How we averaged 18.90% for the last 11 years using a combination of Demographics and connecting the dots?
2007: Israel was at war with Lebanon. In August the markets were still flat for the year. In that year, the famed Harry Dent predicted it was going to be a banner year. But the markets hate uncertainty and was not going up. Fearing the markets were heading into the yearly correction period Sept/Oct, Harry Dent told everyone to get out of the markets.
I served in Canadian armed forces and have become a historian since then. So knowing that Israel’s Tanks were on the Syrian border which is north of Lebanon and the Israelis came from the southern border that meant they had already done most of the fighting and only a mop up was expected for peace to occur.
I could see this happening in two weeks. I predicted a sling shot would follow and as it turns out, I was correct the war was over and more importantly so was the uncertainty.
By the end of the year we were up 25% because we used our strategy “connecting the dots” to draw the real picture of what was happening and make our profit.
2008: Well this was the year that surprised the world and the media made it worse.
Warren Buffett, the world’s best investor was down 61% most others were down 50% .We did not escape either and we were down 35%. While I hated going through it I was not concerned because I never looked at my own statements and therefore never owned the negativeness that comes with it.
I focused on what was coming next.
2009: In the last months of 2008 at seminars and answering phone calls and emails I kept saying to my clients the worse this gets the better it gets. Everyone stated I was the only one that said this. Everyone else was predicting the worse was coming thanks again to the media. Everyone thought I was wrong.
But I knew the worse this gets meant that the central Banks of all the world had their backs against the wall and the fastest way to restore order was to lower interest rates. I knew it was the subprime that caused all this and therefore the Banks need an inflow of new money to come in and pay for all those bad bonds they sold to the public.
The best way to do this was to drop the interest from the current 4 ½ % to 2 ½ %. This way everyone who owed money, would take advantage of the lower rates and go to their Banks and re-finance all their debt, bringing Billions of new dollars to the Banks.
I even predicted what date it would happen March 19th 2009.
The feds went way beyond what I thought and cut the rates by a whole 4% down to ½ % which meant now we have an explosion of business coming to the Banks and markets would soar. Again this is using “connecting the dots”.
The reason I knew the exact date was because that was the next time the feds were going to meet and that’s when they said they would have to cut rates. I had learned from my studies of Warren Buffett that every time markets go down it creates opportunity to buy great stocks at cheap prices. This is when the wealthy go fishing.
I had also learned that after every crash a stimulus package comes out to stimulate the economy and this creates a sling shot effect on markets.
It’s how we made 125% in Natural Resources in 1993 when Mortgage rates started to drop from 13% in 1991. My first taste of the sling shot effect.
I had also learned from Warren Buffett how to look for the fastest growing area of the markets on the upcoming turnaround.
It’s one thing to connect the dots and see a sling shot coming but you need to know where to invest to get the best returns.
This is where we use our other strategy “Demographics” to pin point the strongest area of growth which was at that time the BRIC [Brazil, Russia, India and China].
The results were a staggering 84% return
2010: was again where we had to “connect the dots”.
Because the U.S deficit was getting out of control, 107% to its net GDP income and spending $85 Billion per month was creating uncertainty in the U.S dollar and since the world trades in U.S. dollars, Central Banks around the world started to buy gold in order to protect their own currency.
This meant Gold was going to soar, so in our 100% tax exempt investment we invested in Gold and made a further 45% return.
The scary part is our clients made 129% in the two years following 2008 making up for the losses they had in 2008. We had played the sling shot correctly because we knew it was coming. But 84% of Canadians were still on the side line with their losses as they were unaware of the markets rally until after the fact.
That tells you that your Banks are not as knowledgeable as you thought they were and as long as you keep investing in them you are not going to be wealthy.
2011: Was a year of losses all around the world, because of the threat to the European Union. Fearing it was going to break up because Greece defaulted on their loans and other countries were having troubles too, like Portugal, Italy and Spain.
We ended up being down 15%.
2012: Started off much the same way being down most of the year.
Then Germany and France came to the rescue of Greece and we ended up 12.5% for the year.
2013: Was again time to look at our “Demographics strategy” and two major areas of opportunity was starting to develop.
First was Japan. After reaching 45,000 in 1989 the Nikkei dropped all the way down to 8,000 as the Japanese population aged and stopped spending and buying big ticket items like Homes and automobiles around 1991. But now their sons and daughters were old enough to start buying homes again and of course automobiles. This means a boom was about to happen there.
The other place of even greater opportunity was Health Care. Every day we heard on TV how the U.S. was having health care costs skyrocket due to the ageing of Baby boomers. Every day we were hearing about new drugs with wonderful effects, Viagra for example and then there was the discovery of the Gnome and Stem cell research.
The internet was speeding up the developments of all kinds of health care research at the same time the baby boomers were ageing. The ageing baby boomers were going to cause a tsunami in health care demand over the next 20 years. Demographics was pointing us here.
By the end of the year we were up 28.9% led by Health Care funds’ return of 51.49% and Japan was on its way to doubling over the next two years .
2014: We kept all investments the same and made a further 27.5% led again by Japan. The Nikkei was almost 18,000 now, more than the 8,000 we started with two years previously. And of course the Health Care fund continued with a stellar 33.4% return.
2015: We continued to be in the same funds again riding the trend [another thing I learned was “the trend is you friend, don’t fight the trend”]. So while demographics was directing us then, connecting the dots was telling me something negative was about to happen.
We were due a correction we were up for 30 straight months without a healthy correction. I knew the Sept/Oct weak spot was coming up and lastly the new Fed General Janet Yellen wanted to make a statement by raising interest rates .She was scheduled to do this in September. Everything pointed to a correction to start in Sept. So we locked in our gains for the year in August and moved all our funds to safety.
You can see this in last year’s July’s article. The results we locked in were 16%.
After the interest rates went up we knew November and December was the start of the buying season and markets would be over the interest rate hikes. So we jumped back into the markets. 60% in Health care that was on a great run in the last three years with returns of 51.49%, 33% and 30% .That’s over 100% in three years and you can see why with no fear of Health Care demands going away, it looked like a safe bet. We had 20% in the NASDAQ and 20% in Asian Pacific.
By the end of the year we had gains of 22.5%, another year over 20%.
So now after 9 years we were averaging 22%.
The following year the markets started to get upset with the presidential race that they thought was un-American to say the least and we all know the markets do not like uncertainty plus you had Brexit that took away all the gains for the year in the summer. However when all the protests started to happen in Britain with Scotland and Ireland saying they would separate from the U.K. if they did leave the E.U., the markets rebounded 100% and were actually up . Then came the battle between Hillary Clinton and Donald Trump and the victim was the place we did not want it to be, Obama’s Healthcare plan. She wanted to make changes and he wanted to get rid of it. The Health care fund took a quick dive, within a week it went down 20%. As you know 90% of market crashes are caused by Politics. Once you correct the politics the market will rebound, because this was our star fund, we held on.
The situation was still on going by the end of the year as we waited for a turn around and sling shot. We ended up being down 16.5% on the Health Care fund but since we had made 124.49% on this fund in the previous 3 years, I was not alarmed. I knew Health care demand was not changing for the better in fact it was getting worse. Our additional two funds were in positive ground and took away some of the losses. So we ended up the year with a loss of -9.5%.
2017: started well as the new President fulfilled his first promise to sign on the Keystone pipeline agreement creating all kinds of jobs and become less dependent on the OPEC countries.
In the meantime I was switching funds out of Health Care into the NASDAQ, Where we ended up with a portfolio of 80% NASDAQ and 20% in China and India. The reasoning behind this was I had a strong feeling that India was about to do what China did 30 years ago, turn the corner and become a growth Country with a 7.5% GDP last year and 30% return on investment. I was right on target. I felt China would rebound and as the U.S picked up steam, so would exports from China. Again we were right on target. As for moving out of Health Care I had uncertainties about this sector because we did not know how far Trump would go to change OBAMA-CARE. At the same time because of the Tax cuts we had certainty of a strong market in the U.S. So I went with the certainty.
Trump then, went after Obamacare twice and that of course hit the markets in a negative way. Thankfully, Congress turned it down both times. For now the markets were looking forward to all the promises Trump made about the future and the biggest one of course was the “BIG REALLY BIG TAX CUTS .“ Finally in November they came and our funds bounced back with a 19.5% return for the year.
So when you add up all the numbers and divide by the 11 years, we come out with an average just above 18.90%.
If you have been on my mailing lists, then you know this has all been documented, just as my testimonials testify too. You can research the old articles in Magazines and on Linked in or on my web site.
Bill Gates says that if you were born poor it’s not your mistake, but he also says if you die poor it is your mistake .My job is to help you become wealthy by connecting the dots along with Demographics we have proved here that you can create wealth. Along with reducing your taxes either by using my ultimate RRSP program or using Tax exempt products you can compound your wealth yearly. You now have this information.
For the first time I am sharing this with the public in print. So Act on this now, do not procrastinate. Procrastination is where opportunity is buried.