Archive for economy

Proceed with Caution

Posted in Michael Douville, Trend Update with tags , , , , , on December 5, 2018 by paulthepoke

1 Chronicles 12:32a And of the sons of Issachar, having understanding of the times, to know what Israel should do.

There is an ongoing Housing Correction, a Global Slowdown and Turmoil in Iran, Russia and Turkey. Understanding these dynamics will help you navigate the future and not only survive but prosper.

Michael released this video about a month ago. Since then, oil has dropped to $53 per barrel. Housing starts continue to decline. The Dow Jones Industrial Index dropped close to 800 points at its last close.

Know the times we are living. Have an understanding. Have a plan. Know what to do.

Click the video link below for Michael’s 3 minute broadcast.

 

https://michaeldouville.com/

 

 

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Time to Assess Vulnerabilities, Michael Douville

Posted in Michael Douville with tags , , , , , , , , on October 22, 2018 by paulthepoke

Ecclesiastes 3:1 For everything there is a season, and a time for every matter under heaven:

Ecclesiastes 3:3b a time to break down, and a time to build up…

ice berg douville

https://michaeldouville.com

The decision to retire is a Financial Decision, not an Age Requirement! Once Financial Freedom is achieved, one’s Life’s Savings, Nest Egg, Capital Stack must be preserved. A simple recognition of Risk demands action!


Everyone is always amazed at how quickly the Stock Market can drop! The Stock Market declined 1300 points in 7 days! Oct 3, the Dow recorded a nominal new high; in a video, I suggested that would be an outstanding time to take profits. The adage “you cannot go broke taking a profit” certainly applies. More than profits, take at least half out of Harm’s Way and reduce Risk and Exposure. Back in February, when the Stock Market dropped 3000 points in just a few weeks and then stabilized, many analysis suggested the Market would recover to record a new high.

Indeed, there was a gap on the S&P near 2830 which further suggested a return to the old highs.

The market did recover and did make a nominal new high; perhaps a “Double Top? Only for a day! After 1300 points, the question now is will the Stock Market recover and again make another nominal new high or is the Top for this Cycle already achieved? The answer should not matter; as a baby Boomer, can we really take the chance? Can we assume the Risk?

The decision to retire is a Financial Decision, not an Age Requirement! Once Financial Freedom is achieved, one’s Life’s Savings, Nest Egg, Capital Stack must be preserved. A simple recognition of Risk demands action! An assessment of Vulnerabilities should be conducted with your Financial Professional for your protection. By all measures, the current Stock Market has provided the participants with excellent returns; however, many metrics point to a vulnerable market. Although the current market may go considerably higher, there comes a time when Prudence demands thought; how much downside can be tolerated? There is Historic Margin debt financing the portfolios; leverage accentuates gains and creates tremendous profits in a Rising Market.

A Declining Market creates “Air Pocket” plunges as margin Calls produce stock liquidations usually at precarious moments accelerating the downside. At 65, 69, or 72 years of age and beyond, there is no time to recover losses. There is no “Long Run” left! Should a portfolio experience a 39.6% decline which represents the losses incurred in a typical cycle completion, how would your Life be affected? The market may be Vulnerable, are YOU?

There are times to be Aggressive; now is not one of them. Consider reducing exposure to Risk and increasing the Cash Flow component of your Wealth Portfolio.  Risk cannot be totally eliminated, but can be drastically reduced.  The recognition of change is a great advantage; there will be another Bull Market, it will just change asset classes. Consider accumulating very conservative rental properties in the entry level price range. Typically, there are very good opportunities close to everyone’s home. There are several strong growth markets across America that may provide conservative, consistent, cash flow for many years that may prove to be a “Lifeboat” for your Family and your Future.

https://michaeldouville.com

 

Old, Sick & Very Broke pt 3 of 3… Michael Douville

Posted in Michael Douville with tags , , , , , , , , , , , , , , , , , , , , , , , , , , , , on August 21, 2018 by paulthepoke

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.

https://michaeldouville.com

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!!!

https://michaeldouville.com

Warning: China Economic Data

Posted in Michael Douville, Trend Update with tags , , , , , , , , , , , on July 18, 2018 by paulthepoke

Isaiah 49:12 Look, they come from far away! Look, some come from the north and west, and others from the land of Sinim!

Genesis 10:16-18 the Jebusites, Amorites, Girgashites, Hivites, Arkites, Sinites, Arvadites, Zemarites, and Hamathites. Eventually the families of the Canaanites were scattered.

The following is from the Genesis Record, Henry Morris.

The Biblical mention of a people in the Far East named “Sinim” (Isaiah 49:12), together with references in ancient secular histories to people in the Far East called “Sinae,” at least suggests the possibility that some of Sin’s descendants migrated eastward, while others went south into the land of Canaan. It is significant that the Chinese people have always been identified by the prefix “Sino-” (e.g., Sino-Japanese War; Sinology, the study of Chinese history). The name “Sin” is frequently encountered in Chinese names in the form “Siang” or its equivalent.

The evidence is tenuous but, of all the names in the Table of Nations, it does seem that two sons of Canaan, Heth (Hittites = Khittae = Cathay) and Sin (Sinites = Sinim = China), are the most likely to have become ancestors of the Oriental peoples. Since it seems reasonable that divine inspiration would include in such a table information concerning the ancestry of all the major streams of human development, it is reasonable to conclude that the Mongoloid peoples (and therefore also the American Indians) have come mostly from the Hamitic line.

 

Another warning that the Economy may not be as strong as we think. Data on China, as well as Europe is not good.

 

michael@michaeldouville.com

https://michaeldouville.com/

The Rising US Dollar, Michael Douville

Posted in Michael Douville with tags , , , , , , on July 7, 2018 by paulthepoke

1 Samuel 2:7 The LORD makes poor and rich; He brings low, He also exalts.

Proverbs 3:13-16 How blessed is the man who finds wisdom and the man who gains understanding. For her profit is better than the profit of silver and her gain better than fine gold. She is more precious than jewels; and nothing you desire compares with her. Long life is in her right hand; in her left hand are riches and honor.

Michael

The US enjoys the Global Reserve Currency status. Virtually all of the major business transactions throughout the world are priced in Dollars. Sovereign Wealth Funds, Pension Funds, Insurance Funds, Corporate funds need to “Park” billions and billions of transactional cash! The ONLY currency liquid and vast enough is the US Dollar! Not Lire, Not Yuan, Not Euro, not the Yen, only the US Dollar. It is stable, safe, liquid and accepted around the World. International pricing expresses the transactional cost in US Dollars of oil, copper, grain, lead, tallow, butter, milk,  beef, etc. along with virtually all International agreements. The dollar does fluctuate, but pegging to the US Dollar standardizes Global transactions.

A weak US Dollar is good for the Global Economic community. The US Dollar was 102.21  October 1, 2016, just prior to the Presidential Elections. The World experienced “A cyclic upturn in a structural downturn” exactly as ECRI (Economic Cycle Research Institute) forecasted.  The Dollar then declined to 88.25 in February 2018; which may have been a cyclic bottom.  A weaker dollar is good for Emerging Market Economies. Raw Material sales translate into more local currency which then can buy more local and regional  goods and services. Local inflation is reduced.  During the past decade, Sovereigns around the World have gorged on cheap loans priced well below 1%, some even negative. With a declining US Dollar, not only are the loans Historically cheap, a 20% decline in currency exchange equates to repaying only $80 million of the $100 million borrowed plus receiving a higher price for exports usually oil, copper, aluminum, etc.

money
photo: MarketWatch

Like all things, the US Dollar cycles. It does not remain cheap forever. Timing becomes important. The US Dollar has risen and risen very fast from a possible low of 88 just a few months ago to a recent high of 96. This cycle of peaks and valleys is not a new phenomena; this cycle repeats historically. What is new is the record DEBT pervasive throughout the World. Debtors have enjoyed the discount of a declining US Dollar; that is now gone. Interest rates at or near zero are gone in the US and scheduled to be gone soon everywhere else. Obscene amounts of DEBT have propelled the good fortunes of virtually everyone from Credit Cards and HELOCs for citizens to massive Public and Sovereign debt in EVERY Village, Hamlet, Town, City, Municipality, County, State and Nation on the face of the PLANET!!

 

A strong Dollar will reduce the value of exports thereby slowing the economy in exporting Nations. A negative spiral’s outcome is a slowing of all global economies. This then results  in declining demand that ripples throughout the World. That is bad enough; add in rapidly rising rates and there lies a recipe for Catastrophe! The obscene debt is rarely paid off, rarely even reduced. The debt is rolled over or refinanced. A rise to only 2% equates to multiples of 10 to 20 times the debt service. There is going to be  a very rude awakening very soon!

Debt will default and these defaults will accelerate throughout the world pressuring rates even higher as nonpayment risk pressures returns. Bonds and Bond Funds will be at HUGE RISK. All manners of Debt will be affected. Rates will rise and rise quicker than anyone anticipates. Get out of Debt! Payoff Credit Cards, Helocs, anything that floats with an Index. Refinance into fixed rate LONG TERM debt.  Raise cash!  The dollar cycle peak is forecast to reach 103.8 as a typical permutation in a typical cycle.  This may not be TYPICAL! Turmoil could drive the US Dollar to 120 causing massive disruptions!  For those aware, for those prepared, Generational Wealth can be achieved when the cycle again turns down……

https://michaeldouville.com

 

It’s All A Big Party Until You Hit The Iceberg! Michael Douville

Posted in Michael Douville with tags , , , , on June 12, 2018 by paulthepoke

MichaelEverything seems great in the Stock Market but is there underlying instability. Michael talks about the state of the economy. Don’t miss this!

https://michaeldouville.com/blog/

Take provision for yourself as well as others. God speaking to Noah…

Genesis 6:21 Also take with you every sort of food that is eaten, and store it up. It shall serve as food for you and for them.

Good times do not last forever! Have a plan and prepare for a rainy day!

michael@michaeldouville.com

Listen to Michael’s comments in the video link below.

 

 

Economic Tug-Of-War…Featuring Michael Douville

Posted in Michael Douville with tags , , , on March 13, 2018 by paulthepoke

1 Timothy 5:18 For the Scripture says, “You shall not muzzle an ox when it treads out the grain,” and, “The laborer deserves his wages.”

Very good employment numbers came out today, over 300,000 new jobs were created in February 2018. However other numbers came out indicating the economy might be slowing down.

 

Michael

Do you have all your money in stocks and bonds? What happens if we see a sharp reduction in the markets. Have you prepared your life boat? Michael talks about alternate ways to make income without worrying about the markets. Check us out at michaeldouville.com. The first consultation is always free. Michael’s Book, How to Create a Real Estate Money Machine and Retire with Income, is available on line.

 

Email Michael at michael@michaeldouville.com

https://michaeldouville.com

 

PaulthePoke

Prophecy Watch & Bible Study

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