The Equedia Weekly Letter
 
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More Fannie and Freddie Outrage     

 

Fannie Mae and Freddie Mac got the biggest taxpayer bailout during the 2008 meltdown. Yet, they still get more everyday with a total of $170 billion so far. So why are the guys who run these failures getting as much as $17 million in bonuses for the top guys and another $100 million to other top executives.

 

Watch the video as Lachlan Markay of the Heritage Foundation discusses the situation surrounding executive pay at the two companies.   

 


November 20, 2011
Dear Readers,

Does the stock market dictate our future, or does our future dictate the stock market?

 

We have once again been forced onto another wooden roller coaster. It seems that despite the grim outlook, the market wants to rise. But just as it does, we're brought back down to reality.

 

Last month, we hit new lows only to rise again back to year highs. This all happened despite bad economic news and a grim outlook. History tells us that anytime we hit a major market bottom, and the market rallies despite bad news, a bull market is being formed.

 

It happened in 2002 with the tech bubble. It happened in 2008 with the world financial system on the brink of collapse. Is it about to happen again? Have we hit a major market bottom? Are we heading towards a brighter future?

 

As you know, the stock market is forward-looking by about six months. Given the trading patterns of last month, it appears that we're almost out of the woods. But I wouldn't get your hopes up just yet.

 

We are still on the brink of a worldwide financial breakdown. Europe remains the one big question that could break ten on the Richter scale, with Italy possibly being the final blow.

 

The average citizen has no idea how close we are to a world financial system breakdown. They have no idea what is really happening in Europe. But perhaps it's for the better. What they don't know can't hurt them, right?

 

If Italy fails, France will be next, and with it the rest of Europe - and the world. Why?  

 

One word: derivatives.  

 

Many of the major US banks, including the Bank of America, hold an undisclosed but astronomical amount of derivatives tied to the Eurozone. If Europe collapses, the amount lost would be too big for any US bank to handle - meaning the numbers are so grand that they far exceed the banks' worth.  

 

If the major US banks fail, the world financial system will come tumbling down with it as citizens scramble to withdraw their assets from the so-called safe haven we call banks. That's the worst-case scenario. Could the world governments let that happen? Would they?

 

The market, while still volatile, have shown us signs of life and a future that is brighter. The US stock market on a technical basis is showing strength, despite the caution flags.

 

While it may be hard to digest now, the market is the forward thinker and its almost always right.  

 

Price action has been impressive and indicators show us there's room for more growth. While short-term indicators show that some stocks are overbought and a slight pullback may occur, the longer-term leading indicators show us otherwise. Perhaps this is why we've seen stocks trying to break out, only to be slapped back down last week.

 

That means if things settle. and provided we don't experience any major market news, next week may look pretty good. And let's not forget that there is still a strong chance the Fed will stimulate over the coming months which will bolster the markets - albeit only temporarily.   

 

But there is a curveball when looking at price action and technical indicators in this market... 

 

Computers Predict the Future 

 

The market may no longer behave as it once did in the past. Just because history tells us the stock market is a forward thinker, doesn't mean it is anymore. Why? 

 

The markets are volatile and traders are taking advantage of every swing.

 


The worst part about the volatility is the absence of retail investors and the dominance of algorithmic high frequency software traders.

The world is literally on the brink of a financial collapse and we have software programs running and gauging our day-to-day markets. It's a scary thought.

Software programs have bugs. At any given time, the wrong input our output could cause catastrophe. I am sure everyone has had their computer crash or had some kind of weird malfunction with a software program before. Imagine when it happens with software trading programs that control billions of dollars worth of wealth - ie. flash crashes.

Current data shows that more than 70% of all equity volume traded in the US markets are now as a result of these algo traders. In a market where retail investors are holding onto cash, this percentage may be even higher. That means the real gauge of market sentiment and technical analysis is no longer controlled by retail investors and investors with the ability to gauge economic factors. It is now controlled by computers.

If history tells us that the stock market is forward looking by 6 months, then computer programs are now dictating our future...imagine that.

It reminds me of the movie Paycheck where a machine was created to predict the future, but in actual fact it was really just creating events that we believed would be our future. I have always said that perception is reality. If computer programs are now dictating our future via the stock market, one can only imagine what our markets will look like in the future. It's a scary thought.

Next week, I'll be continuing with the lessons on mining valuations from a few weeks prior.

 

   

 

Until next week,

 

Ivan Lo

Equedia Weekly  

 

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Yamana Begins Operations at the Mercedes Mine in Mexico - Click to Read

Casey Research  

Don't Sweat the Correction in Gold       

   

By Jeff Clark, Big Gold      


Crescent Mine I've told more than one concerned investor that when the gold price falls, they should "come back in three months" and see if they're still worried. The idea is that the daily and monthly gyrations are nothing to fret over, that the price will recover and, in time, fetch new highs.

 

That advice has worked every time gold underwent any significant correction (except in late 2008, when one had to take a longer view than three months). Here's proof.

 

I've traded emails regularly with Brent Johnson ever since meeting him at an investor event I spoke at a couple years ago. He's the managing director of Baker Avenue Asset Management, a wealth management firm with over $700 million in assets. He forwarded some charts he'd prepared for his clients that put gold's September decline into perspective; it's a good visualization of my standing advice to worriers.

 

The following charts document corrections in the gold price of 8% or more - first measured with daily prices, then monthly, quarterly, and finally annually. See if this doesn't put things into perspective. 

 

 

 

 

 

While the gold price has had plenty of big corrections since late 2001, they're not so concerning when viewed beyond a day-to-day basis. In fact, if one resists checking the gold price except once a quarter, one might wonder what all the fuss with price declines is about.

 

You'll also notice that...

 

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More Casey Research Articles

 

> Is It a Good Time to Invest in Pipeline Companies? 

> Why Gold Should Set New Highs for the Holidays

> The Gold Investor's Biggest Risk 

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Stock Picking Ideas from Economic Reports     


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Every week the government and other entities release economic reports that cover all areas of the economy; from retail sales and housing to international trade and consumer sentiment.

 

In fact, on virtually any given day there could be anywhere from one to a handful of reports.

 

And while the financial media does cover them, they usually focus on headline numbers without doing a deeper dive.

  

Watch the video as Kevin Matras shows how to find winning stock-picking ideas in the government's 'boring' economic reports.

.   

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> Understanding Delta is the Key to Option Profitability Video 

> Stock Picks for Safe Money, Healthy Snacks, and Cancer Cures 

> Stocks Do Not Fear Europe Video 

> Starbucks Gets Into Juice Video 

> Buffett's IBM Stake is Funny

> Aggressive Growth Stock Picks with Analyst Research on FARO Technologies (FARO) and Build-A-Bear Workshop (BBW) Video - November 17, 2011

> Value Stock Picks with analyst research on CNH Global (CNH) and Corn Products International (CPO) Video - November 16, 2011

> Growth & Income Stock Picks featuring analyst research on Norfolk Southern Corp. (NSC) and Seagate technology (STX) Video - November 15, 2011 

Featured BNN Clip:

BNN: Barrick JV gets denied mining licence for $3B project in Pakistan - Click to Read

Technical Trading with Harry Boxer 

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Harry has more than 40 years of Wall Street investment and technical analysis experience, including eight years on Wall Street as chief technical analyst with three brokerage firms.

 

Watch the November 17 video as he walks you through his technical analysis on a whole bunch of stocks he thinks you should be watching from last week. To see more videos, Click Here.  

 

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Forward-Looking Statements

Except for the statements of historical fact, the information contained herein is of a forward-looking nature. Such forward-looking information involves known and unknown risks, uncertainties and other factors which may cause the actual results, performance or achievement of the Company to be materially different from any future results, performance or achievements expressed or implied by statements containing forward-looking information.

 

Although the Company has attempted to identify important factors that could cause actual results to differ materially, there may be other factors that cause results not to be as anticipated, estimated or intended. There can be no assurance that statements containing forward looking information will prove to be accurate as actual results and future events could differ materially from those anticipated in such statements. Accordingly, readers should not place undue reliance on statements containing forward looking information. Readers should review the risk factors set out in the Company's prospectus and the documents incorporated by reference.

 

Cautionary Note to U.S. Investors Concerning Estimates of Inferred Resources

 

This presentation uses the term "Inferred Resources". U.S. investors are advised that while this term is recognized and required by Canadian regulations, the Securities and Exchange Commission does not recognize it. "Inferred Resources" have a great amount of uncertainty as to their existence, and great uncertainty as to their economic and legal feasibility. It cannot be assumed that all or any part of an Inferred Resource will ever be upgraded to a higher category. Under Canadian rules, estimates of "Inferred Resources" may not form the basis of feasibility or other economic studies. U.S. investors are also cautioned not to assume that all or any part of an "Inferred Mineral Resource" exists, or is economically or legally mineable.


In This Issue
Yamana Begins Operations at the Mercedes Mine in Mexico
Don't Sweat the Correction in Gold
Guyana Goldfields Receives the Mining License for the Aurora Gold Project
Stock Picking Ideas from Economic Reports
BNN Clip: Barrick JV gets denied mining licence for $3B project in Pakistan
Technical Trading with Harry Boxer
Morningstar: Expect Higher Oil Prices to Stick Around
Upload Your Own Videos
Equedia Tips- Markets Tab
Additional Features
Forward-Looking Statements
Featured Stock Reports
This Week's Most Wanted
Equedia Watch: Companies Under Evalualtion

 

Get Featured

 

Equedia 2011 Media Kit  

 

Featured Posts

 

BNN: Barrick JV gets denied mining licence for $3B project in Pakistan 

 

Wall Street Journal: Euro-Zone Contagion Still Spreading 

 

Morningstar: Expect Higher Oil Prices to Stick Around 

 

 

Featured Reports   

 

The Equedia Report: The African Road to Riches 

 

The Equedia Report: The Next Big Alaskan Gold Play 

 

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Equedia 2011 Media Kit 

 


Quick Links

This Week's Most Wanted

 

The Stock Market's Most Interesting Videos That You Should Watch 

  


Equedia Watch   
Companies Under Evaluation This Past Week

 

Rants and Raves 

 

Inside the mind of Equedia's editor - unrated, uncut, and unedited


The 10 Big Under-The-Radar Stories You Probably Missed This Week

From Eric Platt of Business Insider

Japan's economy grew for the first time in four quarters

Boeing receives two massive orders, toppling records

Warren Buffet announces massive stake in computer services firm IBM

Spaniards expected to vote in opposition party to office

Four major banks announce layoffs

U.K. unemployment hits a 15 year high

Eurozone GDP actually expanded during the quarter

U.S. retail sales beat expectations, grow 0.5%

Ratings agency Standard & Poor's errs in two reports

Goldman Sachs names its smallest managing director class since 2008

click for report on Abzu Gold (TSX.V: ABS)

click for report on Kiska Metals (TSX.V: KSK)


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