New Home Sales 'Soaring' and 'Surging,' With More Gains to Come

 
"U.S. New Home Sales Soar to Highest Level in a Decade," USA Today reported last week.
 
"New Homes Sales Growth Surges to 25-Year High," the Wall Street Journal said.
 
So which is it? Are new-home sales the highest they've been in a decade… or in 25 years?
 
It turns out, the answer is BOTH…
 
The number of new homes sold last month reached 667,000 – the highest level since October 2007, a decade ago, during the last housing boom.
 
Looked at another way, though, new-home sales jumped by 18.9% – the highest monthly sales growth in 25 years.
 
Why did so many new homes sell last month? The hurricanes likely played a part.
 
But to me, the big factor in the housing market is the low supply of existing homes for sale.
 
It's Economics 101 – when you have no supply and a ton of demand, prices go higher.
 
Specifically, housing supply is measured in months – that is, how long it will take for the existing inventory of houses to sell at the existing rate of sales. Right now, we're sitting at 4.2 months of supply.
 
It is rarely lower than this… In fact, over the last 20 years, it was significantly lower only once – in early 2005. That was during the final years of the last great housing boom in the U.S… And house prices REALLY soared after that.
 
I expect the low supply today will create a similar effect – dramatically higher home prices.
 
The average sale price of new homes hit an all-time record last month, at $385,200. The median price for new homes was $319,700.
 
Keep in mind, new homes are only a fraction of the housing market. And the average home price is always higher than the median home price… For comparison, the median price of existing homes sold last month was $246,800.
 
But with scarce supply, that means we have plenty of upside ahead.
 
Higher house prices have been part of my big theme for the last eight years… Since then, I have said:
 
Interest rates will stay lower than you can imagine, for longer than you can imagine… And that will push asset prices, like stocks and real estate, higher than you can imagine.
The "Melt Up" is arriving in stocks, driving stock prices to new heights as the bull market enters its final phase. And now, the boom time is arriving in the housing market, too…
 
I believe we still have plenty of upside potential ahead… You haven't missed it yet in housing.
 
Good investing,
 
Steve
 
Editor's note: Steve just recommended a "one click" way to profit from this trend in his True Wealth advisory. This investment lets you own a stake in tens of thousands of rental homes – in some of the best markets across the U.S. Better yet, more than 25% of this real estate is in Florida, where Steve is most bullish today. To learn more about True Wealth – and how to access this recommendation – click here.

Source: DailyWealth

Nobody's Throwing Rose Petals at My Feet

 
"It was hard to get meetings," a China-fund manager told me last week.
 
He was traveling in the U.S. to spread the China stock story to anyone who would listen.
 
Turns out, nobody would…
 
"I wish it wasn't the case, candidly, Steve. I managed to fill the schedule. But not necessarily with several top-tier firms," he said.
 
The China-fund manager was positive, though…
 
"The lack of interest in China makes me more bullish," he told me. "Investors still don't appreciate what is taking place in China today.
 
"When folks are throwing rose petals at my feet, and I'm too busy to return your phone call, that's my ultimate sell indicator."
 
We're not there yet…
 
It's crazy to me that investors aren't interested…
 
Subscribers to my True Wealth China Opportunities newsletter are up 46% year-to-date on our simple four-fund China portfolio. And they're up more than 38% on our China stock portfolio.
 
But nobody around the world cares…
 
Shockingly, $4.5 billion has flowed OUT of China exchange-traded funds (ETFs) globally so far this year.
 
Most importantly for you, we're still early in this China trade…
 
You might not know it, but China has two stock markets – one in Shanghai, and the other across the border from Hong Kong in Shenzhen.
 
The benchmark index in Shanghai – the SSE Composite Index – is up around 9% in the last 12 months. The Shenzhen Composite Index has performed even worse – it's actually down 2% over the last 12 months.
 
Meanwhile, as I explained to my subscribers in my China Opportunities letter last week, $1.7 trillion could flow into Chinese stocks by the end of 2019.
 
Sure, my subscribers are up – a lot – in China. But we'll see a lot more to come…
 
Nobody cares about Chinese stocks today. Billions of dollars have flowed out of China ETFs this year. And China-fund managers can hardly find someone willing to give them the time of day.
 
This is not what a top looks like. When this fund manager won't take my call (because he's too busy basking in rose petals), then I'll know we're at the top.
 
We're a long way from that today. This is more what a bottom looks like than a top.
 
It's time for you to get some money into Chinese stocks, if you haven't already.
 
I promise, you haven't missed it yet. It's time to take action… Buy China, now…
 
Good investing,
 
Steve
 

Source: DailyWealth

A Lottery That No One Wants to Win

The Weekend Edition is pulled from the daily Stansberry Digest. The Digest comes free with a subscription to any of our premium products.
 
 A major jubilee is coming to America soon…
 
Lots of people will be excited about this once-in-50-years event. The crowds will cheer. And politicians will promise new and better prosperity.
 
But what will happen is really a national nightmare.
 
If you've never heard of the concept, of a national jubilee, I (Porter) would urge you to please read today's essay more carefully – and more skeptically – than you ever have before.
 
You see, I fear we may be among the only people in America who know what's about to happen… and why it can't be stopped.
 
 Have you ever read "The Lottery" – Shirley Jackson's acclaimed short story? The story starts out by painting a picture of a beautiful, small farming community…
 
The morning of June 27th was clear and sunny, with the fresh warmth of a full-summer day; the flowers were blossoming profusely and the grass was richly green. The people of the village began to gather in the square, between the post office and the bank, around ten o'clock… The children assembled first, of course. School was recently over for the summer, and the feeling of liberty sat uneasily on most of them; they tended to gather together quietly for a while before they broke into boisterous play. 
 
The author, however, soon hints at the depravity that will follow…
 
Bobby Martin had already stuffed his pockets full of stones, and the other boys soon followed his example, selecting the smoothest and roundest stones; Bobby and Harry Jones and Dickie Delacroix – the villagers pronounced this name "Dellacroy" – eventually made a great pile of stones in one corner of the square and guarded it against the raids of the other boys.
 This is a lottery that no one wants to win…
 
As you know if you've ever read the story, every adult has to draw a card from the black box. Whoever pulls out the card with the mark of death (a black spot) is stoned to death.
 
It's a ritual killing. Every member of the community must take part. They even hand a stone to the victim's young son, so he can take part in the ritual.
 
 The jubilee we're about to experience will have many of the same characteristics…
 
Millions of Americans will soon be calling for it. Some violently. The young, the poor, and the ignorant will all rally for the jubilee. They will, in effect, start piling up stones. And the person who is going to be ritually killed? That will be us.
 
Let me explain…
 
Economies collapse when debt-service costs grow faster than income for a long time – usually 50 years or more. These aren't normal default cycles. These are far different… These are debt-fueled revolutions.
 
What happens is that debt builds and builds. Once debt-service costs start growing faster than the economy, then the total debt is never reduced.
 
Sooner or later, debt begins to grow geometrically, far faster than income. And then… it simply can't be managed. That's when the crisis hits.
 
These debt revolutions are characterized by the inability of the debt burden to be reduced in "normal" ways. In a normal cycle, deleveraging reduces debt burdens. And this happens through some combination of reduced spending (to pay off debt), defaults (where assets are redistributed among creditors), and increases to the money supply (to prevent a deflationary spiral and stoke economic growth).
 
But in a debt revolution… those normal measures don't work. Austerity causes a big reduction in economic growth. Spending slows and the economy declines faster than debt can be reduced.
 
Likewise, the debt burdens can be so big that defaults don't work because the collateral won't come close to covering the debt. (Think about General Motors' bankruptcy. The government put an additional $50 billion into the company, and it still couldn't pay its creditors.) And sometimes even an extreme amount of money printing doesn't work because interest costs increase more than inflation, causing the debt burden to continually grow faster than the economy.
 
 What happens in these situations?
 
When deleveraging doesn't work, the debt burden grows and grows. It begins to weigh heavier and heavier across the poorest segments of society. It leads to despair. To depression. To violence. And to revolution.
 
I don't think I have to tell anyone that the federal debt burden has been growing uncontrollably for the last decade. Since 2008, total U.S. federal debt has more than doubled. That is, our government has borrowed more money in the last 10 years than it borrowed in the 231 prior years of its existence.
 
Yes, in terms of debt to gross domestic product (GDP), government borrowing was larger during the Civil War and during World War II. That's true. But it's also irrelevant.
 
What really matters is that it's not only the government's debt that continues to grow uncontrollably. What really matters is that our country's total debt load (household, corporate, and government) continues to grow. Even after the crisis of 2008. Even with $4 trillion in new money. Even with the huge number of mortgage defaults (over $1 trillion in losses).
 
And… what really matters is that, more so than ever before, the burden of these debts is falling most heavily on the poorest members of our society – the people most likely to be radicalized. The people most likely to be violent. The people most likely to declare a jubilee.
 
 Most Americans believe the 2008-2011 financial crisis solved our debt problem…
 
We all know someone who defaulted on his mortgage and hasn't been able to borrow money since. Most of us believe that solved the problem… that everything is fine now. Well, except for the government's debt… But that's a different kind of problem.
 
But the facts tell a different story.
 
U.S. total debt (household, corporate, and government) hasn't declined since 2008.
 
Federal debt only declined in one quarter (first quarter 2017, -2.6%) since 2008. Household debt only declined twice (2010, 2011 by less than 1%). And corporate debt has declined twice, too (-4% in 2009, less than 1% in 2010).
 
Total debt is currently growing at almost 4% a year. Since 2008, our economy has grown an average of 2.9% a year. That means, once again, our debts are growing much faster than our economy.
 
Our economy did not deleverage. The "normal" methods of reducing our country's debt burdens did not work.
 
Economists will be quick to tell you that this doesn't really matter because debt service burdens fell. That has allowed disposable income to rise and led to "solid" economic growth that, eventually, will allow these debts to be repaid.
 
Please remember this idea: It is because debt-service obligations have fallen (relative to GDP) that our economy recovered, not because of any reduction in debt load.
 
As you know, interest rates have fallen dramatically over the past eight years. Yields on corporate junk bonds have never been lower. Same with yields on government debt. Same with most mortgage loans. These huge reductions in borrowing costs allowed the economy to continue growing despite the lack of any deleveraging and the continued growth of our debt burden.
 
These massive reductions in interest rates were caused by the Federal Reserve's actions… which are now being reversed.
 
 There's another problem that most people haven't figured out yet…
 
Most of the household credit growth over the last few years wasn't in mortgages, which are normally safe loans. They're well collateralized. And most people who buy a house have the income required to support the loan. The new debt has been highly concentrated in the poorest segments of our society.
 
Credit Suisse Chief Global Strategist Jonathan Wilmot published some debt research that looked at debt-to-income ratios across different segments of the population. In the late 1980s, the 20% of Americans with the least amount of income held little debt, when measured against their income levels. Today, however, this segment of the population is the most in debt when measured against income.
 
The poorest Americans now hold debts in excess of 250% of their incomes, or about five times more debt than the wealthiest 20%.
 
This massive change in the character of our household debts came about because of "innovations" in lending – like subprime auto loans, payday lenders, and, most important, student loans. Today, total household debt is almost $13 trillion. That's higher than the previous all-time high of $12.6 trillion, set in the third quarter of 2008 – immediately prior to the last crisis.
 
And what's most important to understand is that the cost of this debt burden has been artificially reduced since 2009 by the Fed. These costs – not just the normal debt service, but also the cost of defaults – are about to soar.
 
More than 10% of these loans are student loans ($1.5 trillion outstanding). Most were made to poor people against zero collateral, where there isn't any legal process to deal with defaults. This is a serious economic problem that will transform into a serious political problem because we have no economic or legal way to deal with these debts.
 
In other words… this massive debt bubble has mostly been created by the 44 million Americans who have student loans. These are the people in our society who are the least able to manage their debts. They are the most likely to default.
 
In 2016, no payments were made by more than 4 million borrowers against a total of $137 billion in outstanding student loans. This represents a 14% annual increase in the default rate from 2015. On average, 3,000 new people default on their student loans each day.
 
And yet… the issuance of these bad debts continues to soar. Since 2013, the average balance of all student borrowers has increased by 17% to more than $30,000.
 
 Dear subscribers… what do you think happens next?
 
What happens when the least educated, least "vested," and most violent members of your society (unmarried men in their 20s)… also make up the largest demographic block… and have the largest debts (relative to income) with zero ability to pay back these debts back or discharge them through bankruptcy?
 
As I said… 44 million people carry a student loan. Most of them can't afford these loans. Nor can they default. They can't restructure. They're stuck – many with $100,000 loans that absorb more than 100% of their disposable income.
 
What do you think they are going to do?
 
 All they can do is fight…
 
When you watch the news and you see people rioting about race in Charlottesville, Virginia… when you see the inner cities burning in Baltimore… when you see more and more radicalized politics – like resurgent neo-Nazi groups, the rise of Black Lives Matter protests, and college students embracing violence to protest at any conservative speaker – what you're really seeing is the beginning of the jubilee.
 
These protests may nominally be about race. Or about Donald Trump. But what they are really about is hopelessness. What they are really about is economics.
 
The poor – and especially the young and poor in our country – have no hope of being able to afford the American dream. Not when median incomes are $60,000 and the average college debt is more than $30,000. Not when the average cost of a house is more than $250,000 and even a decent apartment is unaffordable for most college graduates.
 
 The jubilee has started in America…
 
The jubilee is a Jewish economic tradition. It is part of the Old Testament. You'll find it described in the Book of Leviticus, Chapter 25. The idea was simple. At the end of 49 years, all debts would be wiped out and collateral property returned. It was a way of completely "resetting" the financial order, of making sure the wealthy didn't become too dominant… of making sure their economy didn't collapse… of making sure there was never a violent revolution.
 
The jubilee has started. You haven't seen yet it. But it's there. Mark Zuckerberg (founder of Facebook) recently toured all 50 states. His message: we should forgive all student loans and offer a guaranteed income to every American. Likewise, both the Hillary Clinton and Bernie Sanders campaigns pledged to forgive student loans and make college "free."
 
 There is a fourth way to deleverage an economy…
 
I already mentioned the three normal ways: austerity… default… and money printing. You can also redistribute the wealth. That's the jubilee. We've been trying the first three ways for almost 10 years. They haven't worked… at all. Instead, the debt burden has only grown larger, and it has grown fastest on the backs of the poorest members of our society. This does not bode well for the stability of our country.
 
Think about it… Most of the voting households in our country can't handle a $400 emergency. Millions and millions of them have a debt burden they can't afford. So out of the four ways to reduce our economy's debt burden, which do you think we're going to try next?
 
It's a jubilee. And just like Shirley Jackson's lottery, it's likely to be incredibly violent… with the young violently taking from the old.
 
 President Trump comes up for re-election in 2020…
 
That's 49 years to the day since the last jubilee in America… in 1971. That's when President Nixon repudiated our government's debt by abandoning the Bretton Woods gold-standard system and telling our creditors, who had been promised payment in gold, to "go pound sand."
 
Since then, total debt in America has soared from around 100% of GDP to close to 400% of GDP. Many of you can remember the 1970s. The violent protests. The soaring inflation. The feeling that the country was coming apart at the seams.
 
Well, this time will be about four times worse.
 
The jubilee is coming. Keep a copy of this essay… Share it with your friends. And remember where you first heard about the jubilee.
 
Regards,
 
Porter Stansberry
 
Editor's note: Porter and his team are convinced America's next "debt jubilee" is already in motion. That's why they've prepared a brand-new presentation explaining how this shocking event is likely to play out… exactly how it will affect you and your money… and most important, a few simple, but crucial steps you can take now to not only survive – but actually prosper – as it unfolds. Click here to view the presentation.

Source: DailyWealth

Here's Why I Hope You Miss the Boat…

 
It's going to happen… And it's going to be frustrating…
 
You're going to miss the boat.
 
At least, I hope you do…
 
Over the past two months, the benchmark S&P 500 Index is up 4.7%… The tech-heavy Nasdaq Composite Index is up 4.8%… And the small-cap Russell 2000 Index is up 8.4%.
 
My colleague Steve Sjuggerud says this is the beginning of the "Melt Up" – the last stretch in a bull market when stocks skyrocket.
 
We can't know whether or not a Melt Up will play out as it did in the late 1990s. But based on the recent price action, it's looking more and more likely that Steve will be right. So today, we're going to think about how you can prepare.
 
Now, when I say, "I hope you miss the boat," I don't mean the Melt Up as a whole. (I am here to help you make money, after all.)
 
I'm talking about specific stocks…
 
Before I explain what I mean by that, though, let's talk about volatility…
 
One of the funny things about bull markets is that they like to take as few people along for the ride as possible. They'll throw you off and trample you, given the chance.
 
Just look at a chart of the Nasdaq from late 1998 through mid-April 2000. During the final 15 months of the last Melt Up, the Nasdaq soared 146%But it also dropped 8% or more, six times
 
By contrast, over the past 15 months, the biggest drop in the Nasdaq was 5.5%, which came leading up to the presidential election last year. Since then, volatility has been almost nonexistent.
 
And I'll go out on a limb and say that most folks with money in stocks today are not prepared for the sort of volatility we saw during the last Melt Up. Not mentally or strategically…
 
To prepare mentally, you may want to print out that chart and tape it to your computer monitor.
 
To prepare strategically, you need to get comfortable with missing the boat.
 
Here's what I mean…
 
During a Melt Up, you won't know when a sharp decline is coming. The chart above shows the Nasdaq… which is an average of thousands of stocks. When the index fell 10%, a lot of individual stocks fell far more.
 
If you happened to buy a stock at the wrong time, you could have stopped out for a 15%-25% loss in a matter of days… then watched as it turned around and doubled, tripled, or more. You could have missed the boat.
 
I'd like you to take away two important points here…
 
First, during a Melt Up, you won't know which decline will be the start of a bear market… So you need to set stop losses on all of your positions, and stick to them. It's one of the best ways to protect your wealth.
 
You may miss the biggest gains on some, or even a lot of stocks. But that's OK. As long as you follow this next piece of advice, you should still do extremely well…
 
You need to be picky about your entry points. If a stock looks great – but has just popped higher – wait for a pullback before you buy. By waiting for a pullback, you'll greatly reduce your chances of stopping out ahead of the next big move.
 
If you're picky about your entry points, you'll still miss the boat sometimes. The stocks you want to own won't always pull back to a convenient entry point. But at least this way, if you do miss the boat, you won't take a big loss beforehand.
 
In my DailyWealth Trader newsletter, we apply this idea by recommending stocks with buy-up-to prices – sometimes below the current share price. We can't know if they will come back down to our buy-up-to prices… We may miss one here and there.
 
If one gets away from us, we'll keep an eye on the stock. We may see another good entry point. But we're ready and willing to move on… to look for other opportunities.
 
We may be in the early stages of a spectacular Melt Up. If you're prepared both mentally and strategically, you should be able to make a lot of money. If you're not, it could be a major source of frustration.
 
One of the best ways to prepare is by being disciplined with your purchases. And that means sometimes, you'll miss the boat.
 
Good trading,
 
Ben Morris
 
Editor's note: Steve believes the Melt Up is starting… And he says the biggest gains of the eight-year rally still lie ahead. In fact, Steve predicts the stodgy, blue-chip Dow Jones Industrial Average could more than double – to 50,000 or more – before it all ends… And many individual stocks could do far better. Click here to learn more.

Source: DailyWealth

Investors Just Bailed on These Stocks – We're In!

 
U.S. tech stocks recently had their largest inflows in 38 weeks, as I wrote on Tuesday.
 
To me, that's a sign that my "Melt Up" thesis is in full swing – that investors finally love stocks. We could see incredible gains over the next 12 to 18 months… And you want to be in on it.
 
However, for maximum returns on my long-term investments – the ones I'll be holding long after the Melt Up – I don't want to buy what's loved. I want to buy what's "hated."
 
To find the bottom, I don't want to see record inflows from investors. I want to see record outflows.
 
Record outflows are a great sign to me that an investment is hated. Then I want to wait for the start of an uptrend. That's my basic recipe for finding a great long-term investment…
 
Last week – the same week that U.S. tech-stock funds attracted more than a billion dollars – Reuters reported some crazy news about Japanese stock flows.
 
"Japanese equities suffered their largest weekly outflows on record, losing $4.4 billion, with 86% of this related to redemptions from exchange-traded funds," Reuters said.
 
The article attempted to explain why the outflows happened:
 
Japan's Nikkei 225 [Index] has posted its longest daily winning streak in over 50 years, advancing more than 5% over the last 14 days on hopes that Japanese Prime Minister Shinzo Abe's ruling coalition will win a national election on October 22. However, the market is prone to profit-taking before elections…
Investors were taking profits before the election results.
 
They all got out… And that gives us an opportunity. You see, Abe won the election this week…
 
In December 2012, I called Japanese stocks "The Number One Opportunity of 2013: Abe's Revenge." It was the headline in my True Wealth newsletter.
 
Back then, Abe had recently returned to office – back for "revenge" – after resigning in 2007. Abe made his comeback by promising to undo the mistakes he made in 2006, when he backed Japan's central bank in raising interest rates.
 
His new goal? To create massive inflation, and break Japan out of its long struggle with deflation for good.
 
As I explained in 2012…
 
I expect Abe's revenge will create a massive bubble in Japan's stock market, and trigger a potentially significant fall in Japan's currency…
 
The very best way to take advantage of Abe's revenge is through the WisdomTree Japan Hedged Equity Fund (DXJ) – which takes out currency movements, and gives us direct exposure to an index of Japanese stocks.

That turned out to be exactly right… Shares of DXJ went from around $33 near the end of 2012 to around $50 at the end of 2013 – more than a 50% gain! (Our subscribers pocketed 62% gains on this trade, as we held it longer.)
 
Now, we have the same setup conditions…
 
Abe was just re-elected. He will follow the same blueprint. We can expect the same outcome – higher stock prices, and a lower currency value.
 
My True Wealth subscribers are back in this trade… And they're already up 24% in less than a year.
 
Meanwhile, nobody else is interested… The shares outstanding of DXJ are at four-year lows. It's exactly what I like to see.
 
With the re-election of Abe ensuring higher stock prices and a weaker yen… with Japanese stocks hated by investors today… and with the uptrend in place… you haven't missed it yet.
 
Japanese stocks are hated and in an uptrend. We're in! What about you?
 
Good investing,
 
Steve
 

Source: DailyWealth

Is This Common Investor Bias Costing You a Fortune Today?

Steve's note: It's clear that bitcoin stirs up controversy and skepticism. I'm cautious on cryptocurrencies myself. But it's a fascinating new idea, worth learning about. Last week, we shared a bitcoin series from my colleague Tama Churchouse. Today, we're sharing another essay from his publisher Kim Iskyan about how bitcoin triggers our hidden biases – and how fighting those biases can make you a better investor…
 
You don't have to look far to find financial luminaries and talking heads declaring the death of bitcoin…
 
In just the past few months:
 
•   JPMorgan CEO Jamie Dimon declared bitcoin is "not a real thing, eventually it will be closed."
    
•   "Wolf of Wall Street" Jordan Belfort called it a "fraud."
    
•   Billionaire investor Howard Marks said cryptocurrencies "aren't real."
 
These folks all have one thing in common. They're victims of the "default bias"…
 
Have you ever been overwhelmed by the choices on a restaurant's wine menu and just decided on the house wine? Or, when you buy the latest mobile phone, do you just accept the factory default settings and not even bother changing the ringtone?
 
Most people are happy to stick with the standard options. Even when we have several choices, we go with the default choice because it's easier and more comfortable.
 
For example, scientists have looked at people's attitudes toward donating their organs when they die. In countries where you have to opt in to be a donor, only about 15% of people choose to donate their organs. But in countries where donating organs is the default option, more than 90% of people opt to donate.
 
If no default or standard option exists, we tend to use the past as our "default setting." Most people like to stick with what they know and are anxious about taking on new risks, even if the change would be good for them.
 
Default bias is the offspring of two other biases: status-quo bias and loss aversion. Keeping things the same (status quo) is convenient… And we believe the pain of losing is greater than the joy that comes from winning (loss aversion).
 
Put these together, and our brains often tell us it's just easier to keep things the same and avoid any potential pain that might come from changing things.
 
For investors, this default bias can stop us from making changes to our portfolio or strategy. We tend to cling to the way things are, even if it's not the best thing for us.
 
This even happened with one of history's most game-changing technologies…
 
In the early 1990s, the Internet was just starting to go mainstream. And many otherwise smart folks were convinced it was just a fad.
 
Here's a quote from U.S. astronomer Clifford Stroll in 1995:
 
Visionaries see a future of telecommuting workers, interactive libraries and multimedia classrooms. They speak of electronic town meetings and virtual communities. Commerce and business will shift from offices and malls to networks and modems. And the freedom of digital networks will make government more democratic. Baloney.
Even the inventor of Ethernet, Robert Metcalfe, didn't believe in the Internet. "I predict the Internet will soon go spectacularly supernova and in 1996 catastrophically collapse," he said.
 
And telecommunications expert Waring Partridge had this to say: "Most things that succeed don't require retraining 250 million people."
 
These people fell for the default bias. They believed in what they knew and were anxious about making big changes.
 
Plenty of investors fell for it, too. And they missed out on big gains as the Nasdaq – which is home to many tech stocks – increased 400% from 1995 to 2000.
 
We're seeing the exact same thing happen with bitcoin and cryptocurrencies today… It's like a replay of the status-quo bias that led people to dismiss the Internet.
 
Anyone who claims bitcoin isn't "real" or it will "close" (as Dimon did) doesn't understand the cryptocurrency at all…
 
As my colleague Tama Churchouse has written before, bitcoin is money. It can be moved around (far more easily than traditional currencies). It can buy goods and services. And it has scarcity… Only 21 million bitcoins will ever be mined. And more than 16.5 million have already been mined.
 
As for the concern that bitcoin is purely "digital," it's worth remembering that more than 90% of all money that exists today around the world is not physical (i.e., not notes or coins).
 
Lastly, bitcoin can't be "closed." It's not an overleveraged credit derivative fund. It's a highly secure distributed blockchain running on a global network of computers.
 
Bitcoin is just a cryptographically secure medium of exchanging value.
 
In short, every now and then something truly new and different comes along. And if you're willing to go against your default bias, you could make a fortune.
 
Good investing,
 
Kim Iskyan
 
Editor's note: If you're interested in speculating on these new assets, Kim's publishing company has started releasing the highest-quality cryptocurrency research we've seen anywhere, at any price. It's Tama's new Crypto Capital advisory – comprehensive enough for even experienced crypto traders… but clear and simple enough for a total novice to understand. Click here to access a risk-free trial.

Source: DailyWealth

Money Flooded Into Stocks Last Week – Here's What to Do

 
U.S. equity funds just attracted their largest inflows in 18 weeks.
 
As Reuters reported on Friday, $7.5 billion flowed into stock funds last week alone. Where did individual investors put all this money?
 
"Tech stocks attracted a bumper $1 billion, the largest inflows in 38 weeks," the article stated.
 
My friend, this is more evidence that the "Melt Up" is FINALLY 100% here… the market's last big push higher.
 
Individual investors are FINALLY buying stocks. And they're not looking for the "safe" plays. They're buying tech. They're taking on risk. This is what happens in the late stages of a bull market.
 
But what took people so long to buy, I wonder?
 
The stock market bottomed in March of 2009. It's been going up – almost nonstop – for eight and a half years.
 
You would think that – at some point – people would have gotten seriously interested in buying stocks. But they hadn't, yet.
 
So what changed last week?
 
What changed is "everything's just perfect" now, according to my friend Jason Goepfert of SentimenTrader.com.
 
How does he define perfection?
 
•  
The market closed at a record daily high every day last week.
 
•  
It has closed at a record weekly high every week for the last six weeks.
 
•   It has closed at a record monthly high every month for the last seven months.
"That combination has never been seen before in market history," Jason says.
 
Here's the thing: Markets fluctuate.
 
Sounds simple, I know. But markets go up… And markets go down.
 
We've had five record days… six record weeks… and seven record months. After that record run, you might start to believe that markets don't go down. But they do…
 
So I want you to be prepared for a market correction.
 
Don't get me wrong… I'm not going back on my prediction that stocks will absolutely soar in the Melt Up.
 
My "working script" is simple. I believe we'll see two things here…
 
•  
Some degree of market correction, first. Then…
 
•   Crazy new highs, after that.
Remember: Markets fluctuate. Markets go up… And they go down.
 
When this market goes down – and it will – that move will scare people…
 
Everyone on CNBC will start saying, "This is the end." Your friends (who just got on board buying tech stocks this week) will likely sell.
 
You will stand alone… But you will know what's going on. You will not panic. You will stay strong.
 
You will remember that markets fluctuate. They go up… And they go down. And you will take advantage of it.
 
I suggest using the upcoming down move in the markets as one final opportunity to buy the stocks you want – before the big final push higher in the Melt Up.
 
I can't know when that day will arrive. But I am certain it is coming. And I don't want you to be scared by it. Instead, I want you to take advantage of it…
 
Good investing,
 
Steve
 
P.S. Investors are entering a dangerous time… when every decision counts. History says this could be the last bull market we'll ever see. That's why I've put together a "blueprint" to profiting from the Melt Up. It includes the ideas and investments that I expect will lead to the biggest returns as the market melts dramatically higher… Click here to learn more.

Source: DailyWealth

This Group of Stocks Could Crush the U.S., Even During the 'Melt Up'

 
The last time we saw today's setup, one group of stocks more than doubled in four years and left U.S. stocks in the dust…
 
It has nothing to do with China. And it might surprise you…
 
European stocks are now dirt-cheap compared with their U.S. counterparts.
 
Based on history, that means we could see an incredible scenario… European stocks could significantly outperform the overall U.S. market during the next four years.
 
Don't get me wrong… I am still bullish on U.S. stocks over the next 12 to 18 months. I think they will absolutely soar, thanks to the last explosive phase in this bull market, which I've called the "Melt Up." But Europe could do even better.
 
Let me share the details…
 
U.S. stocks crushed European stocks in 2016… The S&P 500 Index soared 12%, while the STOXX Europe 600 Index actually fell 1%.
 
The U.S. market has been outperforming Europe like this for years. But this outperformance might finally be coming to an end… even as the Melt Up gets going.
 
You see, U.S. stocks are expensive compared with European stocks today. The chart below shows the premium of the U.S. market versus Europe, based on the price-to-book value ratio.
 
It's coming off the highest level we've seen in years. Take a look…
 
 
The U.S. market is roughly 65% more expensive than Europe right now. That's a massive premium. As you can see above, the last time U.S. stocks were this expensive relative to the U.S. was in 2003.
 
Surprisingly, that wasn't a bad time to own U.S. stocks… Just because they were more expensive than Europe didn't mean they were set to crash.
 
In fact, that year turned out to be a great time to own both the U.S. and Europe. U.S. stocks did well from 2003 to 2007… But European stocks absolutely crushed the returns we saw in the U.S. Take a look…
 
Total Returns
Year
European Stocks
U.S. Stocks
2004
21.8%
10.9%
2005
11.3%
4.9%
2006
35.7%
15.8%
2007
13.8%
5.6%
U.S. stocks jumped a total of 42% over this four-year stretch… But European stocks more than doubled.
 
We could be at the beginning of a similar trend… a multiyear move higher in the U.S. and Europe… with European stocks dramatically outperforming. It's already starting this year…
 
European stocks are up 24.4% this year, while U.S. stocks are up only 16.3%.
 
Again, don't get me wrong here. I expect the gains in the U.S. to continue…
 
The Melt Up should help push the overall U.S. market higher. And certain sectors will absolutely soar – potentially hundreds of percent.
 
But on the whole, European stocks could outperform during the next few years or so. They're dirt-cheap compared with the U.S. And they doubled in four years the last time we saw an opportunity like today… a massive 100% gain.
 
If you're interested in owning Europe, the simplest way to do it is through the SPDR EURO STOXX 50 Fund (FEZ).
 
FEZ holds a basket of Europe's largest blue-chip companies. And while the U.S. will likely soar in the years to come, European stocks – and shares of FEZ – could do even better…
 
Good investing,
 
Steve
 
P.S. Today looks like a perfect time to own both U.S. and European stocks – just like it was in 2003. So when you make this trade, don't forget about the Melt Up… It could be your last chance to see truly explosive gains in the U.S. market. And if you make the right moves now, you could earn an absolute fortune before it's all over. Click here to learn more.

Source: DailyWealth

Shocking Stat Shows China Has Overtaken the U.S.

The Weekend Edition is pulled from the daily Stansberry Digest. The Digest comes free with a subscription to any of our premium products.
 
 What's the world's largest economy?
 
If you're like most folks, you probably believe it's the United States.
 
After all, U.S. gross domestic product (or "GDP") is an incredible $18.6 trillion. That's more than 65% bigger than China's… and more than three times bigger than those of Japan, Germany, and the U.K.
 
But according to Stony Brook University finance professor Noah Smith, you're wrong…
 
In reality, China has already surpassed the U.S. We just don't know it yet because we're looking at the wrong data. It's a controversial idea, for sure. But Smith makes a compelling argument. As he explained in a Bloomberg View column this week…
 
This comparison is misleading, because things cost different amounts in different countries. GDP is supposed to measure the amount of real stuff – cars, phones, financial services, back massages, etc. – that a country produces.
 
If the same phone costs $400 in the U.S. but only $200 in China, China's GDP is getting undercounted by 50% when we measure at market exchange rates. In general, less developed countries have lower prices, which means their GDP gets systematically undercounted.

 
 When you take these price differences into account, the picture looks a little different…

 
Using a wonky adjustment that economists call purchasing power parity ("PPP"), China's economy swells to more than $21.4 trillion – nearly $3 trillion bigger than the U.S. economy. More important, Smith argues China's lead is only likely to grow from here…
 
China's modest per-person income simply means that the country has plenty of room to grow. Whereas developed countries can only get richer by inventing new things or making their economies more efficient, poor countries can cheaply copy foreign technology or imitate foreign organizational practices. That doesn't always happen, of course – many poor countries find themselves trapped by dysfunctional institutions, lack of human capital or other barriers to development.
 
But there's good reason to think that China will overcome at least some of these obstacles. Economists Randall Morck and Bernard Yeung have a new paper comparing the histories of Japan and South Korea – both of which climbed out of poverty to achieve rich-country status – with the recent rise of China. They find that China's institutions are, broadly speaking, developing along the same path followed by its successful neighbors.

And data continue to suggest this is likely. Despite a slowdown in recent years, China's economy is still growing at a rate of nearly 7%, according to the latest quarterly report this week – compared with a little more than 2% in the U.S.
 
At that rate, Smith notes China's economy will be twice the size of the U.S. in less than two decades.
 
 Whether it's No. 1 or No. 2, China has undeniably become a dominant economy…
 
And yet, the Chinese stock market – which is also larger than any other besides the U.S. – remains one of the least owned in the world.
 
This is one of the biggest reasons our colleague Steve Sjuggerud turned bullish on China last year and launched his True Wealth China Opportunities advisory.
 
As Steve noted at the time, virtually no one owned local Chinese stocks, known as "A-shares." U.S. investors hated them. They were largely excluded from global stock market indexes, which meant large institutional investors like mutual funds couldn't touch them, even if they wanted to. And even Chinese investors – who had just been burned by a mini-boom and bust in 2015 – had no interest in buying these stocks.
 
Steve's contrarian call has paid off for his subscribers. But despite the big gains in Chinese stocks over the past year, most investors still don't own any Chinese stocks.
 
However, that may be finally starting to change…
 
As we've discussed, index provider MSCI finally agreed to begin including Chinese A-shares in its indexes back in June. Starting next year, hundreds of billions of dollars in institutional money will be forced into these stocks. And large private investors and hedge funds have already begun moving in advance.
 
 But the biggest move may come from inside China itself…
 
A recent note from Morgan Stanley analysts pointed out that nearly $2 trillion of Chinese savings could flow back into A-shares over the next few years.
 
Why? Because Chinese investors increasingly have no other choice.
 
The Chinese government has been cracking down on speculation in many areas of the market. Equities are now one of the last remaining options for most investors. As Bloomberg reported this week (emphasis added)…
 
Property, overseas investments and shadow-banking products have all been targeted by China's campaign to curb financial risks over the past year. What's left?
 
Some analysts are betting that restrictions on other popular investment channels will lure what's often called China's giant ball of money back into stocks, which, despite steady gains, have seen a slow take up in volumes since a spectacular boom and bust in 2015.
 
Chinese equity holdings will swell by up to 11 trillion yuan ($1.7 trillion) in the two and a half years through end-2019 amid policies to clean up the financial system, Morgan Stanley predicts.

More important, improving fundamentals coupled with investors' recent experience in 2015 suggest this move will be more sustainable. As lead analyst Richard Xu explained in the note…
 
Rebound in corporate profit growth and still-high savings rate will support fund flows to quality equity names. This will be a lasting but somewhat gradual process, unlike the boom in 2015.
In other words, despite the big gains in Chinese stocks this year, all signs suggest the real rally hasn't even started yet.
 
 One last note before we sign off…
 
As you likely know, we held our first-ever cryptocurrency webinar this week.
 
Porter was joined by our friend and colleague Tama Churchouse – editor for our corporate affiliate, Stansberry Churchouse Research – for an in-depth conversation on bitcoin and other "cryptos." If you joined us, we hope you enjoyed it as much as we did.
 
But if you couldn't make it, it's not too late to take advantage of a special discount on Tama's exclusive new cryptocurrency advisory, Crypto Capital.
 
We just had a look at the introductory materials, and we can say without a doubt that it is among the highest-quality cryptocurrency research available anywhere, at any price. It is comprehensive enough for even experienced crypto traders, but clear and simple enough for even a total novice to understand.
 
A subscription to Crypto Capital also includes five step-by-step user guides and nine short video tutorials from Tama himself, walking you through everything you need to know to get started.
 
If you have any interest in speculating in cryptos, you owe it to yourself to learn more. Tama will even give you a full 30 days to try this service, absolutely risk free. Click here to learn more.
 
Regards,
 
Justin Brill
 
Editor's note: Bitcoin prices are up nearly 500% this year. You may think you've missed the boat. But Tama has found a way to potentially turn a $100 speculation into as much as $20,000. And he just put together a brand-new presentation explaining how to avoid the mistakes that 99% of investors are making in cryptos… how to put his little-known technique to work… and everything else you need to know to get started. Watch it here.

Source: DailyWealth

How to Rescue Your Retirement in Four Easy Steps

 
Forget fear… Stress is the real hurdle for retirement savings.
 
According to a recent survey run by Schwab Retirement Plan Services, day-to-day financial stresses keep folks from contributing to retirement plans.
 
The biggest issue? Debt. In fact, Americans today owe more than they did in December 2007, just as the recession started. It's a common reason folks don't invest for retirement.
 
Here's what's even more worrisome… Those surveyed said they spend more time choosing which car to buy than they do planning their 401(k) investments.
 
We can't rely on pensions anymore. You need to grow the wealth on your own… And you'd better spend more than a second choosing your investments. That new car might last you a decade or two, but we're talking about setting yourself up for the rest of your life…
 
"I'll start saving after I pay off my credit-card debt… after the kids are done with school… after I get that new job… after the next market correction… "
 
If any of these sound familiar, you're shooting yourself in the foot. As we've written before many times… the sooner you start saving for retirement, the better.
 
Think about it this way. Imagine you save $5,000 a year for 40 years and earn just 4% a year on your investments… You set aside $200,000, and it grows to $494,000. But if you boost your annual return to 8%, the same $200,000 grows to $1.3 million.
 
By the way, we didn't pick these numbers at random. A study by research firm DALBAR shows that while the stock market earned about 11.1% a year over the last 30 years, the typical investor only earned about 3.7%… thanks to bad investment decisions. (We decided to use a more conservative market return of 8% a year.)
 
And in the new era of 401(k)s and IRAs, the investment performance falls on you. Getting just 4% won't cut it. You owe it to yourself and your family to earn the best return possible.
 
So here are four easy steps anyone can take to get in a stronger financial position today…
 
   1.  Make a budget.
 
List out all sources of income, all your fixed monthly bills (like your mortgage, utilities, and insurance), and all your variable bills (things like entertainment, dining out, vacations, etc.). Getting a full picture of what comes in and what goes out will help you make adjustments for step two.
 
   2.  Save, save, and save.
 
The more you can save (and sooner), the better off you'll be in the long term. We ran the numbers on the average American saving 5% of his income… With a modest investment return of 5%, it will take 65 years to accumulate enough wealth to replace his income without touching the principal.
 
Bumping up your savings to 10% would lower that to 50 years… And sacking away 30% takes it down to 30 years. When you add to this the power of compounding over time, the earlier you start saving more, the better your future.
 
   3.  Do your homework.
 
The multitude of offerings in a traditional 401(k) or IRA is enough to overwhelm anyone.
 
Typically, I like to start with a simple allocation: Decide between stocks and bonds. If you have a longer-term view and a higher tolerance for risk, you might make your allocation 80% stocks and 20% bonds. If you are closer to retirement and don't like volatile returns, you could do 70% bonds and 30% stocks.
 
But more than anything else, you'll need to fully understand all of the associated fees with each investment. Don't throw away money on management and other fees that you could avoid by choosing a different vehicle. One percent here, two percent there can all add up to a huge chunk of your money.

   4.  Make use of employer matching and catch-up contributions.

 
Employers may match contributions to your retirement accounts. Find out if they do, and take full advantage of the matching program. Here at our company, we match up to the first 6%.
 
Catch-up contributions will help make up for lower contributions early in life. Once you hit 50, you can start increasing your contributions to IRAs, 401(k)s, and other accounts. Depending on the plan, you may be eligible at 50 or 55 to start adding another $1,000 a year.
 
In conclusion… if you're in the group of Americans with little to no retirement savings yet, pay attention to the tips we've outlined today. And if you already have several retirement accounts, use this as a refresher to take stock of how you're doing…
 
Here's to our health, wealth, and a great retirement,
 
Dr. David Eifrig
 
Editor's note: If you have money in a retirement account, Dave says a controversial White House memo may be your chance at a one-time cash windfall over the next few weeks… But you must get positioned before next month's deadline. Dave has designed three steps to help you take advantage of this rare situation. To learn how to access his research today, click here.

Source: DailyWealth