Let me start with some background. The population of the Conejo Valley is about 130,000 people, according to conejovalley.com. While there may be 2,000 to 3,000 financial advisers with good intentions in the immediate community, for the most part most of us look alike, think alike and sound the same. I suspect we frequently say the same things because we listen to the same sources. Our sources tend to be securities and insurance companies that all have product to sell. In fact we are fond of saying how long we might have been in the business, but the truth is we don’t always have, say thirty years of experience, as it may be more likely that we have one year of experience repeated thirty times. Every professional and nearly every investor, for example, can repeat the buy and hold, hold and home, or stock for the long haul mantras.
I am aware of only two financial services firms in the Conejo Valley that pay for independent research. Starting in 1999 my firm determined that it makes sense to pay for independent, objective information from those with no product to offer investors. It also impresses me when those who have an opinion study information and data before they offer their opinion. Opinions are like belly buttons, everybody has one. It makes sense to me to obtain informed opinions based on the research that has been studied, as opposed to coming to a conclusion about something, then look for points of view that support what you already believe to be true. That seems rather backwards to me. Thanks to the economic forecasting and investment research team, when it comes to reading the economic tea leaves in this country, I assert the job requires studying ordinary consumer’s buying behavior based on age. Let me also make clear that buy and hold concept may work well when you don’t need to spend any money and the market recovers from losses. As we have shown, buy and hold has more difficulty working after one severe market decline in the same year that reasonable withdrawals are taken. This can be especially true when the withdrawals are systematic as in annual.
As I am fond of saying, it’s not about the prediction it’s all about the preparation. Well prepared investors can weather the storms of unexpected events better than those who attempt to pick up the pieces after Humpty Dumpty has crashed to the ground. Life is too complicated these days to simply create a portfolio only to set it and forget it. Financial consultant firm FinMason released information at Financial Advisor IQ on February 3, 2017 that tackled the topic of risk tolerance. Fin Mason surveyed 1074 investors and found that a whopping 43% do not know what risk tolerance is. If this number sounds shocking, it should. The survey found that 27% of respondents had an advisor explain their potential losses in another big market crash, leaving 73% with little-to-no explanation. Smart investors know in advance what design capability are put in place to systematically (not manually) help withstand severe market declines. It is my opinion that too many investors remain unprepared for another loss like 2000-02 and 2008-09.
With an informed point of view amid all of the uncertainty around the world, here’s what Harry Dent, Founder, Dent Research said to look for on February 1, 2017. Unfortunately, the state we find ourselves in today has been painted on the wall for a long time! And my hierarchy of cycles – which includes the Spending Wave Cycle, the Technology Cycle, the Geopolitical Cycle and the Boom/Bust Cycle – have shown me for many years now what we have in store. And now a near 100-year cycle in globalization has peaked, much like the last one did when World War I started. Dent wrote, “It’s not pretty. In fact, it’s downright scary, which is one of the reasons I upped and relocated with my wife to Puerto Rico (which should tell you a hell of a lot).” Dent went on to say, “I’m not saying that the United States is certain to split. But I am saying that the possibility is very real. I believe the U.S. has become the third trigger that could topple this mighty bubble (with a southern Europe banking crisis and the China real estate bubble burst). And I believe it now may be the one to blow first.”
The Red/Blue State War Is On:
Starting, of Course, in California
The “Yes California” Independence Campaign has set out to collect the 585,407 signatures it needs by July 25 to allow the state to hold a ballot in November 2018 to repeal the constitutional clause that states California is an inseparable state of the United States, and that the U.S. is the supreme law of the land. If they get all those signatures, and if the ballot passes, there would be a second referendum in 2019 to leave the Union! Could this be the beginning of the end of the United States of America as we know it? Stay tuned.
Dent notes at this point, “Polls show that only one out of three people support this campaign. But The Donald has only been in office for 10 days and already he’s had a major tiff with Mexico, China, Muslim immigrants, illegal immigrants and refugees. Whether you agree or disagree with Trump and his actions, whether you’re a Trump supporter or not, there’s no doubt that he’s becoming a wrecking ball. And the traditional “blue states” may not tolerate his “red state” mandate, which he is following as promised. Besides, the polls have such a poor track record at this point, so I don’t hold much stock in what they say!”
At the Irrational Economics Summit in October, Dent submitted that there could be a red state/blue state split or some level of civil war in the U.S. He said, “Our political and social values are more polarized now than any time since the Civil War. We had very similar levels of income inequality in the Roaring ’20s and the Great Depression as we do today. What we didn’t have back then was the political polarity we have today, where the right is getting farther right and the left farther left. There’s little or no middle ground anymore. No room for compromise.” Here’s the map of the red/blue states from the 2012 presidential election.
With the red states clustered in the southeast, mid-west and the Rockies, the blue states are on the West Coast, Northeastern seaboard and upper Mid-West, and Colorado. Outliers for the blue were New Mexico and Florida, as some of the blue states in the Mid-West were border line, like Michigan, Wisconsin, Iowa, and Pennsylvania.
The map changed recently.
At a City National Rochdale conference in Westlake Village on February 2, 2017 I learned that California is 11% of the U.S. population and at 14% of U.S. GDP is ahead of both New York and Texas. With a population of 39.5 million (almost the size of Spain) if the Golden State does get serious about secession, it is conceivable that Oregon, Washington, and Nevada would join the ranks. That combination accounts for a population of 51 million. If Colorado and New Mexico are included that makes for a grand total of 58.5 million. That would constitute a new Western U.S. bloc, submits Harry Dent, Founder, Dent Research on February 1, 2017.
If that’s not crazy enough, British Columbia has little in common with Alberta, Canada. If they were to join this new union, the total would become a blue heaven of 63 million. That’s the population of France and both are larger than the U.K. The Northeast and New England could form their own Eastern bloc. Given what’s happening now, I agree with Glenn Beck, “We must be vigilant.”
We are on a mission to save your assets.
200 N. Westlake Blvd., Suite 109
Westlake Village, California 91362-3783
805.495.2077 800.266.2077 888.WHY.BEPOOR
The information contained in this newsletter is general in nature and should not be construed as comprehensive financial, tax, or legal advice. As with any financial or legal matter, consult with your qualified securities, tax, or legal representative before taking action. Not to be construed as investment advice or relied upon for investment decisions. Investment in stocks will fluctuate with changes in market conditions. No investment strategies can ensure a profit or protect against a loss. Past performance is not a guarantee of future results. This material contains forward-looking statements including, but not limited to, predictions or indications of future events, trends, plans or objectives. Undue reliance should not be placed on such statements because, by their nature, they are subject to known and unknown risks and uncertainties.
The information presented here has been provided by HS Dent. HS Dent is an economic research company that uses various techniques to study the potential impact of various changes in demographic trends in our economy. No one person or strategy can accurately predict market movements.
Securities and advisory services offered through National Planning Corporation (NPC), Member
FINRA/SIPC, a Registered Investment Adviser. Investors Advantage and NPC are separate and unrelated companies.