| Hey there, my name is Eric Fry.
Welcome to Smart Money I'm glad to have you here.
Wall Street has sold investors on the idea that they should start with "micro" analysis, the idea that they should make investment decisions by comparing things like price/earnings ratios, income statements, or other company details.
But I do the opposite; I start with the "macro" analysis.
I look for big-picture trends that drive huge, multiyear moves in entire market sectors.
I'm talking about trends that can spin off dozens of triple- and even quadruple-digit gains in just a few years. Catching just one of these trends at the right time can help anyone rack up enough "generational" wealth to support themselves in retirement and even enough to leave riches behind.
When investors use the global macro strategy, they identify investment opportunities from a broad, global, top-down perspective rather than by examining stocks individually (a micro, bottom-up perspective).
For instance, the price trend of crude oil could prompt us to buy stock in an Australian transport company, weather patterns in the American Midwest could make me want to short a Russian fertilizer producer, changes in the Chinese economy could have us running out to pick up a Brazilian iron ore stock.
Compelling opportunities can emerge in any major financial market... and even some minor ones.
Throughout history, the greatest global macro traders have made billions of dollars by trading any asset... in any country... in any direction. - During the 2007-09 financial crisis, John Paulson made nearly $4 billion using credit default swaps to bet against the U.S. subprime mortgage market.
- In 2009, David Tepper believed the worst of the financial crisis was over for the U.S. banks. So, he took a big position in bank stocks and made more than $5 billion as banks recovered.
- n 1992, George Soros and Stanley Druckenmiller made more than $1 billion by betting against the British pound.
- In 1991, Louis Bacon made a one-year return of 86% by anticipating the effects of the U.S. invasion of Iraq. He went long oil and made more money in one year than most people make in a lifetime.
- In 1987, Paul Tudor Jones earned $100 million by anticipating the Black Monday stock market crash and making bearish bets.
- And in 2000, Sir John Templeton bet on the dot-com bubble bursting and made $80 million. As overpriced tech stocks began plunging, he made a fortune.
- I think there's room for more names on that list. Maybe yours.
And you won't have to get there by day trading in and out of stocks.
That's not our strategy at Smart Money.
Here's what is… Where You Make the Real Money By learning global macro analysis, you'll soon pinpoint huge trends as they take off. I'm talking about the kinds of trends that can generate huge, multiyear moves in stock prices.
That's where you make the real money.
I'm not exaggerating when I say that if you spot one of these big trends early, take a sizable position, and ride the wave, you can make life-changing returns.
You only need to catch one big wave to make a large amount of money.
Let me share a real-life example…
In 2000, while most investors were wild for Silicon Valley's tech stocks, an incredible development unfolded on the other side of the world.
China was entering the early stages of the biggest infrastructure build-out in history. The country began constructing highways, ports, bridges, factories, and power plants on a scale never before seen in history.
Of course, all that activity required stunning quantities of natural resources.
To fuel its building binge, China consumed massive amounts of copper, iron ore, oil, natural gas, coal, zinc, and tin. This construction boom created one of the biggest, longest commodity bull markets in history.
During this bull market: - The share price of oil producerSuncor Energy Inc. (SU) gained more than 1,300%.
- Copper minerFreeport-McMoRan Inc. (FCX) soared more than 2,000%.
- Norilsk Nickel Mining & Metallurgical Co. (NILSY) climbed more than 3,500%.
- The stock of Brazilian iron ore producer Vale SA (VALE) rocketed nearly 10,000%!
While these resource stocks were busy producing their spectacular gains, a huge macro opportunity in gold was just getting underway.
Throughout the 1990s, gold was ignored by the investment public. It had been a "dead money" investment for almost two decades. But in 2001, I called gold my "trade of the decade."
Back then, tech stocks were crashing, and geopolitical tensions were heating up because of the 9/11 attacks. Global central banks responded to these dual traumas by printing more and more money.
As a result, investors flocked to gold as a hedge against both volatility and currency debasement. From its 2001 low of around $250 an ounce, gold soared to nearly $2,000 an ounce by 2011, a gain of more than 600%.
This big move produced incredible moves in gold stocks. During this epic bull market: - Top gold miners like Goldcorp Inc. (GG) and Buenaventura Mining Co. Inc. (BVN) advanced more than 1,500%.
- Gold royalty company Royal Gold Inc. (RGLD) soared more than 4,000%.
- Shares of big Mexican silver and gold miner Industrias Penoles S.A. DE C.V. (IPOAF) rocketed nearly 10,000%!
Results like that would be impressive anytime. But consider this: Smart investors were making these huge gains while U.S. stocks were losing ground.
The gaping divergence between Freeport-McMoRan's huge upswing and the S&P 500's simultaneous downswing highlights the power of global macro investing of Smart Money investing.
To be clear, I'm not saying global macro analysis will pinpoint the exact bottom or top of every big move. Instead, I highlight what's possible when a big financial wave hits a specific financial market or industry sector.
The world's financial markets share fundamental connections to one another. As they interact, they produce a continuous stream of opportunities.
A disciplined and informed Smart Money analysis has the power to identify these opportunities.
And it will do so just as they are on the verge of producing millions for smart investors.
Tomorrow, I'll talk to you about my No. 1 theme that's been charging my investing philosophy recently: What I’m calling “Elon Musk’s Project Omega.”
Stay tuned.
Regards, |
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