February 1, 2017
All four of the cycles I track point down now. One after the next has peaked in the last several years. All four point down into early 2020 or so. That’s only happened in the early to mid-’70s when we had the worst stock crashes back then, the OPEC embargo, etc — the worst set of crises since the 1930s.
Of course, in the early ’30s we had this same configuration of all four of these fundamental cycles, cycles that have taken me 30 years to hone and say “these are the four that matter”.
The next three years are likely to be the worst we see in our lifetimes. It will be more like the early 1930s when stocks hit a debt bubble and financial asset bubbles crashed, which they only do once in a lifetime such as the early 1930s. Stocks will be down 70, 80, 90% — that’s to be as expected in this stage of the cycle after such a bubble.
I went from being the most bullish economist in the ’80s and ’90s to now being of the most bearish because what goes up goes down. That’s what cycles do. At heart, I’m a cycle guy. Demographics just happens to be the most important cycle in this modern era since the middle class only formed recently — its only been since World War 2 that the everyday person mattered so much; because now they have $50,000-$60,000 in income and can buy homes over 30 years and borrow a lot of money. This was not the case before the Great Depression and World War 2.
And based on demographics, we predicted that the U.S. Baby Boom wouldn’t peak until 2007, and then our economy will weaken — as both did in 2008. We’ve lived off of QE every since…
That’s a brief summary of my fundamentals and of why I tell people this is not the time to believe in the Trump rally. I’ll go into that. I’ll show you why that cannot last and he cannot create 4% in growth.
Then we also go into which areas will have been favored by demographics and by our cycles. You’ll never see prices this low if you protect your capital now and convert it to cash or to safe, long-term high quality bonds, then you can take advantage of the sale of a lifetime. If you don’t, you’ll have seen your financial assets wiped out a good bit more than they were in 2008 and ’09, and the markets won’t come roaring back to new highs next time
If you are concerned, you might want to consider our Half Right/Half Wrong Approach