Transcription of last Friday’s Market Situation Report

This email is a full transcription of Friday's "Market Situation Report". We all synthesis information differently…and for some text is best.

I hope you enjoy Friday's transcription. If you would prefer the video format, you can find that here

Draghi's Bullhorn Isn't Enough

 

I'm speaking to you from my kitchen.  It's dark outside.  It's about 9:15 on Thursday night.

Burgess is up in the city in San Francisco with a good friend at the MoMA (Museum of Modern Art). Both kids are sleeping.  And have been sleeping since 6:30pm, our kids have the best sleeping habits in the world!

So here is the situation:

Mario Drahgi, the European Central Banks Chief, spoke with his bull horn and it wasn't enough.

The S&P 500 reacted with a 1.75% today.
The 10-year US Bond was up almost 7%.
And the US Dollar shrugged off his announcement.

It's always interesting when someone is willing to print someone else's money.

And that idea, was not lost on gold. Gold broke back above $1700.  Will it stick?  I don't know.  But the longer it stays between $1650-$1700 the stronger the base will be for it's move up to $2,000. And, silver was flirting with $33.

So the quick take away is gold and silver liked the money printing announcement and almost everything else kind of shrugged it off…almost as if all the asset classes said, "oh, that thing again."

The situation I want to talk to you about is to step back and delete, delete, delete as much as we can so we can really see what is happening in the world of money.

Delete the news.
Delete the bullhorns.
Delete the gossip.

Delete what the big box advisors are saying, they've been consistently wrong for 12 years.

Delete what independent financial advisors are saying, they too have been wrong for 12 years.

Delete what the workshop roadshow people are saying because they can only make things look good on those weekends. But after the weekend comes the darn Monday again and nothing seems to work.

What I want you to do is to step back, step really far back.

Step back and say " What is really happening?  Where should I have my money?"

And I know exactly how to show you what is happening. I want to show you a place that never lies, in fact it cannot lie.

So, let's take a look.

Now, here's the thing: there are only four asset classes in the entire world.

I don't care where you live, what you eat for dinner, who you pray to at night (or during the day…or even if you do not pray) – there are only four asset classes on the planet.

1) Businesses, which you can buy via the stock market, outright, or through private equity, to name the most common ways. 

2) Debt, which most people call bonds. This is where you lend money and get (hopefully) your principle back and interest.

3) Currencies, the most common being, the US Dollar, Euro, Yen, the Pound, and gold.

4) Physical assets, which are categorized into three types, commodities, collectables and real estate.

All I want to do is show you a price chart of all four asset classes above with as much data that we can possible delete. So we are left with just one data point…the direction.

Sounds good? Okay, lets start.

Oops, I forgot to mention, there is just one more thing, when you are looking at the price charts with minimal data, I want a part of you to start to notice that it is really your own beliefs about the world, beliefs that precede you, that are determining your future security and wealth.

And if you are not as rich as you want to be or you have not secured your future it's because your beliefs have not allowed you to do so. It's people's beliefs that make sure they get and don't have what they have right now.

So with saying that, I want to introduce you to someone called Michele Masters. She would never call herself this, but I like to call Michelle a "belief coach".  Because she has helped me almost more than anyone in this world to get that security of my future and my kids future because of shifting my beliefs. I'll talk more about Michelle at the end.

Okay, now on to those four asset classes.

Let's look at the SPY (Figure 1).  We are looking at what the S&P 500 has done over the last twelve plus years. In the past 12 years the S&P 500 has gone up a cumulative 3.34% (not including dividends).

Fig1_9.7.12.jpg

Let me ask you, "Do you think Mario Drahgi is going to change the direction of the S&P 500 over the next six years?"

"Or is Bernanke going to change the direction of the S&P 500 over the next six years?

I don't think so. There is a very high probability that the S&P 500 will be exactly where it is today and was 12 years ago in six more years.

Next let's look at the Bond market (asset class #2). In the figure below you see a price chart going back almost 13 years, that is the US 10-year Treasury Bond price chart.

Over the past 12.75 years notice how the dividend yield has fallen almost 75%.  (Figure 2)

Fig2_9.7.12.jpg

That means that people that are saving are getting crushed because their savings isn't even keeping up with inflation anymore, because the dividend yield has fallen from about 6.5% to about 1.7% today. You can thank your central banker for this.

The yield on the 10-year US Bond has fallen 74%.  This is one of the many reasons why people are feeling poorer.

Next, let's look at the Commodity Research Bureau, CRB (Figure 3) chart. For those of you that are not familiar with the CRB, it is basically the S&P500 of commodities.

Fig3_9.7.12.jpg

Notice over the same 12.75 years, it is up 52%. That is more than 15x better than the S&P 500.

Lastly, let's look at what the US Dollar has done over the past twelve plus years (Figure 4).

Fig4_9.7.12.jpg

Notice the US Dollar is down 20%.  It has fallen in purchasing power by at least 20%, and that is against other fiat currencies, which means the purchasing power loss is probably worse then what it appears to be. 

So do you think Mario Drahgi's Bullhorn is going to change the direction of those four asset classes over the next 6 years?

No. He can't change them and neither can anyone else. What Draghi and Bernanke are doing is prolonging the pain for the bottom 98% of the world.

So what is someone to do?

Get plugged into a platform, a strategy, a portfolio that has gotten the big picture right.

And the other thing for someone to do, is to work on their beliefs.  I can show people what to do.  But it's up to that person's beliefs to allow them to do it. I know this is going to sound very weird and "out there" for many people, and let that be okay.

Okay, I want to show you one more chart for fun. It is a price chart of Gold (Figure 5).  One of my strategies that people have plugged into over the years got them into gold in 2004.

Fig5_9.7.12.jpg

Notice gold is up about 500% over the exact same twelve plus year period.  Your take away this week – money printing will not change the direction of the four asset classes. In fact it will only accelerate them.

So that is the Situation as I see it this week.

People cannot change the direction of these four asset classes BUT people can adopt a strategy that adapts to the market so their wealth is protected.

People can get the big picture right. People can know when to be in and out of the markets. People simply have to know what platform to plug into. A platform that can operate in the background.

One more quick thing…Michelle Masters. Michelle has put a course together that helps people shift their beliefs so they can have the changes they would like. If you are at all curious, check out the great free training video she put together. You can find it right here. AND you do not even need to opt-in for it.

Thank you so much for being here and remember it's together we are growing and protecting your wealth.

What investment platform are you plugged into right now? You want to check out ours? You can learn about it here.

Together, we are growing and protecting your wealth,

rc_signature.jpg 
RC Peck, CFP 

Fearless Wealth | Investment Independence
Helping Individuals Reach Financial Independence Sooner, Faster, Safer.

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