A Tale of 4 Buy Signals
As you can see and have seen in multiple alerts in the past the Nasdaq 100, the world’s most important index, is in a multi-year bull market with no sign of an end in sight. On this very long-term chart, we have just had the fourth smiley buy signal in nearly 40 years. You could say something similar about Bitcoin (chart not shown) which is leading me to suspect that something amazing may be happening in the world.
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I have a cousin who is somewhat eccentric but very bright. He has told me consistently that inflation never goes away, it just expresses itself in different forms. In the past and in much of South America it shows itself in the form of rapidly rising prices for goods and services and we have had a burst of that in Western economies recently.
More commonly it expresses itself in rising asset prices, especially for shares and property and most latterly for cryptocurrencies which have experienced one of the most incredible bull markets in history. The flipside of these asset booms is rapidly diminishing purchasing power for the denominators of which the most important is the US dollar.
Paper Money looks Like Yesterday’s World
I want to reference again a quote included with a recent Bitcoin alert.
The scarcity of safe currencies is a growing problem with the yen effectively excluded from an already small pool of potentially safe assets. This lack of safer currencies has led to dollar rallies even when the source of worries fuelling risk aversion stems from the United States.
While that is illogical, the dollar’s status as a safe haven has grown now that it is supported by an interest rate greater than those for other major-traded currencies.
Having dropped to a record low last year, the yen – once deemed safe – can surely no longer be viewed safe, and those that have chosen to hold it would certainly have lost on those investments.
There are few alternates. The pound has never been regarded as safe and like the yen, it has been falling over the long term. Investors have never been keen to hold the euro – the existence of which was in doubt not too long ago, while the yuan (currency of world’s second largest economy) isn’t even fully convertible. Switzerland’s franc and gold lack the liquidity needed to make them truly safe.
As a result nations are holding trillions of dollars in reserves that are much greater than the total of every other currency held when those are combined.
They are maintaining the size of these dollar holdings even while trying to stem declines in their own currencies, and because dollars sold to stem local currency drops are bought back, local currencies are remaining under pressure and may well fall further.
Although central banks have been seen selling dollars – or authorising sales on their behalf to support yuan, rupee and Turkish lira, all remain extremely weak while FX reserves are little changed.
The big issue for investors is that should an increasingly attractive dollar draw more buyers then there will be a point when investment in it becomes overcrowded, and then it too won’t be safe.
Reuters, 21 February 2024
The crazies hiding in caves with their cans of baked beans and their machine guns have been saying this for decades but maybe they have a point, maybe the era of fiat money, paper money, is ending. Naturally, after 2008/09 nobody trusts banks any more, look at Coutts and Farage, and when it comes to paying for things this is increasingly digital.
Tories Facing an Extinction-Level Event
OK, I am well out of my comfort zone here but what I suspect is that the incredible rise in Bitcoin is the flipside of declining faith in paper money, institutions and politicians. Trump looks like a shoo-in to become the next US president and if Reform UK splits the right-of-centre vote the Tories could face an extinction-level event at the next election. What we are seeing is a flight to assets which can be trusted which, in a capitalist world means shares in corporations, especially the most successful ones, in property, especially scarce property which means ~New York, London, coastlines, National Parks etc.
It’s just a theory but intriguing.
And what may be emerging as the ultimate store of value, which is Bitcoin. Put another way the scene is being set for the most explosive bull markets in the history of humanity. This ties in with the charts which look incredibly bullish. Wealth creation in the developing world could be about to go berserk.
Bitcoin sums it up for me. The Bitcoin whales, holders of more than 1,000 shares and whose number has increased by more than 100 in the last month, may push the price up and down in an unpredictable manner but with new sources of demand coming in like ETFs and according to one rumour, Jeff Bezos, while supply grows ever tighter the scene is set for an explosion.
The same with shares and property. There are only so many AI-centric shares in the world and property in key locations is also in tight supply. In a world moving from billions (bn) to trillions (T), there could be the most amazing fireworks ahead.
The global situation is also becoming ever more tense with a not inconceivable possibility that the current cold war between Russia/ Iran and NATO/ Israel could flare up into something hotter.
Charts may not have predictive value. The jury is out on that one although I find them very useful. What is clear though is that the current chart positions on favoured US shares and on the more popular cryptos are compatible with much higher prices ahead. Both Bitcoin and the Nasdaq 100 could easily go ballistic from here.
They could go down too; that is always a possibility but looks to me like the much less likely option except as volatility in a continuing uptrend. My suggestion to investors is that now is a time to be on the front foot. I see bulls not bears in my little crystal ball.
How to Construct a Slow-Burn Portfolio
First, I want to make clear that by slow-burn I mean slow for me. For many of you it will be the fastest, most exciting investment thrill ride you have ever been on if you do it. The reason why it is slow for me is because very often I hold just one or two shares in a spread betting account on five times leverage. A habit, incidentally, which I am trying to break. This will be different.
The idea is to hold 25 carefully chosen shares in a spread betting account but on a more restrained three times leverage. If that is too wild two times would be OK but less than that would be chicken-hearted.
I am just going to list the stocks below under Share Recommendations. There are no ETFs because the regulators make it such a pain to buy them but there is one tech-focused investment trust.
Share Recommendations
Microsoft. MSFT. Buy @ $413
Nvidia. NVDA. Buy @ $819
Meta Platforms. META. Buy @ $499
Polar Capital Technology Trust. PCT. Buy @ 2950p
Intuit. INTU. Buy @ $661
Intuitive Surgical Group. ISRG. Buy @ $393
Broadcom. AVGO. Buy @ $1373
ServiceNow. NOW. Buy @ $773.50
Advanced Micro Devices. AMD. Buy @ $199
Cadence Design Systems. CDNS. Buy @ $312.5
Synopsys. SNPS. Buy @ $585
Chipotle Mexican Grill. CMG. Buy @ $2692
Wingstop. WING. Buy @ $358.50
Fiserve. FI. Buy @ $150
Fair Isaac Corporation. FICO. Buy @ $1284
Brunello Cucinelli. BC. Buy @ Euro112.50
E.L.F. Beauty. ELF. Buy @ $213.50
Ferrari. RACE. Buy @ $424.5
Eli Lilly. LLY. Buy @ $777
Novo Nordisk. NOVO_B. Buy @ DKK850
Super Micro Computing. SMCI. Buy @ $913
United Rentals URI. Buy @ $696
Hermes RMS Buy @ Euro2308
ASML. ASML. Buy @ $968
Microstrategy MSTR. Buy @ $1025
Remember that my suggestion is that you invest equal amounts in all these shares on two or three times leverage in a spread betting account. It’s time to be bold.
