GUALFIN, ARGENTINA – “U.S. stocks fall on Trump talk…” began a headline at Bloomberg.
Or it may be Trump action.
We had already counted six major campaign promises – including no O’care repeal and no “America First” foreign policy – already buried (some for the better).
Then came four more major policy reversals on Wednesday. Seeking Alpha reports:
In a single day, President Trump appeared to reverse his positions on no fewer than four key pledges that arguably led to his election victory.
Trump told WSJ [The Wall Street Journal] yesterday that China is no longer a currency manipulator, he respects Janet Yellen and perhaps could nominate her to another term leading the Fed, he would support the Ex-Im [Export-Import] bank after previously saying he would shut it down (good news for the likes of GE and Boeing), and NATO was no longer obsolete since it is fighting terrorism.
In the same interview, Trump said he believed the dollar was “getting too strong,” sending the dollar lower and gold higher.
In a way, this is good news.
“The Donald” is doing the same things, more or less, that anyone else in his position would have done. He is doing what the insiders want.
And now that Team Trump and the Deep State are lined up, we can get back to business.
No need to focus anymore on day-to-day politics; the program is the same as it has been for the last 30 years.
Every government is a conspiracy of the few against the many. Call it communism, socialism, or liberalism… “divine right”… or “dictatorship of the proletariat”… or “Make America Great Again” – it hardly matters.
The program is the same: Insiders use the government to take power, status, and money from the great mass of outsiders.
What matters from the point of view of the average person is not what you call it, but how much of it there is.
The less the better. The government that governs best, as Jefferson put it, is the one that governs least.
The key difference between the insiders and outsiders is how they do business.
Common folk do win-win deals with each other… trying as best they can to earn a living.
The insiders trade in win-lose deals… sweetheart contracts… taxes… wars… asset confiscations… financial repression… artificial interest rates… and restrictions and regulations that favor their industries.
And all of it is backed, ultimately, by the power of the feds to do you harm if you don’t go along.
When we talk about win-win and win-lose deals, we’re not talking about the outcome. We can never know how a deal will turn out because we can never know the future. We’re talking about the deal at the outset.
When two people in the Main Street economy make a deal – it could be as complicated as a merchandising contract or as simple as buying a quart of milk – each party to the deal must believe he will come out ahead.
Otherwise, he wouldn’t do the deal. Win-win.
But when the feds impose a new tax… drop a bomb… or write a regulation, they are forcing a bad deal on people.
The manufacturer of the bomb may make a profit, but the people on whom the bomb is dropped have no choice but to accept it. Win-lose.
The bomb takes time and resources to build – destroying wealth that could be used for other things. When it explodes, it destroys even more wealth.
The common, civilized man of the Main Street economy is a maker. He has to give in order to get. His boss, his customer, his client – he has to satisfy them or he will get nothing.
The insider is a taker. He may toil from sunup to sundown, too… but the fix is in.
Like a TSA agent or an EPA inspector, he gets his money whether he does anything useful or not. No need to meet a payroll, provide a real service, or satisfy a demanding customer.
So the measure of happiness (and wealth… though it doesn’t have to be financial wealth) in a society can be expressed simply as:
S (satisfaction) = RV (real value) of w-w – w-l
…all of which merely sets the stage for an observation.
Trump was right: The way to make America great again is to “drain the swamp” of all those win-lose deals imposed on them by the insiders.
But now that we see that Mr. Trump is working with the insiders rather than against them – pumping in water, not pumping it out – we can see, faintly, what happens next.
Because the insiders never know when to stop.
The feds control the system. And the insiders control the feds.
They are like ticks on a dog.
Collectively, they may know that if they keep draining the poor dog’s blood, the animal will drop dead, and they will all have to find a new home.
But individually, none of them has an incentive to stop sucking.
They take, take, take… until something gives.
Historically, the only way the insiders have been shaken off is by catastrophe.
War, conquest, bankruptcy, revolution, or plague. Take your pick.
P.S. The biggest revolution in human history took place – at least according to the popular narrative – on this day, about two millennia ago. Jesus was crucified.
This marked the transition from the Old Testament to the New Testament… from a religion of a people (the Jews) to a religion for everyone (as individuals)… and from the win-lose deals of antiquity to the win-win deals of modern consensual capitalism.
“Do unto others as you would have them do unto you” is the only rule you need for a civilized win-win economy.
More to come… when we get around to it.
BY Jeff Clark, Editor, Delta Report
Editor’s Note: Today’s essay comes from our friend and colleague Jeff Clark, expert trader and options wizard. Over the last decade, he’s delivered 28 triple-digit winners and 78 double-digit windfalls for his readers.
I was only 19 years old when I made my first options trade.
I had a gut feeling the market was going to go higher… so I bought four S&P 100 call options at $1.50 – a total investment of $600. A few hours later, the options were trading at $4.50. I sold and took the $1,200 profit – a 200% gain. And I was hooked on options forever.[A stock option is a contract to buy or sell a stock. Each contract represents 100 shares. And each contract is fixed at a certain price… and expires on a specific date.
A call option is an agreement to buy a stock. A put option is an agreement to sell.]
My next trade was in tech giant IBM (IBM). I bought 10 $1 calls for a total of $1,000. This time, it took a couple of days to double my money. Next, I bought Digital Equipment put options… which nearly tripled in just a few days.
I made 17 trades during my first six weeks as a trader. Every single one was a winner.
Going 17 for 17 was a remarkable feat for a rookie trader – especially since I wasn’t using any sort of fundamental or technical analysis. I was just going with my gut. But I was careful not to put more than $1,000 or $2,000 into any single trade. And I still managed to turn my $5,000 brokerage account into $50,000 in just six weeks…
And then I decided it was time to get serious. No more tiny trades. I was too good for the small stuff. For whatever reason, I had figured out a way to beat the market. Heck, I had just rattled off 17 straight triple-digit winners. So I decided to take the $50,000 in my account, add to it my $25,000 in savings, and put it into a handful of options trades.
You can probably guess what happened next…
The stock market has a habit of humbling folks who think they’ve figured it out. For me, the humbling started right away.
At first, the positions started slightly moving against me. It was nothing to be concerned about. One good day would put everything back in the profit column.
But then, one by one, each position blew up on me. It was too painful to watch. I kept the television off and avoided reading the newspaper for fear I’d see something bad about the stock market and my positions.
When I finally got up enough courage to call the branch manager and check on the status of my account, I learned all the gains I had built up over the previous six weeks were gone.
“Just sell everything,” I said.
That was an expensive lesson to learn. But it’s one every options trader learns at some point. I was just fortunate it happened to me early in my career.
You see, that experience changed how I looked at trading. Instead of using options as vehicles for speculation – a way to juice my returns and get more bang for my buck – I started using them the way they were intended to be used: as a way to reduce risk.
Options allow investors to hedge their positions… and to risk much less money than they would if they bought a stock outright.
Rather than purchasing 100 shares at $10 per share, an investor could buy one call option for $50 and have the right, but not the obligation, to purchase the same number of shares at an agreed-upon time in the future.
This is a simple example. But the simplicity proves my point. Options allow you to risk much less and profit just as much as you would by buying stocks.
Today, I still do my fair share of speculating. But I’m not focused on how much money I can make. I’m focused on how little I can lose.
That’s a huge difference. It has allowed me to trade options successfully for three decades. And it allowed me to retire at 42.
– Jeff Clark
P.S. For the past six months or so, I’ve been refining what I consider the single best idea I’ve come up with in over three decades of trading. I’ve tested this idea with my own money on 35 trades… and have averaged 50.14% gains.
I’m now nearing the finish line on this project. If you’d like to receive updates on it as well as my morning market commentary, Jeff Clark’s Market Minute, you can be added to my list by clicking here.
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In the dark of the Nicaraguan countryside, Bill reveals to his top analyst his secret for securing long-term wealth.
Today, readers respond to a number of topics: Trump, the economy, and Syria…
I’m amazed at the clarity with which you see things back here in the USA on the back of horse and behind a cloud of dust rounding up cattle on your ranch back in the boonies in Gualfin, Argentina. Your vision however, seems to be 20/20 because everything you mentioned about Trump’s “flip flopping” on his campaign promises are coming true as we speak.
They may not all be happening for the same reasons you quoted, but they are happening. Here is something I read the other day that came from the world’s second greatest financial analysis, you being first of course, “A government never controls itself because it’s too busy trying to control its subjects.”
– J. Burnette
Janet Yellen may be pressing on the accelerator, but the economy is stuck in neutral. All you get with that combination is a lot of noise, maybe some vibration, but no forward progress. Pretty fair assessment of the current situation. Maybe she never drove a manual transmission so she just doesn’t understand how the real world works. Of course, if you hold the throttle down too long, it all blows up.
– M. Sparling
It sure seems to me there’s a lot of naive readers regarding Syria. Did Assad just use chemical weapons on children when he’s already in the national spotlight and trying to retain control of the government?
I agree something very unkind should be done to the perpetrators. But let’s use a little thinking effort and figure out if it’s real, and if so, who the guilty party is first.
The United States Government Easily Accepts False Flags, as a reason for war. I’m 77, the United States has been in either a hot or cold War my entire life!
Meanwhile, feedback on Bill’s ranch stories continues to pour in. This in response to yesterday’s Diary, “Yipping and Yelling.”
What is all this about Bill Bonner playing cowboy? How does that help any investor? Why not recommend a few stocks or strategies rather than playing home on the range?
– R. Arnold
Hi! I was so furious reading about the abuse of the cattle and their young ones. Those dogs, who can’t be controlled, need to be removed from the herd. They are vicious.
I also didn’t like the viciousness of your help either. I am still furious. The calf with the broken leg should have been helped by you or your wife. All of you should be arrested and taken to trial. I am so angry that I want to scream at all of you.
– L. McLain
Over the last four years, the cryptocurrency market has exploded in value…
Bitcoin shot up more than 8,000% in 2013 alone.
Next Thursday, Teeka Tiwari – former hedge fund manager and the youngest VP in the history of Shearson Lehman – is hosting a free webinar. He will show you how to join this little-known bull market and see extraordinary gains in the coming months and years.
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