Peer To Peer Lending In India

Peer to peer lending is going to revolutionize the lending platform of India in a couple of years. This platform promises immense return in a very short period. It mutually benefits the lenders and borrowers with healthy returns by eliminating any middlemen in between.

A very informative article on this topic made me think to invest in such a platform. Already this type of an investment option is doing wonders in countries like United States and soon it is going to hit India.

The article which I read gives a very wonderful overview and meaning about peer to peer lending in India. Trust me, I had no clue about it before I read this article.

The following points that needs to be kept in mind about peer to peer lending are-

1] It is an online marketplace for lenders and borrowers
2] The benefit of using an online platform is that it makes P2P lending easier to afford than borrowing money through traditional financial institutions.
3] RBI will soon regulate peer to peer lending in India.

The Face of Peer to Peer Lending in India

Peer to peer lending can be identified as a disruptive technology; something people are not sure about. A good example of a disruptive technology is the Internet. in the beginning, Internet was mostly a source of information for academic people or researchers. However, it soon became a foundation of technological advancements as we know them today. the thing to understand here is that it can take some time to see the results and benefits of a disruptive technology.

Many people believe that the current decade is all about financial technology. We have seen innovations like virtual currency in the financial industry. Virtual currency a.ka. Bitcoin is taken as a revolution in the financial sector and has already sunk its roots in the Indian market. Therefore, an innovation like P2P lending should not come as a surprise to people interested in Indian financial market.

P2P Popularity in India

Peer to peer lending began from the Western markets but India was not far behind. The banking sector in India is only able to provide credit to 15% of the population which seems quite a small figure given that India is the largest democracy in the world. However, analysts believe that India is the largest P2P market. Due to the fact that many P2P platforms in India don’t make their books public, it is difficult to calculate the amount of lending through them. However, there are over 30 start-ups in India which proves that P2P lending is gradually becoming popular. Some of these companies provide individual loans but others mix individual and business loans.

The Direction Of Market Trends

One of the trading pearls of wisdom is to always trade “with the wind at your back.”

The reasoning here is that the trend, or the overall direction of price for a pre-determined time-frame, is most likely to persist in that direction for a greater period of time than price movement in the opposing direction, and therefore placing trades in the same direction of the trend puts the odds of winning on your side.

Of course there are other things to consider. For example, there is the TIMING of entering the trade in the direction of the trend. You could know the overall trend to be bullish and enter a trade LONG (buying), but if you do so right when a correction is beginning (when prices move counter-trend temporarily), you could turn out a loser if you are unable to withstand the losses that will accrue during that correction. So clearly knowing and trading in the direction of the trend is just part of the equation.

Another thing to consider is the method of determining the trend. You can use moving averages or some other oscillating indicator, or you can use trendlines and note the angle of ascent or descent of the market swings, or some other method. You also have to determine the time-frame for the trends you wish to base your trades on.

For instance, if you are a day trader you certainly do not want to determine the trend based on a YEARLY time-frame chart alone. The reason for this is that the YEARLY chart is far removed in the scope of TIME from the INTRADAY (based on minutes, hours or fractions thereof) time-frame. A more realistic time-frame for determining trend for day-traders would be to use a DAILY time-frame chart. If you happen to trade based on the DAILY chart and hold your trades overnight for one or more days, you would likely want to determine your overall trend using the WEEKLY time-frame chart. The rule of thumb is to use the next higher time-frame for trend determination from the time-frame you actually use for trade decisions.

In this article I’m going to approach the subject by using the WEEKLY time-frame chart to determine overall trend as if trading from the DAILY time-frame (holding my position for one or more days, also known as a ‘short-term’ or ‘position’ trader).

The weekly chart that I’ve decided to use for the examples in this article is the CRUDE OIL weekly chart from around January 2015 to the present (July 2016). No trades will be discussed as the focus is on approaches to deciding on overall price trend for the purpose of trading with the trend at the lower DAILY time frame. You can use the same method for any time-frame you desire, however.

The very basic method is to note the most recent market swing, whether it be a swing top or bottom. If a top, consider the trend bearish. If a bottom, consider the trend bullish. For the very short-term trades this can often have you trading in the best direction. All trades assume you have a good timing method, such as using the FDate method or combination of indicators you are comfortable with. A swing bottom is simply a price bar with a LOW that is ‘equal or lower’ than the previous bar’s low and that the high of the bar has already been exceeded by price (by the subsequent bar or bars). A swing top would be a price bar with a HIGH that is ‘equal or higher’ than the previous bar’s high and a following bar has moved below its low. The occurrence of a subsequent higher-high (in the case of a swing bottom) or lower-low (in the case of a swing top) is called ‘confirming’ the swing (top or bottom).

To improve on the basic method, you could apply what are called ‘filters’. A filter is simply one or more chart indicators, such as moving averages, stochastic, MACD or other alone or in various combinations that you use to help you decide on trend direction.

One filter I have found useful is using the histogram of a MACD indicator set to the standard (12, 26, 9) setting. The histogram reflects the orientation of the oscillator and signal lines. If the oscillator line is above the signal line, the histogram will form above the zero level and is considered bullish. If the oscillator line is below the signal line, the histogram forms below the zero level and is considered bearish.

The thing about the bullish or bearish indication just mentioned is that there are times when the oscillator/signal line orientation is bullish but the market is trending bearish for weeks on end. The reverse is true for the bearish indication where prices could trend bullish for weeks. Thus alone this may not be a suitable filter and could use some adjustment. One such adjustment is to note the histogram range from zero.

For example, if each bullish (above zero) histogram bar is taller than the last, consider the trend bullish. But as soon as a shorter histogram bar forms, consider staying out of the market (neutral). For bearish trend determination, as long as each histogram bar below zero is taller than the last the trend is considered bearish. Once a shorter histogram bar forms, go neutral.

For good stretches you may find this approach works well. However, it too has flaws and used alone could poise a problem. For example, a taller bullish histogram formed for the February 20, 2015 week which would have suggested a bullish trend has started. And the prior 3 weeks was indeed bullish. Unfortunately the bearish wave was just starting and exactly from this week! Had you followed this method alone without the help of another filter you would have been pointed in the wrong direction until week ending March 13, 2015.

What you could do is add another qualifier filter. An example could be using the %R (14 period) along with the MACD histogram.

Using the %R, you could ignore the bullish MACD histogram bars anytime the %R has turned down, or the bearish MACD histogram bars when the %R has turned up. The MACD histogram would dictate trend direction and the %R would dictate when the histogram is to be ignored.

Another useful filter and one of my personal favorites is to apply the 8-bar exponential moving average right on the chart. I would use this along with the MACD histogram, but only use the histogram to indicate whether above zero (bullish) or below zero (bearish) with no consideration of one histogram bar being taller or shorter than the last. If the histogram bars are above zero (on my chart they are colored green) and the last weekly price bar has closed ABOVE the 8-bar exponential MA, I consider trading in the bullish direction. If the histogram bars are below zero (on my chart they are red) and the last weekly price bar has closed BELOW the 8-bar exponential MA, I consider trading in the bearish direction. Anything else and it is considered neutral.

Starting with week March 20, 2015 the histogram is bullish but the close is below the 8-bar MA. So the trend is neutral. Week ending April 10, 2015 closed above the 8-bar MA and the histogram was bullish, therefore signaling taking bullish trades. The market did not close below the 8-MA until week July 3, 2015 and this also turned out to be the last week where the histogram was bullish. It turned bearish the following week, and now the trend is considered bearish by histogram and 8-bar MA. This lasted until week September 11, 2015 although price still closed below the 8-MA but the histogram went bullish (above zero).

Above I have given you some ideas that you can employ for trend determination. There are many other ways and I encourage you to backtest them. The point is to determine the trend by examining the time-frame just above the one you trade from and discipline yourself to only trade in that direction for higher probability trading. Use filters to help you avoid trading in a direction based on a false trend signal. Do not expect any method to be perfect. You are going to get some false signals from time to time. If you have a good timing method to go along with your trend determination method you may still avoid bad trades due to a temporary false trend signal.

Always know the trend. You will be better off with the ‘wind at your back’!

Rusia In 2017

There was a time when I was supposed to hate Russia. We were all supposed to hate Russia.

It was back when I was a kid, in the 1970s and ’80s. Russia – well, technically, the Soviet Union at that point – was country non grata. Russia was the imposing bear to our freedom-loving eagle. Communism versus capitalism. Mutual destruction. Cold War. Spies. Olympic rivals. Reagan and Gorbachev and all that.

Nowadays, it seems the American mood toward Russia has morphed – or, at least, the Republican view has morphed – if one is to believe a December poll conducted by The Economist and YouGov. Thirty-seven percent of Republicans now hold a favorable view of Russia’s Vladimir Putin, nearly quadruple the amount just six years earlier.

On a narrower level, more than half of Trump supporters think our new president holds favorable views of Russia… and that’s where we have an opportunity as investors.

Welcome to what I am calling the Year of Russia.

Later this month, Donald Trump assumes the mantle as Leader of the Free World. And one of the biggest winners will be Russia.

The bromance between Trump and Putin is almost cloying. Trump has said on several occasions that he wants to reset America’s relationship with Russia in a more positive light, and he has taken every opportunity to praise Putin.

In turn, Putin, a former KGB official who is an expert at mental manipulation, has praised Trump as “brilliant and talented.” Putin even went so far as to refrain from imposing tit-for-tat sanctions on America after the Obama administration expelled numerous Russky diplomats in the wake of alleged Russian interference with our recent presidential election. He did so knowing that Trump will, almost assuredly, immediately reverse Obama’s decision and allow Russian diplomats to return to American soil.

All that is just preamble to the main event, however: Russia’s return to the fold.

 

The Power of the Russian Bear

Russia has been on the outs with the global community since the Crimea crisis – a crisis that the West cast in the wrong light for its own needs. Under the Obama administration, America pressed hard to slap Russia around as punishment for reclaiming Crimea from Ukraine. The U.S. and Europe (largely under pressure from the Obama team) imposed economic sanctions on Russia, prompting Putin to retaliate with his own sanctions.

Thing is, much of Europe was never really fond of the sanctions – and that’s according to the various people I have talked to in Europe and in Russia as part of my travels over the last two years.

Europeans know their history. They know Crimea had been Russian territory since the late 1700s. Though they weren’t particularly fond of the civil war in Ukraine and Russia’s involvement, they do understand the reclaiming of historical lands, a character trait of Europe that has continually reshaped that continent for centuries.

More relevant to today, they know that Russia is an economic power that slow-growth and unemployment-addled Europe needs as a trading partner. Russians buy a ton of European goods, particularly from Germany, while Russian tourists spend billions annually on vacations and shopping in Greece, Spain, Italy, Germany, France and the U.K.

Europeans and Russians want the sanctions gone, and they both know the only reason the sanctions still exist is because of American pressure to keep Russia boxed in economically.

That, I am betting, will change very quickly after Trump takes up residence at 1600 Pennsylvania Avenue.

 

The 2017 Blockbuster

My bet: Donald Trump calls for an end to sanctions on Russia before his first 100 days in office are over.

Europe will eagerly and excitedly agree… and trade flows with Russia will ramp up quickly.

Those of us invested in Russia will win big as the Russian ruble trades higher against the dollar and as Russian stocks, now among the cheapest in the world, rebound.

The ruble is already up nearly 8% since Trump’s victory. That’s a significant move in the currency market. Meanwhile, Russia’s main stock market index, the Micex, is up more than 9%.

I’ve been recommending buying the Russian ruble for pretty much the past year, and I even opened my own ruble account.

I recommended a particular Russian investment that is up 13% so far, and based on historical rebounds the Russian stock market has experienced after various crises, I expect that investment could see triple-digit gains once sanctions are lifted.

Every time Russia has an economic crisis, the local market gets annihilated. And every time that happens, the Russian market rebounds smartly when the crisis passes.

We are now approaching that inflection point. If Trump does indeed call for the end of sanctions – and that seems all but assured – Russian stocks are going to have a blockbuster 2017.

Second Chance to Invest in Oil

There’s a reason why oil is called black gold.

Like bullion, it’s difficult to find in large quantities, hard to get out of the ground, and – relative to all the people who want or need it – there never seems to be enough to go around.

There’s one key difference though: Bullion can be sliced, diced, melted, cooled and reused again.

Oil? We just keep burning more of the stuff every day.

All of which means – given the fearful headlines about a new “bear market in oil” – this is a second chance to buy into petroleum stocks or the commodity itself… and be well rewarded.

Oil’s Zigs and Zags

In case we’ve all forgotten, oil basically doubled in price – climbing to $51 a barrel – in just four months’ time earlier this year. Did we think further advances were going to come without a pullback (or three)?

The oil market is justifiably famous for its volatility, especially when rocketing out of its periodic bear-market cycles.

It happened in 1986 when oil jumped 70% in a month’s time. A vicious pullback retraced nearly the entire gain, only to have the commodity double in price over the following year.

It happened in 1994.

And then again in 1999, 2001, 2003, 2006… well, you get the point. Twenty-percent pullbacks (and worse) go with the territory when the smell of a bear market still lingers in the air.

The key thing to remember is that the fundamentals for higher prices remain quite good. Right now, you’ll read plenty about worries of oversupply in the oil market. Yeah, sure – for a handful of months. In the meantime…

We just keep burning more of the stuff every day.

Hitting the (Clogged) Open Roads

A few weeks ago, the Energy Information Administration said Americans are on track to break a nine-year record for gasoline consumption. Our cars are guzzling down, on average, more than 9 million barrels a day.

The same agency expects U.S. crude oil production to keep declining through next year, stating that: “The expectation of reduced cash flows has prompted many companies to scale back investment programs, deferring major new undertakings until a sustained price recovery occurs.”

Nor has the rest of the world lost its taste for hydrocarbons, despite all the ongoing investment in wind- and solar-powered energy.

China is a good case in question. We all know the story about a slowing economy there. Yet Platts China Oil noted in June that its measurements of “apparent oil demand” (owing to the opaque nature of China’s official energy data) fell just 1.3% in the first four months of this year.

Buried inside its data is an interesting change in trend. Industrial oil demand is pretty much flat. On the other hand, gasoline use is hitting all kinds of records. It’s already up 8% in the first four months of the year.

As you can see, the industrial side of its economy is on idle, but that’s not stopping millions of Chinese from buying cars and taking to the roads and highways. Passenger vehicle sales rose more than 6% (with a particular buyer preference for gas-guzzling SUVs, which saw a 46% spike in sales).

India is a similar story. Auto sales are up 8%, and gasoline demand is up 14% on a year-over-year basis. India’s decades-long focus on service-based industries is widening to include more manufacturing, too. Oil experts believe the nation of 1.2 billion people now burns through 4.2 million barrels of oil each day, making it the third-largest consumer of crude in the world behind the U.S. and China.

No Help From Oil’s Wide-Open Spigot

On the supply side, what about all the talk of “market share,” “gluts,” Saudi Arabia and the rest of OPEC?

As others note, the cartel’s power is slipping away. The group’s ability to pump extra amounts of oil – what experts call “spare capacity” – is at its lowest level since 2008.

Nor is Saudi Arabia, historically the “swing producer” for oil, much help.

One big factor: hotter summers. It means more and more electrical demand for air conditioning. And unlike the U.S., where natural gas fuels a majority of power-generating capacity, Saudi Arabia burns oil to keep its citizens’ A/C units reliably set on “max cool” mode.

The result?

In 2015, the Kingdom’s used up a quarter of its reserves serving its own domestic needs. For a record eight-month decline, between October last year and May, the country’s overall crude inventories dropped 12% to a little less than 300 million barrels.

We’ve been warning for some time about the rising opportunities available in the oil industry.

So don’t let the recent headlines in the past month about “plunging oil prices” keep you from taking advantage of this second chance at getting in on black gold.

Commodities Are Limited

After college, my first car was a Toyota Corolla hatchback. The engine was a nicely engineered piece of machinery. I wish I could say the same for the body panels, which quickly took on the look of rusty Swiss cheese; the holes widening year by year.

Thanks to such episodes, carmakers began using galvanized steel – the body panels “hot dipped” in a molten bath of corrosion-resistant zinc.

But car companies in two of the world’s most populous countries didn’t get that memo. At least, not until recently.

The result? A huge bullish stampede into the zinc market at a time when many of the world’s leading analysts least expected it…

Bloomberg’s recent headline “China’s Rusty Cars Set to Sustain Rally for 2016’s Top Metal” says it all. So does the reaction in zinc prices, up 60% since the start of this year.

Only about one-third of the 19 million cars and trucks made in China last year were built with galvanized steel.

It’s much the same in India, where consumers bought a record 2 million vehicles last year; only about 20% were made with galvanized steel, according to India’s Institute of Technology Bombay.

When you think about vehicle sales forecasts in either country by 2020 (24 million in China, 5 million in India), that’s a lot of zinc.

Don’t Look Now, But…

My point isn’t to run out and buy zinc-mining stocks. It’s just to note that demand for commodities often materializes in ways no one expects until the rise in prices makes it all too obvious.

Take a look at what’s happening with nickel.

The Philippines are a major supplier of raw nickel ore. The new Duterte administration, which took office over the summer, is in the middle of a “review” of the nation’s three dozen or so mines, threatening to put some out of commission for alleged environmental violations.

That’s not exactly “love,” but it certainly helps the case for loving the ongoing run in nickel prices. Analysts at UBS Group AG see nickel prices rising another 25% next year (after the 20% gain so far this year).

Out of all the major industrial metals, copper is one of the most widely watched. The price of the red metal barely moved all year. It’s down 50% since 2011.

Yet Japan’s largest producer, Pan Pacific Copper, sees the price rising 40% to roughly $7,000 a ton by the time 2020 rolls around. Citigroup recently made a similar forecast. Why?

It’s all about supply and demand.

Copper demand has remained relatively firm, even though economic growth in China – the world’s No. 1 consumer of copper – has slowed in recent years.

But copper supply is another matter completely.

Late last year, Glencore – one of the world’s largest copper miners – decided to mothball its largest mines in Africa, taking up to 400,000 tons of copper production off the global market. In Chile, the single largest supplier of copper in the world, the state-run copper commission announced big investment cuts through 2025, eliminating eight mine-development projects worth nearly $23 billion.

Now you can see where these copper-price projections came from. At Citigroup, analysts see widening deficits between copper supply and demand. At the aforementioned Pan Pacific Copper, the company’s president said, “Output will fail to keep pace with demand because of the absence of new mine supply – unless prices reach $7,000 [per ton].”

With the price of copper below $5,000 a ton right now, that provides a lot of leeway for potential profit – and yet another reason to keep a close eye on this class of “most hated” commodities.

Advantages and Disadvantages Of Trading Futures

Before I can tell you the advantages and disadvantages of trading futures, it’s important to understand how it differs from trading stocks.

When you buy a stock, you own part of the company. That is, you share ownership with other investors. That’s why we say you buy shares.

Trading futures, on the other hand, requires a contract to buy or sell the commodity in the future. That’s why they are called futures.

You can buy or sell those futures contracts as easily as trading stocks. For that matter, you don’t even have to lay out the money. However, you do tie up resources in the form of margin.

The problem is that the margin held is nowhere near the actual value of the commodity if you were to purchase it. This is known as the Notional Value. It’s calculated as the market value multiplied by the leverage.

Okay, I just threw you two more terms that need definition:

The market value is the price that traders are willing to pay. In general, this is determined by supply and demand. The leverage is the number of units of the future index.

For example, the E-Mini SP& 500 Futures has a leverage of 50. As of this writing it’s trading near a market value of 2100. Multiply that by the leverage (50) and you get $105,000. That’s the Notional Value of the E-Mini S&P.

As you can see, if you buy one E-Mini S&P contract, you are controlling $105,000 in value. However, unlike stocks, you don’t own it. You just have a contract to buy or sell it, depending if you went long or short.

Low Margin Required

What did you actually pay? That’s known as the margin that the broker requires you to hold while that trade is active. It varies, but it’s around $5,000.

If you bought a stock valued at $105,000 you’d have to pay $105,000. If you used margin, it would still require a payment of half of that. The advantage with futures is that you only tie up a small fraction.

However, the disadvantage is that you need to know what you’re doing. If you let a Futures trade get away from you, you are liable for a huge investment. Remember, it’s a contract.

That’s why traders buy and sell Futures contracts without actually ever buying the commodity.

What’s the disadvantage?

When trading futures you have to apply your due diligence in knowing the notional value of the future contract.

If you don’t pay attention to the Notional Value, and a trade keeps going against you and you don’t close the trade at a small loss, it can get out of hand.

You could end up losing a lot of money in a short time. If you reach the limits of your margin, your broker will close the trade if you don’t. That means you’ve been taken out of the market and you may not have the resources to get back in. Game over!

For this reason, you need to stay small. Don’t add to bad trades hoping to lower your cost bases. Rather, just admit that you were wrong and you’ll be around to play another day when an opportunity arises.

Advantages?

There are many, and these are the reasons why I love futures over stocks. The rest of this article will briefly list the advantages with trading futures.

Trading Long and Short

Going short with Futures is just as easy as going long. It’s just a matter of deciding in which direction you think the market is headed.

No Day Trading Limits

There is no day trading limit with Futures. Stocks can only be traded three times in a day before the IRS considers you a day trader. Futures can be bought and sold any number of times in a day, allowing one to take quick profits and benefit from intraday swings.

No Wash Sales Penalties

The IRS does not penalize you for taking a loss and reentering the same trade within 30 days. When this is done with stocks it is considered a wash sale and you lose the benefit of deducting the loss unless you can carry it forward to a future gain on the same stock.

The reason why it’s not penalized for Futures is because Futures pricing are recorded as Marked to Market. I won’t get into that here. You can always do a Google search for the term if interested.

Trading 24 hours

Futures trade nearly around the clock, except on weekends and short periods in between for exchange record keeping.

European Style Trading

Stock Options follow the American Style that can be exercised anytime. When trading stock options, one needs to be careful to avoid being exercised if the option is in the money.

Most Futures Options trade European Style, which can’t be exercised before expiration. There are some exceptions, especially with weeklies. That’s beyond the scope of this article though.

Tax Advantage

Futures and Options on Futures are treated according to IRS Section 1256. That provides a tax advantage since 60% of all gains are considered Long Term. This is true even if held for just a few seconds.

The Big Oil

Every week brings another spate of headlines about the heavy blows soon to rain down on the energy sector…

“The Oil Collapse ‘Death Spiral'” is coming soon…

And… “Oil Prices Might Never Recover.”

Apparently, very soon, we will all ditch our gasoline-fueled cars and trucks for Tesla knockoffs. The slow-growth U.S. economy and the rising number of wind- and solar-energy installations around the world will supposedly finish the job.

Boom! Petroleum is “the new coal.”

Don’t believe it. In fact, we may well be entering a new golden era for oil investing – all because of a certain country in Asia with a five-letter name…

If you want to know which economy will have the single largest impact on the global price of oil – and why we will continue to look at the oil sector as an important part of any investment strategy – all you have to do is look at what’s happening in India.

India – with a population of 1.3 billion and a gross domestic product (GDP) growth trend that’s now rising at a faster pace than China (7.5% versus 6.9% in 2015) – is still in the early stages of a massive love affair with crude. And considering that it needs to import about 80% of what it consumes, it’s a love affair that’s growing literally by the month.

In September, oil imports rose nearly 12% compared to year-ago levels. It was the same in August (a 9% increase) when the country brought in a record of nearly 19 million metric tons of crude – the equivalent of nearly 4.5 million barrels a day. By comparison, China, with a more developed economy and nearly 1.4 billion people, imports around 6 million barrels a day.

As the International Energy Agency (IEA) recently noted: “India is taking over from China as the main growth market for oil.”

At the current pace, the country is on track to raise yearly imports by 7% for the second time in a row, having doubled its crude oil imports in a decade’s time.

What’s driving all the demand?

It’s a familiar story – a small, but rising middle class (which makes up about a fifth of India’s population now, say demographers, but is expected to swell to more than 40% by 2030).

And new cars. Lots and lots of new cars.

In 2015, passenger car sales rose nearly 10% to more than 2 million units, the fastest pace in five years. One of India’s largest carmakers, Maruti Suzuki, recently predicted annual sales would hit 5 million a year by the end of this decade.

Keep in mind, all of this is occurring against a backdrop in which the IEA, in its World Energy Investment 2016 report, said current oil wells around the globe are depleting by an average of about 9% a year. Discoveries of new oil reserves are “dropping to levels not seen in the last 60 years.”

Of course, it’s important to ask whether electric-vehicle sales might become a bigger factor and perhaps drain off India’s surging oil demand.

The answer, I’m sure, is yes. But when is anyone’s guess. As India’s Economic Times noted, the country has 400 million people with no access to reliable electrical power. And even in major cities, outages have been common because of a lack of investment in India’s power grid in prior decades. Without reliable power, even the fastest-charging, longest-range electric car or motorcycle is useless.

The situation is starting to change in India, but it’s going to take decades. In the meantime, oil remains the only practical game in town for investors and as a foundation for India’s rapidly developing economy.

Do You Ready for the New Trump Economy

Well, now that that’s over with, where to next?

Truthfully, I’m disappointed the Fed raised interest rates last week. I expected as much, though I saw reasons why a rate hike would be ill-advised and should have been avoided.

There are simply too many deleterious impacts on massively indebted U.S. consumers, American multinational companies slammed by the strengthening dollar and emerging market economies that have taken on trillions in dollar-denominated debt that’s getting more and more costly. Those impacts will come home to roost soon enough…

Now we’re supposedly on the march toward three more rate hikes in 2017. Maybe – though doubtful. But we shall see.

The stock market certainly got what it thought it wanted, then promptly went nowhere.

Bonds flagged.

The dollar rallied.

Cheerleaders claim we’re on the road to even higher stock prices – never mind that rising interest rates have historically meant falling stock market valuations (more on that in an upcoming dispatch).

But we’re still left with the question: Where to next?

I have an idea, and you’ll want to own commodities if I’m right.

Having bullied Yellen for a rate hike, Wall Street is now waiting for the Day After – January 21. It will be like no other day after a presidential inauguration in modern history.

So many promises/threats are waiting to either unfold or fizzle. Which Donald Trump will show up to his first day on the job? Wall Street’s directional future depends on that answer.

The Threat of Stagflation

If Candidate Trump arrives, then we have economic challenges that will torment the market.

Immigrants who make up a goodly portion of the service-sector workforce will be rounded up and summarily dispatched back to their homelands – a massive disruption to restaurant back-of-house operations, the construction industry, agriculture, hoteling, landscape companies, etc. That’s inflationary and a significant brake on economic growth.

Chinese manufacturers/exporters face stiff tariffs as Candidate Trump executes his belief that China is manipulating its currency. That, too, is inflationary and will see China lash out with similar tariffs that hit U.S. exporters, leading to layoffs here at home.

U.S. companies also face punitive measures for trying to remain competitive globally by opening production facilities overseas (made all the more important because of the anti-competitive impacts of the strong dollar). That will hit corporate profit margins and lead to declining stock prices and job losses at home.

Meanwhile, infrastructure spending combined with proposed tax cuts means a fresh round of hell for budget deficits and America’s debt. That’s stagflationary because the rising cost of government debt payments takes productive capital out of the economy, while infrastructure projects dump money into the economy which will be chasing goods and services – i.e., rising demand (which will be happening even as all the other inflationary moves unfold).

So, Candidate Trump arriving to work on Day One could present quite the problem for stocks and bonds, since inflation erodes corporate profits and the value of current bond yields.

A More Moderate Approach

If Presidential Trump shows up, we have a slightly brighter path to tomorrow – though economic challenges still exist.

Presidential Trump will not provoke a trade war, saving America from another losing battle, while limiting inflationary stresses at home and saving U.S. multinationals from the pain of rapid profit deterioration (nearly half the S&P 500’s sales and profits come from overseas).

Nor will Presidential Trump deport 11 million illegal immigrants starting on the Day After, preventing mass pain across service-sector industries, inside American wallets and across the broad economy in general.

Nor will he impose punitive measures on American companies that are desperate to remain competitive in a modern global economy. That will preserve corporate profits and limit the impact on stock prices.

Presidential Trump will, however, pursue his infrastructure spending plan, no matter what. And that will be inflationary… which means it’s time to add “hard commodities” to your portfolio – and, in particular, industrial commodities, or “base metals,” as they’re called, such as copper, nickel, aluminum and whatnot.

The Winner for 2017…

Inflation will drive the price of commodities higher, as will increasing demand which will stem from U.S. infrastructure spending, since new roads and bridges and airports and whatever project is on the docket require an abundance of industrial metals.

One of the single best hard commodity opportunities for 2017 is the PowerShares Deutsche Bank Base Metals ETF (NYSE Arca: DBB), an exchange-traded fund (ETF) that, among its peers, has the best track record over the last five years.

This particular ETF is tied to copper, zinc and aluminum, and its returns are based on the performance of futures contracts in those three metals. As a way to gain basic exposure to rising prices for some of the most widely used base metals, this fund is fine.

As with all such hard commodity ETFs, however, the returns are impacted by the fund’s continual need to roll over the futures contracts it owns from one month to the next.

So that’s where we stand – Wall Street waiting to see which Donald Trump shows up. But whichever one it is, it’s a Trump who’s likely to be quite the tailwind for commodity investments.

The Differences Between Investing And Trading

Investing vs Trading: What is the difference?

This is a commonly asked question that beginners have when they want to start managing their own brokerage accounts. Since most people are interested in stocks, I will use equities to explain the difference between these two strategies. Realistically, this goes far beyond equities, and there are many investment or assets types that I could use as an example.

What is an Investor?

A simple explanation of an investor is someone who buys stock in a company to make money off the companies operations. You commonly hear the terms Dividend Investor or the Buy and Hold Forever Strategy. This is someone who buys a stock because they think the company has the potential to grow in the long run. In macroeconomics, the long run is defined as over a year or more than one operating cycle. An investor will have a long-term outlook and some investors like Warren Buffet will buy and hold the same company for a lifetime.

What Does A Winning Investment Look Like?

A smart investor will look at the accounting and the fundamentals of a company because that is the way to see how a company has done in the past. Then they can speculate on how this company will do in the future.

The fundamentals of a business can be anything that gives a business an edge over their competition. For some companies, this won’t be things that directly show up in their financial statements. For example, I invested in a REIT because they had the best management team. This management team was more experienced than their competitions and this investment outperformed all the other REITS.

From an accounting perspective, a good investment will have an increasing net income, a balance sheet with improving assets, and a great looking cash flow. You don’t need to go to school and learn everything about financial statements but knowing the basics will help you with making informed investment decisions.

When someone holds a stock they want to make a profit through growth or get paid through dividends. This makes fundamentals and accounting important because they will tell you that this company can increase in size, continue paying you a dividend, or have a growing dividend.

Trading

A trader is someone who will buy and sell stock due to price volatility. Price volatility is the short-term price changes. This means that a trader will look at the short term trends instead of how well the company is doing over the long run. A trader will focus less on fundamentals and accounting. Instead, their focus is on Technical Analysis and other short-term price drivers.

The timing of a trade will be much shorter than an investor’s time frame. There are a few basic types of traders. One is a scalper or Day Trader who has extremely short term trades. By definition, these are people who hold a trade for less than a day. Another example is a swing trader. These traders hold an investment more than one day but will sell the trade off the trend swing which is normally less than a week.

What does a Successful trade look like?

This is really simple. A successful trade is when someone’s trade hits their intended price target or they hit their profit goal. Since traders are in a trade for less time they are in the market and out of the market as quickly as possible. A trader wants their trade to hit its price target as quickly as possible.

Another important thing is that they will set price goals. A trader will go for a small gain at a time. An equities day trader might want 1 percent gain a day where a swing trader might set a goal of 5 percent a week.

Brexit and Trump Were Shocks

It started with the Brexit vote in the UK, and then Trump’s victory in the US. These two votes sent shock waves throughout the world, as none of the political elite could ever have imagined such results could possibly happen. But they did happen, and there are plenty more shock waves to come. Over the next couple of years we will likely see many more ‘black swan’ events, promoting pro-independence, and even outright separatism movements. The curtain is being pulled back further, exposing more of the establishment status quo.

First the UK, then the US, and now the next big ‘shocks’ will come from Europe, We have just spent the past four decades living in an ‘age of entitlement‘, with governments offering handouts every election, treating its voters like heroin addicts, their motto being “just promise them more stuff, and they will be happy.” It didn’t matter which party, they all did the same thing. The problem was they didn’t have the money to pay for all these freebies, and now it’s the day of reckoning.

Those in charge have run global economies into the ground, initiating monetary policies that included creating trillions of dollars out of thin air, to even forcing negative interest rates onto consumers. They have robbed the seniors of any return on their savings, and have now jeopardized pension funds, which have now incurred massive funding gaps thanks to low rates.

What we have seen in the last year has been quite remarkable, but what’s about to happen is going to make the last couple of years seem docile. There are a number of big political events coming in Europe in the next year. The next big date is December 4th, when we have both the Italian referendum on constitutional change, and the Austrian Presidential election. With anti-EU sentiment rising throughout Europe, either one of these events could be the domino that triggers a contagion, with more dominoes falling. sending entire continent into a state of terminal socioeconomic collapse.

The European Union is at great risk of unraveling, and the potential financial repercussions are massive. Those Europeans who have converted Euro to US dollars on any Euro rally are in a very good position today. Investors need to understand the big picture on what is coming in the global economy. Once you have the big picture, then devise strategies on how to profit from it.

The number one priority is to protect our wealth. Many lost a fortune in the real-estate crash in 2006, and the stock market crash in 2008. We are very concerned that these same people are going to get hit extremely hard in the coming global Bond Market Crash.

You must understand that all markets are connected. When investors in Europe saw rising unemployment, and escalating violence, they didn’t want to leave all their money in that economy. They looked around and even though the US economy was not growing rapidly, it was growing. They also knew that the US dollar was the world reserve currency, and that the US equity markets were the most liquid in the world. So they started to open US dollar bank accounts, and invest in the US stock markets. Investors from Russia, China, and all over the world are doing the same thing, they are moving their capital out of perceived risky areas, into the perceived safety of the US dollar, North American real estate, and equity markets.

So while we have seen a lot of volatility in the past two years, it is nothing compared to what is coming. We are already starting to see the consequences of negative rates. Bonds are now being sold off. This is happening in government bonds and corporate bonds. This is a major trend change, one that is going to deliver massive losses to many investors.

Things are heating up and you will need to navigate through this fast approaching, massive trend change. It will impact everything in your life: your finances, your currency, your mortgage, and your ability to sleep at night. These changes will hit the currency, equity, precious metal, oil, bond, and real estate markets. If you understand what is coming, and have a concrete plan on how to nimbly maneuver your investments as each phase is triggered, that’s good. But if you do not a plan, get help before the coming tsunami of economic changes.

It’s your money – take control!