G’day Traders,

Last night I was fortunate enough to hear Peter J. Daniels speak at a local church. Peter is 78, from a disadvantaged background and became a very wealthy businessman, a famous motivational author and the world’s highest paid speaker. An avid reader who meets regularly with UN and World Bank officials, last night he said that the greatest crash the world has ever known has started and it will be at its worst in September/October next year.

Do I agree with him? No, I believe the markets will drop below last year’s lows and down to about 500 in the S&P500. If Daniels is right it would have to be over a 90% drop to beat ’29 and that puts it at around 150!

The problems we both agree on is that the economy is in trouble, world government debt is out of control and the US empire is crumbling. He thinks the earliest we will recover will be 2020 and I think he is probably right. We both are very optimistic about what can be done.

The point is that you need to do something about it. You need to act if you want to be in front. No one became successful from not making a decision to act and once you make decisions you can always make adjustments. Just sitting there is not going to help under these market conditions.

Just because the speed of this collapse is slow doesn’t mean you are not losing money. Think of the highs in 2007 and how long it took to accelerate. No one even remembers that it was the start of what was to come.

Enough of predicting the future… if you want to know what to do about it then under the ETF Investing section on the LIS website there are some investment ideas.

The US S&P500 -0.40, European top 500 +0.68 and UK +0.76%. China flat. In early trade Asian markets are down with Nikkei over 1/2 a percent as is the ASX.

Twitter – I wrote something interesting yesterday about the gap for yields between 2 and 10 year US Treasuries – the economy has never contracted with such a gap and one of the Federal Reserve branches puts the likelihood at 15.5% of a recession within the next year. That is something positive, but then again that just shows me that:
1 – The market is scared of lending long term to the US government.
2 – The smart money wants to hold cash because this money is deeply concerned.

ETFs – Read the articles if you want some great ideas. Do it before the end of the month so you can be prepared to make proactive decisions.

Options – I think you may get this month in. I am not going to recommend trading bullish option writing strategies for this October expiration unless you are hedged.

Today’s Top Tip

Thinking about attending the exclusive advanced training in Austria in January 2011?

Visit http://www.lifestyleinvestorservices.com/austria/

Information for Beginners – Hey… a market crash means great profits on Forex and Commodities – so it’s not that bad unless you let all your other investments halve in value.

Information for Intermediate – Watch Sugar – they are predicting a record demand as crops are failing across the globe. Stick to the trends. Speculators are more bullish on Commodities at any other time than at October 2008 – remember that and what happened to stocks after?….hmmm great trading

Information for Advanced – I am often early in my calls. This has taught me to be more patient – if I have a view I must wait for a confirmation signal. Mindset is critical here because you want to be on the big moves.

Scott Goold

Head of Lifestyle R&D

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Trader Term of the Day – Stop Order

A buy order placed above the market (or a sell order placed below the market) that becomes a market order when the specified price is reached. Stop orders are most frequently used to limit losses.