As my many more reports cause raising eyebrows, more readers are raising follow-up questions.
Below, I address many of your latest range of queries with much appreciation and respect.
Karin F., for example, is a single grandmother raising two grandchildren and confesses to having very little experience in investing.
Like so many other really good and hard-working people, she has a 401K that got severely hurt in 2008 and is naturally concerned about what to do next amidst all the scary, conflicting, and seemingly endless flow of news, products, and “experts” asking her to join their service.
She is understandably overwhelmed and asking for blunt guidance.
For all folks like Karin, the first and most important step is simple and already in motion: Just get informed.
You don’t need fancy degrees or years of trading to self-educate and feed the wisdom of common sense which we all naturally possess.
Once equipped with facts (rather than rants), your own judgement feels sharpened.
Straightforward information is the first step to making better personal decisions.
Begin with the First Rule: Protect What You Have
Critical Signals Report was designed to cut through all the fog and provide a blunt reality-check on where markets are, where they are heading and how they got to such a distorted and dangerous place.
As for older, hard-working folks with very little experience in investing and with children or grandchildren to support, I don’t advise taking excessive risk or trying to swing for the fences in options, levered, or inverse ETFs or daily trading signals which require constant attention.
If you are worried about another “2008 moment,” there’s nothing wrong at all with simply protecting what you have, going more to cash (or money market accounts in your 401K).
As I indicated here, the first rule in making money is NOT losing money.
Many older investors cannot afford to be “all-in” topping markets, as the risk of suffering losses which could take decades to “win back” is too high for such folks to “wait out.”
The key, again, is avoiding losses.
Very soon, Critical Signals Report will be offering good people like Karin a service to track markets with simple portfolio allocation models which include cash allocation percentages based on the distance to the approaching market storm.
The way Critical Signals Report tracks and prepares for this storm (or trades during calm periods) is extremely sophisticated and involves a great deal of complexity in tracking numerous indicators.
Fortunately, however, the way Critical Signals Report presents this data is extremely simple and easy to follow for busy, caring, and good people like Karin.
Others, like Kessir N. from Europe, are worried about dangers from China.
This is entirely understandable as tensions increase with every changing headline, tweet, and chest-pounding cry from Beijing to D.C.
The reason the world has tried to avoid both nuclear and trade wars for so long is quite simple: Nobody wins such wars, as they offer “mutually assured destruction” – i.e. “MAD.”
The truth is that both China and the U.S. need each other’s massive markets to buy and sell their goods.
At some point, they will have to reach an agreement despite obvious grievances.
If not, everyone gets burned.
China, by the way, is hardly thriving…
The trade imbalance, for example, certainly seems unfair, as the Chinese sell significantly more to us than they buy from us.
That’s neither fair nor right.
Furthermore, Chinese theft of intellectual property and its other centralized business practices are often egregious.
But the U.S. must also recognize that the vast majority of its “U.S.” products are now “made in China” because overly greedy American executives favor cheaper Chinese labor (and hence improved margins and costs) over providing better U.S. production and jobs here in our own country.
Our own companies, in fact, have intentionally sacrificed over 6 million American jobs, now replaced by much cheaper foreign labor.
If America wants to fix this, part of the responsibility rests in bringing manufacturing, production, and jobs back to our own country, even if this means higher product costs due to higher wages for workers (and less for the overpaid executives).
Our dying middle class certainly deserves this respect and opportunity if America is to ever be great again.
I’d certainly be willing to pay a bit more for shoes, computers, or toasters made in America.
Besides, the tariffs are already making us pay more for those same “American” products now made in China.
It’s all pretty nuts and full of political silliness on all sides.
If wisdom and common sense, however, do not prevail, then an escalating trade war will be a disastrous trigger for falling markets – both in the U.S. and globally.
Naturally, Critical Signals Report will be tracking this trade issue carefully.
A Real Estate Crisis?
Others, like Marvin R., are asking about real estate markets and another possible mortgage crisis.
The problem in today’s real estate market is less about sub-prime mortgages (as in 2008), and more about over-supply colliding with weakening demand.
Due to the Fed’s 10+ years of dangerously low interest rates, real estate markets have seen a massive and overly-aggressive rise in purchases (and hence prices) which is starting to “top-out.”
Property inventory levels have reached dangerous highs while demand for such real estate is waning.
This confluence of rising supply and weakening demand could trigger massive declines in valuations, which many experts foresee falling by 40% or more in valuation over the coming years.
Folks are asking if they should sell their rental properties.
Of course, each scenario depends on local valuations, entry costs, and deal-specific factors.
However, in broad terms if rental properties are properly purchased, well-located geographically, and re-financed at current low rates, they will be solid rather than dangerous assets in a housing crisis.
Demand for rentals will rise, not fall, when the next housing bubble “pops.”
Some, like Phillip J., have been asking about gold as a safety net.
To this end, I’ve written an extensive report on the interesting convergence of a strengthening U.S. Dollar and a rising gold price.
This 2-part report will be published in the coming days and should address most of your questions about precious metal investing, which is indeed a smart part of every portfolio as a recessionary “hedge.”
Again, keep a look-out for my two-part report on the USD and Gold coming out soon.
Global Military Tensions
Many are asking about potential and rising military tensions and the impact this could have on the markets.
Sadly, this is a topic we must confront, as war never seems to fall out of fashion…
To this end, I’ve written an extensive report here on the global military situation and what this means for your portfolio.
Many, like Greg R., have read my reports on the Great Con being played out by politicians of all parties when it comes to spending, debt, and misreported facts on everything from inflation to GDP.
To such readers, please know I fully share your concern as well as disgust for the unsustainable debt levels facing our country and what this says about the nature and distortion of our democracy and markets.
Debt is and will be the number one catalyst for the next recession.
In many ways, the U.S. has lost sight of its fundamental values and now it is less and less the country our founding fathers envisioned.
I touch upon the history of this sad decline at length here.
History Lessons from France to Japan
Following my recent report on the French Money Printing Crisis of the 1790’s, reader A. Yamamoto chimed in to make some important observations regarding a similar history out of Japan, which is no stranger to printing money and crippling its economy.
Interestingly enough, I was working on a report that very same day on that very same topic, namely Japan’s uniquely egregious circumstances.
In this recent Japan Report, I address Japan’s bond market, debt levels, and truly insane central bank.
I hope this piece on Japan is helpful to all readers.
As always, keep the questions coming.
I try hard to address as many as possible and appreciate your insights, curiosity, and passion to stay informed, which is the foundation to better investing.
As always, stay safe out there.
May 19 2019