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Tharp's Thoughts
Weekly Newsletter
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Feature: Can Cryptocurrencies Replace Gold as a Hedge Against Government Inefficiency?
by Van K. Tharp, Ph.D.
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Workshops: $700 Early Enrollment Discounts Expire Next Week on August Workshops
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Tips: When a Market Just Won’t Go Down,
by D.R. Barton, Jr.
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Day Trading Systems Workshop in August
Deadline is approaching! Register by This Coming Monday to Give Yourself Time to Prepare
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TIME SENSITIVE: Due to the extensive pre-work that will be distributed by Dr. Long to prepare for this class, it is highly recommended that students sign up by next week, July 24th. We want each student to have ample time to complete the pre-workshop assignments and be fully prepared so Ken can focus his teaching time on the most beneficial topics instead of basics. The course pre-work requires about two weeks of study (evenings and weekends).
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Can Cryptocurrencies Replace Gold as a Hedge Against Government Inefficiency?
by Van K. Tharp, Ph.D.
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We now have several dozen major crypto-currencies. These include the familiar ones like Bitcoin and Ethereum which together make up about 75% of the market. There are now, however, a number of other important cryptos which include Monero (XMR), Steem Power (STEEM), Lykke (LKK), Antshares (ANS), Peerplays (PPY), Factom (FCT), Ethereum Classic (ETC). Beyond those, more than 20 other “major” cryptocurrencies have emerged very recently.
Cryptocurrencies are still very early in their life cycle. In January 2017, the market cap of the entire cryptocurrencies market was about $21 billion (US). Not long after that, it dropped down to about $14 billion but by late May, the market had recovered and gone up to $88 billion. It dropped shortly afterwards to around $60 billion and then it went to about $120 billion. Right now it’s around $81 billion. Those are huge fluctuations – and all of them happened in the first six months of this year. From its low to its high in 2017, the cryptocurrency market cap increased about 857%. That kind of range never happens with stocks. Cryptocurrencies have also had three
separate market cap decreases of about 30% -- just this year. That never happens with stocks either.
Cryptocurrencies have also been gaining the attention of big money in the last year. One firm applied to offer an ETF based on Bitcoin. That wasn’t approved - but a Bitcoin ETF is probably inevitable. And now, we have the possibility of buying/selling options soon on Bitcoin and Ethereum so that investors can hedge their bets to minimize their risk. Making options available on cryptocurrencies could easily send the market cap up another 850% within the next six months to a year. In a few years, cryptocurrencies could have a trillion dollar market cap . . . and at that point, things are going to get really interesting.
What Is This All About?
Cryptography is a way to communicate privately. Cryptocurrencies are basically a way to store money in a computer and send it securely from one location to another. A cryptocurrency is a decentralized peer-to-peer system — an open system – and very different than the current banking system. Each cryptocurrency runs on a public ledger that’s called a blockchain.
Currently, when you go to a bank and withdraw money, the bank looks at the ledger in its systems to determine if you have enough in your account. If you do, then you can withdraw the money. Then instantly, your new balance is “known” at every ATM and at every other bank. That ledger system is “closed” – only banks know the available balance for an account.
The blockchain is also a ledger system but it is public. All transaction details can be seen by everyone though the identities of the transacting parties are anonymous. But thousands of independent computers all over the world know what’s going on because they are constantly talking to each other.
Besides the public ledger, blockchain technology is revolutionary for several additional reasons –
- It is impossible to shut down.
- It prevents double spending.
- It cannot be hacked.
- It does all of this without needing a central authority.
Systems thinking would refer to blockchain technology and cryptocurrencies as a self-organizing, emergent phenomenon. (I’m giving a systems thinking workshop in September to help traders improve the ways they think about trading and markets.) If economists still hope one day to predict economic activity with any accuracy, cryptocurrencies will add an entirely new dimension to the process. Cryptocurrencies could one day eliminate central banks and government control of money which will probably destroy whatever validity their models currently have. In fact, cryptocurrencies have the potential to become a form of international money.
Bitcoin, the first cryptocurrency, used to be considered somewhat shady – an underground way to handle certain online purchases and sales. But today, companies such as Cisco, WalMart, Starbucks, and Microsoft all accept payment by Bitcoin. In fact, more than 100,000 merchants today accept Bitcoin – that's more than 20 times the number of merchants just four years ago. (I am open to having the Van Tharp Institute accept it as well in the future.) And today, you can actually hold Bitcoin in your IRA.
Regardless of your home country, Bitcoin has suddenly become a hedge against imprudent government monetary policies - be those of the US, Europe, or Asia. Here were talking about things like negative interest rates, unofficial debt of over $100 trillion, etc.
Given the troubles with existing currencies, I would have expected Gold to have been doing very well in its traditional role as the primary hedge against such troubles. Gold, however, has been in a flat range for years and significantly below its 2011 high. See the chart below of the London PM fix of Gold over the last 10 years. There’s certainly little to get excited about here. In addition, I recently bought some U.S. Liberty $20 gold coins at only a few dollars above the spot price of gold. To me, that says something could be wrong with the gold market.
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Bitcoin emerged in 2009 but it began to get serious about the time Gold started to fall off its highs. Do you think there is a coincidence there?
Change Is Inevitable.
Right now, Forex is a huge market with daily volume of about $5.3 trillion in trading. Contrast that to the market cap of all cryptocurrencies at about $81 billion where Bitcoin has about 50% of that total and Ethereum has another 25%. Even with those humble figures today, however, it wouldn’t surprise me if cryptocurrencies one day replaced government backed money.
Forbes recently published an article listing about fifteen hedge funds that are investing in cryptocurrencies. When options allow hedging for Bitcoin and Ethereum, expect the number of hedge funds trading cryptocurrencies to go up dramatically. If the SEC approves a Bitcoin ETF in the next few years, then everyone will be able to easily invest in cryptocurrencies – and the floodgates will open.
In the meantime, I’m exploring investing some of my own money (a very small amount) in cryptocurrencies. I regret that I didn’t get in when I first thought about it a few years ago when Bitcoin was at about $500. Contrast that price with Bitcoin’s fluctuations today at around $2,300.
We will probably present a lot more about cryptocurrencies in the future. In the meantime, you can get some idea what is going on from this website – https://coinmarketcap.com/currencies/ They currently list 810 different cryptocurrencies and the list continues to grow.
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About the Author: Trading coach, and author, Dr. Van K. Tharp is widely recognized for his best-selling books and his outstanding Peak Performance Home Study program - a highly regarded classic that is suitable for all levels of traders and investors. You can learn more about Van Tharp www.vantharp.com.
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August 5-7
Saturday-Monday
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August 8-9
Tuesday-Wednesday
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TIME SENSITIVE: Due to the extensive pre-work that will be distributed by Dr. Long to prepare for this class, it is highly recommended that students sign up by next week, July 24th. We want each student to have ample time to complete the pre-workshop assignments and be fully prepared so Ken can focus his teaching time on the most beneficial topics instead of basics. The course pre-work requires about two weeks of study (evenings and weekends).
Plus, the early enrollment discount of $700 expires on this workshop next week, July 26th.
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Dr. Ken Long begins his Day Trading Systems workshop by teaching you two day trading systems called the Frog and RLCO. Through his action-packed lectures students will gain an understanding of each system’s beliefs, rules, and variations.
Ken has been a long-time active trader and observer of the markets. He's noticed the consistent habit of prices for particular issues to move a certain amount. Much like a frog jumps when it hears a loud noise, prices tend to move a certain amount before they pause or move again. Different frogs are able to jump different distances, but each one tends to jump about the same distance as it did last time. Would it be possible to know about how far a stock’s price would move on any given day?
After attending this three-day workshop you qualify to stay on and live trade these same systems for the next two days alongside Ken. Plus attendees will receive follow up assistance in Ken's ongoing Chatroom for Traders.
Special Bonus: Free Membership in Powerful 'Chatroom' Plus Three Coaching Calls
Inspired by the powerful networking Ken has seen develop over the years at VTI, both through the Super Trader program and workshop attendees, he created and leads a group of traders with a shared interest in swing trading and intraday trading which he calls the Chatroom.
Ken and his chatroom members have been developing a daily community of practice to encourage a healthy and helpful environment to support each members' development as a trader.
And, as a way to maintain the spirit of cooperation experienced at the workshops after you are headed back home, you get free membership and access to this chatroom forum. And while this membership is free to workshop attendees, the value of this ongoing interaction and learning is likely as valuable the workshop itself.
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Attend Both August Workshops and Take an Extra $1,000 Off the Combo!
Early Bird Discount of $700 Expires Next Week on Each Individual Workshop
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Presented by Kim Andersson
Profit When Price Goes Nowhere: How to Successfully Trade Sideways Markets In Every Time Frame
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August 11-13
Friday-Sunday
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Announcing An Exclusive New Trading Workshop:
Sideways Market Strategies Profit When Price Goes Nowhere:
How to Successfully Trade Sideways Markets In Every Time Frame
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Kim Andersson covers a few objectives of the new Sideways Market Strategies course in this short video above.
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Did you realize that no matter what time frame you trade or what method you use to measure them, Sideways markets happen between 59% and 65% of the time!
And yet scant attention is given to this market type. When you encounter them the task of trading becomes much more challenging, stressing your systems and your psychology beyond your normal comfort zone. This new workshop is the antidote to this under appreciated, and least understood market type.
AN EXTRA SPECIAL BONUS FROM YOUR INSTRUCTOR
As an extra added bonus, Kim Andersson has agreed to provide additional support to all Sideways Market Strategies attendees for the remainder of 2017! This is no small offer. Your class will get four monthly calls (1 hour each), as well as ongoing email support for months after the workshop. She will offer her feedback and expert guidance for any sideways trading issues you may have for the rest of 2017. This way you know that you can be fully prepared to trade in Sideways conditions and get your follow up questions answered.
Plus! For The First Time Ever We Have An Exciting New Benefit to Offer Sideways Market Attendees: You will have access to a recording of the workshop during the period of follow-up coaching!
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Presented by Van Tharp
with co-presenter RJ Hixson
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September 15-17
Friday-Sunday
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Exciting New Work from Van Tharp
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September 19-21
Tuesday-Thursday
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October 2017 LONDON, ENGLAND
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Presented by Van Tharp
with co-presenter RJ Hixson
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October 13-15
Friday-Sunday
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Presented by RJ Hixson
and Van Tharp
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October 17-19
Tuesday-Thursday
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October 21-23
Saturday-Monday
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Presented by Gabriel Grammatidis
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November 10-12
Friday-Sunday
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Presented by Gabriel Grammatidis
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November 13-14
Monday-Tuesday
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The Super Trader Program Price Increase Deadline is 12 Days Away
We have only two openings remaining.
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If you've ever wondered what it is like to be part of Van Tharp's Super Trader Program click on the short 4 minute video below to hear more about what our students have to say about their Super Trader journeys.
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I plan to continually look for new things to model to help people become more successful traders and investors. And what we are working on now is doing everything we can to make the Super Trader Program, which I think is already unique and the best in the world, even better...We have about 10 open slots in the Super Trader Program for 2017. We’d like to make sure that everyone who wants to join this year can get in at the current rate, which goes up after July 31st. Right now the price of the program is $52,500 for the first three years. It will go up to $60,000 for the first three years in August 2017. As a result, for those who qualify*, we are running a one month special on the
program.
Now through July 31, We Have The Following Specials:
- A lump sum one-time payment of $50,000 (less applicable discounts**) will save people $10,000 over the new price.
- Three installment payments six months apart for the current price of $52,500 (less applicable discounts**) will save people $7,500 over the new price. This payment option spreads out the cost over a year's time — which I don’t do normally.
*To apply you must have attended the Peak Performance 101 Workshop or the Oneness Awakening Workshop in order for Dr. Tharp to assess your openness to the program.
For more information about the program click here.
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When a Market Just Won’t Go Down
by D.R. Barton, Jr.
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Over the past several years, the market action tends to have been driven by one central theme for a period of time. I call this the market narrative. When news or economic announcements come out and support the current narrative, markets go up. If news hits counter to the narrative, markets drop. In addition, the market narrative shifts from one theme to another over time.
Since the November U.S. presidential election, the markets have been driven by what I’ll call the Trump/Republican Congress Growth Narrative. Three big pillars support this recent narrative – reduced taxes, less regulation and more infrastructure spending. Whenever news has come out reinforcing one or more of those pillars – markets have gone higher.
Significantly, news damaging to the narrative have given the market setbacks recently – but only very small and very short setbacks. Think of the market reactions to the multiple health care reform missteps and all the issues with the possible Russian influence in the election (Comey firing, Trump, Jr. emails, etc.). After each new “oops” in the news, the market has rebounded quickly.
I believe, however, that the market has started transitioning from one narrative to another. The old Trump/Republican Congress Growth Narrative is giving way to a new narrative — “The Great Unwind” of the Fed’s balance sheet (there will be more on this new narrative in a future article).
Still, while we straddle between these transitioning narratives, the markets just won’t go down. In fact, we are in a market with historically low volatility (read: complacency). Also, we are racking up more and more notable streaks of various kinds. Here’s an example. According to data compiled by Charlie Bilello at Pension Partners, we are now in the longest market streak without a 5% pullback in 23 years. As of July 11, this run had become the 5th longest such streak of all-time (and as of today, it looks like we have moved into 4th place). Here’s the data::
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With the effects of the current narrative winding down (and as many believe, already priced into the market), what could be pushing indexes to new incremental all-time highs time and again? I believe there’s a completely logical answer: earnings growth. After $3.5 trillion dollars of monetary injections by the Fed (and similar staggering amounts by the European Central Bank, Bank of Japan, etc.) we are finally seeing a sustained boost in corporate earnings. LPL Financial provides some supporting data showing how the S&P has rebounded from an “earnings recession” in 2015 and 2016:
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So What?
The “Trump Bump” may be on its last legs as a narrative—but a new force now seems to keep pushing the market up — corporate earnings. Netflix just blew out new subscriber estimates and upped their earnings projections for the year. Let’s keep a close eye out to see if the other FANGMA stocks (Facebook, Amazon, Netflix, Google, Microsoft and Apple) can follow suit.
Your thoughts and comments are always welcome - please send them to drbarton “at” vantharp.com
Great Trading,
D. R.
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About the Author: A passion for the systematic approach to the markets and lifelong love of teaching and learning have propelled D.R. Barton, Jr. to the top of the investment and trading arena. He is a regularly featured analyst on Fox Business' Varney & Co. TV show (catch him most Thursdays between 12:30 and 12:45), on Bloomberg Radio Taking Stock and MarketWatch's Money Life Show. He is also a frequent guest analyst on CNBC's Closing Bell, WTOP News Radio in Washington, D.C., and has been a guest on China Central Television - America and Canada's Business News Network. His articles have appeared on SmartMoney.com MarketWatch.com and Financial Advisor magazine. You may contact D.R. at "drbarton" at
"vantharp.com".
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NEW E-learning Course!
The Power of Position Sizing Strategies:
SQN Secrets Revealed
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If you've ever wanted to know more about creating effective Postion Sizing Strategies, we can now give you some powerful new tools to help you master this critical area of trading. Not only do you get a course with nearly 7 hours of instruction, you also get a FREE copy of Van's Definitive Guide to Postion Sizing Strategies Book and a set of spreadsheet tools to put your new knowledge to work. Read more about this exciting new course below to decide if it will help you with your trading goals.
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If you've ever wanted to know how to:
- Use a Monte Carlo simulator to understand what kind of R multiples your trading system could generate in the best case scenario, worst case scenario, and most likely range scenario,
- Use each trading system’s SQN score to help you craft a distinct position sizing strategy for each system,
- Develop position sizing strategies that help you reach your returns objectives while simultaneously avoiding your drawdown limits,
- Implement an effective Market’s Money mindset and position sizing strategy,
- Evaluate the probable effects on your equity from different position sizing strategies and variations of them.
Then you’ll want to learn the simple process and use the powerful tools found in our new Power of Position Sizing Strategies—SQN Secrets Revealed home study course.
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Watch this short 4 minute video to learn a little about what is included and hear what the impact has been on people who have gone through this course.
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FREE Book!
We pay for the book, you just pay for shipping.
Read Van’s Latest Book —
TRADING BEYOND THE MATRIX
The Red Pill for Traders and Investors
Eleven traders tell their stories about transforming
their trading results and lives, in this 400 plus page book.
Below is a brief video on how powerful this book is to traders.
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Cary, NC Workshop Information
For a list of nearby hotels for our Cary, North Carolina locations,
click here.
Book your flight arriving to the Raleigh-Durham International Airport (RDU).
When traveling to a three-day course, it's best to arrive the evening before.
To help determine your arrival and departure times, see:
Questions? Click Here to Ask Van...
CONTACT US
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This is a supplement to our subscription based newsletter, Tharp's Thoughts.
800-385-4486 * 919-466-0043 * Fax 919-466-0408
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