- U.S. Liabilities $100 Trillion
- QE4 $85 Billion in Bond Buying Per Month (no exit strategy)
- Long Term Unemployment at a Record
- National Debt 16.3 Trillion
- No Driver for Jobs, Youth Unemployment Highest since the Depression of the 1930’s
- Food Stamps at a Record 48 Million
- Government Borrowing 43 Cents for Every Dollar Spent
- Cheap Resources is Behind Us
Does the above depress you? It shouldn’t, it should excite you because just as large as the problems are listed above, the opportunities are even larger.
Many after understanding the current state of our economy have decided to literally bunker down and wait until the crisis ends, but we believe that is a huge mistake. One of the worst things that you will experience in investing is being right and not making a dime. The only thing worse is being right and losing money like most of the people in 2008 who only held gold and silver experienced. They were 100% right about the economy collapsing, but gold fell with the markets and silver got decimated, down over 50%. This is NOT us taking a negative tone on the precious metals, we just want to point out that being right and losing money sucks, so don’t ever think things will play out as simple as the bankers get screwed and the doomsday prepper becomes a multi-millionaire over night.
The stock market has survived and thrived during two world wars, a depression, severe inflation, and a banking crisis over the past century. The stock market is nothing more than a facilitator to purchase fractional ownership of a business, so if you think McDonalds (MCD), Exxon Mobil (XOM), and others will still be around in 50 years, then Dow 14,000 is just background noise. More important than the market trend is at what pricewill you be entering a position.
With volume low and retail investors not buying stocks right now, you can bet on stocks rallying for at least another year. Remember in 2008 retail investors got smashed, then they missed out on the massive rally of the past 4 years which due to the FED will probably last a few more years. The time to get scared out of stocks is when everyone is jumping back in like it is 1999.
If you are concerned about inflation, remember during times of inflation, especially severe inflation, stock markets are a great hedge as they move up nominally as the currency falls in real value. Sort of like we are seeing with the overall market today, however this doesn’t mean you can’t pick a few undervalued companies in order to see real returns.
The next step after understanding the current crisis is to focus on the investments that will do well during and after the crisis because the world isn’t coming to an end just because America’s middle class is. Don’t get swept into the poverty that awaits millions, be a pro-active educated investor.