The Duality of Investments & Debt

Hi Everyone,

The battle between good and evil plays out repeatedly on various stages but, unlike the movies or a comic book, in real life it’s not always easy to tell which is which and who is who.

With investments, sometimes it can be difficult to tell which assets in your portfolio are toxic and which have tremendous potential. That’s why asset managers try to look for combinations of several different stocks that can outperform.

At eToro, we continue to develop various portfolio templates in search of fantastic combinations. The newest one we’ve released focuses on high powered stocks, which are known to pay out a large portion of their profits to investors on a regular basis.

The new CopyPortfolio™ is aptly named Yield King and can be found at this link. As you can see, these super stocks have been super resilient even during this volatile year, outperforming the benchmark S&P 500 Index.

eToro, Senior Market Analyst

Today’s Highlights

  • Another Tech Sell-off
  • Japan’s Debt Mountain
  • Kryptonite

Please note: All data, figures & graphs are valid as of November 13th. All trading carries risk. Only risk capital you can afford to lose.

Traditional Markets

One of the strongest sectors for a number of years is now showing the weakest performance. IT stocks fell yesterday erasing the entire post-mid-term election rally. The tech-heavy Nasdaq is now firmly below its 200 day moving average.

In this interview, famous investor Ray Dalio puts us near the end of the financial cycle and says that a downturn will likely happen sometime within the next few years, but that this next downturn is going to be very different.

Ray’s new book is all about bull runs and bears and how setting the US Dollar as the global reserve currency exacerbates how the cycles function. What’s interesting though is that he doesn’t paint the buck as the villain of this story; he says it actually it helps to preserve the balance.

One person who did seem to influence the cycle yesterday is US President Donald Trump. Yesterday we discussed crude oil’s support at $60 and the Saudi attempts to defend that level.

Around lunchtime in the USA, Trump launched another offensive with this tweet….

The time of the tweet is circled in purple on the graph below and as we can see, within the hour the $60 support was obliterated.

Today we’ll watch out for earnings announcements from two of the largest players in the cannabis industry. Cronos will be reporting before the opening bell and the legendary Tilray will be after the market closes this evening.

It will be incredibly interesting to see these earnings reports as this new industry is still a bit mysterious to the average investor.

A Mountain of Debt

As Dalio wrote about debt, I feel it prudent to mention another debt milestone that happened recently. The Bank of Japan has been by far the most aggressive central bank in the world and though the USA and Europe have mostly wound down their QE printing programs, Japan continues to pump money into its economy by buying financial assets at an alarming pace.

This latest update is most surprising….

What this means is that the Bank of Japan has now created enough wealth from thin air to buy all the goods and services that the country produces in an entire year.

Here we can see it on the chart…

The long-term effects of such action are at this point impossible to predict. We are now in deep experimental monetary policy territory.

Crypto Rally Stalled

As disappointing as it may be, it seems the rally that we saw last week in the crypto markets spurred on by the Bitcoin Cash hard fork has now stalled. Most cryptos are down over the last 24 hours. Looking at November so far, we can see a rather mixed performance but still mostly positive.

Bitcoin’s transaction rate continues to push forward yet the price remains stable.

This daily market update is dedicated to the amazing memory of Stan Lee.

Have a marvelous day ahead!

This content is provided for information and educational purposes only and should not be considered to be investment advice or recommendation.

Past performance is not an indication of future results. All trading involves risk; only risk capital you are prepared to lose.

The outlook presented is a personal opinion of the analyst and does not represent an official position of eToro.

eToro is a multi-asset platform which offers both investing in stocks and cryptocurrencies, as well as trading CFD assets.

Please note that CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 65% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you understand how CFDs work, and whether you can afford to take the high risk of losing your money.

Cryptocurrencies can widely fluctuate in prices and are not appropriate for all investors. Trading cryptocurrencies is not supervised by any EU regulatory framework.

Best regards,
Mati Greenspan
Senior Market Analyst

Connect with me on….

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