Lady Astor to Winston Churchill: 'Sir, if you were my husband, I would poison your drink.' Churchill's reply: 'Madam, if you were my wife, I would drink it.'
House prices and equity markets are the backbone of retirement plans for many citizens. Housing seems self explanatory. Prices went crazy as unregulated and unaccountable lending led to a wave of easy funding which brought new players, both speculators and marginal owners into the game. We know how this bubble ends. House prices eventually revert to the mean and that means 3.3 times household income. Federal agencies are allowing 38% income to loan and requiring just 3% equity for Federal funding. Workouts and minimal interest rates are designed to take the sting out of the housing correction and it will to some extent. But this paradigm is unchangeable despite economists and fellow boosters’ attempts to reinvent this particular wheel. Most understand how housing prices really work. Those who didn’t are getting a salutary lesson.
The other asset class, freely available to most citizens who can read and have an internet connection, is financial markets. This great powerhouse of entrepreneurial and institutional wealth which is so central to wealth creation for many, is regrettably the least understood and there are reasons why. Markets are presented as creatures of great complexity, understood only by an elite who habitually reside in highly desirable office blocks, dine at the best restaurants and inhabit a world of golf and country clubs with extensive and frequent holidays on mega yachts and exotic resorts.
World markets have about $1.5 trillion in disclosed losses since the credit crisis forced a repricing of almost all asset classes. You can recall most of the great and not so great corporate catastrophes of 2008. More importantly your 401(k) tells you what happens when greed and incompetence rule. The reason your retirement prospects are in tatters is because you believed and trusted others. For some of you that meant buying stocks and watching their value collapse. For others you handed your money to others and watched hedge fund and mutual funds collapse. Yet others got caught up in the commodity boom and bought Gold, Oil, Grains or other commodity assets and then watched the leveraged community get hammered, taking the markets with them.
So what are you to make of these disasters. Do you feel out of your depth in even thinking about the array of products spruiked through endless layers of media? Most do.
The current consensus by thinking commentators and no doubt by the working man is that financial markets are a highly specialised industry where only gurus and those in the know can survive. This week’s summary of 2008 from the leading US market media outlet was:
- All economists got the call for 2008 wrong
- Bankers, investment advisers and fund managers were all wrong
- Traders were wrong
- Nobody saw the tsunami coming and what made 2008 so freakish is that both long side and short side traders were burnt
- The 2% and 20% brigade, supposedly the best and brightest were wrong and the higher up the fee chain your investment went, the worse the results were
Add to this the latest perceived wisdom emerging from Bernie Madoff’s party, that:
- Nobody can have all good years and to assert otherwise is a prima facie sign of fraud, and
- Bernie had a back street auditor, a one man show in a part time office. This according to the pundits is a sure sign of fraud and the smart lads will know this.
So given this collective assertion, I guess that soon, you will never want to hear about markets again.
And that would be reasonable if the collective wisdom were true. But it’s not.
Most of the statements about 2008 markets are simply wrong. 2008 was a marvellous trading year, one of the very best on record. What is now being pushed as the collective summary for 2008 is just another smoke screen to obscure the incompetence of those who profess to be the leaders of the investment industry. In regard to A above, the reason d’être of trading is to make good returns in all markets both bull and bear. If you can’t make money in down markets, you are not a trader. Investors too need to know how to make money in down markets. Classifying yourself as a long only trader or investor, is a cop out. You will do well 75% of the time with this stance but the other 25% will kill you.
In regard to B, yesterday’s demise of Satyam Computer Services, India's 4th-biggest software services exporter and a Fortune 500 company, promptly gave the lie to this new tidbit of perceived wisdom. Having admitted to falsifying its accounts for many years, Satyam, listed on SENSEX, NYSE and Euronext, lost 80% of its market value in a day (including US depository receipts) when its founder and CEO, like Bernie, buckled under the stress of fudging the books and fessed up. The company’s auditors? PriceWaterhouseCoopers, one of the surviving biggies. It’s sponsors, with analyst coverage were Goldman Sachs Group Inc., Citigroup Inc., HSBC Holdings Plc, and Credit Suisse Group AG, whilst Merrill was its capital adviser. What a pedigree. I guess that blows the “big auditor” argument out of the water. With 58,000 employees Satyam was declared as “India’s Enron”
Bernie Madoff’s demise has given us an instructional insight into the arcane world of OPM or Other People’s Money. What is of interest is to see the money flows from banks, hedge funds, investment partnerships and others. What they all have in common is that massive fees are charged on the way to the trader. Various layers of managers, expert analysts and investment houses including big name banks are no more than salesmen masquerading as something much more important. Their arcane strategies too are more puff than fact. If they can’t price risk (and they have showed us this in spades), then nothing else is going to save them. I have argued for much of 2008 that banks of every ilk are not to be trusted. Now the proof is apparent.
If you are going to go through hell, keep going.-Winston Churchill
Into this unhappy summary of the great and the not so good, and their shenanigans with OPM (shareholders’ funds are OPM too), I give you the shining example of Jim P from Kansas, one of the working men of America. I have long urged you to consider learning to trade. This too is a path fraught with pitfalls as many including your scribe have parted with significant sums of money and time in an attempt to learn these market mysteries. By introducing the Danielcode to Financial Sense readers at the end of 2007, we have given traders new insights and tools to bring confidence and success to their trading.
Whilst I have hedge funds, prop traders and banks within my clientele, nothing has given me more pleasure this year than this letter from Jim P which I publish in its entirety. There are a number of important points hidden in its wisdom that more than ever should resonate with you now. Jim, being a mid-west farm boy is not given to hyperbole, but clearly he has had a sterling 2008.
I wanted to send you a quick note thanking you for the work you do with the Daniel Code. A little history about me might be helpful for you to fully appreciate what I’m about to tell you. I’m a twenty three year veteran of a police department in central Kansas. I have an agriculture background. We still raise sheep, cattle and hay to supplement our income. We use the board to hedge our agriculture production. In 2008, my wife lost her job because of economic reasons which could have made a huge impact on our family’s bottom line.
Prior to that event in 2008, I saw your advertisement about the Daniel Code and it fascinated me. I’m not a Bible scholar. However, I’m an avid Bible reader and student. The price was feasible for us which allowed us to take a look at it. Over the years, we have spent a fortune purchasing books, programs, attending seminars not to mention making losing trades. After following the Daniel Code, it has made a huge impact on our bottom line. We have stepped out and opened a spec-account and we are doing fantastic. In fact, 2008 was a phenomenal year for us trading.
One of the nicest things that you have done for us is the T.03 indicator. The quick videos on www.youtube.com are so easy to follow. We are grateful that you have included the grains in your program. I promote you as often as I can. Several of the officers that I work with were planning to retire in 2009. With the world’s economic status many have lost their retirement due to the stock market. How sad. With your help, we are doing fine.
Thank you for making your program economical enough that a “working man” can afford it. Our family wishes you and your family the very best in 2009.
What excites me here, is that Jim is using the Danielcode for the benefit of his family. That is the gift of the Danielcode and part of its purpose. Jim is a working man and a senior officer in law enforcement. He is overcoming adversities and of crucial importance he is keeping his money in his own hands. He is building a safety net in the markets whilst others have sadly lost much. I identify closely with the joy in success that he has found in the Danielcode. I, like Jim and many others trod the path of seminars, books and gurus, before I finally realised that trading too is an industry more given to marketing than substance, and thus began my long search for the Danielcode.
You don’t need to pay grandiose fees and trust your future to others. How did that work out in 2008? Take some time and make an investment in your own future by stepping down the path of financial independence. Financial freedom or even a step in that direction is one of the greatest gifts you can bestow. I have dedicated much of 2008 to learning more about deciphering the DC sequences and putting them into an easily understood format, so that even part time traders can benefit from the gift of the Danielcode. Jim’s only mistake is in saying that he saw a DC advertisement. I never advertise.
Those who crave knowledge must search for it.
It is promised to those who seek
Men occasionally stumble over the truth, but most of them pick themselves up and hurry off as if nothing had happened.- Winston Churchill
To show you what Jim means by my proprietary T.03 signals, which are just one of many consistent outputs from the DC number sequences, here are some of the members charts of recent T.03 trades posted on the website today. These signals are posted about 3 hours after US markets close so bear that in mind as you review the following charts. They are not dependent on market structures or “News”. Just the math.
This is Monday mornings post from the Danielcode Online: “The T.03 Buy signal in Crude Oil on Wednesday 24th December, gave us a per barrel rally. We also had big T.03 Buy trades in the holiday period in S&P, DAX, and Dow, all from the T.03 signals. One contract in the Dow yielded almost ,000, the DAX trade shows almost €8,000, the S&P almost ,000 and you can add the Crude trade on top of that. If you didn't have these trades, you missed more great opportunities. The Danielcode knew.”
Just a perfect end to 2008 but not by any means unusual or particularly outstanding trades. Just what we try to do all the time. The T.03 signals have simplified the DC sequences significantly. We don’t have patterns, wave counts or even a view of markets. T.03 signals are posted as Buy or Sell for 35 different trading markets and they are either elected within the allowable time (2 days for this particular protocol) or they lapse.
Here is the summary of the T.03 signals in Forex since 07/01/08, updated only to 12/12:
Danielcode T.03 Model Forex Account*
Trades Fin YTD:
Return Fin YTD:
Whatever you trade, the DC sequences will make you better. There are a number of videos available at the DC website which show you how Jim had such a rewarding year and make the simplicity of order execution apparent.
And this little bit of irony, where the Danielcode apparently knew of Satyam Computers’ demise before Indian markets opened. Apparently the Danielcode knew, even if Satyam’s analysts, banks and auditors didn’t! A big time broker in Mumbai, India who is a Danielcode member, got the lot and loved it.
For Jim P, like me, there are no flash offices or glossy brochures. No company expense account, limos or private jets. No celebrity, recognition and little thanks.
But we have a gift beyond price; grains of knowledge and wisdom from the Danielcode. As always, I invite you to join us.
Mat 11:28 Come to Me all you who labor and are heavy laden, and I will give you rest.
Copyright © 2009 John Needham