Archive for commodities

Bitcoin Mania…Featuring Michael Douville

Posted in Michael Douville with tags , , on December 20, 2017 by paulthepoke

Psalm 119:72 The law of your mouth is better to me than thousands of coins of gold and silver. 

MichaelIt has taken almost 400 years, but according to Convoy Investments, Bitcoin has surpassed The Tulip Bulb Bubble, where even Sir Issac Newton lost his fortune, as the largest Financial Bubble in History.  Everyone wants to get rich! Everyone wants to be part of this phenomenon.  When queried,  there is a complete lack of understanding what Bitcoin is or can do. It is a “Store of Wealth”, however, you cannot go to Walmart and buy clothes or food with Bitcoin, nor can you fill up your car at the Gas Station. You cannot pay your mortgage,  health costs, utilities, or even buy a really good meal with Bitcoin! Yet, there is a rush to spend precious Investment Dollars, Retirement Funds, or worse yet, the Family “Nest Egg” in pursuit of the “Riches” to be made.

This will not end well! Wealth is not achieved by Speculating in the last stage of a spiking and crowded trade; that is a recipe for losses, HUGE losses.  Wealth is achieved by understanding the flow of the economy and attempting to purchase good assets early in their cycle. Purchasing assets that will appreciate as time goes on; investing long before everyone else recognizes the potential of your asset class.  Such opportunities present themselves a few times in your life. Certainly,  March 2009 for the Equities Market or Investing in Bonds after the traumatic ending of the Interest Rate Cycle in 1982 when short term rates broached 20%; resulting in  35 years of declining rates and rising Bond prices. Just these two illustrate that the time to buy is when everyone is selling and swearing never to enter that Market again.  Two possible considerations come to mind.

As China was saving the world in 2009-2012, Iron Ore, Copper, Aluminum, Timber, etc. were in demand and prices rose sharply; they have since fallen sharply. The rise of Commodity prices were also the result of the completion of the Commodity Cycle; typically a 15 year duration: 7.5 years up, 7.5 years down. The down cycle appears to be in the process of completion. No one wants to own Commodities!

Typically, Housing experiences a Mid-Cycle Correction in the 7.5 to 9 years from the cycle completion date. The last cycle would have bottomed and completed in mid to late 2009; the vulnerability stage would then be early 2017 to the end of 2018. A correction in this time frame would constitute a buying opportunity in an ongoing Bull Market. With both the Stock and Bond Market heading toward completion of their respective cycles, this “Correction” could be pretty “Scary”.  However,  the best price appreciation is generally achieved just prior to the cycle tipping point often resulting in a Price Spike. This event should transpire for Housing in the 2023/2024 time period also coinciding with Commodity Cycle. In order to benefit from both trends,  investing in cash flowing residential rentals in the high growth corridors of the US might be considered. One should always consult with your advisor prior to investing.

https://michaeldouville.com/bitcoin-mani/

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Time to Preserve your Wealth…Featuring Michael Douville

Posted in Michael Douville, Uncategorized with tags , , , , , , , , on December 7, 2017 by paulthepoke

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Ecclesiastes 3:12 I perceived that there is nothing better for them than to be joyful and to do good as long as they live…

“Timing; it is all about Timing!” “ Know when to get off!” “There are times to be aggressive and times to be cautious!” “It is not what you make, but what you keep that Counts” “Trees do not grow to the sky!”

These adages are especially true today regarding the Historic levels of both the Stock and Bond Markets. These sayings mimic real life experience and explain that Life is a series of Cycles that ebb and flow throughout History. It is Wisdom that allows one the courage to ACT! Courage will be needed to recognize danger and courage will be needed to Preserve your Wealth for the Future!

Stock Market Cycles have characteristics of a Wave Pattern that peaks about every 7 years; examples of the latest bubbles are March 2000, then December 2007 (7.5 years), and now almost 10 years from the last Stock Market Peak; courtesy of the World’s Central Banks. The final push to the top often is exaggerated with huge gains associated with the Peaking Process.; a vertical price appreciation spike often develops near the cycle end, adding to the Mania. The Mantra of “This Time is Different” is almost universal in the topping process as no one wants to believe the “Good Times” are ending. The Federal Reserve has announced it will no longer support the markets; rather, the Fed is withdrawing liquidity at a scheduled rate of $510 Billion for 2018. The “Good Times” are over! The Central Banks of the World have also declared their intention to bring Central Bank purchases to a screeching halt from $2 Trillion to ZERO by April of 2018. Beware, the Party IS OVER!! “What goes up, must come down.

If the Cycle has been artificially stretched by Central Bank intervention and the Banks have declared their intentions to end this intervention in BOTH the Stock and Bond Markets, it is time to “Jump Ship”. One does not need to be fully invested at all times. Numerous Private and Institutional Clients have already begun to take profits. Perhaps removing the original investment from any Risk or “Harm’s Way” would be prudent; parking the proceeds in Cash. Preserving Wealth will allow one to participate in different Investment Cycles such as the Commodity Cycle that appears to be in the bottoming process. Much of the Price Risk has been “Drained” from that Asset class as the demand for Raw Materials has “fallen off a cliff” and is beginning to show some signs of improvement. The Commodity Cycle, once it starts to rise, often completes in 7.5 years; plenty of time to season more true Wealth. Consider this, the Housing Cycle is a much longer cycle of 18.5 years that should Peak and Possibly Spike in the 2023/24 time frame. Investing in Housing now will allow participation in the Commodity Cycle as well as the Real Estate Cycle. Raw Materials are necessary for Construction, as they inflate, housing will follow; thus benefiting from two powerful trends.

https://michaeldouville.com/time-preserve-wealth/

 

 

The Other Side of the Peak…Featuring Michael Douville

Posted in Michael Douville, Uncategorized with tags , , , , , , , , , , , on November 9, 2017 by paulthepoke

MichaelProverbs 1:5 A wise man will hear and increase in learning, and a man of understanding will acquire wise counsel…

From the lows in March of 2009 to the lofty levels of today, by any metric, the Stock Market has done extremely well. Hardly anyone caught the very bottom, but even those that came close have doubled or tripled their investment; very well done! Lucky Investors have ridden the S&P and The Dow up to 2582 and 23,517 respectively and the ride UP has been FUN! Please pay very close attention to this chart, the Other Side is a completely different World. The higher the Peak becomes, the steeper the Other Side! There is no Plateau!

In order to preserve the Gains, a Courageous decision MUST be made; when to EXIT! Greed dictates grabbing every extra dollar one can; Prudence cautions that it is not what you make, but what you keep that counts! The climb to the Peak is exhilarating, even intoxicating. The Fall is depressing. Unfortunately, typical Human fashion,  the average Investor believes that the “Peak” will be recognized and they will escape in plenty of time to capture the Maximum gains. This “Time is Different” always becomes the Mantra! The brutal lessons of History teach that most Investors ride the wave up and then ride the wave down; this time the Fall may be devastating. The Central Banks of the World have exaggerated the Bubble with their Trillions of Dollars of Liquidity. The Federal Reserve has stated they will begin removing liquidity the 4th Quarter of 2017 at the rate of $10 Billion a month growing to $510 Billion withdrawn in 2018. The World Central Banks have pledged to reduce their liquidity injections from $2 Trillion annually to ZERO by April 2018.

Without Global Central Banks participation Risk will rise substantially. The Doctrine of Enough (or How Much do I Need?) prescribes taking the profits gained and moving to another Asset Class; reducing risk. Bonds have traditionally been the choice of risk adverse Investors. However, the Debt Binge of most Government Entities as well as many Corporate Entities make Bonds as risky or maybe even more so than Equities; this Asset Class should also be avoided.  Precious Metals and the larger class of Real Assets and Commodities are just starting to bottom after years of decline; the process has not yet completed. They are at or near the lowest values in decades.

Recognizing the coming shift in Cycles is not easy. However, the basic industrial components such as Iron Ore, Copper, Lumber, Oil,  and Aluminum will soon cycle off their bottoms. These are the components of Single Family homes which as the raw materials rise, house prices will also rise. Housing unlike Gold has a “Use Factor” of “Shelter” and is a necessary component of Life. Accumulating Single Family homes and providing “Shelter” by leasing them to families may not only transfer profits from an aging, riskier asset class to an emerging class, but also provide conservative, consistent, and monthly Income to weather an Economic Storm.

Maricopa County in Arizona is still ranked as one of the best long term Real Estate Markets in the Nation. Your Core Real Estate Lifeboat may provide Generations of Wealth and Income.  Our website is https://michaeldouville.com and our first consultation is always free.

 

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