Every news item is a warning or an opportunity. Timing your entry and exit is critical investing and trading. Screw this up and the big opportunity is going to elude you. So how do you know when the big opportunities will present? Listen up and I will do my best to explain.
All economies and markets are related in one single defining way. Interest rates! Every market revolves around Central Bank interest rates. Stock markets, commodity markets, currency markets, index markets, Gold, Oil, you name it; it all boils down to what Central Banks are doing with interest rates and if they are printing money. So your success as an investor is highly likely going to come down to you timing your investments surrounding Central Bank actions. Your knowledge and timing of credit cycles and your understanding of what Central Banks are doing with interest rates is key. You must know how interest rates and monetary policy adjustments (printing money) affect markets.
Interest rate adjustments create credit booms and busts and it is these booms and busts that create tremendous profit making opportunities.
In reality consumers can only spend what they earn. But what most consumers do around the world today is borrow to be able to keep up with the “Joneses” and live a lifestyle they really can’t afford. It’s an illusion they get sucked into that is like a black hole for many. Take for example the headline story on CNBC today that 1/3 of Americans (106 million) have saved less than $1000 for retirement. 57% have less than $25,000. The average Australian’s Super is gone by the age of 70.
The huge borrowing we all undertake throughout our lives creates short-term debt cycles where consumers borrow more than they can afford which ultimately leads to a recession and a credit bust. This is then followed by a credit boom as consumers spend more than they can afford again. Central Banks eventually tighten monetary policy and interest rates rise and the credit boom turns into a credit bust and the cycle continues again and again.
Every currency and every financial market is cycling around these credit booms and busts. Right now in Australia we are experiencing a credit boom in the housing market as interest rates are at historical lows and borrowing money is cheap. In the USA they are also experiencing the start of another credit boom as the US economy recovers from the credit bust of the GFC.
These credit cycles usually last around 5 to 8 years and the credit bust in the USA in 2008 that quickly spread globally lead to an eventual credit boom created by Central Banks. In another 5 to 8 years the credit bust will happen again and the cycle will continue.
My question to you today is this. Do you understand what credit cycle the market is in right now and how to profit? If you do know then you are in the box seat to make a lot of money, so long as you act on the opportunity and you don’t sit and watch the credit cycles pass you by. The average person does not and that is why most of the people around the world who are approaching retirement age will sadly die poor and this will only get worse in the future. This is the single biggest fear baby boomers have today. Dying poor.
To make big money or to ensure you do not die poor you need to pay attention to credit cycles and understand where price is likely going to be in the future, not where price is now or next week. Understand the credit cycles, understand what Central Banks are likely doing in the coming 6 to 9 months and position your money in the direction that favours the credit cycles. That’s when you will truly see success as a trader or investor and you will make very meaningful profits.
And you will give yourself a fighting chance to retire and die rich!
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Past performance is not a reliable indicator of future performance. This is a leveraged investment that can magnify losses as well as profits. All ROI (Returns on Investment) are for the calendar month stated, based on profits earned for the month on their Trading Capital. ROI quoted is after all fees and brokerage.