For the last three years you may have been reading my articles “RRSP THE TAX TIME BOMB”, but today I want to give you something you are not getting from anywhere else – a reason to be optimistic about the current stock market. The mass media is promoting doom and gloom because they get more readers with more negative news versus positive news. At the same time, most Financial Planners get the majority of their information from the companies they already work for.
I am sure you have all seen and heard advice like “… you have to ride out the downturns in the markets as your investment is a long term investment and I am sure you will be happy with the results in 5 years”. To me such advice just means that the advisor lacks experience or really has no clue what is going on in the markets. I was like that in my early years until I started to extensively study the markets with my analytical mind, which over time gave me a huge edge over my competition. I developed four unique strategies that has helped my clients achieve above average returns.
If you have not yet seen my popular article, please read the article called “CONNECTING THE DOTS”. Michael Murphy from True Help Financial says “it is the best article on Finance I have ever read in my 40 years of being an advisor.” If you connect the dots that I propose in my article you will realize that it can work for you too.
I have been in the financial markets for 37 years and I have witnessed stock market crashes and global financial crises with many corrections. My experience, my analytical skills and my research shows that investing short term or long term is all the same – everyone in- vests for life! The key to success is to not let emotion get involved. I never look at my statements anymore when they say the markets are down 30% from their highs; seeing your low numbers may keep you up at night and you may react to the market downturns with emotion and make a big mistake. I keep my eye on the markets everyday and I connect the data. For example, today the Nasdaq is up 8.12% so I only have to go up another 22% and I am even, right back where I was before this new virus caused a panic. I did not look at my statement or go online and therefore I have no number keeping me up every night, nor do I listen to the main street media tell me that I am losing money. Had I listened to them I would have panicked and sold everything sitting on the sideline, while smart investors just made 8% in one day. What about the 9.33% it made just two Fridays ago? You will feel a lot better if you do not see your actual port- folio numbers and therefore you do not own those numbers. You only own them if you make them a reality by selling. Just think if those two days combined were back to back; it would have been a rebound of 17.45% – more than half of what you lost since the virus went main- stream. Can a rebound happen in a few days? It happens all the time and day traders have fun with it.
First, markets crash until they capitulate and all sellers are out of market. Then you start getting “Dead Cat Bounces”, which is usually a trap for many investors. Then you get some positive news such as interest rates going down. This should drive the markets back up, how- ever, many day traders play games and take out profits continuously, which makes the markets drop again. This is where we are now. The worst is over but you will see days of huge drops after days of large rallies, like today. When the markets go up Friday and you know that the day traders have put their sell orders in over the week- end, Monday drops and the mass media will say that the stock market continues to lose ground; all the while you may feel depressed when in fact the markets are just treading water up and down like a yoyo. In 2016, the markets lost 15% in the mid-term elections and I remember one month when they dropped another 10% and then regained the same 10% by the end of month. All month long the media kept saying the markets were going down but in reality they stayed even. Connect the dots and you will not feel the urge to react.
Let’s revisit 2008 and the Global Financial Crisis. Prior to 2008 (since about 1990) I had been predicting a stock market crash to rival the 1929 crash that could take up to 15 years to recover. I was analyzing another one of my financial strategies called “Global Demographics”. Baby boomers would start to retire and start taking money out of their investment to supplement their retirement income. Over 100 million Baby Boomers would be leaving the work force and no longer buying big ticket items like houses that drove the markets and of course cars. They also would hang onto the ones they just purchased. After calling for a crash for nearly 20 years we ended up being short by only 12 months.
We knew it was coming because the Japanese had suffered through their own crash in 1994 when the stock market dropped from 45,000 to 8,000 and it never re- bounded until 20 years later. So we were getting ready for it. The sub-prime situation brought it on 12 months earlier but it came and it hit hard.
Last week on YouTube I watched a young real estate broker tell everyone that he can make up all their losses in real estate just as many did after 2008. Well I didn’t want to burst his bubble but that was then, not now. First in Japan when their crash happened, the housing market crashed also because many people did not have any money left and could not afford to buy homes, which kept driving the markets up. In fact, many were forced to sell in order to have money to live on. Fast forward that to the USA. A big city like Detroit that suffered job losses to overseas manufacturing saw more than half the city’s population leave while homes were being bull- dozed after falling apart and full of rats. The US housing market was terrible for years.
The only reason we all jumped into the housing market was because the Chinese and Indians were buying every- thing and driving up prices. Things have changed, which means that this market will never be the same again. The housing market has already had a decade of rising values that are pricing first time buyers out of the market and add to that the taxes for foreign investors.
You will always get real estate brokers telling you that real estate is the way to go because that’s what they sell. Do you remember all those Syndicated Mortgages? Most of them have had issues and have lost investors’ millions. So now that you know where not to invest what do you do?
Well lets try “connecting the dots again as we did in 2008.
In 2008 the mass media said this is it; the end of capital- ism and a recession is coming… they were dead wrong. In my November 2008 seminar many of my clients and other investors were upset as we were down 25% and the news kept saying there was more to come.
But I kept saying ”the worse this gets, the better it is for us”. They said I was nuts and asking me ”why is every- one else saying the opposite and how can you be right and everyone else be wrong?”
I had experienced 1987 and then again March of 2000. I researched the only person that predicted the 2000 dot com crash: Tony Sagami from Texas who used a Nobel Prize mathematical formula to predict the crash; while I studied what he had to say he taught me how to “connect the dots”. In the next twenty years I averaged 18% re- turns for my clients using this method of investing. Not many people in Canada have been able to match what I achieved. Every move I made is documented on my website under “Connecting the dots”.
So back to 2008 when I kept saying ”the worse this is the better it is for us.” It was simple: I knew the worse it got, the Feds had their backs against the wall and they had to react fast. I also knew that the worse it got they would have to cut interest rates sharply.
The interest rate at that time was 4.5% in the U.S. and I figured they would drop them by 2% down to 2.5%. Everyone that had a loan or a mortgage would be lining up outside their banks renegotiating the monthly payments. The banks that caused the problems would be flush with money and the crisis would come to an end.
To my surprise they dropped them 4% to 0.50%, which meant that the markets would explode. One of the funniest things I remember is that I told everyone it would start on March 19th 2009. They thought I had a crystal ball but it was me just ”connecting the dots”, as that was the next day when the Feds was scheduled to meet. Besides this fact, the U.S. government had learnt what not to do from Japan. They had experienced their own crash in 1994 and were still not out of their depression. The Feds flooded the markets with $85,000,000,000 a month; they announced that they will be buying back their own bonds (a shell game selling and buying their own bonds) and they would also be buying stocks. How could I be wrong at that time when the government guaranteed us that the markets were going to rebound? So this got me doing more research on every crash that ever happened; I found out that after every crash governments around the world are forced into handing out stimulus packages – every time that would happen a sling shot in the stock market occurred.
I also researched what Warren Buffet would do and I found out not to stick my toe in the water but to jump right in, once I was convinced that the markets were going to do a sling shot.
So I searched for the hottest part of the market before the crash and it was the ”BRIC” (Brazil, Russia, India and China).
Here are the results:
– Brazil made 194% in 2009
– Russia gained 179% in 2009
– India rebounded 137.3% in 2009
– China made 89.5%.
We were at the right place at the right time.
But because we were also invested in U.S. and Canada we only made 88%. We followed this strategy up by switching to Gold because spending $85 Billion per month was causing concerns about the state of the world debt; every central bank was buying Gold to protect their currency. We ended up making a further 45%, all 100% tax free.
What was a bit upsetting was the fact that about 84% of Canadians were not aware of this massive sling shot because of the advice they were receiving and were still sitting on the side lines losing money.
That was then, what about now?
Well we have lower interest rates again. We even have lower oil prices this time, which is sure to help the costs of shipping for big manufacturers. Also, the cost of energy will have a major affect on companies’ balance sheets. Today, the markets are again reacting to the stimulus packages around the world and the Dow is now up
11.33% today.
So this virus is a flu, and as we know, flu season ends when it gets warmer. Therefore sooner or later this virus pandemic will be over but all the massive stimulus pack- ages will be igniting the stock markets and a huge sling shot will happen, again.
Besides many natural solutions like Vitamin D, Zink and some Malaria drugs that could possibly help slow down the spread of this virus, many companies are very close to manufacturing a vaccine for this new virus. So the new virus will likely be over faster than they say in the media and the stimulus will make markets soar.
On a final note, I have a very special strategy that only happens once in a lifetime, which will happen at the same time as the sling shot, and it will enhance your returns even more.