Stock Market Wealth
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HONEYMOON Over: Election Results ARE IN!
History is clear on this. We’re entering the best, 9-month period for the stock market.
The midterms are one of the best times to put money to work.
This is especially true, as investor sentiment right now is more bearish than in 2008!
Talking with 11 brokers, 17 fund managers, and a number of wealth advisors over the past 10 days confirms this. Here’s what brokers told me:
- “People are raising cash.” When I inquired about what precisely clients are mentioning as their reason, the answer I got is, “There are too many problems for stocks to keep rising.”
I wanted more details, so I asked one long-time broker to lunch. He told me that even within the brokerage firm, traders are not confident that they can “read” the equities game right now, so they are “parked” in Dollars.
No matter what you think about the people in Washington, or how pessimistic you are, in the heart of hearts, a professional always follows facts, not his flitting emotions.
Buffett has bought back over $1B of Berkshire Hathaway stocks this year, which is highly irregular for him. This move is telling us that Buffett doesn’t like the fact that he is finding it hard to invest Berkshire’s $100B cash position, but it also means that the master-investor believes that fsirly valued shares are better than inflating cash. He also might be considering buying a new company, so he wants his share price higher, before inking a new deal, but this is only my hunch.
Buffett clearly knows that cash isn’t where he wants to be, after a major move for the Dollar index in recent years.
If the purchasing power of the Dollar were to decline by 2%-3% a year for the foreseeable future, for a period of 6-7 years, Berkshire shareholders would lose some $15B. Instead, Buffett buys back shares, knowing full well that Berkshire’s businesses are making record profits right now.
Buying BRK shares is very similar to buying a refined version of the S&P 500, since it owns over 100 businesses of varied industries.
Buffett is investing in America, since everyone is counting it out right now.
On May 1st, 2019, I will be in Omaha, Nebraska, at the annual shareholder meeting.
Charlie and Warren aren’t getting any younger…
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RECESSION MONITOR: NO WARNING SIGNALS IN SIGHT
Democrats gaining control of the House of Representatives is a sign of the times, but it was pretty much expected. America is divided, but what country isn’t?
Wealth Research Group splits America’s issues into four:
- Federal and State liabilities: This is the big one. Several States are going broke. Washington is the largest debtor, dollar-wise, and it keeps on borrowing.
It doesn’t take a rocket scientist to detect this problem.
The question comes down to: What is the best solution, on a personal level, to a problem, which you, as the individual, have very little control over? The answer is always to increase your active income.
You can do this in today’s America. Wages have been stagnant for decades. Employers can increase them, if employees add value. In fact, there is no reason not to do so. In my own businesses, I’ve been giving bonuses and increasing wages, on my own initiative, for years.
The last thing I want is a crown jewel, a valuable employee, leaving any of my companies. You, as an employee, have much more control over your future pay than you might think. Bury your head in the business you’re in. Treat it like you own it, and you’ll immediately sense doors opening for you.
- Federal and State unfunded liabilities: This is a critical roadblock, perhaps the biggest of all. How on earth, with an already $1T annual deficit, do you pay retirees, without sacrificing defense spending, after you’ve been waging war on virtually every other nation?
You can’t cut on education, either. America is walking a slippery slope and, one of these days, the government will need to make difficult choices.
I have little doubt that we will see currency printing.
- Auto Loans/Student Debt/Credit Card obligations/Mortgages: America is hooked on debt.
Yet, this isn’t an out-of-hand situation. Loans can be restructured, and solutions can be found. Student loans have a high rate of defaults, but it is contained. The only real problem is that debt is a habit for most Americans – they’re hooked.
Once the USD no longer serves as the reserve currency, I expect Americans to snap out of it, but not a day sooner, unfortunately. This is mostly because the majority of people don’t even know that there is such a thing as the petro-dollar system.
- Private businesses and public businesses: The best in the world. No doubt they are not cheap to own today, after ten years of rising prices, but concerning quality, nothing comes close.
Personally, I’m drawn to businesses, which are expanding overseas, becoming dominators in China and India, which will “own” this century. I see no reason to change the tune.
Beneath all of my financial decisions, my security comes from the “Chaos Portfolio” that I had put together:
- Cash Duffle Bag: The 1-yr of living expenses, secured in physical cash notes, in Swiss Francs, Euros, Dollars, Canadian dollars, and Australian currency and some Hong Kong dollars as well.
- Precious Metals: Make sure you own some. For me, it’s about having 5% of my net worth in them, or at least 24 months of living expenses.
But, my ultimate insurance policy, inspired by my first mentor, is the investment in myself. Increasing in skills, as a daily policy, deliberately strengthening in my relationships and in my profession is the only real security in life.
He used to say: “You can take everything I have from me. Leave me a pair of underwear and parachute me into any small town in America, and within one year, I’ll be earning 5-figures a month. Within three years, I’ll be a millionaire again.”
This confidence can only come from a person, who developed a unique skill set.
It’s the backbone to prosperity and will free you up from ever concerning yourself with who sits in the oval office.
This work is based on SEC filings, current events, interviews, corporate press releases and what we’ve learned as financial journalists. It may contain errors and you shouldn’t make any investment decision based solely on what you read here. It’s your money and your responsibility. Information contained in this profile was extracted from current documents filed with the SEC, the company web site and other publicly available sources deemed reliable. The information herein is not intended to be personal legal or investment advice and may not be appropriate or applicable for all readers. If personal advice is needed, the services of a qualified legal, investment or tax professional should be sought.