[Note: We have found the work of Lior Gantz from WealthResearchGroup.com to be excellent and interesting, so we’re sharing his articles with you. Hope you enjoy them and find them useful.]
In two weeks, we hand over the keys to this decade to the history books and put 3,650 days in the basement to collect dust, and embark upon a new one. The U.S. administration and the Chinese government have announced that the 18-month long negotiations, which included tariffs and plenty of shenanigans, are not in vain; there’s a deal getting struck.
Many are debating how meaningful this deal really is, how much contribution and productivity it will add and if it is more of a PR stunt to boost confidence and make Trump look better in the eyes of voters than it is a juicy agreement, filled with substance.
Here’s what we know, for a fact: the U.S. is a country that works in a way that generates TREMENDOUS wealth and equity, BUT traps it and delivers it into the hands of the few.
The biggest takeaways from this decade are as follows: the central bank’s policies are ROCKET FUEL for stocks, the government is not INTERESTED in making any difficult austerity measures or budget cuts to balance the budget, the baby boomer generation is DUMPING stocks for bonds, an increasing number of Americans will continue to join the poor, while others become millionaires and the middle-class VAPORIZES, and millennials have their work cut out for them.
Compared with the national debt, the total wealth of households is staggering. In other words, the government could (in theory) close the national debt, if it was to tax/confiscate wealth and deal with the problem head-on. I personally don’t see that as a real threat.
The deflationists, the promotors of the “Demographic Cliff” that theorizes that the baby boomers’ liquidation of stocks should have caused the deepest bear market in history were proven wrong – they didn’t factor in the ability of corporations to buy back shares.
In the past 40 years, through 4 decades of both Republican and Democratic presidents, with interest rates ranging from nearly 18% to 0%, and with wars happening all over the globe, stocks have FLOURISHED.
Corporations are worth investing in, but what has transpired in the process is that the VALUE moved from the level of the worker to the level of the decision-making management.
In other words, corporations have become true wealth generators, on a consistent basis, but the profits don’t trickle to most of the employees.
Courtesy: U.S. Global Investors
In the developed world, but especially in the U.S., the 21st century has been brutal for those that don’t keep pace with what’s going on. As a country, they’re growing slowly at 2%-3%, but that is the AVERAGE. Most people are not in the middle, but are at the polar extremes of this 2% world. The S&P 500 has delivered a 15%/year gain in the past decade and real estate prices have gone parabolic as well.
On the flip side, half of the workforce earns $30K/year, so the majority of the taxpayers are not happy campers.
Look at poverty rates and trends; to me, it seems that each SLOWDOWN will create more PERMANENTLY poor families. Said differently, once you’re poor, you will remain that way.
In his presidency, Donald Trump has mastered the strategy that boosts corporate returns, but now he has given investors assurance and confidence to ease their concerns, add risk to their portfolios and EMBRACE growth.
This, as we see it, might be the end of the global strength trade for the dollar, especially since it coincided with Brexit, which adds to the certainty in Europe, now that everyone knows where everything stands.
Now, with all this good news behind us, investors need to look closely at their portfolio and figure out if inflation doesn’t pose a sudden risk.
As we see it, dollar weakness and low rates are back. In other words, the 2009-2011 era is upon us and reflation will do wonders for resource stocks!
Today’s news moves at a faster pace than ever. Whatfinger.com is my go-to source for keeping up with all the latest events in real time.