Montreal Analyst

Let’s say it again, bull markets do not end due to overvaluation. They generally end with interest rates rising, often with a decline in the money supply or recession. But again dangerous market tops are usually accompanied by overvaluation and euphoria. Are we seeing overvaluation now?  We think so.          We see high risk in many popular and highly recommended stocks. Opportunities for capital gains are always present in many stocks but far too many “popular” stocks are being recommended by the so called experts at the very high end of their valuation and price ranges. It violates the standby rule to focus on what is undervalued and not what is popular. Many of the best performing stocks are now selling at extremely high valuations. That always ends sadly.    INSIDER SELLING… Last week, we saw what was the largest dollar value total of “insiders” who are the officers and directors selling their own personally held shares in the companies where they are employed. It was by far the largest total dollar value of sales. Their stock sales totaled an astounding value of $1,174,371,122 (over one billion dollars worth) while buying was slightly over $31 million in dollar value…. quite a contrast. These insider sell levels in the past have in the past concurrent with the beginning of what led into brutal bear markets and declines of 32% to 40%.    The value of publicly traded U.S. stocks to U.S. Gross Domestic Production is now over 143%. While not a “timing signal,” brutal bear markets […]

For six years we had expected  the stock market to have suffered 20% corrections after large moves up and each time it would to be followed by returns to the upside- that would have been normal! Those corrections did not occur. The market continued  to move up despite serious overvaluations in many stocks. Those normal corrections  would have prevented the stock market from its current extremely high overall valuation. More importantly, harsh corrections such as 20%-25% price declines offer investors and institutions exceptional  buying opportunities to buy shares at lower prices while they are “on sale.” WERE YOU AWARE OF THIS? The S&P 500 is up approximately 3% in 2018. Fact: This year without  the price performances  in 2018 of  Microsoft, Amazon, Apple, Netflix, Facebook  and five others companies,  the Standard & Poor’s’  500 would not be up!  Business TV rarely mentions some of the unknown facts behind the market as it may interfere with advertising. They do a fine  job of informing viewers of the markets and business news but they should emphasize all the information. The stage is now set for another brutal bear market. We do not want it to occur and we are not short sellers; we are monitoring various indicators and they firmly suggest caution. Near zero interest rates and Quantitative Easing have been the enablers supporting the stock market.  When it ends it will be very unpleasant. All the excuses will be made by the brokerage industry- naturally blaming others. While we always are […]

From time to time I would see at various New York functions a starting National Football League lineman who played enough seasons to qualify for the NFL pension. He was and is a very gracious and intelligent man. The point of this anecdote is  that professional athletes often work at other jobs to prepare for life after their athletic careers are finished and he was no different.  So?………….. When his first season was over, he decided to enter the brokerage industry with a “big name” American brokerage house that of course gave people the impression that it (and its’ esteemed analysts) had all the answers. Yeah sure!  It was obvious that the brokerage firm believed that the player would have a perfect entree to other high salaried  players as large potential clients with cash to put in the markets. In the end, he said that it was a very unpleasant experience to say the least………. After following his the major firm’s brilliant investment recommendations, the results for his clients proved to be disastrous. “I was very embarrassed by what happened” he told me. So after the following football season he returned to the brokerage industry but instead joined a small brokerage house; this time he took a different approach. “I moved into the trading room with traders and market makers and for the first time I was regularly making money; I was able to see what the informed and smart money was doing.”……….  The fact is that he saw what the experienced […]

This is a very negative indicator for the direction of the stock market. It is not a “timing indicator” but rather suggests that when and if the stock market does enter a bear phase, it will go down far more than normal. Historically it was a very good timing indicator, but lately it has not been.   Last week insiders (the officers and directors) sold $690,896,754 worth of their own (personally owned shares) companies’ shares. That is the third largest total that we have seen reported over the last fifteen years. At the same time they bought slightly over $63,012,466 of their own companies’ shares. The brokerage industry and the companies themselves do not want to see these sell numbers publicized for obvious reasons as they send out very bearish warnings that can discourage the public from investing. Again, insiders are unloading their own shares at a very high rate in terms of  dollar value. Few investors pay attention to this indicator-we do.

    NAPOLEON BONAPARTE… Napoleon Bonaparte once advised to “never interfere with an enemy when he is making a mistake.” Some gold companies’ shareholders may now be making serious mistakes by selling shares in stocks that they have lost patience with; yet that is normal at low prices. They might ask themselves “who is buying?” as there is a strong possibility that they are giving away undervalued stocks at very low prices. It may prove to be a serious mistake as incredible bargains in gold stocks occur at price lows. Today value oriented investors can find many companies that are exceptionally undervalued on the basis of various valuation gauges. Our analysis suggests that we are about to commence further price moves up in Gold, Silver, mining and exploration stocks. Many of them should move up to price levels that will amaze investors. Because there is so little comprehensive research coverage for most metals companies, many remain undervalued. The coming price moves up in the precious metals stocks’ prices should far exceed investors’ expectations.   Cycles…Maybe the most important ingredient of all Cycles can be very extremely useful when trying to make timing decisions. It is important for investors to recognize that several important cycles are projecting that Gold should soon have a large move up….very large. At the same time, several cycles forecast bad times for the industrial stock market. ……and very bearish times coming for industrial stocks which is positive for gold, silver, mining shares and hard assets.

If we use every major gauge of  historic valuation for this stock market,  it faces what would be a normal decline of 35% to 40% from the recent top. As the old time New York Yankees manager Casey Stengel would often say…”you can look it up.” Those gauges are the total value of the stock market to Gross Domestic Product; Stock Sales by officers and directors; price to sales ratio for the overall stock market (at its’ highest ever!) among other indicators suggesting that investors take some profits and wait for cheaper buying opportunities or look for stocks that are undervalued.  Sure, for several years we have suggested that 20% plus market declines should have occurred to be followed by rallies back up. Those interim corrections would have prevented the stock market from carrying such dangerous overvaluation today and offered investors opportunties to invest when stocks are undervalued and “on sale.” Moreover, it does not help the situation that much of the business media act like bench jockeys constantly rooting the stock market up to overvalued levels yet rarely ever suggesting taking some profits.  But why do stock market periods of severe overvaluation occur? Often because the brokerage and investment industry need activity, commissions  and business volume. Those industries cannot survive on prudence, low volume and patient value investing. The activity meter must be kept running. Manipulation has fed the upmoves along with the central banks buying stocks. But that overvaluation now faces a stark reality. That reality is that […]

Posted on March 1, 2018 | By KCGrainger | No comments,   From www.Canadianmineanalysis.com We are about to commence a major bull market in Gold, Silver, mining and exploration stocks. Many of them should move up to price levels that will astonish investors. Because there is very little comprehensive research coverage for most precious metals companies, many remain overlooked and undervalued. The oncoming price moves up in the precious metals shares’ prices should be far above investor expectations. INDICATORS? If our eight indicators are correct, we are about to begin a full-fledged bull market in precious metals and many of the mining and exploration stocks. Yes, we have had an early stage bull market in some gold and commodities stocks which already carried some gold stocks up 800% and more (examples: Canadians Richmont, Claude Resources, Niogold-all taken over). NAPOLEON BONAPARTE… Napoleon Bonaparte once advised to “never interfere with an enemy when he is making a mistake.”  Some gold companies’ shareholders may be making a mistake by selling shares in stocks that they have lost patience with which is normal in a bear market. They should ask themselves “who is buying?” The mistake is that there is a very strong possibility that they are giving away undervalued stocks at very low prices. It may prove to be a big mistake as bargains occur during bear markets. When the frustrated selling shareholder says “just get me out of this stock” a value investor may say “what a great opportunity the seller and the weak metals market have given me.”  Price weakness offers value investors opportunities to invest […]

      The U.S. stock markets are trading at levels that are carrying exceptional and dangerous overvaluation. We are attempting to explain what we have seen and how we interpret it.  We have no problem with overvaluation in stocks as long as investors take advantage of it and take money off  the table. At current prices, too many stocks and sectors are extremely overvalued based upon both their fundamentals and their technical charts.  What will follow is a brutal bear market. Yet large U.S. brokerages continue to strongly recommend already overvalued stocks. Yes, we have expected corrections of 20% to 25% to occur over the last six years to be followed by rallies up. This was the normal cyclical and technical expectation from the past decades. They did not occur which would have given institutional and private investors opportunities to accumulate stocks when they are not overvalued and represent solid value. Too many stocks have been bought at the very high end of their five year price ranges. “Paying up” is always proves to be the killer. While we remain quite negative for many of the stocks in the Dow Jones Industrials, S&P 500 and Nasdaq stocks and others as well, we are near fully invested in undervalued and overlooked stocks that have been trading near their price lows. QUESTION ! Why are the stock markets trading at such high levels ? ***The major U.S.brokerages desperately need  heavy trading activity, volume and commissions so activity is forced. The industry […]

We have seen the initial stage of a bull market in gold and other hard asset commodities which beginning in 2015 has already carried some small to mid cap gold stocks up 800% and more. But the majority of mining and exploration stocks have languished. Yet at the same time experienced shrewd investors have been accumulating the mining shares. The price weakness has  offered patient value oriented investors opportunities to accumulate mining shares while they are exceptionally cheap. Keep this in mind, “He who has patience will have it all” a quote of Benjamin Franklin. Our analysis now suggests a move into the $1400 to $1500 (US Dollars) which will bring with it an enormous move up in many gold, silver and exploration stocks. Our analysis, which includes fundamental, technical  and cyclical analysis has never been this positive. Yes, the banksters may continue with their manipulation of gold bullion but that game should end soon. Bon conseil  We want to thank our mining investor friends Claude Lemire, Ray Langevin, Louis Baribeau, David Crevier , Philippe Cloutier and Peter Cashin for their advice and input, What have we waited for?  One thing is the need for a bear market in the industrial stocks which we almost require to have a bull market in gold and mining stocks. What is the one most important ingredient today for a bull market in gold?  We have said it time and again; we need a lower value in the US Dollar to have a bull market in gold. We […]