Yesterday, Jeff Clark told his faithful Market Minute readers why cash is king…
After trading stocks and options for 36 years, I know this to be true… It’s dangerous to buy stocks into overbought conditions, and it’s dangerous to short stocks when conditions are oversold.
In those environments, the safest trade is to be conservative and to hold a large amount of cash.
That prompted a good question, so we reached out to Jeff for an answer…
Reader question: Hi Jeff. What percentage of your investing funds comprises “a large amount of cash”?
– Donald G. (Legacy member)
Jeff’s answer: That’s a great question – especially since I’ve been telling folks that the best trading strategy when the market is chopping back and forth in a tight trading range is to “do nothing and just sit tight with a large pile of cash.”
All traders are different, of course. But, for me… a fully invested account would have 20 positions. Ten of the trades would be conservative and likely be held for several weeks to several months. Ten of the trades would be more speculative and shorter-term oriented and likely to play out over just a few days to maybe two weeks.
I consider a “large amount of cash” to be whenever I have fewer than 10 positions at work. Typically, that would mean I have 50% or more of my trading account in cash.
But it’s not just about playing it safe… Cash gives traders the flexibility to put money to work during stock market corrections. That’s an advantage you don’t have if you’re fully leveraged into an overbought market.
As we head into the latter half of September – when the stock market typically struggles – having a decent amount of cash on hand should prove to be a good thing.
It will give you the chance to buy stocks at depressed prices in anticipation of a rally into the end of the year.
Next up for this Friday Q&A… our essays about using cryptocurrencies to protect yourself against online snooping and escape from your digital prison prompted lots of questions from your fellow Daily Cut readers.
Let’s start with the basics…
Reader question: How can I buy cryptocurrencies? Can you give us some more information?
– Antya S. (Legacy member)
We’re fortunate to have Palm Beach Research Group as part of the Legacy Research publishing alliance… They’re the foremost crypto experts in the game today, and they put together the following guides for first-time crypto buyers who want to reclaim their financial freedom…
And now, a couple more advanced questions for Legacy’s go-to crypto authority, Teeka Tiwari…
Reader question: Teeka has talked about Bitcoin/cryptocurrency ETFs several times. It seems that he believes the CBOE [Chicago Board Options Exchange] will be the first to get an ETF approved. Do we know what coins will be in the ETF? I have been searching with Google but can’t find anything.
– Joseph M. (Legacy member)
Teeka’s answer: The CBOE-backed ETF will hold bitcoin (BTC) only.
In the future I expect more ETFs will offer multiple coin coverage.
Reader question: Ethereum seems to be taking a worse bath than other cryptos of relative size. I have done some searching to find a reason but, as of yet, I can find none. Any insight?
– Bill T. (Legacy member)
Teeka’s answer: Ethereum’s native currency, ether (ETH), is the primary funding currency for initial coin offerings (ICOs). As the whole crypto market has been hit, ETH has been hit harder because ICOs have been selling ETH for dollars to make sure they have enough money to fund their projects.
The biggest ICO of the last 12 months has been a project called EOS. They raised billions of dollars in their ICO. Most of it was in ETH. They have been moving out of their ETH position (presumably into cash to fund their operations), and this has been weighing heavily on the price of ether.
Reader question: I just listened to Teeka’s video update on why the crypto market is taking a beating. I didn’t get to listen to him on Glenn Beck’s radio show but am wondering if Teeka believes bitcoin will still reach $40k or more by year’s end?
– Adam W. (Legacy member)
Teeka’s answer: The short answer is, yes.
The long answer is my end-of-year $40k call is based on an ETF getting approved this year with the additional tailwind of the Bakkt platform – the cryptocurrency trading platform for institutions and individuals created by ICE (Intercontinental Exchange), which owns the New York Stock Exchange – going live.
Finally… one dear Daily Cut reader challenges us to put up or shut up when it comes to our warnings about the Deep State. So, we turned to our foremost authorities – Bill Bonner and Dan Denning – for some answers…
Reader question: What is your plan to disassemble the Deep State before it is too late, or is it already too late?
– Gayle D. (Legacy member)
Bill’s answer: If I were in the White House… I’d try to…
Bring home all troops
Balance the budget
Pass a flat tax of 10%
And be impeached.
Dan’s answer: I don’t have a plan for the country… just for individuals. It begins with securing your wealth. I think that’s the best defense against the Deep State… being able to take care of yourself and your family. Financial liberty helps preserve political liberty.
That said, I proposed five specific things in the last issue of The Bill Bonner Letter. These would help secure financial and political liberty from the Deep State, and its Wall Street, Pentagon, Silicon Valley, and security services factions:
A complete ban on the use of facial recognition technology by the government to prevent a permanent surveillance state from destroying liberty in America.
A right to cash, guaranteeing that it will never be abolished and that private citizens have the right to engage in win-win commerce with bearer instruments and no state supervision.
A balanced budget amendment to the Constitution, such that Congress will be obliged – by the Constitution – to balance the budget annually and to live within its means.
The abolition of civil asset forfeiture, so that no local, state, or federal law enforcement officials can confiscate your cash or property without due process, as specified by the Fifth Amendment.
The rights to digital privacy, so you can own your data, sell it, take it with you, or keep it private.
That’s all we have time for this week. But be sure to tune in next Friday for more great questions and answers.
P.S. Teeka, Bill, Jeff, Dan, and Chris will be in Bermuda for the first annual Legacy Investment Summit, October 17-19.
To find out how you can join them and ask all your questions in person… click here.