Best of the Week
Most Popular
1. The Trump Stock Market Trap May Be Triggered - Barry_M_Ferguson
2.Why are Central Banks Buying Gold and Dumping Dollars? - Richard_Mills
3.US China War - Thucydides Trap and gold - Richard_Mills
4.Gold Price Trend Forcast to End September 2019 - Nadeem_Walayat
5.Money Saving Kids Gardening Growing Giant Sunflowers Summer Fun - Anika_Walayat
6.US Dollar Breakdown Begins, Gold Price to Bolt Higher - Jim_Willie_CB
7.INTEL (INTC) Stock Investing to Profit From AI Machine Learning Boom - Nadeem_Walayat
8.Will Google AI Kill Us? Man vs Machine Intelligence - N_Walayat
9.US Prepares for Currency War with China - Richard_Mills
10.Gold Price Epochal Breakout Will Not Be Negated by a Correction - Clive Maund
Last 7 days
Is This Time Different? Predictive Power of the Yield Curve and Gold - 19th Aug 19
New Dawn for the iGaming Industry in the United States - 19th Aug 19
Gold Set to Correct but Internals Remain Bullish - 19th Aug 19
Stock Market Correction Continues - 19th Aug 19
The Number One Gold Stock Of 2019 - 19th Aug 19
The State of the Financial Union - 18th Aug 19
The Nuts and Bolts: Yield Inversion Says Recession is Coming But it May take 24 months - 18th Aug 19
Markets August 19 Turn Date is Tomorrow – Are You Ready? - 18th Aug 19
JOHNSON AND JOHNSON - JNJ for Life Extension Pharma Stocks Investing - 17th Aug 19
Negative Bond Market Yields Tell A Story Of Shifting Economic Stock Market Leadership - 17th Aug 19
Is Stock Market About to Crash? Three Charts That Suggest It’s Possible - 17th Aug 19
It’s Time For Colombia To Dump The Peso - 17th Aug 19
Gold & Silver Stand Strong amid Stock Volatility & Falling Rates - 16th Aug 19
Gold Mining Stocks Q2’19 Fundamentals - 16th Aug 19
Silver, Transports, and Dow Jones Index At Targets – What Direct Next? - 16th Aug 19
When the US Bond Market Bubble Blows Up! - 16th Aug 19
Dark days are closing in on Apple - 16th Aug 19
Precious Metals Gone Wild! Reaching Initial Targets – Now What’s Next - 16th Aug 19
US Government Is Beholden To The Fed; And Vice-Versa - 15th Aug 19
GBP vs USD Forex Pair Swings Into Focus Amid Brexit Chaos - 15th Aug 19
US Negative Interest Rates Go Mainstream - With Some Glaring Omissions - 15th Aug 19
GOLD BULL RUN TREND ANALYSIS - 15th Aug 19
US Stock Market Could Fall 12% to 25% - 15th Aug 19
A Level Exam Results School Live Reaction Shock 2019! - 15th Aug 19
It's Time to Get Serious about Silver - 15th Aug 19
The EagleFX Beginners Guide – Financial Markets - 15th Aug 19
Central Banks Move To Keep The Global Markets Party Rolling – Part III - 14th Aug 19
You Have to Buy Bonds Even When Interest Rates Are Low - 14th Aug 19
Gold Near Term Risk is Increasing - 14th Aug 19
Installment Loans vs Personal Bank Loans - 14th Aug 19
ROCHE - RHHBY Life Extension Pharma Stocks Investing - 14th Aug 19
Gold Bulls Must Love the Hong Kong Protests - 14th Aug 19
Gold, Markets and Invasive Species - 14th Aug 19
Cannabis Stocks With Millennial Appeal - 14th Aug 19
August 19 (Crazy Ivan) Stock Market Event Only A Few Days Away - 13th Aug 19
This is the real move in gold and silver… it’s going to be multiyear - 13th Aug 19
Global Central Banks Kick Can Down The Road Again - 13th Aug 19
US Dollar Finally the Achillles Heel - 13th Aug 19
Financial Success Formula Failure - 13th Aug 19
How to Test Your Car Alternator with a Multimeter - 13th Aug 19
London Under Attack! Victoria Embankment Gardens Statues and Monuments - 13th Aug 19
More Stock Market Weakness Ahead - 12th Aug 19
Global Central Banks Move To Keep The Party Rolling Onward - 12th Aug 19
All Eyes On Copper - 12th Aug 19
History of Yield Curve Inversions and Gold - 12th Aug 19
Precious Metals Soar on Falling Yields, Currency Turmoil - 12th Aug 19
Why GraphQL? The Benefits Explained - 12th Aug 19
Is the Stock Market Making a V-shaped Recovery? - 11th Aug 19
Precious Metals and Stocks VIX Are About To Pull A “Crazy Ivan” - 11th Aug 19
Social Media Civil War - 11th Aug 19
Gold and the Bond Yield Continuum - 11th Aug 19
Traders: Which Markets Should You Trade? - 11th Aug 19

Market Oracle FREE Newsletter

The No 1 Gold Stock for 2019

Nationalisation of the Wests Banking System

Stock-Markets / Financial Markets Oct 13, 2008 - 04:10 AM GMT

By: Submissions

Stock-Markets

Best Financial Markets Analysis ArticleA quick review, first.

We wrote, on 24th January 2008:“ In FTSE 100 terms, we were above 6700 in October and we went to 5300 this week – a fall of 20%.  That is a crash by any other name.


In the Far East, markets have fallen even further – Japan went down 28% and Hong Kong (closely linked to China) went down 33%!

The global banks wrote off c $100 BNs last year, in the second half.

In three weeks this year, they've already written off 10s of $BNs.  There are probably hundreds still to come!  We may not be at the bottom yet.

In our view, there will be a further leg down… “

We wrote, on 17th March 2008: “ I have continued to be strongly bearish on the real economy – house prices collapsing…… huge numbers of repossessions, bankruptcies, job losses etc and the stock market is NOT the real economy.  It looks ahead ...  The recession may yet be much much worse than even I forecast.”

We wrote, on 20th May: “There are still huge market and economic risks out there…as the $ continues to rise, in the short term, we can see a significant pullback this summer on commodities and gold.

Another important issue is the €.  We feel that it has topped out at €1.6 to $1.  Thus, it could well be time to move out of €.” 

Our clients took action and saved themselves from huge losses. 

Sure, commodities were hit hard over the summer however, as we have said on numerous occasions, commodities (gold, agriculture etc) are in a secular bull market and we expect strong average rises (with volatility) for the next 10 years or so.  Hence, over the last year or two we have advised our clients to increase their exposure to these areas.

All in all, the last few years have seen us steering clients away from property and largely out of stocks since 2006/07.

Residential prices are back to February 2006 levels (Halifax).  Everyone knows that we believe house prices will fall until they go to 2003 or 2002 levels. 

The stock market is back to early 2004 levels (FTSE 100).  The market is 40% down from one year ago.  As it happens, at 60p in the £, this may be a useful time to start moving back in – on a medium term view (‘start to' being the operative phrase).  Remember one of our adages – Buy Low, Sell High!

Western governments have, to all intents and purposes, nationalised (globalised?) the banking system.  We truly are in a new world post 2nd World War.  It would appear that there will be tighter lending going forward.  Look at Northern ‘Wreck'.  Immediately, the new management hiked the rates charged and reduced levels of lending.  This was to have as many borrowers as possible redeem so that the bank could repay HM Govt.

Also, I can see only one result, fiscally: after the next election there will be higher taxes and/or very much lower public services and state benefits.

There is deflation of the amount of money in the system.  However, looking out, as companies go bust there will be significant industrial consolidation bringing back pricing power i.e. inflation.

Also, we feel that with all the printing of money seen in the world over the last few weeks, this will be the presage to high inflation down the line, whatever happens in the short term.  Cash may be king now but not in the future.

Going forward, £ and € will not be good homes for holding value.  The $ will  also restart its long term decline (started around 2002/03) – then long term interest rates will go through the roof.  Hence, investors MUST ensure their assets are secured against devaluation of their currencies and inflation.  We've had low inflation for over a decade now and investors have almost forgotten what double digit inflation feels like it.  They'll feel it sooner rather than later.

We can safely say that the ‘hole of light' at the end of the stockmarket tunnel is widening.  Clearer daylight is foreseeable.  That is not something we have been prepared to say for a long time.  Thus, we are starting to be able to see ways of making money rather than preserving what we have – which has been the focus for what feels an eternity.

Remember, the stock market IS NOT the real economy.  It forecasts the reality – banking losses, lower corporate profits, bankruptcies and a recession.

Inevitably, the stock market will come out of it's malaise BEFORE the economy pulls out of it's.  However, whatever happens to the stock market, it is our view that commodities will rise in the medium and long terms.

As we have repeatedly stated: at point of maximum pessimism is the point of maximum opportunity.  (Last year we talked of maximum euphoria and maximum risk.)

Our longer term intentions: we are trying to take investors off the roller-coaster.  The way to make money from long term investing is to keep it after you've made it.  Most investors make it then lose the gains.  Thus, their long term average annual returns are not much greater than cash.  What's the point in taking all that risk and receiving a return not much more than the risk-free rate?

Hence, we strongly believe that our clients' long term returns will be significantly greater than the risk-free rate, as they will enter the next bull market from a higher point, with their savings intact.  Also, this will be with much much reduced levels of risk.

At Armstrong Davis, we are serious about preserving capital, first and foremost. 

Long term, commodities, agriculture and precious metals are going to the moon.  These will make a lot of money for you. 

Who do you know who could benefit from a no-obligation review of their investments.  Some of our clients have 7-figure investment accounts.  We're looking for our first 8-figure client.

We merge our expertise of markets and macroeconomics with financial planning tools to provide excellent financial advice to high net worth families and trust funds.

Please remember, investments can fall as well as rise – and they will.

As ever, if you have any queries – and I‘m sure you have many – please do not hesitate to contact me.

With kind regards,    

Jonathan

Jonathan Davis BA MBA FCII AIFP FPFS  , Chartered Financial Planner

Managing Director
www.ArmstrongDavis.com

jdavis@ArmstrongDavis.com

Armstrong Davis Ltd accepts no responsibility for any loss or damage resulting directly or indirectly from the use of this content.

© 2008 Copyright Jonathan Davis - All Rights Reserved
Disclaimer: The above is a matter of opinion provided for general information purposes only and is not intended as investment advice. Information and analysis above are derived from sources and utilising methods believed to be reliable, but we cannot accept responsibility for any losses you may incur as a result of this analysis. Individuals should consult with their personal financial advisors.


© 2005-2019 http://www.MarketOracle.co.uk - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.


Post Comment

Only logged in users are allowed to post comments. Register/ Log in

6 Critical Money Making Rules