People have called me a "perma-bull" forever. Mish Shedlock
called me a "wacko." Zerohedge has called me insane. Nouriel
Roubini has laughed in my face. My daughters still quote Don Luskin
when he was on CNBC shaking his head and saying, "James, James,
James..." while laughing after I said the market was going to hit
Well, the market has hit new highs. That's ok for those guys.
I'm sure they all do well on their newsletters. I have no
newsletter. I only invest with my own money. I live and die in the
markets and I don't depend on anyone else.
Is there a reason to change my mind? Not really. Eventually, the
market will be higher than it is now.
But for the first time in a long time, I'm not a super bull on
the overall market (although I like certain smaller stocks, see
The overall market (let's say, the S&P 500) price is a
function of supply and demand. I know people know this from
Economics 101 and they view this as a micro-economic principle but
it's also macro-economic. It's not only the price of Oranges
determined by supply and demand, the aggregated price of every
company in the world is also determined by this.
So what is "Supply" in terms of the stock market? Answer: It's
the total number of shares outstanding.
What is "Demand"? It's the appetite to buy shares.
Supply is going down. This is both a good thing and a bad
The good: Companies have enormous profit margins and are using
their excess cash to buy back shares. This, of course, reduces
shares outstanding. When companies with $100 billion in cash like
Apple buy back shares, this reduces supply for the big mutual
Also good: When supply goes down, price goes up. This is why the
stock market right now is at all-time highs.
But then there is the BAD: I am seeing first hand within the
private companies that I am invested in: nobody wants to go public.
How come? Private markets are valuing companies higher than the
That's really funny: the PUBLIC is actually smarter than the
supposed smart money. Look at Facebook (
), Groupon, and Zynga (
) for examples.
And even the companies that want to go public: it's pretty damn
hard. I can't quote you statistics. I only see this because I'm
getting all the calls from brokers. If a broker is calling me to
dump their little shitty IPO, it means they can't get institutions
Demand: Everyone is still pretty nervous.
Someone asked me the other day: when will this recession be
Guess what? It's been over for four years.
But people don't seem to know that?
How come? Because they feel like shit. Because people are
getting jobs less than what their skillset suggests they should
get. Because people are taking jobs for pay that doesn't match what
they would've gotten ten years ago. Underemployment, as this is
called, is supposedly around 20% but my guess is it's more like
Things feel like they suck.
Nobody feels like the stock market is back. Or that housing is
starting to creep up. Or that America is starting to insource
manufacturing again because globalization has crept up prices
People look at their crappy jobs and salaries and say, "I don't
feel so good". And so they get a scarcity mentality and don't want
to buy shares.
I don't blame them.
Meanwhile, supply is going to flatten out. There's only so much
stock that people can buy.
So Demand will probably remain the same, but now Supply will
stop going down.
What happens then? Stocks go down. Or struggle to stay
My solution: I am buying smaller stocks where I am not competing
for information against massive hedge funds and mutual funds that
do everything they can to cheat the system (insider trading,
manipulative trading, high frequency trading, special access to
I also invest in long-term demographic trends that I believe in.
These companies will do well regardless of the overall stock
market. It's why microcaps always outperform large caps in the long
So I'm invested in
Petro River (PTRC.OB) - America is the new Middle East in terms
of oil. All of the oil that we stopped drilling for in 1971 because
the technology was not there, we are now drilling for. Fracking is
here to stay and will drill up the several billion barrels of oil
underneath the Mississippi Lime.
Corporate Resources (CRRS.OB) - I'm on the Board of Directors so
can't say much. Needless to say, no company wants to deal with the
red tape of Obamacare. It's a nightmare. Even Democrats now admit
it. Google it. I'm not political. I haven't voted since 1991. But a
total of zero companies want to deal with Obamacare. So what do
they do? They fire everyone and outsource to temp staffing
companies. That's why I like being on the board. So I can see
first-hand what is happening in this industry.
) and Cancer Genetics (CGIX.OB) - We all know three things about
healthcare over the next 10-30 years:
- taxes are going up on medical devices. So this will be
detrimental to the 77 million aging baby boomers who have just
- "prevention is the cure." People have ignored this for the
past century but they can't anymore. Lifespans have gone up. People
need good diagnostics to prevent cancer and other diseases that are
common killers. I can go into details on why these two are the best
and I will at some point (I already have repeatedly on TROV when it
was half the price it is now).
- Lifespans are going up. The average lifespan was 61 60 years
ago. Now it's 79 and going higher. So people will need medical
care. Since people can no longer afford medical care, they will
need prevention. The FDA, drug companies, insurance companies, and
the government, have made medical care too expensive. So
diagnostics, which are easier to get approval for, are the
), Neonode (
) - I own these for the patent plans which I've described in
And that's it. My wife owns a handful of other big cap stocks
but in small amounts.
What I don't do:
I never daytrade.
I used to and I used to make a good living at it. But in the link
above I describe why I don't.
And I will not own the broader market here.
It's a criminal enterprise.
That's a sucker's game at this point.
I am long [[CRRS.OB]], [[PTRC.OB]], [[VRNG]], [[NEON]],
[[CGIX.OB]], [[TROV]]. I wrote this article myself, and it
expresses my own opinions. I am not receiving compensation for it.
I have no business relationship with any company whose stock is
mentioned in this article.
I have no intention of selling any of these stocks any time
Silver, Zinc And Lead For The Sandstorm