Today, we have a rogue central bank. It’s destroyed honest price discovery in the money and capital markets.
I once said, “Invest in anything that Bernanke can’t destroy, including gold, canned beans, bottled water, and flashlight batteries.”
You can say the same thing about Yellen today.
The Fed’s monetary injections, “puts,” and safety nets under the price of risk assets now drive everything. Accordingly, investors ignore risk and mechanically “buy the dips.”
This irrationally inflates asset prices – that is, until the bubble becomes unsustainable and then splatters violently, as it has done twice already this century.
The vital core of capitalism is the capital markets. That’s where capital is supposed to be raised and allocated. It’s where future profits are rationally assessed and discounted. And it’s where entrepreneurs and business enterprises are honestly rewarded for their contributions to free market prosperity.
Now all of that has long disappeared. The Fed has turned the capital markets into casinos where speculators and gamblers are showered with ill-gotten gains. Financial operators strip-mine the Main Street economy.
I call this the “Age of Bubble Finance.” And I’ve been working on a new publication called Bubble Finance Trader that helps you make trades in this unique environment in transition.
The timing could not be better…
It is not merely that the financial markets have drastically changed – even from where they stood in the mid-1980s when I was working in the Reagan White House. Washington’s crony capitalist bailouts and the massive flow of cheap money and artificial credit from the Fed have wholly corrupted them.
In this crazy Fed-distorted market, the first thing you should focus on is capital preservation. Rule No. 1 is don’t lose money. This is more important than capital gains when government and central banks have gone rogue and have chronically violated every known rule of fiscal rectitude and sound money.
That means getting out of harm’s way in all the financial markets – debt, equity, commodities, and derivatives – because when the big correction comes, they will all experience a thundering collapse.
The second thing you should be aware of is that short-term liquid investments and cash are not as bad as their microscopic yields imply.
The 20-year worldwide central bank credit boom has generated vast overinvestment in mining, manufacturing, transportation, and distribution capacity worldwide. But now, the credit inflation is reaching its outer limits and we are entering what I described as the “crackup” phase. During this phase, the forces of global deflation will drive down the price of goods and many consumer services as well.
When the next crisis fully materializes, cash will be king. It will buy more everyday goods and services and will have command over drastically marked-down financial and real estate assets of every kind.
The third thing you should know is that the impending collapse of the global central bank credit bubble will generate unprecedented volatility and drastic movements in asset prices of all kinds.
So, I have two specific recommendations…
On the wealth preservation side, you should buy the one asset that will be left standing tall when the central bank money printers finally fail: gold.
On the wealth-building side, you should consider deploying your discretionary capital — money you can afford to lose — by betting against vastly overvalued stocks. This could reap huge rewards during this unfolding market crash.
What’s the best way to do this?
Well, you can short stocks. Or, you can buy “put options.”
I recommend the latter. Put options are easy to use and an effective way to execute my bubble finance trading strategy. Here are the basics.
There are two types of options: “call options” and “put options”. Both give you the right, but not the obligation, to buy or sell a stock at a certain price.
You buy a call option if you think the market is going up. A lot of people have been making a lot of money doing that during the entire expansion of this financial bubble.
You buy a put option – which I’m recommending to you – if you think market is going to fall. That’s our thesis. The market is going to fall further, faster, soon. Put options are a safe way to take a profitable position where the facts and analysis overwhelmingly suggest that a stock or exchange-traded fund (ETF) is going to fall.
I say they’re safe because you can never lose more than the money you pay for the put options. Your risk is limited. Meanwhile, if you bet correctly, you’ll earn your money back, plus double or triple your original investment if the stock in question falls.
The worst-case scenario is that if your timing is wrong, or if the market moves in the opposite direction, you’ve bet you can lose all of the money you purchased the option for.
This is the best strategy to use right now. Because the inflated market valuations of the past seven years have gotten so out of hand. With the Federal Reserve raising interest rates and signs of recession spooking investors, you can expect the selling momentum in many markets – especially those that were most inflated – to intensify.
And there are many more opportunities. I’ll be broadcasting a live video feed from my home in Aspen, Colorado, next week to give you the details on the most urgent opportunity I’m seeing right now. You can click here to sign up to watch free of charge. I’ll be taking questions and teaching my bubble finance trading strategy to you.
It’s an important time to learn how it works. In just seven months, I’ve been able to show my Bubble Finance Trader readers how to capture what amounts to a 477% annualized gain on our four closed trades. We’re four for four on closed trades. And we’re currently at a 527% gain on our five open trades. Yet we have just scratched the surface during what has been described as the worst start to the stock market in history.
That’s because when the global recession becomes fully evident, the gamblers in the Wall Street casino will panic like never before. After a 30-year bubble, they have come to believe that the central banks are infallible and that all economic downturns and market corrections are quickly remedied with new rounds of monetary stimulus.
I should be clear, though, that bubble finance trading is not automatic or guaranteed. Don’t believe anyone who tells you their strategy is foolproof. But buying put options is the ideal way to profit in this new market environment. They can make you two, three, and four times your money as the most overvalued stocks and ETFs take a big fall.
The market is going down. That doesn’t mean it will go down every day (as I write this, for example, all three indexes are in the green), but there won’t be relief rallies. Rational investors in thought will drive the market, instead of robo-traders and machines. As 2016 unfolds and the recessionary forces become manifest in our economy, the markets will go even lower.
Editor, Bubble Finance Trader
P.S. The same fatal technical flaw that caused the August 2015 flash crash is still present in the market. And it’s estimated that five million investors – probably you – are exposed to it. That’s why I’m hosting a free live training event on February 24 – exclusively for serious people like you…
There’s nothing you need to buy – only time-sensitive warnings and strategies to protect yourself from this coming crash. RSVP right here before your spot is taken.