On Tuesday, right before the market opened, I published a cautionary alert that this past week’s incredibly bullish action was a fake-out, a false relief breakout.
Tuesday’s trading session proved this exact warning to be dead-on.
Volatility is set to grow, from here on, as corporate credit markets are under pressure, the Federal Reserve is about to announce its most anticipated rate decision in three years, and with the Trump-Xi truce out the window.
This is the best time to take profits on strength and bounce rallies for investors who can’t stomach volatility because 2019 will be filled with it.
Virtually all investment banks are taking defensive positions, dumping FAANG holdings for the world’s safest businesses, such as Walgreens, which we have been bullish on, since it traded in the high $60’s range, before recently breaking out to 52-week highs.
For investors, who have been cashing-up, the market, in its scariest moments, will offer chances to get aggressive – to be a hog, and play it right. You’d be able to invest heavily into certain businesses, which don’t usually trade at steep discounts, will suddenly become cheap, after years of fair valuations.
I’m currently headed to Asia, as I want to see, first-hand, how emerging markets, China, in particular, look to handle both the slowing down of their own economy and their stock market crash in recent months.
Historically, the Chinese government has propped-up asset prices, whenever it could, this past decade because you don’t want civil unrest with 1.4B people on your hands.
We found ourselves today, three years into the tightening cycle, which started in December of 2015. It’s been a lengthy one, but I want you to notice that the FED can’t continue to act alone, while in Europe and Japan, no signs of raising interest rates are mentioned.
If this continues to be the case in 2019, the geopolitical environment will worsen and become even more challenging than it already is.
We could be hitting the RESET button, as the populist movements in Europe make their presence felt, influencing decision-makers to think twice before they make any major policy changes and austerity measures.
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France is showing us how sensitive the lower-classes are to even the slightest increases in their expenses column.
In the coming years, the U.S. will have no choice, but to start to publicly tackle the unsustainability of its own pension funds, Medicare, Medicaid, and Social Security liabilities.
We’re entering the most intensive period, since the 1930s, so take the approach that diversification is much wiser than concentration.
Ideally, develop another, secondary income stream. An extra $100-$300 a month could make the difference between just scraping by and living comfortably.
Many home-based income sources take no more than 2-3 hours a day to master and can bring in even $100 a week. I’ve never seen any mainstream financial outlet mention the strategy of enjoying more than one source of reliable revenue stream in your life, but it is, nonetheless, paramount for the financial health of households, if inflationary pressures persist.
Get on top of It!
Research Partner, PortfolioWealthGlobal.com
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This work is based on SEC filings, current events, interviews, corporate press releases and what we’ve learned as financial journalists. It may contain errors and you shouldn’t make any investment decision based solely on what you read here. It’s your money and your responsibility. The information herein is not intended to be personal legal or investment advice and may not be appropriate or applicable for all readers. If personal advice is needed, the services of a qualified legal, investment or tax professional should be sought.
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