Harry S. Dent Jr.'s Blog, page 126

Where Three of the Top Portfolio Managers Are Investing

When it comes to investing, there are no bonus points for originality. And while you don’t want to mindlessly ape another investor’s moves, it never hurts to see how your own portfolio stacks up against some of the best in the business.

Seth Klarman of Baupost Capital runs a multi-billion-dollar portfolio with just 40 stocks in it. The man’s like a demigod among value investors. Needless to say, he’s confident in his picks.

So, what is Mr. Klarman betting on?

Try energy. Lots of energy: a full 39% of his portfolio as of quarter-end, with nearly half of that in a single stock.

Now, Klarman isn’t betting on the price of oil rising or on “Big Oil” stocks in general. His bet is a targeted one on liquefied natural gas exportation. But it goes to show that, even in a full-blown crisis, there can be pockets of opportunity.

Next, let’s take a look at Dan Loeb, principal of hedge fund Third Point.

Loeb is not a passive investor. He’s a notorious activist investor known for taking large stakes in companies and then pushing for major change. You and I don’t have that kind of power, but we can still take a peek over his shoulder and see where he sees the most value.

Today, it’s in health care. About 40% of his portfolio is currently invested in health and biotech stocks.

I don’t have the stomach to invest 40% of my portfolio in the volatile biotech sector. And we’re also wary of the broader health care sector, as it suffered a significant blow in August and has yet to fully recover.

And finally, we get to Mohnish Pabrai, a well-respected value investor and the author of one of my favorite books on investing, The Dhandho Investor.

Pabrai runs the most concentrated portfolio I have ever seen among large managers. He has just seven stocks in his portfolio, and global auto stocks make up nearly 70% of the total.

Longer term, autos are a bad bet. Demographic trends suggest that, at least in the U.S. and Europe, auto sales are looking at a major reduction in demand. But any stock can be an interesting short-term opportunity if priced right, and Pabrai is currently showing a handsome profit on the trade.

For all we know, these superinvestors might dump these stocks tomorrow… if they haven’t already (we typically get the ownership data on a 45-day lag).

The takeaway is that it’s fine to bet big on a high-conviction trade if your system or research tells you to. But you should have an exit strategy, and you should be prepared to sell if your investing thesis fails to pan out.

Charles Sizemore

Editor, Dent 401k Advisor

Uh-oh! There Are Literally Not Enough Women

I took a year off after college. I don’t remember it having a cool name like “gap year” back then. Most people considered it goofing off. I spent the summer and fall on the coast in Florida waiting tables, then moved out west to Jackson Hole, WY for the ski season. I worked at a hotel at night and skied during the day. It was a modest existence, no doubt, but it was also just as awesome as it sounds.

Back then Jackson Hole was still a hole. The airport had not been expanded, so there was no large jet service. However, changes were already happening. It was clear the place was about to explode. The owner of the hotel at which I worked called me into his office at the end of season. He offered me a job as a real estate agent, working with him selling vacation properties to tourists.

I thought about it for a few seconds, and then told him there were 65 guys for each girl in that town, and the one girl wasn’t that pretty. I’d be leaving for New York as soon as the season was over.

I’m certain he made another fortune in real estate, and I’m also certain that the girl/boy ratio did not change nearly fast enough to suit me.

Luckily, I had the option to move, but for millions of people, there’s no escaping the fact that there aren’t enough women for each man to marry.

Much has been written about the imbalance between the number of boys and girls in China, where roughly 118 boys are born for each 100 girls.

What gets less attention is that India has the same issue, although not as bad.

Given the desire for male children in Chinese culture, the Chinese one-child policy led many couples to abort their pregnancy if they found out the child was a girl. Indian couples also prefer male children, but it was a desire for smaller families that led them to terminate pregnancies if the child was a girl.

The end result is that the two countries on the planet that house one-third of our population are missing about 100 million women.

Houston, we have a problem.

The imbalance grew from the 1980s through the 2000s, so only now are large numbers of young men reaching marriage age and finding no likely brides. The problem will only get worse over the next several decades and will hit India harder than China.

China’s fertility rate has been low, but steady, for many years. They have a constant, but unequal, stream of men and women joining the marriageable age group.

India’s fertility rate meanwhile has been dropping rapidly, so the flow of women into the group is slowing dramatically compared to the number of men that are already there. This makes the gender imbalance worse in India, even though the absolute numbers look worse in China.

The question on everyone’s mind is: “What happens next?”

There are some historical examples of big gender imbalances, like in Europe after WWI. But typically society quickly rebalanced. Today, China and India are in uncharted territory because they have engaged in gender selection for so long and the numbers are now so out of whack.

We don’t know exactly what will happen over the next several decades, but there are some signs of what might lie ahead. Unfortunately, none of it is good.

The biggest issue in China is savings. The domestic population saves roughly 30% of its income. They limit what they spend, thereby slowing economic growth. Many people save for retirement and health issues, but those with boys must put away extra cash to make their little prince attractive to prospective mates. This involves paying for education as well as helping the young man buy property, which is a big mark of success.

Both China and India will have to contend with a potential rise in crime and social unrest.

According to a study from the Australian Centre on China in the World, unmarried men of working age are much more likely to turn to crime than married men, especially if they lack education. Women tend to marry up on the social ladder, so at the bottom of the ladder there will be millions of uneducated, unsuccessful men with no wife and nothing to do.

It’s easy to see how this might lead to problems.

Some solutions have been suggested, like wife-sharing. To my Western mind, the thought is so foreign it’s a non-starter. It might be more plausible in Asia, but judging from the backlash to the Chinese professor who brought it up, I don’t think so.

The good news is that the real problems from this imbalance are still two decades away. India has tremendous growth potential during that time, while China’s labor force will start to decline. Let’s hope both countries use some of those years to come up with a better solution than more prisons.

Rodney

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Here’s the Lowdown on Big Pharma’s Mega-Merger Mania

Last spring, I found myself at a wedding talking to my cousin about “poison pills.”

Not the Romeo and Juliet kind. The shareholder rights plans – known as “poison pills” – that corporations use to discourage hostile takeovers.

I hadn’t seen this cousin in years. But the first words out of her mouth were literally:

“Adam! You’re an investments guy… have you heard anything about [pharmaceutical company] trying to buy [another pharmaceutical company]!?”

My cousin’s interest in mergers and acquisitions (M&A) rumors had nothing to do with investments. She’s a worrywart… and whispers of a corporate takeover had her anxious about losing her job as a drug rep – hence, her googling of “poison pill” and a slew of other terms that were being tossed around her company’s cafeteria.

Indeed, big pharma’s mega-merger mania has grown to the point where Main Street Americans are talking about it.

As they should be – because the increasingly concentrated control of the health care sector, by a small handful of corporate juggernauts, will no doubt have an impact on both the quality and cost of care.

The latest health care deal to make a splash is Pfizer’s (NYSE: PFE) purchase of Allergan (NYSE: AGN). Announced on Monday, the merger is reportedly worth $160 billion – making it the largest deal in the health care sector’s history.

It’s also the biggest “tax inversion” deal on record.

That’s right… the United States’ largest drug-maker has effectively purchased a Dublin, Ireland postal code – giving it access to tax rates well below the 35% cut Uncle Sam takes from U.S.-domiciled companies.

And get this…

Before Pfizer bought Allergan (cough: for its tax-advantaged postal code)… another U.S-based company, Actavis, had bought Allergan for the same reason in late 2014!

So-called “tax inversion” deals – whereby a U.S. corporation buys a foreign one, aiming to lower its tax bill – have been increasingly popular in recent years. Corporate executives, Pfizer’s included, cite the U.S. corporate tax rate as being an unfair headwind, crippling the competitiveness of U.S. corporations on the global economic stage.

And since lobbyists haven’t had much luck changing the tax code, U.S. corporations are simply moving overseas to gain access to cheaper rates.

While these loop-hole moves are legal, the Treasury Department frowns upon them – understandably ­– and has been writing tougher rules aimed at blocking more of them.

But the problem I see goes beyond these tax inversion deals. Merger and acquisitions are happening all across the health care sector – at a record pace and in record amounts.

Medical-device maker Medtronic plc (NYSE: MDT) acquired Covidien last year in a deal worth $72 billion.

Earlier this year, UnitedHealth Group (NYSE: UNH) – the largest health insurance provider – bought out pharmacy benefits manager, Catamaran Corporation, for $13 billion.

And the next four largest U.S. health insurance companies may be consolidated into just two, as Anthem (NYSE: ANTM) aims to buy Cigna (NYSE: CI)… and Aetna (NYSE: AET) looks to acquire Humana (NYSE: HUM).

The list goes on…

CVS Health Corp. (NYSE: CSV) agreed to buy 1,600 drugstores from Target (NYSE: TGT) for $1.9 billion in June.

And last month, Walgreens (NYSE: WBA) made an offer to buy pharmacy rival Rite Aid (NYSE: RAD) for $17.2 billion, which, if approved, would combine the country’s second- and third-largest pharmacies.

That’s the rub.

These big pharma mega-mergers are consolidating Corporate America’s control of the health care system.

And the real question is… who benefits from these deals?

Not surprisingly, corporate executives can be caught talking out of both sides of their mouths.

From one side, health care executives say “corporate synergies” will allow them to bring costs down… savings they’ll gladly pass on to the consumer, making everything from doctor’s visits to medications more affordable.

Indeed, America’s health care consumers could use a break, as medical costs have risen much faster than inflation for over a decade.

But from the other side, they’re promising investors better “shareholder value” from the deals – meaning, fatter dividends and rising stock prices.

What’s worrisome – for investors – is that M&A activity may be the last source of shareholder value for a while.

Profit margins look like they’ve peaked…

Cost-cutting measures have been exhausted…

Earnings are on the decline…

And borrowed money will never be cheaper.

That’s why corporate dealmakers are desperately gobbling up smaller competitors, since organic growth is nowhere to be found.

Ultimately, I don’t think the health care sector’s M&A frenzy will be able to benefit both patients and shareholders. After all, the goals of these two groups are at odds – patients want cheaper pricing, investors want fatter profits.

And it’s becoming harder and harder for the sector to achieve either, let alone both, of these goals.

Adam O’Dell, CMT

Chief Investment Strategist, Dent Research

Seriously? You Can Get Paid to Walk?

Now that it’s time to work that Thanksgiving feast off – how about getting paid for it?

One of the latest innovations is Bitwalking, an app you download on your phone that tracks your mileage and literally pays you for walking.

The company’s website maintains that everyone should have the freedom and ability to make money. It also incentivizes people to get out more and stretch those legs!

But before you quit your day job, or attach your phone to your favorite furry friend and set him free in the backyard, the app only generates about one dollar for every five miles, and the monthly maximum is $26. (Maybe enough to cover Fido’s food bill?)

Now, I’m not talking about dimes, nickels and Benjamins. Bitwalking dollars are actually a digital currency, similar to Bitcoin. The difference is, instead of “mining” through complex algorithms, you walk.

And while you’ll at most make a couple hundred dollars a year with this app, there’s a bigger development at play here. Bitwalking could ultimately make the still-cryptic concept of “digital currency” more available to the average consumer.

That’s important. The creators of Bitwalking dollars have just found a new, friendlier approach to unleashing a new digital currency to the masses.

And it’s even bigger than that: this company is really at a new threshold of innovation by blending fitness lifestyle data with digital currency.

The end state for digital currencies is to eventually use them as a low-cost transfer between major existing currencies. Digital currencies cut the big banks, and more importantly their fees, out of the picture for currency transfers.

That’s the goal… and in the meantime, innovations like Bitwalking can drive business at whatever online vendors choose to accept it.

I’m tracking emerging digital currency trends as well as major advances in lifestyle data so my subscribers can be a step ahead of the market – no pun intended.

Ben Benoy

Editor,

A Thanksgiving Note: Becoming Part of Someone’s Solution

The days before Thanksgiving always find me in the same place – a parking lot. I’m not panhandling or trying to find my car. I’m directing traffic.

Years ago I got involved with a local charity, Metropolitan Ministries, that helps homeless families stabilize their lives and achieve self-sustainability. We also provide food for low-income families during the holidays and toys at Christmas.

This season we expect to provide food for 18,000 people and toys for 22,000 children.

That means a lot of cars.

A local developer allows us to put our tent, the size of a football field, on an undeveloped plot of land.  The parking area is uneven grass, so when it rains, parts of it turn into a muddy mess. Throughout each day, thousands of clients come through our gate, along with hundreds of volunteers and donors.

Needless to say, getting everyone to the right place – without incident – can be a challenge.

The simple act of directing hundreds of vehicles can be difficult enough, and while most get where they need to be with ease, there are always exceptions.

Some people can’t follow directions. Others have dead batteries. A few end up stuck in the mud. When that happens, I gather a few volunteers and we push. At least one day each season, I come home covered in mud.

I’ve been doing this for a number of years, so now I’m one of the lead “parking guys.” For hours on end, I talk to everyone who comes through the gate, deciding where they go.

I’m thankful that I get the opportunity to give back to my community, but it’s more than that. I get the chance to be part of someone’s solution, and I learn a lot about people along the way.

People show up in everything from shiny, new SUV’s with 22” rims, to broke-down minivans held together with bungee cords and duct tape. A few walk, even though we are far from most housing and not on a bus route.

I long ago gave up guessing about the people that come through the gate, because this describes our donors and volunteers as well as our clients.

Many times I’ve watched a car barely make it through the gate, greeted a scruffy driver that I thought was another client, only to find out that he wanted to know where he could drop off his donation of canned goods.

For several years, a gentleman from the low-income housing projects nearby would walk over the bridge and work with me in the parking lot all day on the weekends.

These people weren’t living a life of luxury, and yet they felt it necessary to share their modest bounty or limited time with others who, while they are employed, could use a hand. They did not cause any of the problems that our clients encounter. Still, they’re working to be part of the solution.

This Thanksgiving, I am thankful that in a small way I can help provide a solution to some working families in our community that are in need, and I’m thankful that I live in a country where providing a hand up, instead of a hand out, is a time-honored tradition that goes back centuries.

May we all honor that tradition in our own ways, and strengthen our communities by becoming part of a solution.

Rodney

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Pfizer’s Mega-Merger Is NOT a Sign of Strength

Pfizer’s (NYSE: PFE) acquisition of Ireland-based Allergan (NYSE: AGN) is the biggest mergers and acquisitions (M&A) deal in the history of the health care sector.

And with a price tag of around $160 billion, it would be reasonable to assume that Pfizer’s latest acquisition is a showing of its strength and vigor.

But this chart suggests otherwise. Take a look…

In reality, Pfizer’s stock has lagged the S&P 500 (SPY)… which has itself lagged the health care (XLV) sector… which has lagged the astronomical gains made by the pharmaceutical (XPH) sector.

I don’t know about you… but I find it odd that an industry laggard is making the biggest M&A deal in health care history.

Of course, the company’s executives are putting a positive spin on the merger (as they always do). They’re promising health care consumers cheaper drugs, and investors better returns… all thanks to this deal.

But after looking at the deteriorating trends in Pfizer’s fundamentals, I can’t help but see its merger with Allergan as a last-ditch attempt to grow – and to grow at any cost ­­– now that the reality of slowing global growth is sinking in.

Get this…

Pfizer’s revenue is down 24% from four years ago.

Its operating profit margin is down 35% from two years ago.

Earnings-per-share (EPS) is down 83% from its June 2013 peak.

Meanwhile, the company’s total liabilities are now nearly double what they were in 2008.

And shares – with a price-to-earnings ratio (P/E) of 23 – are now three-times as expensive as they were just two years ago.

These are clearly not good trends. In fact, they’re downright horrible.

Yet somehow, Pfizer’s merger with Allergan is expected to turn this all around… making the “new” Pfizer a prodigy of the up-and-coming “growth pharma” business model, where bigger is better.

I have my doubts… which I’ll discuss in more detail later this week.

For now, I recommend steering clear of these mega-merger players. Pfizer’s is just the latest, but there’s a lot more of them.

Adam O’Dell, CMT

Chief Investment Strategist, Dent Research

Gold $5,000: Maybe When You’re Dead!

I have so many bets on the go with gold bugs like Porter Stansberry (Stansberry Research) and Jeff Clark at Casey Research… and I just keep winning ‘em.

That’s something to be happy about, right?

But I’m more pained than happy about it because, when I debate these guys (including Peter Schiff), we all agree that we’re in an unprecedented debt and financial bubble with QE adding kerosene to the fire. We all agree that things are about to end very badly.

But we disagree on the outcome of this bubble burst.

They see the dollar collapsing and gold going to $5,000-plus.

I see the dollar strengthening and gold going to as low as $250 an ounce (at the lowest).

This leaves worried investors like you throwing your arms in the air: do you buy gold, or sell it?

My research says to stay away from gold until at least 2023 or $250-$400, whichever comes first. And today I wanted to share just one of my reasons for saying so…

What sets my research apart from those gold bugs I battle is that I study longer term cycles, from where I can see clear oscillations between inflation and deflation – like the extreme deflation of the 1930s and the extreme inflation of the 1970s.

Both extremes, along with demographic downturns in spending, create financial crises and long-term downturns in the economy.

Gold bugs think gold responds in kind to each. They’re wrong. It responds differently.

The two great illusions in the gold camp are that:

Gold is a crisis hedge, and
Gold is the only true currency.

The real truth is that gold is the very best inflation hedge.

Look at this chart…

As you can see, gold correlates more than anything else with inflation. It was one of the very best investment during the inflationary crisis of the 1970s, when gold exploded nearly 10 times in value.

And gold bugs think we’re heading for more inflation.

That’s where we differ. I don’t see inflation on the horizon – I see more deflation, where we’ll see the deleveraging of massive debt and financial bubbles. This follows every debt bubble in history.

Their gold forecasts are based on the assumption that, after unprecedented money creation to stimulate the economy, we would see massive inflation… or even hyperinflation.

In such a world, gold would take off again.

Maybe I’m senile, but it’s been seven years and counting, and inflation is nowhere in sight.

There’s a couple reasons why.

For one, our economy had already over-expanded, with debt growing 2.6 times GDP for 26 years in the great boom. Consumers and businesses both over-expanded and over-borrowed… and our government ran unprecedented deficits in a boom period.

Secondly, all this new money the Fed threw at us didn’t go much into lending and expanding the money supply – which would have caused inflation.

Instead, it went into financial speculation in asset bubbles at zero short-term and long-term interest rates (adjusted for inflation).

In short, inflation is not the threat. Deflation is. With the largest, global financial asset and debt bubble in recorded history, when this goes belly up, trillions of dollars are going to disappear overnight, like magic… now you see it, now you don’t! That’s not only going to strengthen the dollar, it’s going to create a massive wave of deflation and the destruction of gold.

Still, the bugs cling to their gold: “But Harry, look at all the crises through history. Gold has soared during each one!”

True, but one little detail they’re conveniently ignoring is that almost all the crises we’ve witnessed over the last century have been inflationary. World War I. World War II. Vietnam. The Cold War. The OPEC embargoes and inflation crisis of the 1970s.

Only the 1930s were deflationary – and back then, gold was fixed in price and confiscated!

So we can’t judge its real performance during that time. But we can judge its real performance during the first short deflationary crisis in late 2008, when the banking and financial system melted down.

And what did gold do? It went running to mommy! Between June and November 2008, the greatest deflationary financial crisis we have seen in a long time, gold went down 33% and silver 50%!

And the dollar that was supposed to collapse? It went up 27% in that crisis.

We’re in for more of the same ahead, only worse.

Earlier, I mentioned there were two myths gold bugs relied on. I’ve debunked the first today, and I debunk the second in my newest book How to Survive (& Thrive) in the Great Gold Bust Ahead. I also delve into the numerous other myths gold bugs rely on to trap you like a moth to the flame.

That book is due for release on December 1. We’ve reserved a handful of copies to give to subscribers for free. Get your name on the waiting list now.

Sure, gold may well get as high as $5,000 one day – in the next great 30-year commodity cycle. But you may be dead before that day comes.

Don’t let gold be the anchor that drowns your retirement.

Harry

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The Bond Market Seems Unconvinced About a Rate Hike

We had some important releases last week… but not too many surprises. The Fed released their minutes from the last meeting, giving the stock market hope since some policy makers called for more stimulus instead of a rate hike. That led to a strong rally in equities.

The long-term Treasury yields trended lower all week but still held near the 3% level. So, as certain as traders were earlier in the month of a rate hike, with yields trending lower, doubt has crept back into the market.

The tipping point may come when the November jobs report comes out next week. If there is no major financial market calamity in the meantime, the jobs numbers (especially wage growth) will likely make up the Fed’s mind on whether or not to hike.

I believe that even if the Fed does hike, we’ll soon find out that it won’t be the first of several but a “one and done.” So, if they hike, it will be by a small amount, and it won’t mean much to the markets.

The bond market seems to agree. Take a look at what has happened over the last month below… the yield curve is moving flatter.

A steepening yield curve means the bond market thinks the economy is heating up, with a likelihood of rising yields. A flattening yield curve means exactly the opposite.

As you can see above, short-term yields moved slightly higher over the last month in response to the Fed’s talk of raising the federal funds rate next month. The long end of the curve (30-year) barely budged.

This tells us that bond investors do not expect the economy to heat up in the future and that inflation is not a worry. This also tells us that traders expect any rate hike to be an isolated event and not the first of many.

Since the market reaction from the Paris terrorist attacks was non-existent and stocks actually rallied, I think it’s still likely the Fed will raise rates.

But again, my system doesn’t rely on what the Fed does or doesn’t do, but analyses moves in the long end of the yield curve.

Following the brief breakout about two weeks ago, Treasury bonds have settled back down. There should be opportunities ahead for data surprises, and I’ll be watching very closely if Dent Digest Trader triggers a trade alert. Stay tuned.

Lance Gaitan

Editor,

Petro-Countries Could Introduce a Major Shift in the Markets

As consumers gear up for Thanksgiving and then holiday shopping, they can add one more thing to their list of blessings – the falling price of gasoline.

Since most forms of shipping are propelled by oil, most everything we buy is affected by its changing price. With oil trading under $40, we’re getting a break that only a year ago seemed improbable to most.

And don’t expect prices to rebound anytime soon. The oil glut could be with us for years. OPEC members keep pumping out the stuff in an effort to drive shale producers in the U.S. out of business, and it looks like it’s working.

But that doesn’t mean the oil in the U.S. disappears. It will be there for when either prices go up or production costs drop. Because there is so much supply waiting at the edge of the market, it’s hard to see how prices could zoom higher without a major market disruption, such as a major war in the Middle East.

Continued low oil prices hurt the energy sector, no doubt. Cities in North Dakota, Louisiana, Oklahoma, and several other states that were beehives of activity just a year ago are now almost ghost towns.

But while these places are suffering economically, they don’t threaten the entire nation. The U.S. is fortunate to be the largest economy on the planet, with a wide diversity of industries.

Other countries aren’t so lucky. Their oil pain is going to be deep, and last for a long time.

When the U.S. was busy importing oil, running up its trade deficit, oil-rich countries were collecting dollars at a record pace.

Many of them took the opportunity to build their wealth instead of spending everything, pouring the dollars into sovereign wealth funds (SWFs).

Today, these funds are among the largest institutional investors in the world, with oil-based countries accounting for roughly $7.3 trillion dollars.

With oil trading at less than half of what it was in the summer of 2014, and petro-countries suffering with busted budgets, it’s likely these countries will have to sell some of these accumulated assets. They’re already expected to use all of their petroleum proceeds for social spending.

Norway is a posterchild for this situation. In the current budget cycle, the Northern European country expects to use all of its oil revenue for current spending needs, and to tap about 2.8% of its sovereign wealth fund.

The good news is, its sovereign wealth fund has amassed more than $800 billion over the past 19 years, and the fund is expected to grow by 4%. They can easily afford to liquidate 2.8%.

Saudi Arabia isn’t quite as fiscally sound.

The Kingdom’s reserve fund peaked around $737 billion in the summer of 2014. By August of this year, it was down to $654.5 billion. With no end to the oil glut in sight, the Saudis are looking for ways to trim their spending and have issued bonds for the first time in years.

Even blustery Putin isn’t immune to market forces. The Russian Reserve Fund, one of the country’s two oil funds, is worth around $140 billion. The country plans to spend almost half of this fund to address the current recession.

Other states, such as Qatar, the United Arab Emirates, Kuwait, and Abu Dhabi are all in the same boat.

Nothing good can happen when some of the biggest investors on the planet stop buying assets on the global market, and instead begin selling their holdings.

Large portions of these funds are invested in bonds around the world, while smaller allocations are in equities. As governments divert assets from investment to social spending, global markets will not only have fewer clients for existing inventory, but also potentially have to deal with more stocks and bonds up for sale.

The result, all else being equal, will be higher interest rates and lower stock prices – which is right in line with our forecast of where the markets were headed anyway. The added pressure from these sovereign wealth funds just adds more fuel to the fire.

There’s an opportunity here for investors.

We’ve long been calling for modestly higher interest rates and a selloff in the stock market, but things don’t stop there. We expect interest rates to climb a bit, then move lower as the economy cools off and investors leave the equity markets.

As Harry noted in Boom & Bust this month, now is shaping up to be a great time to buy bonds. Potential liquidations in sovereign wealth funds should make the opportunity even better.

Rodney

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Misery Loves Company: A Look at the Economic Misery Index

While misery loves company, there’s not a lot of it going around these days – supposedly. An economic indicator