Habakkuk 1:5 Look among the nations, and see; wonder and be astounded. For I am doing a work in your days that you would not believe if told. -LORD God
Proverbs 22:3 The prudent see danger and take cover, but the simple keep going and suffer the consequences.
Ecclesiastes 3:1 For everything there is a season, and a time for every matter under heaven…
Ecclesiastes 7:12 For the protection of wisdom is like the protection of money, and the advantage of knowledge is that wisdom preserves the life of him who has it.
Michael Douville and Charles Nenner discuss the latest in economic and market news. What’s coming next. Dr. Nenner is one of the world’s best when it comes to economic cycles.
Charles Nenner believes the current Banking Crisis will resolve itself for a short time only. The Banking Index will rise for a “Bounce” only. Charles believes the Whole System is ready to go under.
We need to make plans.
One of the 3 strategies would be trading. This is not a “Buy and Hold” environment.
Charles also believes Inflation will start up again after May.
We are in for a “terrible” time. Charles’ War Cycle and Civil Disruption are turning up.
It is time to be cautious. Build cash reserves. Hold some cash at home, and when buying physical gold, take possession.
Click on the link below for the interview and video. You can’t afford not to listen…
Learn how Charles Nenner’s unique research can help you get better experience for your future investments: https://www.charlesnenner.com/
Ecclesiastes 3:1 For everything there is a season, and a time for every matter under heaven…
Proverbs 22:3 The prudent see danger and take cover, but the simple keep going and suffer the consequences.
With inflation, market volatility, and economic changes occurring in today’s world, Michael Douville had a chance to sit down and visit with one of the world’s foremost cyclical economist and market forecaster, Dr. Charles Nenner.
Dr. Nenner offers a free trial subscription for a few weeks. Please mention you watched this video. https://www.charlesnenner.com/
photo: Pinterest
May 2022: An Amazing and Candid interview with Charles Nenner. Charles discusses his Dow Jones Weekly chart showing all three of his Cycles that rule the Equity Market. The three cycles are all topping; topping just as they did in 2007. The Cycles are worse than in 2007-2008, the amount of downside in the last 4 months is the worst in 80 years; if this is the beginning, it can be a very bad time. There is a window of opportunity to sell into a bounce that appears to be imminent.
Dr. Nenner recommended to exit the Bond market for the last 2 years. The amount of money lost is tremendous; Q1 2022 was the worst Quarter for Bonds in 157 years. Interest rates are going much higher.
Charles Nenner sees a slight short term topping of Inflation and a near term moderation of Inflation, but sees Inflation for many years very similar as in the 80’s. Inflation will be a big problem moving forward. Natural gas and Crude oil are a big component.
Charles thinks there is nowhere to hide, but Cash is King at the moment. He believes Inflation will continue to be a major problem. European pension funds are in Bonds, many that are below zero. This is very difficult for Pension funds, it is not safe and no return. It will be very difficult for people to retire. It is not good to “Be in it for the long term!”
Dr. Nenner and Michael Douville have a significant discussion on the housing market. Are we in the process of peaking???
The Us Dollar is flirting with the 104 on the DXY, it is possible the US will get very strong and possibly go up to possible the low 120’s.
Looking at the Wheat chart, the prices are heading higher. Food prices are going to get much higher.
Click on the link below for all the economic details with Dr. Nenner’s proprietary charts and analysis.
Ecclesiastes 3:1 For everything there is a season, and a time for every matter under heaven…
Dr. Charles Nenner is considered one of the Top Cycle researchers in the World. A former Goldman Sachs researcher, he is often interviewed on CNBC, Bloomberg, and MarketWatch.
If Dr. Nenner is talking, you should listen. Well… Michael Douville recently sat down with Dr. Charles Nenner to get his thoughts on the markets.
This is an in depth interview with Charles Nenner discussing Charles Nenner’s proprietary charts of the Dow, S&P, FANGS, and the Retail Chart.
Charles Nenner is out of the Stock Market, but other asset classes offer opportunity.
In addition, Dr. Nenner discusses the Bond Market with a forecast for declining interest rates.
The Gold market is soon poised for a multi-year upward trend; the Gold market has not yet bottomed, but is getting closer. Dividends from Gold mining stocks supplement income streams while waiting for the uptrend to begin.
Toll Brothers as a proxy for Real Estate is still in an uptrend until 2023.
Click on the video below for in depth market analysis.
Ecclesiastes 3:1 For everything there is a season, and a time for every matter under heaven…
Ecclesiastes 7:12 For the protection of wisdom is like the protection of money, and the advantage of knowledge is that wisdom preserves the life of him who has it.
Michael Douville has just completed a sit down interview with Dr. Charles Nenner. He is one of the most influential Cycle Researchers in the world. When Dr. Nenner is talking, it would be wise to listen.
BUCKLE UP!!!! Check your stock positions, check your bond positions and be conservative and cautious! Dr. Nenner is still recommending gold and small residential rental units as a GOOD conservative investments.
Dr. Nenner sees interest rates to bottom in the next couple weeks. From there, he looks for rates to increase 2-4 years out.
We are heading into turmoil, it will be very dark, but there is a HUGE opportunity coming right behind this.
As Michael Douville states, there are times to be Bold and times to be Cautious. We read the tea leaves daily; we do not want to make a Mistake! As a follower of the Business Cycle and a realization that life does not move in a linear fashion, but rather moves through Cycles.
In 2001, Charles Nenner founded, and is president of, the Charles Nenner Research Center. Mr. Nenner has provided his independent market research to the following entities all over the world: hedge funds, banks, brokerage firms, family offices, and individual clients. Mr. Nenner worked for Goldman, Sachs & Co in NY, from 2001 to 2008. Before that time, Mr. Nenner worked exclusively for Goldman, Sachs & Co. in London, where he served as a technical analyst for Goldman’s fixed income trading group from 1998 to 2001. From 1997 to 1998, he served as the head of trading research at Rabobank International, and from 1992 to 1994, he was head of Market Timing at Ofek Securities in Tel Aviv. Mr. Nenner served as Director of Research at Windsor NY between 1987 and 1989, and was a Financial Consultant with Merrill Lynch out of its Amsterdam Office from 1985 to 1987. Mr. Nenner initiated a system of pattern forecasting and securities analysis, and developed a computer program which takes many indicators into account, including Mr. Nenner’s use of proprietary cycle analysis. Mr. Nenner graduated from Maimonides College Amsterdam in 1972, and from the University of Amsterdam Medical College, where he earned his medical degree in 1984.
1 Timothy 6:10-11 For the love of money is a root of all kinds of evils. It is through this craving that some have wandered away from the faith and pierced themselves with many pangs. But as for you, O man of God, flee these things. Pursue righteousness, godliness, faith, love, steadfastness, gentleness.
Notice what the verse does not say. It does not say, “Money is the root of all evil.”
It is the love of money that is the problem. Coveting money is the problem. It is the longing and desire and focus. The mental attitude is the issue. Making money in the stock market is not evil. There is nothing wrong with investing. But don’t be greedy…
Timing is EVERYTHING!!! Investing in Stocks in early 2009 was the perfect time to enter the market. The S&P has enjoyed an unbroken string of positive years for the last 9 years; the second longest in History. An almost no risk Investment resulting in a 280% increase in the Index including dividend reinvestment; Wow! If one had the prescience to purchase Facebook, Google, Amazon, Apple, and Netflix in the same period, multiples of the S&P have been gained; 500-900%. WOW, WOW!!
Using a little longer time line, historically, the Casino was not built on winners!
Recently cracks in the Markets are starting to show. First Netflix missed the projected number of new subscribers and also lower revenue, and on July 17, 2018 the stock dropped 14% in after hours trading immediately after the announcement. This was followed one week later July 26th by Facebook’s lower than projected Quarterly and again after hours experienced the greatest loss in history of over $119 Billion Dollars in 24 hours. Just days later, another tech giant, Twitter, lost 21% in value on July 28th. Wealthy one day; not so wealthy the next. Timing is Everything!
A player at the Casino has had an extraordinary run of luck; an extravagant bet of $100 has become $12,800 in 8 wins at the Dice Pass line. The player is allowing the winnings to accumulate in a double or nothing strategy. The” House” is encouraging another bet. After all historically, the player has won each time. What should the player do? Using a little longer time line, historically, the Casino was not built on winners!
Timing is Everything! Assess your goals, assess your needs; you do to need to be 100% invested. You do not need to be invested 100% of the time. Maybe the advice should be take some of the winnings off the table!!! Maybe you have enough and it is time to reduce RISK!
Deuteronomy 28:12 The LORD will open for you His good storehouse, the heavens, to give rain to your land in its season and to bless all the work of your hand; and you shall lend to many nations, but you shall not borrow.
Deuteronomy 23:20 You may charge a foreigner interest, but you may not charge your brother interest, that the LORD your God may bless you in all that you undertake in the land that you are entering to take possession of it.
Continuing with the theme of rising interest rates, bad things happen to Stocks as well.
Rising interest rates compete with the dividend rate of stocks. Currently, the S&P pays a total of 1.68% for annual dividends, but accepting market risk. Currently in June of 2018, a 1 year Treasury held to maturity pays 2.34% with almost no risk. That rate has risen from 1.22% just exactly 1 year earlier. Further, Corporations have been the largest buyer of their own company stock. Executives have realized that by borrowing money to buy company stock, they can reduce the outstanding shares and thereby raise the per share return just by maintaining the same revenue. The Executives bonus is tied to increasing share revenue which increases their bonus share offering. Everyone wins; well the executives win!
The Real Estate turmoil should be contained as a correction in an ongoing Bull Market. It could be severe! It could be scary!
However, as rates rise, it is more difficult and more expensive to borrow funds earmarked for Financial Engineering so less and less buybacks will occur at exactly the same time Central banks are reducing purchases. Share prices are directly related to profits; rising rates will deteriorate those profits. As an aside, $4 Trillion in Corporate Bonds are due to be refinanced in the next 3 years; all will be at much higher rates. Higher rates cause costs of Production, Research and Development, and all CAPEX to rise squeezing viability. Just this one HUGE change should cause the hair on the back of your neck to rise; for 10 years, rates were basically ZERO. Now they are NOT!
Retirees hold 70% of their assets in Stocks. Prices can go down much faster than they go up. In fact, they can plummet! This fact has been ignored for years until a 3000 point drop in 2 weeks in February 2018. UH-OH! Wake Up! Historic Margin debt may be one cause of these sharp air pocket declines. Leveraging an Equity position is oh so fun as the market expands to new levels. A reverse of trend will intensify and magnify the losses. Margin calls will force sales which forces prices down which forces sales. A very bad spiral.
Boomers have watched this Movie before; get out of the way! Take Profits! Remove some portion of the portfolio to safety.
Higher rates will impact the Real Estate asset class as well. Fewer families will be able to afford a home of their own as the Affordability Index is directly correlated to payment levels. Fewer buyers qualifying places pressure on prices. Property in overheated markets will be at risk. Luxury homes will become less affordable. Already our neighbors to the North are experiencing declining sales in Toronto and Alberta. New York City is starting to feel pressure in the luxury condo market as new units come onto the market already crowded with existing units. The Real Estate Cycle is long; 18.5 years. The last Real Estate Bubble scorched the Earth when it failed, but that was only 9 years ago. Too early for completion of that cycle.
However, the timing would be perfect for a Real Estate correction which typically occurs 7.5 to 9.5 years from the bottom. Just as a reminder, the bottom was January 2010, give or take a few months. Simple math places the Real Estate Cycle in the middle of the Jeopardy Period; perfectly matching the expected Epic completion of both the Stock and Bond Markets.
The Real Estate turmoil should be contained as a correction in an ongoing Bull Market. It could be severe! It could be scary! It will be a Generational buying opportunity for those with vision and courage; also surviving Capital!!! Remember the Affordability Index that should start to close families out of the buying market. They will become TENANTS!!! Long term TENANTS!! Fortunes will be made!!! Not only huge Capital Gains as the Real Estate Cycle moves out of the correction phase, but CASH FLOW! Increasing CASH FLOW. More revenue each year, growing earnings. If a little leverage is used, the tenants PAY OFF the Mortgage! Remember the Bengen Rule with 4% fixed for life depleting in 30 years? Throw it out!!! Not only will the rental revenue grow and grow providing more and more cash each month, but the loan is being paid off. A simple 20% down payment becomes a 100% after 30 years; multiplying by 5 times!!! Rentals are easy! Rentals are Profitable! Rentals are run by Property Managers, NOT you!!!
Consult with your Professional about an Exit Strategy for the Stock and Bond Markets. Take Profits and preserve your Wealth! Move your assets into a different Asset Class that has a much longer horizon for Wealth and Income forever!!!
This is a simple thought. When you are in retirement or getting ready for it, you are “not in it for the long haul”! Getting older can sometimes feel like a chore, but it comes with the added benefit of perspective; asset markets have a cycle. If you are in your 60’s, you have been through 4 or 5 Business Cycles and know they all end badly. This current Cycle will not be any different. Already, the current expansion is the second longest on record. It is also the weakest expansion ever! In this Cycle, the GDP has never exceeded 2.3% and that is with massive fiscal stimulation. The Great Financial Crisis scared the authorities and Ben Bernanke embarked on a unprecedented program of Global monetary liquidation forcing the economy to postpone the cleansing of insolvent, poorly managed, or ill timed investments. In June of 2018, Mr Bernanke now has been quoted as alluding to a Wile E. Coyote moment for the US Economy within the next 12 months as the Business Cycle hits an air pocket for FREE FALL!
Knowing what will happen is not the same as when it will happen! There certainly is a Timing Component to consider. Leave the Stocks and Bond markets too early and the late stage gains are forfeited, too late and maybe all the gains are lost, or worse! Knowing that the Cycle does and will end gives an incredible advantage. One can watch for signs the Business Cycle is about to complete. Invariably, the Federal Reserve raises rates until a slowdown is well established. Not recognizing the Change in Trend the Fed generally hikes at least 2 or 3 times more until a downward spiral has started leading into the Last Stage of the Business Cycle which is ugly and can be very brutal. The Federal Reserve has been hiking rates for two years and now much more aggressively indicating a 25 basis raise every other Fed meeting.
Retirees typically allocate 20-40% of their portfolio to Bonds and Debt. The cash flow generated by fixed investment is predictable and consistent; Debt is a Stealthy Risk. Rising rates will devastate Bonds. Would not the prudent course of action be to reduce to much shorter duration and raise the quality?
This chart illustrates the drastic change in the pace of the rate increases. “Normalization” is still a long way away. 2.38% June 22, 2018, Credit card debt has already risen from 8% to well over 13% and the consumer has accumulated RECORD CREDIT CARD DEBT!
2 year Treasuries climbing FAST!
The Federal Reserve not only directly influences the short term rates in the US, but sets the tone for the rest of the World. As rates rise in the US, other Central Banks are still suppressing rates notably the European Central Bank maintaining their policy of buying bonds. However, all central banks have stated they are in the process of tapering their Asset Purchases to Zero!! The effect is rates are now free to rise and the ascension has started. Further, this will come as no surprise, the markets are anticipating increasing rates. The process has started!
As of June 22, 2018, Turkey’s 10 Year Bond was priced at 15.7%. The Turkish Lire is also rapidly losing value; Turkey has defaulted 6 times in the last 100 years. Argentina, Brazil, Venezuela, the Ukraine are just a few of the Sovereign Nations in trouble with their debt. Look for Defaults; once started a possible Cascade.
Turkey is in REAL trouble! US rates are driving rates higher throughout the World. Higher rates affect 40-60% of all Global Debt currently estimated at $217 Trillion. None of us think about the fact that Governments never pay the principal back or even reduce it, Government Debt is simply refinanced. Think about that!! What will tripling the debt service do to already stretched budgets? Social Services will need to be reduced. Not only those that receive the benefit, but also the providers will be curtailed causing a declining ripple effect throughout the World. When the Central Banks stop buying the debt of the Nations, Municipalities, Towns, Villages and Corporations, who will buy Debt priced a 0.1%, or 1%, or 2 %? Probably no one! Rates are heading up and heading up fast and much higher than anyone thought.
Italy has been in the news and not in a good way! Pay Attention!
As the Federal Reserve unwinds the Debt on it’s balance sheet, long term rates will rise as well.
The Federal Reserve has stated it’s intention to raise rates. Central Banks around the World have joined together to state they also will allow rates to rise. All Debt including Treasury Notes, Bills, and Bonds lose value when rates rise. The longer the maturity, the greater the loss. Unless one believes this trend is going to reverse , holding debt guarantees a loss unless held to maturity. Bond Funds never mature; probably losses have already started. A rapid rise in rates may cause a rush to exit the asset class. If Sovereign, Municipality, State, or Corporate bonds begin to default as rising rates and a slowing economy could initiate, there could be a Panic to sell Bonds.
Retirees typically allocate 20-40% of their portfolio to Bonds and Debt. The cash flow generated by fixed investment is predictable and consistent; Debt is a Stealthy Risk. Rising rates will devastate Bonds. Would not the prudent course of action be to reduce to much shorter duration and raise the quality? Maybe reduce the exposure to Debt? One does not need to be fully invested at all times. Cash flow from other asset classes can easily replace fixed income revenue, potentially grow to double or triple the cash flow, and probably prove to be a much, much safer allocation.
The Bond Market has an incredibly long Cycle of 70 years: 35 years with rates trending up and 35 years with rates trending down. It appears the Bond Cycle bottomed in July of 2016. As such, the Risk is very evident. As Turmoil begins in the World, Capital will flow to supposedly safer Assets. US Treasuries should enjoy a short window of lower rates as demand for Treasuries depresses rates.This Window may be short-lived, any adjustable rates should be reviewed for refinance into fixed. Further, for disciplined Investors only; Helocs might be created and the funds saved for a Rainy Day. When turmoil strikes, the Banks quit lending. Cash becomes KING!
Stocks are a little more complicated. The typical Stock Cycle is 7.5 to 9.5 years. This one is the second longest in recent history.
Stocks and Bonds peak and then roll over, but it is a process not an event. The US Stock market is usually the last to suffer. Turmoil around the world “Pushes” Capital to perceived “Safer” Investments. Martin Armstrong makes a very impressive case for yet higher prices for US Stocks particularly the Dow and S&P as foreign Capital leaves Europe, Asia, and Emerging Markets and looks for safety. There may be a limit as eventually events overwhelm and the Stock Cycle completes. Since November 2016, the rise in the Stock market has been nothing short of “Explosive”.
Did the Dow peak in February? As of June 2018, the Dow is just about even for the year; unless you invested in January! Retail Brokerages opened record new Stock accounts in January of 2018 as the “Retail” crowd rushed in with maximum FOMO ( Fear Of Missing Out). Private and Institutional money that had entered the S&P and DOW in 2009, were very happy to sell to them!! Timing is very important so is the Asset Class! Wealth is gained by entering an asset class early in it’s cycle. Commodities are still bottoming; Rental Real Estate is approaching mid-point with many years until it completes.
Proverbs 30:24-25 Four things on earth are small, but they are exceedingly wise: the ants are a people not strong, yet they provide their food in the summer…
Michael Douville is a syndicated columnist for the Wall Street Greek.
Most of my friends are broke! At 66 years old, retirement is certainly in the forefront of their thoughts. “How much longer can or should I work?” How many years will I still be viable and able to pursue my interests? What if my spouse gets sick; or I get sick and then we are no longer able to travel; available time taken up with other issues like Health. Time becomes extremely important; the accumulation of Wealth, not so much.
After 10 to 15 years, the Baby Boomers are back to work. The 75 years and OLDER, represent the largest segment of workers entering the workforce; 63% will go back to work. Completely broke! A travesty!
It is this balance between having “Enough” and not that becomes startlingly clear as one ages and one approaches the end of a career or the end of one’s working life. Ideally, Investments have been made that have blossomed and grown to replace the W-2 income stream and Financial Freedom is attained. This is almost always a process achieved over a number of years; each year growing and adding income. However, the sad truth is 51% of American Retirees retire Broke. No planning, no savings, no assets! Even worse, the vast majority of my generation, The Baby Boomers, retire the moment they are eligible for Social Security and do not receive their full benefits; taking less, but taking payments earlier.
Making a “Bad” situation worse, most soon-to-be-retired have absolutely no idea what their monthly expenses are and how much it takes to continue their lifestyle. There are so many variables to factor in monthly housing costs such as Real Estate taxes that are exorbitantly higher in New Jersey, Illinois, New York, and California which drive up the cost to live enormously. Transportation costs in the suburbs or rural areas are much more than public transit in the urban areas. However, seldom are monthly costs less than $3000 per month and typically closer to $4000 per month; the Department of labor Statistics claims $3700 is the magic monthly cost. Unfortunately, the average “Baby Boomer” retiring in 2018 receives a Social Security check of around $1300 if unmarried and $2200 if your spouse is still alive and collecting as well. This is a very far cry from what is needed. Sadly, 41.9 million retired Americans depend exclusively on Social Security.
If a couple has managed to save $300,000, it places them in the 86th percentile of the entire US Population of 55 years and above! That amount of savings and assets gives a certain degree of comfort. Not enough, not even close enough to provide for the rest of your entire life! You will be BROKE in 10-15 years and looking at any menial job that comes your way just to keep the lights on!
There are formulas and guidelines for Monthly withdrawals. The Bengen Rule was developed by William Bengen as an attempt to account for 30 years of monthly withdrawals from the $300,000 Nest Egg. Although again, variables such as any earnings the Nest Egg may generate or worse any losses it sustains, will certainly affect the longevity of the funds. The general consensus is 4% of the funds per year. not including your home, can be safely withdrawn. The goal is for the Nest Egg to last for 30 years after which the asset is depleted or very nearly so. The suppression of interest rates coupled with the lack of any Financial Correction of assets has changed the outlook to even lower withdrawls. The new conservative approach is to reduce the monthly Distribution from 4% to 3.3%, the Pfau Rule! The results are the same net effect; after 30 years, hopefully you are dead along with your Spouse as all of the Nest Egg is probably gone!
These withdrawal rates absolutely astound people and are met with disbelief. That $300,000 nest egg will generate $12,000 with Bengen and $9,900 with Pfau! Uh-Oh! Keep in mind, according to the Bureau of Labor Statistics, the average Baby Boomer needs $3700 a month. Social Security provides $2200 until a spouse passes then it reduces to the highest individual benefits of the married couple, still a sizable reduction. With a $2200 Social Security monthly check and as an honorary member of the Elite having accumulated $300,000, which can deliver $1,000 a month, the benefits are still falling short. There is a shortfall of $500 each and every month; no frills, no motor homes, no Family vacations with the Grand kids, no college funds, and NO ROOM for Health Issues. Certain Financial trouble for the survivng spouse. At the Death of a Spouse, the benefits reduce substantially and that $500 shortfall can easily become $1500+.
After 10 to 15 years, the Baby Boomers are back to work. The 75 years and OLDER, represent the largest segment of workers entering the workforce; 63% will go back to work. Completely broke! A travesty!
What if you are very lucky? What if you live more than 30 years in retirement? More and more Seniors are living to 100 through Medical Advancements. Will you be living with your children or grandchildren, a niece or your son or daughter, a person down the street, or maybe a Ward of the State? Will you be subject to someone else’s charity when you are 90 years old? 6.2 million Seniors already live below the poverty line.
Take control of your own Destiny! Life is a Gift given by Almighty God. You have the ability to change your Life! If you are still working, PAY ATTENTION!! It takes about 7 to 10 years and requires discipline and a Strategy. You can develop Wealth for multi generations that will last for your children, grandchildren, and great-grandchildren and will NEVER DEPLETE. Take your husband or wife and explore Europe, walk the Great Wall of China, paint the landscape of the Dead Sea, or learn to cook in France. Enjoy every minute given to you. It is a simple choice, but it is YOUR choice.
Ecclesiastes 3:12 I perceived that there is nothing better for them than to be joyful and to do good as long as they live…
“Timing; it is all about Timing!” “ Know when to get off!” “There are times to be aggressive and times to be cautious!” “It is not what you make, but what you keep that Counts” “Trees do not grow to the sky!”
These adages are especially true today regarding the Historic levels of both the Stock and Bond Markets. These sayings mimic real life experience and explain that Life is a series of Cycles that ebb and flow throughout History. It is Wisdom that allows one the courage to ACT! Courage will be needed to recognize danger and courage will be needed to Preserve your Wealth for the Future!
Stock Market Cycles have characteristics of a Wave Pattern that peaks about every 7 years; examples of the latest bubbles are March 2000, then December 2007 (7.5 years), and now almost 10 years from the last Stock Market Peak; courtesy of the World’s Central Banks. The final push to the top often is exaggerated with huge gains associated with the Peaking Process.; a vertical price appreciation spike often develops near the cycle end, adding to the Mania. The Mantra of “This Time is Different” is almost universal in the topping process as no one wants to believe the “Good Times” are ending. The Federal Reserve has announced it will no longer support the markets; rather, the Fed is withdrawing liquidity at a scheduled rate of $510 Billion for 2018. The “Good Times” are over! The Central Banks of the World have also declared their intention to bring Central Bank purchases to a screeching halt from $2 Trillion to ZERO by April of 2018. Beware, the Party IS OVER!! “What goes up, must come down.”
If the Cycle has been artificially stretched by Central Bank intervention and the Banks have declared their intentions to end this intervention in BOTH the Stock and Bond Markets, it is time to “Jump Ship”. One does not need to be fully invested at all times. Numerous Private and Institutional Clients have already begun to take profits. Perhaps removing the original investment from any Risk or “Harm’s Way” would be prudent; parking the proceeds in Cash. Preserving Wealth will allow one to participate in different Investment Cycles such as the Commodity Cycle that appears to be in the bottoming process. Much of the Price Risk has been “Drained” from that Asset class as the demand for Raw Materials has “fallen off a cliff” and is beginning to show some signs of improvement. The Commodity Cycle, once it starts to rise, often completes in 7.5 years; plenty of time to season more true Wealth. Consider this, the Housing Cycle is a much longer cycle of 18.5 years that should Peak and Possibly Spike in the 2023/24 time frame. Investing in Housing now will allow participation in the Commodity Cycle as well as the Real Estate Cycle. Raw Materials are necessary for Construction, as they inflate, housing will follow; thus benefiting from two powerful trends.
