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1.19.2019 - Free Investment Newsletter Bookmark

NOTE>> Last Sunday ( and all through the week) we’ve sent out our “intro” letter about our new product, to those who signed up. The “new product” is for the longer term investor, and we’re calling it “Horizons.” For 25 years, people have asked us for a letter focused on longer term horizons, not swing trading. So, we’ve finally done it. The First “actionable” letter goes out tonight ( Sunday evening).
If you’ve been looking for a longer term holds type of newsletter, that’s a bit different than the main stream, consider a one year subscription to Horizons. I will send the “intro” letter to anyone that signs up throughout the year, since it’s important to understand what we’re trying to accomplish and how. Anyway, if you want in on the “ground floor”, click the following link and sign up!



 
Getting Closer
 
Any of you that have been reading my rants for a few years, know that it is my “dream” for the Sunlight that strikes the earth, to power everything we do. Yes folks, solar energy.
 
Before you jump in, foaming at the mouth about initial costs, rainy days, and efficiencies of the panels, and blah blah blah, stop for a minute. I know all about these problems. But I also know this, the sun rains down solar energy for free. In fact it gives us so much of it, we couldn’t use one day’s worth in a century. That’s one hell of a lot of wasted power.
 
In a single hour, the amount of power from the sun that strikes the Earth is more than the entire world consumes in a year. To put that in numbers, from the US Department of Energy: Each hour 430 quintillion Joules of energy from the sun hits the Earth. That's 430 with 18 zeroes after it.
 
So we’ve got this free energy coming down every day, 24/7/365. But of course, because of earth’s rotation, we can only get 6 - 8 hours of prime sunlight in most locations. That’s a problem. A problem of STORAGE, not the amount of energy received in those 8 hours. If only we had a low cost, efficient way to store that energy, we’d be in fat city.
 
Electrical Storage has been the problem of every electrical device we use. Those silly phones that our society is so addicted to has a battery. The laptop you cart around has a battery. The flashlight, the cordless mouse, the electric car and bus, and a million other “things” have a battery. And they all suck.
 
Sure, the advancements over the last 100 years has been impressive, but as any of you who have hunted for an electrical outlet because your phone battery died knows, it “ain’t” perfect. In fact, the rechargeable Lithium battery we currently use in most of these applications are about maxed out. Created in 1991 this technology is almost 30 years old already. We’ve pushed it to its limits of power and safety. Oh and safety is THE BIGGEST LIMITING FACTOR. Most people don’t understand that.
 
I’m sure you’ve seen the video’s of the exploding laptops, or the melting cell phone, or the vape battery, or even the burning Tesla. Every lithium battery produced has the ability to detonate like a hand grenade. If there’s a fracture in the casing, or the internal baffles and the “wrong stuff” can mix with each other, the liquid in the battery goes into hyper thermal run away.
 
People have asked me many times...why... if I’m such a proponent of electric vehicles, don’t I have one? The reason is I don’t want to be sitting on a bomb. A lithium battery doesn’t even have to be punctured, or physically damaged to explode. The simple act of aggressive recharging can make it happen.
 
As Amit Katwala explained in Wired magazine, As lithium ions dance between the two electrodes when a battery is charged and discharged, they sometimes struggle to make it all the way home. Instead, particularly when the battery is charged too quickly, they can accumulate on the outside of the electrode, growing into branching dendrites that form over time like stalactites on the roof of a cave. Eventually, these dendrites - which look like frost on a window pane - can actually reach all the way through the electrolyte, pierce through the separator, and create a short-circuit by touching the electrode on the opposite side.
 
As the layers get closer together, this risk increases, and there is less margin for error. Getting it wrong can be damaging and expensive, as Samsung discovered last year. A tiny manufacturing defect caused a short-circuit inside the batteries of Galaxy Note 7 tablets. In some devices, the anode and the cathode ended up in contact with each other - a disaster, with exploding cell phones costing them over 3 billion in recalls.
 
The issue is and always has been the safety factor. IF they could just come up with the right electrolyte, they could literally extract TEN times more power out of the same exact sized battery. But with the materials we’ve had so far, they can’t do it. Cellphones would be blowing up like landmines on Normandy beach.
 
Well, there’s been a breakthrough. Or at least, that’s what we’ve been told, and it does look promising. Mike Zimmerman, the founder and CEO of Ionic Materials, thinks his company has found the holy grail of battery technology by replacing the electrolytic liquid with a polymer. A polymer that is not only, non flammable, but can transmit ions through it at room temperature!
 
With Ionic Materials, Zimmerman created a polymer with an entirely new conduction mechanism, modelled on the way electrons move through metals. It’s the first solid-state polymer that can conduct lithium-ions at room temperature. The material is flexible, low-cost, and stands up to all manner of abuse. Ionic Materials drove screwdrivers through their battery packs, shot them with bullets, and lop pieces off them with scissors without them heating up or halting the flow of electrons.
 
For one experiment, they sent a prototype to a ballistics facility normally used to test bulletproof vests and peppered it with 9mm ammunition. Two wires connected the cell, a flat silver pouch, to a Samsung tablet whose own power source had been very carefully removed. When the bullets hit, the battery burst like a volcano. In a slow motion video, plastic and metal spurt out of the craters like lava. But there was no eruption, no explosion or fire inside the battery pack. With each impact - one, two, three - the device stayed switched on. “We always thought the polymer would make it safe,” says Zimmerman. “We never counted on the battery still working afterwards.”
 
I’m not a scientist folks. But the fact that his little company has been getting millions upon millions of dollars from some massive names in technology and the auto industry suggests this is the real deal. Can you imagine??
 
If by using this proprietary polymer they can go “full boat” on the amount of lithium they use ( did you know they only use about 2% lithium in batteries, because using more will almost always end up with thermal run away explosions?) what a game changer it will be. If they can incorporate this technology with some of the other innovations that are already being developed in other companies, the sky is the limit.
 
Imagine an electric vehicle that doesn’t have a 200 or 250 mile range, but 1000 miles. Imagine that same battery recharging in 5 minutes instead of 4 hours. Oh and imagine being in an accident and the car does NOT burst into flames.
 
Imagine your cell phone running for 8 days on a charge, and recharging in 30 seconds. Imagine your laptop running for a week playing video’s, instead of 3 hours. Then imagine that they could actually make them cheaper than current batteries, with 10 times the lifespan!
 
Then imagine solar power in that scenario. A scenario where you take in enough power through multiple panels, and store it, NOT just to use that night, but for several days. To me, the lowly battery is at the pinnacle of disruptive technology. If this turns out to be as real as it ‘looks” to be, it is a major game changer.
 
I have to believe that there’s going to be some interesting investment opportunities coming if this all works out. I’ll be watching that space very closely.
 
God gave us light, and every living thing on this planet uses it for life. I have to believe that in addition to producing our food, it’s to be used for our energy needs. Storing it has always been the boogie man, and each day we’re getting closer to slaying that dragon. Let’s keep our fingers crossed, but my bet is that in less than 5 years, maybe as soon as 2, we’re going to have “super-batteries” available to us. And I can’t wait.
 
The Market:
 
Impressive isn’t it? See what happens when Central banks collude and decide to “increase” their balance sheets instead of cutting them? We’ve had just 1 truly red day since January 2nd.
 
We opened Jan. 2nd at 23,058. We closed Friday at 24,706. Roughly 1700 points in 13 trading days. You can call it a melt up. You can mention short covering. You can say it’s on the heels of hope for a trade deal with China. You can say it’s the “Feds going dovish,” you can make a laundry list of reasons why we got what we got.
 
Meanwhile, the story you’ve been sold for 50 years is that “in the end, the market trades on earnings” is obviously Bull crap. This earnings season has sucked out loud. Misses, warnings, lower guidance, layoffs, the whole 9 yards. And yet the market screams higher.
 
Let me give you a refresher. The market moves on liquidity and credit. Not earnings, not analyst upgrades, not unicorns, not fundamentals. None of it matters. If the central banks create excess cash, it WILL get deployed, and it usually finds its way to stocks. As long as companies have the credit to buy back shares, the market will go up.
 
Something very strange has happened ( not really very strange). The Central banks have been telling us how they need to ( and are) reducing their balance sheets, but the latest data suggests there’s been a surge in the size of those ledgers. They’ve been injecting money into the system.
 
This was coordinated by Mnuchin and the Plunge Patrol Team. The market was looking for all intents in December to be heading for the cliff. Diving off cliffs makes central banks look bad, Presidents look bad, Treasury Secretaries look bad, Wall Street Scumbags look bad, etc. So, they “fixed” it.
 
How long does it last this time? Is it high tides and green grass for ever? I don’t suppose so. I said a month ago that if the Fed’s were to go dovish AND we get a China deal we’ll get a face ripping rally. Well the Fed’s went dovish, and we’re getting little hints of a China deal. So, we’ve got a manufactured rally here.
 
This is what I printed earlier in the week in this letter:
 
Well, we’re above 2600 and nudged up against the 50 day moving average at 2628. Now, it’s my guess and it’s only a guess, that the algo’s have been programmed to see if the 50 day acts as a significant resistance, or if the average pushes through it. If we get through it, that is when I think the bulk of any short CTA’s will flip and cover those shorts. It could lead us to a nice pop higher.
 
I would call Thursday and Friday’s 500 point gain “a nice pop higher” But it’s also starting to look over done. I mentioned to the Insiders club members on Friday that I wasn’t going to add any positions if we ended the day strong. We ended + 360. Why was that? Because I didn’t want to buy anything in a market that extended, and maybe walk into a blood red market Tuesday morning.
 
I certainly can’t complain about missing more gains. I was lucky enough to catch the bounce with the SPY, getting in at 253.95. It closed Friday at 266.46. Twelve bucks a share in as many days is “good stuff.” But it can’t gain like this every day, so for me it was time to “sit tight.”.
 
Expect more volatility folks, nothing is fixed. Good luck and trade safely, anything and I mean anything could happen right now.

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