Fighting With Bears

  • The Biggest Story You Didn’t
    Read Yesterday
  • Still Bulletproof
  • Investor Woodstock

I have to hand it
TradeMaster Daily Stock Alerts’ Jason Cimpl. Yesterday, his morning alert to
his traders was titled "The Biggest Story You Didn’t Read Yesterday".

And I’ll admit, I missed
this story. But Jason, ever on the lookout for events that can lead to solid
profits for his readers, was all over it.

Of course the biggest story
yesterday, which was the failed auction in China,
received no coverage from the U.S.
media. China’s
finance ministry could not come up with enough bids in yesterday’s $4 billion
1-year auction. Over the past year there has been much debate as to whether or
not China’s
yuan is undervalued. Speculators have slowly priced in a currency adjustment,
but yesterday’s auction could indicate that the adjustment will happen this year.

The PBC has gradually raised
reserve requirements on Chinese banks for the past year and it is widely
expected that the bank will raise interest rates for the first time in three
years this quarter. In that environment banks favor long-term debt, which typically
have higher yields, but the notion that a 1-year auction did not receive enough
bids is bizarre.

Although interest rates are
expected to increase this year, short term debt can be converted into cash next
year and similarly invested at a higher rate. Since debt investors shunned
yesterday’s auction, it could be a sign that a more drastic hike is expected
this year or a currency adjustment is around the corner. Since both have a
major impact on China’s
economy each is a story worth monitoring.

I am fascinated to see if
this is a precursor to a currency adjustment from China. That should be a very
bullish even for both Chinese stocks and U.S. stocks.

On the other hand, if China
simply raises interest rates, it will likely be seen as negative for Chinese

again, the bears were unable to take control of the stock market. The weakness
that emerged on Tuesday and Wednesday has quickly turned around.

The S&P 500 had to fight
to get through resistance at 1,188 on Wednesday. But yesterday, it cruised
effortlessly through 1,195 and closed at 1,206. Next up could be a run at

I hope you took my advice
from Wednesday to take advantage of the move below 1,200 to buy stocks. This
market is not offering much to the investors who wants to buy. You have to act
quickly when an opportunity arises.

That type of stock market
action is often associated with strong rallies. Prices simply run away from
investors. Pullbacks are quick, and not particularly deep.

I’ve been calling this rally
"bulletproof" for a couple months now. And it’s still acting that
way. And unless GDP is a complete miss, which is highly unlikely, you could be
quickly rewarded for any stocks you bought on Wednesday.

The hotel
reservations have been made, the flights have been booked. And this weekend,
thousands of Buffett Millionaires will descend on Omaha, Nebraska
for the Berkshire Hathaway annual shareholder meeting.

Sometimes referred to as the
Woodstock of
investing, Buffett’s annual meeting is always an important event. Especially
for a Warren Buffett fan like me.

For one, Buffett’s
hilarious. Second he’s the greatest living investor. And I’ve learned a lot from
Buffett. In fact, I model much of my approach after his.

I’m particularly fond of the
quote "Price is what you pay, value is what you get." If you always
get good value from the stocks buy, you’ll make money most of the time. One way
to do this is to pay attention to a company’s cash flow just as closely as you
do to its earnings.

To learn more about how I
apply Buffett’s methodology to uncover quality stocks at attractive prices,
click HERE.

Have a great weekend,

Ian Wyatt


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