Blog : Worst Stock Market Start in 84 Years?

by Peter Leeds on January 5th, 2016

Coming Today:  Our newest pick is a 40 cent penny stock which will benefit strongly from our geopolitical comments below (click here to make sure you see it).

What in the World is Going On With Stocks?

The markets kicked off the first trading day of 2016 with a bang.  That took the form of a 400+ point plunge on the DJIA.

Since stock market slides rarely occur in a vacuum, you probably also surmised that the NASDAQ, AMEX, most sectors, and commodities also fell pretty strongly.

This first-day drop was the worst in 84 years.  However, it should be noted that when it occurred back in 1931, it did turn out to be a major stock market bottom.

Gold was one of the only points of gain on the markets, spiking as much $14 per ounce.  Expect even further strength from the world's risk-hedge, as tensions in the Middle East get worse before they get better.

CNBC has published a great deal of information about why there won't be an oil war.  However, there will be escalating tensions, this is a fact. 

That rising chaos will inflate the risk premium on assets like oil and gold, and should also be supportive of commodity-related assets, and investments related to the fear index (VIX).

Many people do not understand the significance of what is going on between Iran and Saudi Arabia right now.  This could become the beginning of an acceleration of the 1,400 year battle between the two religions, and in fact is already spilling into proxy wars over the nations of Syria and Yemen.

Shias all over the world detest the ruling royal family, and even the royal hold on power among their own populace is somewhat tenuous.  This relationship could become strained with the current state of incredibly low oil prices, as it has resulted in doubling of gas prices, and other cuts, increases, and adjustments to the numerous subsidies the Saudi people have enjoyed.

The U.S. 5th fleet is stationed at Bahrain (which is right beside Saudi Arabia), and America has interests in keeping the region calm.  The US involvement has helped the Saudi royal family stay in power, and retaliation to this is showing up in numerous ways.  

It was not a coincidence that the vast majority of 9/11 plane hijackers were of Saudi decent, or that Saudi nationals of Shia upbringing are travelling to Syria and Iraq to join ISIS.  These events are all directly connected.

In a typical year, we send Saudi Arabia well over $1 million, plus military hardware and training.  A few days ago, the royal family conducted a mostly-Shia mass execution of 47 people.

The Iranian response of burning down the Saudi embassy is not surprising.  The Saudis called back their diplomats, and cut all economic ties.  Iran responded in the same fashion.

Some people believe we should double-down on support for Saudi Arabia.  Others believe we are backing the wrong side.  There is also the group which feel we shouldn't be involved over there in any way at all.  I personally do not have the answers, but I'd love to hear opinions from all of you.

The issue will get worse, and will result in new risks and opportunities in the penny stock markets.  There will be fortunes to be made, and we'll take all geopolitical events into account in our analysis.

Penny Stocks for Dummies goes upside down!

We just discovered 3 copies of Penny Stocks for Dummies which were accidentally printed upside down.  We were getting them ready to send back to the printer to be replaced, but we realized that they may be a fun collectors item.  

So we will keep them, to be used for promotional purposes.  Especially since just about every person interested in penny stocks has (or should or will) read international bestseller Penny Stocks for Dummies.  A misprinted copy may have some significance to a collector, or be useful for charity fund raisers.