2017 - get ready for an explosive year!
TRANSCRIPT
2017: Get Ready For An Explosive Year!By NICO Omer Jonckheere, SE, MM
”Predictions are very difficult, especially about the future.”
--Yogi Berra
The Trump Honeymoon period will turn into the Trump Presidential Reality Show, and that will shake things up
substantially.
President-elect Trump may have grand ideas for the U.S. economy. However his hands will be tied by the massive official US national debt, which is approximately $20 trillion as of Dec 2016 and has approximately doubled every 8 years at a 9% compounded rate for over a century:
Year Official Debt2016 $20 trillion2024 $40 trillion2032 $80 trillion2040 $160 trillion
(What could go wrong?)
“Looking further ahead, the most worrying signs relate to the risk of greater protectionism. There would be no winners, only losers. Lower global growth, and possibly higher inflation, would benefit no one.”
--BIS’ Claudio Borio
Trump’s campaign rhetoric signals the likelihood of protectionism, tariffs and trade wars. None of this is
particularly encouraging for growth projections:
This will not help the overall US economy. In fact, it will worsen it. As Ron Paul has stated in layman’s terms, the
expense of a tariff is simply passed along to the consumer:
Trump has made it clear he does not like the EU. He prefers bilateral negotiations.
There is now a clear shift in attitude within the electorate of the developed economies towards anti-globalization. Existing free trade agreements, tariffs and protectionism are all on the table now.
The question no is: Which countries will be hurt the most by another protectionist era and sharp contraction of global trade?
In an interview with The Wall Street Journal, Trump said the US dollar, which touched a more than 14-year high about six weeks ago, has
gotten “too strong” against the Chinese yuan. He told the WSJ, “Our companies can’t compete with them now because our currency is too
strong. And it’s killing us.”
”A new global financial panic will be one legacy of the Trump administration. It won’t be Trump’s fault, merely his misfortune.” --Jim Rickards
“I think 2017 is going to see abattle between deflationary forces (as paper assets like stocks and bonds begin to rollover to the downside) and inflationary forces (as
deteriorating currency values and natural resource challenges steadily push commodity prices higher).”
--Eric Hadik of www.insiidetrack.com
2017: What to Buy & What to Sell?
If borrowing costs keep rising, companies with a lot of debt could struggle to pay their bills. We could even see a
huge spike in corporate defaults.
The trend in ‘actual’ earnings has been dismal … but the trend in ‘hope’ has been exceptional!
This indicator peaked at 11.35 as an Internet-driven bull market of the 1990s was ending!!
Today it’s at 11.27…
The median price/revenue ratio of individual S&P 500 component stocks now stands just over 2.45, easily the highest level in history!
The optimism of professional money managers has reached an extreme!
The DJIA has soared 73% in five years to 20,000 even as aggregate revenues have been mired down in a sea of stagnation.
After the S&P 500 hit its low of 666 points in 2009, overall trading volume continued to decline.
IHSG or JCI
IDR
SEKTOR & SAHAM PILIHAN
PUSATKAN PERHATIAN PADA PERUSAHAAN DENGAN:
“Buying good companies at bargain prices makes sense.”
- Joel Greenblatt
1) pertumbuhan penjualan dan laba bersih;2) cash flow yang positif;3) sedikit hutang;4) ROE yang tinggi, dan5) ekspansi dalam OPM.
INVESTMENT STRATEGY The key is to look for cash flow, a reasonable dividend
payout, if you can find it, and growing fundamentals. Companies that exhibit those characteristics represent value. There are not many, but for those investors willing to do the homework, they exist.
I remain positive towards those kinds of investment that will retain inflationary protection like hard assets such as commodities.
As Greg Fisher of Adepa Asset Management wrote, amid a world of worries, “keeping the discipline of holding lowly valued, under-owned and unleveraged companies is likely to continue to protect our capital and earn us both income and capital appreciation over the longer term.”
Or to put it more plainly, and in the words of Warren Buffett, “price is what you pay; value is what you get.”
Also stick to small-caps, which come with big advantages because of their size. Few analysts cover the smaller stocks on the market, and few mutual funds are even allowed to invest in them. That lack of professional awareness of small caps means that you are far more likely to run across a major mispricing or hidden opportunity in a small cap than you are in a larger name.
MY FAVORITE FIVE
A true mania for gold stocks could develop over the coming years. This could make anyone who buys gold stocks at their current depressed levels very rich!
Gold stocks have been in the second-deepest bear market since 1975. In other words, this is an incredible opportunity!
The ratio in the chart above compares gold stocks with the price of gold. The lower the ratio, the cheaper gold stocks are compared to gold. According to this ratio, gold stocks haven’t been this cheap since the early ‘80s!
VALBURY’S STOCK PICKS
VALUE STOCKS
CONCLUSION
“If you were smart at the start of the 19th century, you made your
way to London. If you were smart at the start of the 20th century, you
moved to New York. And if you are smart at the start of the 21st
century, you will find your way to Asia.”
--Jim Rogers
Thank You
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