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March 2020

Reality Check: More than 80 Million Americans are Likely to be Infected

March 6, 2020TradeSmith Research Team

When crisis conditions are real, it is better to be informed than uninformed. The reality of a crisis situation is worth getting a handle on early — even if the truth is unpleasant. So let’s lay out some grim data points: More than 80 million Americans are likely to contract the coronavirus. Even by very optimistic estimates, more than 400,000 Americans could die from it. The point of discussing this is not to provoke anxiety or panic. Instead, the goal

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America is Entering the Coronavirus J-Curve

March 5, 2020TradeSmith Research Team

America is entering the coronavirus J-curve. This means we are going to see rising levels of anxiety, fear, and even panic. Unfortunately, there is no way around this: You can’t sidestep a J-curve. Once you’re in one, you can only get through it. J-curve theory has applications in fields like economics, geopolitics, and venture capital. The basic message of the J-curve is that “sometimes, things have to get worse before they get better.” In economics, the J-curve applies to currency

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Get Ready For “The End of Retirement”

March 4, 2020TradeSmith Research Team

“The End of Retirement” is a theme we’ve been studying for almost two years. The basic idea is that retirement as we know it, the popular concept we are all familiar with, is dead. From here on out the 20th century concept of retirement — may it rest in peace — will be replaced by one of two options: One group of retirement-age individuals will stay mentally and physically engaged, finding ways to fulfill themselves with active life pursuits, well

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Central Banks are Confirming a 71-Year-Old Prophecy from Austrian Economics

March 3, 2020TradeSmith Research Team

On Monday, Feb. 2, 2020, the Dow Jones industrial average roared higher by nearly 1,300 points. The single-day rally was the Dow’s best day in more than a decade. And the Dow was only one part of it. Stocks in general were up big on Monday in the anticipation of central bank stimulus. The story is well known: When things get bad, central banks ride to the rescue. Investors have learned this lesson over and over for 30-plus years, dating

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Why the Outbreak is Like a Biological EMP Attack

March 2, 2020TradeSmith Research Team

Last week, the markets experienced true panic. The S&P 500 saw its fastest-ever 10% correction from all-time highs; the 30-year U.S. treasury bond yield fell to all-time lows on safe-haven buying; and the Chicago Board Options Exchange (CBOE) Volatility Index, also known as the VIX, saw a bigger intra-month spike than it did in October 2008. The source of fear was the coronavirus, which has now killed more than 3,000 people and spread to every continent barring Antarctica. Coronavirus, also

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February 2020

A Rare and Powerful “Bearseye” Signal Has Been Triggered — Here’s What That Means

February 28, 2020TradeSmith Research Team

As a brutal week comes to a close, the Dow Jones industrial average has endured its worst stretch of losses since the 2008 financial crisis. The S&P 500 has completed its fastest correction (a 10% drop from the highs) in history. And the yield on the 10-year treasury note, a “flight to safety” barometer, has hit new record lows. Our indicators also show a “bearseye” signal has been triggered via SPY, the bellwether S&P 500 ETF. What is a bearseye

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Markets are Underestimating Supply Chain Risk

February 27, 2020TradeSmith Research Team

The S&P 500 index is having its worst week since 2008 and has entered “correction” territory, defined by a 10% decline from the highs. Some will argue this is an overreaction. It is not. The coronavirus threat is still being underestimated — not just to human beings, but to businesses and corporate earnings, and the global economy on the whole. The Johns Hopkins University Global Cases dashboard is still showing an alarmingly high death rate. If you divide the total

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Coronavirus is Coming to the United States — Here’s What to Watch

February 26, 2020TradeSmith Research Team

Coronavirus is coming to the United States. “It’s not so much of a question of if this will happen anymore,” Nancy Messonnier, Director of the National Center for Immunization and Respiratory Diseases (NCIRD), said in a Wednesday briefing, “but rather more of a question of exactly when this will happen.” Immediately after the NCIRD briefing was released, the stock market sold off for a third day in a row. “We are asking the American public to work with us to

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As Silicon Valley Faces “The End,” Venture Capital Firms are Raising Money as Fast as They Can

February 25, 2020TradeSmith Research Team

In the natural resource industry, they have a saying: “When the ducks quack, feed ’em.” Demand for natural resources — precious and base metals, energy, timber, and so on — tends to be highly cyclical. There are boom periods and bust periods. After the boom, the inevitable bust comes. And then, over a period of years, the pendulum swings back again. “When the ducks quack, feed ’em” refers to the appetite of the public for speculative natural resource ventures. Like

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Gold Stocks are a Portfolio Inoculation Against Coronavirus and Central Banks

February 24, 2020TradeSmith Research Team

As of late February 2020, the major U.S. indexes are down more than 3% — and gold stocks are up more than 3%. On a day when global equities were hit hard by coronavirus (COVID-19) fears, gold and gold stocks surged to brand-new, multi-year highs. That is not a coincidence. Gold miner profit margins are leveraged to the long-term gold price. A key metric is the miner’s all-in cost of production, and how far above that threshold the current gold

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The WeWork Saga Was Even Nuttier Than We Thought

February 21, 2020TradeSmith Research Team

The era that ran from 2007 to 2019 was the most epic in Silicon Valley history. In 2007, Steve Jobs introduced the first iPhone. Then came the rise of Facebook and Twitter, the founding of Airbnb and Uber, the genesis of Bitcoin, the dominance of mobile apps, and the ubiquity of the “gig economy.” And then, finally, the spectacular collapse of WeWork closed things out. In 2019 — before the IPO was pulled and the CEO fired — we explained

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The Zero-Cost Investing Model is Taking Over Wall Street

February 20, 2020TradeSmith Research Team

The zero-cost investing model is taking over Wall Street. Everywhere you look, the cost of participation is being driven towards zero. Fees and commissions are shrinking, to the point they nearly vanish. And when it comes to investing and trading via brokerage firm applications, the “zero” in zero cost is literal. For buying and selling stocks through various brokers and apps, there is often no charge at all these days. The trend was just reinforced by news of another big

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