Phil's Newsletter

Wednesday Weakness – Broader Indexes Can’t Close the Deal on New Highs

Image result for water freeze animated gif"Water freezes at 32 degrees

That's a FACT we can all agree on, right?  Unless, of course, you are using Celsius, in which case 32 degrees is 90 degrees (89.6 for your sticklers) Fahrenheit and -402.07 Farenheit if your 32 was in Kelvin.  But water doesn't care, it still turns from solid to liquid at the same temperature – no matter what your opinion of measurement is.  It's not the FACT of water changing that is in dispute, it's how you choose to interpret that fact but that does NOT mean that "everyone is entitled to their own opinion" about what temperature water freezes at.  

So there can be an absolute fact but there can be endles confusion about how to report the fact and that then leads to many interpretations of what the facts actually mean and the more facts you are using the more complex the interpretations can become – and that's the stock market.  Not only are the measurements used by Economorons always in flux but there is even the added challenge that we don't have consistent measuring tools. 

Image result for facts and figures"For example, trade could be up 3% from last year but, if the Dollar is 5% weaker, then our Import Spending would rise 8% while our Export Revenues would fall 0.2%, leading one to conclude that the trade gap had widened by 10%.  Of course, it's much more complicated than that because each trading partner has their own currency exchange and some goods are price flexible and some are not and some, like Oil, are priced in Dollars anyway.  All in all it's enough to make your head spin if you think about it – so most people don't.  

Companies do have real value – it is just distorted through so many lenses that most people think it's difficult to determine as, not only do you have to adjust for current business measurments, currency fluctuations, taxes, etc. but you also have to determine if the past is directly comparable to the future and you then have to predict the future for the company, which means predicting the future of their particular sector and perhaps the overall economy locally, nationally and globally.  …
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Tempting Tuesday – China Adds More Stimulus to the Global Excess

What are they so afraid of?

I know I sound like an old curmudgeon, always looking at the downside of all these rallies but doesn't it seem odd that our Governments seem to find it necessary to add various forms of stimulus to economies they keep telling us are great – again?  This week it's China, with the PBOC cutting rates on its Repos for the first time since October of 2015 – sending the Shenzhen Index up 1.8% overnight and even Hong Kong's Hang Seng Index rose 1.5% to the sound of gunfire on the streets exchanged between students and the police.

Having had a day to digest that news, investors seem to believe that the rate cut is indeed a sign of better liquidity on the way, lifting more sentiment-driven stocks in Shenzhen,“ said Bill Chen, CIO at Shenzhen Valley Asset Management Co.  As to the Hang Seng – it was in danger of failing 26,000 and turning negative for the year and China doesn't want it to look like the protests are affecting their business – even though they clearly are.  

Image result for china state media cartoon"In fact, the headline in the South China Morning Post is:  "Hong Kong's Stock Market Bulls Shrug Aside City's Street Protests" saying: "42% investors surveyed by Bright Smart Securities expect the Hang Seng Index to rise 5% next year, while only 6% see it declining from the current level." 

Apparently, 52% of the investors were hiding from the Government surveyors…  “The protests may have led Hong Kong’s economy into a technical recession in the third quarter, but the survey shows Hong Kong investors are cautiously optimistic about the stock market next year,” said Edmond Hui, chief executive of Bright Smart Securities.

Image result for fox news memesCan you imagine living in a near-totalitarian state where the Government controls the news?  That must be creepy!  Almost as creepy as the fake world over at Fox where the mountains of evidence against the President are still being called a "Witch Hunt" and attempts to hold our leader accountable is "A Coup" when, not only is it IN the Constitution – IT'S THE WHOLE POINT OF HAVING A CONSTITUTION!!!

I mean, come on…
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Monday Market Momentum – Still Going Up!

Image result for curiouser and curiouser"Curiouser and curiouser.

Now we're approaching 3,150 on the S&P 500 (/ES) and my prediction was 3,300 IF we got a trade deal (and then back below 3,000) but, if we're getting this simply on rumors of a partial trade deal maybe happening sometime – who knows what madness lies ahead?

"One pill makes you larger, and one pill makes you small
And the ones that mother gives you, don't do anything at all
Go ask Alice, when she's ten feet tall
And if you go chasing rabbits, and you know you're going to fall" – Jefferson Airplane

Image result for a very merry unbirthday animated gif"Uh oh!  The last time I started making Alice in Wonderland references about the stock market being ridiculous was back in the Summer of 2008 when, as it turned out – it was ridiculous and we crashed horribly soon after.  Today we are celebrating that crash's UnBirthday though the situation is a bit different this time and apparently traders have gotten older – simply not wiser… 

Back in 2008 oil was over $100 per barrel and most people thought it was a sign of a strong economy but I said "How can the Consumers afford to keep paying this?" and, lo and behold – they could not.  Now we have a rally that is fueled not by oil money but FREE MONEY and, while Consumers are spending at record levels – their debts are piling up at record levels as well.  How can the Consumers and the Government afford to keep paying this?

That, my friends, is a HELL of a thing to ignore – isn't it?  The National Debt was, in fact $11.5Tn at the start of 2009 so we're up almost exactly 100% since then but the statistic we should keep in mind was that our GDP…
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Thank Kudlow It’s Friday – Trade On!

Image result for kudlow crazy"Larry Kudlow says things are going great!

That's enough to pop the indexes another half a point overnight because there is ALWAYS about to be a trade deal with China and we ALWAYS celebrate it as if it's a surprise party – over and over again.   As George Orwell said:

"And if all others accepted the lie which the Party imposed -if all records told the same tale — then the lie passed into history and became truth. Who controls the past,' ran the Party slogan, 'controls the future: who controls the present controls the past. And yet the past, though of its nature alterable, never had been altered. Whatever was true now was true from everlasting to everlasting. It was quite simple. All that was needed was an unending series of victories over your own memory. 'Reality control', they called it: in Newspeak, 'doublethink'."

You need to read 1984 to understand the current political climate in the US, where the (Grand Old) Party practices constant Doublespeak and is always rewriting the past.  "If you tell a lie often enough, it becomes the truth" is another basic tenet of modern propaganda and it's no coincidence the Orwell worked for the British Propaganda Office in the Spanish Wars and WWII as he imagined a society where the truth was subject to change at the whims of whichever party controlled the media – which would become so invastive that there was a screen in every room – watching you as much as you were watching it. 

Image result for orwell quotes"Even Orwell never imagined we'd actually be forced to carry screens with us at all times AND that they would add a microphone AND a GPS tracker AND transaction tracking – so "THEY" would know what we were doing every second of every day.  Gosh, they even track our heart-rates now!

“But what is peculiar to our own age,” Orwell wrote, “is the abandonment of the idea that history could be truthfully written”; that there is a “body… of neutral fact on which neither [historian] would seriously challenge the other.” ?

So we can accept the party's lies and all be good citizens.  The good citizens of Oceana had jobs and enjoyed their rations and they hated the enemy of the moment
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Trade Off Thursday – Words Speak Louder than Actions

Image result for trump trade football charlie brown"And now there's no trade deal – again.

Keep in mind that, a month ago, we were told the deal was ready to sign and it amazes me that, almost every day, the Financial Media carries articles that say "President Trump Says Great Progress Being Made" as that's like running headlines saying "Boy Who Cried "Wolf" Says There's a Wolf".  Are we seriously that dumb?  Apparently, you can fool some of the people ALL of the time because someone is that dumb and the market rallies EVERY SINGLE TIME on the same news it rallied about last time

Remember, all Trump even promised was a LIMITED deal, a part one of 5 or whatever because there was no way they could even pretend to be close on an overall deal.  In fact, 100 Economists polled by Reuters don't expect a real trade truce until 2021 - let alone next week.  While the median probability of a Recession for the coming year fell to 25% from 35% last month, the Economic Growth outlook remained modest. 

Image result for economic forecast cartoon"Over 80% of 52 respondents to an additional question said the Fed had done enough to delay the next recession but that already-modest growth forecasts were largely left unchanged.  "I think in terms of the risks, they are probably still tilted towards the Fed maybe cutting rates once more at some point in the coming months if growth slows further, certainly if there is some renewed breakdown in trade talks," said Andrew Hunter, senior U.S. economist at Capital Economics.  "But barring that, it does look like they have done enough to avert a recession. In our baseline forecast, there is growth slowing a little bit further over the next couple of quarters but starting to recover next year."

I gave my own Economic Forecast last night on Money Talk, embracing the uncertainty:

As you can see, the NYSE has indeed been drifting along under the 13,500 line for two years after breaching it early in 2018.  The NYSE is the…
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Wild Wednesday – Trade In Doubt, Impeachment Begins, Powell Testifies and We Take Money Talk to The Street!

Where do I begin?  

The Index Futures are down about 0.5% as Trump once again puts a Trade Deal into doubt.  Europe and Asia are down more like 1% so we might be just getting started or Trump could send out one of those "I was joking" tweets after he threatened China with more tariffs yesterday.  “In the short term the market’s been too optimistic. The best interpretation of the trade situation is that almost everything that can be tariffed has been tariffed,said Christopher Mahon, director of asset allocation research at Barings.  

How come when he says it on Nov 12th, he's quoted in the WSJ but when I've been saying it for two months – no one notices?  I have to get a better publicist – or A publicist….  

Speaking of which, I guess I will have a better publicist as we move some of our Member Portfolios over to TheStreet.com starting with our Money Talk Portfolio, which kicks off this evening on BNN (Bloomberg Canada) at 7pm this evening.  Through the end of this quarter, the Money Talk tab usually found on PSW will ALSO be found on TheStreet but, over time, they will get the exclusive on that and a couple of other portfolios as well as some PSW content (also a subscription).   

We closed the old Money Talk Portfolio after two years with a 148.1% gain on Sept 18th as I didn't trust the upcoming quarter enough to risk the gains.  Turned out I was premature in my worries (as I often am because I'm a worrier) but I'm still worried so we're going to start with a couple of conservative trade ideas and see how things go.  The rule of the Money Talk Portfolio is we only do trades we announce on the show, once each quarter so it's a very low-touch portfolio using our options strategies to hedge the risk and lever our returns. 

When closing down the MTP, I did make the following suggestion for a good use of our $124,042 of cash:

Our 2019 Stock of the Year is IBM (IBM) and


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Testification Tuesday – Let the Impeachment Begin!

Image result for trump i am not a crook"Here we go!

After months of nonsense, the public Impeachment Hearings finally begin next week and, just to be clear, this is just a show for the public because the witnesses have, for the most part, already testified in closed-door meetings and will now be asked to repeat the highlights of their testimony for public consumption.  That's not a knock on the Democrats – that's just how these things work.  

Later on, there will be fresh testimony from people closer to the top of the Trump Food Chain – as well as from people who are, even now, attempting to block being forced to testify so they can (hopefully) avoid being charged as co-conspiritors, enablers or traitors.  During Nixon's impeachment, we had testimony from:

James McCord: One of the Watergate burglers who used to be in the CIA and the FBI.  Security officer for the Committe to RE-Elect the President (CREEP).  McCord wrote a letter to Judge Sirica claiming the defendents had pled guilty under pressrue and committed purjury.  In January 1973, WH Security Liaison Caulfield had told McCord the White House would grant him clemency, money and a job if he accepted his prison sentence and didn’t testify against members of the administration. When McCord relayed he had been offered clemency “from the highest levels of the White House” before the Senate Watergate committee on May 18, 1973, Nixon’s ties to the efforts of the White House to break into Democratic National Committee Headquarters finally surfaced.

John Dean: Former WH Counsel pled guilty to obstruction of justice in Oct, 1973.  Spent 4 months in jail.  Barred from practicing law (as Guilianni will be), Dean became an author and does well as a guest and speaker post-Watergate.  

HR Halerman:  Nixon's Chief of Staff.  A tape revealed the President discussing with Haldeman a plan to have the CIA divert the FBI from the probe because it involved national security. Haldeman resigned in April 1973 and was jailed for 18 months.  Halderman went to work for David Murdock's Real Estate Company.  

Alexander Butterfield: Nixon's Deputy Chief of Staff who revealed the existence of the taping system in the first place saying “When Don Sanders, the deputy
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Monday Market Momentum – Lost Due to Trade Setback

Trade off!

Over the weekend we had a little setback in the trade negotiations as Trump said he has NOT agreed to remove tariffs on Chinese goods and that news came after Chinese markets had closed on Friday so this morning,  the Shanghai Composite wwas down 1.8% and Hong Kong's Hang Seng dropped 2.6%.

Also in Hong Kong, tensions escalated even further this morning as the police opened fire on protesters while Hong Kong's Governor said the Govevernment won't "yield to violence."  A man was also "set on fire" – apparently by the protesters.  Around midday, crowds of office workers were seen fleeing clouds of tear gas filling the streets. Some rushed into the lobbies of buildings to seek shelter and poured water over their eyes to relieve the pain. Police made a number of arrests as people chanted abuse at them.  

Combine that level of chaos in a densely packed city AND have the market start to collapse – that's a recipe for disaster and one of the main reasons we've been leary about re-committing our capital to the market.  Chinese protests, however, also gave us our shorting premise on Booking.com (BKNG), as we discussed last week in our Short-Term Portfolio Review.  We felt the earnings would be impacted by the protests – which have been going on all quarter and we got a nice dip in BKNG on earnings, leading to a massive $18,872 (19%) portfolio gain in just two days – your welcome!  

Our BKNG spread is now up $34,600 out of $40,000 potential in just two months but the way we've set it up is to generate quarterly premium income selling puts and calls – and it's right on track to make us $40,490 this quarter alone so no, we're not going to be cashing in this one early – despite the massive gains.  This is why I started Phil's Stock WORLD 15 years ago – Global Events matter, Politics matter – and most investing sites ignore them or only pay them lip service at best and ignore them at worst, while we find ways to profit from them instead!

We will be starting a brand new
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Fabulous Friday Finish

Wow.

I mean WOW!  Check out the headline on the front page of today's Wall Street Journal.  Is it really "news" to say the same thing, over and over again for month after month?  I guess it is news to traders because, once again, we're up in pre-market trading.  This is just what we were talking about yesterday, MADNESS!  

I guess it helps distract Conservative readers from the headline in the NY Times that says: "Impeachment Inquiry Tests Ties Between Barr and Trump" as it turns out Trump put pressure on Barr to make an official statement that his Ukraine call was "perfect" but Barr refused to say the President did not commit a crime when Trump demanded the Ukraine launch an investigation of Joe Biden and his son in exchange for the military aid Congress had already approved for our NATO allies in the Ukraine.  

Mr. Trump on Thursday angrily denied a report in The Washington Post, which was confirmed by The New York Times, that he wanted Mr. Barr to hold a news conference to say that the president had broken no laws, only to be rebuffed by the attorney general.  In a Twitter post, Mr. Trump called The Post’s article “pure fiction,” adding: “We both deny this story, which they knew before they wrote it. A garbage newspaper!” Mr. Barr, however, did not publicly deny the account.

Image result for trump obstruction impeachment"Perhaps if Trump hadn't already had Barr make a fool of himself attempting to exhonerate the President in the Meuller Report, Trump would still have some political capital to spend but the sheer volume of scandals surrounding the President makes it hard for Barr to be the point man defending every crime – lest he himself become an impeachable obstructor.  

Barr is getting into hot water as he's been in the loop as half the witnesses called by the House Committee investigating the matter have refused to testify.  Failure to answer a Congressional subpeona is a jailable offense but, so far, the House is just skipping ahead to the next witness and will re-call the dodgers next week in the public hearings so they can publically defy Congress and then there will be…
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Thrilling Thursday – Markets Blast Higher on Trade Progress (Again?)

Image result for peek a boo trump animated gif"I feel like we're playing Peek-a-Boo!  

You know, the game in which you are able to surprise a baby over and over again with the same simple trick?  Yeah, "peek-a-boo" – whose got a trade deal?  You have a trade deal!  Good boy.   Where's the trade deal?  Peek-a-boo!  There it is?  Look, it's a trade deal.  Where's the trade deal?  Where is it?  Peek-a-Boo!  There it is!  Who's a good boy?  Where's the trade deal?  Do you see a trade deal?  Peek-a-Boo!  There it is!  

Isn't that fun?  I could play that game for months and, apparently, every time I play the market goes higher – no matter how many times I show some small amount of progress towards a trade deal WE FRIGGING HAD TWO YEARS AGO!  There is no imagined scenario in which the US is actually getting a "better" deal than the free trade deal we had BEFORE Trump began messing around.  Trump has forced China to make other trading alliances – and China is not going to throw that away just to please the unreliable US.  

Today's big reveal, that's good for a 150-point (0.5%) gain on the Dow is because Beijing, WITHOUT saying there will be a deal, laid our a framework for phasing out tariffs over time.  Officially, according to the WSJ:

BEIJING—China’s Commerce Ministry said China and the U.S. have agreed to lift some tariffs on one another in stages if the two countries reach a partial trade deal, a goal both have been building toward since October.

If the phase-one deal is signed, China and the U.S. should remove the same proportion of tariffs simultaneously based on the content of the deal,” spokesman Gao Feng said at a regular press


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Zero Hedge

China (And The World Economy) At The End Of The Road

Courtesy of ZeroHedge View original post here.

Authored by Tuomas Malinen via GnSEconomics.com,

We have been monitoring China closely since March 2017. We were one of the first to show that China had driven the global business cycle since 2009 and that the remarkable recovery of the world economy from the 2015 slump was mostly China’s doing.

Now that the world economy is, again, heading down, many are wondering, what...



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Phil's Favorites

Why hearsay isn't a problem for Congress in impeachment hearings

 

Why hearsay isn't a problem for Congress in impeachment hearings

I heard him saying… ASDF_MEDIA/Shutterstock.com

Courtesy of James Steiner-Dillon, University of Dayton

Wednesday’s testimony by U.S. Ambassador to the European Union Gordon Sondland included the allegation that Sondland pushed Ukraine to investigate the Biden family in exchange for U.S. political support at the “...



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Insider Scoop

GM Sues Fiat Chrysler, Alleges Racketeering And Corruption In UAW Negotiations

Courtesy of Benzinga

General Motors Company (NYSE: GM) is suing rival Fiat Chrysler Automobiles NV (NYSE: FCAU), alleging Fiat executives bribed union officials to gain an advantage over GM in how its contracts were structured.

The alleged corruption has also been the focus of a federal criminal probe into Fiat Chrysler and the Unit...



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Kimble Charting Solutions

New York Stock Exchange Double Topping or Sending A Strong Bullish Message?

Courtesy of Chris Kimble

A very broad index is testing last year’s highs, as monthly momentum is creating lower highs? Which indicator is more important, price or momentum?

This chart looks at the New York Stock Exchange Index (NYSE) on a monthly basis over the past 15-years.

The index peaked in January of 2018, as momentum was the highest since the peak in 2007.

The rally off the lows around Christmas last year, has the index testing the highs of January 2018. While the rally has taken place over the past 12-months, lofty momentum has created a series of lower highs.

Can you believe th...



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Lee's Free Thinking

NY Department of Welfare Announces Increased Subsidies for Primary Dealers, Thank God!

 

NY Department of Welfare Announces Increased Subsidies for Primary Dealers, Thank God!

Courtesy of , Wall Street Examiner

Here’s today’s press release (11/14/19) from the NY Fed verbatim. They’ve announced that they will be making special holiday welfare payments to the Primary Dealers this Christmas season. I have highlighted the relevant text.

The Open Market Trading Desk (the Desk) at the Federal Reserve Bank of New York has released the schedule of repurchase agreement (repo)...



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The Technical Traders

VIX Warns Of Imminent Market Correction

Courtesy of Technical Traders

The VIX is warning that a market peak may be setting up in the global markets and that investors should be cautious of the extremely low price in the VIX. These extremely low prices in the VIX are typically followed by some type of increased volatility in the markets.

The US Federal Reserve continues to push an easy money policy and has recently begun acquiring more dept allowing a deeper move towards a Quantitative Easing stance. This move, along with investor confidence in the US markets, has prompted early warning signs that the market has reached near extreme levels/peaks. 

Vix Value Drops Before Monthly Expiration

When the VIX falls to levels below 12~13, this typically v...



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Biotech

Why telling people with diabetes to use Walmart insulin can be dangerous advice

Reminder: We are available to chat with Members, comments are found below each post.

 

Why telling people with diabetes to use Walmart insulin can be dangerous advice

A vial of insulin. Prices for the drug, crucial for those with diabetes, have soared in recent years. Oleksandr Nagaiets/Shutterstock.com

Courtesy of Jeffrey Bennett, Vanderbilt University

About 7.4 million people ...



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Chart School

Dow Jones cycle update and are we there yet?

Courtesy of Read the Ticker

Today the Dow and the SP500 are making new all time highs. However all long and strong bull markets end on a new all time high. Today no one knows how many new all time highs are to go, maybe 1 or 100+ more to go, who knows! So are we there yet?

readtheticker.com combine market tools from Richard Wyckoff, Jim Hurst and William Gann to understand and forecast price action. In concept terms (in order), demand and supply, market cycles, and time to price analysis. 

Cycle are excellent to understand the wider picture, after all markets do not move in a straight line and bear markets do follow bull markets. 



CHART 1: The Dow Jones Industrial average with the 900 period cycle.

A) Red Cycle:...

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Digital Currencies

Is Bitcoin a Macro Asset?

 

Is Bitcoin a Macro Asset?

Courtesy of 

As part of Coindesk’s popup podcast series centered around today’s Invest conference, I answered a few questions for Nolan Bauerly about Bitcoin from a wealth management perspective. I decided in December of 2017 that investing directly into crypto currencies was unnecessary and not a good use of a portfolio’s allocation slots. I remain in this posture today but I am openminded about how this may change in the future.

You can listen to this short exchange below:

...



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Mapping The Market

How IPOs Are Priced

Via Jean Luc 

Funny but probably true:

...

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Members' Corner

Despacito - How to Make Money the Old-Fashioned Way - SLOWLY!

Are you ready to retire?  

For most people, the purpose of investing is to build up enough wealth to allow you to retire.  In general, that's usually enough money to reliably generate a year's worth of your average income, each year into your retirement so that that, plus you Social Security, should be enough to pay your bills without having to draw down on your principle.

Unfortunately, as the last decade has shown us, we can't count on bonds to pay us more than 3% and the average return from the stock market over the past 20 years has been erratic - to say the least - with 4 negative years (2000, 2001, 2002 and 2008) and 14 positives, though mostly in the 10% range on the positives.  A string of losses like we had from 2000-02 could easily wipe out a decades worth of gains.

Still, the stock market has been better over the last 10 (7%) an...



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Promotions

Free eBook - "My Top Strategies for 2017"

 

 

Here's a free ebook for you to check out! 

Phil has a chapter in a newly-released eBook that we think you’ll enjoy.

In My Top Strategies for 2017, Phil's chapter is Secret Santa’s Inflation Hedges for 2017.

This chapter isn’t about risk or leverage. Phil present a few smart, practical ideas you can use as a hedge against inflation as well as hedging strategies designed to assist you in staying ahead of the markets.

Some other great content in this free eBook includes:

 

·       How 2017 Will Affect Oil, the US Dollar and the European Union

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About Phil:

Philip R. Davis is a founder Phil's Stock World, a stock and options trading site that teaches the art of options trading to newcomers and devises advanced strategies for expert traders...

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About Ilene:

Ilene is editor and affiliate program coordinator for PSW. She manages the site market shadows, archives, more. Contact Ilene to learn about our affiliate and content sharing programs.

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