VRA Market Update, All Time Highs, Once Again. AAII Still Neutral to Bearish. VRA Investing System Tenets.
/Good Thursday morning all. This week’s surge higher in US stock prices was credited to Trumps trade deal with Mexico and as details begin to emerge, we’re learning just how serious Trump has been about “actual free trade” all along. We’ve covered this here often; Trump is (obviously) a nationalist. He ran and won on it. Globalism, as any honest history book will demonstrate going forward, for 3 decades helped to nearly destroy the middle class and US manufacturing, exporting tens of millions of good paying jobs abroad. The Federal Reserves printing press and US dollar purchasing power destruction did most of the rest of the damage.
China has globalism (and insider dealing US politicians) to thank for their ascendancy to the second largest economy on the planet.
But if you want to get an idea of what our trade deals with Canada, the EU and China will look like, look no further than yesterdays deal with Mexico.
Final point on Trump and his “trade wars”. Remember all of the perma bears that said Trump would sink the US economy? Remember the chicken littles that said US stock markets would be crushed? Because I do.
These are the same charlatans that predicted economic melt-downs from; Brexit, Trump getting elected, rising interest rates, inverted yield curve, the Turkish currency crisis, etc, etc, etc.
Folks, be very careful who you listen to. I’m well aware of the fact that scare tactics sell better than optimism, but if you’re paying attention to supposed guru’s that have been consistently wrong, do not let them scare you out of making money in this historic bull market.
It has a long, long ways to go.
VRA Market Update
New all time highs, once again, in S&P 500, Nasdaq and Russell 2000. The (overbought) melt-up continues. VRA System market internals continue to exhibit solid strength; 2:1 advances to declines. 2:1 up/down volume. New 52 week highs/lows: 581–110, another 5:1 day. Stellar.
Outside of hitting extreme overbought levels, zero signs of a reversal.
Granted, short term, anyone that tells you (with confidence) that they know what’s about to happen in the stock market should be avoided. Short term predictions are (mostly) worthless. I say this with one caveat; when the VRA Investing System reaches “extreme oversold” levels in the midst of a powerful bull market, 15 years of VRA history has shown (in all modesty, stock gods) that VRA System reversal signals are highly accurate. We are quite good at calling significant bottoms. But in my 33 years I’ve found no one that can tell me what the market will do in the very short term (day to day). Medium term to long term, that’s a much different story.
And yes, there will come a time (though likely not for years) when the markets will flip from bullish to bearish and we’ll be playing the markets from the short side, as we did during the 2008/2009 melt-down. But today, this market continues to behave like a market that’s in melt-up mode, for the remainder of 2018.
Think back to Bitcoin at $20,000. It was headed to $100,000. Everyone had to own it. This is what investor euphoria acts like. This is what a market peak feels like. And BTW, Bitcoin bulls were not wrong. Bitcoin is headed to $100,000, assuming they stick by their decision to cease mining once they hit 21 million. I first bought Bitcoin at $600 and while I doubt I’ll ever like it as much as I do gold/silver, Bitcoin absolutely has a place in most investors portfolios. It will get red hot again (but I suspect it will first spend a year or two basing, first).
The bigger point I’m making here is that US equity markets are NOWHERE near the euphoria phase. In fact, markets still have more of a bearish than bullish sentiment, as evidenced by last nights AAII Investor Sentiment Survey:
Yes, bulls have jumped to 43.5%, a two month high, but in no way can this be seen as overly bullish sentiment. Neutral/bearish investors still total 56%. Stunning.
Best guess, once we hit DJ 40,000, investor euphoria will take hold. This is when we’ll see Wall Street gurus predicting DJ 100,000 (aka Bitcoin).
But today, still tons of perma bears, many with TDS. They are certain…absolutely certain…that the next market crash is just around the corner. Of course, Trump will be the cause of it.
Stat of the Day: Going back to 1954, following the mid-terms the S&P 500 has had an average gain of 17% over the next 12 months. It’s also been higher 100% of the time.
I expect we’ll see some nervousness around the mid-terms…the fear of the unknown. And we know the history of Septembers and Octobers. If the market is going to crash, these are the months its most likely to happen.
VRA Investing System; 33 Years in Development. Crushing Mr. Market, Year After Year
As we grow and welcome new VRA Members each month it’s important that we’re all on the same page. That means understanding the VRA Investing System, ensuring that we are positioned to crush Mr. Market.
After my first few years on Wall Street, reality hit me right between the eyes. Fostered by a series of enlightening conversations with my first mentor (RIP Ted Parsons) I discovered that Wall Street analysts primary objective was not to make my clients money. The primary objective of Wall Street analysts was to make the firm money, working hand in glove with investment banking, where the serious money was (and is) made for brokerage firms and their elite clients.
Once this reality set in I had two choices; quit and find another profession or find a way to actually make money for my clients. The VRA Investing System was born out of that decision.
The VRA system was built to uncover the best investments (at the best time) and to remove emotion from my investing. It was built to have us out of the markets in times of turmoil (or short) and in the market when the bull wants to run.
The VRA System combines fundamentals, technicals and investor sentiment…the 3 most important elements of investing (in any/all asset classes). We use broad market positions, employing leveraged ETF’s for maximum returns, combined with my ability to ferret out world class, small to mid-cap “growth stock, story stocks” for the opportunity of several hundred percent to more than 1000% in profits.
I rarely recommend more than 10–12 investments at any one time. If you want to own 30–40–50 stocks, buy an index fund. While I am as aggressive as they come, it is a “controlled aggression”; I know the companies that I recommend. I know their management teams, I know their business model and I know how to pick winners. Period. I also put my own money in the stocks that I recommend. Anything else would be Wall Street-like hypocrisy. Still, my investment style is not for everyone. I would never recommend placing all of your investment dollars into VRA Portfolio buy rec’s. However, for your “risk capital”…those funds that you put aside to make your retirement account everything that it could/should be, the VRA has been designed to get that job done.
I encourage you to resist the temptation to go “all in” on just 1–2 VRA Buy Rec’s. I only recommend 10–12 stocks at a time for a reason. Diversification is a hallmark of successful investors and reduces the risk of becoming emotional about our positions. “Loading up” can also lead to large daily/weekly swings in your portfolio…the kinds of swings that can lead to oversized losses. Emotional investors tend to “buy high and sell low”, or just the inverse of what we’re looking to accomplish.
For our broad market positions in leveraged ETF’s, the VRA System employs “trend following” methodology. The game plan with trend following is to capture 80% of the move, in our investments of choice. It’s not about calling market tops and bottoms (although the VRA has caught NUMEROUS significant market turning points over our 15 years). Instead, we want to capture that middle 80% of the move…that’s our sweet spot…that’s where the most reliable and predictable profits reside. This makes the VRA System most important…its the major predictor as to whether a stock/sector/market is in a bull or bear market. It’s been my primary trend go-to for 30+ years.
The VRA System has 12 Propriety Screens. Today, 9/12 screens remain in bullish mode. 70% of the screens are fundamental and 30% of the screens are technical. Here’s the breakdown of my 12 screens:
This is how the VRA System works…in bull markets or bear. Sure, its MUCH more fun making money in a bull market; making money as we watch the US economy rock and roll and US stock prices soar. This, of course, is the market we are in today. Making money in a bear market means we’re forced to be “pessimists”. And who wants to be pessimistic? I’ve been a glass is half full guy my whole life…its highly likely that 90% reading this identity the same way…but it’s not our job to tell the market what to do, based on our emotions. Our job is to make money. Period. At least when it comes to investing.
We are quite likely the most unique investment advisory you’ll find, as our objective is simple; make money for you…our valued clients…as we crush the markets, year after year. The VRA has outperformed the S&P 500 in 14/15 years. Since 2014 we have more than 2300% in net profits. We are positioned to crush Mr. Market for the remainder of 2018 and going forward.
Investing Tenets and Observations of the Day
My mentors (Ted Parsons and Michael Metz, RIP) were smart, market savvy and most importantly, patient! Here are some of their favorite investing lessons…
1) “Don’t fight the tape, don’t fight the FED”. Yes, the FED has started raising rates…at some point the markets will have to deal with this…but the rising “tape” says we must remain bullish.
2) “The trend is your friend”. When the major averages are in confirmed bull market status (according to the VRA System), we want to be long. Conversely, in a confirmed bear market, we want to invest primarily from the short side. Today, if you’re not long, you’re wrong.
3) “There is no more bullish sign than an overbought market/stock that continues to rise”. This is exactly what we’re seeing today. Overbought markets that continue to rise. Highly bullish
4) “It’s not a stock market….it’s a market of stocks”. One of the best investing lessons my mentors taught me. There’s always an opportunity to make money, by focusing on both VRA fundamental & technical research. This rule is at the heart of the VRA System.
Until next time, thanks again for reading…
Kip
The VRA has featured 2400% net gains since 2014.
