when the outlook is bad, and everyone is ignoring it… but meanwhile, the price has quietly started to go up.
 
When you find that setup… take advantage of it!
 
Good investing,
 
Steve
 

Source: DailyWealth