Transcription of last Friday’s “Market Situation Report”

This email is a full transcription of Friday's "Market Situation Report". We all synthesis information differently…and for some text is best. 

I hope you enjoy the transcription of last Friday's Market Situation Report. If you would prefer the video format, you can find that here

 

The Market Situation Report


There are definitely a lot of things going on in the Market this week.

And the one I want to focus on is Ben's money printing, well not exactly. I want to focus on what happened to investments the last time Ben Bernanke announced and then started printing money.

In order to do that, we have to all the way back to September 1st 2010 (two years ago).  Two years ago, almost to the date,  Bernanke came out and gave a very, very strong hit that quantitative easing 2.0 was going to start.

Then 2 months after that QE 2.0 did start.  Let's go back to September 1st 2010 and see what reacted the most to give us insight as to what might respond this time.

Before I jump to the charts I want to point out something about the Fearless Wealth Portfolio. One of the key things that make the portfolio work so well is its flexibility.

The portfolio never takes sides. And it does not need to take a side because its job is to adapt to the external world. That means the portfolio is never "all in" on an idea or a side.

So there could be trillions in money printing or none. Europe could implode or not. Deflation could happen or inflation could happen. None of it matters, because the portfolio is constantly adjusting.

Okay, with that being said, let us jump to the charts from two years ago. First, let's start with what reacted (went up) the most.

So, what did go up the most?

Would you believe cotton?

Figure 1: Cotton

9.20.12_Fig1.jpg

Cotton went from about $35 to $120.  So it went up about 300% during that run of QE2.  Now will cotton do that again? Probably not.  But what I want you to notice is that cotton is a physical asset, a commodity to be specific.

The second biggest winner of QE2.0 was Silver.       

Figure 2: Silver

9.20.12_Fig2.jpg

Silver went from about $18 to $50.  It basically went up about 200%.  Will Silver do it again? I think so. But what I want you to notice is that silver is either considered a physical asset or a non-printable currency.

The next asset that went up was Oil Servicing Companies.

Figure 3: Energy Companies

9.20.12_Fig3.jpg

Energy companies (OIH) did not go up as much as what cotton or Silver did.  But still, they went up about 65% in seven months. Again, what is most important is that you notice that these companies had to do with physical assets, specifically oil.

The next asset was sugar.

Figure 4: Sugar

9.20.12_Fig4.jpg

Now will sugar double again? Probably be not, but notice once again it was a commodity that reacted.

The next asset is coffee.

Figure 5: Coffee

9.20.12_Fig5.jpg

Now look at what coffee did (via the ETF "JO"), it went from $37 to $80.  Again, we are getting physical assets that are doubling with Ben's printing.

Lastly let us look at coal.       

Figure 6:  Coal

9.20.12_Fig6.jpg

Coal didn't do that bad either (KOL).  KOL went from about $32 to $52 dollars.  Again, a $20 move on a $30 stock.

So the biggest movers were all commodities and one non-printable currency.

That is the situation for this week.  Bernanke is going to print his $40 billion a month until he doesn't (for years) which is on the back of Operation Twist, which is another  $45 billion a month until the end of the year.

So we are going to get at least a half a trillion dollars in printing each year until the economy or unemployment turn around.


Together, we are growing and protecting your wealth,

rc_signature.jpg 
RC Peck, CFP 

Fearless Wealth | Investment Independence
Helping Individuals Reach Financial Independence Sooner, Faster, Safer.

0 Comments