CRInvestor

A word of caution to investors - deflation is getting serious

BTCE:BTCUSD   Bitcoin / Dollar
855 31 11
Hello all,
I have been working on an idea for a while and it seems to me the market is trying to confirm that idea - deflation is our primary concern, not inflation. This is such a concern for me, I thought I ought to bring it to the broader investment communities attention and am doing so through this TradingView platform.
The chart here is a comparison of the US Dollar index             ( DXY             ) the spread between the TLT/TIPS and one popular Inflation proxy of late ( Bitcoins ). One could use the price of gold             or Bitcoins , they basically look the same.
So what are some of the messages we can draw from the market's price action?
1. The US Dollar             has turned dramatically higher over the summer. Double bottoms within double bottoms suggested rally and that has what has happened.
2. The spread between the Inflation protected US government bonds and non-protected US government bonds has gone negative suggesting investors are not willing to pay a premium for inflation protection. A negative reading would go so far as to imply deflationary expectations as the inflation premium will actually cost you.
3. One inflation proxy (in this case Bitcoin ) has a very solid market structure top working that coincides with the US Dollar             Index's bottom.

So put it all together and I think we are getting one clear message. That message is a cautionary one - keep in mind, the US Dollar index             is considered the market;s 'fear' proxy and from what I can see, investors do have a bit to be fearful of at the moment.
From an economic perspective, Europe has been and continues to languish. At the same time the prospects for more easy monetary policy ( QE             ) from the US Federal Reserve Board appear to be diminishing. That is understandable considering the US stock market is at or near all time highs. The problem here is that these two economic drivers are dangerous when we look out into the future. If stocks are at all time highs and the Fed wants to take away the punch bowl, does that not imply a lot of risk?
From a Geo-political perspective, the world is a rather 'hot' place at the moment and only looks to be getting 'hotter' From the typical Middle east concerns to saber rattling in the South China Sea, to an all out civil war on Europe's doorstep in Ukraine, one could argue there is very good reason for the market to rather fearful at the moment. The problem too with current Geo-political situation is there appears to be no leadership coming from the West. Obama is basically a lame duck and the American electorate doesn't seem to have the appetite for direct US involvement. Lets hope it doesn't take another 9/11 to change their minds.

So with all this said please take this cautionary note when going forward. If you are heavily invested in stocks then maybe buying a Put option might be wise ( a little insurance never hurts). If you are new to the market consider waiting until we get on the other side of this typically tough time of year (September is historically the worst performing month on average ) before considering purchases. If you just don't know what to do, maybe is a good time just to stay out...

Hope this analysis helps in your trading decisions and best of luck,
Brian
aka The Rational Investor

p.s. if you are serious about working on your trading skills and may actually consider trading for a living, please take a moment and visit our Bitcoin related trading site at http://www.therationalinvestor.co Along with regular blog posts and member videos, we run a school to teach aspiring traders the basic essentials to trading for profit over the long term. From risk management, to strategic planning to crafting a personalized trading plan, our 12 week program's aim is to give you the tools needed to survive and prosper over the long term.
SunnyEvening
2 years ago
yes that's true thank you for your words and comments
+1 Reply
MoonTrader
2 years ago
I would suggest you keep your foreign policy to yourself. America can't afford another "involvement" in the form of occupying another nation and spending even more billions that we don't have on wars overseas.

In America, you are 8 times more likely to be killed by a cop than a terrorist, so don't get me started about "let's hope it doesn't take another 9/11". Maybe if America defended its own borders it wouldn't have to worry so much about the small threat of terrorist attacks. The world can sort itself out without our help. The world and the American people don't need America to get involved in things that aren't its business.
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CRInvestor PRO MoonTrader
2 years ago
wow....spoken like a true 'isolationist' and exactly what I would expect into typical 'fear' cycle peak...kaboom. Unfortunately, this is exactly the type of thinking that let Hitler run around Europe unchecked. How far will it take to break that issolationism? In that case it took Pearl Harbor....do you see where this conversation is going??? Good thing here is we all get to have opinions so you won't get shot over your 'suggestion'....lol....cheers and thanks for the lively rhetoric
+3 Reply
Adohgg CRInvestor
2 years ago
Agreed completely. Most of the Bitcoin crowd is isolationist/libertarian and seem to share MoonTraders opinion.
+1 Reply
Maddie Adohgg
2 years ago
“We have elected to put our money and faith in a mathematical framework that is free of politics and human error.”
+1 Reply
MarvinMartian Maddie
2 years ago
Uhm. Are we talking about something else? Cause, lol... there is nothing but politics, infighting and new legislation on the horizon.

And please, free of human error, what do you call a 51% attack? 100% poor planning.

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MarvinMartian MarvinMartian
2 years ago
http://www.cryptocoinsnews.com/news/bitcoin-mining-pool-ghash-io-is-unapologetic-risk-theoretical-51-attack/2014/06/12

Even IF a 51% attack isn't a valuable attack, it IS a valid attack modal... ie, Human Error.
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MoonTrader CRInvestor
2 years ago
Why are people always "isolationists" just because they don't want to constantly be at war? Answer me that.
+1 Reply
CRInvestor PRO MoonTrader
2 years ago
well first maybe we should ask, why would people not like American capitalism???...lol....If Coke was only sold within US boarders I would say fine with isolationism but you can't have your cake and eat it too...You either have US style capitalist structure and agree to be the world's watch dog, or Yankee go home......lol....It's obvious US Capitalism won the Cold War, the question now is, can they keep the peace...
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ezen CRInvestor
2 years ago
Given the US involvement in overthrowing governments and generally trying to run all the countries it has a vested interest in, I'd say we've done a pretty crappy job. I'm all for competition and generally allowing consumer choice but I would never say I'm a "capitalist".

I don't get why you seem to be implying that in order for us to continue thriving we need to keep up American Imperialism. The Middle East is pretty messed up, sure, but is it really something we *have* to get involved with? Not saying we should but it seems that, in many of the conflicts, there is NO good side to back.
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CRInvestor PRO ezen
2 years ago
Totally agree...don't even wanna touch Israel (hahaha). The point here is we have tried your route (isolationism) before and it didn't work. Please learn from history or we will be doomed to repeat it....global village and all...I am certainly not saying our system is the best but as Churchill said, 'its the best we got'...
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MoonTrader CRInvestor
2 years ago
You keep saying that word, "isolationism", but I don't think you know what it means. You probably heard it on FOX news, but my question is, is there any other way to relate with countries and not isolate ourselves without fighting them? Do we really have to go to war in order to not isolate ourselves from the world? Really, how stupid an idea is that? Why do we have to have our military over there in order to not be isolated? I think the most peaceful thing we can do is not try to occupy every single nation on earth while bankrupting ourselves doing it. Why is that such an outlandish idea?
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CRInvestor PRO MoonTrader
2 years ago
I give you quotes from Winston Churchill and you drop an insult like 'You probably hear it on FOX news'....I'm done with you....lol
+3 Reply
MoonTrader CRInvestor
2 years ago
You're fooling yourself if you think we can keep occupying foreign countries on borrowed money. These wars aren't even legal. Joe six pack will fall out of love with war when this whole stupid empire based on lies finally collapses, and it won't be pretty. The charade must come to an end.
+1 Reply
MoonTrader MoonTrader
2 years ago
Point being, don't call me a fucking isolationist. That word is a made up fucking lie. I'm fucking sick of hearing it.
-1 Reply
PaulAnthony MoonTrader
2 years ago
since when did antiwar = isolationist?
+1 Reply
MoonTrader PaulAnthony
2 years ago
Since all the major media outlets in the US spread the lie that that's what it is and everyone latched on like they invented the fucking word.
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afbitcoins CRInvestor
2 years ago
America is no longer a capitalist model, funny how so many people don't realise or choose to ignore an obvious fact. USA is getting extrememly repressive, constitution is being flushed down the toilet. In capitalism failed business would fail, not be bailed out. Federal reserve is closer to communist than capitalism.

USA needs to stop meddling in other countries affairs where it has NO legitimate buisness.

What do you believe happened on 9/11 ?
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LudmilaHanania MoonTrader
2 years ago
I totally agree with you, plus Russia is not Iraq or Syria or Gaza, Russia takes care of its interests and security just like the USA does, did Russia place sanctions on the USA for invading Iraq , Libya, supplying weapons to ISIS etc. ? All these sanctions are just a show with no results, Putin will never allow Ukraine to join NATO, missles in Ukraine pointing to Russia is not in the cards.
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MarvinMartian
2 years ago
A better word of caution to investors...

You're "investing" (long) in BTC? Are you serious?

If you think you are a chart trader, and you can't see the OBVIOUS manipulation of BTC, you are not a TA.

I mean, would you give me $10,000 to invest for you, and then hear back each day... It's worth 9000 today, it's worth 11,000 today, it's worth 8500 today, etc? Same thing, you are giving basically an algorithmic trading bot, your money to play with.

Now, if you are playing the sawtooth... carry on =) I know I am.

If you want an algo trading bot, message me.
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MarvinMartian MarvinMartian
2 years ago
Downvote me, but I'm a programmer and dev in the crypto community, I've had a hand in making some of those bots you meatbags are trading against. And I've been trading in Forex since BEFORE the crash, not like these newbs. Plenty of MT4 programming experience way before crypto was even thought of.

There are STABLE markets and there are INSTABLE markets. This is WILDLY instable.
+1 Reply
CRInvestor PRO MarvinMartian
2 years ago
lol total
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CRInvestor PRO MarvinMartian
2 years ago
Couldn't agree more. Interestingly, when I first got started with my Bitcoin adventure last fall/winter I would make the exact same argument to the tech zealots- Main street simply can not consider using BTC as an alternative to 'fiat' because of it's volatility. Interesting too, I built a BTC oriented business and as an experiment priced the first offering in BTC - boy was that a mistake...lol...
Sadly, you seem to have missed the whole point of this post. Regardless of it BTC, gold, property, bonds, stocks...whatever, this is a very very risky market at the moment and both my classic 'fear' proxy (DXY) and my inflation/deflation gauge (TLT/TIP spread) are confirming that notion....Please don't insult me (or this post) with your grandiose trading statements, I have over 20 years trading/brokering experience, I am more than comfortable with my skill set and trading/investing ability. if you have an idea publish it, don't waist your time being critical of my posts, if you don't like....don't read....
+1 Reply
BStewart1984 CRInvestor
2 years ago
Thank you for your graph above and discussion points. Gold and certain types of property could do well in deflation. Cash might also be good but there is the risk of bail outs/in, confiscation. Your thoughts?
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CRInvestor PRO BStewart1984
2 years ago
As long as the Fed can print money (ie market accepts more QE's) then the Fed will do more QE's if the market tanks. If the Fed does not need to do more QE's (ie market does not crash) then they will continue to curtail programs. My hunch is market will break and they will need to do more QE's. One could argue a rallying US Dollar gives the Fed lots of wiggle room to work with. The market is saying 'its ok to do more QE, please don't stop'..... at what time does the Fed listen, usually they are a lagging indicator meaning they only act after they have to...
+1 Reply
LudmilaHanania CRInvestor
2 years ago
This will work out as long as the USD is the currency, Saddam and Gaddafi were both executed because they started selling oil in other currencies , now it is on a different level with Russia , China and the rest of the BRICS doing business in their own currencies, one day soon the printing press will not be able to do the job. One of the best traders ever, who was featured in Market wizards who i got to meet during a private 2 day training he did for 10 attendees a few years ago, told me to get all money out of the USD and put it in Palladium coins and Norwegian Kroner for the long term.
+1 Reply
CRInvestor PRO LudmilaHanania
2 years ago
ah, who was that? I luv Schwager's work. Palladium, why not Lithium :0) far greater profit margins, I luv the rare earths too...lol
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LudmilaHanania CRInvestor
2 years ago
Russian Ballerina Palladium coins, bought at an average of $350 , some serious $ amount, i am still holding to them, todays price for these coins is over $1200 in MS70 or PR69. He predicted Palladium will take the old $1200 high from the early 2000s , dwindling supply and Russia being the main producer. On cash I have been earning 3.5% in NOK , though I missed all the rally in the stock market because I was not a believer and still not. It was trader Vic, Victor Sperandeo, he is one of a kind , and a very down to earth person whom i was fortunate to learn the way he thinks .
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CRInvestor PRO BStewart1984
2 years ago
Hard asset ownership does well 'relative' to other assets IF you do not have to sell (ie leveraged ownership). My mother used to tell us stories of her and her father going around during the great depression to collect the rent on the houses they owned and the tenants asking if they could pay in chickens.....the more things change, the more they stay exactly the same
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BStewart1984 CRInvestor
2 years ago
Gail Tsverberg's work here (www.ourfiniteworld.com) points to an underlying energy constraint that she believes will ultimately cause financial and societal collapse. It may be of interest to some here. I'm not sure if more and more QE can reinflate the market after the next crash, to me it looks like we are in quite a decline, particularly the middle class. The debt will become unsustainable without growth ultimately. We could indeed be bartering again and reminiscing about the days of bitcoin and tradingview lol
+1 Reply
CRInvestor PRO BStewart1984
2 years ago
A bit too doom and gloom for me....lol....fwiw, we are fast approaching North America's demographic 'fear' cycle peak (Q3'17'ish). The 20th century's 'fear' cycle peak's saw the creation of the US Fed, WW2 and the War on Inflation. Through the peaks there was lots of 'end of the world' talk (or at least end of USA) and I assume we will have lots of that kind of talk this go round too. The key here is not to get fixated on the individual trees but to see the whole forest. Asset wise, prices (ie supply and demand) are actually acting very normally (or at least as expected) in my opinion through this cycle - markets do what markets do. I am not so concerned with coming up with the reason specifically why something is moving , more at what the market is trying to tell us. The market is speaking, the question is, are we listening...as for this post, the market is speaking rather loudly, and its a message I don't really like...BEWARE
+1 Reply
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