Greg Canavan here, Head of Research at Fat Tail Investment Research.
I’ve been granted some space in Money Morning today to talk to you briefly about some personal research of mine that’s being released today.
In this e-letter, we try and keep things optimistic, opportunity-driven, and forward-looking.
And there have been opportunities aplenty in the crypto and growth stock spaces in recent years.
But opportunities tend to come with a flipside.
It’s this flipside I’d like to bring to your attention now.
It’s my opinion that what’s unfolding between China, Australia, and the rest of the world constitutes the defining investing trend of this decade.
And yet, very few in the mainstream have grasped its significance.
We’ve seen the crisis in the Chinese property sector become very ominous recently.
Next week is a huge week. On Monday/Tuesday, Evergrande will hit its default deadline. A raft of other developers face payment deadlines between now and the end of the year.
We’ve also seen iron ore prices crash amazingly quickly.
And it’s going to get worse for the iron ore market in the years to come.
Increasing supply will overtake the story of decreasing demand.
Maybe a story for next year.
Right now, it’s all about China…the AUKUS agreement that’s further angered them…and, of course, what’s going on inside China’s unravelling property sector.
If you think none of this is going to have ripple effects on Australian portfolios next year, I’m afraid you’re mistaken…
The world has fretted over the last month about the possibility of Evergrande’s collapse becoming a ‘Lehman moment’. In other words, a trigger for a global credit crisis.
That hasn’t happened, and I don’t think it will. The two are very different.
Huge question marks still hang over the Chinese economy, however.
And that means massive question marks for Australia, too.
I think every investor who cares about
their capital needs this on their radar
Even if you’re fundamentally optimistic about the economy and markets in 2022…it’s a defining issue you still need to learn as much as you can about.
If you’re interested in doing that, I’d urge you to read my new research report, released today, called ‘Divorcing the Tiger’.
What you’ll see is that our relations with China are crumbling on a weekly basis.
Some of it is being broadly reported in the mainstream press.
Much of it isn’t.
China’s burning bridges with multiple countries. But the China-Australia relationship has become the most toxic.
Our biggest economic partner is morphing into our biggest adversary.
You need to understand and plan for this changing dynamic now.
The West no longer trusts China, and countries around the world are reconfiguring their supply chains accordingly.
What does all this mean for Australia and for your investments?
Should you be selling your mining stocks while they’re still priced relatively high?
And are there opportunities coming out of this crisis that you should think about pursuing?
I’ll show you how and where I see the toxifying Australia-China relationship going in 2022.
And how it could impact everything from your share trading accounts…to your retirement savings…to your business interests.
China is just one ‘Code Red’
There are more…
A ‘Code Red’ is a term used by the military, medical professionals, emergency services, and even climate scientists.
When a situation escalates to a Code Red, the public is alerted to the dangers we face. And told how to prepare for the probable eventuality.
Yet, when it comes to markets, no such alarms are being raised.
Not by government. Not by mainstream media. And not by financial advisors.
I’d also like to let you know about an even bigger project that Fat Tail Investment Research has invested considerable resources into in recent months.
It’s regarding a series of wider, possibly existential threats to the entire global financial system.
That sounds rather lofty and ominous.
And lofty and ominous is not the beat here at Money Morning.
So I promise you we will not be interrupting our normal schedule here in the coming week to continue bringing this project to your attention any further.
But if you’re worried about the slight downturn in the markets recently…
If the high valuations of all kinds of assets make you a little anxious…
If you’re well aware that this bull market has gone on far longer than is normal…
And you have any amount of scepticism at all that central bankers can keep this party going for infinity…
Then I urge you to follow this new project.
At this stage, it’s code-named Code Red.
It’s spearheaded by Fat Tail Investment Research’s Vern Gowdie over at The Rum Rebellion.
And this project asks three simple questions:
- When might this bull market end?
- Which investments are most at risk?
- What should you be doing now to prepare?
As I say, we’re not going to bombard you with doom messages in the coming week.
If you wish to follow this project more closely (it will be released one week from now), you’ll need to subscribe to The Rum Rebellion if you don’t already.
If you are already subscribed, please make sure you read The Rum Rebellion all through next week.
Just like Money Morning, it’s free.
No one knows for sure when the music stops on this ‘Everything Bubble’.
But if you care about your personal wealth, the stakes couldn’t be higher.
As investing legend Jeremy Grantham states:
‘Make no mistake — for the majority of investors today, this could very well be the most important event of your investing lives.
‘Speaking as an old student and historian of markets, it is intellectually exciting and terrifying at the same time.’
In Code Red we look at some terrifying and exciting scenarios that could emerge when the cycle turns.
You’ll have a much better idea of what to do with your investments right now to protect yourself from a seismic shift in the markets.
And you’ll be given a five-part plan that sets out all the smart moves to make with your money over the coming months and years.
If you agree with Vern — you’ve some big decisions to make.
These are decisions you have to get right.
In the meantime, one good decision is to read my new research on the China crisis, and what it could mean for Aussie investors next year. You can do so by clicking here.
Head of Research,
Fat Tail Investment Research
PS: Our publication Money Morning is a fantastic place to start on your investment journey. We talk about the big trends driving the most innovative stocks on the ASX. Learn all about it here