By Justin Spittler, editor, Casey Daily Dispatch
Strap on your seat belt.
The stock market could take you for a ride soon.
This isn’t based on a hunch. It’s based on history.
The chart below says it all. It shows the average realized volatility minus the overall average volatility for each month since 2007.
I know that sounds confusing, but stick with me. This chart simply tells us which months are the most volatile.
As you can see, we just entered the most volatile quarter of the year. We’re also now in the most volatile month (October), with November being the second-most volatile month.
Now, I realize that may sound bad. After all, most people equate volatility with sell-offs and crashes. But we also see huge spikes in volatility during strong rallies. Plus, December has historically been the best month to own the S&P 500.
In other words, this chart—on its own—isn’t a reason to be bearish or bullish. Instead, it’s a reminder to expect an extra dose of volatility as we close out the year.
So, stay disciplined. Don’t panic sell at the first sign of trouble. You also shouldn’t chase stocks higher on big moves. Wait for opportunities to come to you instead.
You may also want to use the coming months as a trading opportunity. I say this because volatile environments create more opportunities for quick profits than normal. And that’s great for traders.
But don’t take my word for it. My colleague, master trader Jeff Clark, has a unique method to profit from the coming volatility. In fact, he says this is “the biggest money-making opportunity we’ve seen in nine years.” You can learn more about his strategy in this video presentation.
October 4, 2018
P.S. Changing gears, I’ll pass off the baton to John Hunt, Doug Casey’s coauthor in the High Ground Series, who has a brand-new interview with Durk Pearson and Sandy Shaw…
John: Many people get frustrated by all the weirdness and foolishness in the news. They get angry. They blow off steam. Meanwhile, things are changing that they aren’t noticing.
Sandy: We each need to expend our resources on our own defense and not so much worry about what’s going on in the world at large. We aren’t going to be able to affect the world with the resources we have available.
Durk: So, you’ve got to be careful about your investments. For example, you don’t want to invest in a company with strong unions. Because the next time the Democrats are in control and the company goes bankrupt—even though you’re a secured creditor and the union isn’t—it will be the union that ends up with all the assets. That’s what happened with General Motors as the secured creditors all got screwed. And so basically the UAW [United Automobile Workers] now owns General Motors as the Obama administration simply declared that most of the secured creditors would lose their investment.
John: When we ignore the rule of law, we get ruled by the whims of the powerful. And the powerful won’t often be on your side. People need to remember that, before they give more and more power to the government.
Durk: On the other hand, good things are happening entirely under the radar. The Federal Register is a daily journal that lists of all the changes to the rules and regulations of the US government bureaucracy. The Federal Register is important because it provides the advance notices of proposed regulations and the time period during which public comments are accepted as per the Administrative Procedure Act. The Federal Register is a good index as to the shape of things to come. In Obama’s last year, 2016, the Federal Register was over 95,000 pages long.
John: That’s enough new regulatory activity to warm the globe.
Durk: They say ignorance of the law is no excuse.
Sandy: But no one could possibly comply with all that new rulemaking.
Durk: A famous civil rights lawyer named Harvey Silverglate wrote an excellent book called Three Felonies a Day. The average American commits three federal felonies per day, not because they’re hurting anybody, not because they’re doing anything evil, but because there are so damn many rules and regulations you can’t avoid unknowingly violating them. Well, for Obama’s last year, the 95,894 page long Federal Register set an all-time record high. For Trump’s first year: 61,950 pages—the shortest since Bill Clinton’s first year.
Sandy: Big improvement.
John: But is that 62,000 pages just a slowing in the growth of new regulations, or is it mostly deregulation, which takes up Federal Register space, too?
Durk: During Trump’s election campaign he promised that for every new regulation, they would get rid of two old regulations. The actual ratio for the first year is about 22 old regulations removed for every one new regulation. Trump promised that by the end of his first term, the Federal Register would be only 25,000 pages long. It hasn’t been that short since the 1960s. I didn’t believe a word of it then. I thought, “well, it’s a good intention, but this is impossible.” But all of a sudden, it’s credible. Regulations cost a lot. Last year, regulations cost Americans $1.7 trillion, and that compares to $2.3 trillion in total federal taxes. So, we’re talking about regulations being almost as expensive as taxes.
John: It’s not just the money spent on it, but the time, the energy, the malinvestments made by the small businessman who’s having to make decisions based on tax policy and regulatory policy, as opposed to trying to maximize the benefits to their customers.
Durk: Exactly right. We, meaning Sandy and I, spend more time and money on income tax compliance and keeping records on our rental homes than we pay in taxes.
Sandy: It’s taken a lot of time away that we should be doing research. A couple of hundred hours per year!
John: That’s wasted time that human beings should have been spending helping to resolve poverty, improving investment of capital, fighting entropy, or just having fun.
Durk: Or preventing or curing metabolic syndrome or hyperlipidemia or Alzheimer’s.
Sandy: Or finding ways to live a long time. We are all wasting our lives doing this mandatory government stuff, when we could be doing valuable things.
John: Let’s talk more about the Trump stories, since he’s pretty much the news that both sides see.
Durk: The idea that Russia was into the DNC’s email server, that’s almost certain. There were no significant cyberdefenses there. I could have gotten into it. A goat herder could have gotten into it. I’m sure Russia was into it, as was China, Iran, North Korea, the Mossad, GCHQ. Everybody was in there who wanted to get in there.
The DNC email server was never examined by the FBI or the NSA. They never asked to see it. Why? There’s something very funny going on here. The people who said that the Russians did it worked at a company called CrowdStrike. This was a DNC contractor, a computer security contractor the DNC hired after the fact.
There was bunch of CIA software for hacking that was, unsurprisingly, hacked out of the CIA and released on the internet. One of those is a piece of software for planting false clues as to who was hacking your computer. If you’re going to hack somebody, you probably want to make it look like somebody else did it. Somebody else who you want to cause trouble for.
John: Governments tend to be so inclined.
Durk: One of the reasons CrowdStrike thought that it was the Russians is because a couple of the servers used in the hack had been used by the GRU [Russian Military Intelligence] about a decade earlier. Oh really? You think that the GRU doesn’t have $100 to buy a new internet IP address for an important operation like this? One that isn’t publicly known to have been a GRU asset?
Another thing that was said by CrowdStrike to prove that the Russians did it was a name on one of the emails of the DNC server. The “from” was changed to Felix Dzerzhinsky. He was the head of the Cheka—the Russian secret police way back when, 100 years ago. Do you really think that a GRU agent—that is, a Russian military hacker trying to stay secret—is going to put the name Felix Dzerzhinsky in an email? And use a Cyrillic keyboard? No! Someone who wants to make trouble for Russia is going to do that.
I’m sure Russia was in there, but I don’t think it was Russia who gave the data to WikiLeaks. Think about William Binney, who used to be the head of NSA’s technology department. After he retired, he became a whistleblower. But unlike Snowden, he didn’t release any classified information so he didn’t have to run off to Russia to keep out of jail. What Binney and a bunch of other people who are very experienced in computer security have found out—and I checked on this and it’s true—is that there are timestamps on all those files downloaded from the DNC email server. The timestamps showed that the files were downloaded at exactly a USB2 download rate—that’s the rate that data moves from a computer onto a thumb drive. Furthermore, there would be time jitter on those downloads if it had gone over the internet. But there’s no time jitter. It’s pretty clear that it was downloaded directly to a thumb drive and that’s how it got to WikiLeaks. Not distant Russian hackers.
This is not at all what people are reading. I’m sure Russia spies on us. But Trump had nothing to do with that.
Sandy: Because there are so many inconsistencies in how things appear, I think a lot of people know that they can’t really believe what they hear or read. Many have lost interest in it.
Durk: I’m not a lawyer… but it seems to me that it would be within Trump’s executive powers to issue an executive order to the FBI to arrange to subpoena the DNC email server and Hillary’s email server and to examine them and to make mirror copies and turn them over to the NSA for examination. Incidentally, it was the FBI and the CIA who said, “yeah, we agree Russia did it.” But the NSA was not part of that agreement. They’ve never looked at the server.
John: What would be the big shock of learning that a foreign country tried to interfere with a United States election one way or the other? How much of this is just hype being made by the media for something that’s probably always happened in our elections for as long as Russia has been able to? Or any other country…
Durk: That’s exactly right. Rand Paul came up with a very interesting statement. He found a reputable academic study that showed that the US has interfered in over 80 foreign elections. Major powers spy on each other! They’ve always done it. They always will do it. And they’ll try messing with each other’s elections, too.
Sandy: What the United States is doing in terms of spying on other countries is not something that people, in general, want. It’s done because of the political concentration at the top of the United States. These people have their own interests. They don’t necessarily care for the interests of the people at large.
Durk: You’ve got the Deep State. And they’re in it for themselves. Basically, states are a protection racket, and they’ll do as little as possible for the people, just enough to make the people think, oh, we’re on your side.
John: You pay the state, and you do their bidding, or else they will take your stuff and beat you up. If a shop owner on the block fails to pay the gang leader enough protection money, the gang will destroy the store.
Durk: The Mafia is actually often preferable! The mafia are better businessmen than the typical bureaucrats. They’ll usually take your money and leave you alone. They won’t try regulating you. The government will use the money they extort out of you to beat you into submission.
Today, a reader responds to last week’s featured interview: “Doug Casey, Nick Giambruno, and Marco Wutzer on Cryptocurrencies”…
This is exactly the kind of exchange of information, knowledge, and ideas among those who know about the developing crypto market for the benefit of those of us who only know enough about cryptos to be dangerous. It’s precisely what we need to hear.
And as always, if you have any questions or suggestions for the Dispatch, send them to us right here.
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