Fresh Gains of 300% - Next Up
/My apologies on the previous update that was sent out on Monday. As you may have noticed, parts were incomplete...this update includes full kipherriage.com commenatary and game plan. Thanks for your patience.
Kip
In the VRA's 12 year history, last week may have been our best. We've actually had a week with larger profits (400%+ in one week late last year...thanks again Russia), but our predictions last week on Greece, China and the overall stock market each came to pass...major market moving events that were not only spot on, but actionable as well, producing net returns of more than 200% for VRA Subscribers.
For those that may be new to my work, since the beginning of 2014 the VRA has produced net profits of more than 1500% (after the gains from this past week, this number is higher...something like 300-400% higher). If there is a better performing investment advisory in either the US or globally, we cannot find it...and we've looked. Hulbert Financial Digest ranks investment newsletters that submit their work for review, and VRA's results would better Hulbert's top ranked newsletter...for at least the last 5 years...and candidly, by a wide margin.
At some point the VRA may well submit our results for review and ranking with Hulbert. We've maintained all research, records and VRA Updates back to 2005, when our first VRA site was launched. Many have encouraged me to do so, and if/when we do, our community will almost certainly grow by a "fair" amount. With that growth of course would come change...maybe I'm just superstitious, but the thought of doing anything that might have a negative impact on our investment performance doesn't excite me...my guess is that it doesn't excite you either. I'm sharing this only in the interest of full disclosure...a number of VRA Subscribers have been in the loop on this discussion and the ultimate decision...and now, everyone else can say the same thing.
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Importantly, this update should we read in conjunction wtih last weeks...that is, if you are tracking along with my work here at kipherriage.com but not a Subscriber to to the VRA. In addition, I'm including some of my macro work on China...and folks, I believe it's important that you pay attention to this research. Not only is it likely some of my best (only time will tell of course), but it could mean major profits for you in the hours, days and weeks to come. I'm going to hit lots of points here...and they will all tie in together (somehow), so bear with me:
CHINA - I AM A MAJOR CHINA BULL! I covered many of my reasons for being bullish on China earlier in the week...now, let's dive deeper...this is the stuff that most people have no real understanding of. Either that, or they just don't get how important it is.
First, total Chinese stock market assets make up less than 1.5% of Chinese bank assets...my guess is that most do not realize just how tiny this is compared to the rest of the world. In most parts of the industrialized world, this figure is well past 100%...this tells us that Chinese stock markets are going MUCH higher, especially due to that middle class of 300 million that can now open accounts and move money back and forth (from Hong Kong to the rest of the world...these regulatory and financial/banking/investment changes are BIG).
Second, China's coming inclusion into the MSCI global benchmark (which granted, may not happen until 2017, but my money is on it happening much sooner...either late this year or by mid-2016, at the latest). I'll discuss this more going forward, but for now, know this; "WHEN" this happens, in just the first year it will cause more than $50 billion in fresh, international funds, to come flooding into Chinese equities. And that's just year one...after that, fogetaboutit...it's on like donkey kong. I've seen estimates that put this figure at more than $100 billion/year by year five.
Third, global acceptance of the Yuan, and the Shenzen-Hong Kong connect. Now, for the first time in history, the structural changes I mentioned earlier are allowing billions in intl. investments to flow directly into Chinese A Shares (instead of just Hong Kong listed stocks, as has been the case up until now). This is resulting in millions of new brokerage accounts...EACH MONTH!
BTW, if you're listening to some of the talking heads and their forecasts about China crashing, count me as skeptical. When I was in China for about a week (2008), I was blown away by two things. First, the Chinese work ethic...and no, in my view, it has not been exaggerated...the Chinese absolutely love working. They tend to get their second wind in about hour 10.
Second, the Chinese competitive spirit...especially when it comes to beating the US. Make no mistake about it, the Chinese may dislike and want to beat Japan into the ground, but I found that the Chinese REALLY want to out-do the US...especially when it comes to long term business building and wealth creation. This drives the Chinese a great deal, and if the US isn't paying attention, we are going to get our butts absolutely kicked within a decade...likely less.
Also, if you've heard the bears talking about all of that Chinese margin debt, then check this out; in just 5 days, Chinese margin debt has dropped by a full 1/3. It still totals $240 billion or so, but due to the fact that Chinese brokerages only allow margin on 1/2 of the total account value, this really is not a big deal..at least it's not if Chinese stocks can find a floor anywhere near here.
Bottom line: Those that don't buy this pullback in China, especially since the govt. is now the markets official monetary backstop, are going to miss out on some pretty sensational gains in the next 1-2 years. If you don't believe me, listen to what Goldman Sachs said about China just this week: "Serious long term investors should use this pullback to buy Chinese stocks. We expect a monster rally over the next year."
Until next time, thanks again for reading...stay vertical!
Kip