Reasons of company insiders are buying

15  Dec 2018

Dear Fellow Investor,

The background and why company insiders are buying

Paul Tudor Jones, a billionaire commodity and futures  trader was interviewed on Bloomberg recently and asked about his market outlook. He gave an objective and balanced view based on the trend of world commodities.

The CRB index  represents 19 global commodities including energy, agricultural, precious and industrial metals and soft commodities.

As you can see in the above daily chart, global commodities have been in a fierce downtrend for more than 40 days. They are trading at multi year lows.  Jones said that this reflects a global slowdown and deflation.  It means that if the US Federal Reserve raises interest rates in 2019, it would possibly trigger a world wide recession and stock market collapse.  That is why he believes there will be no US interest rate rises in 2019 and a rally of between 10 and 15 % in world stocks.

All individual markets can be manipulated- witness individual shares or crude palm oil -but it would be almost impossible to manipulate all 19 commodities in the CRB Index. That is why the trend of the CRB reflects reality and truth versus  media hype and political  propaganda.

As commodities world wide go lower, it means deflation is a risk and with high levels of private and public debt it makes it more difficult to service the debt. This is why I recommend quality value shares with sold financials . We must avoid highly leveraged companies.

Higher interest rates makes the debt problem worse and that is why the Federal Reserve will according to Jones put interest rate rises on hold for 2019. They may even start QE again.

Doom and gloom is the dominant emotion at present The fear index is at an extreme.  Retailers are dumping shares  while company insiders continue to buy back their shares. Since 2009 we have had over 62 share market corrections of over 6 % and we have stayed the course  and recovered. Odds favour a recovery after this correction.

Invest well and grow your wealth

Bill

Critter of the week is:

the 'Remarkable Award' category  by South African photographer William Kruger -- and is entitled "Vulture and Jackal".