The 1% Recovery…Are You Part of It?

 

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                                     The 1% Recovery…Are You Part of It?

As some of you know, I celebrated my 42nd birthday last week.  That started me thinking about my 20s & 30s; when I was able to eat and drink whatever I wanted, and didn’t need to exercise.  Incredibly, it seemed, at the time, that my body was getting stronger.

However, in my 40s, that didn’t hold true any longer.  I can no longer do those things anymore.  It seems that my job now is to maintain or “slow the melt”.

When the stock market is going up like it did from 1982 to 2000, it’s much like your 20s and early 30s.  You can do anything you want to your body and it really won’t show the ‘wear and tear’.

But, when you get into your 40s, you really need to maintain.  Your 40s and 50s are similar to a sideways market, which most of the world has been in since the year 2000.

You can’t really hide that you have been treating your body badly or not working out in a sideways market. You also can’t hide that you didn’t know how to ‘grow’ money.

That’s where we are today, and we probably have five more years of this sideways market. I immediately think that if people have already crash-landed their portfolios two, three or four times in the last 10-12 years, there are probably more crash-landings before we get out of this sideways market in 2018 for them.

I’m calling whatever Bernanke and Company are doing the “1% Recovery”, which is really driven by the imagination of Central bankers.

Will you part of the “1% Recovery”?

If you are paid to think, then you have the ability to gain wealth.

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In the Silicon Valley, people who work for Oracle, Cisco, Apple, Facebook, or Google, are usually getting paid for using their brain.  They will be able to maintain, and some may even gain wealth during the “1% Recovery”.

It’s not a guarantee, but the choice is there for them.

However, the bottom 97% of the country that is paid to lift things and sweat, are really screwed.  This is because the 1% Recovery is not going to help those people. 

And even if you are not one of them, as the bottom 97% get poorer, that is going to affect the economy, which will eventually affect the stock market. 

This is after the imagination of the Central bankers is taken out…which will eventually happen.

How do I know this to be true?

First, look at the image below showing the Fourth Congressional District of Illinois.  The reason I want to show you this, is because this is how politicians think.  The entity that designed the Fourth Congressional District of Illinois are the same people/politicians/Central bankers in Washington who are making policy.

In other words, politicians are torturing the data and information to fit their own personal agenda, just like the leaders of the Fourth Congressional District of Illinois are manipulating the district boundaries to their own advantage.

In political terms this is called “gerrymandering” and guess who gets hurt the most? Yep.  It’s the bottom 97% of the people in that district.

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The 1% Recovery is going to fail because it is manipulating markets to create advantages for certain people (the top one to three percent). And, the world has a very clear history on how these things end.

In fact, I can prove that it is not working by showing this next image. The red line shows that the median household income in 2000 was about $41,000.  Today, it is about $51,000. 

 

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Hey, RC, people are making $10,000 more!  But, if you look at the blue line and adjust for inflation, you see that the REAL median income has gone down from $56,000 to $51,000.  So, they (the bottom 97%) have actually lost 10% of their income to inflation.

This is going to impact long-term trajectory of the entire West.  This is due to the manufacturing, manipulation and intervention of the central bankers.

You have six graduating classes, and counting, who are sleeping at home on the couch and working at Starbucks as baristas.   This is because the normal price discovery mechanism of the economy and stock market is broken.  That is not good for the market, and it is not going to stop any time soon.

If you look at this next image, you see the 10-year yield for the US Treasuries.  People think that overnight yields are going to take off to 5%-7%.  It did happen from 1974-1982, which is depicted in the vertical rectangle in the image below.  But, if you look in the horizontal rectangle on the left, you see the 10-year bond yields stayed below 3% for 18 years.

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It is more likely that it will have a bottoming like in the 1950s.

Over the last month, the 10-year Treasury has gone up above 2%, which is really impressive.  But, if you look at this next image below, the light green shaded line represents the Japanese lost decades and what their 10 year rates did.  And then look at the light grey line; that is the Great Depression.  You can see that again rates stayed low for a very long time.

We will see much more sideways in our rates than most people think, or believe, is possible.

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We could go many more years having Central bankers keeping rates low and sideways.  This is going to create a lot of imbalance in the world that will eventually have to work itself out.

The next image below shows the median new home price in the United States, going back to 1986.  Today, new home sale prices are at a lifetime high.  Palo Alto hit lifetime highs last year and the year before.  All over Silicon Valley, real estate is going crazy with increases of 15%-20% per year.

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This is because inflation will not squeeze out evenly across the country.  It will squeeze out in certain areas, which it is clearly doing in real estate in the Silicon Valley and Manhattan.

All of this boils down to one point that I want to make this week: If you lost 50% of your portfolio in the 2000 crash, lost another 50% of your portfolio in the 2008 crash and were greatly hurt or lost all of your real estate holdings from 2007-2009, and you’ve been badly hurt by Gold falling over the past 18 months, it means that your investment approach to investing hasn’t adapted.

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It is not the strongest or the fastest that are going to survive, but the ones that best adapt to what is going on.  Adapting to what is going on today is what is going to help protect and grown your money.

You do not adapt by finding a ticker symbol or a sector.  You adapt by finding strategies that adapt.  Think about what you have shifted or changed with your strategies.  Anything…? Or just ticker symbols?

And I am not referring to switches from Merrill-Lynch to Ameriprise or Ameriprise to Raymond James, Edward Jones or Morgan Stanley, which is the same person.  What has been shifted for you?

Seriously, this is the question you must be asking yourself.

And shifts are not changing sectors, asset classes or stocks.  It has to be an approach; that is what a real shift is.

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This month’s Strategy Gathering is coming up in less than two weeks, on June 11th.  I will stream it live at 11 AM PST.

We are adding a few ticker symbols to the Obvious Trend Strategy.  We are also adapting and I look forward to having you on that call.  Thank you for being in my world.

Together, we are growing and protecting your wealth,

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A Note from RC: My team and I have spent the last decade, and nearly $1 million, designing an overall system to take the human error out of investing…and help you beat the market over the long-term.  It’s simply called The Fearless Wealth System.  Large hedge funds spend millions of dollars for these kinds of results.  Click here to learn more about how regular investors are using it to profit right now.

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