Welcome to the inaugural edition of The Daily Cut Friday mailbag.
This is where we put your questions to the Legacy Research Group panel of experts and let them respond directly to you and your fellow Daily Cut readers.
First up… many of your fellow readers are curious about cryptocurrencies (aka cryptos) following last Thursday’s issue, “The Battle Against Online Snooping Starts Here”…
So we turn to Legacy Research co-founder and world-renowned crypto expert Teeka Tiwari for an answer to the most intriguing question we’ve received…
Question: Could you please comment on this concern: I fear that Wall Street will try and take over this market, as they have so many others. Manipulating the coin prices to get the price they want is not surprising. Is this happening, and can it be stopped?
– Tamara D. (Legacy Research member)
Teeka’s answer: On the day JPMorgan Chase CEO Jamie Dimon said he’d fire any trader buying bitcoin, the price of bitcoin dropped. We came to find out that JPMorgan Chase traders in London used that weakness to load up on bitcoin.
That’s only one instance of manipulation that we know of. I’m sure there have been – and will continue to be – many others.
As individual investors and speculators, we must face the fact that we cannot stop market manipulation. Every day, multibillion-dollar-valued public companies are manipulated by trading firms on Wall Street.
Just because manipulation exists doesn’t invalidate the investment case of the underlying asset. What it means is that we have to pay special attention to our research, buy-up-to prices, and position sizes.
Doing great research does the most to nullify the impact of manipulation. Having a buy-up-to price helps mitigate overpaying. Sensible position-sizing gives us the emotional strength to handle the downside volatility that can sometimes come from overt and covert manipulation of crypto assets.
So to answer the question, yes, manipulation exists, but we have the tools to weather it… Do in-depth research. Use a buy-up-to price. Use small, uniform position sizes across your portfolio.
Moving on… one dear reader doesn’t know what to make of our recent essays about China’s “Social Credit System.” (Catch up here and here.)
Question: I enjoy reading your letters, but I can’t find anyone to verify your article on the “social credit score” your article claims is being used in China. I’m a dealer at MGM National Harbor, which is located five miles south of Washington, DC, and at least a third (150+) of my fellow peers are from China.
Even though most of the peers who are Chinese haven’t been there for one to five years, they have never heard of the “Sharp Eyes” policy your article claims is in existence. Nor have their relatives who still reside in China. Can you help me understand how this is possible?
– David W. (Legacy Research member)
Daily Cut editor Chris Lowe has the answer…
Chris’ answer: The Sharp Eyes program isn’t a secret. You can point your colleagues to this article. It comes from Global Times, a Chinese English-language newspaper owned by People’s Daily, the official newspaper of China’s Communist Party. Nothing runs in these newspapers without government approval.
Or you could point your colleagues to China’s 13th Five-Year Plan – the blueprint for the nation’s development that the government rolled out in 2015. According to another state-owned newspaper, Legal Daily, the plan requires 100% surveillance and facial recognition coverage across the country.
Unless this system is stopped – and there’s no sign it will be – China will become a two-tier society. In one group will be citizens the government deems “trustworthy.” The other group will contain citizens it deems “untrustworthy.”
The idea is that this will incentivize you to do whatever the government says you need to do to become trustworthy again – say, do community work… espouse the right ideas… join the right groups… etc. It’s the kind of thing that every totalitarian regime has dreamed of. Except now it’s a reality.
And don’t think something similar can’t happen in the U.S. As we’ll be covering in Monday’s Daily Cut, Facebook has started rating 2 billion users based on how trustworthy it thinks they are.
And finally… a die-hard Doug Casey fan has a question about the High Ground book series Doug is co-writing with John Hunt…
Question: When is Doug going to publish his next book? The first two were spellbinding. Thanks.
– Ken W. (Legacy Research member)
John’s answer: I am the hold-up here in finalizing Assassin, and I apologize. We are revising and tweaking some more.
It won’t be out this summer, but it’s coming, and it’s going to be good.
During the drafting of each of the books, the manuscripts travel numerous times back and forth between Doug (at his spreads in Uruguay, Argentina, or Aspen… or whatever dysfunctional hell-hole he might be visiting at the moment) and me (usually in either Virginia or Maine).
Drug Lord went back and forth between us 17 times! Speculator, too.
We’ll update you as Assassin goes to press. Thanks for your interest!
That’s all for now.
P.S. If you missed Jeff Clark’s Market Minute on Tuesday, “The Dance That Made My Summer,” I urge you to click here and read it.
As you can see from the responses below – and these are just a fraction of what we received – it’s not Jeff’s usual fare…
That is a most moving story about your family in Florence. Those are the kinds of memories that keep us poised. Thanks for sharing that delightful memorable experience of yours. God bless you and your wonderful family, Jeff! I love all your notes and advice, so valuable, as well as your stories.
– Carol G. (Legacy Research member)
Jeff, I always knew you were a great trader. I did not realize what a great storyteller you are. Your story brought a tear to my eye.
– Bob B. (Legacy Research member)
Thanks, Jeff, for such a beautiful and uplifting story. I haven’t traveled for over 20 years but through your descriptive talent I feel as though I’ve been to Florence.
– Deb M.
Jeff, thank you. Despite the fact that I value your advice, I am quite certain that’s your best email to date. I am lucky enough to have been to Florence a number of times, so I could picture all of this in my head as I read your story and still have tears. You’re a good husband and dad.
– Joy M.
Thank you for the beautiful story, Jeff! I read all of your Market Minute letters and appreciate your analysis, but I never reply to tell you so. Well, your story inspired me to do so. You told the story as well as you “tell” the market.
– Craig C.
P.P.S. If you’ve got a question for one of our Legacy Research experts, send it to us at [email protected], then check back in next Friday for the answer.