Saturday, March 9, 2013

Starting Your Own Business Is The Way Out Of The Depression

from FinancialSurvivalNet
W.L. Laney grew up in a migrant worker shack. By all rights, he should still be living in that shack, but now he’s got several successful businesses that keep him very busy. Now he helps other people realize and take advantage of similar opportunities. It’s one thing to have an idea for a new business, it’s quite another thing to actually go out and do it. While WL is a religious person, he believes most strongly in the ability of the individual to succeed, even in the face of the most challenging circumstances.
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Jim Sinclair – Expect $1,000 Days In Gold As West Battles East

from KingWorldNews:
Today legendary trader Jim Sinclair predicted that the gold market will shock market participants with $1,000 daily trading ranges as the West battles the East in the gold war. Below is what Sinclair, who has been actively trading the markets for over half a century and whose father was business partners with legendary trader Jesse Livermore, had to say about what is now taking place and what to expect as the gold war continues to rage.
Eric King: “The volatility in gold that you expect to see, Jim, can you talk about that?
Jim Sinclair: “I believe you will see a $1,000 day (in gold), and I think you will see it on at least three occasions. It’s not unimaginable if you go back to the market of the 1970s … And it will happen because kicking and screaming, gold is going to drag the US into a position of a balanced balance sheet, or near balanced balance sheet, if you assume that the gold the US claims to have in fact they do have, and the world will assume that…”
Jim Sinclair continues @ KingWorldNews.com
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How to Live on a Single Paycheck

from Casey Research

Dear Reader,
Vedran Vuk here, filling in for David Galland. David’s schedule is packed with events down in Argentina including the Harvest Celebration at La Estancia de Cafayate, so I’ll be steering the ship for the next few weeks. First today, we’ll have an article from Dennis Miller on when to trust your instincts on your gold holdings. Then, I’ll address the age-old question, “How come you could raise a family on a single paycheck back in the day and now you can’t?” I’ll give you one big reason why, as well as a way to make that old standard a reality again.
Also, make sure to check out Dennis’ recent interview on Real Money Radio with David Holland (to get right into the part with Dennis, skip about the first five minutes of the program). Dennis really knocked this interview out of the park. He tells his retirement story of having a secure nest egg of CDs ripped out from under him, thanks to the 2008 crisis.
Continue Reading at CaseyResearch.com…
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The Next "Greatest Trade Ever" the Market is Completely Ignoring

The financial crisis of 2008 produced what many insiders consider the greatest trade ever.

With the economy and stock market buckling under the weight of the worst financial crisis in 70 years, the decline in the housing market that began in the second quarter of 2006 accelerated. No city or neighborhood was safe. High-growth areas such as Phoenix and Las Vegas saw home prices decline as much as 70% -- national home values were decimated, which have yet to fully recover.
 
But three steps ahead of the curve was John Paulson, a little-known hedge fund operator from New York. Years before, Paulson laid the foundation to profit from what he calculated as unsustainable prices: He placed huge, leveraged bets against the housing market.

Paulson and his small team of analysts would score a mind-blowing $15 billion profit, giving birth to what many insiders today call the "The Greatest Trade Ever" and a best-selling book by the same name.

Two key forces enabled Paulson to pull off the greatest trade ever. The first was a massive macro event that led to the boom and burst of the housing bubble. The second: He operated far ahead of the curve, relying on the public's willful ignorance of compelling data that signaled big trouble around the corner.

But if you missed the housing trade, don't worry. (more)

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How the Rich Beat the Taxman



How do the rich avoid paying tax and protect their fortunes? Dispatches reveals the clever devices they use.
With more than 20 millionaires in the cabinet, reporter Antony Barnett examines the financial affairs of some ministers and others who have helped the coalition.
George Osborne says ‘we’re all in this together’ but are ministers and top Tories paying the same rates of tax as the rest of us?
Barnett visits a number of offshore tax havens around the world still under control of Britain, including the Cayman Islands and the British Virgin Islands, to find out more about tax avoidance ploys.

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Have Old Crop Corn Prices Topped?

I believe that it's extremely unlikely that old crop corn prices have topped. Recently, the March corn contract surged 50 cents, moving from $6.88 to $7.32 over a six day span. Suddenly, the market turned lower, losing about half of the 50 cent gain. One reason for the setback in corn prices can be attributed to evidence that prices trading in the $7.20-$7.30 range seemed to choke off demand. With the strong basis, cash corn prices have been near $7.50 in central Illinois. A negative weekly corn export number (released Thursday March 7th) tends to confirm that corn priced in the $7.50 area is shutting off demand. The ethanol crush continues to edge lower at these price levels, as well.
With projected ending corn stocks at pipeline minimum levels, the function of corn prices is to remain high enough for long enough to assure the rationing of tight stocks until the next harvest. Certainly the harvest and shipment of the South American crop will help alleviate this rationing process. However, widespread relief from South American corn may be 30 to 40 days away, possibly longer.
The old crop futures market remains totally inverted, a sign of tight supplies and an indication that prices could still move higher. The March/May corn spread has moved out to record highs. The next spread to likely move could be the May/July corn spread. Finding a way to participate in this spread, or in the May contract, with limited risk, is the subject of this article. March corn futures expire on Thursday, March 14th. Currently the March is trading 19 cents over the May. This spread peaked recently at 24 cents over. Keep in mind these inversions are extremely rare as normally the board has a carry built into the spreads, which typically accounts for the cost of storage. Assuming that March expires next week, say 20 cents over the May, I'm willing to speculate that May futures will be well bid and possibly rally toward the expiration price of the March. The trick is finding a way to participate in this market without assuming a ton of risk.
I have two suggestions to consider. First, consider purchasing the April corn $7.10 calls at 3 cents. For a premium outlay of $150 per option, before commissions, one can own the right to be long May corn futures from $7.10 until the expiration date, which is March 22nd. Second, consider establishing the May/July corn spread at 18 cents, risking a close in the spread below 15 cents. The upside target on this spread should be 28 to 32 cents over. The initial margin to hold this spread is $675. While it appears the risk, as outlined here is only 3 cents, one must be aware the spread could be well below 15 cents into the close, making the risk potentially more than 3 cents. Having said that, the spread will not expire as the April call option will, thus the risk of losing, due to time decay is eliminated. In addition, you'll be able to hold the spread through the March 28th quarterly stocks and prospective plantings report. 
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This Moving Average Strategy Beats Buy and Hold by Nearly 3-to-1

Moving averages (MAs) are one of the most popular trading tools. Their popularity may be due to their simplicity. Before there were calculators or computers, a 10-day simple moving average could be found by adding up the last 10 closing prices and moving the decimal point one space to the left. I've talked to old floor traders who told me that was the reason the 10-day moving average become popular.

Now, MAs of any length are easy to calculate and widely used. We also have variations of the simple calculation. Rather than just adding up numbers and dividing by the total number, there are at least four other possible ways to find a moving average:
1. Exponential Moving Average: Assigns a greater weight to the more recent market action in an effort to be more responsive to changes in the trend.
2. Weighted Moving Average: Allows users to decide which data should be overweighted and allows for the weighting values to be changed.
3. Triangular Moving Average: Weights the middle of the data more heavily.
4. Adaptive Moving Average: Uses smoothing factors to adjust the number of days used in the calculations to current market conditions.

Each method has its proponents and each of the four methods adds a level of complexity to what was originally a simple indicator. Complexity, at least in my mind, is only OK if it adds value. Visually, it looks like the different moving averages move in the same general direction.

The chart below is a weekly chart of the SPDR S&P 500 ETF (NYSE: SPY) with the prices hidden so all we see are the moving averages. This eliminates the clutter on the chart and makes it possible to see that the moving averages rise and fall at the same time.
SPY Moving Averages Chart
The adaptive moving average, the thin red line, stands out as consistently lagging the simple MA, shown as the thick blue line. At the bottom in 2009, the exponential MA, the brown line, was the last to signal a buy. That signal came after SPY had gained more than 35%. The other MAs signaled a buy after a gain of 25%. Large delays at bottoms are one of the most significant drawbacks of trading with a moving average. The other significant drawback is that there are a large number of small trades in a sideways market.

Based on the visual comparison, we can say that the averages are all close to each other. More detailed quantitative testing of the various MAs is required to develop a stronger opinion as to which one is best. The results are summarized in the table below. All results are for a 26-week MA and the system is always in the market, long when the price is above the MA and short when the price is below the MA.
Moving Averages Table 1
Each MA delivered a low number of winning trades and none beat the market. Digging deeper, we learn that the performance problems are due to large losses on the short side.
Looking at the results for a long-only MA system, moving to cash when the price falls below the MA, we see much better performance.
Moving Averages Table 2
Although the number of winning trades is still low, the adaptive MA beats buy and hold by a significant amount, nearly 3-to-1. This indicator will not call the top of the market. In fact, because it is calculated with historical data, it is impossible for any MA to signal at the exact top or bottom.
At the time of this writing, SPY is well above its adaptive MA, and based on this indicator alone, a bull market would be intact as long as SPY remains above $141.36. Of course, the precise value of the MA changes daily, and will likely be higher when the next bear market does begin.
SPY Adaptive Moving Average Chart
There is no way to fully eliminate the problems associated with moving averages. But in my experience, the best way to use them is to apply an adaptive MA as a long-only signal. No matter what type of MA is used, when the prices are below the MA, the chances of profitable buys are low. Personally, I'd consider selling any stock or ETF when the price moves below the 26-week moving average.
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