That’sright。

Unlikepreviousbouts,wheretheFedcreatedacertainamountofmoneytobuyafixedamountofbonds,QE3willbeongoing。

TheFedwillbuy$40bnofbondsamonthuntilUSunemploymentimproves“substantially”。

Thatsoundsalottouslike“thebeatingsshallcontinueuntilmoralestartstoimprove。

”Butit’scertainlygoodnewsforoneassetwelike–gold。

Thebestwaytomakemoneyfromgold

Butwhilewethinkyoushouldhaveachunkoftheyellowmetalinyourportfolioasinsurance,atthisstageyoumightbeevenbettercheckingoutgoldminers。

Oratleast,that’swhatoneofournewestinvestmentwriters,SimonPopple,certainlybelieves。

Simonrunshisowncapital-raisingfirmintheCity,helpingtosecurefinanceforcommodityprojects。

Asaresulthe’shadafrontrowseatonthegoldminingstoryforthelasttwodecades。

Heisconvincedthatnowisthetimetobuyin。

HecanexplainhistechniquesbetterthanIcan,sotakealookathislatestreport-thishasgeneratedalotofinterestamongstourreaderssincehereleaseditonWednesday,soit’swellworthyourtime。

Thetruthaboutenergy

InThursday’sMoneyMorningMatthewPartridgetookanindepthlookatanothersideofthecommoditymarketthat’salsobeenboostedbyQE3energy。

Energyexpertstendtofallintotwocamps,saysMatthew。

Ononesidearethosewhothinkwe’reabouttoenteranageofabundantcheapenergyastheUSandothersexploitvastreservesofshalegasandoil。

Ontheother,youhave‘peakoil’punditsclaimingthat,becauseconventionaloilsupplieshavepeaked,thedaysofcheapenergyareover。

Sowho’sright?

“There’ssometruthinbotharguments,”saysMatthew。

Butthetruthisthat“bothtrendshavebeenover-exaggerated”。

That’sbecause“boththebullstoryonoilandthebearstoryongas…assumethatcurrenttrendswillcontinue。

Thisisanaturalhumantendency–youseeitplayedoutinmarketsacrosstheglobe,everyday。

Weallthinkthattodaywillbemuchthesameasyesterdaywas,andthengetshockedonthedayswhenitisn’t。



Peakoiltheoristsoftenassumethatnewdiscoverieswon’taddmuchtoknownreserves。

“However,historyshowsthatreservelevelsareanythingbutstatic。

Theoilindustryhasconsistentlymanagedtofindnewoilatapacethatkeepsupwithdemand”,saysMatthew。

Also,peopleeventuallystopusingasmuchoil–cuttingbackondrivingforexample–ifpricesstayhighforlongenough。

Thesametendencytoextrapolatecurrenttrendsmayalsounderminevisions“ofashalegasutopia”。

OnereasonwhygasproductionhasshotupisbecauseofthenatureofcontractsmanyUSproducershave。

Theyhavetosellasmuchgasaspossibleveryquickly,evenifit’snotveryprofitable。

That’sunlikelytocontinue,saysMatthew。

Inshort,“oilislikelytogetcheaper,andthepriceofgasislikelytogoup”,saysMatthew。

Hedetailssomewaystotakeadvantageofthesetrendshere:Theexpertsarewrongonenergy–here’showyoucanprofit。

TheUK’semploymentriddle

Britain’semploymentfigureshavehadeconomistsscratchingtheirheads,blogsMerrynSomersetWebb。

Therearetwomainquestions:“How,theyask,canemploymentbegoingupsofastinarecession?

(Thenumberofpeopleinworkwentupby236,000inthethreemonthstoJuly,leavingthenumberofpeopleemployedintheUKamere1,000shortofourall-timehigh。

)

“Andifemploymentisrisingsofast,howcomeunemploymentisn’tcomingdownfaster?

(Thenumberoftheunemployedfellbyamere7,000inthesameperiod。

)”

Thesecondquestionisprobablythesimplesttoanswer–therearemorepeopleintheworkforce。

Tougheconomicconditionsmeanthathugenumbersofstudentsandretireesarelookingforworkandswellingoverallnumbersintheworkforce,saysMerryn。

Thismeansthatevenwithhigheremployment,thepercentageofpeopleunemployedisslowtocomedown。

“Andasforhowsomanypeoplecanfindworkinarecession,thefirstthingtonoteisthatwemightnotbeinarecession。

TheGDPnumbersareendlesslyrevised,andveryfewoftheotherstatisticsoutinthelastfewmonthsbackuptheideathattheeconomyisactuallycontractingatthemoment。

Itclearlyisn’tbooming(andisn’tgoingtoforsometimetocome),butitprobablyisn’tshrinkingeither。



Anotherfactorcouldbetodowiththetypeofjobs,saysMerryn。

Manyofthemareprobablylowerpaidorlessproductive。

Thismeansyoucanhavemorepeople,workingmorehours,whilethecountry’soveralleconomicoutput,theGDP,isstagnant。

Thefactis,wearegoingthroughadeleveragingprocess“bywhichwegiveupthebubblegrowthofthepre-2007years”,saysMerryn。

“Ouremploymentnumberslookfine;good,even。

Butiftheyreflectnotfull-timejobsindynamicindustriesbuthordesofdesperatepensionersandwomentakingwhateverworktheycanatfallingrealwagelevels,theydon’tnecessarilytellusthingsareimprovingaswewouldlikethemtoo。



Readerswerequicktoaddtheiropinionsonthetopic。

‘Kawasakifreak’wonderedif“fallingrealwagesintheUKispartofthecorrectionprocesscontinuingthroughouttheworldeconomy?



WhileAlastaircontributedagloomyanalogy,comparingtheUKeconomytoa“buggywhipmanufacturerwhokepttryingtomakebetterwhipstocompetewithhorselesscarriages。

Heimprovedefficiencyandproductivityby100%butsaleskeptfallingoff。

Hecouldntunderstandwhyhewentoutofbusiness。



It’saninterestingdebatesoreadthepieceandhaveyoursay:ThetruthaboutBritainsemploymentfigures。

Howtostingshortsellers

OnWednesday,BengtSaelensmindeexplainedinhisTheRightSidenewsletter,howa‘hated’strategycanmakeinvestorsmoney。

“Alotofinvestorshatethenotionofshortselling”,saysBengt。

“Especiallywhensomeone’sshortingthehelloutofoneoftheirstocks!

Ofcoursenobodylikestoseetheirsharestrashedjustsothatsomeoneelsecanmakea‘well-earned’profit。



Butashortattackisn’talwaysbadnews,saysBengt。

Sometimesitcangive“youafantasticopportunitytobuyaqualitystockandmakeagoodprofit”。

Thethingaboutshorters,saysBengt,isthey’rehighlyexposed。

“Atsomepointtheyhavetobuybackin。

Andthatleavesthematthemercyofashortsqueeze。

Whenthathappens,itcanleadtoarapidpriceriseastheshortersscrambletobuybacksharestoclosetheirpositionsandstoplosingmoney。



AgreatexampleisclothingretailerSupergroup。

“TheshortsqueezehammeredSupergroup’sshort-sellersyesterday。

Supergrouprocketedbackupover£5。

80astheshortswereslain。



BengtcanunderstandwhypeopleshortedSupergroup。

Thehigh-flyingfashionbrandgrewmeteoricallyandthemanagementsoonshowedthemselvestobeillprepared。

IndeedpeoplewhoshortedthestockbackinAprilmadeakillingafteraseriesofmanagementblunders。

Butthenmoreshortersjoinedthebandwagon。

IndeedinJuneandJuly,Supergroup“earnedtheaccoladeofthemostshortedstockintown”,saysBengt。

Buttherewasoneflawintheshorters’thinking,saysBengt。

“Thisbusinesshasnodebt。

Personally,Iwouldn’tshortanythingwithoutadebtproblem。

”Ifabusinesshasnodebt,saysBengt,itcankeepploddingon。

Andthatmeansashortcancomeundoneveryquickly。

That’sexactlywhathappenedthisweek。

Supergroupreleasedadecentsetofresults。

Notamazing,butenoughtoshowthatthereislifeinthefirmyet。

Shortersbegantorealisetheirmistakeandtriedtorunfortheexit。

Thattriggeredanupwardspiral。

“Asshorttradersbuybackstock,itcreatesevenmoredemand–thepricegoesup–movingagainstanyonestillshort。

Comelateafternoon,thepipsbegantosqueak。

Theshortsgotclobbered,thesqueezewasonasthepricemovedashighas£5。

80–45por8%upontheday。



Bengt’soriginalpieceexplainshowtheshortsunfoldedwithsomegoodgraphs,soreaditinfullhere:Howthis‘hated’tacticcanhelpyoumakebigprofits。

Also,forthoseofyouwhodon’tregularlyreadhisnewsletter,Bengtisn’tjustbeingwiseaftertheevent。

HebackedSupergroupmonthsagoafterthestocktanked:Supergroup:I’vegotsomeexplainingtodo。

YoucansignuptomorefreeinsightfromBengthere。

Does‘alpha’reallyexist…?

Asmostofyouwillknowthefinanceindustryisnotshortonjargon。

Oneofitsfavouritebuzzwordsis‘alpha’。

Fundmanagementstickitontoallsortsofinvestmentvehiclestodrumupsales。

Inthisweek’svideotutorialMoneyWeekdeputyeditor,TimBennett,asks:“Whatisalphaanddoesitreallyexist?

”It’sessentialviewing。

AndbeforeIgo,mostofyouwillhaveseenthateventsarehottingupinAsia。

ChinaandJapanhaveenteredabitterwarofwordsaboutadisputedislandchainand,asIwritethis,aresendingpatrolboatstothearea。

GivenAsia’sgrowingimportanceintheworldeconomy,thisdispute,andothersintheregion,willhaveabigimpactonyourinvestments。

Inthisweek’sMoneyWeekmagazinecoverstoryIexaminehowitwillaffectyou:HowtoprofitasChinaflexesitsmuscles。

IfyourenotalreadyasubscribertoMoneyWeek,youcansubscribetoMoneyWeekmagazine。

Tohearaboutotherbitsandpiecesontheinternetthathaveamusedusormadeusthink,signupforourTwitterfeeds–wevelistedthembelow。

Haveagreatweekend!



MoneyWeek



MerrynSomersetWebb



JohnStepek



TimBennett



JamesMcKeigue



MatthewPartridge



DavidStevenson



ThisarticleistakenfromthefreeinvestmentemailMoneyMorning。

SignuptoMoneyMorninghere。

MMfooter(onMMarticles)?

Thisarticleistakenfromourfreedailyinvestmentemail,MoneyMorning。

SignuptoMoneyMorninghere。

NakedTextNakedText