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    What Strange Lessons We Can Learn From Money Monster

    I just saw the movie.

    I won’t give it away, you should see it … its good!

    Two items from the movie got me thinking:

    Corporate Socialism


    Clooney’s character Lee Gates (a spoof on Jim Kramer) tries a form of cumbersome crowd sourced investing to juice a stock higher.

    He asks his millions upon millions of viewers to buy a small amount of one company, the collective buying would be enormous and push the stock sky high!

    Does it work?

    You’ll have to check out the movie for yourself.

    I had mentioned the same concept about a year ago in a prior article.

    I was intrigued then that given the number of people on social media, done right, this approach could effectively socialize corporations.

    That is, let’s say a target is identified by a social media authority (millions of followers). And each of those followers diligently buys $10 or $100 of stock through their online broker.

    All of a sudden a company has a million + shareholders. Well why not only service those shareholders at cost + a tiny margin. The revenue volume would be huge which could make up for the loss of margin and control is effectively transferred / socialized amongst millions of shareholders ….… hmmmmm?

    Africa ‘oh Africa

     The second item that got me thinking

    [Spoiler alert]

    The use of South Africa as the source for generating ill-gotten gains.

    Again I won’t go into detail here but as a behavioral finance student I find it interesting that [South] Africa is viewed as corrupt, dangerous yet high tech... I’m not saying it isn’t and it does remind me of a society portrayed in the movie Chappie by Neil Blomkamp.

    But I’m a contrarian and if this negativity towards South Africa is surfacing out of mass psychology I would say there may be reason to explore going the other way.

    A day when Africa itself emerges as a world super power?

    Believe the unbelievable!

    I love the Stock Traders Almanac.

     I find it interesting that most professionals consider market timing a worthless exercise. As if it’s best to ignore its very existence, which, to us is like ignoring the tides of the ocean because they don’t always make sense!?

    But seasons do exist in the market and if everyone disdains them then a serious market student should pay attention for an edge.

    The Almanac Reads: Best Eight Months with MACD timing:

    “NASDAQ’s amazing eight-month run from November through June is hard to miss … A $10,000 investment in these eight months since 1971 gains $542,597 versus a loss of $1,655 during the void that is the four-month period July-October”

    Combine the above with a Moving Average Convergence Divergence Indicator (MACD), a technical momentum indicator, creates stellar returns. The above $10,000 leaps to $1,404,313 while the $10,000 during the four month void shrinks to $6,748.

    The MACD indicator is incorporated by looking for a crossover (momentum shifting upwards or downwards) beginning the last month of each period.

    So from October 1st (last month of worst 4) begin looking for an upward MACD crossover as a buy signal and from June 1st prepare to exit on a MACD crossover sell signal.

    As can be seen   from the chart below – said MACD sell signal occurred on June 10th ushering in the Worst 4 month’s period (to October 31st).

    Worth monitoring?

     Figure 1 - NASDAQ displaying MACD crossover sell signal on time for worst 4 months of the year

    Final Thought

    It is remarkable to us that it has been 13 months since the major equity averages made their all-time highs and nearly 19th months since the market decelerated from its long move up off the 2009 lows.

    That’s 19 months and the market has essentially gone nowhere!

    Instead of the common media refrain that we are only 3% or 2% or 1% from all-time highs we think more ominously that 19 months have passed by and the market has failed to make new highs.

    What would pull the market out of its 19 month top?

    Ironically we think that higher interest rates will be the catalyst.

    As we write Global Bond yields are plumbing multi-decade and in some instance multi-century lows. Whether it is near term Brexit fears or out of control central banks, interest rates do not seem to support the fundamentals.

    CPI, for example, in the US is constantly surprising to the upside as does unemployment numbers (lower).

    The Fed (and other central banks) have broken the price transmission mechanism by suppressing interest rates – creating bubbles and impoverishing the middle class – and hence the market may indeed applaud when a normal pricing mechanism reasserts itself.

    The corollary is that markets may move lower on lower interest rates in a kind of negative reinforcement loop as it were – which is exactly in synch with what the Stock Trader’s Almanac is predicting!

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    Thank you for reading my post. I regularly write about private market opportunities and trends. If you would like to read my regular posts feel free to also connect on LinkedIn, Twitter or via Atlanta Capital Group Investment Management.

    Greg Silberman is the Chief Investment Officer of Atlanta Capital Group Investment Management [ACGIM]. Atlanta Capital Group specializes in creating custom private market solutions for RIA/Family Office clients.

    Advisory Services offered through Atlanta Capital Group Investment Management.

    Nothing in this article should be interpreted as a recommendation to buy any security. Please conduct your own due diligence.  

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    Why Millennials Have No Right to Complain

     

    In 1992 I took a gap year from University.

    I traveled all over Europe and the Middle East while making London my base.

    There was no internet, no cell phones.

    We would send home hand written letters.

    The turnaround time to receive one back was about 3 weeks.

    I guess that makes you selective in what you write, only the important stuff!

    Said letter would go into a bright red Paddington Bear Post Box.

     

    To be delivered by no less than the Royal Mail itself to a far flung corner of the British Empire called South Africa.

    For perspective this was nary three years after the Berlin Wall came down!

    Look, us 40 something guys most likely would have led VERY different lives with the knowledge our 30 something brethren have at their fingertips today.

    I’m a big self-help devotee.

    And the amount of self-help on the internet is fantastic (who to trust is admittedly a problem).

    One interesting and growing trend (take note entrepreneurs) is self-help attributable to men that are trying to find their way back to being Real Men.

    Unbeknownst to us 40 something guys – we were not exactly raised to be manly men.

    Some of us are progeny of single mothers - nothing against single mom’s in fact much respect.

    Apparently we drank out of too many plastic containers.

    And ate too much processed food which stripped us of our manhood aka. Testosterone.

    In a world where all the above information is now freely available, where dating Apps have essentially eliminated the social stigma of living in the equivalent of a village and Airbnb obfuscates the need to own a home in one location anymore … you 30 something guys have got it good and get to avoid all the mistakes we made.

    To be fair we did kinda messed it up for you guys with that whole 2008 financial crisis thingy but you’ll figure it out … I’m sure Lending Club (down 61% YTD) and Lending Tree (down 20% YTD) may indeed revolutionize lending in a way Wall Street Pirates could not.

    So be it.

    I’m jealous of you guys.

    All the mistakes we made, all the knowledge we had to scrape to learn is literally out there for you right now for Free.

    Incidentally my Robo Advisor says I should be aggressively positioned in Equities right now …. just kidding!

     ---

     I was recently speaking to an influential dealmaker.

    Someone we would consider in the ‘flow’.

    He shared with me an interesting tidbit I hadn’t realized before.

    He said the Chinese are buying apartments in New York for any price.

    I have been aware for some time from my sources in Australia that the same frenzied Chinese buying of units has been going on there.

    And the spread widening between the onshore-offshore renminbi is indicating accelerated capital outflows from China.

     

    Per my sources the theory is that Real Estate in Sydney or New York (or London) will never go to Zero whereas the debt situation in China may cause the currency to devalue significantly.

    So who cares if Real Estate in trophy cities is overvalued?

    I’d rather take a 50% loss (GS: hyperbole) as opposed to a 100% currency loss.

    This dovetails nicely with Byron Wien’s 10 predictions for 2016:

    "High-end residential real estate in New York and London has a sharp downturn. Russian and Chinese buyers disappear from the market in both places. Low oil prices cause caution among Middle East buyers. Many expensive condominiums remain unsold, putting developers under financial stress."

    CPI continues to Surprise to the Upside

     Regular readers will know we are not surprised by the continued strength in CPI (+0.4% mom in April) and 1.1% annualized.

    While the constituents driving higher prices vary, one consistent has been owners equivalent rent which is interrelated with home prices which have been rising as new home sales continue to strengthen.

    CPI numbers continue to come in above expectations and we have been intimating the Fed will not sit idly by - so as if by magic a Fed rate hike in June becomes a distinct reality.

    Although not terribly surprised we note the yield curve is becoming as flat as a pancake [differential between 10 and 2yr rates continues to narrow … chart heads lower] :

     

    If the economy is improving as the Fed surmises, why is the long end of the curve (which should be more inflation sensitive) not reacting by moving higher?

    In our opinion either a torrent of money is coming onshore due to negative interest rates elsewhere or the (smart) fixed income market doubts growth is a) real or b) sustainable.

     Current Position: We like $ Cash and special situations with identifiable catalysts!

     Your roaming Chief Investment Officer

    Greg

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    Thank you for reading my post. I regularly write about private market opportunities and trends. If you would like to read my regular posts feel free to also connect on LinkedIn, Twitter or via Atlanta Capital Group.

    Greg Silberman is the Chief Investment Officer of Atlanta Capital Group. Atlanta Capital Group specializes in creating custom private market solutions for RIA/Family Office clients and is an active acquirer of independent wealth management practices.

    Advisory Services offered through Atlanta Capital Group.

    Securities offered through Triad Advisors, Member FINRA / SIPC.

    Atlanta Capital Group is not affiliated with Triad Advisors

    Nothing in this article should be interpreted as a recommendation to buy any security. Please conduct your own due diligence.  

    Main pic: http://www.gratisography.com/

     

     

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