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my latest short report on long-term economic trends in the US

December 8, 2019

As someone who published several forecasts of the prior global economic downturn of 2006-2009, I have been tracking a variety of measures that can signal impending economic strength or weakness. I will feature a handful of charts that focus on the US.

 

For perspective, let’s start with a very long-term chart showing the extent of the increase in monthly GDP data (“Gross Domestic” Productivity). The green lines indicate a few of the longest periods of time when there was increasing GDP for every single month in the entire time period shown (or at least no decline in the GDP). For instance, the most recent period started around 2014.

Why do I show this particular chart below? Like with all of the charts I present here, I want you to see the trend with me. Further, I want you to visually recognize the obviousness of the pattern before I comment on how I consider the pattern important (which I will do below). 

So, my focus here is on the orange areas. There is thin orange horizontal line (as in parallel to the green line). There are also several orange “spikes.”

The horizontal orange line marks a level of about a 3% growth rate in GDP, which is the “mean” (numerical average) for the entire period shown. I added orange “spikes” only within the time periods where I had already added the green lines. (So, the basic idea is to simplify the data to just focus on long periods of growing GDP – with green lines – and the relative growth rates during those times – with orange spikes.)

So, what do you notice about those orange sections? I expect you to be able to answer that question almost in an instant. I will even show you the same data, but after simplifying it even further by only showing the data from during those periods of lasting growth.

What trend(s) do you notice about the orange sections over time? First, is it obvious that the HEIGHT of the orange areas generally get lower as we go to the right (as we go from the late 1940s to now in 2019)? Second, is it also obvious that as we go BACKWARDS from right to left, the relative frequency of orange rises? In other words, the proportion of orange in the more recent periods of time (on the right) is lower than the proportion of orange in the older periods of time (on the left).

If you are not clear on what I mean, these next few sentences in italics should clarify it. Then, let’s consider what it means.

The one in the early 1950s was quite tall (with GDP growing at more than 10% for big portions of that time. Into the 1960s, growth in the GDP was consistently above 3% and often above 5%. There was another prominent orange section in the early 1980s.

But in to the 1990s, we see only “specks” of orange. The GDP rarely grew faster than 5% across that period.

Into this century, there was again a long period with growing GDP. However, very little of that period had GDP growing 3% or more.

As for the recent period starting around 2014, almost the entire period shows growth below 3%. So, what would you say is the trend regarding the orange areas that I highlighted.


Let’s repeat that last image with a single line added:

GDP - modified 2

So, what does it mean? It means that the growth rate of the US economy has been consistently declining for MANY decades. Also, although there has been consistent growth in the US economy for most of the last four decades, the actual amount of growth has been “historically modest” (and generally decelerating).

If the US economy was to be compared to the changing skill of a pro athlete (like NBA star Michael Jordan), we would say that young Mike got MUCH better in his first few years of basketball, like long before college. Then during college he also got quite a bit better (though perhaps not with the massive increases in skill from when he grew from four feet tall to five feet tall). Even after college, he consistently improved across long periods of time… but the actual amount of change in how much better he got did generally decrease over time.

Further, this kind of historical trend would not surprise us if we saw it for other NBA stars (like Lebron, Shaq, Kobe, Magic, Kareem, or Wilt). To stay with the athletic analogy, we could even notice that Michael Jordan had a few injuries along the way when his skills greatly diminished… if only briefly.

The analogy that I picked obviously suggests that future “periods of continued improvement” are not guaranteed. In fact, there is no controversy that there have been periods of “declining GDP” in every recent decade.

I could present current charts showing the 30 year declines in Japan’s economy. I could present charts of the 20 year decline in the overall economy of Europe (or the last 12 years for Asia overall). I will skip those for now… but I do want to emphasize that just as there can be long periods of tremendous economic growth (like in the US in the 1950s or 1960s), there can also be long periods of continuing economic decline.

Ok… my next topic is a chart showing 4 decades of declining interest rates in the US. This chart is from 2018:

I copied that chart from someone else’s article. In fact, interest rates “feel back in to the prior trendchannel” in 2019. However, I published clear forecasts in August 2019 of the rebound that started in early September.

For brevity, I will simply say that I remain concerned that interest rates in the US may soon return to levels we have not seen since the 1990s (like 6% – 9%). As I have covered the implications of that many times before, I will also be very brief in adding that the massive decline in interest rates since 1980 has been fantastic for lots of folks, especially real estate speculators, and a return to high rates would likely be catastrophic financially for real estate speculators as well as the mortgage industry and realtors etc….

That reminds me to point out that I am clear that the more favorable or unfavorable a particular outcome seems to a particular person’s current investment strategies, the more or less open they are likely to be to accepting and digesting that reality. However, the data is not in controversy.

Ready for some good news? 

The good news is… the more clear you are about reality, then the better you can reduce risk and increase opportunity. I can even help you.

So, is the US safe from another recession?

Above is some data from this November 14th article: https://www.economist.com/united-states/2019/11/14/americas-yield-curve-is-no-longer-inverted

The author of that article warned of imminent danger of a recession within a few months. Why? After every prior “red period” ended, there was a recession soon following.

How are real estate prices in the US lately?

For years, I’ve been warning about a peak and a lasting decline. Here’s a chart:

Prices have already been in a downtrend for about 2 years. Do you notice how the recent trend looks a bit like the trend in 2007-2009?

How is construction spending lately?

It also peaked about 24 months ago. Do you notice how once again the recent trend looks a bit like the trend in 2006-2008?

Before a decline, a deceleration is common:

This chart shows that construction spending was growing very rapidly in 2015, then the growth incrementally slowed across 2016 and 2017 (before the growth shifted to a decline).

In closing, with a short report like this, I do not want to put much time in to commenting on what is shown here. My purpose is to intrigue you and invite you to a conversation about the risks and oppurtunities present (and I consider both to be “historically massive”).

Note also that all of the data I just presented is relatively easy to find and free to access. However, unless someone looks for it (like I do as I am creating forecasts), then most people will never see data like this. They will make decisions based on… something other than the data that they have never seen because they never looked for it.

For those interested, I can provide links to my various commentaries on topics like:

why do I consistently “nail” forecasts (long-term and short-term) that others miss?

why was I so focused in 2004 and 2005 on the future of global fuel prices… and what are my updated comments?

why do I consider the retiring of the baby boom to be such a big issue?

what do I think of the massive debt of the US Treasury (including as it relates to the future purchasing power of the US Dollar)?

(For instance, do I consider the issues in the US today to be more like Japan in the 1990s or more like places like Venezuela or Zimbabwe in the last few years?)

My August forecasts predicted the gains of well over %70 as of today.

November 8, 2019
An investment called DTYS is up over 60% in the last 2 months. In August (weeks prior to the rise in price), I repeatedly referenced my expectation for a near-future surge in interest rates in the US bond market, which is what produced the >60% increase in DTYS. In fact, DTYS actually went up 60% in 7 days during September (and today was the first day since then for it to make a new high).



While the timing of my August alerts was based on relatively “short-term data,” I prefer to introduce the broader topic of “forecasting” by way of “things that most people already know… at least somewhat.” Below is some background on my longer-term “outlook.” Plus, all of that background information will have major implications for the longer-term near future of the global economy that most people, if they understand what is below, should find rather alarming.
 
Simply enough, baby boomers across the world are getting older and then retiring. That reality alone (given that the subsequent generations had lower birth rates) could be enough to reverse two of the key developments in recent decades: a massive decline in interest rates and a massive balloon in real estate demand (and prices).
 
When birth rates are rising (assuming no other major factors like a war or famine), then about 20-25 years later there will be a “tidal” shift in the number of people entering the workforce and eventually buying homes. Wave after wave of more and more people enter the workforce each day or at least each month. Likewise, when birth rates are falling (like after about 1965 in the US and many parts of the world), then there will be a contrary shift about 20-25 years later… as in a deceleration in the expansion of the workforce.
 
However, while changing demand for housing correlates to people reaching the age of around 20-25 years, there is a distinct development about 60-70 years after birth rates change. That is of course the change in the number of people retiring. In waves, the tide shifts in regard to how many people are retiring from jobs, reducing their incomes (and income tax payments), reducing the amount of debt they can enter, downsizing their homes, and selling their stock-based retirement investments (whether to spend on living expenses or to shift in to bond-based investments). We’ll come back to a few of those details later.
 
First, note that since about 1980, interest rates in the US have plunged decade after decade. Plunging interest rates created tremendous attraction to entering mortgages aggressively (because the monthly payments on a $200k mortgage would drop dramatically as interest rates fell by over 80% across the last 4 decades).
 
In general, access to credit had been getting easier and easier decade after decade. That includes easing access to credit for speculating in real estate using borrowed money (mortgages).
 
All of that easing access to credit tends to result in many people thinking that their line of credit is basically the same as having that much cash. So, if I have $300k of cash and then get a $300k mortgage, then I might relate to my $300k of cash as if it was only half of my total asset base. I might “discount” the value of that $300k of cash. I might tend to relate to the home currently valued at $330k (or whatever) as being an asset worth $330k to me, when in fact my “equity” or portion of ownership might be only $30k… which would vanish if the market price of my real estate fell 10% (from $330k to about $300k)
 
Obviously, by entering a big mortgage, I would not instantly improve my finances- like doubling my amount of cash or doubling my net worth. I simply take on a massive risk (that of course also has great potential for profit IF timed correctly).
 
So, enthusiastic speculators can pour in to mortgages (or mutual funds etc), with the mass of investors greatly discounting the functional value of their cash reserves in the process. Since there is such a huge majority of people who all are continuously discounting the value of their cash, that produces spending sprees (often, credit-driven). I mean consumer spending sprees but also corporate spending sprees and even the federal government’s spending of over $2 billion per day of borrowed money (money that they do not own and have contractually promised to eventually repay… somehow).
 
So, all that spending drives up prices (of a lot of things). And, if certain markets (such as real estate) are especially attractive to that mass of speculators, then prices in those markets go up the most sharply… until the prices reverse.
 
My expectation is that the retiring of the baby boomers will be a very big deal in many parts of the world. It already is in some places.
 
The tidal shift in the number of new retirees per year has already happened. That meant that pension funds that had been bringing in more money than they were sending out have been in deficits for years. Many pension funds, like that of the state of New Jersey or the company Intel, currently have less than 50% of the assets set aside to cover the promises that were previously made.
 
And not only was all of that easy to anticipate, but it can logically be expected to get worse soon (potentially much worse as these two things happen together: lifespans extend and birth rates decline). Pension funds that promise to pay out $4 million per month and yet consistently only bring in $2 million PER YEAR… are temporary. They will go insolvent and file bankruptcy, just like happened in recent years in Puerto Rico.
 
Since pension funds worldwide are in general severely underfunded as of now, there is a big issue with the fact that the tide has already changed (in terms of accelerating departures from the workforce of baby boomers and decelerating arrivals of younger generations). That tidal change means that not just occasionally but for years and decades, they can expect to bring in less money than they are legally obligated to pay out.
 
I project that the continuing retirement of the baby boomers will not only eventually demolish the majority of pension funds, but many insurance companies as well (and not just massive ones like AIG). What about the mortgage industry? There are similar issues there.
 
Many lenders have taken enormous risks (by borrowing lots of money and then lending out so much of the money that they borrowed). Those risks do not allow them to stay in business if the volume of mortgages plunges. Once the tide shifts in terms of fewer mortgage applications, that leads to fewer companies staying in business, so even fewer mortgages. All of that reverses the long-term trend in real estate prices.
 
This won’t be a repeat of 2006-2008. To me, that was just the first “wink” of what will come from the “changing of the tide” in lending markets (including mortgage markets).
 
A slightly better example would be what has happened in Japan in the last 30 years. Still that is only a hint of what is emerging in Europe and North America.
 
So, while I mentioned that those who understand this may find it alarming, I also began this post with a reference to a clear public forecast that I repeatedly made in August. That prediction immediately preceded a 7-day gain of 60% in DTYS (which is an investment that rises in value when interest rates rise).
 
Note that I can help you access the benefits of my expertise. For more details, contact me (by a reply to this post is fine).

Am I currently invested in DTYS? I am not (or in anything else related to the bond market.. as of less than an hour ago when I closed my positions as we begin the weekend).
 
For now (Nov. 8 2019) I have actually “rotated” my exposure toward a near-future potential for significant declines in the US stock market (which would spike the value of one of my current investments, TVIX). As for the faint line in the chart image, that is DUST, which is an investment that recently went up a lot because of declining prices of silver and gold (which I also clearly forecast in August in several facebook posts).

I predicted the recent bounce in interest rates, but what could it mean for the construction industry?

September 22, 2019

The following content is primarily for builders and other professionals involved in construction and remodeling (in the US). Eventually, I will say more about my interest in sending this to people like you. First, I want to show you a few quick details that may spark some intrigue for you.

Here is a chart showing that construction spending in the US has already fallen since the peak in February of 2018. You can also see the prior rally, reversal, and decline of last decade.

Could we be on the brink of something similar to the prior decline (or even more extreme)? I will very directly address that issue in a bit.

Next, around a year ago, I sent emails to dozens of builders about my forecast at that time. Here are a few quotes on my risk of the elevated levels of a risk of a downturn (plus a few updated versions of the charts from those emails).

NAHB’s builder confidence index recently exceeded 2005 levels…. Average prices of NEW home purchases in the US overall are actually down 3.5% from September of 2017 to September of 2018. Do you dare to guess when the last time was that prices of new homes in the US fell while prices of used homes rose?”

Here is some updated data (note the orange line marking October 2018, when I made the prior report).

What is a key issue influencing the amount of spending by corporations and households on new construction? As I noted in the subject line of this email (and that last chart above), interest rates are a big factor.

Imagine someone who is comfortable budgeting $2,000 per month on a mortgage. For them, how big a difference is there between a 4% mortgage and a 8% mortgage (or even 12%)? Here are some approximate numbers:

A $2000/mo mortgage at 4.0% interest allows borrowing of $313,000.

A $2000/mo mortgage at 8.0% interest allows borrowing of $221,000.

A $2000/mo mortgage at 12.0% interest allows borrowing of $158,000.

Regarding large commercial construction projects, the effects of rising interest rates can be even more startling:

To borrow $20 million at 4.0% requires a monthly payment of only $104,000.

To borrow $20 million at 12.0% requires a monthly payment of over $214,000.

Next, let’s look at what one forecaster said about interest rates on August 19, 2019:

“I am betting on some major downwards movement soon in prices for… US treasury bonds. I expect interest rates to shoot up over the long-term. That can be very bad for real estate sales volume (and prices).”

Here is what happened just after that:

Here is a chart from that same forecaster showing gains in 8 days of over 60% in certain investments related to that rise in US bond prices (and the related drop in interest rates for US bonds):

By the way, yes, I am that forecaster. And I am not new to forecasting interest rate fluctuations (or other investment trends). Here is a chart showing 8 reversals that I predicted from October 2018 to June of 2019. Here is a link to report that goes with this chart: https://jrfibonacci.wordpress.com/2019/09/01/review-my-recent-predictions-of-reversals-in-major-investment-markets/

Next is a comment I published in 2004. It was presented as an analogy comparing past developments to my forecast for much of the global economy within the next few years.

“Eventually, more delinquency on mortgages led to more foreclosures. With so many foreclosure auctions, most local housing prices dropped. People who had just refinanced their homes suddenly owed more than their homes would sell for, plus many had even less income than before. Bankruptcy rates increased.” 

I published this in 2005 (Ocotober 18th) regarding the housing market downturn that I had been publishing commentaries on since 2003.

“I mentioned real estate a lot already in the prior emails…. I’ve already told you about the other dominoes that will fall after the first catalyst triggers a drop in real estate…. I saw a flyer today for $333 per month on a $100,000 property. Sure, this is tempting to many folks…. If you get that $100,000 loan because it is only $333 per month to service the mortgage (the first year), that is fine. Just don’t be surprised when your $100,000 home is assessed at $50,000 in a few years….  If you don’t know how big a deal [just] a 15% drop in real estate prices is, you will- and it should be much deeper than that.”

Link: http://groups.yahoo.com/group/redpill_info/message/28

Next is a chart showing the price changes in the housing sector of the US stock market at that time. I also showed other charts pinpointing the peak in the housing market of Phoenix AZ in mid-2005 (as measured by a decline in volume of home sales as well as a rise in the average time from listing to sale).

Here is an updated chart (which I show you earlier).

Note that there was a rebound in late 2005, then a deeper drop. One key point is that I had been expecting a decline in several real estate trends and so I was publishing comments when there were sudden, large price declines that were atypical in recent times prior to that decline.

/////

So, what is my forecast for the future of the construction industry? My first forecast is very simple: “the baby boomers will continue to retire.”

But that might not seem very relevant yet, right? It gets more relevant when we consider that for about 4 decades, interest rates have been generally falling in the US. That detail could be a big factor in the growth of the construction industry in those same decades, right? (Remember the data about how different interest rates correspond to different purchase prices for real estate?)

What if the retiring of baby boomers means less overall spending by them? For example, do you know how many times a month do I talk to retirees who are downsizing from their 3000+ sf home to a home as much as 50% smaller? (That kind of conversation happens regularly.)

I propose that the declines in the economies of Europe and Asia have 2 main factors: the retiring of the baby boomers and rising fuel prices. (Keep in kind that I was saying these kinds of things LONG PRIOR to the 2007 peak in stock prices for Asia.)

I also propose that a big part of why things have been different in the US is because the US is the #1 producer of crude oil, so a major beneficiary from the surge in fuel prices since 1999. (This chart dsiplays the huge increase in inflation-adjusted gasoline prices in the US from 1999-2007.)

Note that stock prices in Europe peaked way back in the year 2000. This chart only shows data through mid 2017, but prices as of 9/20/2019 are slightly lower (and still more than 30% below the peak of prices in 2000.)

 

So, will the retiring of baby boomers lead to a long-term rise in interest rates? They certainly could. Here is a big part of why:

Rates rise when the risk of default is perceived to rise. Why does the retiring of baby boomers correspond to a rising risk of default?

Many pension funds are severely underfunded. If they go broke (or AS they go broke), then there could be a massive economic crisis.

Pension funds that are sending out more money to pensioners that they are getting as revenues will be forced to sell their assets. What are their assets? They own stocks and bonds (plus some real estate holdings).

Many pension funds (and analysts) are publishing reports of how soon they expect to operate before reaching bankruptcy. The retiring of the baby boomers would not result in a pension fund crisis if those pension funds had been ethically operated, but most have not.

As of late 2017, California’s state pensions funds owed $900 billion more than they had in assets (which is by the far the biggest shortfall of any public pension fund in the US). Below is a chart from this January 2018 article: https://www.globalresearch.ca/the-state-of-americas-pension-funds/5630374

It shows that several major companies have private pension funds that report that the assets of those funds is less than 70% (or even less than 50%) of what their future obligations will be. Unlike governments, corporations cannot raise tax to raise revenue. Their only legal choices are to sell assets, attempt to borrow more (going deeper in to debt), or file bankruptcy.

///

The relevant issues are not a secret. The existence of the baby boom is of course no secret either.

What WILL happen as pension funds WILL dump their bond holdings? Bond prices WILL crash. Crashing bond prices equates to SPIKING interest rates. (Again, that can be very bad for real estate markets.)

Some will ask “yeah… but what about the Fed?” They May have much less influence than you have been led to believe. Here is a chart showing that they consistently FOLLOW the trends of the open market for bond interest rates:

Because of the lack of regulation of pension funds, the retiring of the baby boom will devastate many pension funds. To impose same regulations now would actually just speed up the arrival of the emerging crisis.

As those pension funds collapse, the “debt bubble” will collapse (AKA “deflate”). I have dove deep enough in to the technical details for now to shift back to the bigger picture. The basic point is that, given the current issues in GLOBAL finances (global since the baby boom and pension crisis are issues on MANY continents), a long-term rise in interest rates is not only likely soon… but logically is almost inevitable eventually.

Such a spike in interest rates would logically crush demand for real estate (including for new residential construction and all new construction). Note that the recent wave of NEGATIVE interest rates in many parts of the world reflects an UNPRECEDENTED extreme.

This chart shows that in 2019 alone, the number of governments with negative interest rates for their 10-year treasury bonds went from ONE to NINETEEN. This comes within a few years of dozens of central banks shifting to negative rates:

Source of charts (article published in 2019 on August 13th): https://www.ft.com/content/82c4d584-bce3-11e9-89e2-41e555e96722

////

So that ends the segments on “a few quick details to intrigue you” plus my more extended comments on the future of pension funds, interest rates, and construction spending. The other important issue is what my interest is in sharing this with you.

I might not have shared any of this with you, right? I generally don’t push this info on prospective clients that are about to spend $50k or $500k on construction or remodeling (at least not if I will be collecting a commission if they do make those purchases).

However, I already showed you a chart of 60% gains in 8 days early in September 2019. I also showed the chart of 8 reversals that I traded across a 9 month period. I profit from the same opportunities that most people ignore (and that eventually result in big losses for most investors).

I could show you more of my publications that predicted the US stock market crash of 2007-2009. I could show you my March 2009 commentary that US stocks were poised to rebound. That rebound began just a few days later.

So I have quite a track record of anticipating price changes (long-term and short-term). I also have extensive experience selecting specific trades to profit from those price changes.

What I did not mention yet (in this email) is that I offer a service to people with savings (or other retirement investments). So, I am willing to give you access to my expertise (in forecasting and trading) in exchange for a portion of the profits that I will generate for you.

Let’s jump to the issue of why all the info in this email is not in the mainstream news. The media does not have any way to profit off of giving you this info. They have no service to offer that allows them to say “instead of worrying or panicking about these things, partner with me to profit from this historic opportunity.”

Their job is to distract you from these issues (as they promote whatever investments their advertisers profit from). By the way, some of you know that I worked in the newspaper and radio industry before having any involvement with construction. The primary concern of all media companies is revenue from advertising. They are not charities!

Likewise, I am not a charity either. However, I am very clear about how to profit from the same emerging developments that WILL be very challenging for lots of households and corporations across the planet (and across the US).

Maybe you are yourself a baby boomer that is already planning to reduce your involvement in construction. Or maybe you are someone who just understands the benefits of “wise diversification.” Either way, I’d like to know if you are open to profiting from my expertise in financial forecasting and trading. So let me know.

By the way, all the brokerages that I know have standards forms to fill out when setting someone as your “authorized trader” for your account. (Note though that some of them may not use that precise terminology). While you many have never considered most of what I am proposing, Maybe it is time to change that.

Here is a link to one of those forms (at a brokerage that actually charges ZERO commissions on ALL investments):

Here is a link to set up an account with them (and, for most people, you will probably want to set it up as a Roth IRA… though we can discuss those kind of details later):

Here is a video of myself and investment client of mine going through some consistent gains across that summer:

(Yeah, that skinny guy on the left is me as of September 2013… although I am no longer so skinny.)

Here is a video clip of me from way back in November of 2006 (yes, even more skinny) talking about the financial crisis that manifested across the next few years:

https://www.youtube.com/watch?v=TIAFuQzr134

“Years ago, I suggested that a very large downturn was coming in real estate …based primarily on my forecast of the credit market contracting. When the credit market contracts, real estate is very much going to shift along with that.”

What more do you want to know before we get started? Let me know. Note that of course I will also have some questions for you….

 

LeBron: “loyalty is good and indoctrination is bad.”

September 11, 2019

True or false? 4-time MVP LeBron recently revealed his secrets for avoiding disappointment and maximizing happiness. He also gave some examples of how they make a difference (regarding health as well as finances). First, here are the secrets:

(1) Stay loyal to what you know.

(2) Condemn indoctrination of any kind.

Next, let’s explore some examples of how those secrets have made a difference in real life.

As you know, many institutions exist with the specific function of focusing attention on selected topics and then promoting certain ideas about those selected topics. So, let’s focus for a moment on schools in general and science classes in particular.

It is very important to put the word SCIENCE prominently on the cover of a textbook or the top of a piece of paper, like so that you can know whether a test is a science test or a math test. We need to know that this is not just a test about memorizing and repeating ideas blindly. Are these ideas that we have compared to systematic observations or critically examined in any way? If we put the word science at the top, then those issues do not matter because we call this class a science class and this test a science test.

So, yes it is a science test. It is short though. There is only one question.

Which one of the following two statements best applies to cholesterol:

A ) It is one of the most dangerous substances that has been discovered in the last 17 thousand years because many organisms have a liver (which is an organ that makes a lot of cholesterol whether you eat any cholesterol or not), so eating foods that contain cholesterol will definitely kill you. Don’t be naive!

B ) Cholesterol is an essential nutrient that is the foundation for many hormones such as estrogen and testosterone, plus is it an important component of the immune system, so it will often be found at the site of weak and injured tissues. However, it probably caused the tissue to be weak (obviously), so it is not hysterical paranoia to religiously use powerful and expensive drugs to attack your liver and thus reduce the liver’s ability to produce cholesterol. In other words, some cholesterol is good and some is bad, but all livers are fundamentally bad and frequently attacking as many livers as possible is the only way to avoid the long-term health challenges that would otherwise inevitably be produced by having a high-functioning liver.

Now, how do the above principles apply to this situation? All you need to do to know if the answer is A or B is to look in the sacred textbook of your religion and then repeat whatever is in there. This method will earn the social validation of your teacher and your classmates (all of whom are now or soon will be world-renowned experts on the important topic of cholesterol).

Furthermore, if you do well on this test, then you will also become an expert as well. So, you will not be open to wasting your time by considering competing ideas about cholesterol (because you already aced that one science test). If several decades have passed since you aced that science test, there probably has not been any significant developments in science since then, so do not confuse your google search (that leads you to actual research by actual PhD researchers) with the expensive medical degree that I earned in the 1980s or 1960s or whatever.

Also, while some brainwashed idiots may suggest that the rituals of science classrooms are indoctrination, that cannot be true. Indoctrination is wrong, so schools that I personally like would never do that. Plus, if you think about the accusers and conspiracy theorists behind those ridiculous accusations, you will find that they are the kind of people who do not listen to my favorite kind of music, meaning that all their ideas must be false and probably intended to mislead and confuse us (because they are conspiracy theorists, unlike me).

Next, let’s move on to the thoughts of 4-time dodgeball MVP LeBron Bernays on the very important topic of personal finances. Briefly, finances are a good thing.

Also, if you are familiar with allocating a portion of each paycheck to a mutual fund that is designed for people of your age group, be ferociously loyal to that idea. That practice is heavily promoted to lots of people and lots of people adopt it, so it must be the best option for you personally.

While some people claim that investment markets are reasonably easy to forecast (plus they point to a clear history of decades of reliable predictions), if these ideas are unfamiliar, then just ignore or reject them. Pension funds are safe because I want them to be safe. So, I do not need to consider how safe or risky they are because pension funds are familiar and indoctrination is wrong, which is why I condemn it.

As for the claim that in the 20th century there was a baby boom that was followed by a decline in birth rates, we know that is true because it is familiar. However, what about the idea that pension funds can predict how many of the employees that contribute to that fund are about to reach the age of mandatory retirement? That idea is either irrelevant or false or both.

No one knows how many years exactly it will take for someone who is now 60 to turn 65. It is basically a mystery, kind of like human health (and why any self-respecting liver would generate lots of something clearly poisonous such as cholesterol).

So, if the current amount of money coming in to a pension fund is far below the amount of money going out already to pensioners, that is probably just temporary. Any company can obviously just hire 300% more people so that the payouts from the pension fund to pensioners will never fall below the revenues in to the pension fund from current employees. If I am not currently familiar with any budget shortfalls for any pension funds, then that is because there are currently no shortfalls (and I sure as hell hope that there never are).

Just like no one can predict how long it will take for someone who is 60 to turn 65, no one can predict what financial changes those people might make when they retire. Will they stop pouring a portion of every paycheck in to a retirement fund? Maybe they will and maybe not- even though they no longer will have a paycheck.

Will they start selling their retirement investments and spending their savings? Maybe eventually, but that could literally take weeks (or even months). There is just no way to know.

How do I know that pension funds are stable and safe? Because if I have invested many thousands of dollars in to one, then I do not want it to collapse or go bankrupt.

Sure, I know that some pension funds have published reports saying that they do not expect to run out of money until 12 years from now. So what? I plan to retire in only 9 years (so I have nothing to worry about).

Plus, I got a B+ in one economics class 47 years ago, so obviously I am an expert on all current and future possibilities. Just to be sure, I even asked 2 of my co-workers what they were doing with their investments, and we are all doing basically the same thing. So, I expect us all to get above average results by doing exactly the same thing that the vast majority of other people are doing.

Now that we have thoroughly covered the secret to personal finances, let’s briefly consider the idea that mainstream institutions program the masses to value familiarity over prudence. First, that idea is unappealing to me. Okay, that about covers it.

My pension fund depends on the pharmaceutical industry growing hundreds of percent in the coming decades, therefore it must. What about allegations that makers of cholesterol-lowering drugs have invested in a deceptive campaign to demonize cholesterol? I do not want those allegations to be true, so they are clearly offensive and exaggerated and false.

Prudence is imprudent. Familiarity is prudent.

What I prefer must be true because I prefer it. If pension funds have some kind of an accounting problem, then they should just hire more or better accountants so they can fix the gosh darn problem, right?

Anyone who suggests that I might explore methods that are not already familiar to me is an insulting embarrassment. They should be ashamed of their lack of admiration for my established expertise in science class as well as in economics class.

I strongly recommend that you do not betray your loyalty to the holy institutions that could not have indoctrinated you to condemn indoctrination (because indoctrination is wrong and shameful). Do not explore ideas or methods that were not emphasized in your classes in grade school in the 1960s (unless they are featured in TV ads on a network that you like).

Therefore, everyone should buy silver because I like Ron Paul as well as David Wilcock. If silver prices rise, that is a clear signal to buy more. If silver prices drop, that is a clear signal to buy more. If prices do not change, keep pouring a portion of every paycheck in to purchasing silver because in the long run, silver prices fell about 90% from 1980 to 1999, so you know that it is safe today (and every day).

Before we switch to other important topics like ridiculing people who target above average results of any kind, let’s talk about one more thing. There is a deep state plot to indoctrinate a small group of amazingly intelligent people who are extremely resistant to the idea that they are actually quite naive. The targeted geniuses will be fed the emotionally-appealing idea that the deep state should be overthrown and the best way to do that is to subscribe to a certain twitter feed and then wait very patiently. Wait for what? Wait for the savior to overthrow the deep state while we sit in comfortable recliners and drink protein shakes. If you agree with me in this, that proves that you are highly intelligent like me.

Because George Orwell clearly said in his book 1984 that the deep state would never create a revolutionary front movement to entrap intellectuals, that is impossible. Plus, once again, I just do not like the idea at all.

Also, for the deep state to incite me in to contempt for the deep state would be ironic. Why would they want me to have contempt for them while I invest lots of emotion in to the idea of a political savior that will bring down the deep state? I am doing my part to bring down the deep state because I am wearing a MAGA hat. Yes, the hat was made in China, but it was made prior to the trade war thing, so it is okay.

My favorite political savior is going to defeat the deep state in a boxing match with one hand tied behind his back, plus increase employment by 900% to prevent the baby boom bubble from popping (like it already has in Europe and Asia), plus genetically engineer a superior type of liver that does not make poisonous substances like cholesterol. Anyone who does not agree with me 100% is probably a traitor or a Mossad agent or both.

In conclusion, not only should you buy lots of silver, but you should probably buy it from me. I will sell it to you for $20/oz. I am so sure that it will go to $50/oz very soon that I want to sell you all of my stash for only $20/oz.

So you can memorize the following for the pop quiz next week, here are those 2 secrets again:

(1) maintain ferocious loyalty to whatever is already familiar.

(2) champion the idea that indoctrination is a practice that should not ever be done by anyone or any group.

Review my recent predictions of reversals in major investment markets

September 1, 2019

For investors, here is a brief review of the last 9 months or so of my investments (across several major markets). In addition to showing several charts (of when I invested in what), I will conclude by referencing a few of the commentaries that I have published in the last 16 years.

If you find that you are interested in benefiting from my trading insights, I can either trade your funds within a pool or within your own private account (as your “authorized trader”). Contact me for details.

 

Generally speaking, my perception is that most investors greatly underestimate the risks of conventional investment strategies and also underestimate the benefits of strategies like mine. Mainly, we will focus here on my strategy and how it is distinctively beneficial.

Overall, my strategy features the occasional analysis of several major markets to identify which ones are strongest or weakest at any particular time. I attempt first to identify in advance the potential of a long-term reversal in each market. Second, I also attempt to identify specific short-term opportunities and trading signals. In this presentation, we will focus mainly on my recent record of identifying long-term reversals. At the end, I will link some relevant commentaries of mine from 2004 and 2005.

 

Again, my top priority when planning my investments is to identify significant price reversals before they start. By significant, I mean price reversals that will begin trends that will last at least for months if not years. Once I identify a probable reversal, I then position myself to profit from those “major changes in trend.” Knowing of probable trend changes before they happen is key for controlling risk as well as for maximizing profit potential.

First, we will quickly review the 3 of the 5 major markets that I occasionally trade with attention to which kind of position I entered across the last 10 months in each market (within a specific brokerage account that I opened on 10/4/2018). Those 3 markets shown below are US treasury bonds, the US stock market, and precious metals (primarily silver). For those who ask, I can also provide charts of my trades for crude oil and for the currency exchange rate between the Euro and the US Dollar.

While many people focus almost exclusively on the US stock market, that is obviously not my orientation. However, there are two periods of time in the last 10 months that I have made very distinctive statements about a high probability of a decline in US stock prices. For Facebook users, I am even posting a series of links to the specific comments of mine on Facebook in those two clusters of time:
period 1:
9/26/2019 – 10/4/2019
period 2:
7/19/2019
Facebook users can ask me to tag them in the thread to see the specific relevant comment (which is deep within the “thread” of comments):

spx 12 months with notes

You can also see the 18 days that I entered positions that profit from a rise in US stock prices. That includes a cluster of 5 straight days in December of 2018. Note that those were the best days in the last year to purchase US stocks. Across the first few months of 2019, I also entered “long” positions in the US stock market within a day or two of several short-term lows. Next, in late May, prior to a long rally in US stocks, there was 1 more day that I entered positions that are “long” US stocks. Last, during August 2019 there have been a few weeks of “bouncing” markets and I entered trades that were “long” the US stock market on several of those days.

tlt with notes
Next, within the US bond market, I entered trades a total of 19 days from October 2018 to June of 2019. The only 3 days that I entered trades “long” the US bond market are shown in a green oval. Again, that was the best period of the year to go long US bonds. Among the 16 days that I “shorted” the US bond market (shown in red), I also circled 5 days in a row of shorting US bonds at the very end of 2018.
slv

Concluding comments:

Generally speaking, I did quite well in identifying the main price reversals in those 3 markets within the last 9 to 10 months. If you are interested in benefiting from my trading insights, I can either trade your funds within a pool or within your own private account (as your “authorized trader”). Contact me for details.

Now, before we conclude, let’s consider some “bigger picture” issues. There was a baby boom in the middle of the 19th century. You are probably aware of it. As those people retire (and begin to sell their retirement investments, plus no longer add to them), I expect a “tide” of massive changes in many investment markets.

In fact, that tide has already manifested in many parts of the world. In Asia overall, stock markets peaked in 2007 and have generally fallen since then. In Europe overall, stock markets peaked in 2000 and have generally fallen since then.

 

What do I propose has kept the US economy ahead of those regions? Among other things, the US is the top producer of crude oil in the world. In contrast, much of Asia and Europe are extremely dependent on imported fossil fuels. That is why in 2008 prices of diesel exceeded $11 per gallon in parts of Europe.

 

Further, in my publications of 2004 and 2005, I specifically forecast that the rise in fuel prices that started in 1999 would continue. I explained exactly why I expected that rise to continue. I also explained what results I considered to be predictable (including a big downturn in lending markets that would result in a real estate decline, plus major destabilizations of mainstream financial institutions).

 

Item #1)

Navigating the New Economy, Lesson 1: “Worth its Weight in OIL”

J.R. Fibonacci
September 9th, 2005

Link to the original article:
http://321energy.com/editorials/fibonacci/fibonacci090705.html 

Item #2)

Are you affected by the real US deficit: oil?

November 7th, 2004

Reprinted version of that 2004 article:

Way back in 2004 I was bringing up issues that, within a few years, many others would also consider:

 

A key section in that article was when I made an analogy about what kinds of events could be expected globally because of major fluctuations in CRUDE OIL markets. I was referencing a specific past development as a clear warning for future potentials:

“Eventually, more delinquency on mortgages led to more foreclosures. With so many foreclosure auctions, most local housing prices dropped. People who had just refinanced their homes suddenly owed more than their homes would sell for, plus many had even less income than before. Bankruptcy rates increased.” 

 
Recall that within a few years, not only were lots of people concerned about rising fuel prices, but also about the exact set of developments that I had written about in 2004. (By the way, I can provide links to many other articles of mine across 2003 to 2008 in which I reference the events that manifested in 2007-2009.)

So, in addition to specifically forecasting many of the biggest changes in global markets in recent decades, I also have a clear record of anticipating smaller moves (multi-month moves). The basic point is that I know and respect some of the major “leading indicators” that precede major moves up AND down (across a wide variety of markets). In many cases, I even recognize very quickly that a specific trend change is likely to last years rather than only a few months. 

In fact, I can send you a link to a commentary of mine in early March of 2009 in which I forecast a significant rebound in US stock prices. That rebound began a few days AFTER that commentary (and has lasted for OVER A DECADE).

However, in my commentary prior to the start of that rally, I actually was not clear that the rally would last so many years. Still, as long as I can forecast even multi-month fluctuations, then there is no issue of “missing” the long-term ones. The short-term ones become long-term ones.

On that note, I have recently mentioned to several people that I expect the recent rally in prices of precious metals and US bonds to both reverse sharply (downward) and to decline not just for months but years. That is because the extremes in the data that I monitor are at “historic levels,” not just “multi-month extremes.”

As a sidenote for real estate investors, a multi-year decline in US bond prices corresponds to a multi-year increase in interest rates. That can be very bad for the real estate market (just as the last 4 decades of mostly declining interest rates has overall been fantastic for US real estate markets in that time).

Once again, if you are interested in benefiting from my trading insights, I can either trade your funds within a pool or within your own private account (as your “authorized trader”). Contact me for details.

photos of home to have garage built in Pflugerville TN

January 27, 2019
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Recognizing and releasing self-defeating behaviors

January 20, 2019

What matters most for your health and wealth?

TOPIC: Recognizing and releasing self-defeating behaviors

First, I can recognize in my own history many occasions when I was aware of behaviors that I perceived to consistently produce favorable results, yet I did other things anyway (or simply “nothing at all”). I have even done many things that I expected would be “counterproductive” or at least wasteful. Is any of that familiar for you so far?

Eventually I got curious why I would form “self-defeating habits” and how to break those habits. As I witness similar behaviors in others, I naturally speculate and explore questions like “how do self-defeating behaviors become habitual and (perhaps much more importantly) how do those habits cease or get replaced with more functional patterns?”

I will jump right ahead to a few rather deep questions: what if I have a deep attraction to experiencing grief? What if I actually prefer (over some of the priorities or goals that I might claim) experiencing at least occasional helplessness, guilt, shame, isolation, or even despair?

What if behind all of that is a desire for others to notice me having those experiences and then “get involved?” What if I crave to be rescued, like as a validation that at least one or more other people relate to me as someone “worthy of being rescued?” What if I have been identifying myself (as in relating to myself) as someone whose mere existence
needs to be justified (in order to be worthy, deserving, acceptable, etc)?

 

To clarify, my interest here is the possibility that I might have been practicing thought patterns that have led to reduced effectiveness, plus that there could be a major improvement in my future effectiveness by removing or replacing those habits of thinking. Further, if those thought patterns are just habits, routines, or programs, then can I in solitude directly explore what may have been unconscious or semi-conscious thought patterns so as to improve them and the results that then get produced? (Or, in contrast to me directly exploring them alone, would involving other people in my exploration be preferable or even essential?)

The issue of solitude (or partnership) bridges in to a key issue. Have I been thinking in ways that lead me to avoid effective partnership (or to avoid solitude and any effectiveness that might result from that)? Have I been targeting partners that would lead to disappointment for me? Or have I even been neglecting or compromising partnerships that otherwise might have been far more productive?

In the moments of me typing these sequences of words, I do so in private, though with an expectation of sharing these words with others (and probably in a rather public way online like on social media). That detail reminds me of many experiences of gratitude from repeatedly finding great value in content that I encountered online (either by researching for it directly, by “stumbling upon” it while exploring something else, or by seeing it when someone else shared it “randomly” on social media).

When I first considered making this post, I thought to note that it might seem surprising that I would focus much at all on the topic stated here (of updating ineffective thought programs) instead of simply promoting some of my breakthroughs. Why not just publicize once again my recent 70% gains in under 3 months (or promote my latest discoveries in cutting-edge health treatments that mainstream health practitioners are too busy / too wealthy to explore or develop)?

Repeatedly, I have been surprised at how uninterested so many people seem to me to be in those results (and methods). So, I keep getting curious about why so many people seem so much more interested in other pursuits, such as condemning particular ideas or political celebrities (rather than in investing in directly promoting their own well-being).

Further, what I observe in others reminds me of me (whether in my distant past or quite recently). Why would we invest so much time in condemning distant targets or vilifying ideas that we claim to consider to be not just unintelligent but unworthy of our time?

“Those other people over there should not waste so much time complaining about which people waste the wrong amount of time focusing on the wrong topics in the wrong ways. They are basically ruining my life by victimizing me with their MANY faults, especially their lack of a sense of humor.

Instead, they just keep investing their time in ways that lead them to neglecting an awareness of how much time they are investing and of the results of those investments. They seek an ongoing flood of emotional drama and controversy to distract them from perceptions that are much more personally humbling and frightening.”

As I said at the very beginning, my own history contains many occasions when I was aware of behaviors that I perceived to offer superior results, but I did those things less than I could have (or only weeks or months after my initial perception of their superiority). But so what? I’m mainly just interested in that detail as a bridge to exploring how to release ineffective habits and develop more beneficial ones.

I certainly could comment a lot on how we get influenced or even programmed to adopt certain habits of thinking, presuming, interpreting, and perceiving. I may be quite brief though, for I expect brevity to be most efficient. I want to quickly  get to “what to do instead.”

 

Imagine that there are a few possible social systems that could form (in this case, among humans). Could we rank a few contrasting social systems in regard to how efficiently they influence lots of organisms to generally sacrifice their own interests to promote the stability and expansion of that social system?

At least during certain periods of time, is it logical that any system that produces lots of devotion and conformity and self-sacrifice will generally tend to “outperform” any other systems? Potentially least robust would be systems that effectively promote functional independence and social diversity (and here I do not mean “lip service” to a particular ideal of diversity, but actual diversity or variety of behaviors and ideas), right?

However, I expect that there could be a cycle (or alternating “waves”) in which totalitarian religions and governments do well for a while, followed by times when experimentation and innovation “outperform” (in contrast to being neglected, ridiculed, penalized, or entirely prevented). As a side note, as I see social waves of ridicule of people for allegedly “rejecting science,” I notice that some of the most passionate critics seem to me to cling to programmed dogmas about science that are pseudo-scientific at best.

When the pro-conformity messages extend to ridiculing “all religious traditions,” that is itself to me just another religion of contempt, ridicule, and of course blind conformity.
When the “glorious champions” of mainstream science ridicule the possibility of dissent or controversy among science enthusiasts, that is to me an ironic avoidance of actual scientific inquiry.

 

So, here are some attributes that might fit an “ideally-efficient social system” during certain periods of time at least:

1) the vast majority of the public is far from satisfied (even deeply discontent or in despair), but extremely ashamed of their own experience (and thus chronically anxious about hiding it or reflexively justifying it with socially-acceptable rationalizations, such as being victimized by someone else or by “fluke” circumstances).

2) A popular perceived solution to their shame and anxiety is to devote themselves to reforming the political system toward fulfillment of specific programmed ideals (like “liberty” or “universal basic income”) through specific programmed methods (like voting for a better Prime Minister or donating more money to lobbyists who will finally bribe the ruling Monarch in to “doing the right thing”). Instead of improving their own results through refining their methods, they invest in reforming the policies and results of their rulers. If they dare to talk about “going to another political jurisdiction where the policies are FAR more attractive,” they do so with anxious guilt about “abandoning” the “holy cause” of the government to whom they “owe so much.” (Also, in places where the core principles of national socialism are dominant, the more that a citizen  has been forced to contribute financially to a social welfare program, the more that they hope to receive benefits when they retire… which leads us to the next issue.)

3) the vast majority of the public experience multiple forms of dependency. For instance, they may be chemically dependent on several prescribed medications, psychologically
dependent on future government benefits (like social security), and financially dependent on their current job and credit. Even those who are in fact relatively wealthy will perceive themselves as “close to the edge of embarrassment.”

4) Experiencing themselves as “dependent,” their primary hopes are for first of course defending any present external support structures and second expanding them. So, how will they predictably experience any data suggesting that an “entitlement” program is nearing financial insolvency or political collapse? They will carefully attempt to filter it out (so as not to deal with it). Then, if confronted with it, they will fiercely resist and ridicule it.

5) Being so emotionally dependent on external social validation, they will also devote themselves to rigorously defending their prior choices and their current biases (as in their current patterns of action and their current conceptual presumptions, of which they will likely claim to have none).

 

Next, consider the issue of bias as it applies to prices in investment markets. The more that the social system can get the masses to invest in the same things, the more that prices of those things will soar.

Gamblers gathered around a table playing a card game like poker do not all cheer because the pile of chips in the center of the table is growing to historic extremes.  They each celebrate individually when moving a big pile of chips from the center in to their own pile.

However, mainstream investors have been programmed to relate to rising stock prices as being completely unlike a growing pile of chips in the center of a table of poker players. Until they sell their assets, the current market price of their assets is relatively trivial. Until a poker player moves the chips from the center to their own pile, the number of chips in the center may be intriguing, but not more intriguing than looking at what cards are in your own hand.

Also, poker games require ongoing investments in order to reach the end and a possible “profit.” To continue to have a chance at a big profit, it takes bigger and bigger investments to “keep playing.” What is more important to how much more one should invest in this hand of poker: the amount of chips currently in the center of the table or the “quality” of the combined cards in your hand?

 

So, what action drives up prices of a particular stock? More buying than selling.

What other action drives up prices of stocks? Nothing.

Among stock market investors, everyone is not getting rich together. It is the same with poker players. The growing pile of chips is not everyone getting rich. It is everyone risking more and more.

For stock market investors, they are not all spending their way together to mutual prosperity. They may all be increasing their risk levels. Someone will profit when the masses all dump funds in to a particular stock and drive up prices.

However, the mechanism for their profit is that they will sell to someone else (who provides the wealth that the seller moves from the center of the table to their own private pile). There is no magic creation of value in stock markets. There is simply transfer of wealth, just like at a poker table.

 

As simple as these realities are, like for a ten year-old child to comprehend, try telling it to someone who in recent decades has invested $50k or even $500k in to mutual funds or other stock holdings (or is expecting a pension fund to be solvent in 10 years or 20 years). Their resistance and distress at simple realities can be enormous.

But they are not the extreme case. The extreme case is real estate speculators.

These people might invest several thousand dollars of their own funds while borrowing hundreds of thousands of dollars that they promise to repay over a few decades. Then they all pour in to real estate markets and watch the pile at the center of the poker table grow and grow.

They may be taking actions that historically are clearly evident to be occasionally catastrophic to their personal finances (or the finances of the corporation or pension fund that they operate). But they are conceptually “blind” to the basic realities of what is driving up real estate prices.

More buying than selling is the only thing that drives up prices, just the same as how the pile at the center of a poker table grows. Everyone is not making each other rich. Everyone is making each other more and more enthusiastic and confident, but in a delusional way.

When a few people want to sell real estate or stocks, that just creates a tiny influence on overall market values. However, what if 20% of the homeowners in your town all list their home to sell at the same time? What happens to prices?

What if 50% of the homeowners in your town all try to sell at once? What if 100% all try to sell at once?

 

Again, the only source of profit from speculating in real estate or stocks is the next wave of buyers. There is no other source.

If that next wave is smaller than expected (or does not happen at all), then prices drop or even plunge. That is not because the physical real estate lost practical value (like a hurricane ripped off the roof). That is simply because there was never any lasting significance to the current size of the pile of chips in the center of the poker table.

Retirement investors often just dump a portion of their paychecks in to the center of that pile. They may never look at the details of what they are investing in (as in never looking at the cards in their hands). They may not even think about the possibility that the size of the central pile is a totally distinct issue from the quality of the cards on which they (or the managers of the 401K funds) are betting / gambling / investing / speculating.

They simply look a few times a year (or less) at the growing pile of chips in the center. They actually may think that those chips in the center of that poker table are effectively their own private stash of chips.

But all of them cannot be correct about that. They all see how much everyone else has been dumping in to the central pile.

They look at the market value of their real estate. They look at the market value of their IRA or 401K. They look at the amount of chips in the center.

 

 

They are like poker players saying “there are four people playing this hand of poker and I put in about 25% of the chips in to that central pile, so I can count all the chips in the center and divide that number by four and call it mine.” That is delusional. No poker players do that.

But that is basically what stock market investors do. They see current market prices, multiply by that by the number of shares they hold, then think of it all as functionally identical to holding that amount of cash. That is inaccurate (as in delusional).

Everyone cannot sell their stocks at once without market prices collapsing. Same for real estate.

And pension funds have been dumping assets negligently in to stock markets and real estate for decades. But for now, let’s just focus on the detail that I personally see the current situation in investment markets as the biggest opportunity in modern history.

In contrast, the same opportunity that I am very clear about (and have seen lots of statistics to measure how historically extreme it is) will likely be ignored by the vast majority of people already invested in to markets that they HOPE are stable. The more invested financially they are in to any particular market, the more psychologically invested they are likely to be in avoiding or discounting contrary evidence.

The more resistant they are to clear realities (and to clarity about those realities), the more they will avoid or even ridicule those who dare to challenge their presumptions about how all the poker players are going to get rich together. “Look,” they may say, “the central pile is getting bigger, so that proves that everyone at this table is getting richer the more that we move chips out of our own private stash and toward the central pile!”

In fact, they may complain that when their investment strategies clearly do poorly, the problem is that there are too many people who ruined “my finances” by not playing poker at “my” favorite table (whether that table is bitcoin, gold, real estate, tech stocks, marijuana stocks, or something else). Perhaps the real problem (according to them) is that there is more than one table and the government should come in and properly fix this situation, right?

What if the primary function of certain government programs is to present the idea to the masses that the government can fix a certain issue (and will do so in the immediate future)? Again, note that in the prior sentence I made no reference to actually creating any result other than presenting a particular idea.

You could invest in the next promises of political salvation from basic economic realities. Or, you could invest in a partnership with someone who has demonstrated the unusual profitability of applying certain very simple principles.

Will a government reform create a new influence on stock prices to solve the “problem” of the possibility of rapid decline in market values caused by selling? That may be promised. Over and over and over, in direct conflict with an abundance of actual evidence, that idea may be promoted so well that many naive investors
all count the pile of chips in the center of the table as “mine alone.”

If it was a poker game, one may have a pair of threes in their hand and another has a pair of fives. But they do not look at their cards and instead they both say to each other “it is a very complicated thing to evaluate the quality of the cards in one’s hand because the rules of poker are very mysterious, right?”

They just keep dumping money every paycheck in to the central pile. They just keep counting the chips in the center and relating to all of those chips as “mine alone.”

Are they all getting rich together? Or all they all piling in to enormous risks together?

What if there were groups who designed campaigns to promote certain perceptions in the general public? Why would they go to the trouble of creating
huge bureaucracies to publicize certain ideas or presumptions or doctrines or dogmas? Why would they invest huge amounts of money in to those
publicity campaigns?

Are those groups trying to help everyone get rich together? Or, might those groups be investing in the value of biasing the masses?

Who should you and I bet on (or bet against)? For most retirement investors, they have already placed their bets (though they could
easily change their bets). But most of them are remarkably resistant to changing their bets. Most of them will continue to take actions
that generate profits for the prudent and produce catastrophic losses for the rest.

Should it be this way? Oh no, it certainly should not!

It should be whatever way the publicity campaigns program the masses to believe that it should be. Any day now, political salvation will be delivered right to your door like a dead lizard brought by a house cat as a gift to you.

All we need to do is have faith. The new political savior will be victorious, so we must be very patient (and do not do anything to move our investments from the center of the table to our own private stash).

The more you invest in a particular strategy, the more biased you may be to continue to invest in it – as in without regard to the actual results produced by that method (or without regard for contrasting results produced by contrasting methods). In fact, there are no other methods than loyally waiting for the (political) savior to rescue you.

You know the savior that I mean. I obviously do not mean the alleged savior of the idiots who disagree with you. After all, we know that they are idiots as established by the fact that they disagree with you on certain things, right?

So, what exactly shall we do to those who tempt you away from being a glorious patriot who patiently waits for salvation? Those crazy fanatics should be avoided, ridiculed, and then beheaded (though perhaps not in that specific order).

You owe it to society to loyally dump chips in to the center of the poker table as fast as you receive them. You can be part of the glorious achievement of driving up stock prices (or real estate prices, bitcoin prices, etc) to new levels. Wouldn’t that be a wonderful thing for millions of people to put on their headstones at their gravesites?

In conclusion, there is no such thing as a self-defeating pattern. We will all get rich together by pretending that there is some other source of rising prices than buying. To clarify, by ignoring that delusional idea that buying raises prices, we will all get rich together. In other words, together, we will all get rich by ridiculing a long list of things that obviously do not exist (or at least, according to certain publicity campaigns, should not exist).

 

As a final side note, I have about $4 trillion of real estate that I am selling because it will definitely be worth 6 or 7 trillion really soon, so let me know if you are interested in getting in on the safest and simplest profit in history. After all, real estate prices always rise because they never decline.

Or, if you think stocks are the way to go, I have a few trillion of that stuff and you should buy all of them right away because stocks always rise in value too, right? Or, if you like Barrack Obama, he told me last week that he is pouring his assets in to bitcoin because it may not always rise in value, but it will definitely bring down the Federal Reserve (probably within the next 72 hours), and he just feels an obligation to his children and grandchildren to do the right thing, right?

A brief analysis of my trades in 4 markets this quarter (which produced profits of over 70 percent)

December 30, 2018

Below is some content that I emailed several people yesterday, then the brief reply of 1 correspondent, then my longer reply to him.


This is a quick update to my prior report on 12/7.

The account that was up 26.3% on 12/7 is up to over 73% as of yesterday (12/28). I opened it on 10/4: http://allycm.com/actual-results.php

The account that was up 53% went up to 77% as of 12/17 (and, as I make some changes for the new year, that account has been “liquidated to 100% cash” to remain at a 77% gain). I opened it on 11/9 (so those big gains took only 6 weeks): http://allycm.com/77-percent-gains-from-Nov-9-to%20Dec-17.php

FYI, I can document more than 15 years of my publications of accurate long-term forecasts. That includes calling the “bottom” of the global stock market decline in March of 2009 (which I published a few days BEFORE the final low in US stocks).



Great work man!!! This stuff make me nervous with the crazy market for sure!!!


 

Thank you. As most investors begin to get nervous, I get even more interested in “the data.” Those who invest with me will benefit along with me.

As of late September, I was clear that the US stock market was near a reversal that was even more obvious to me than the 2007 high or the 2009 low (both of which I also publicly forecast). In the last 3 months, there have also been 3 other investment markets that showed enough evidence for a price reversal that I entered trades (and almost of all of have been profitable). Below are charts of the 4 markets and my timing.

US Stocks:
image.png
(The reason I emphasized the red section- in regard to the fact that on 12/20 I was already taking positions for a large rise in stock prices-  is because 12/26 was one of the largest point gains in the history of the US stock market. However, As of Friday 12/28, I actually have already reversed position AGAIN, expecting another downward acceleration of stock prices in the US and internationally.)
Silver:
image.png
(I am still positioned for a further rise in silver prices.)

US Treasury Bonds:

image.png
(In this case, I entered this market 2 days BEFORE the actual low… and it took almost 3 weeks before I had a decent profit. I target getting in early and getting out early- long before the majority of investors are concerned about that market reversing.)
Forex (EUR:USD exchange rate)
image.png
(Though I have reduced my initial exposure to this market, I remain in position for a much larger and longer rise.)

 

How global fuel prices and baby boomers led to my 77% gains in 6 weeks

December 25, 2018

I tend to be skeptical when people claim an interest in “economic literacy” (or in “prosperity”). Many people seem strongly committed instead to defending their prior biases and choices. However, what about when the data does not fit the presumption / dogma?

First, people seem to me to focus too much on secondary “investment” markets and not enough on primary “economic” markets. Below is an example of what I mean by that. (By the way, a big reason that I made 77% gains recently in 6 weeks was because IN ADDITION to focusing carefully on investment markets, I respect basic economics as well.)

So, when gas prices go way down, what do people say in response? Many people say “awesome- what a relief!”

However, when gas prices passed $11 per gallon in parts of Europe in 2008, many people said “I just can’t continue my old patterns… and I might even get an electric vehicle.” They are responding to “economic fundamentals” (lower prices attract more buying and higher prices attract less buying).

However, many people do not know the BIG long-term issue in fuel markets (because they invest their attention instead mainly on financial speculations). I will cover that issue further down.

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Before we get to that, note that opposite to “economical thinking” is the thinking of mainstream investors in regard to what they buy. When asset prices have been rising for a long time, many people say “great… I will plan to borrow a few more hundred thousand dollars to speculate more aggressively on more rising prices in the future.” Then, when prices eventually go down, the first response after all that enthusiasm / mania is “this is fine… I clearly should immediately buy even more now that prices have dipped.”

That kind of thinking is evidence of a speculative financial bubble. I have seen it in real estate, stocks, bitcoin, gold, and so on.

Mainstream speculators totally ignore the issue of “economizing” most of the time, then when convenient in the service of their pre-existing bias / dogma, they briefly give some “lip service” to the principles of long-term economic patterns. For instance, if I offer to show them data that “this latest dip might not be brief,” how interested are they in preserving >$100k of equity in real estate (or in an IRA)? In some cases, perhaps “not at all” (at least not yet).

So, to the vast majority of people investing in mainstream investment markets, those markets are VERY “secondary” even to those investors. Those markets will never be as important to their everyday lives as buying fuel month after month (or buying groceries, etc…). Those “secondary” markets are for “excess capital for investing” (such as their retirement funds).

Even with real estate speculators (as in anyone who expects to eventually resell property at a higher price), their expectations may be greatly divergent from the actual data. What data? Outside of 1996-2006, real estate prices in the US overall have barely kept pace with inflation in recent decades. You might not want to see the data, but I could show you the chart (and you could easily find it yourself).

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Moving on, I mentioned above a big long-term issue in fuel markets. There are a few ways to present the issue, so here is the what I consider the most concise: decade after decade, INFLATION-ADJUSTED fuel prices were dropping in the US (among other places), but… that has changed.

The all-time low in gasoline prices (when adjusting for inflation) was 1999. Gas prices increased quite a bit in to 2008, then fell and “bounced around” since then.

Since 1999, oil prices went from $11 per barrel to $148 per barrel, then down to about $30, then bounced for a while as well. (Very recently, they have been plunging, as shown in the chart below.)

I wrote about the importance of fuel prices a lot starting in 2004. I also have repeatedly said since 2009 (after fuel prices had plunged) that fuel prices would eventually rise again. Specifically, I predicted that they would recover enough to create destabilization in “secondary markets” of real estate speculation, stock market speculation, and even speculation in things like bitcoin and gold.

So, what exactly do we see in the chart below? That is 3 years of time and two markets.

The faint tan line tracks the trend of stock prices for a group of 500 big companies in the US (a.k.a. “the S&P 500”). The prominent black line is the global price of crude oil.

Most notable to me is that the prices of US stocks started to fall PRIOR to global fuel prices (crude oil). That fit with my presumption for a repeat of the pattern in 2007-2008: that fuel prices would eventually rise enough to “break the speculative bubbles” in “secondary markets.”

In fact, another chart I could show is for stock prices worldwide, which peaked in January of 2018… which was LONG before the decline began in global oil prices. Real estate markets in some parts of the US had also weakened long before the recent peak in oil prices (though not yet in a clear overall decline). Bitcoin’s bubble popped late in 2017. Gold’s bubble popped way back in 2011.

FYI, stock markets in Asia overall have been down since 2007. In Europe, the all-time high in stock markets was way back in 2000.

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Next, besides the issue of fuel prices, another “long-term economic issue” involves population trends (“demographics”). Basically, in many parts of the world that were involved in World War 2, there was a baby boom of high birth rates (that later declined).

As that generation retires, they begin to cash in their retirement accounts to spend on their actual retirement. Apparently, the younger generations in the workforce are not pouring in equal amounts of capital in to their retirement accounts. More selling than buying results in declining prices (whether of stocks or anything else).

Even without the issue of fuel prices worldwide, the issue of the retiring of baby boomers globally is another big factor in my long-term forecasts. As for those who “defend their pre-existing bias” that hyperinflation will “balance everything out,” where is the data to back that up?

In contrast, I can point to the case of Argentina, where stock prices plunged in 2018 even as the currency there was losing massive amounts of purchasing power. Did their huge national debt lead to massive inflation? Yes, but asset prices still plunged.

https://seekingalpha.com/article/4183072-argentinas-stock-market-risky-risk-worth-taking

I can also point to Japan, where stock prices peaked in 1989. Did their massive national debt lead to a plunge in purchasing power of their currency? No, the Yen deflated (increasing in purchasing power). Plus, stock prices plunged to 7200 Yen in 2009 from a high of about 39000 Yen in 1989.

What most “insulated” Americans overlook is that the US has a massive advantage over most of world by being the #1 producer of crude oil. Why did US stocks rise so much since 2009 compared to the majority of Asia and Europe? Places that spend billions of dollar per day importing fuel must either balance that cost with exports… or eventually they will not be able to afford to import billions of dollars of fuel per day.

How did global oil prices plunge from $148 to $30 so fast after the 2008 peak? Did the economies of many parts of the world greatly reduce consumption? How about the EU, Japan, China, and India?

Fuel consumption did fall, but not really by much (or for very long). Here’s some data:

https://www.indexmundi.com/energy/

But in Europe, fuel consumption from 2006-2016 was down. It is the type of development that had not been considered by mainstream investors and analysts.

To confirm the data, see page 8 of this PDF:

https://www.bp.com/content/dam/bp/en/corporate/pdf/energy-economics/statistical-review/bp-stats-review-2018-full-report.pdf

Also, data on page 11 shows that coal and oil have been losing “market share” to natural gas for a LONG time. What would happen to the economy of various nations if those prices rise from current levels ($4) to prior levels ($15)?

That would be (relatively) unfavorable for importers and favorable for producers (places where natural gas is extracted), right? That is the same differential that is evident in other fuel markets like coal or oil (or electricity generated as nuclear, hydroelectric, wind, etc).

So, my perspective is that without a MASSIVE and rapid shift toward the widespread use of a much less expensive (and sustainable) fuel source, the retiring of the baby boomers worldwide will “pop all of the speculative bubbles.” I do not expect one. I could be wrong though.

Will there be a huge advance in energy technology coming (or already underway)? That is certainly possible…. although without WIDESPREAD implementation of a technology of that kind, I continue to expect a specific series of major changes in global economics (and politics).

For investors: better returns, no management fees, and better tax sheltering

December 15, 2018

For those interested in my investing services (managing your private IRA account etc), this is an edit of a private email I just sent someone on that topic: /////

Hi, as for getting “better returns” (than what you have been getting lately with your 401K, IRA, and robo-trading from Betterment), “better returns” is my primary specialty. Plus, perhaps I can make some useful comments on some of the other issues you raised. First, I will make a couple quick points on those other topics.

Regarding management fees, I have not built my “authorized trader” service around typical “management fees.” Instead, I simply use a profit-sharing model. In other words, there would never be any “out-of-pocket” cost to you at all (in the sense that your only expenses are already covered by the prior profits generated).

As for taxes, I generally recommend that people consider maximizing their use of tax shelters such as IRAs and tax-exempt trusts (such as “charitable remainder trusts”). CRTs are similar to Roth IRAs in terms of sheltering the ongoing investment profits from taxes, but without the typical restrictions of Roth IRAs (especially when it comes to receiving money from out of an account prior to age 59 & 1/2 – or whatever they change it to as time goes on).

Another nice thing about CRTs is that the implications for your personal tax returns would be extremely simple (since they are not subject to “early withdrawal penalties” and related documentation). Further, CRTs also offer a potential tax deduction when you create them. If that is not appealing for tax year 2018, then of course we are only 2 weeks from 2019….

Next, for any funds you can control, my current strategy would be to set me up to trade anything that can be traded (such as the IRA) and to shift anything else to cash / “near cash equivalents” (money market or very short-term treasury bonds). With 401Ks, people often have very limited alternatives within that structure, so you can just either “park” those assets in to cash for now or “roll over” the 401K, probably in to a “traditional IRA.” As for robo-trading through Betterment, I am not a fan….

As for your current positions, they are rather different from mine (with a minor exception in regard to metals). As I have noted on facebook in a few places, I have been taking some positions in SLV and USLV lately (and in fact I currently hold a few shares of GLD). Other than metals, I have been primarily “shorting” a few of the major indices of the US stock market plus taking a series of short-term “long positions” in US bonds (though I currently do not hold any). Some examples are in this link: http://allycm.com/order%20history%20for%20account%20opened%20November%209%202018.php

Ultimately, regarding “better returns” in particular, I’m not sure what you comments of mine that you have seen or not. I posted yesterday on Facebook that an account I opened on 10/4 had exceeded a 32% percent gain as of late Friday. The week prior, it was up “only” 23.6%, and the sudden large profit was mainly based on taking advantage of a notable “set-up” that I had posted about on Thursday while markets were open. (As you probably know, I consider Friday’s market activity to be only the latest wave of much larger developments).

As another example, on 12/8 (a week ago), I posted that another of mine just passed a 50% gain in just under 1 month (since the account was opened on 12/9). The link above is for that account.

The methods used in each of those accounts are a bit too aggressive for most IRA investors (though generally legally-compatible with IRA accounts). So, the main “take-away” point is that in the last month or two, overall I “nailed” the drops in stock prices plus the more recent rallies in bonds and metals.

For now, I will also make just a very brief reference to my published forecasts going back to 2003. I gave lots of warning about the crisis of 2006-2009, detailing in advance what would happen regarding global fuel prices, stock markets, and lending markets (which in turn produced huge changes in real estate prices). I also published forecasts of the stock market rebound that started in early 2009- just days before the “bottom” in US stocks.

So, I have been trading for a long time (since 2002) and I have learned a lot in that time- even though my long-term forecasting has been quite solid from the start. I also am very clear what my presumptions are regarding any particular forecast or strategy, which is very useful in case the presumptions later get violated.

The most notable example to me is that when I forecast the rebound in global stock prices in early 2009, I did not anticipate that crude oil production in the US would triple within just a few years. In fact, I expected it to continue to drop. The huge increase in US crude oil production violated one of my key presumptions and resulted in that rebound lasting MUCH longer than what I had referenced in early 2009 prior to it starting. Further, that huge increase in oil production was not just a massive benefit to the US economy and stock market, but also internationally.

However, all developments are temporary. So, just as stock markets in Europe has not yet recovered to the point of their highs in 2000 (or Japan’s in late 1989), I expect similar developments in the US. I expect the highs of 2018 in US stocks to hold for not just years but decades.

To me, current conditions presents the most lucrative opportunity in my lifetime- apparently far more profit potential than the 2007 “crash.” Unless there is a MAJOR shift in the global energy market (as in the widespread use of a technology that renders fossil fuels obsolete), I expect the tide of retiring baby boomers to… sell. Stock prices (and many prominent financial institutions) are poised to be “crushed.”

Incidentally, my own long-term targets include relocating outside of the continental US (or at least having plenty of financial independence to do so in the event that I desire it). I would not surprise me if you had similar interests.

Let me know your thoughts and interests.


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