Nicholas Vardy
GLOBAL STOCK INVESTOR HOTLINE UPDATE 55
It’s been a remarkable last week in global markets. Just during the past 10 days, the commodities markets — some of the most profitable investments of the past 18 months — experienced not one but two exceedingly rare “Black Swan” events. As measured by the Commodities Research Bureau (CRB) Index, two of the largest, one-day declines ever in the history of the index both occurred last week, 4.62% on March 17 and 4.07% on March 19. And that’s no mean feat, considering that the index goes back more than 50 years to 1956.
The Black Swan Visits the Commodities Markets — Twice
My friend Nassim Taleb, author of last year’s bestseller "The Black Swan: The Impact of the Highly Improbable," defines a "Black Swan" as a large-impact, hard-to-predict, and rare event beyond the realm of normal expectations. Last week, the commodities markets, which have been some of the most profitable investments of the past 18 months, experienced not one but two such "Black Swan" events. As measured by the Commodities Research Bureau (CRB) Index, two of the largest, one-day declines ever in the history of the index both occurred last week, 4.62% on March 17 and 4.07% on March 19. And that’s no mean feat, considering that the index goes back more than 50 years to 1956.
GLOBAL STOCK INVESTOR HOTLINE UPDATE 54
It’s yet another manic week in global markets. The Federal Reserve engineered a bailout of Bear Stearns, Wall Street’s fifth-biggest bank, by rival J.P Morgan Chase & Co., even as the Fed slashed its key interest rate by three-quarters of a percentage point to 2.25%. Yesterday, the Dow Jones industrial average soared 420 points, or 3.51%, to 12,392.66 — its biggest one-day point gain in more than five years. Asian stock markets rose overnight. European markets today look less impressed.
Doubling Up On The Precious Metal Boom; Booking Triple-Digit Percentage Profits On The Japanese Yen
Global markets had another rough day on Friday when the Fed and investment bank JP Morgan bailed out rival Bear Stearns. The move ultimately resulted in JPMorgan Chase acquiring Bear Stearns for a bargain-basement price yesterday of $236.2 million, or $2 a share, a stunning collapse for one of the world’s largest and most-storied investment banks. The Federal Reserve cut the discount rate, its lending rate to financial institutions, to 3.25% from 3.5%, effective immediately. The result? Asian and European markets are down sharply this morning — reflecting more panic than relief.
GLOBAL STOCK INVESTOR HOTLINE UPDATE 53
Global stock markets rallied sharply yesterday in the Fed’s creative move to inject more liquidity into the marketplace. Wall Street indices closed with its biggest-single advance in more than five years. The S&P 500 closed up 3.7% — its best performance since October 2002. The Nasdaq soared 4% to 2,255.76 and the Dow Jones Industrial Average climbed 3.6%. Most of your Global Stock Investor holdings jumped even more, with some stocks like Potash (POT) rallying almost 10%. The only holding that weakened was the CurrencyShares Japanese Yen Trust (FXY), which had hit a record high the previous week. Six of your nine Global Stock Investor picks are still showing double-digit percentage profits and two are notching single-digit percentage profits.
Yet Another Bet on the Commodities Boom — and Booking 50% Gains on the Japanese Yen
It has been another tough week for markets with the Dow Jones Industrial average now down more than 10% for the year at Friday’s close, even as Asian markets traded sharply down overnight. The good news is that with none of your current Global Bull Market Portfolio holdings tied directly to the stock market, you’ve been little affected by the turmoil. Five of your seven positions are firmly in the black — with three positions showing double-digit percentage gains as of Friday’s close during the span of the last three to six weeks.