Investment research firm TrimTabs, whose institutional clients pay at least $5,000 a year for its comprehensive tracking of supply and demand for stocks and money, is making portfolio recommendations available to retail investors for $10 a week.
Charles Biderman, the firm’s voluble CEO known for his harsh criticism of governmental manipulation of the stock market, told AdvisorOne that the newsletter, called “Biderman’s Market Picks,” is not something that TrimTabs particularly needs as a revenue source.
The purpose of the newsletter is about “the financial survival of me and my family and people I care about,” said Biderman, who is 65 and has a stable institutional client base. He noted that TrimTabs has received thousands of requests from individual investors for access to its research over the years.
Those investors who follow Biderman’s media remarks or Daily Edge videocasts and share his concerns about “delay and pray” policies in the U.S., Europe and Japan can now access easy-to-implement portfolio recommendations reflecting Biderman’s bearish views. In fact, Biderman opens his newsletter stating he is now “the most bearish I have been in quite some time,” a stark statement given his profoundly negative views over the past several years.
The pessimism stems from the fact that public companies have become net sellers of stocks in May—despite the huge Facebook IPO—selling “$25 billion more of new shares than they bought back.” And the $18 billion that went to Facebook shares has also limited the supply of investment capital. “When there’s no new money for stocks, you have to sell existing shares,” he said.
This is why so many big players in the Facebook IPO got burned, he added. “The real problem with Facebook is the smart guys [who] can flip hot deals…couldn’t flip Facebook,” he said. “There just wasn’t any cash around.”
A pronounced slowing of wage and salary growth in the U.S. and Europe’s mounting problems, for which he sees no repair, are the other key reasons for Biderman’s current negativity.
Biderman’s largest allocation in his model portfolio is gold, to which he assigns a 25% weight. While the model uses an ETF (GLD) to track performance, Biderman recommends buying gold in one-ounce bars from a reputable dealer.
“In turbulent times you want physical possession,” he said. “My parents were survivors of the Holocaust. One lesson I learned from them is that physical possession could save your life.” He added that it could be hard to cash out of paper securities in the midst of a global financial crisis.
Biderman’s newsletter says gold “is an obvious bet for the long term” because “the U.S., Europe and Japan are all debasing their currencies via the printing press,” but warns that gold will falter over the short term because of the slowdown in China and India that has reduced demand for gold bullion and jewelry.
Another 25% of the model portfolio is in Treasury inflation-protected securities, since he expects inflation to surge “at some point in time.”