MANDATORY READING: The Markets Have Changed

Time for Your Annual Lobotomy. [Morning Reckoning] November 21, 2023 [WEBSITE]( | [UNSUBSCRIBE]( MANDATORY READING: The Markets Have Changed [External Advertisement] [Sell every Stock except ONE]( [SPEAKER IMG]( Markets are down... But Jeff Clark couldn't care less because he ignores almost every stock in the market except ONE. He lives financially free trading this One Stock Once per month... [Ticker Revealed]( [LEARN MORE]( Baltimore, Maryland November 21, 2023 [Greg Guenthner] GREG GUENTHNER Good Morning Reader, Before we get started, I want to invite you to join me this morning at 11 a.m. ET where I’ll be going LIVE on Zoom to talk about what I’m seeing on my trading screen. With stocks rallying into the winter, there’s a ton we need to talk about. I’ll share predictions for where I believe the market will go before the end of the year and provide tips about how to trade in this environment. And put away your wallet, because this event is completely free to attend. I just want you to take advantage of fast-moving markets. So I’ll highlight my favorite company and how you can profit from it. Plus, I want to hear from you and what you’re most interested in when it comes to markets… trading… and everything in between. But you MUST sign up to attend. [>> Click here to sign up for my Top Trades LIVE, today, Nov. 21, at 11 a.m. ET. <<]( Clicking the link above automatically registers you for Top Trades Today, but does not obligate you in any way to attend the event. By reserving your spot, you will receive event updates. We will not share your email address with anyone. And you can opt out at any time. [Privacy Policy]( I’ll be going live every Tuesday morning to share my thoughts on where the market might be headed any given week. Sometimes I’ll share a big-picture view… Other times, I might share a chart I like… But no matter what, you’ll have a better grasp on what the market might throw your way. Speaking of stocks… As stocks continue to explode off their October lows, powerful rallies are rippling through the markets, triggering some much-needed FOMO amongst the unwashed masses. If you’re one of the unfortunate souls who loaded up on bearish bets into this face-ripper, you’ll need to perform some evasive maneuvers to limit your losses as the melt-up rally accelerates into the holiday shopping season. Fortunately, all is not lost. There’s no reason to throw your hands up and surrender your portfolio to mediocre returns during the final few weeks of the year — even if the market’s sudden shift has caught you off guard. You haven’t completely missed your chance for trading greatness…not yet! In fact, even the world’s most pessimistic uber-bears can ride stocks higher as waves of sold-out bulls buy back the shares they sold back in October. There’s only one catch: You must act decisively. A trader stuck on the wrong side of a rally is a lot like a soldier getting caught in an ambush. Bullets are flying, so staying put is not an option. If you’re suddenly taking fire — real or metaphorical — your enemy probably has you right where they want you. Sitting on your hands only makes your situation worse. Recently, we discussed how the rally evolved, why the market bounced where it did, and how to regroup if you missed the initial move off the lows. [Click here if you missed it]( This week, I’m going to dig into specific actions you can take to play the rally, including how to adjust your market strategy to benefit from a melt-up move. Plus, I’ll show you a hidden opportunity to trade against the herd and potentially outperform the averages into 2024. Fundamentally Flawed First things first: It’s time for your annual lobotomy. There’s an endless supply of bearish news available for consumption. In October, we were faced with poor market breadth and a near-total evaporation of new highs — all while the major averages threatened to sink to five-month lows. And that’s just price action! The news was even worse. A fresh war in the Middle East had investors on edge as World War 3 and Black Monday began trending on social media. Even mainstream financial pundits were expecting cataclysmic events to rip through the markets, sparking a historic crash. Instead, the market gave us a quick washout below key support to set up the rally that’s unfolding right now. Sentiment tipped extremely bearish at the exact wrong time – a normal period of market weakness that perfectly aligned with seasonal trends. Investors who are unable to change their minds fast enough are now forced to watch stocks explode higher without them. Or worse, they’re left to frantically cover short positions into the powerful holiday melt-up rally. The market’s going to chew you to bits if you get too caught up in fundamental arguments during these important turning points. Sure, some stocks are falling apart after badly missing earnings estimates or lowering expectations. But most stocks are catching higher with a strong seasonal tailwind aiding their rise. To be clear, I’m not suggesting economic or fundamental concerns are wrong or completely useless. But you’re wasting your time trying to fight a rally during this incredible seasonal strength. Your best bet is to table those bearish thoughts until January. For now, the best strategy is to turn off your brain and buy. An Opportunity to Trade Against the Herd Mega-caps and other market leaders rolling over is a fairly reliable sign that the market is near the end of a drawdown. This is the exact action we saw toward the end of October — just as stocks were about to turn higher. Sellers come for the big boys last since these names usually act as “safe havens” for investors trying to hide from the carnage. These little washouts will typically scare some weak hands out of their positions. The dips then lead to abrupt upside reversals as stocks find buyers and begin to push off their lows. The “Magnificent Seven” mega-caps have outperformed all year by a wide margin. That’s no secret! Professional and Main Street investors alike have been hiding in these names since the broad market rally began to cool in July. I don’t think these stocks are going to suddenly fall off a cliff. But I do think other stocks have a better shot at producing faster gains into January. Instead of piling into stocks like NVDA and META that are already pushing to new highs, shift your trading focus to the more rate-sensitive growth names in tech. I’m talking about the stocks that took big hits over the past three months as the market corrected. Software stocks, biotechs, and the former tech-growth darlings are ripe for huge short-covering rallies into the holidays. Fundamentally flawed names sporting hot charts will be the best trades over the next seven weeks. They probably won’t magically become market leaders in 2024. But they will give you the opportunity to play catch up as the market roars higher into December. Best, [Greg Guenthner] Greg Guenthner Contributing Editor, Morning Reckoning feedback@dailyreckoning.com [Are you worried about “Biden Bucks”?]( [gold back img]( Don’t be. All you need to protect yourself and your money is this secret gold investment you see here. This new alternative gold currency is the perfect way for you to sidestep “Biden Bucks” while preserving your wealth at the same time. To show you how it works, just watch this [quick 2-minute video]( walking you through all of the details… [Just click here now for all of the details.]( [LEARN MORE]( In Case You Missed It… “The Middle Ages’ Richest Man Revolutionized Finance” Sean Ring, Editor [Sean Ring] SEAN RING Good morning Reader, This week, [my interview with German economist, gold expert, and author Thorsten Polleit]( hit the Paradigm Press YouTube Channel. We talked about everything from the deindustrialization of Germany… how socialism has taken hold in America… why the powers that be want a one-nation totalitarian money system… and why gold miners aren’t your best investment when gold reaches where Thorsten predicts it will. You can check out that interview by clicking below… [yt-img]( And in [this morning’s]( Rude Awakening, my friend and Paradigm colleague Byron King talks about visiting Saxony and the home of the Joachimsthaler, on which the Founding Fathers based the then-new US currency, the dollar. (By the way… Byron will also be our guest in tomorrow’s Paradigm Press YouTube video, you can [subscribe here]( to be notified when our interview goes live.) But when Dan Amoss mentioned the biography of Germany’s richest-ever man, I thought I’d stay in Deutschland for this piece. No man had a bigger influence on medieval finance and politics than the man you’re about to read about. But so few Americans have heard of him. Well, sit back, relax, and enjoy the biographical piece. Who the Fugger is this? In the annals of history, few names resonate with the opulence and influence of Jakob Fugger. Dubbed 'Fugger the Rich,' this medieval magnate's wealth and power dwarf the riches of many modern billionaires. His story is a tapestry woven with threads of ambition, innovation, and strategic mastery, set against the backdrop of a Europe on the cusp of the Renaissance. Fugger wasn’t just a wealthy merchant but a pivotal figure in his era's economic and political transformation. His life story reads like a grand narrative, intertwining empires' destinies with modern finance's evolution. Early Life and Background Born in 1459 in the imperial city of Augsburg, then a bustling mercantile center in the Holy Roman Empire, Jakob Fugger was destined for a life beyond the ordinary. His family, already established in the textile trade, provided a fertile ground for his early introduction to commerce. Fugger's education, rare for its breadth and depth during that period, was a fusion of practical business training and a broader grasp of the geopolitical landscape of the time. This blend of knowledge and acumen set the stage for his later exploits. In his early twenties, Fugger traveled extensively, a journey crucial in shaping his global perspective on trade and finance. These formative years were instrumental in developing his understanding of the interconnected nature of European economies and the emerging global trade networks. Rise to Power and Wealth Astute, bold financial moves marked Jakob Fugger's ascent to the top of European wealth. His entry into the banking world was almost accidental, born out of necessity and opportunity, but it quickly became the cornerstone of his empire. The pivotal moment came with his foray into financing the ambitions of the Habsburg dynasty, particularly Emperor Maximilian I. This was more than a mere financial transaction; it was a strategic partnership that would yield immense power and influence. A mix of innovation and risk-taking characterized his business ventures. He was a pioneer in the use of financial instruments such as bills of exchange and letters of credit, precursors to modern banking tools. A bill of exchange mandates that one party pay a fixed amount of money to another party at a specified time in the future. The entity that creates the bill, known as the drawer, usually issues it to another party, the drawee, who is instructed to pay a third party, the payee, or to the order of the payee. Bills of exchange are often used in transactions between buyers and sellers in different countries. They’re used to secure payment for goods or services and can be bought, sold, or traded. A key feature of a bill of exchange is that it can be endorsed over to another party, making it a negotiable (in this case, “negotiable” means “tradable” or “transferable”) instrument. This means the legal ownership of the bill and the right to receive the money can be transferred. They’re often used to guarantee payment at a future date, which can help manage cash flows and credit risks. A letter of credit is a document from a bank guaranteeing that a seller will receive payment up to the amount specified in the letter, provided certain conditions are met. In international trade, this is particularly useful as it reduces the risk for the seller. The seller is assured that they will receive payment as long as they deliver the goods according to the agreed-upon terms. The buyer obtains the letter of credit from a bank and provides it to the seller. The bank will release the funds to the seller once the goods are shipped, and the required documents are submitted. Letters of credit are crucial in international trade where the buyer and seller may not know each other personally and are operating under different legal systems. They offer a level of security in transactions, ensuring that the seller is not at risk of non-payment and that the buyer receives the goods or services as specified. His establishment of joint-stock companies was revolutionary, predating the famed Dutch East India Company by decades. But, the Dutch East India Company was the first publicly traded joint stock company. Joint-stock companies — like today’s publicly traded companies — have several defining features: Shared Ownership: In a joint-stock company, ownership is divided into shares, representing a portion of the company. Individuals or entities can buy and sell these shares, known as shareholders or stockholders. Limited Liability: Shareholders in a joint-stock company typically have limited liability. This means they are only liable for the company's debts and obligations up to their invested amount. The shareholders' personal assets are generally protected if the company goes bankrupt or faces legal issues. Capital Accumulation: One of the main advantages of joint-stock companies is their ability to accumulate large amounts of capital. By selling shares, a company can raise significant funds from a broad base of investors. This makes it easier to finance large-scale projects and ventures. Transferability of Shares: Shares in a joint-stock company can be freely bought and sold (transferred) on stock exchanges or privately. This transferability makes it attractive for investors, who can liquidate their investments if necessary. Separate Legal Entity: A joint-stock company is a separate legal entity from its owners. This means it can own property, enter into contracts, sue, and be sued in its name. Governance Structure: Such companies are usually managed by a board of directors elected by the shareholders. The board makes major decisions and oversees the company's overall strategy, while executives appointed by the board manage the day-to-day operations. Perpetual Succession: Joint-stock companies continue to exist even if the ownership or the board members change. This perpetual succession is not dependent on the life of its shareholders or directors, giving the company stability and an indefinite lifespan. Without these three innovations, we simply don’t have world trade or modern finance. Major Business Ventures and Achievements The scope of Fugger's business ventures was vast, covering everything from mining operations in Central Europe to trade expeditions to the Far East and Africa. His investment in the mining industry was a testament to his business acumen and a strategic move to control essential resources. The Thuringian copper mine, for example, provided him with not only immense wealth but also a commodity in high demand across Europe. Fugger’s involvement in the spice trade was another cornerstone of his empire. He understood the value of these commodities in a way that few others did, capitalizing on the burgeoning demand for luxury goods in Europe. His trade routes were not just commercial enterprises; they were geopolitical tools that helped him build a network of influence that extended far beyond the borders of Augsburg. His monopoly over the European copper market was akin to controlling a precious lifeline of the continent's economy. This control afforded him leverage over commercial and political realms, making him indispensable in European power dynamics. Political Influence and Relationships Jakob Fugger's wealth and business acumen catapulted him into the upper echelons of European politics. His financial support was crucial in securing Charles V's election as Holy Roman Emperor, which reshaped European politics for decades. His influence extended beyond mere financial transactions; he was a crucial player in the complex chess game of European politics. His relationships with monarchs and church leaders were carefully cultivated, allowing him to navigate the tumultuous political landscape of the time. He balanced his business interests with political alliances, often acting as a mediator and advisor to the most powerful figures of his era. Legacy and Impact on Banking and Finance Jakob Fugger’s contributions to the field of finance were revolutionary. His pioneering of financial instruments like letters of credit and bills of exchange laid the groundwork for the modern financial system. His practices in banking and finance were ahead of their time, setting the stage for a more interconnected and efficient economic world. His legacy in finance is comparable to that of modern financial innovators. Fugger was a visionary who saw the potential of financial markets long before the concept of globalized economies had taken shape. His impact is felt even today in the principles and practices of banking and trade. Personal Life and Philanthropy Despite his immense wealth and influence, Fugger's personal life was marked by a commitment to his community and a deeply ingrained sense of responsibility. His establishment of the Fuggerei, a housing complex for those in need that still operates today, is a testament to his philanthropic vision. He was a devout Catholic, and his faith played a significant role in his charitable endeavors. His personal life was characterized by a balance between his ambitious business pursuits and a commitment to social welfare. This aspect of his character often contrasts with the typical image of a shrewd and ruthless businessman, showcasing a complexity that defines the man behind the wealth. Wrap Up Jakob Fugger's life and achievements represent a pivotal chapter in the history of finance and economics. He was more than just a merchant or a banker… He was a visionary who transformed the economic landscape of his time. His story is a blend of ambition, innovation, and strategic mastery, underscored by a nuanced understanding of the power of wealth. Fugger was not just a man of the Middle Ages… he was a figure who laid the foundations for the modern economic world, a legacy that continues to influence the way we understand and engage with finance and economics. All the best, [Sean Ring] Sean Ring Contributing Editor, The Morning Reckoning feedback@dailyreckoning.com X (formerly Twitter): [@seaniechaos]( Thank you for reading The Morning Reckoning! We greatly value your questions and comments. Please send all feedback to [feedback@dailyreckoning.com.](mailto:dr@dailyreckoning.com) [Greg Guenthner] [Greg Guenthner, CMT,]( is chief strategist at Forge Research Group. He has spent the better part of the past two decades developing long-term and short-term strategies with a single goal in mind: to help everyday investors generate outstanding returns and control their financial futures. Greg’s charts, analysis, and insights have appeared in Marketwatch, Forbes, Yahoo Finance, and many other financial publications. 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