Mr. Dines: Finding Future Stock Market Leaders
Publisher's Note: Today we bring you the latest Interim Wealth Bulletin, a supplemental service for The Dines Letter.
Read on for Mr. James Dines' latest market analysis and a discussion on what sectors of the market will drive gains for investors going forward.
To your wealth,
Publisher, Outsider Club
President Trump is singlehandedly boosting the economy’s prospects, for example by urging our allies to keep oil prices low, and suppressing interest rates by blaming the Fed’s rate hikes for a possible economic downturn.
With the 2020 election in sight, the president is also using the Fed to activate its so-called “Quantitative Easing,” code words for “running the printing presses,” used by economists to avoid informing the public of the dilution. Instead, more paper dollars would have little immediate effect on the stock market. Even if the S&P 500 does eke out a new all-time high, that would only be a few percentage points higher than our “Sell” was one year ago. Many of 2018’s leading stocks are in fact still lower than they were then. When this rally finally stalls, golds and silvers should begin their rises.
On January 1, 2019, we foresaw “a market rally in early 2019.” We deliberately avoided playing it because we concluded that the serious profits were not going to be in the averages, but rather in new stock market leaders. It is astonishing that we cannot find anywhere in the mass media that the S&P 500 average has remained virtually unchanged for 14 months, and our interpretation is that under that flatness is concealed group rotation, the moving out of previous winners and into new areas.
We have made no secret as “The Original Pot Bug,” fearlessly braving the hostility of its illegality, on the ground that we were confidently predicting its legalization. Some of our pot recommendations have had stunning percentage rises, yet we are still predicting an ongoing stampede into marijuana stocks. Indeed, as another sign of marijuana’s growing acceptability, prominent lifestyle personalities, businessmen, and politicians are accepting advisory and endorsement roles.
Our laser focus is on future leaders, not yesteryear’s. The real challenge, visible to few, is to locate the winners in those groups before they appear in the headlines, at which time we should be selling on the news that we had been predicting was coming.
Always seek to buy upstream from the Herd. We will try to explore additional probable upcoming leaders in our next TDL, and are constantly pondering on the possibilities. For example, a probable new industry is ride-hailing, such as Uber or Lyft — sending automobile manufacturing lower. It is not easy being the first to plow a field, even while others are stumped by the tree stumps.
In our last TDL (The Dines Letter) we finally stopped dropping hints and instead came out full blast in favor of HEMP, a different variety of the cannabis plant, with almost none of the psychoactive element THC (tetrahydrocannabinol). Hemp has many commercial uses, from fabrics, to cosmetics and wellness products. Instead of calling ourselves The Original Hemp Bug, we decided to declare ourselves “The Original Cannabis Bug,” because it includes both hemp and pot, again unafraid to lead. Being first in any bull market, in this case hemp, has the advantage of getting in near bottoms, cheaper, able to get doubles, triples, or many more times the investment. See our hemp recommendations in the last TDL which have exploded into vertical gains. The point is, our recommendations are making money no matter what the S&P 500 does.
Let others obsess over trade deals, with China for example, which would affect the long term more, but trying to make near-term money on it is not so easy. We based the idea of a rally in China in our February 8, 2019 TDL on the theory that the market would rise perhaps to discount that good a trade deal with China, which has been widely publicized, and all sentient investors were already aware of that. Next, there should be contrary selling after the actual conclusion of the deal, selling on the news.
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We became “THE ORIGINAL BIT BUG” back on November 4, 2016, and decided that the smartest way to play cryptos would be long term, putting some money in for at least a five-year hold. Or longer. Indeed, in our 36-page 2019 Annual Forecast Issue, we spent an entire page on cryptocurrencies, calling for a bottom. That prediction came true as prices suddenly exploded skyward with no warning or news; an investor had to have already been in this asset to have profited from the rally.
What’s next? Our guess is that short-sellers got hooked, so we’re not looking for an immediate decline yet, due to their short-covering. However there should be a consolidation of approximately lateral motion to absorb selling by amateurs looking to “get out even.”
As “The Original Goldbug” we cover precious metals in considerable depth, because every sensible portfolio should include some, if only as “insurance” in case of a monetary upheaval. With America’s debt at a breathtaking $22 trillion, rising at a rate of another trillion a year, and with no serious attempt at balancing the budget — or even running a surplus, to begin paying down the debt — we consider that debt to be unpayable. An unpayable debt on America’s bonds would eventually have a serious impact on the entire world, definitely inducing Big Money to rush out of government bonds and into gold as “insurance.” Even Russia is openly dumping its dollars and switching into gold, for safety; as with other leaders of vulnerable regimes worldwide.
As “The Original Silver Bug” we foresaw its major bull market ahead because it is also a currency — and has historically moved with gold. In this case, we still predict that a bull market began in August 2018. At this early a stage, silver bullion will typically sneak higher unobtrusively; although it is already up 16%, from $13.91 to $16.16 — however our DISSA (Dines Silver Stock Average) is up 33% since December 2018.
Patient investors are advised not to be deterred by the fact that silver has been holding firm between $14 and $16/oz for seven months since then, as we are waiting patiently and with strong determination for the inevitable breakout from this trading range.
Palladium, also in the precious metals group, has been a world leader, having soared 240% from $470 to as high as $1,599 since 2016, demonstrated in its chart we shared in the 2019 Annual Forecast Issue. It is in a correction mode at the moment.
We next envision a market with investors increasingly sensitive to events, even though we do not believe they matter greatly to stock markets themselves. The pact with China is already known, as noted above. But the immigration problems with Mexico might be news-responsive. Nonetheless, again, we have striven to deliberately choose stocks in powerful uptrends that would presumably be among the last to go down during a possible bear market, giving us time to liquidate positions.
More seriously ominous is the geopolitical situation. Russia has inserted 100 soldiers into Venezuela. It has so far received disappointingly scant attention in the mass media, but we think it is extremely important because we view it as comparable with the Cuban Missile Crisis of 1962 all over again. That’s when Nikita Khrushchev tried to send missiles to Cuba and President Kennedy stared him down, prepared to start a nuclear war over it. The missiles went back to Russia.
That Russia has now been allowed to insert those soldiers into Venezuela without American outrage is reminiscent of how it seized Crimea, an inch at a time, as Putin plays chess first, inserting a pawn to study the reaction. These days not everybody is aware of what the Monroe Doctrine is, keeping European wars out of the western hemisphere — it has been relegated to obscurity because our education system ostensibly did not consider it important. So now there is the menace of wars in Latin America like never before, echoing other geographical areas worldwide that are being tortured by the cruelty of wars. That is the real news on which we are pondering — and find it menacing. Especially if Russia follows up with sending additional military assets into this hemisphere.
The reality is, there’s a new world war going on, spreading like wildfire worldwide, low key but visible to those who look and also see, led by Russia and China, Belt and Road, all fought largely by cyberwarfare, and TDL does not have any idea what we could do about it other than report our vision. Hopefully our work might fall on the awareness of those capable of doing so.
James Dines is legendary for having made correct forecasts that were in complete contradiction to the rest of the financial community. He is the author of five highly regarded books, including "Goldbug!," in addition to his popular newsletter, The Dines Letter, and videotaped educational series. Dines' highly successful investment strategies have been praised by Barron's, Financial Times, Forbes, Moneyline, and The New York Times, among others.
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