Harry S. Dent Jr.'s Blog, page 90

Riding the Bear Market Rally

Everybody’s been obsessed with “Dow 20,000” lately.

The Dow Jones Industrial Average is perhaps the most widely-watched gauge of the U.S. stock market. And “20,000” is a big, fat, impressive-sounding round number. So it’s not surprising the financial media latched onto “Dow 20,000” like a dog to a bone.

U.S. stock indices are indeed breaking to new highs. And that’s generally a positive sign for stocks ahead. Even though stocks are valued fairly richly right now, the current trend is still bullish… and Trump’s election seems to have conjured investors’ animal spirits.

But while everyone is distracted by stocks (and tweets), a milestone bigger than “Dow 20,000” is quietly going unnoticed.

On Friday, commodity prices made a new 52-week high.

In fact, the PowerShares DB Commodity Index ETF (NYSE: DBC) hit its highest price since July 2015. The broad-based commodity index is now up a full 35% from its January 2015 low.

Unlike stocks, though, commodities are still in a longer-term bear market.

After peaking in 2011, commodity prices fell a whopping 63% into last January’s lows. And even after the recent 35% rally, prices are still 50% below the 2011 top.

After so many years of carnage, investors had all but given up on commodities as a viable investment.

But as I shared with you a month ago, the bear market rally in commodities is nothing to ignore!

Dent Research has, as you know, been quite bearish on commodities.

Hard assets, like commodities, tend to struggle in deflationary economic environment. And while most mainstream economists have been worried about inflation being “just around the corner,” Harry’s research continues to point to deflation as the dominant force. And that means lower commodity prices, in the long run.

But as I said in my January 6th Economy & Markets piece, “nothing moves in a straight line.” And even though the longer-term trend in commodities is still down… we’re smack in the middle of a four-month “sweet spot” for commodity prices.

For one, the first four months of the year typically provide a seasonal tailwind for commodities and materials sector stocks. And so far this year, this positive seasonality appears to be holding strong.

Year-to-date, the materials sector (XLB) is up 4.1% – more than every other market sector, with the exception of technology (XLK).

Energy markets – like oil and natural gas – have struggled a bit. But other commodity markets are absolutely booming!

Gold (GLD) is up more than 6% year-to-date…

Silver (SLV) prices are up 10%…

And both copper (JJC) and base metals (DBB) have already gained more than 12%.

Even the “softs,” or “agricultural” markets are doing well… with corn, soybeans, cotton and coffee each up 5% to 6% in 2017.

Now, I attribute some of the recent strength in commodities to the bullish seasonality they tend to enjoy between January and April. But there’s another factor at play. That is… the U.S. dollar.

Since commodities are largely priced in U.S. dollars, the two tend to have an inverse relationship. That is, when the U.S. dollar is strengthening… it puts downward pressure on commodity prices. And vice versa, when the dollar weakens… commodity prices tend to firm up.

So let’s take a look at the good ol’ greenback and see what it’s been up to recently. Here’s a chart of U.S. dollar futures going back to 2016.

Trump’s election win turned out to be an immediate boost for the U.S. dollar, which gained nearly 6% between November 6 and December (a massive move for a major currency).

No doubt, everyone one their brother was feverishly speculating what a Trump presidency would mean for the U.S. dollar (and everything else, really). And for whatever reasons – well-informed or not – everyone traded on the belief that Trump was bullish for the dollar.

Now, though, everyone’s no so sure. Not even Trump himself.

I read the other day that Trump recently called his National Security Advisor, Mike Flynn, (at 3am in the morning) to ask him, essentially, “do we want a strong dollar or weak dollar? Which is better for our economy?” Flynn reportedly advised Trump to consult with an economist.

Our long-term forecasting here at Dent Research continues to suggest dollar strength ahead. But like the recent bear market rally in commodities, it seems a (bearish) countertrend move in the dollar is unfolding.

I told my Cycle 9 Alert subscribers the dollar was likely to fall as I was recommending a bullish commodity play in late December. My Trade Alert hit their inboxes on December 20. And since then, the U.S. dollar (UUP) has lost nearly 3%… commodity prices have gained 3%… and my subscribers are currently holding a profit of around 20% on the specific commodity play I recommended.

Needless to say, while everyone is fixated on “Dow 20,000”… we’re riding the stealth bear market rally in commodities.

The question is: Are you?

There’s still time to get in on the action, as I’m targeting a further 7% rally in commodity prices between now and April. And with that rally, the position I’ve recommended to my Cycle 9 Alert subscribers is poised to hand us a profit of 120% or more. Click here to join in on this trade today.

 

 

 

 

Adam O’Dell

Editor, Project V

Follow me on Twitter @InvestWithAdam

The post Riding the Bear Market Rally appeared first on Economy and Markets.

Riding the Bear Market Rally

Everybody’s been obsessed with “Dow 20,000” lately.

The Dow Jones Industrial Average is perhaps the most widely-watched gauge of the U.S. stock market. And “20,000” is a big, fat, impressive-sounding round number. So it’s not surprising the financial media latched onto “Dow 20,000” like a dog to a bone.

U.S. stock indices are indeed breaking to new highs. And that’s generally a positive sign for stocks ahead. Even though stocks are valued fairly richly right now, the current trend is still bullish… and Trump’s election seems to have conjured investors’ animal spirits.

But while everyone is distracted by stocks (and tweets), a milestone bigger than “Dow 20,000” is quietly going unnoticed.

On Friday, commodity prices made a new 52-week high.

In fact, the PowerShares DB Commodity Index ETF (NYSE: DBC) hit its highest price since July 2015. The broad-based commodity index is now up a full 35% from its January 2015 low.

Unlike stocks, though, commodities are still in a longer-term bear market.

After peaking in 2011, commodity prices fell a whopping 63% into last January’s lows. And even after the recent 35% rally, prices are still 50% below the 2011 top.

After so many years of carnage, investors had all but given up on commodities as a viable investment.

But as I shared with you a month ago, the bear market rally in commodities is nothing to ignore!

Dent Research has, as you know, been quite bearish on commodities.

Hard assets, like commodities, tend to struggle in deflationary economic environment. And while most mainstream economists have been worried about inflation being “just around the corner,” Harry’s research continues to point to deflation as the dominant force. And that means lower commodity prices, in the long run.

But as I said in my January 6th Economy & Markets piece, “nothing moves in a straight line.” And even though the longer-term trend in commodities is still down… we’re smack in the middle of a four-month “sweet spot” for commodity prices.

For one, the first four months of the year typically provide a seasonal tailwind for commodities and materials sector stocks. And so far this year, this positive seasonality appears to be holding strong.

Year-to-date, the materials sector (XLB) is up 4.1% – more than every other market sector, with the exception of technology (XLK).

Energy markets – like oil and natural gas – have struggled a bit. But other commodity markets are absolutely booming!

Gold (GLD) is up more than 6% year-to-date…

Silver (SLV) prices are up 10%…

And both copper (JJC) and base metals (DBB) have already gained more than 12%.

Even the “softs,” or “agricultural” markets are doing well… with corn, soybeans, cotton and coffee each up 5% to 6% in 2017.

Now, I attribute some of the recent strength in commodities to the bullish seasonality they tend to enjoy between January and April. But there’s another factor at play. That is… the U.S. dollar.

Since commodities are largely priced in U.S. dollars, the two tend to have an inverse relationship. That is, when the U.S. dollar is strengthening… it puts downward pressure on commodity prices. And vice versa, when the dollar weakens… commodity prices tend to firm up.

So let’s take a look at the good ol’ greenback and see what it’s been up to recently. Here’s a chart of U.S. dollar futures going back to 2016.

Trump’s election win turned out to be an immediate boost for the U.S. dollar, which gained nearly 6% between November 6 and December (a massive move for a major currency).

No doubt, everyone one their brother was feverishly speculating what a Trump presidency would mean for the U.S. dollar (and everything else, really). And for whatever reasons – well-informed or not – everyone traded on the belief that Trump was bullish for the dollar.

Now, though, everyone’s no so sure. Not even Trump himself.

I read the other day that Trump recently called his National Security Advisor, Mike Flynn, (at 3am in the morning) to ask him, essentially, “do we want a strong dollar or weak dollar? Which is better for our economy?” Flynn reportedly advised Trump to consult with an economist.

Our long-term forecasting here at Dent Research continues to suggest dollar strength ahead. But like the recent bear market rally in commodities, it seems a (bearish) countertrend move in the dollar is unfolding.

I told my Cycle 9 Alert subscribers the dollar was likely to fall as I was recommending a bullish commodity play in late December. My Trade Alert hit their inboxes on December 20. And since then, the U.S. dollar (UUP) has lost nearly 3%… commodity prices have gained 3%… and my subscribers are currently holding a profit of around 20% on the specific commodity play I recommended.

Needless to say, while everyone is fixated on “Dow 20,000”… we’re riding the stealth bear market rally in commodities.

The question is: Are you?

There’s still time to get in on the action, as I’m targeting a further 7% rally in commodity prices between now and April. And with that rally, the position I’ve recommended to my Cycle 9 Alert subscribers is poised to hand us a profit of 120% or more. Click here to join in on this trade today.

 

 

 

 

Adam O’Dell

Editor, Project V

Follow me on Twitter @InvestWithAdam

The post Riding the Bear Market Rally appeared first on Economy and Markets.

Zombies and Zealots

I’m sure you’re familiar with someone who thinks they’re a Big Deal. Your boss, that weird cousin on Facebook, your toddler. No corner of society is immune from a puffed-up sense of self, and you know the government is no exception.

The Fed wants us to believe that its every move – every press conference, every meeting, and every quote in the papers – is a Big Deal. It really does take itself quite so seriously, but its recent history shows we don’t have to take it all that seriously.

Remember, the Fed promised four rate hikes last year and only delivered once, but with the amount of ink spilled on their press conferences and coffee orders (only sort of joking) you’d think they tried to create a whole new U.S. economy.

This year, it’s promised three rate hikes and according to its statement after the conclusion of this year’s first meeting, nothing has changed.

The Fed stated that job gains remained solid while the unemployment rate remained low. That’s fine, but wages and other measures of compensation are still low. Inflation is still below their 2% long-term objective and their measure of inflation expectations remain unchanged.

But they did note that consumer and business expectations have improved.

Big deal!

It’s a wonder, to me at least, why the Fed bothers with a policy meeting every six weeks since guidance and policy is unlikely to change that often. Its view of the economy is so macro, there’s really only so much it can do to affect the day-to-day lives of Americans. It seems it wants to hold these meetings just to stay relevant.

Former Minneapolis Fed president Narayana Kocherlakota went hard on the Fed recently. He accused them of holding “zombie meetings” – meetings that don’t include a live statement or press conference.

In other words, the four meetings per year where the Fed chair gives her live statement and presser are considered “live” meetings with a possible policy change (and thus are actually useful to the public and worth our time) while the other four are viewed as “dead.”

Congress only requires the Fed to hold four meetings per year and it probably wouldn’t need to make major policy changes more often than that. But for now, the Fed wants to be transparent and visible so, in addition to the eight policy meetings, statements (live and written), and four press conferences, we also get countless Fed speeches along with Senate and House testimony from the Chair.

Phew!

That’s a lot of talk and maybe why the Fed has lost a lot of credibility over the last few years. Why say something if you’ve got nothing to say?

The next meeting in March will be a “live” meeting but the market hasn’t fully priced in another hike until the June “live” meeting.

And that really gets to the meat of the issue, as I see it.

The market does the talking for the Fed, particularly of late. So far, big-picture economic data has been mixed and concerns about lack of inflation and wage growth remains.

Right now, the markets are more concerned with what government policy will be going forward and not too much with what Fed policy will be.

So, for now, forget about zombie meetings and live meetings and get your popcorn. The entertainment will start when Fed Chair Janet Yellen testifies before Congress next week. She’ll be defending failed policies, the Fed’s independence, and her job!

Yellen seems to be secure, for now, since her Chair appointment isn’t up until next year (along with the Vice-Chair). President Trump will certainly fill the two vacant Board of Governors seats in the near term. So, we may get a better feel for Yellen’s standing with the new administration during next week’s hearings.

I’m pretty sure we’ll just see more political grand-standing (like we haven’t had enough of that!), like any other Congressional hearing. But it would be nice if Congress rolled back the “dual mandate.” That’s the Fed’s responsibility to promote maximum employment and stable prices. I would suggest that they just focus on regulating their member banks and making sure they have the ability to lend to qualified borrowers. A classic “keep it simple, stupid” situation.

Let’s face it, the federal government has more influence on employment through tax and regulatory policy than the Fed could ever have with their monetary toolbox.

Today, instead of being overly concerned about future Fed action, the markets seem more focused on the new administrations fiscal policies. The markets are still convinced they need stimulation but more so in the way of government spending and less regulations.

Stock markets shot to new highs after the financial crisis of 2008 because of enormous Fed stimulus, but our economy barely grew, corporate profits were stunted, and wages are still stagnant… nine years later!

Since Trump was elected, stocks again moved higher on the bet that he will spend on infrastructure, cut taxes and regulations.

But, it’s just like the failed monetary policy experiments from the Fed. The government can’t change demographics. We are getting older, spending less and stimulus is just a short-term waste of taxpayer money that won’t have a lasting effect on our economy.

Over the last couple weeks, the markets have been quiet. It could be complacency but my bet is that it’s the calm before the storm.

The risks to the markets and your money are growing by the minute. From central bank policies to executive actions to overseas worries like China and Europe… any surprise might cause a violent reaction. That’s how my subscribers profit with Treasury Profits Accelerator. We pounce on opportunities created by surprise moves in the long-term Treasury bond market!

Good investing,

 

 

 

 

Lance Gaitan

Editor, Treasury Profits Accelerator

The post Zombies and Zealots appeared first on Economy and Markets.

A Look Inside My Retirement Plan

Editor’s note: Over the next few weeks, we’re going to do something a little different. We’re going to make things personal… and give you an inside look at our Editors very own retirement plans. As our retirement guru, Charles is up first. He’s not only the Boom & Bust Portfolio Manager, but also editor of Dent’s 401K Advisor and our new Peak Income service. For more details, watch this space!

I pay my bills by telling other people what to do with their money. But I’m often asked: What do I do with my own money?

Well, that’s a very legitimate question, and I’m happy to share.

Before I get into it, I have to throw out a few common-sense caveats. Remember, I’m 39, have two young boys in the house that can clean out a pantry faster than a swarm of locusts, and a stay-at-home wife. I’m also in the prime of my career and trying to stash as much cash away as possible for retirement.

You might be in a very different stage of life or have a very different situation. What makes sense for me might be absurd for you.

So with that said, let’s get into it.

The backbone of my retirement planning is remarkably conventional.

I max out my 401(k) plan by the full $18,000 I’m allowed every year, like clockwork. The precise allocation of the 401(k) plan will change, and you can always get an idea of my latest thoughts in my retirement letter, Dent 401k Advisor. But my number one priority is dumping that first $18,000 in savings into my retirement plan.

I also have a decent amount of “side hustle” income that I do my best to shelter as well via a SEP IRA. (Yes, if you have income from both a normal W2 job and separate 1099 income from side projects, you can contribute to and even max out both a 401(k) and a SEP IRA.) This is fairly common with doctors that are employees of a hospital but also have self-employment income from a private practice.

And finally, like virtually everyone else in America these days, I’ve been corralled into a high-deductible health insurance plan, but I do what I can to turn that to my advantage.

I dump the maximum $6,750 into my health savings account and effectively use it as a spillover IRA. (There are big differences between HSAs and IRAs that I don’t have time to get into here, but this is how I personally allocate my investment dollars.)

The key takeaway here?

I focus on getting the money in the right accounts before I spend a second worrying about what specific investments to buy. This makes all the sense in the world, because as I wrote a few years ago, the “returns” you get from tax savings and employer matching absolutely obliterate the returns you’re likely to earn from the investments themselves.

We’re talking annual “returns” in excess of 40% for investors in the highest tax brackets. Not even George Soros or Warren Buffett, in their primes of their careers, were able to consistently generate returns like those.

Now What?

Once I have the cash in the proper account, I focus on what to actually do with it.

Like everyone else, my 401(k) options are limited to a smattering of mutual funds. I do the best with the options I have and invest along the lines of what you see in Dent 401k Advisor. Company rules don’t allow me to purchase any stock I specifically recommend to readers, but I follow the same basic allocation guidelines.

I have the most freedom with my non-401(k) savings, as I’m not limited to a menu of mutual funds. And this is where I get more creative, and where my new service, Peak Income, comes squarely into play.

I’m a big believer in the closed-end funds (CEFs) I recommend in Peak Income, and I invest a large block of my non-401(k) savings in these kinds of funds. Like I said with my 401(k) recommendations, I’m unfortunately not allowed to buy the funds I recommend per company rules, but the CEF space is large enough to allow me to get close enough.

I do make one big deviation though. Remember, Peak Income is dedicated to generating current income for people in or near retirement. Well, I’m a long way from retirement, so I automatically reinvest my dividends in new shares. This transforms “boring” income-focused CEFs into growth compounding machines.

The remainder of my portfolio is allocated a little more exotically.

I have some money invested in real estate (still mostly boring, conservative mini-storage units and the like), in long/short strategies and in a few other concepts I still consider experimental at this point. But one thing that all of these options have in common is that they are uncorrelated… both to each other and to the stock market. That’s a big deal, as diversification is worthless if everything you own rises and falls together.

I also have one final “investment.”

Like most Americans, I have a house with a 30-year mortgage. But I despise having debt… the very idea roils my stomach. So I “invest” in paying down my mortgage early. I’m running about 10 years ahead of schedule with a goal of having the house paid for in another few years.

Then I suppose I’ll have one additional asset allocation decision to make… convincing my wife that we don’t need a bigger, more expensive house. But that’s a decision for another day.

 

 

 

Charles Sizemore

Editor, Peak Investor

The post A Look Inside My Retirement Plan appeared first on Economy and Markets.

This ‘Border Adjustment’ Will Hit You in the Wallet

Economic theories don’t get much play at cocktail parties, and there’s a good reason.

They’re boring.

Who wants to talk about the Phillips Curve, the Taylor Rule, or Triffin Dilemma? They might have cool names, but once you dive into the details, the emotion goes flatter than a day-old beer.

But we should pay more attention, because these theories, and the economic policies built on them or against them, directly affect our lives… or more specifically, our wallets.

The economic topic at the top of the list today is the so-called “border adjustment,” or corporate tax reform, proposed by the GOP, which President Trump is slowly adopting.

To hear the proponents tell the story, the new financial arrangement should promote exports and discourage imports (and U.S. companies’ offshore operations), but not affect consumers one bit.

If you’re skeptical of this, then score one for your B.S. meter.

We will pay dearly for any such scheme. The question is, do you want to?

The border tax adjustment calls for exempting exports from corporate tax, while not allowing companies to deduct taxes on imports.

If Caterpillar sells a $100,000 tractor to a client in India, then the company can subtract that $100,000 from its taxed revenue. This will save Caterpillar $20,000 under the new, proposed lower corporate tax rate of 20%, down from the current 35%.

However, if General Motors imports a $20,000 Impala from Mexico, which it then sells for $24,000, the company can’t expense the $20,000 cost of the import. The government will tax General Motors on the full $24,000, not just the $4,000 of profit. At the new tax level, General Motors will pay $4,000 more in tax than it did before.

It’s hard to see how GM will make a profit by selling a $24,000 car that costs $20,000 to import and paying $4,800 in taxes, which is 20% of the sell price. Of course, they won’t. The company would have to either pay less for the import, or charge more for the car.

This is where you and I, or at least our wallets, come into play.

The theory of a border tax adjustment – most often used by European countries – calls for exporters (Caterpillar) to lower the price of their goods because they no longer have to pay taxes and can therefore be more competitive in the global market. This is supposed to cause a general scramble for dollars around the world, driving up the valuation of the dollar.

As the greenback appreciates, importers like GM can pay less for their goods from overseas, allowing them to maintain their current prices and still make a profit.

Right.

I’ve got a few observations… and a question.

Just because Caterpillar can keep more of its revenue, because it no longer pays taxes on exports, doesn’t mean the company is obligated to lower prices.

In fact, any corporate executive that simply tries to maintain equilibrium (pricing and sales) instead of improving the company’s bottom line should be fired immediately. Of course Cat will hold prices firm internationally as best it can, because the company wants to boost profits!

As for foreign buyers clamoring for dollars, well if Cat doesn’t lower prices, then this all goes out the window. But even if Cat did lower prices, and foreign consumers did buy more of our stuff overall, it doesn’t mean the dollar has to appreciate by the same amount.

There are the not-so-small matters of central bank policy both here and abroad, economic growth disparities, geopolitical developments, like the ones Harry has talked about recently, and a host of other things that affect exchange rates.

And why in the world would any company selling to the U.S. lower its prices just because the dollar strengthened?

This is exactly what foreign exporters want, because it boosts their profits back home! If they lowered their prices every time their home currency dropped, it would offset the benefits of holding down their currency.

Suggesting that exporters, importers, and the currency markets would behave like this makes no sense.

It ignores everything we’ve experienced over the past nine years.

And then there’s the little matter of why we would do this in the first place? If the exchange rate will adjust to offset any price difference the consumer might have paid, then presumably corporate actors (Caterpillar and GM, in our example) would be indifferent as well. Why go to the trouble?

Because the offset won’t happen, there will be economic winners and losers, and there will be pain.

The dollar won’t adjust as the pundits predict. Exporters will hold onto profits instead of lowering prices. Importers will raise prices to offset their increased costs. The end result will be a tax policy that favors exporters at the expense of importers, paid for by U.S. consumers.

The point of the policy will be to promote companies that create goods and services here, and to punish those that source those things from other countries. Which leaves me with one final question. How much are you willing to pay for this?

Consider everything you buy, from gasoline (imported oil), to furniture, to towels, and plastic utensils.

Most of it is made overseas.

And a good portion of domestic goods, like cars, contains a lot of foreign parts. If GM produces a car in the U.S., but uses 50% imported parts, then half of the car’s value can’t be expensed. This is just one more dimension of a multi-faced problem.

The short answer is, with a border tax adjustment, all of it will cost more.

Without an offsetting bump in income, rising prices lead to a lower standard of living, hitting consumers, like you and I, right in the wallet.

 

 

 

 

Rodney

Follow me on Twitter @RJHSDent

The post This ‘Border Adjustment’ Will Hit You in the Wallet appeared first on Economy and Markets.

Don’t Let Decision Fatigue Wreck Your Investments

I’ve always struggled with making decisions. It just doesn’t come naturally to me.

I blame it on my mother, who was loving and good-intentioned, but a little heavy-handed in the parental decision-making department. My brothers and I never heard anything like, “What do you feel like for dinner tonight?”

Everything was always already decided for us: “Tonight’s spaghetti. Could you set the table for me?”

Needless to say, when I was grown and on my own, I had to figure out how to make decisions. And as I struggled through that process, I learned about the negative effects of what psychologists call “decision fatigue,” and how to overcome them.

The more I learn about decision fatigue, the more I’m convinced that it’s one of the primary reasons why most investors struggle to meet their financial goals – whether they (cough, you) realize it or not.

And I’m also convinced that systematic (“rules-based”) investment strategies are the perfect solution to the damaging effects of decision fatigue.

But before I make my case for systematic strategies, let me show you proof that decision fatigue is real (and really harmful)…

The most popular story used to explain decision fatigue is about hungry judges.

In 2010, Stanford researchers studied judges and their decisions to either grant or deny parole to prisoners coming before the court. They analyzed over 1,100 individual decisions, made throughout the course of a year.

In total, judges approved parole appeals in about one-third of the 1,100 cases studied – in line with known proportions. But the researchers discovered that time of day was a significant factor in judges’ decisions.

Essentially, prisoners who appeared before the court early in the day tended to get more favorable parole decisions, while those appearing just before lunch were more often than not denied parole.

Then, after lunch, the number of paroles granted jumped back up to the early-morning levels. But throughout the afternoon, the rate of paroles granted trended down again, hitting a low by the end of the day.

Here’s the chart (with the dotted line indicating food breaks)…

Now, if judges were robots – unaffected by hunger, fatigue or mood – this chart would not exist. Instead, you’d see one steady rate of favorable parole decisions, regardless the time of day.

But judges aren’t robots (obviously).

Even though they’re generally smart, well-intentioned and ethical people… they still get tired, hungry, and moody, just like the rest of us. And, clearly, those “fatigue” factors have a dramatic impact on the decisions they make.

In the simplest terms, decision fatigue is the observation that people tend to make worse decisions the more decisions they make. And it affects everyone.

It taints decisions we’re faced with in all aspects of our daily lives – everything from what to make for dinner and, of course, what to do with your investments.

In fact, the decisions you must make about your money are endless.

Should I buy this or that?

Do I spend or save?

Cash or T-bills?

Stocks or bonds?

Passive or active?

Diversified or concentrated?

Growth or value?

Google or Amazon?

Sell (for a loss) or hold?

Sell (for a profit) or hold?

You get the idea…

As an investor (even as a consumer), every decision you make can be hugely consequential to your investment portfolio and to your family’s financial goals. And you’ll be up against decision fatigue every step of the way.

Now, to avoid the downside of decision fatigue… you’ve got to avoid decisions. Or, at least, you’ve got to greatly minimize the number of decisions you have to make.

And that’s where systematic investment strategies come into play.

Systematic, or “rules-based,” investment strategies minimize your role in the decision-making process. Therefore, they minimize the number of opportunities you have to make a foolish decision, caused by decision fatigue.

And that’s why I love systematic investment strategies.

I don’t have to make decisions all day long… I don’t have to face the same decision – “Do I buy? Do I sell? Do I hold?” – each and every day. I don’t have to second-guess myself.

Truly, committing to systematic investing is one of the best things I’ve ever done for myself. It’s taken the monkey of continual decision-making off my back – and with that, I’ve seen dramatic improvements in both my wealth and health.

It’s my sincere hope that you, too, will join me in appreciating the many benefits of systematic investing. That’s really what my trading services – Cycle 9 Alert and Project V – are all about.

We implement a “rules-based” strategy with discipline. And that allows us to avoid the pitfalls of decision fatigue, cognitive biases and our tendency to make “irrational” decisions with money.

Is this approach right for you?

Well, that’s something only you can decide.

But you should certainly give it a chance. I’m pretty confident that once you get the hang of it, you’ll never go back to discretionary investing again.

I know I won’t!

 

 

 

 

Adam O’Dell

Editor, Project V

Follow me on Twitter @InvestWithAdam

The post Don’t Let Decision Fatigue Wreck Your Investments appeared first on Economy and Markets.

A Case of Reaction Instead of Action

[image error]Look. Economy & Markets isn’t a political newsletter, and I typically stay away from talking about it – people are touchy on the subject, and it’s the quickest way to make enemies.

Yet I find myself writing about Trump again! It’s like I just can’t escape the man.

Of course, I can choose not to write about him, and instead write about any number of other important things… but I don’t think that would be valuable to you because everything that The Donald has done so far connects directly back to the research and the heart of our operation: demographics and cycles.

Really, it’s not about the man himself – love him or hate him. It’s about the environment we’re in right now… the economic winter season, where four power cycles – demographic, technological, geopolitical and boom/bust – have converged in a downward spiral.

Recently with the original Greece crisis, Brexit and Trump, it is becoming obvious that a near 100-year Globalization Cycle is peaking. Trump is just part of that natural cycle unfolding.

I saw it coming. Those who’ve followed me for a while saw it coming too. We may not have known the exact details of how this all plays out. But we knew it would be big and disruptive.

And if it was any other politician in that seat of power, making the moves that The Donald is making, they too would be the source of our… frustration, for lack of a better word.

Frustration because this is all so reactionary rather than “actionary.” Trump’s push to build a wall is the perfect example to illustrate this point with.

A wall may have been useful in the 1980s or early 1990s. Now it’s too late because there are actually more Mexican illegals leaving the U.S. than entering it. In fact, this reversal in the tide of illegal Mexican immigrants started back in 2007, after the Great Recession.

The Donald isn’t acting with this plan to build a wall. He’s reacting to a situation that doesn’t even exist anymore!

That’s why, at Dent Research, we’re more interesting in what consumers, technologies and businesses do. Government, politicians and policies seem to operate in a vacuum. I mean, seriously… even the Fed – an agency that is supposed to lead the economy – has reverted to data watching and being reactionary!

Here are the facts about the illegal Mexicans Trump is building a wall to keep out…

Immigration rates into the U.S. peaked in 1991 with a spike and surge from the Reagan amnesty program. Since 2007, they’ve been in sharp decline… a trend they’ll remain in for many years to come.

 

Would you look at that!

Since the Great Recession in 2008-09, more illegal Mexicans have been leaving than entering. That don’t feel as welcome, our economy and jobs aren’t as good… and maybe they miss their families back in Mexico.

Imagine how much this trend could fall further if we see a much worse downturn in the next three to six years, as I predict?

Trump is basically trying to build a wall for nobody… and he’s insulting the Mexican population and government, and many Americans, in the process.

In our Boom & Bust March issue I plan to discuss this immigration issue in greater detail and from all angles, including the clear disadvantages of illegal immigrants and how to turn those more positive… And Charles will have the details of the next model portfolio move we plan to make. So, don’t miss it.

Most Americans – including our President and his advisors – are dangerously ill-informed about the pros and cons of immigration: legal and illegal. We’ll give you the truth, rather than the politics. And then we’ll tell you what to do with that information to survive and prosper.

 

 

 

 

Harry

Follow me on Twitter @harrydentjr

 

The post A Case of Reaction Instead of Action appeared first on Economy and Markets.

7 Reasons Why Trump’s Win Was Inevitable

[image error]Before November 8, 2016, only a handful of people believed Trump would become the 45th President of the United States. For many today, it still seems surreal. Yet here we are. He’s been confirmed president and has lost no time rocking the boat!

I won’t claim to have predicted his win (although our team member, Charles Sizemore, did). I will claim that I didn’t consider it out of the realm of possibility. As such, I’d go as far as saying we saw it coming…

That’s why, back in June and July of last year, we published two infographics, presenting readers with the seven reasons why we believed Trump could very well win the election.

We were right!

And those reasons remain. Nothing on the ground has changed, which is why we live in such a volatile, charged environment right now… where neighbors and family aren’t on speaking terms, where the streets are blocked with protests, and international alliances are shifting right before our eyes.

So, whether you agree or disagree with the actions President Trump has already taken since he’s taken office…

Whether you voted for him or not…

Whether you like the man or not…

Here are six of the seven reasons why Trump is our president today…

 

 

 

 

 

Harry

Follow me on Twitter @harrydentjr

The post 7 Reasons Why Trump’s Win Was Inevitable appeared first on Economy and Markets.

The Aging Face of America

It was a long time ago, way back in 1950.

The United States was recovering from World War II while facing down a new enemy, China, on the Korean Peninsula. We were an exporting powerhouse that fortunately escaped the war with all of our production capacity intact. And, our population was experiencing a baby boom.

We were growing our wealth, expanding our military capabilities, and increasing our population. Even after the ravages of war, we had a tremendous group of workers 20 to 49 years old, and an explosion of babies on the way.

We were a strong, young nation. Anything seemed possible.

The picture today is starkly different. Our demographics (and their impact on programs like Social Security and Medicare) are undeniable. We’re an aging nation facing some big problems…

The chart below shows the U.S. population by age in 1950, with generations differentiated by color: Henry Ford (50-and-older, gray); Bob Hope (black); the boomers (red).

Twenty years later, by 1970, the birth wave was over and had started to recede. The next generation, GenX, shown in purple in this next chart, was on the way, and their numbers were much smaller than the boomers.

At this point, our demographics and social programs were still balanced. President Roosevelt introduced Social Security in the 1930s, which relied on workers paying for retirees. With so many workers in the system, the program ran a surplus.

Medicare, introduced as part of President Johnson’s Great Society in the 1960s, tacked on healthcare for the elderly. Again, the program relied on current workers paying for retirees, and like with Social Security, the age structure of the country made the program go… for a little while.

As the boomers flooded the job market, a lot of extra cash sloshed around in our entitlement programs because they collected a percentage of wages. But by the 1980s, our long-term social program problems were coming into focus.

We had fewer children in the late 1960s and 1970s, so eventually there’d be fewer workers to support a bulging number of retirees. Longer lifespans made the problem worse. Congress fiddled with Social Security in the early 1980s, but the reforms just put off the pain. They didn’t solve the problem. And there was no attempt to fix the issues with Medicare.

Fast-forward to 2010.

By then our triangle-shaped society was morphing into a rectangle, as you can see in the next chart. We added the millennial generation in green, and even the first years of the next, unnamed group in blue. Notice that the shape is almost straight-edged for every group 54 and younger, which is much different than the age structure of the nation in the previous decades.

Clearly, we’re no longer a nation teeming with strapping young workers who far outnumber the older generation. We don’t have younger people who can bear the burden of their elders with a modest payroll tax spread across many workers per retiree.

Instead, we’re a nation full of aging adults, whose employment statistics reveal more than meets the eye. We look at the younger group with trepidation. With the cost so high, will the millennials be able to pay the taxes necessary to provide the benefits that boomers have coming to them, just as the boomers did for their parents?

And what exactly can, or will, a Trump presidency do in this demographic reality?

I explore these issues in depth in the February issue of Boom & Bust and our portfolio manager, Charles Sizemore, explains what investment strategies you should put in place considering it all. Charles even recommended an investment (and investment class) that could help you overcome one of the biggest challenges facing this country. If you’d like to read this latest issue, you can do so here.

 

 

 

 

Rodney

Follow me on Twitter @RJHSDent

The post The Aging Face of America appeared first on Economy and Markets.

The Third – Potentially Lethal – Trigger

[image error]This past Monday I updated my Boom & Bust subscribers about an important new development in the civil war that I see brewing… or at least the possibility that the United States of America won’t remain the way we know it for much longer. We’re certainly no longer united. In fact, we’ve not been this polarized and divided since the Civil War.

Unfortunately, the state we find ourselves in today has been painted on the wall for a long time! And my hierarchy of cycles – which includes the Spending Wave Cycle, the Technology Cycle, the Geopolitical Cycle and the Boom/Bust Cycle – have shown me for many years now what we have in store. And now a near 100-year cycle in globalization has peaked, much like the last one did when World War I started.

It’s not pretty. In fact, it’s downright scary, which is one of the reasons I upped and relocated with my wife to Puerto Rico (which should tell you a hell of a lot).

Fortunately, it’s all predictable. (Yes, I intentionally labelled that predictability as unfortunate and fortunate!)

Knowing years in advance what kind of environment we face gives you a powerful advantage. You can prepare. You can build a virtual fortress around your money and literal fortress around your family if that’s what you feel is necessary. You can set the traps to snatch up those opportunities as they fly on by. And because you know what kinds of opportunities are likely swarming your way, you know what kind of traps to set!

I’m not saying that the United States is certain to split. But I am saying that the possibility is very real, so today I want to share that email I sent to my paid subscribers on Monday, in their weekly 5 Day Forecast. It’s important that you read this because I believe the U.S. has become the third trigger that could topple this mighty bubble (with a southern Europe banking crisis and the China real estate bubble burst). And I believe it now may well be the one to blow first!

I hope you find the information interesting and useful. And I hope it encourages you to try out a subscription. If it does, / If you missed the email on Monday, read on…

The Red/Blue State War Is On:  Starting, of Course, in California

The “Yes California” Independence Campaign has set out to collect the 585,407 signatures it needs by July 25 to allow the state to hold a ballot in November 2018 to repeal the constitutional clause that states California is an inseparable state of the United States, and that the U.S. is the supreme law of the land. If they get all those signatures, and if the ballot passes, there would be a second referendum in 2019 to leave the Union!

Will this be the beginning of the end of the United States of America? It very may well be…

At this point, polls show that only one out of three people support this campaign. But The Donald has only been in office for 10 days and already he’s had a major tiff with Mexico, China, Muslim immigrants, illegal immigrants and refugees. Whether you agree or disagree with Trump and his actions, whether you’re a Trump supporter or not, there’s no doubt that he’s becoming a wrecking ball. And the traditional “blue states” may not tolerate his “red state” mandate, which he is following as promised.

Besides, the polls have such a poor track record at this point, I don’t hold much stock in what they say!

In my November 2016 Leading Edge newsletter, and at our Irrational Economics Summit in October, I forecast that there would be such a red state/blue state split or some level of civil war likely starting by late this year. Our political and social values are more polarized now than any time since the Civil War.

We had very similar levels of income inequality in the Roaring ’20s and the Great Depression as we do today. What we didn’t have back then was the political polarity we have today, where the right is getting farther right and the left farther left. There’s little or no middle ground anymore. No room for compromise.

Here’s the map of the red/blue states, from the 2012 presidential election, that I showed in that issue.

The red states are clustered very clearly in the Southeast, Mid-West and Rockies. The blue states are on the West Coast, Northeastern seaboard and upper Mid-West. Colorado, New Mexico and Florida were the outliers for the blue, while some of the blue states in the Mid-West were borderline, like Michigan, Wisconsin, Iowa and Pennsylvania.

After the election, that map changed a bit, as you well know…

But here’s the thing…

If California, with a population of 39.5 million (almost the size of Spain) does get serious about secession, why wouldn’t Oregon, Washington and Nevada join them? Together, they’d have a combined population of 51 million? And maybe Colorado and New Mexico would join, making that a total of 58.5 million. We could have a new Western U.S. bloc.

Come to think of it, British Columbia actually has little in common with its Alberta neighbor and they could even join this new union, making it a blue heaven of 63 million people. That’s the population size of France!

Then the Northeast and New England could consider forming their own Eastern bloc. New York, Massachusetts, Connecticut, Maine, Vermont, New Hampshire, Maryland, Virginia, D.C… and possibly the upper Mid-West.

The rest of the country would remain as Trump America! It could have its capital in Dallas.

This is crazy stuff we’re talking about here.

Of course, such a California (or broader) split is far from inevitable at this point, but I think it’s more likely than most would think. The world is moving through the isolationist, local-centric turn of the globalization trend. We’re deep into the negative arm of the geopolitical cycle. Citizens across the globe, from Britain to Italy, and now the U.S., are revolting.

This will be very interesting to watch, especially after July 25, if the “Yes California” campaign gets enough signatures to go to ballot in 2018. That alone could trigger a major stock crash into the danger zone of late July through late October! Andy Pancholi at markettimingreport.com has his largest turning point for late July… interesting.

This now forms the third potential trigger for the next larger crash, along with the southern Europe banking crisis and the great China bubble bursting. And this could be the first to blow and help trigger the euro crisis again in Europe.

My advice? Don’t wait until then to prepare for the financial fallout that could ensue. Take steps now to pay down debt. Find investment strategies that fit your comfort level and that will help you achieve your desired outcome. Adam’s Cycle 9 Alert and Project V strategies are a good place to start. Lance’s Treasury Profit Accelerator is also on fire. And gear yourself up to take advantages we’ll see arising from this chaos, regardless of the outcome.

At the very least, don’t be complacent. You’ll regret that!

 

 

 

 

Harry

Follow me on Twitter @harrydentjr

The post The Third – Potentially Lethal – Trigger appeared first on Economy and Markets.