LUX April 2017

LUX - April 2017 29 The Core Foundation of All Economies flagship strategies, the Sentiment Table Strategy, returned 70 1/2% in 2015, but it did it on only 21 trades while being in cash 68% of the time. The recommendations associated with that strategy are provided overnight too, which means that virtually anyone, even people with a job who cannot watch the market during the day, could manage this strategy. Not all of our strategies are like this, some are much more active, but about half of our strategies are something people with normal jobs should be capable of managing themselves. Do you have any strategies for conservative investors? Yes! In fact, most of the money that I manage is in our conservative strategy. It is called the CORE portfolio strategy, and it is designed to make money slowly but surely with very little volatility. It remains neutralised to market risk almost always, and only exposes itself to the market when the probabilities of an increase are high. When downside risks exist, the strategy is neutralised, which means it has virtually no exposure to the market. Talking about Managing Money, tell us about the results of Equity Logic First, whenever we talk about performance we must issue a disclaimer, and that is that past performance is no guarantee of future results, substantial losses can come from investing in the stock market, and you should consult with your financial advisor before making any decisions to invest in anything. With that said, our strategies are covered by HedgeCo, eVestment, and Morningstar and according to HedgeCo we had the fourth best performing strategy in 2016 with a 108% return (LETS Strategy), and the fifth best performing strategy in 2015 with a 70.5% return (Sentiment Table Strategy). These are aggressive strategies by definition, but we couple those with our CORE Portfolio Strategy to appropriate risk. Those three strategies together allow us to manage risk and provide decent returns. A typical portfolio might have 50% in the CORE portfolio strategy, and 25% in each of the other strategies. Are there requirements to participate? Equity Logic, where I manage money, has minimum investment thresholds, but there are no minimums at Stock Traders Daily, and at Stock Traders Daily investors can learn more about me, my strategies, my philosophy, approach, and the investment Rate, before requesting me to consider managing their money. There is a significant added value to this, and when investors can learn first-hand what a manager is thinking, watch his strategies operate in real time, and understand the rationale behind the trades that are made within the strategy, educated decisions, which are based on hands on experience without direct participation, can be made. How and when did you get involved in proactive strategies? I suppose it all started back late in 1999. I was a retail stock broker working for Dean Witter, who had just merged with Morgan Stanley. This was the Internet bubble, arguably the peak of the Internet bubble, and I had begun shorting Internet stocks as aggressively as I could. Anything with .com in the name was on my radar, but interestingly most of those stocks were also rated as strong buys by the company I worked for. There is an unwritten rule at these large brokerage firms, and that is you cannot short stocks that the company has a strong buy rating on, but I thought the stocks were in a bubble, I saw tremendous downside potential, and I didn’t like that rule. I banged heads with my manager a few times, who was getting flak from his upper management, and eventually decided to start Stock Traders Daily in January of 2000. In 2000 we made approximately 250%, largely from shorting Internet stocks, and in 2001 and 2002 we made about 150% each year by being proactive. You might say that I fell into this, I started my business when proactive trading strategies were required, and that has been my wheelhouse ever since. These proactive trading strategies are not nearly as attractive to Retail Investors when markets move straight up like they have with the help of fabricated stimulus dollars, but when markets fall like they did after the Internet bubble and during the credit crisis these proactive strategies, which are designed to be able to make money if the market goes up or if it goes down, become extremely attractive. Anything that goes up when the market goes down is attractive to investors, and that’s what our strategies are capable of doing. This has been great, but what do you think is going to happen? The writing is on the wall. Asset prices have been propped up by fabricated demand from stimulus programs, but once stimulus comes to an official and globally the demand, or the bid, for assets like stocks, bonds, and real estate will diminish considerably. Risk appetites will fall, and the multiple levied on the S&P 500, which was about 26 times earnings in the first quarter of 2017, will decline to a more reasonable and normal 14x multiple. It will not require bad news, won’t require a crisis like what we saw in 2008, all that needs to happen is for the fabricated demand to go away, and in my opinion it will very soon, and when it does the stock market, bond market, and real estate markets are going to reprice. This is a gentle way of saying that the market is absolutely poised to crash, but not until the fabricated demand goes away. That’s the key, that’s what we’re watching, but we’re also engaged in strategies that can work no matter what happens so the timing of such an event is less important to us than it is to traditional investors who buy and hold. I know it is coming, but I don’t care when it happens because we will be prepared for it no matter what. My opinion is that everyone should recognise what is coming and engage proactive strategies where appropriate. Manage risk!