Archive for central banks

The Other Side of the Peak…Featuring Michael Douville

Posted in Michael Douville, Uncategorized with tags , , , , , , , , , , , on November 9, 2017 by paulthepoke

MichaelProverbs 1:5 A wise man will hear and increase in learning, and a man of understanding will acquire wise counsel…

From the lows in March of 2009 to the lofty levels of today, by any metric, the Stock Market has done extremely well. Hardly anyone caught the very bottom, but even those that came close have doubled or tripled their investment; very well done! Lucky Investors have ridden the S&P and The Dow up to 2582 and 23,517 respectively and the ride UP has been FUN! Please pay very close attention to this chart, the Other Side is a completely different World. The higher the Peak becomes, the steeper the Other Side! There is no Plateau!

In order to preserve the Gains, a Courageous decision MUST be made; when to EXIT! Greed dictates grabbing every extra dollar one can; Prudence cautions that it is not what you make, but what you keep that counts! The climb to the Peak is exhilarating, even intoxicating. The Fall is depressing. Unfortunately, typical Human fashion,  the average Investor believes that the “Peak” will be recognized and they will escape in plenty of time to capture the Maximum gains. This “Time is Different” always becomes the Mantra! The brutal lessons of History teach that most Investors ride the wave up and then ride the wave down; this time the Fall may be devastating. The Central Banks of the World have exaggerated the Bubble with their Trillions of Dollars of Liquidity. The Federal Reserve has stated they will begin removing liquidity the 4th Quarter of 2017 at the rate of $10 Billion a month growing to $510 Billion withdrawn in 2018. The World Central Banks have pledged to reduce their liquidity injections from $2 Trillion annually to ZERO by April 2018.

Without Global Central Banks participation Risk will rise substantially. The Doctrine of Enough (or How Much do I Need?) prescribes taking the profits gained and moving to another Asset Class; reducing risk. Bonds have traditionally been the choice of risk adverse Investors. However, the Debt Binge of most Government Entities as well as many Corporate Entities make Bonds as risky or maybe even more so than Equities; this Asset Class should also be avoided.  Precious Metals and the larger class of Real Assets and Commodities are just starting to bottom after years of decline; the process has not yet completed. They are at or near the lowest values in decades.

Recognizing the coming shift in Cycles is not easy. However, the basic industrial components such as Iron Ore, Copper, Lumber, Oil,  and Aluminum will soon cycle off their bottoms. These are the components of Single Family homes which as the raw materials rise, house prices will also rise. Housing unlike Gold has a “Use Factor” of “Shelter” and is a necessary component of Life. Accumulating Single Family homes and providing “Shelter” by leasing them to families may not only transfer profits from an aging, riskier asset class to an emerging class, but also provide conservative, consistent, and monthly Income to weather an Economic Storm.

Maricopa County in Arizona is still ranked as one of the best long term Real Estate Markets in the Nation. Your Core Real Estate Lifeboat may provide Generations of Wealth and Income.  Our website is https://michaeldouville.com and our first consultation is always free.

 

Buy at Amazon.com in paperback or Kindle below. Click on “Preview” for a free sample of the book.

Rapture compressed

https://www.smashwords.com/books/view/731160

Also available online at Barnes & Noble, iBooks, Kobo, and Inktera

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Return OF Your Investment!…Featuring Michael Douville

Posted in Michael Douville with tags , , , , , , , , on September 27, 2017 by paulthepoke

MichaelProverbs 27:12 The prudent see danger and take refuge, but the simple keep going and pay the penalty.

There are times to be Bold and times to be Cautious. Everything associated with the US Stock Market is distorted! The Stock Market has reached all time record highs, but valuations seem to be overly stretched with historically precarious P/E ratios of over 30+. Current Corporate Profits are suspect due to the liberal use of Non-GAAP accounting procedures which give enormous flexibility to Earnings. In addition, Dividends have been paid with Debt rather than Profits and the use of debt is so pervasive that Margin Debt used to leverage stock purchases is now also at Historic all-time levels and will compound and multiply any downturn in prices. Further, Central Banks have for 10 years, relentlessly pushed the Global Stock and Bond Markets higher, but now are attempting to shrink their balance sheets. The Fed is starting to sell $10 Billion a month for the 4th Quarter of 2017 and will be increasing every quarter through 2018 resulting in $510 Billion of liquidity withdrawal. Removing the constant purchasing of Equities may introduce Selling Pressure creating the unwanted opposite effect.
Trees do not grow to the sky and cycles eventually turn. There comes a time to take profits and re-distribute assets to safer allocations. In December of 2007, Charles Nenner recommended cashing out of the Stock Market and remained out until after March of 2009 avoiding the horrific sell off. He has again recommended to be out of Equities since July 1, 2017 and recommends only “Small Units” that can be rented for a portion of assets. Bill Gross who was known as the Bond King because of his stature with PIMCO, has stated he does not like Stocks and does not like Bonds believing both asset classes are extremely overvalued and risky. Mr Gross recommended Real Assets such as Gold and Real Estate in August of 2016. Real Assets versus Financial Assets are now inverse to Financials having declined for several years; they now appear to have bottomed, but have not yet turned up.
 

As shown on the chart above, a new Commodity Cycle is due to appear. There are many reasons for an increase in prices; a declining US Dollar would be a good pick. Nonetheless, these cycles come with regularity and are inverse to the Stock and Bond Markets. As copper, iron ore, gold, lumber, and land increase, typically, stocks and bonds decline as higher commodity prices are the harbinger to higher interest rates and inflation.

To be Prudent, consider an exit strategy for any precipitous decline in the Markets or Economy. Should the Commodity Cycle begin, the building components of Single Family homes typically thrive causing Capital Appreciation in addition to the consistent monthly Cash Flow and Income. Due to the Hurricane damage in Houston and Florida, Maricopa County in Arizona should be considered as a prime market for investment.

Contact us at 480.948.5554.  Your first consultation is always free and check out our website for more information at

https://michaeldouville.com/return-of-your-investment/

Thank you.

PaulthePoke

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