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Hey, Dan Murphy here, happy holidays and in the spirit of Christmas let’s just have some fun first because I'm going to get into a more serious topic about six things that you should really know about the markets. But, first let’s have a little fun and this is something I learned today, well at least re-learned. First of all, don’t wear a white shirt while eating yellow curry, as I look down I can see exactly why that is.

Second up on the list, I did not do this but I was thinking it, don’t pick your nose after eating red hot peppers, that’s important and finally coming back to the markets here, so we can talk about some important stuff, is never ever trade without a clearly defined edge. No seat of your pants trading, no gut. We don’t do that stuff in trading. Let’s talk about exactly what I wanted to talk about today and that is: six asset classes that you should really be looking at.

It’s so funny I always hear about that show, you know the one where they talk about: “Am I diversified or not?” and then what do they do, people call in and they talk about all these stocks that they hold. Stocks are simply an asset class. Here’s what we should really be looking at. Here are some of the most liquid assets out there. Obviously, I’ve left a few off the list here but let’s just go through them one by one and some of them are very correlated to each other, let’s just talk about it real quick.

First of all, one of the asset classes would be stocks and the S&P 500, being the 500 largest companies in the United States, would definitely qualify as a great asset class to trade in and extremely, extremely liquid of course. Next up we have bonds. You can use something like TLT and there's various others bonds, of course, like ETF and Futures and so forth that you can actually trade and as you’ll see going down the list there’s another type of bond as well. That would be another asset.

Gold, clearly an asset especially these days. As the monetary base increases worldwide creating money from nothing that's the way the Fiat currency works, it’s just a note and I believe gold is only accounting for 8% of the world’s currency. Shows you that we’re not even close to ending this bull market even though gold is certainly seen as a bear market, silver the same thing. Let’s just keep going through our topic here. Oil is a pretty good asset to have. It’s hard to move around but it doesn’t spoil, you don’t have to refrigerate it, none of that stuff.

The other bond I was talking about would be junk bonds, high yield bonds. They’re very correlated to the S&P 500 but, again, these separate asset classes. Finally, on this list would be VNQ would be the ETF for real estate stocks. So that would be another asset and things that I've left off the asset list: Of course, currencies are not an asset; it’s just a means of exchange. It just makes it really convenient instead of using these assets to actually buy and sell things, that currency like our notes that we use, dollar bills and so forth are just a medium of exchange, and you might notice that I've left off any foreign stocks, foreign indices. DEX, FTSE, any of that stuff.

Worldwide stocks are correlated to each other dramatically over the past few of years. Same with stocks, that’s again why I'm talking about these different asset classes. I'm going to get to the finish line a little bit here, introduce you to a different concept here but I just want to say that a lot of the worldwide stocks and, certainly, stocks in general are much, much more correlated to each other these days. It’s hard to get diversification without truly going through all these different assets and more off this list.

Art is an asset but you can’t really day trade art and just real estate itself you can’t trade real estate, it takes a while to close all the deals. If you’ve bought or sold or house there are some extreme fees that go along with that. Just going over really liquid assets. Business would be another one that is not liquid whatsoever but is also an asset. These are the most liquid that I could come up with off the top of my head that weren’t extremely correlated, so our nice list of six here.

You diversify yourself if you buy all of these but the concept that I really wanted to introduce to you today would be assets switching. Imagine that we have a balloon here; I know I'm drawing again. I know you guys love it when I draw and I tell you that I seriously can draw, I used to paint. Unfortunately, this bamboo pad does not express that whatsoever. Let’s put a little fong reflection on there.

Here is our balloon, if you press on part of the balloon the rest of the balloon gets bigger. If you think of this, that if one asset goes down then there's probably one of these things that’s going to take its place. For example, if we just look through the past month, we’ll have a little window of action. We have the S&P 500 is neutral. We have bonds are also neutral, that’s not a big surprise considering look at this war shock, ink blot test here, they’re basically reverse images of each other.

Gold is down. Oil is also neutral over that period of time. Junk bonds, though, are increasing and real estate investments trusts are also increasing over that period of time. Some are neutral, some are down. There are clearly two assets that are going up at this time. So that’s the concept I want to talk and there are trading methods out there that I'm going to talk about them in future parts as I go over this, probably in the next couple of weeks, but I just want to let you know that there are trading methods that utilize these strategies.

If money is going out of somewhere, you're pressing on the balloon here; well it’s got to go somewhere else because we are in very tightly laced economies worldwide and the money has to go somewhere, it doesn’t get destroyed. If you destroy money or a currency in a Fiat, a monetary base, of course that is deflation and Fiat monetary currencies, they do not survive in a worldwide deflationary environment and that is why you're seeing money being created from nothing.

Such as what recently happened, the news about Europe. I want to just let you know about that. I'm going to go through future instalments talking about moving assets but this show “Am I diversified?” and say if you want to diversify between stocks, buy this TV show over. They probably would hate me over there and we’ll go a lot further than that whole discussion and talk about these assets again at a later time including different trading models to trade each of these. That’s my hint to you.

Happy holidays again, if you have not done so already, I'm going to be opening the Million Dollar Target Mentorship Program. That’s going to be January 3rd. I'm going to tell you when I'm taking applications for that, there will be an application process. I'm going to redirect you over to that page right now, just put your email address and I’ll send you information over. Merry Christmas, I’ll see you before the New Year. Dan Murphy, signing out.