This Week in Barrons - 8-14-2016

This Week in Barrons – 8-14-2016:

Wow … What a Day / Week / Month.

Thoughts:

According to PNC’s chief economist, August can be summed up in one word: “sideways”.  A 30-economist panel was surveyed and predicted that 2016 would end with: Inflation at 2.0%, Unemployment at 4.7%, GDP at 1.8%, Oil at $49 per barrel, Gold at $1,450 per ounce, and the S&P shedding about 30 points to end the year at 2150.  Some saw aggressive monetary easing by the ECB taking the Euro down to 95 cents, and forecasting oil at $55/barrel due to Iran’s production capacity being too optimistic.  The common sentiment was that there’s an “oversupply of everything” – from liquidity to debt to cheap labor.  These oversupplies have helped to elongate economic cycles, and have broken down traditional connections between many indicators.  The same 30-economist panel believes that increased market volatility comes with central bankers bumping up against the limits of monetary policy.

The economists also cited that over the past year investors have pulled $317B from actively managed funds and put $374B into passively managed funds.  Thirty years ago passive funds accounted for 1% of managed assets, and today they are 35%.  Remember, there is a tremendous amount of risk in a ‘crowded trade’.  In 1999, the ‘crowded (risky) trade’ was the dot.com bubble stocks.  In 2007, the ‘crowded (risky) trade’ was all financial companies tied to real estate.  Today, the ‘crowded (risky) trade’ is in low-volatility, income oriented, passive strategies.  Now-a-days market pundits recommend higher yielding dividend stocks, because historically they have held up better in a downturn.  Unfortunately, historically these stocks were NOT the ‘crowded trade’.  Today these stocks are SO ‘crowded’ that respected funds like Vanguard are closing their doors to new investors.

The 30-economists also pointed out that there is something fishy going on in the U.S. credit markets, and it may give stocks a temporary boost.  “There has never been an August like this in the history of finance,” said Brian Reynolds, chief market strategist at New Albion.  August (typically a sleepy month for corporate bond issuance) has seen record issuance in its first six days.  For stock investors, this means that the debt-fueled share buyback craze is in full force.  Companies sold $70B in bonds in the first 6 days of August - already more than half the normal monthly average issuance of $125B.  Companies are aware of hungry bond buyers, among cash-flush public pensions in particular, so they’re more than happy to come to market now.  Pension funds in particular are itching for yield, and are now allocating much of their cash to corporate bonds, even if they are typically a higher risk than government bonds.  The U.S. public pension system has developed a $3.4T funding hole that will put pressure upon cities and states to cut spending or raise taxes to avoid Detroit-style bankruptcies.  Along with cities and states, our public pension funds are also dramatically under-funded and face ‘grave difficulties’ according to Professor Olivia Mitchell at the Wharton School at the University of Pennsylvania.

This week I learned that the U.S. has entered into an exclusive contract with a real estate firm to sell 56 old U.S. Post Offices.  The sale of these properties will fetch about $19B.  A real estate sales commission of between 3-6% will be paid to the company of record: CRI.  CRI belongs to a man named Richard Blum.  Richard Blum is the husband of Senator Dianne Feinstein.  Senator Feinstein and her husband stand to make between $950m and $1.1B on the sale of U.S. Post Office properties.  How does a U.S. Senator from San Francisco manage to get away with organizing and lobbying such a sweet deal?  Isn't this just like insider trading?

Finally, most economists agreed that the biggest question surrounds the Presidential election.  The viewership for the two Conventions was between 23 - 29m viewers.  Sept. 26 (the date of the 1^st Presidential debate) will be 56 years (to the day) since the first televised general-election debate between John F. Kennedy and Richard Nixon in 1960.  66m people – all on grainy black and white televisions, watched that debate.  This year I fully expect to see ALL of the viewership records broken.  I've been hearing about ‘Debate Parties’ already being planned.  Some estimates (that include global, live streaming) are calling for over 100m viewers.  The digital numbers are quite illuminating:

-       Facebook:     Trump: 10.2m Likes / Clinton: 5.4m Likes

-       Twitter:           Trump: 10.6 million Followers / Hillary: 8.1 million Followers

-       YouTube Live Stream: Trump: Averages 30,000 live viewers per stream / Hillary Averages 500 live viewers per stream

-       Instagram:    Trump: 2.2 million followers / Clinton: 1.8 million followers, &

-       Reddit:           Trump: 198k subscribers / Hillary: 24k subscribers / Hillary for Prison: 55k subscribers

The Market....

 

On Thursday of this week, we saw the DOW, the S&P, and the NASDAQ all hit all time highs on the same day.  Could history be getting ready for a repeat of 1999-2000?  The perma-bulls say no.  The people that either don't know, or won't admit why this market is at all time highs – say no.  The smart money people that understand Central Bank buying, and 0% corporate debt borrowing to fuel stock buy-backs – say yes.  The only unknown is when.  It could be Monday.  It could be a year from now.

Factually, this week we discovered that:

-       David Tepper’s Appaloosa Hedge Fund suffered a Q2 loss of 33%.

-       Over 70% of current market volume is taken up by Central Bank buying and by companies executing stock buy backs during the last hour of trading.

-       6 of the largest global investors, and the largest institutional banks have given the SELL signal to their clients. 

o   Goldman Sachs … “Stocks are a SELL”

o   George Soros … “Sell stocks, buy more Gold"

o   Marc Faber … “The market will crash 50% lower”

o   Carl Icahn … “The public is walking into a trap, as they did in 2007."

o   Andrew Smithers … “U.S. stocks are now about 80% overvalued”

-       Productivity FELL 0.5% last month – it’s longest losing streak since 1979,

-       Retail sales (excluding autos) FELL 0.3% last month,

-       The Producer Price Index FELL 0.4% last month, and

-       A falling stock market would be a systemic risk to Deutsche Bank, Italy's oldest bank, and several banks in Spain that are holding on by a thread.

-       Macy's announced the closing of 100 of their 728 stores.  Nothing says ‘strength’ like closing 100 stores – aye?

Economist Hyman Minsky believed that a financial crisis is caused by debt being financed with market stability.  He broke debt into three buckets:

-       Hedged (low risk) = interest and principal payments are made normally,

-       Speculative (risky) = interest ONLY is paid, and the principal rolled into the future, and

-       Ponzi (very high risk) = additional funds are borrowed to pay existing interest on debt.  You are betting that the assets will appreciate fast enough that they can pay off the debt and interest.

Currently we are seeing a boom in Ponzi Financing, so much so we have even come up with a term for some of these companies that fall into this category: ‘Unicorns’.  The U.S. Government meets the very definition of Ponzi financing:

-       Their current interest ONLY payment is over $400B per year, and

-       They’re borrowing over $500B per year just to meet their interest ONLY debt payments.

The next crisis will come sooner rather than later because we are: investing in Unicorns, house-flipping, having reduced income growth, experiencing horrendous job quality, debating the minimum wage (which tells you about the quality of jobs), and seeing increased debt financing.

We got here because we never deleveraged.  Rather than taking the pain of the last housing crisis, the FED and government stepped in and (in many instances) rewarded failure: Freddie, Fannie, AIG, GM, and others were bailed out.  Failure would have made us stronger by making risk a reality, and allowing us to respect it.  By not allowing failure we only make the problem bigger.  “You can choose to ignore the math, but in the end you can’t avoid it”…Chris Wiles.

We are seeing a concerted effort by all 55 Central Banks around the world to do anything and everything to keep markets higher.  They're doing it by printing money out of thin air and injecting it into the financial centers. The IMF says the world's biggest nations are $60T in debt and growing every day.

Look at it this way:

-       You’re XYZ company – in bad shape because your revenues have fallen for 2 years, and your earnings are fading each quarter.  In ‘normal’ times, investors would look at your balance sheet, and head for the exits.  Your stock would fall day after day, month after month.

-       Now assume you’re the same XYZ company, with all of the same retail and institutional investors selling your stock because it is fundamentally flawed.  The only change is that every month the Swiss National Bank gets handed another $60B in printed money and buys 5m of company XYZ’s shares.  Then the Japanese Pension Foundation buys another 10m shares.  And pretty soon XYZ’s shares are at 52 week highs – despite being only days from bankruptcy / failure.

As long as Central banks are going to print money and buy stocks – stocks can’t go down.  This is a perverted market and at some point, something strange is going to happen.  Be alert, and don't be afraid to take profits. I suspect that one day there's not going to be any left to take.

On a separate note, over the past 5 years I’ve laid out a path for the U.S. dollar to lose it’s sole Reserve status.  2009 was a wake up call to the hundreds of nations that got stuck with our bogus dollars.  They then lobbied the IMF and World Bank to make the monetary system more equitable.  Fortunately or unfortunately, the plan is coming together: http://www.worldbank.org/en/news/press-release/2016/08/12/world-bank-approved-as-the-first-sdr-bond-issuer-in-china?cid=EXT_WBSocialShare_EXT  The World Bank will be the first issuer of Special Drawing Rights (SDR) bonds in China in September.  I’m not patting myself on the back, but rather noticing that no one seems to be following this angle.  The world is growing tired of the U.S. being the sole reserve currency, and the SDR's are the way they're going to get around it.  Keep a close eye on the precious metals from September through the end next year.  The precious metals could rise dramatically over the next 12 to 18 months because China’s currency (included in the SDR) is increasingly backed by more and more gold.

TIPS:

My attraction to the metals continues.  Some relatively inexpensive ones are: FFMGF, NAK, BAA, AUMN, EGO, and FSM.  I’m keeping it simple by being:

-       Long various mining stocks and their respective call options: AG, AUY, CDE, FCX, FFMGF, FSM, HL, NGD, PAAS, PGLC and SAND.

To follow me on Twitter.com and on StockTwits.com to get my daily thoughts and trades – my handle is: taylorpamm. 

Please be safe out there!

Disclaimer:

Expressed thoughts proffered within the BARRONS REPORT, a Private and free weekly economic newsletter, are those of noted entrepreneur, professor and author, R.F. Culbertson, contributing sources and those he interviews.  You can learn more and get your free subscription by visiting: <http://rfcfinancialnews.blogspot.com> .

Please write to Mr. Culbertson at: <rfc@culbertsons.com> to inform him of any reproductions, including when and where copy will be reproduced. You may use in complete form or, if quoting in brief, reference <rfcfinancialnews.blogspot.com>.

If you'd like to view RF's actual stock trades - and see more of his thoughts - please feel free to sign up as a Twitter follower -  "taylorpamm" is the handle.

If you'd like to see RF in action - teaching people about investing - please feel free to view the TED talk that he gave on Fearless Investing: http://www.youtube.com/watch?v=K2Z9I_6ciH0

Creativity = http://vimeo.com/user8991651/review/105373017/0d0c374c28 

Investing = http://vimeo.com/user8991651/review/105373016/a5e84dd610

Marketing = http://vimeo.com/user8991651/review/105373015/d7237d026d

Sales = http://vimeo.com/user8991651/review/105373014/0e44b43962

To unsubscribe please refer to the bottom of the email.

Views expressed are provided for information purposes only and should not be construed in any way as an offer, an endorsement, or inducement to invest and is not in any way a testimony of, or associated with Mr. Culbertson's other firms or associations.  Mr. Culbertson and related parties are not registered and licensed brokers.  This message may contain information that is confidential or privileged and is intended only for the individual or entity named above and does not constitute an offer for or advice about any alternative investment product. Such advice can only be made when accompanied by a prospectus or similar offering document.  Past performance is not indicative of future performance. Please make sure to review important disclosures at the end of each article.

Note: Joining BARRONS REPORT is not an offering for any investment. It represents only the opinions of RF Culbertson and Associates.

PAST RESULTS ARE NOT INDICATIVE OF FUTURE RESULTS. THERE IS RISK OF LOSS AS WELL AS THE OPPORTUNITY FOR GAIN WHEN INVESTING IN MANAGED FUNDS. WHEN CONSIDERING ALTERNATIVE INVESTMENTS (INCLUDING HEDGE FUNDS) AN INVESTOR SHOULD CONSIDER VARIOUS RISKS INCLUDING THE FACT THAT SOME PRODUCTS AND OTHER SPECULATIVE INVESTMENT PRACTICES MAY INCREASE RISK OF INVESTMENT LOSS; MAY NOT BE SUBJECT TO THE SAME REGULATORY REQUIREMENTS AS MUTUAL FUNDS, OFTEN CHARGE HIGH FEES, AND IN MANY CASES THE UNDERLYING INVESTMENTS ARE NOT TRANSPARENT AND ARE KNOWN ONLY TO THE INVESTMENT MANAGER.

Alternative investment performance can be volatile. An investor could lose all or a substantial amount of his or her investment. Often, alternative investment fund and account managers have total trading authority over their funds or accounts; the use of a single advisor applying generally similar trading programs could mean lack of diversification and, consequently, higher risk. There is often no secondary market for an investor's interest in alternative investments, and none is expected to develop.

All material presented herein is believed to be reliable but we cannot attest to its accuracy. Opinions expressed in these reports may change without prior notice. Culbertson and/or the staff may or may not have investments in any funds cited above.

Remember the Blog: <http://rfcfinancialnews.blogspot.com/> 
Until next week – be safe.

R.F. Culbertson

<mailto:rfc@culbertsons.com>

<http://rfcfinancialnews.blogspot.com>

This Week in Barrons - 8-7-2016

This Week in Barrons – 8-7-2016:

$200 Billion a Month…

Thoughts:

$200 Billion A Month is the amount of QE being delivered by Central Banks around the world.  So if you are a corporation with stocks or bonds to sell – my advice would be ‘sell early and sell often’ because every 5 months, $1 Trillion comes ‘out of no where’ and into the world’s capital markets.  Some of it is being used to buy Government bonds and Sovereign short-term notes, but after those purchases showed little impact – the Central Banks started buying corporate debt.

Corporate debt is formed when a company needs cash, and sells its own bonds above normal market rates.  For example, if Uncle Sam is offering to pay you 0.5% per year interest on a $100k investment, a company like Apple could offer to pay you 5% per year to buy $100k worth of its company’s debt.  If the company is a well-run company like Apple, J.Q. Public will be paid back.  However, if the company is not as well run as Apple – and decides that after selling a few million in debt notes to fold, then J.Q. Public will be lucky to get a few cents on the dollar back on his investment.

The problem with Governments using taxpayer money to buy corporate bonds is their lack of analysis and due diligence.  Governments simply have a number of bonds that they are prepared to buy each month, and they end up giving money to badly run companies along with well run ones.  Also, when Central Banks are buying with reckless abandon, company executives start using that money for ‘non-growth’ investments such as: stock buybacks – which push their own stock price higher even in the face of declining earnings to sweeten the paycheck for the corporate executives.

For years now I’ve been telling you about how various Central Banks have been buying U.S. stocks.  The Swiss National Bank is the worst offender, and currently holds $63B in U.S. stocks.  Here’s a link showing you each and every stock they hold and the corresponding quantity.  For example they own: 15m shares of Apple, 21m shares of Microsoft, 26m shares of GE, etc.

http://www.nasdaq.com/quotes/institutional-portfolio/swiss-national-bank-913041  

There is NO true price discovery when a government can print money – and use that ‘fake’ money to buy ‘real’ stocks.  What is the real value of a stock if you have a buyer with endless pockets that doesn’t care about how much they are paying or earning on the stock?  Even CNBC’s’ Jim Cramer gets it.  The other day (on camera) he was wondering how the markets could be so strong with low volumes, saggy earnings and big investors moving money out of the markets? Then he said: “It’s Japan!  The Government Investment Pension Fund of Japan has taken enormous stakes in individual U.S. companies.  The list includes $2B worth of General Electric stock, $1.5B in Alphabet/Google, $100m in Whirlpool, $180m in Eaton, and $150m in Roper Technologies.  Now, if you do these aggressively, under low volume, you actually move these stocks." Cramer went on to say: “It seemed odd to me that some of these stocks have stayed afloat despite reporting so-so earnings.  This is concentrated buying by the government.  Unlike the Federal Reserve, which opted to buy Treasury bonds, Japan has bought stocks -- individually and broadly -- as well as bonds and real estate.  I’m astounded to learn of this tactic.  This fund has to have been one of the biggest, if not the biggest, buyer of GE stock last month,” he said.

This is why this market is still flirting with all time highs while the economy is in the toilet.  

-       $200B a MONTH in QE,

-       The Swiss National Bank buying $63B in US stocks, and

-       The Japanese buying umpteen billions in U.S. stocks, despite

-       A GDP reading of 1.2%,

-       650 interest rate CUTS since 2008 (one rate cut every 3 trading days),

-       And total earnings being lower for 4 straight quarters.

How far can this madness can go before it ends – is a mystery.  How bad will things get when it blows up – is another mystery.  Remember, institutions like Central Banks and the Swiss National Bank have ‘no skin in the game’.  They PRINT money like it’s monopoly money.  The Swiss National Bank could lose 90% of its $63B investment and still sleep like a baby – because in the morning they would just print and buy more.

We are in uncharted waters.  Normally in this situation, experienced sailors slow to idle speed.  They check depth indicators and scan the water for surface patterns that might suggest rocks.  The same thing should be true in this market.  I’d want to be more than just casually cautious about buying something here, because who knows what lurks beneath the surface?  Who knows what stops this madness?  Tread lightly and stay aware because you’re living through a historic time.

The Market...

On Friday, the Non-Farm Payrolls Report showed that the U.S. added 255k jobs in the month of July.  But what wasn’t said was:

-       It was the largest ‘seasonal adjustment’ in 10 years that accounted for 170k of those jobs,

-       Another significantly large ‘birth/death model’ accounted for another 112k of those jobs,

-       So if I subtract off the government ‘fudged’ numbers (‘seasonal adjustments’ and the ‘birth/death model’) – we actually LOST 27k jobs last month.

Loosing 27k jobs last month brings us in line with:

-       Challenger Grey coming out and telling us that there was a 19% increase in layoffs to 45K last month, and

-       The Government showing a 1% reduction in actual withholding taxes paid in the last month, along with last month’s 12% reduction in corporate taxes paid.

The market is all about ‘recession avoidance’.  Just like the Democratic National Convention was rigged against Bernie, the stock market is rigged to be buoyant despite any of its economic ills.  So do we simply move higher every day into November?  As silly as it sounds – that COULD happen.  We’ve moved considerably higher on the heels of: QE, zero and negative rates, the buying of stocks by Central banks and of course the fudging of the economic data.  While it’s fun while it lasts, the question is: How long will it last?  After all, trees don't grow to the moon, and markets will not rise forever.  This could splinter in many different ways:

-       The Eurozone could disintegrate back into 28 separate nations and currencies – which would take down the European Central Bank.

-       War could be declared between NATO and Russia – and we step in.

-       The U.S. could get drawn into the conflict in the South China Sea over Man-Made Islands.

-       The velocity of money could suddenly increase, and almost overnight we could go from 8% inflation to 20 or 30% inflation.

-       China could suddenly say that they have 30K tons of gold, and crash the world’s treasury markets by selling off all of their foreign treasuries.

-       Or maybe Italy pulls out of the EU (which is ‘no big deal’), but as a result their oldest bank collapses.  The Italian bank collapsing would pull the pin on the derivative grenade at Deutsche Bank (DB).  This would cause DB to implode and take out half the Bank of Japan.  The Bank of Japan would be forced to sell all of their U.S. holdings, which would trigger a sharp U.S. market crash – and so it goes.

One thing is certain, if printing fake money forever was the way to true success, it would have worked any one of the times that it has been tried.  Am I to now believe that because ALL nations are trying it, it's going to work?  Sorry I don't think so.  The Reset is coming.

I think the reason Gold is moving higher is because everyone is beginning to see that years of QE haven't solved the economic issues.  FED policy has failed.  And the EU and BOJ spending umpteen billions each month only cause their economies to sag more.  Everyone is noticing China (one of the few nations that is actually growing) buying every last ounce of gold they can get.

My only suggestion on whether to invest in this market is this: If you do so – ONLY do it as a ‘trade’, NOT as an ‘investment’.  In terms of ‘trading’, I would lean into this market and take what you can get.  But for any long-term investments like 401k’s and IRAs – I can’t recommend taking that much risk.  My worry on the 401k and IRA side of things, is to make sure that when this ‘gravy train’ starts to crumble – you can get out quickly.

Enjoy this run, but understand it for what it is – a manufactured run to make everyone believe that all is well with our economy.  My biggest fear is that this doesn’t end with a gradual ‘sideways to down’ cycle, but rather with a: ‘limit down’ one day, ‘limit down’ the next, everyone trying to get out, and circuits blowing up.  Be careful.

TIPS:

Thanks to SF for questioning what would happen if the U.S. Government took a similar position on banking & insurance as South Korea took against Volkswagen’s emissions discrepancies.  “Volkswagen (due to their complete disregard for our emissions legislation) is stripped of its right to sell 80 car models in this country.  A Volkswagen executive (stationed in South Korea) has been indicted on charges of falsifying 140 documents.  Prosecutors have indicated that they will be seeking similar criminal charges against other Volkswagen executives.”

From your e-mails it’s clear that many people are jumping on the gold & silver miner investment bandwagon.  Here are three small miners that you potentially haven’t heard of:

-       Mirasol (MRZLF) is a company that finds good projects, and then partners with larger mining companies to carry them through to production.  Mirasol has an ‘A-List’ management team, and is working in ‘elephant country’ down in Chile and Argentina.  ‘Elephant country’ is where you find big, undiscovered reserves.  Mirasol has a market cap of $103.7 million and 44.7 million shares outstanding.

-       East Africa Metals (EFRMF) is looking for gold in Ethiopia, and finding it.  They expect to have a mine in production next year.  They are a small company with a market cap of $25.7m and 113 million shares outstanding.

-       Telson Resources (SOHFF) is also a small market cap company ($22.2m) and 92.9m shares outstanding.  It just secured a $10m line of credit and is advancing its Mexican Tahuehueto silver-gold project.  They should have revised projections out shortly, and I’ll keep you posted.

My attraction to the metals continues.  Some relatively inexpensive ones are: FFMGF, NAK, BAA, AUMN, EGO, and FSM.  I’m keeping it simple by being:

-       Long Calls in GOOGL, and

-       Long various mining stocks and their respective call options: AG, AUY, CDE, FCX, FFMGF, FSM, HL, NGD, PAAS, PGLC and SAND.

To follow me on Twitter.com and on StockTwits.com to get my daily thoughts and trades – my handle is: taylorpamm. 

Please be safe out there!

Disclaimer:

Expressed thoughts proffered within the BARRONS REPORT, a Private and free weekly economic newsletter, are those of noted entrepreneur, professor and author, R.F. Culbertson, contributing sources and those he interviews.  You can learn more and get your free subscription by visiting: <http://rfcfinancialnews.blogspot.com> .

Please write to Mr. Culbertson at: <rfc@culbertsons.com> to inform him of any reproductions, including when and where copy will be reproduced. You may use in complete form or, if quoting in brief, reference <rfcfinancialnews.blogspot.com>.

If you'd like to view RF's actual stock trades - and see more of his thoughts - please feel free to sign up as a Twitter follower -  "taylorpamm" is the handle.

If you'd like to see RF in action - teaching people about investing - please feel free to view the TED talk that he gave on Fearless Investing: http://www.youtube.com/watch?v=K2Z9I_6ciH0

Creativity = http://vimeo.com/user8991651/review/105373017/0d0c374c28 

Investing = http://vimeo.com/user8991651/review/105373016/a5e84dd610

Marketing = http://vimeo.com/user8991651/review/105373015/d7237d026d

Sales = http://vimeo.com/user8991651/review/105373014/0e44b43962

To unsubscribe please refer to the bottom of the email.

Views expressed are provided for information purposes only and should not be construed in any way as an offer, an endorsement, or inducement to invest and is not in any way a testimony of, or associated with Mr. Culbertson's other firms or associations.  Mr. Culbertson and related parties are not registered and licensed brokers.  This message may contain information that is confidential or privileged and is intended only for the individual or entity named above and does not constitute an offer for or advice about any alternative investment product. Such advice can only be made when accompanied by a prospectus or similar offering document.  Past performance is not indicative of future performance. Please make sure to review important disclosures at the end of each article.

Note: Joining BARRONS REPORT is not an offering for any investment. It represents only the opinions of RF Culbertson and Associates.

PAST RESULTS ARE NOT INDICATIVE OF FUTURE RESULTS. THERE IS RISK OF LOSS AS WELL AS THE OPPORTUNITY FOR GAIN WHEN INVESTING IN MANAGED FUNDS. WHEN CONSIDERING ALTERNATIVE INVESTMENTS (INCLUDING HEDGE FUNDS) AN INVESTOR SHOULD CONSIDER VARIOUS RISKS INCLUDING THE FACT THAT SOME PRODUCTS AND OTHER SPECULATIVE INVESTMENT PRACTICES MAY INCREASE RISK OF INVESTMENT LOSS; MAY NOT BE SUBJECT TO THE SAME REGULATORY REQUIREMENTS AS MUTUAL FUNDS, OFTEN CHARGE HIGH FEES, AND IN MANY CASES THE UNDERLYING INVESTMENTS ARE NOT TRANSPARENT AND ARE KNOWN ONLY TO THE INVESTMENT MANAGER.

Alternative investment performance can be volatile. An investor could lose all or a substantial amount of his or her investment. Often, alternative investment fund and account managers have total trading authority over their funds or accounts; the use of a single advisor applying generally similar trading programs could mean lack of diversification and, consequently, higher risk. There is often no secondary market for an investor's interest in alternative investments, and none is expected to develop.

All material presented herein is believed to be reliable but we cannot attest to its accuracy. Opinions expressed in these reports may change without prior notice. Culbertson and/or the staff may or may not have investments in any funds cited above.

Remember the Blog: <http://rfcfinancialnews.blogspot.com/> 
Until next week – be safe.

R.F. Culbertson

<mailto:rfc@culbertsons.com>

<http://rfcfinancialnews.blogspot.com>