By Kris Sayce, editor, Casey Daily Dispatch
According to Bloomberg, famed money manager Jeremy Grantham has bad news for investors.
His firm predicts “negative returns for 10 of the 11 asset classes it tracks” over the next seven years.
That’s not good.
Especially for anyone near or in retirement.
But don’t fret too much.
There is some good news. Despite Grantham’s overall bearish view, he sees plenty of opportunities.
And it turns out those opportunities almost perfectly align with the approach taken by our Casey Research experts.
More details below…
If this is your first time reading the Dispatch, welcome. If you’ve been here before, welcome back.
At the Dispatch we have two goals:
To introduce you to the most important investing themes of the day, and
To show you how to profit from them.
We do this by showcasing ideas from our in-house investing experts: Dave Forest and Nick Giambruno. And from the founder of our business, Doug Casey.
As long-time Casey Research readers know, we’re not shy about making bearish predictions… but only when we’re convinced there are no opportunities left to make good money from the market.
Right now, there are still plenty of opportunities…
Our Experts Are Exploiting the “Bubble” Too
To be fair, it’s understandable that the mainstream would highlight the negative side of Grantham’s quarterly report.
Grantham has a record for picking market tops. And U.S. markets are at or around record highs.
Yet, as we mentioned, although Grantham fears for the market outlook over the next seven years, his advice isn’t far away from the Casey Research view.
As noted in the just-released quarterly update from Grantham’s firm, Grantham Mayo Van Otterloo (GMO):
Our main message is thus: in a global growth bubble, we are advising clients to do three things: 1) exploit the bubble with an equity long/short strategy, 2) avoid the bubble by investing in alternatives, and 3) concentrate assets away from the bubble in emerging market value, Japan small value, cyclicals, and quality.
Many of those ideas will be familiar to Casey Research’s paying subscribers.
Take his first point about “exploit[ing] the bubble with an equity long/short strategy.” What he means is, buy some stocks, don’t buy others, and even short-sell some stocks.
Both of our key experts, Dave Forest and Nick Giambruno, continue to recommend buying stocks in certain niche sectors.
Some of these recommendations have even included what many may consider to be “bubble” plays (although that’s not necessarily how Dave and Nick see them).
Nick was a relatively early adopter of bitcoin as an investment idea. And he was one of the first investment experts we know who saw the opportunity with bitcoin mining stocks.
For instance, Nick made half a dozen well-timed plays late last year and early this year. In one case, he helped his readers cash-out with a gain of 2,123% in less than 80 days.
As for the short side, Nick has two strategic plays there, too. (We can’t reveal them, because both are still open positions.)
The point of these two plays is that if the market turns south, Nick’s subscribers will have two ready-made positions to profit from or hedge against a falling market.
It’s a great strategy. By having a strategy like that in place, it means you’re less likely to panic-sell along with the rest of the herd. The folks who thought stocks couldn’t fall… and therefore never planned for it.
On Grantham’s second point of avoiding “the bubble by investing in alternatives”… our experts have that covered, too.
Hedge Fund Investing for the Regular Investor
Now, “alternatives” is open to interpretation. It can mean a type of asset, a non-mainstream sector, or a different type of security.
In the “alternatives” basket, we would include warrants. A type of investment that colleague Dave Forest has championed for the past year or so.
By anyone’s definition, they’re different to most investments. They certainly aren’t mainstream. And like many alternative investments, they tend to offer a high risk-reward payoff.
The best example of that is the warrants play that Dave recently helped his subscribers cash out on with a 4,942% gain. One of his plays is currently up 1,370%.
That’s just one example of an alternative asset class. Others include physical gold and silver, and farmland. These ideas are also on Dave Forest’s current recommended list.
Finally, Grantham says investors should invest away from the bubble. He recommends emerging market value and small-cap Japanese stocks.
Right now, that’s where Grantham’s specific advice diverges from our advice. But the idea of investing away from the bubble is sound.
In fact, whether you agree with it or not, some may argue that an investment in bitcoin is investing “away from the bubble.” The argument being that bitcoin investing is partly about taking money out of the government and central bank-controlled system and investing where governments and central banks have no control.
But we would also include in that category some of the stable, dividend-paying stocks that both Dave and Nick have on their recommended list (two of Nick’s picks currently yield 7.2% and 8.5%).
The point is that most investors assume that if you have a negative outlook on the broader market, then you need to sell everything and just hold cash. But that’s not true.
It’s certainly not what the big hedge funds and star money managers do. They spread their wealth around smartly… allocating to various niche sectors they believe will perform well according to their market outlook.
And that’s the same approach our Casey Research experts take. It’s an approach that has served our readers well for many years. And we expect it to serve you well for many more – regardless of which way the market turns.
Editor, Casey Daily Dispatch
P.S. On that subject, make sure you check out Dave’s special presentation on his favorite “alternative” investment – warrants.
You can find it here. As we mentioned above, this warrants strategy has helped many of our readers collect high triple-digit and even quadruple-digit percentage gains.
In one case, investors could have bagged a 4,942% return. A result that would have turned just $500 into $25,210.
Subscribers to his service, who are in his best current open position, would have seen a small $500 stake turn into $6,850. These are incredible returns. Check out the full details here now.
Welcome to Casey Daily Dispatch’s Chart Watch. We’ll look at the best technical opportunities in the market. You’ll see that chart analysis is a very powerful edge that every investor should have in their toolbox.
Our mission is to simplify price charts. We remove all the clutter and the noise, leaving you with a crystal-clear view of the markets.
If You Want 5G Exposure, Don’t Buy This Stock…
By Imre Gams, technical analyst, Casey Research
In today’s Dispatch, Kris referred to niche and alternative investment ideas. One area of the market that many investors may associate with that is 5G.
But rather than pointing you towards a 5G stock you should own, in today’s Chart Watch we’re going to look at the subject in a different – although equally important – way. That is, to profile a stock you should avoid.
And rather than looking at it as a short-term trading opportunity, I’m going to analyze this stock’s chart from the perspective of whether it makes sense as a long-term investment (yes, you can use technical analysis for long-term investing analysis, too).
That stock is for an established player in the telecommunications industry. It’s the world’s largest telecommunications provider and has one of the most robust 5G networks across the U.S.
I’m talking about AT&T. Let’s look at the price chart below.
There are three key features to this chart:
Notice how the price is currently below both the 100 and 200-period moving averages (green and red lines).
The price is currently sitting on a major trendline going all the way back to 2002.
The price has gone basically nowhere since the early 2000s. There have been significant rallies going as high as $43, but investors have consistently cashed out anytime the stock has reached these levels. In January 2006, AT&T traded around $26… today, AT&T is around $28.
All of this adds up to a stock that has traded in a broad range since 2002. In other words, AT&T’s price action just doesn’t have a lot of momentum behind it.
But it’s not just the technicals that make me conclude that AT&T isn’t a good buy.
The telecom giant used to be renowned for its streak of annual dividend hikes. But when AT&T announced it would spin off WarnerMedia for a merger with Discovery, the company stated it would cut its dividend payouts nearly in half.
While I don’t know for sure if AT&T will break through its longstanding support line, it just doesn’t look as though there is much immediate upside in this stock’s future.
The bottom line is that AT&T’s price action has taken 19 years to get back to within a few dollars of where this stock was trading in 2002.
Based on the volatility, AT&T does have some qualities that may interest short-term traders. But as a longer-term investment play, and a 5G investment play, there are many better opportunities elsewhere.
Until next time,