I just finished reading the blog ZeroHedge’s article, “16 Things About 2013 That Are Really Going To Stink,” and decided that instead of putting a noose around our necks, I would like to begin the New Year with something positive to think about…
Let’s start with an inspirational exchange between Clarence the angel and Franklin from the movie It’s A Wonderful Life:
Clarence: You sent for me, sir?
Franklin: Yes, Clarence. A man down on earth needs our help.
Clarence: Splendid! Is he sick?
Franklin: No. Worse. He’s discouraged.
As we head into the second week of 2013, many investors are frustrated, confused, and discouraged.
Although Dow ended last year with a modest gain — 6% — the market doesn’t exactly instill us with a lot of confidence…
How do I know?
Trading volume in the stock market is at a 12-year low.
Here’s the performance of the Dow since 2001, with its trading volume at the bottom:
This tells us the retail investor is confused and discouraged — so much so, they’re either sitting on their hands waiting for a signal to trade, or they’re completely out of the market out of fear.
Dear reader, you just got your signal.
I’m here to tell you to get ready for a blockbuster year.
We can almost guarantee the market will go great guns in 2013.
Let me explain by taking you back two years…
On September 24, 2010, legendary hedge fund manager David Tepper appeared on CNBC.
Looking a little paunchy with a thinning hairline as though he’s been balding since his college days, Tepper looks like he should be serving Pabst Blue Ribbons at the corner bar rather than managing billions of dollars…
And that’s why we like him.
Tepper is a legendary investor, scoring a +132% gain in 2009, making over $7 billion in his hedge fund by buying distressed banking stocks in early 2009. His insights and predictions into the markets were so powerful the day he appeared on CNBC two years ago, the Dow jumped up 196 points.
By the end of the 2010, the Dow closed up 8% from the day of Tepper’s CNBC interview.
Well, a lot. But what everybody points to is this:
Either the economy is going to get better by itself in the next three months…What assets are going to do well? Stocks are going to do well, bonds won’t do so well, gold won’t do as well. Or the economy is not going to pick up in the next three months and the Fed is going to come in with QE.
Then what’s going to do well? Everything, in the near term (though) not bonds…
So let’s see what I got — I got two different situations: One, the economy gets better by itself, stocks are better, bonds are worse, gold is probably worse. The other situation is the fed comes in with money.
For Tepper, it was a “no-lose” situation.
And he was right.
He knows a lot about no-lose investments…
When he was asked how did he know to buy bank stocks in early 2009 while everybody was running away from them like they were on fire, his wit shined through.
Tepper sarcastically said, “It was easy, the government told you what they’re going to do.”
What did he mean?
Well in 2009, the U.S. Treasury published a white paper. It said it was going to be buying bank stocks to bring support into a crashing market. The Treasury even gave a specific date and a specific price it would be buying.
Tepper read the report and purchased bank stocks and bonds before the government did.
It was an epic trade that will be studied for decades to come: David Tepper had front-run the government! And it was 100% legal.
He went on to say “Sometimes it’s just that easy.”
And he’s right. Sometimes it is just that easy.
It’s like a catcher telling the opposing hitter which pitch to expect.
“It’s going to be a fastball… right down the middle, around 85 mph.”
HOMERUN!!!
Well, guess what? Lightening strikes twice.
The government is telling us what they’re going to do — again!
Helicopter Ben told us back in December that he’s going to keep rates low until unemployment reaches 6.5%. He also said he doesn’t see that happening until 2015, at the earliest.
And regardless of what the Fed said last Thursday about ending quantitative easing by the end of this year, unemployment just ticked up…
Start batting practice.
Brian Hicks
Check us out on YouTube!Brian is a founding member and President of Angel Publishing. He writes about general investment strategies for Wealth Daily and Energy & Capital. For more on Brian, take a look at his editor’s page.
