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Tag Archives: hedging

  • Insider
    Traveller.com.au

    Assume The Crash Position

    Actions to take before the market breaks
    by Adam Taggart

    Friday, March 15, 2019, 4:17 PM

    10

    Executive Summary

    • The latest outlook from our endorsed financial advisor, New Harbor Financial
    • My recent portfolio changes & the rationale behind them
    • 6 strategies for positioning your portfolio for the next market downturn
    • Deciding which strategies are most appropriate for you

    If you have not yet read Part 1: Hair-Trigger Markets, available free to all readers, please click here to read it first.

    As we take close note of the “coiling” of the markets, we supplement our own analysis with that of other experts we respect. Are they seeing similar signs of mounting risk?

    New Harbor Financial is an independent financial advisory firm that manages investor capital using a philosophy that takes many of the key trends within The Crash Course into account. We asked them for an update on their current market outlook, and here's their response:

    “The stock market, particularly in the US, is completely disconnected from reality.  It’s clear to us that the global economy has been slowing, and various data series point to a deceleration of global demand, starting in late 2018. For many years central banks have been able to create the illusion of growth by creating trillions of dollars out of thin air and throwing the money into the financial markets, with the primary objective of pushing asset prices higher.  It is becoming clear that not only did central banks fail to create sustainable growth, but by stealing growth from the future, they likely have made the situation even worse.

    The recent sharp rally of approximately 20% from the December low is not unusual in the context of early bear markets.  In fact, a “last gasp” rally often occurs in the early stages of stock market declines.  This rally often lures unwitting investors in due to their fear of “being left behind”, and keeps complacent participants fully invested.

    Stock valuations remain near the highest levels in all of history. Returns from these levels, particularly in the US markets, are likely to be pitiful, perhaps even negative, over the next decade.  Of course, market retreats to more reasonable levels make all the difference in reestablishing valuations that can support healthy subsequent returns.  At New Harbor, our portfolio for most clients has minimal net exposure to the stock market and a healthy percentage of short-term Treasury bills. While we can’t predict the exact path of stock market returns in the future, we believe it is imperative to hold a significant amount of cash to be able to take advantage of lower prices ahead.

    Based on the data, we can’t stress enough how historically overvalued these markets are. While many professional investors acknowledge the data, and how extreme it is, all too often many of these investors will…” (Enroll to read more)

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  • Blog
    livelifehappy.com

    Better A Year Early Than A Day Too Late

    Preparation only has value if it's done in advance
    by Adam Taggart

    Tuesday, August 22, 2017, 5:42 AM

    7

    When it comes, change happens swiftly. And life after — for better or worse — is forever different.

    I've witnessed this time and time again since co-founding Peak Prosperity. And pretty much every time, I notice that the vast majority of people — including many of the the watchful and preparation-minded folks who read this site — are caught by surprise.

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  • Blog
    Dreamstime

    The Marginal Buyer Holds The Pin That Pops Every Asset Bubble

    So it's important to watch him very closely
    by Adam Taggart

    Friday, August 19, 2016, 6:01 AM

    14

    Those of you who took an Economics class in college may remember the saying that prices are set "at the margin". That's a fancy way to say that prices are set by the person (or people) willing to pay the most.

    This person willing to pay top dollar is called the "marginal buyer". Most of us don't really think about him, but he (or she) is very, very important.

    Why? Because the marginal buyer not only determines price levels, but also their stability and degree of volatility. The behavior of the marginal buyer, as well as the degree of competition for his/her "top dog" spot, sets the prices of nearly every asset class held by today's investors.

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  • Insider

    How To Beat Inflation

    Protecting the purchasing power of your wealth
    by charleshughsmith

    Friday, July 29, 2016, 7:31 PM

    29

    Executive Summary

    • Taking Advantage of Subsidies
    • The Importance of Adding New Income Streams
    • Income-Producing Assets
    • Hedges, Cost-Controls & Other Strategies

    If you have not yet read Part 1: The Burrito Index: Consumer Prices Have Soared 160% Since 2001, available free to all readers, please click here to read it first.

    In Part 1, we compared official rates of inflation with hard data from the real world, and found that it’s not just the cost of burritos that has soared over 100% while inflation has supposedly been trundling along at 1% or 2% per year. The real killer is the soaring cost of big-ticket essentials such as rent, higher education and healthcare.

    So what can we do about it? There are only a few strategies that can make a real difference: either qualify for subsidies (i.e. lower household income), own assets and income streams that keep up with real-world inflation, or radically reduce the cost structure of big-ticket household expenses.

    Qualify for Subsidies

    Though it runs counter to our philosophy of self-reliance, we have to address incentives offered by the system we inhabit. One powerful set of incentives is entitlement subsidies for lower income households: rent subsidies (Section 8), healthcare subsidies (Medicaid and ACA/Obamacare), college tuition waivers, food subsidies (food stamps), free school lunches, and so on.

    These programs were designed to aid households that cannot earn more income, but for households on the borderline between paying full freight (no subsidies) and receiving some subsidies, it makes sense to work less, earn less and qualify for substantial subsidies.

    I am not recommending gaming the system, I am simply noting that subsidies exist and those who earn just above qualifying incomes are in effect punished for earning a bit too much.

    In many cases, we assume subsidies are reserved for “poor people” and we don’t qualify. For entitlements such as food stamps (SNAP), this is generally the case. But other programs offer some subsidies to households with incomes that are substantial…

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  • Insider

    How My Personal Portfolio Is Positioned Right Now

    You've asked. I answer.
    by Adam Taggart

    Friday, June 24, 2016, 8:46 PM

    37

    Executive Summary

    If you have not yet read Part 1: Fortunes Will Be Made & Lost When Capital Flees To Safety available free to all readers, please click here to read it first.

    So, given the conclusions in Part 1 — as well as the larger risks to the economy and financial markets that we analyze daily here at Peak Prosperity — how am I positioning my own personal investments?

    I get asked this question often. Often enough that I'm deciding to open the kimono here and let it drop to the ground. Everyone interested to look will get the full frontal.

    Before I do though, let me make a few things absolutely clear. This is NOT personal financial advice. The investment choices I've made are based on my own unique situation, financial goals and risk tolerance. And I may change these choices at any moment given new market developments. What's appropriate for me may not be for you, so DO NOT blindly duplicate what I'm doing.

    As always, we recommend working with a professional financial adviser to build an investment plan customized to your own needs and objectives. (If you do not have a financial adviser or do not feel comfortable with your current adviser's expertise in the market risks we discuss here at PeakProsperity.com, consider scheduling a free consultation with our endorsed adviser)

    Suffice it to say, any investment ideas sparked by this report should be reviewed with your financial adviser before taking any action. Am I being excessively repetitive here in order to drive this point home? Good…

    OK, with that out of the way, let's get started. I'll walk through the asset classes I own and my rationale for holding each.

    The strategy behind my portfolio allocation is of my own devise, though it has been influenced in no small part by the good folks at New Harbor Financial, Peak Prosperity's aforementioned endorsed financial adviser.

    At a high level, it has been constructed to address my strongly-held conclusions that:

    • Prices of most asset classes are dangerously overvalued
    • The risk of another economic contraction on par with (or greater than) the Great Recession within the next 2-4 years is uncomfortably high
    • The most likely path is we will experience a short period of coming deflation, followed soon after by one of high inflation as central banks starting printing currency without restraint (the Ka-POOM theory)
    • Capital will increasingly want to flow from paper assets (tertiary wealth) into tangible ones (primary and secondary wealth)
    • This is a time to prioritize protecting capital (defense) over speculating on how to grow it (offense)
    • Diversification is wise: just be emotionally prepared that some of your bets, by definition, will not pay off
    • In today's world of financial repression, no asset class is truly "safe". As such, asset performance is all relative.

    This is not a swing-for-the-fences portfolio. It's much more of a prepare-for-the-storm approach…

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  • Podcast

    New Harbor: A Time For Staying Out Of Harms Way

    Preserving your financial capital
    by Adam Taggart

    Sunday, January 24, 2016, 5:16 PM

    9

    Given the brutal start to the markets in the first three weeks of 2016, we thought it a good time to check in with the team at New Harbor Financial. We have had them on our podcast periodically over the past years as the market churned to ever new highs, and have always appreciated their skepticism of these liquidity-driven ""markets"" as well as their unwavering commitment to risk management should the party in stocks end suddenly.

    So, how is their risk-managed approach faring now that the S&P 500 has suddenly dropped 8% since Christmas? Quite well. Their general portfolio is flat for the year so far — evidence that caution, prudence and hedging can indeed preserve capital during market downdrafts.

    We've invited the New Harbor team back on this week to hear their latest assessment on the markets, as well as how they're approaching their portfolio positioning moving forward.

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  • Insider
    Oksana Shufrych/Shutterstock

    Off The Cuff: A Financial Adviser’s View Of The Recent Market Turbulence

    New Harbor weighs in
    by Adam Taggart

    Friday, August 28, 2015, 6:26 AM

    14

    In this week's Off The Cuff podcast, Chris and New Harbor Financial discuss the recent gyrations of the market.

    • Are we witnessing a secular trend reversal?
    • What's likely to happen next?
    • How can prudent investors position themselves now?
    • Where can shelter best be taken?
    • Is it time for risk-seekers to place bets?

    All these questions and more are addressed in this podcast. Needless to say, this is one of the most challenging times to protect capital in living memory. 

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  • Blog
    Oleksii Sergieiev, Dreamstime

    For Heaven’s Sake: Hedge!

    If you're not positioned defensively by now, you're nuts
    by Adam Taggart

    Friday, May 1, 2015, 2:58 AM

    15

    Last fall, I wrote an article titled Defying Gravity that warned of the absurd price levels that stocks and bonds had risen to. Less than a month later, the stock market abruptly dropped by 7%. Those who didn't seek safety in advance were left licking their wounds, panicked not knowing if the painful down-draft was over.

    So here we are roughly six months later, and the same warning bells are ringing — just louder this time.

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  • Blog

    Gravity Returns – The Market Drops Nearly 5% in 3 Days

    Years-long trends are finally breaking
    by Adam Taggart

    Monday, October 13, 2014, 11:14 PM

    8

    A month ago, in an analysis titled Defying Gravity, I wrote about the unsustainable state of the stock market's high prices.

    In it, I noted how the stock market had risen for an aberrantly-long time time without a correction, and that it hadn't even tested its 200-daily moving average price once since the beginning of 2012:

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