Friday, 22 October 2021 — Wollongong, Australia

By Greg Canavan Editor, The Rum Rebellion

[3 min read]

Dear Reader,

Let’s start with a disclaimer…

If your faith in this ‘Everything Bubble’ is unshakeable, the research we’re releasing today will fall on deaf ears.

It may even produce a mammalian response of anger.

In investment markets, anyone and everyone succumbs to their mammal brain at some point. Even the professionals.

This is especially the case if you get in too deep.

Right now, investors the world over — big and small, rich and not so rich — are in deep.

Stock markets and real estate are off the charts. Leverage is tipping record levels for households, corporations, banks, and governments.

If a true fire sale takes off…

Is there enough left of central bank balance sheets to put it out?

There has perhaps never been a more important or timely question to ask as an investor.

If you realise that…and if you’re worried or wondering what the best course of action is…then the paper we’re publishing today is for you.

It’s called ‘Four Code Red Investments to Sell Now’.

I urge you to read it today.

Don’t even leave it for the weekend.

You can do so now by clicking here.

These four urgent sell calls come from our own Vern Gowdie.

‘But Vern’s being telling us to sell the market for years!’, you might say.

And you’d be right.

But he’s never made a direct set of calls like these.

You need to find out what they are…and why he’s making them right now as we head into November.

You need to see the new factors that have entered into the calculus over the last few weeks…and the four investments that are now, in his view, screaming Code Red.

And you need to assess your own exposure to them.

Because, according to Vern, we’re finally reaching that overused investment cliché:

‘The tipping point’

Vern’s been in this game a long time. Much longer than me. Black Monday in 1987 was his first experience of a cycle-turning market event.

It didn’t come out of nowhere.

There were Code Reds everywhere.

It’s just that most investors ignored them.

This was the end of a long bull market in stocks that began in 1982.

Today, this bull market has gone on much longer.

And it’s not just stocks.

It’s EVERYTHING

Says Vern:

‘Investors around the world have been seduced by this market…and I can’t blame them. When something good like this goes on for so long, you want some of it in your life.

‘It’s only natural.

‘Fighting the temptation is hard…real hard.

‘But the truth is this…

‘Mathematically, it is not possible for these past returns to be repeated.

‘Share prices are a function of Earnings Per Share (EPS) multiplied by a price/earnings ratio.

‘EPS have been goosed up by share buybacks and accounting trickery. The PE ratio has already expanded well beyond historic norms.

‘Simple mean reversion of these two factors alone could result in annual negative returns for years to come.

‘Then you factor in overvalued property…cryptos and NFTs…“meme stocks”…SPACs…all kinds of collectibles…’

It’s an ‘Everything Bubble’ unprecedented in history

When will it end?

Or might central banks, supervisors, regulators, and governments have the power to STOP it from ending?

That seems unlikely.

But, that said, they’ve done a pretty good job of it so far…

‘Four Code Red Investments to Sell Now’ doesn’t claim to know the exact timing.

Although, as you’ll see, Vern highlights a one-week period in the middle of next January as a potential contagion point.

Who knows?

Fear may well be firmly in control of the markets before then.

And trust me, when fear gets control of this everything bull market, all bets will be off.

Literally.

When the market REALLY starts to move against you, the mammal brain wrests control of the wheel. Its primary aim is to stop the car and get out.

But stopping the car at this time is nearly always the wrong thing to do.

It’s too late.

You can bet that everyone else wants to jump from the car as well.

And you know the only way to beat the market over the long term is to not do what everyone else is doing!

Look, we all know on an intellectual level that buying ‘when there’s blood in the streets’ (a phrase attributed to Nathan Rothschild during the Napoleonic Wars) is the way to make money.

And while it’s all well and good to throw that phrase around from time to time, it ignores the fact that this is precisely when most of us have had our rational brains hijacked by our amygdala.

We have the fear.

This is when you think your survival is at stake.

The mammal brain is in the driver’s seat, freaking out. Your cortex is in the back seat, timidly suggesting that it’s not the end of the world and you should keep going. But your mammal brain is having none of it. It wants out, and will only agree to get back in when the coast is clear.

In short, your brain is an idiot at times like these.

The trick is to make sure you’re out of the market well before.

Can that cost you upside if you’re wrong?

Sure.

But let me ask you…

How much upside do you think is left in this bull market?

5%? 10%? Even 20%?

I don’t claim to know. It could be even more than that?

But is that risk of further upside worth putting your capital at risk to the potential tune of 50%...or even 65%?

Timing tops and bottoms is the most inexact of investment sciences.

But it’s also where the stakes are the absolute highest.

That’s why very few analysts have the balls to go on record and not just tell you WHEN to sell…and WHY…but specifically WHAT.

Vern is doing that today.

You can read his sell recommendations here.

Regards,

Greg Canavan,
Editor, The Rum Rebellion