The Ultimate Buy Setup Right Now in This Asset

 
Everyone's talking bitcoin. It's extremely "loved" by investors right now…
 
Even though I'm cautious on cryptocurrencies, it's a fascinating idea, worth learning about. And that's why we've shared essays on it over the past several days.
 
The thing is, when I look at investment opportunities, I pay more attention to what's "hated."
 
That's where I've found my biggest winners often come from…
 
Two months ago, in my True Wealth newsletter, we bought an asset that had just reached a record hated level.
 
We bought near the bottom, as you can see – and now the uptrend has begun. Take a look…
 
What is this investment?
 
It's a real asset – a commodity – that will never truly go out of style. I'm talking about cocoa.
 
Cocoa beans are what makes chocolate special… The beans are dried, fermented, then broken into bits called "nibs." The nibs are then further processed into chocolate.
 
But nibs, apparently, are facing some setbacks for the moment…
 
Cocoa prices have fallen nearly in half since 2015. Speculators, worried about the possibility of a saturated market, have gotten out of the trade and driven prices down.
 
The pessimism surrounding cocoa reached an extreme over the summer. We can see this by looking at the Commitment of Traders (COT) report, a useful measure of what speculators are betting on today. Take a look…
 
Late in the summer, speculators placed more bets against the price of cocoa than at any time in history. They wanted nothing to do with it.
 
The thing is, demand for cocoa isn't going away. (It's chocolate!)
 
I told my True Wealth subscribers two months ago:
 
We can easily set up a trade with a great risk profile here…
 
I like to have the potential to make three times the money I'm risking on a trade. We can easily do that here…
 
Buy the iPath Bloomberg Cocoa Subindex Total Return ETN (NIB). Sell when you're up 30%, or in 12 months' time, whichever comes first. Use a 10% trailing stop.

As you can see from today's charts, you haven't missed the opportunity yet in cocoa…
 
•   Cocoa is still near record-levels of being "hated" – which is what we want to see. And…
    
•   Cocoa's uptrend has just begun.

 
If you want to make money, typically your best bet won't be on what's getting the love. You want to find a hated asset.

 
Cocoa reached a record hated level over the summer. And now it's in an uptrend.
 
That's the kind of setup you want to take advantage of to be a successful investor…
 
Good investing,
 
Steve
 

Source: DailyWealth

So You Want to Buy Bitcoin… Now What?

Steve's note: If you've read my writings, you know that I haven't commented on cryptocurrencies like bitcoin much. I simply don't have the expertise myself… And I don't want to "fake" that I do.
 
But if you are interested in speculating in bitcoin, I urge you to pay attention to my friend Tama Churchouse. He knows better than anyone how to get started. And if his recent essays have piqued your interest, read on for details on a live event we're hosting tonight, where you can hear his unique perspective on the crypto markets.
 
With bitcoin soaring through $5,500 and beyond, you'd be forgiven – if you haven't bought any yet – for thinking you've missed the boat… that the opportunity has slipped through your fingers.
 
Relax. The opportunity is still there. But it's meaningless if you don't take any action to seize it…
 
Bitcoin works a little differently than the investments you might be used to. Today, I'll share three simple things you need to know before you get started.
 
1Start small.
Speaking from personal experience, I highly recommend that folks looking to buy some bitcoins start with an extremely small amount… no more than a single bitcoin's worth. (You can use less money and buy a fraction of a bitcoin, if you prefer.)
 
The process of buying, moving, and storing bitcoins is not like traditional online banking or investing. If you send bitcoins to the wrong location, for example, you can't just call up your bank and cancel your transaction. So it's critical to first familiarize yourself with the mechanics of moving bitcoins around with a relatively small sum, before moving on to larger dollar amounts.
 
2. Write everything down.
It's ironic that while bitcoin is a highly modern technology, you must make sure to keep offline records of all your bitcoin information. That means pen and paper – or at least using a Microsoft Word document and printing it out as a backup.
 
You see, storing, sending, and receiving bitcoin involves setting up a digital wallet. This is where you "keep" your bitcoins.
 
Your wallet has a public key (which might look a bit like this: 1GwV7fPX97hmavc6iNrUZUogmjpLPrPFoE). This functions like an account name where the bitcoins get sent to.
 
Your wallet also has a private key. This will either be an alpha-numeric sequence that looks like the public key above, or a long sequence of random words generated by the wallet. This is the "password" you use to access your wallet.
 
Either way, secure wallets do not have an "I forgot my password" option.
 
If you lose or forget your private key, you lose access to your wallet. And you lose your investment. Period.
 
I write everything down, and I print out screenshots if I need to (that is, printouts of what is shown on the screen).
 
3. Don't leave money at the exchange.
In order to convert your cash into bitcoin, you need to open an account with an exchange.
 
This process will typically take a few days, since the exchange will need to conduct KYC ("know your customer") diligence on you. This means a standard identity verification so the exchange knows who you are, and that you're not a wanted criminal.
 
Once you've opened the account, you'll be able to fund it with a bank transfer – or by credit card, in some cases – before you start buying bitcoins.
 
If the exchange where you bought bitcoin gets hacked – and if you left your bitcoins there – then you can lose your money. This has happened in a couple of high-profile cases.
 
For example, in 2014, bitcoin exchange Mt. Gox filed for bankruptcy, saying that 750,000 of customer bitcoins were missing. That's more than $4 billion-worth at today's prices. At the time, Mt. Gox was handling up to 70% of all bitcoin volume.
 
The safest place to store your bitcoins is in your digital wallet. You'll find a good selection to choose from online.
 
Good investing,
 
Tama Churchouse
 
Editor's note: Live from Baltimore, Tama is joining Porter Stansberry for our first-ever bitcoin event. He'll explain why even a small investment in cryptos could lead to life-changing gains over the next couple of years… And he'll reveal a little-known technique for making 10 to 50 times your money. But you must tune in TONIGHT at 8 p.m. Eastern time. Click here to reserve your free spot.

Source: DailyWealth

The Big Advantage You Have Over Institutional Investors

Steve's note: My friend and colleague Tama Churchouse is the one guy I trust to give you the full story on bitcoin and other cryptocurrencies. He understands both how they work AND how they can make you money… And not everyone can claim to do that. In this essay, he explains the opportunity – and why you have a chance to beat the big guys to the punch…
 
How can an individual compete against the big, institutional asset managers who dominate the financial markets?
 
These folks have trillions of dollars of assets under management, multimillion-dollar compensation packages for the world's best traders and analysts, and massive budgets for technology and trading systems. And their relationships with investment banks usually give them first pick for a hot initial public offering (IPO), along with access to all the research that Wall Street has to offer.
 
It's not often that individual investors get the upper hand on the big, institutional asset managers. But there's one frontier asset class where you truly hold the advantage over the bigger guys. And that's in cryptocurrencies.
 
Let me explain…
 
Recently, a friend of mine named Lewis Fellas launched a cryptocurrency hedge fund called Bletchley Park Asset Management. Anyone can launch a fund, but Lewis isn't just anyone. He's a world-class trader who's worked for top U.S. investment banks, one of Asia's most successful hedge funds, and, most recently, for the $35 billion Harvard University endowment.
 
When talking with Lewis recently, what I found particularly noteworthy was this: His fund has generated a massive amount of interest from institutional investors.
 
After an article mentioning the launch of his firm appeared in Bloomberg, he told me he was "blown away" by the number of institutional inquiries he received… from sovereign wealth funds, endowments, funds of funds, family offices… you name it.
 
This tells me a few things.
 
First, big institutions are obviously interested in cryptocurrencies as a new financial asset class. But right now, there aren't enough "bridges" between traditional asset managers and this new, less well-understood arena of cryptocurrencies.
 
People like Lewis create a credible "bridge" for these traditional asset managers to cross into the cryptocurrency realm.
 
Let's say you're the manager of a sovereign wealth fund, and you're interested in making a small allocation to cryptocurrencies. How do you go about it? Do you build an internal team and do it yourself?
 
Or do you look for people with strong backgrounds in asset management who have transitioned over to crypto, and who already know how to responsibly invest other people's money?
 
The latter, of course.
 
A few cryptocurrency funds already exist. Notables include MetaStable Capital (a San Francisco-based hedge fund) and Polychain Capital, run by 27-year-old Olaf Carlson-Wee with around $200 million in assets under management.
 
These funds, however, are usually backed mainly by big Silicon Valley venture-capital names like Sequoia Capital and Andreessen Horowitz… not traditional institutional asset managers, like pension funds, for example.
 
The institutional level of participation in cryptocurrencies is still very, very small by any measure… But it's increasing.
 
What does this mean?
 
This means there's every likelihood that over the next year or so, we will see much greater sums of money flow into cryptocurrencies. And bitcoin is likely to be the biggest beneficiary.
 
Right now, the current total market capitalization of the cryptocurrency space is approximately $175 billion. (Bitcoin accounts for around 54% of the total, followed by ethereum at around 18%.)
 
This is still extremely small, when you consider that it's about the same size as the tech company Intel (INTC).
 
The advantage you have as an individual is that right now, you have far fewer hurdles to overcome before you can put some money into cryptocurrencies… and get your money there first.
 
Sovereign wealth fund or endowment managers who want to buy cryptocurrencies need to jump through a lot of hoops. They have to comply with a slew of regulations, get legal opinions, and – not to mention – expand the scope of their investment mandate (which defines what assets they can invest in). This is no easy task.
 
But all you really need to do is open a cryptocurrency exchange account and allocate a little bit of money to bitcoin. You don't have to put a lot of capital at risk, either.
 
Now, you have the opportunity to get out in front of a tide of institutional capital that will likely pour into cryptocurrencies as the asset class becomes increasingly mainstream… and increasingly difficult for asset managers to ignore.
 
Good investing,
 
Tama Churchouse
 
Editor's note: Bitcoin and other cryptocurrencies are ripping higher right now. If you aren't learning about these opportunities, you may be missing out on some of the biggest gains of your lifetime. That's why tomorrow at 8 p.m. Eastern time, Tama is joining Porter Stansberry for our first-ever live bitcoin webinar. Reserve your seat here.

Source: DailyWealth

Bitcoin Won't Replace Gold… Here's Why You Should Still Own It

Steve's note: I haven't covered bitcoin much. The truth is, if you're interested in speculating in this new market, I want to make sure you're listening to the ONLY guy out there I'd trust when it comes to cryptos… Tama Churchouse. 

Tama understands both the technology AND the legitimate investment possibilities – something I don't think is true of most people. Today, he shares an essay on why bitcoin deserves a place right next to gold in your portfolio…

 
Bitcoin is frequently compared to gold. But it's not an either/or proposition… And I'll tell you why.
 
Gold and bitcoin are the only two widely distributed, decentralized methods of exchanging value as currency. They have no central authority issuance, unlike U.S. dollars or any other fiat currency.
 
Likewise, neither bitcoin nor gold can just be "printed" at the push of a button by an anxious central banker. You have to either earn your gold by mining it, or you can pay cash for it. The same is true of bitcoin (although bitcoin miners use computers instead of picks and shovels).
 
But there's one big difference between the two…
 
Gold is the very opposite of new technology.
 
Gold is a physical, tangible, and real asset. You can pick it up and feel its satisfying weight in your hand. It can't be altered. Gold is gold. Once I own it, that's it. I don't need to rely on a functioning Internet. I don't need a computer. It has pure, tangible value.
 
And gold has unquestionably been money for thousands of years. A gold coin can still sit in my pocket, even while I might be fending off mobs, zombies, hordes of cockroaches, or a nuclear winter.
 
On the other hand, bitcoin is nothing more than a code that exists somewhere on the Internet. You can't pick it up and put it in your pocket. If you lose that code… you lose your bitcoin.
 
Not only that, but unlike gold, bitcoin isn't easy to explain to the average guy on the street. The fundamentals of blockchain, and the distributed ledger systems upon which bitcoin is built, are not straightforward. It usually takes time and effort for people to understand just how much of an innovation bitcoin really is as a "trustless" mechanism for exchanging value.
 
(By "trustless," I mean we don't need to trust an intermediary to settle our transaction – we can exchange value directly and securely with one another, thanks to blockchain technology.)
 
Despite its benefits, most people simply can't comprehend bitcoin and blockchain.
 
Gold, however, is easy to understand. Its value has stood the test of time. As a friend of mine once put it: "I prefer a currency that has survived 5,000-plus years of wars, empires, the rise and fall of countries, cold spells, hot spells, and has been universally accepted in every country of the world."
 
I can't argue with that.
 
No matter how big bitcoin gets, it will never be gold.
 
If you were to ask me which I think is more likely to be around a hundred years from now, my answer is gold… every time. Nothing has usurped it for millennia as a globally accepted medium of exchange or store of value, and I don't think bitcoin will do so either.
 
But… you should still own bitcoin. Let me tell you why…
 
Bitcoin is the ultimate in freedom of asset ownership. The government can't confiscate it, as the U.S. government did with gold under Executive Order 6102 in 1933.
 
You can cross national borders with bitcoin in your possession on a USB thumb drive… or, if you can memorize your private key, with no physical object in your possession of any kind.
 
Whether your bitcoin is worth $100 or $100 million, it makes no difference to how you move and store it (which is clearly not the same with gold). You don't need a trusted middleman to send it. And you can move it around the world, securely, in a matter of minutes.
 
And if you're looking for gains… bitcoin is a lot likelier than gold to be up 1,000% three years from now. Even though its price has soared over the past few years, it's still nowhere near mainstream yet.
 
So gold and bitcoin both deserve a place in your portfolio.
 
Gold has stood the test of time and is a medium of storing value. Bitcoin's time, on the other hand, is just beginning. Blockchain technology is the future, and when you have an opportunity to buy the future and tuck it away, you should take it.
 
Good investing,
 
Tama Churchouse
 
Editor's note: Tama's little-known bitcoin technique could potentially make you 10-50 times your money… And this week, he's sitting down with Porter Stansberry – live from Baltimore – to reveal how it works. You'll also hear unique predictions about bitcoin and the crypto markets. This event is completely free to attend – just tune in Wednesday at 8 p.m. Eastern time. Click here to reserve your spot.

Source: DailyWealth

Did You Miss the Last Breakout in Gold? Here's Your Second Chance

The Weekend Edition is pulled from the daily Stansberry Digest. The Digest comes free with a subscription to any of our premium products.
 
 Regular readers know our colleague Ben Morris has been watching gold closely for months.
 
And in late August, he finally got the confirmation he was looking for…
 
The precious metal finally broke out of a massive, decade-long "wedge" pattern. This was an extremely bullish sign, and Ben told his DailyWealth Trader subscribers it was finally time to trade gold from the long side.
 
Gold moved higher almost immediately. It jumped nearly 3% over the next eight trading days. But the rally didn't last long…
 
Gold has been slowly moving lower ever since, and is now down nearly 6% over past month. And many gold bulls are starting to get worried.
 
If you're among them, Ben has some good news. He says gold's recent weakness is normal and natural. In fact, if you missed the big breakout in August, he believes this is could be a great second chance to buy. As he explained to his DailyWealth Trader subscribers on Monday…
 
To see the opportunity in gold, you'll need to understand two of the simplest – and most important – concepts in chart-reading…
 
"Support" is a level at which folks tend to buy an asset and prices often stop falling. "Resistance" is a level at which folks tend to sell and prices often stop rising.
 
On a chart, we can draw support and resistance levels as lines. They can be perfectly horizontal… They can be diagonal… And they can even curve. (For example, the 200-day moving average can serve as support or resistance.)
 
When an asset breaks down through support, the support line becomes resistance… And the asset will likely continue lower. When an asset breaks out above resistance, the resistance line turns into support… And the asset will likely continue higher.

 One important caveat…
 
After an asset breaks through its support or resistance, it will often temporarily reverse course and "test" its breakout point before reversing again and starting a bigger move. And that's exactly what gold is doing now. More from Ben…
 
With this in mind, let's look at gold's former resistance line, which – because gold broke through it – now serves as support. As you can see, gold closed right at support on Friday…
 
Support and resistance lines are rarely perfect. We have a little flexibility in how we draw them… And assets often overshoot a little bit.
 
But gold clearly broke out of its downtrend in late August. And now, it is testing its breakout point. Again, this action is normal.

Ben shared a recent example of another DailyWealth Trader recommendation to illustrate how this scenario often plays out…
 
In early May, we bought Chinese Internet giant Baidu (BIDU) after it broke out of a multiyear wedge. It, too, climbed higher… then pulled back to its breakout point.
 
In the chart below, you can see what happened next…
 
We were down on the position for a week or so. But Baidu ripped higher right after retesting its breakout point. We're now up 40%.

 As we often say, the market is unpredictable…
 
We can't assume gold will follow a similar path. But this chart says the bullish case for gold remains intact… and traders have a low-risk opportunity to buy today. More from Ben…
 
A 10%-20% move higher from here is possible. And even a 10% move would put gold at a four-year high… just above the psychologically important level of $1,400 per ounce. If that happens, other gold-related assets like gold stocks and silver will likely soar as well.
 
In sum, gold has been weak over the past month. But after its recent move higher, that's to be expected. It's now testing its breakout point… And if support holds, a big move higher is likely in the cards.

 Speaking of speculative opportunities…
 
If you've been with us for long, you likely know we've never recommended bitcoin or any other so-called "cryptocurrency." The reason is simple…
 
Many of our analysts have been highly skeptical of "cryptos." And even those of us who have been optimistic about the technology have had serious concerns about the risks to investors.
 
As Porter often writes, our goal at Stansberry Research is to give you the information we would want if our roles were reversed. Unlike some of our competitors in the financial publishing industry, this means we won't recommend anything we wouldn't feel comfortable recommending to friends and family, or putting in our own portfolios.
 
Cryptocurrencies simply didn't meet this standard.
 
However, that could be changing…
 
In recent months, the industry has seen some critical developments take place. And several of our analysts – including Porter himself – are taking a second look at cryptos.
 
To be clear, we remain cautious… We still believe there are significant risks associated with cryptocurrencies. You could lose every penny you put into them. But we can't deny the substantial upside potential.
 
In short, we believe it's time for every investor to learn more about these digital assets. And we're holding our first-ever live cryptocurrency event to help you do just that…
 
On Wednesday, October 18, at 8 p.m. Eastern time, Porter will sit down with two of the most successful cryptocurrency experts in the world to explain the most important things you need to know now… and answer any questions you might have. Learn more about this event here.
 
Regards,
 
Justin Brill
 
Editor's note: We're approaching a potential "tipping point" in the cryptocurrency markets… where significant money could begin to flow into these assets over the next several years. That's why Porter is hosting our first-ever live cryptocurrency event on Wednesday, October 18 at 8 p.m. Eastern time. He will be joined by two of the most successful cryptocurrency experts in the world to explain everything you need to know about bitcoin and cryptocurrencies. Reserve your spot for this free event here.

Source: DailyWealth

Don't Let These Three Reasons Stop You From Buying Bitcoin

Steve's note: I'm skeptical about investing in bitcoin. But I believe it's always valuable to learn something new. In today's essay, analyst Tama Churchouse clears up a few questions about the new world of cryptocurrencies. If you've been wondering how it all works, and what the real risks are, I hope you enjoy this piece…
 
Recently, after a long day of fly-fishing on the Yellowstone river in Montana, a group of us were talking about the day's fish count (specifically the lack thereof) when, at some point, the discussion turned to cryptocurrencies.
 
I was attending a small, offsite annual investment meeting run by a U.S.-based Asian equity fund manager. The handful of partners in the room, each unwinding with a cold beer, collectively held more than a century of fund-management expertise. When it comes to financial markets, and Asia in particular, these guys know their stuff.
 
But bitcoin? Not so much. The whole idea was still new to them. And I was the resident sounding board…
 
Below are the issues that most concerned my fishing partners about the world of cryptocurrencies. If you have doubts or questions about this new asset class, challenge yourself, and read on…
 
1.  "OK, Tama, but what if the Internet goes down?"
This was the first point of concern when it came to bitcoin. It's one that a lot of people have.
 
And if you take a step back for a moment, it's utterly absurd.
 
For example, I've never once in my entire life ever heard anyone question the wisdom of investing in Alphabet (GOOGL), Facebook (FB), or any other technology company because of the risk of the "Internet going down."
 
Similarly, I know of nobody personally (in developed countries, at least) who insists that all his personal monetary wealth be kept in physical notes and coins in his possession rather than at a bank (where your savings represent little more than numbers on an electronic ledger) – all because he'd "lose it all" if the Internet went down.
 
And in the event that the entire global Internet communications system permanently collapsed (which is what would need to happen for bitcoin to become totally worthless), you'd have bigger concerns than the small allocation of cryptocurrencies in your portfolio.
 
2. "What about the risk of hacking?"
In certain circles, bitcoin and cryptocurrencies are synonymous with hacking – thanks to some high-profile hacks of cryptocurrency exchanges. I point the finger at ignorant journalists who propagate their own poor understanding of cryptocurrencies to the broader public.
 
Just to be clear, cryptocurrency exchanges have been hacked. They are third-party platforms where it's unclear how customers' digital assets are being secured. That's why I've said repeatedly that you shouldn't keep large amounts of bitcoin on an exchange… When it's on an exchange, you don't own it – the exchange does.
 
Instead of leaving yourself at the mercy of an incompetent third party, you can take full personal control and accountability for securing it yourself. The safest place to keep your bitcoin is in a digital wallet. You can set up one of these online… And it's one of the first steps to getting started with bitcoin.
 
Bitcoin is one of the most secure assets an individual can own. BUT it's 100% up to the individual to secure it!
 
3. "What if the government bans bitcoin?"
China recently announced a ban on initial coin offerings (ICOs). These are when companies create and issue cryptocurrencies to the public in exchange for bitcoin or ethereum (the second-largest cryptocurrency). I wasn't surprised by the ban, given the sheer volume of ICOs taking place – especially those with seemingly little to no business viability.
 
But China didn't "ban" bitcoin. And even if a government did want to ban it, the question is how? That cat's already out of the bag.
 
Bitcoin doesn't answer to any government. There is no bitcoin head office… no CEO… no board of directors.
 
What's more, major economies have no incentive to "ban" bitcoin. Any government that did would simply be saying, "We don't want innovation, technology jobs, new companies, or enterprise in general."
 
Now don't get me wrong – bitcoin is, and will be, regulated. (For example, don't think for a second that Uncle Sam is going to let you make 10 times your money on a cryptocurrency trade and not pay your "fair share" of taxes to the government's coffers.) But regulation isn't the same thing as an outright ban.
 
In conclusion… Bitcoin is a type of asset that's completely new to most people, so it's right to ask questions. That's a prudent approach when you're considering allocating capital to any venture, let alone one you're unfamiliar with. But don't let pre-existing biases get in your way.
 
When a new idea comes along, you don't have to accept it. But you can always choose to learn more.
 
Good investing,
 
Tama Churchouse
 
Editor's note: Cryptocurrencies are the highest-performing investments so far this year, beating stocks, bonds, and gold… And Tama believes the boom is just beginning. That's why he's joining us on October 18 for our first-ever live broadcast on bitcoin, where he'll explain exactly how to position yourself for big profits. Click here to reserve your free spot.

Source: DailyWealth

Bitcoin Will Change How You Think About Money… Here's Why

Steve's note: Regular readers know that I'm cautious on cryptocurrencies like bitcoin. But you need to understand them… And I'm confident Tama Churchouse, editor at Stansberry Churchouse Research, can tell you everything you need to know. Over the next several days, we'll publish some of his essays on this new technology that's shaking up the investing world…
 
I'm writing this from 35,000 feet above the Pacific Ocean, and we're about to begin our descent into San Francisco.
 
On the obligatory Customs Declaration form, provided by U.S. Customs and Border Protection, I notice I'm required to answer "Yes" or "No" to the following:
 
13. I am (We are) carrying currency of monetary instruments over $10,000 U.S. or foreign equivalent… Monetary instruments include coin, currency, travelers checks and bearer instruments such as personal or cashier's checks and stocks and bonds.
 
Here's a hypothetical question: What if I had $100 million worth of bitcoin on a thumb drive in my pocket… Would I need to declare that?
 
What if I had my bitcoin wallet on my phone?
 
Or better yet, what if I didn't have anything at all except my public and private bitcoin keys – which are the "passwords" I need to access, spend, and transfer my bitcoin from any Internet-connected device – simply memorized and tucked away safely in the recesses of my brain?
 
Would I need to declare that?
 
I'm pondering this question because, despite bitcoin's increasing mainstream adoption and price appreciation, there remains huge debate and skepticism about whether bitcoin is really money…
 
Bitcoin is digital money that is created and held electronically. At the core of bitcoin technology is a super database called the "blockchain." The blockchain contains every transaction in the history of bitcoin and is accessible to anyone. A lot of people think that blockchain will eventually be used to process everything from stock trades to voting.
 
One of the positive side effects of bitcoin's march toward mainstream acceptance is that it pushes everyone to reassess their own personal concept of "money."
 
Plenty of critics say that bitcoin isn't real money. Why not?
 
Let's take a quick look at some of the hallmark characteristics of what we consider money.
 
     1.  Transferability.
 
Can I move it around, and transfer it from myself to another party and vice versa? Yes.
 
Bitcoin is far more transferable than traditional fiat currencies (like the physical dollar, euro, and yen)… And it works just as well as any mobile transaction. I can open my phone and securely transfer $100,000 of bitcoin (or more) straight into your digital wallet in an instant.
 
Of course, you can hand me $100,000 in cash in a briefcase. But I'd need to count it, and check that the notes aren't counterfeit. And then I'd need to secure it. The bitcoin blockchain does all of the above for me. Once I've made the bitcoin transfer and you've seen the balance in your wallet, it's done. That's it. You own those bitcoins.
 
     2.  Usability.
 
Money isn't much good if I can't use it. Can bitcoin be used to buy goods and services? Yes, and increasingly more merchants are accepting bitcoin as a means of payment.
 
Incidentally, as I write this, I'm scheduled to meet with the CEO of a company which is launching a service that allows you to spend your bitcoin the same way you would use a simple debit card. And you can use this service at more than 30 million locations globally.
 
Mainstream acceptance is growing every day. Bitcoin is already legal tender in Japan.
 
     3.  Scarcity.
 
Central banks can, have, and continue to create tens of billions of dollars in fiat currency out of thin air. And as a result, currencies the world over collapse, time and again.
 
Try talking to folks in Venezuela about how much faith they have in the bolivar (the national currency), now essentially worthless. Or Zimbabweans, whose currency collapsed after hyper-printing by their central bank. Or the billion-plus people in India who had their cash lifesavings declared no longer legal tender in an instant last year, when Prime Minister Narendra Modi made a surprise televised announcement informing them they had until the end of the year to exchange their notes for new ones before they would become worthless.
 
The West is truly spoiled when it comes to relative currency stability versus the rest of the world.
 
As for bitcoin, only 21 million will ever be minted, according to the bitcoin protocol, and only around 16 million are in circulation today. No central bank or government can "print" more bitcoin.
 
And 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).
 
When you're buying bitcoin, you're taking a view that more people around the world will accept bitcoin as a form of money. And with a total market cap of around $80 billion, I think it's a worthwhile view to take.
 
Good investing,
 
Tama Churchouse
 
Editor's note: Bitcoin is already up hundreds of percent since January… and dozens of other cryptocurrencies have shot up even higher. If you're asking how this is possible, tune in to our first-ever live bitcoin event on October 18. Tama will sit down with Porter Stansberry to discuss this exciting new asset class – and they'll reveal the best way to cash in on the boom. Click here to learn more.

Source: DailyWealth

How to Do Even Better Than 'Dazzling' Gains

 
Imagine you're on a game show and the host holds out two envelopes…
 
"Each envelope offers you a 50% chance to win money," he says. "You'll have a 50% chance to win $10,000 if you choose the one in my left hand. And you'll have a 50% chance to win $30,000 if you choose the one in my right hand. Which will it be?"
 
You reach for the $30,000 envelope. You open it up, and learn that you didn't win…
 
"I'm so sorry," he says. "You now owe us $15,000."
 
"What? I didn't agree to that."
 
"Yes, you did. You chose to participate. The $30,000 envelope carried the chance of losing 50% of that amount. But had you won, you would have gotten $3,000 a year for the next 10 years."
 
"Are you kidding? That's a terrible deal. What could I have lost with the other envelope?"
 
"Just 5%, or $500. And the $10,000 payout would have been paid to you in one month," he added. "Why didn't you ask any questions beforehand?"
 
You storm off-camera enraged, as the folks in the audience shake their heads.
 
OK… Maybe this game show wouldn't make it on air. But this sort of thing plays out in the market every day.
 
People are dazzled by big numbers… And they ignore almost everything else.
 
Today, I want to show how you can use three different metrics to better measure and understand your trades…
 
Investors and traders like to talk in percentages rather than in dollar amounts. That's because the significance of $10,000, for example, depends on the size of the portfolio. But everyone knows what a 100% gain means. It means doubling your money.
 
The thing is, percentage gains need context, too…
 
If someone tells you he made 300% on an investment, your first reaction might be amazement or jealousy. But what did he risk to make that 300%?
 
If he was willing to lose 100% of his investment, it's still a good return. But it's nothing compared with the same return on a position with just 20% at risk.
 
That's because – if you know you're risking 100% – you won't invest nearly as much. If you're willing to lose $300, you'll only put in $300. So a 300% gain means you would make $900.
 
But if you're willing to lose $300 on a position that risks just 20% of your capital, you can invest $1,500. ($1,500 x 20% = $300.) A 300% gain on this investment means you would make $4,500.
 
The return is 300% either way. And the money at risk is $300 either way. But the "reward to risk ratios" for the two investments are different…
 
The first one has a reward-to-risk ratio of 3-to-1 (a 300% reward divided by a 100% risk). The second has a reward-to-risk ratio of 15-to-1 (a 300% reward divided by a 20% risk).
 
The reward-to-risk ratio should be the first thing that pops into your mind when you think about successful trades. Steve Sjuggerud likes to use a 3-to-1 ratio as a guideline. I do the same in my DailyWealth Trader (DWT) newsletter.
 
In my nearly five years at DWT, I'm most proud of our position in gold miner Newmont Mining (NEM)…
 
I'm proud not only because we're up 135%… but because we risked just 10% to achieve that return. We're up nearly 14 times our initial risk. That's a fantastic trade… And it could continue to grow.
 
Not far behind Newmont is our position in sparkling-water maker National Beverage (FIZZ). On this position, we're up 116% and we risked 17%. That's a return of nearly seven times our risk. And we've only held the position for eight months…
 
The next metric you should use to measure your trades is annualized returns. We've been holding Newmont for a little more than two years now. So the 135% return comes to about 66% per year, so far… a 66% annualized return.
 
Since we've held National Beverage for only about eight months, the 116% return comes to a 170% annualized return. That's spectacular… and almost three times the annualized return on our Newmont trade.
 
I personally put a higher value on reward-to-risk ratios than I do on annualized returns. But you could easily make the case that National Beverage is the better trade.
 
Finally, you need to consider the likelihood of a gain versus a loss
 
From this perspective, I would have to say our position in consumer-electronics giant Apple (AAPL) is our best trade ever in DWT. We're up 66% and we risked 25%… So our reward-to-risk currently stands at just 2.7. And we have held the position for 20 months… So the annualized return is just 41%. But Apple was so cheap – and so strong of a business – that I would have put the likelihood of taking a loss on that position at next to nothing.
 
It was the least risky position we've ever taken in DWT. A 66% gain on such a safe position is rare.
 
To summarize, big percentage gains are great. They look good and feel good. But they're not all that important…
 
If we made a trade tomorrow with 2% downside risk and booked a 40% gain in a year, it would be our best trade ever, hands down. The 20-to-1 reward-to-risk ratio would knock all three positions above out of the running.
 
You could risk $300 and make $6,000. On a trade like that, who cares about the 40% figure? Not me… And you shouldn't either.
 
The next time someone brags to you about making a big percentage gain, ask how much he risked. Ask how long it took him to make that return. And maybe even ask how confident he was it would be a winner.
 
Only then will you have the full story. Only then will you know if it was a good trade.
 
Good trading,
 
Ben Morris
 
Editor's note: Ben recently recommended a company in a boom-and-bust industry poised for a turnaround. With less than 10% downside risk, and upside as high as 99%, he says it's the best trade of its kind that he's seen in months… To learn more about his DailyWealth Trader newsletter – and how to access this recommendation – click here.

Source: DailyWealth

This Sector Could Soar 45% Over the Next Year

 
It's been one of the strongest moves of 2017…
 
Yet practically no one in the U.S. was in the trade. Few had the guts to get into the trade at the beginning of the year.
 
If that was you, I have good news. We're seeing a rare setup… one that means a certain sector on the other side of the world could absolutely soar.
 
History says gains of 45% are possible over the next year. And today, I'll share the simple way to make the trade.
 
Here are the details…
 
Chinese property stocks were one of the hottest sectors in the entire world this year… until late September.
 
They had soared nearly 60%. Then the bottom fell out…
 
The sector fell 5% in a day. It was down as much as 8% within a week. But that big fall set up a rare opportunity…
 
One-day falls of 5%-plus have happened less than 1% of the time going back to 2001. And the recent occurrence was the first in two years.
 
History says a one-day fall of 5%-plus in Chinese property stocks tends to happen before big gains. And that means we could see a 45% rally over the next year alone.
 
You see, we looked at the AlphaShares China Real Estate Index – which focuses on real estate in China, Hong Kong, and Macau – going back to its beginning in 2001. Similar one-day falls have led to massive outperformance over the next year. Take a look…
 
 
1-Month
3-Month
6-Month
1-Year
After extreme
4.6%
7.2%
25.5%
45.2%
All periods
1.1%
3.5%
7.1%
14.7%
Chinese property stocks have returned 14.7% a year since late December 2001. That's more than double the S&P 500's 7.2% annual return over that same period.
 
But that's not even the impressive part. Buying after similar one-day falls led to 45% returns over the next year. That's amazing!
 
One-day falls of 5% or more happened 23 times since 2001. With the exception of 2008 – when everything went down – Chinese property stocks were higher one year later in every instance but one.
 
The simplest way to invest in this sector is through the Guggenheim China Real Estate Fund (TAO). TAO tracks the AlphaShares China Real Estate Index that I mentioned earlier.
 
TAO soared this year before crashing in late September. Take a look…
 
The drop looked scary. But history says a 5% one-day fall isn't a sign of a major correction… And therefore, we don't need to panic.
 
In fact, history may already be repeating itself. As you can see, the fund has almost completely recovered since its September fall – in only two weeks.
 
The last time we saw a 5%-plus one-day decline in TAO was August 2015. The fund rallied 27% over the next year.
 
The message is simple: The recent struggle in Chinese property stocks could be short-lived… And a massive rally could follow. (Of course, always trade them with a trailing stop loss to protect your downside risk in case I'm wrong.)
 
Shares of TAO are the simplest way to take advantage of the opportunity. They're up big in 2017. But history says more gains are likely still to come.
 
Good investing,
 
Steve
 

Source: DailyWealth

Capitalizing on the Surprising Upside in the U.S. Dollar

 
"The dollar jumped to more than two-month highs against the yen and seven-week highs against the euro on Friday," Reuters news service reported on Thursday.
 
Nobody's been talking about it. But I think we're seeing a potentially major tidal shift for the U.S. dollar that will take us through the rest of this year, at least.
 
Since January, the U.S. dollar had been in a downtrend. People got used to it. Nobody cared.
 
But over the last month, a tidal change has happened… The dollar stopped its plunge… and started going up.
 
Over the long run, I expect the U.S. dollar won't be a great-performing currency. But in the short run, I think the dollar has some upside – so much so that I put a trade on in my True Wealth newsletter to capitalize on the opportunity.
 
Let me explain…
 
The chart here shows it clearly…
 
The U.S. Dollar Index had been falling since January. But then, about a month ago, it reversed course. Take a look:
 
So why did the dollar bottom last month and start to go higher?
 
The experts will give you all kinds of reasons (and some of those reasons will contradict each other).
 
But the real reason the dollar bottomed and started to rise is simple…
 
By September, everyone who wanted to sell the dollar had already sold.
 
I don't trade currencies very often in my True Wealth newsletter. But I did this time. The situation in the dollar was becoming too extreme NOT to trade it.
 
So how do you bet on a rising U.S. dollar? The simplest way, believe it or not, is to bet on a falling euro.
 
In September, when the dollar reached a hated extreme, the euro reached a point where it was more "loved" than it had been in a decade.
 
You can view sentiment extremes like this by looking at the Commitment of Traders (COT) report. The COT report tells us what futures traders are doing with real money. And it's one of our favorite contrarian tools…
 
When futures traders all bet on the same outcome, they tend to get it wrong. So if they're all bearish… or if they're all piling into a trade… I like to do the opposite. And futures traders LOVE the euro today.
 
Take a look to see what I mean:
 
The last two times euro speculators were as optimistic as they were in September were in 2011 and in 2013. In those cases, the euro fell 17% and 21% over the next year and a half.
 
Those are actually big moves in a short period of time for a currency – but they're not exciting-enough gains to compete with stock market returns.
 
So in my newsletter, I showed readers how to dramatically amplify those gains if we're right – without taking on too much risk.
 
I told my subscribers I believe a move just as big as those moves in 2011 and 2013 – if not bigger – could happen this time around.
 
So how can you get into this trade – with even more potential upside? Through the ProShares UltraShort Euro Fund (EUO).
 
EUO is a "double inverse" fund. For every 1% daily fall in the euro, EUO goes up by 2%, and vice versa.
 
As you might guess, EUO delivered outstanding returns after 2011 and 2013 – the last two times euro speculators were this optimistic. The fund earned 32% and 53%, respectively, over the next year and a half. Those are incredible gains in a currency.
 
The dollar and the euro are in a unique situation right now. I think the simplest way to take advantage of this opportunity for big returns is through EUO. Check it out…
 
Good investing,
 
Steve
 

Source: DailyWealth