The Earth, as I’m sure you know, has a magnetic field. Now I’m no expert, but if I recall my high school geology correctly, this is generated by churning liquid iron near the solid core of our planet. This magnetism results in the Earth having a north and a south pole.
And that’s why you can depend on a compass needle to point north. A fact that’s come in quite handy for those navigating uncharted territory in the days before the GPS.
But, according to Scientific American, every few hundred thousand years the magnetic poles flip. That means that your compass needle will point south instead of north. And, according to the article, ‘Earth’s magnetic field flip could happen sooner than expected.’
But don’t go throwing out your trusty compass just yet. Even if the flip does happen sooner than expected, we’re still talking hundreds of years from now.
Why do I bring this up? Because a number of our editors have done their own magnetic field flip recently. And this hasn’t taken hundreds of years, either.
The magnetic field flip
‘You’re traveling through another dimension, a dimension not only of sight and sound but also of mind and heart. A journey into a wondrous land whose boundaries are that of feeling and imagination. Look quickly. That’s the signpost up ahead — your next stop, The Twilight Zone!’
The Twilight Zone, CBS, 1959
Over the last few weeks here at Port Phillip Publishing’s headquarters, a number of our editors’ investment compass needles have moved decidedly away from their magnetic north.
Perhaps the biggest shift came from Kris Sayce. For years now he’s been bullish on the stock market, dismissing one false ‘crisis’ after another. And he’s been spot on. But over the last few weeks Kris has taken a different read on the situation.
He sees a number of negative factors lining up that could well cause a market crash as early as October. He’s given the full details to subscribers of Tactical Wealth. Plus a number of stock recommendations to hedge your portfolio against any major drop in the markets.
In short, it has to do with rising interest rates and falling company earnings. And if Kris is right, this could well be the combination that drags the markets down by 20% or more.
Of course Kris hasn’t recommended you sell all of your stocks. In fact, over at Microcap Trader, Kris and analyst Shae Smith continue to uncover tiny Aussie listed companies that should do well regardless of how the wider market moves. Three of their four ASX listed stocks are currently up. One of them by an eye-popping 196% since they tipped it on 23 June.
Our resident bear
Then there’s our resident bear, Vern Gowdie, the editor of Gowdie Family Wealth.
You’re probably familiar with Vern. He’s a former financial planner who got out of the industry in 2006, after he warned his clients about the trouble facing the markets. He was about two years early on that warning. But his clients — at least those who took his advice and moved their wealth into cash — missed out on the GFC market panic and the resulting 50% plunge in the ASX.
Since the launch of Gowdie Family Wealth two years ago, Vern has advised his subscribers to stay out of the stock and bond markets, and out of commodities. He sees the markets as highly overvalued, supported by unsustainable levels of private and public debt, not to mention government intervention.
Vern’s long advocated a 100% cash position, advising patience. After the market crashes, losing 50% or more in value, there will be plenty of bargain hunting to be done.
That crash has yet to occur. So you can imagine my surprise when I read Vern’s August issue and discovered he has just made his first stock recommendation in nine years! (Cue the music from Twilight Zone.)
Now to be clear, Vern has not gone bullish. Far from it. But he does see some potential short term gains in one particular area. Here’s what he told his subscribers last week:
‘My criteria for investing, are simple — low risk/high return.
‘This is another way of saying buy low and sell high.
‘These opportunities do not come along everyday. You have to wait and wait some more for the buying opportunity. And then you have to wait and wait some more for the market to eventually move the price.
‘For more than a year and a half now, I haven’t made any specific investment recommendations to you — aside from my advice on how to get the best and safest returns on your cash — because the market prospects have all been high risk/low reward.
‘But that has recently changed.
‘Although the truly low risk/high reward prospects have yet to materialise, there is one beaten down commodity that represents our first opportunity to move part of our holdings out of cash, at least for the short term.’
Vern’s also currently working around the clock on a brand new project. I only just had my own close look at this last week. I can’t share any of the details with you yet, but I can tell you that from what I’ve seen, this could be the most important investment advisory in Australia.
We’ll fill you in on all the details towards the end of this month. Stay tuned.
Managing Editor, Money Morning