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    WATCH NOW: Dangerous Markets Webinar

    FREE to PP.com's premium subscribers
    by Adam Taggart

    Wednesday, September 13, 2017, 4:14 PM

This week’s Dangerous Markets webinar  is free to PeakProsperity.com’s enrolled members.

Here is the replay video of the event:

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14 Comments

  • Wed, Sep 13, 2017 - 10:22am

    #1

    Adam Taggart

    Status: Platinum Member

    Joined: May 25 2009

    Posts: 7548

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    Replay video now posted above

    The full replay video of today's 'Dangerous Markets' webinar has now been embedded in the original post above.

    It was very excellent  -- Grant and Lance are two extremely data-driven analysts who clearly enjoyed playing off of each other's insights in this discussion.

    Enjoy!

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  • Wed, Sep 13, 2017 - 12:16pm

    #2
    robbie

    robbie

    Status: Bronze Member

    Joined: Jul 16 2008

    Posts: 63

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    Evidence to support market timing?

    Thanks to Chris, Adam and both guests for a very informative and thought -provoking presentation. 

    I'm having difficulty reconciling what is in essence a recommendation for market timing and stock picking with the evidence-based peer-reviewed financial literature which has shown and continues to clearly demonstrate that market timing and stock picking is not only "really difficult" as Chris says, but is overwhelmingly likely to underperform a low cost, three index fund strategy. 

    I don't think there is any dispute that markets are precariously positioned by most measures, and that the risk/ benefit of staying fully invested in equities now is extraordinarily high, but I'm aware of no evidence-based data that shows anyone can reliably predict when to go to cash, and more importantly, when to re-enter the market to enjoy superior investment gains. If we can agree there is overwhelming data that argues against the success of market timing, shouldn't the lesson be to remain fully invested always? Obviously shorter holding periods carry greater risk, but less risk than market timing? I'm aware of no peer-reviewed evidence arguing otherwise.   

    Furthermore, is it likely the TPTB will allow a total market meltdown to occur and wipe out the boomer's retirement plans again, causing political and economic upheaval? Or, is it more politically palatable (easier) and more probable markets will be frozen indefinitely in the event of a *substantial* selloff, panic allowed to return to sanity with appropriate reassurance/ trade reversals, and either restrictions or outright prohibitions placed on certain future market activities until the crisis of confidence has passed.

     

     

     

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  • Wed, Sep 13, 2017 - 1:54pm

    NatalieO

    NatalieO

    Status: Member

    Joined: Apr 28 2010

    Posts: 27

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    Replay video not working

    Hi Adam,

    There's no play button, it's just a black rectangle. Can you look into it? Thanks!

    Natalie

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  • Wed, Sep 13, 2017 - 1:57pm

    Adam Taggart

    Status: Platinum Member

    Joined: May 25 2009

    Posts: 7548

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    Browser issue

    Natalie -

    Sounds like that's likely an issue with the web browser you're using. Do you have a recent version of flash installed?

    Try again using a different web browser and/or downloading the latest version of Flash.

    If that still doesn't work, give us a shout at 707.515.6770 for live help resolving this.

    cheers,

    A

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  • Wed, Sep 13, 2017 - 3:15pm

    suziegruber

    suziegruber

    Status: Bronze Member

    Joined: Dec 03 2008

    Posts: 251

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    Try Clicking The Middle of the Video

    Hi Natalie,
    I have no play button either and I was able to get the video to play by clicking anywhere in the image of the video itself.

    --Suzie

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  • Wed, Sep 13, 2017 - 4:42pm

    #6
    Sharsta

    Sharsta

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    Joined: Aug 12 2009

    Posts: 58

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    Webinar replay

    Thanks for the webinar replay (2am live local time just wasn't going to work! - brain not awake regardless of whether the body is awake or asleep!), I got a lot out of it - took 4 pages of notes.

    Thanks for covering my question yesterday (USA thinking of banning China from the SWIFT system) - I thought it was pretty critical but I hadn't understood the subtilty of consequences of erosion over time happening, when, on the surface, the $US still remains the reserve currency.

    I now have some thinking to do about strategy going forward and education - this is my third trigger that I need to learn all about block chain technology so I can pick up on the trend when it is applied to other fields of endeavour.

    Thanks again, I look forward to the next seminar!

     

     

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  • Wed, Sep 13, 2017 - 7:43pm

    #7
    springbank1

    springbank1

    Status: Member

    Joined: Feb 15 2012

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    Webinar

    Thanks so much for organizing the session.  Great guests and good overall discussion.  I wonder if PP has ever thought of a tail risk manager guest - someone like a Mark Spitznagel?

    Or maybe guy from Artemis Capital profiled in NYT today   

    just a thought   

     

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  • Wed, Sep 13, 2017 - 8:26pm

    Adam Taggart

    Status: Platinum Member

    Joined: May 25 2009

    Posts: 7548

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    Mark Spitznagel

    springbank1 wrote:

    I wonder if PP has ever thought of a tail risk manager guest - someone like a Mark Spitznagel?

    Great idea, Spring.

    I just sent an invitation to Mark. Will report back if he accepts.

    cheers,

    A

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  • Thu, Sep 14, 2017 - 6:36am

    #9
    ckessel

    ckessel

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    Joined: Nov 12 2008

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    Webinar

    Hi Adam and Chris,

    I thought the webinar was very well done. I got a lot out of it and appreciate having access to folks like Grant and Lance. Thanks for making it happen!

    Coop

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  • Thu, Sep 14, 2017 - 7:33pm

    #10
    jrpbax

    jrpbax

    Status: Member

    Joined: May 30 2016

    Posts: 4

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    Moving to Cash

    If we take the premise of protecting capital as *the* fundamental as mentioned by Grant then at current share market valuations it would seem a good time to move a decent portion of a portfolio to cash. 

    However this is not always easy to do when considering the tax implications as even long term capital gains means you are paying 20% of the gain (assuming no offsetting losses) in tax. So superficially I guess the question then becomes do I think the market generally and each particular company I own specifically is going to drop by more than 20%?

    If I think a coming recession will result in a dip of less than 20% then I assume the sensible thing would be to stay put?

    Of course being able to predict either the timing or size of a market correction is a very difficult task. Regardless I am asking these questions just to make sure that conceptually I am thinking about this right..

    Thanks.

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  • Fri, Sep 15, 2017 - 3:59am

    #11
    Chris Martenson

    Chris Martenson

    Status: Platinum Member

    Joined: Jun 07 2007

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    Tax Implications

    jrpbax wrote:

    If we take the premise of protecting capital as *the* fundamental as mentioned by Grant then at current share market valuations it would seem a good time to move a decent portion of a portfolio to cash. 
    However this is not always easy to do when considering the tax implications as even long term capital gains means you are paying 20% of the gain (assuming no offsetting losses) in tax. So superficially I guess the question then becomes do I think the market generally and each particular company I own specifically is going to drop by more than 20%?
    If I think a coming recession will result in a dip of less than 20% then I assume the sensible thing would be to stay put?

    Sort of, but let's run the numbers.  I'm going to go with the idea of long-term capital gains (short-term gains have a different calculus because they become part of ordinary income and are therefore taxed at your specific regular tax rate).
    Your question is, "if I am expecting a 20% market decline, doesn't it make sense to just keep holding?"
    An alternative question is "how far would the market need to decline in order for the tax consequence to be zero or neutral?"  
    Let's try and answer both questions.
    Here's the tax table for LT gains:

    Now let's run the numbers.
    The answer is a little tricky because it depends on the gains involved.  The table below runs a variety of scenarios from having a 10% gain all the way up to a 200% gain.
     

    Here's how we read that table.  At a market decline of 20% the portfolio losses are larger than the tax hit at every possible level.  Those numbers in red are larger than the tax hits at either the 15% or 20% levels.  So if your expectation is a market decline of 20%, taxes are not a consideration.  If you are expecting something less, adjust accordingly.
    The "Market Neutral" columns are answering the question "at what market decline percentage is there no financial gain or loss from standing pat?"
    There we see that even with a 50% portfolio gain a very minor market decline of ~ 5 - 7% (depending on your tax bracket) will swamp your tax implications.
    At the higher gain levels (100% and 200%) you'd need larger market declines to offset the tax implications, obviously, but still certainly nothing too dramatic like a proper bear market decline of 20% or more, with financial neutrality being hit at less than 14%.
     
     
     

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  • Fri, Sep 15, 2017 - 11:59am

    Chris Martenson

    Chris Martenson

    Status: Platinum Member

    Joined: Jun 07 2007

    Posts: 6432

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    Tax Implications

    [quote=jrpbax]

    If we take the premise of protecting capital as *the* fundamental as mentioned by Grant then at current share market valuations it would seem a good time to move a decent portion of a portfolio to cash. 

    However this is not always easy to do when considering the tax implications as even long term capital gains means you are paying 20% of the gain (assuming no offsetting losses) in tax. So superficially I guess the question then becomes do I think the market generally and each particular company I own specifically is going to drop by more than 20%?

    If I think a coming recession will result in a dip of less than 20% then I assume the sensible thing would be to stay put?

    [/quote]

    Sort of, but let's run the numbers.  I'm going to go with the idea of long-term capital gains (short-term gains have a different calculus because they become part of ordinary income and are therefore taxed at your specific regular tax rate).

    Your question is, "if I am expecting a 20% market decline, doesn't it make sense to just keep holding?"

    An alternative question is "how far would the market need to decline in order for the tax consequence to be zero or neutral?"  

    Let's try and answer both questions.

    Here's the tax table for LT gains:

    Now let's run the numbers.

    The answer is a little tricky because it depends on the gains involved.  The table below runs a variety of scenarios from having a 10% gain all the way up to a 200% gain.

     

    Here's how we read that table.  At a market decline of 20% the portfolio losses are larger than the tax hit at every possible level.  Those numbers in red are larger than the tax hits at either the 15% or 20% levels.  So if your expectation is a market decline of 20%, taxes are not a consideration.  If you are expecting something less, adjust accordingly.

    The "Market Neutral" columns are answering the question "at what market decline percentage is there no financial gain or loss from standing pat?"

    There we see that even with a 50% portfolio gain a very minor market decline of ~ 5 - 7% (depending on your tax bracket) will swamp your tax implications.

    At the higher gain levels (100% and 200%) you'd need larger market declines to offset the tax implications, obviously, but still certainly nothing too dramatic like a proper bear market decline of 20% or more, with financial neutrality being hit at less than 14%.

     

     

     

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  • Fri, Sep 15, 2017 - 6:17pm

    jrpbax

    jrpbax

    Status: Member

    Joined: May 30 2016

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    Tax implications

    Chris,

    Thanks for running the numbers on the various scenarios. Certainly makes it clear that the simplistic 20% drop negated by 20% tax idea is way too simplistic.

    As your numbers show for shares with modest gains it's a non issue, it would only be for those where you have a 3x+ return that it would start to even get close to parity and then it becomes more of a judgment call based on all sorts of things like where you plan to part the proceeds and whether you plan to get back in to the market at a later point etc etc.

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  • Sat, Sep 16, 2017 - 9:37pm

    #14
    Sharsta

    Sharsta

    Status: Member

    Joined: Aug 12 2009

    Posts: 58

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    De-Dollarisation and Russia/China dealing with North Korea

    I'm not quite sure where to put this, but it seems that another move in Russia and China's 3D chess strategy is happening....

    Pinned at the top of Zero Hedge right now is John Rubino's article on De-dollarization -

    http://www.zerohedge.com/news/2017-09-16/suddenly-de-dollarization-thing

    Then directly below it (for the time being) is the following article which explains what happened at the Eastern Economic Forum in Vladivostok that occurred on 6-7 September 2017 - Russia and China's plans for economic and geo-political stabilization of the whole region.

    http://www.zerohedge.com/news/2017-09-16/russia-china-plan-north-korea-stability-connectivity

    As the article says, the question is how to convince the DPRK to play along...

    What do others think?

     

     

     

     

     

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