Strategies for Navigating a Low-Growth, Low-Inflation Environment
I’m back bringing you coverage of Day 2 at our fourth annual Irrational Economic Summit.
This morning I shared with you the details of what Harry, Dan Mitchell and the Honorable David Walker told audience members yesterday – and man, were there some fireworks!
In case you missed my email this morning, here’s a recap of everything that went down:
- In his opening presentation, Harry shared details on the coming “Sale of a Lifetime” that will be available once the worst market crash in history finally begins. He said that while you will be able to find pockets of opportunities in the years ahead, you’ll need to be invested in the correct sectors and have a firm understanding of why they’re climbing higher and for how long.
- Dan Mitchell told our viewers that the absolute worst thing that you could do to try to stimulate the economy is raise taxes.
- And David Walker told us that the core of our country’s problems comes down to the fact that the government has grown too big, promised too much, and needs to be restructured.
After the presentations were over we had an amazing reception sponsored by our friends at EverBank. I wanted to chat with Harry to see how he thought the first day had gone, but there was a crowd of people around him so large that I couldn’t even get close. Thankfully, the photographer has a zoom lens!
Harry talking to attendees at the reception.
If you could believe it, this morning was even more jam-packed than our first day. We started bright and early at 8 a.m., and while I didn’t think it was possible, the presenters bumped the intensity up a couple more notches…
Charles started us off by talking about the ways that you can still find value in an overly expensive market.
The thing that you need to know about Charles is that he’s a value investor, which sets him a bit apart from everyone else and makes him a fantastic Portfolio Manager for Boom & Bust. Basically, being a value investor means that he doesn’t get into forecasting where the markets are headed, per say, but instead looks at where prices are at today and finds investments to make right now.
If you think that sounds easy, it’s not.
He explained that the exorbitant rise in stock prices have been a result of ridiculously low bond yields, but here’s the catch: investors are actually basing these prices on a false signal. I could go into all the details here, but I really think that Charles explains it better himself.
In the most basic of terms, Charles’ view of the market is this: Stocks are priced too high, bond yields may go higher, but only in the short-term, volatility is abnormally low and likely to go higher, and macroeconomic risks are elevated.
So, what’s an investor to do?
He advises that you focus on bringing in as much income as possible. In fact, he went over some really great plays that are active in our Boom & Bust portfolio right now – some of which aren’t even in the stock market! It’s not too late to get in on these investments, and with the IES 2016 Digital Replay Kit, you can watch Charles’ presentation for the full details.
We also heard from EverBank’s VP Chris Gaffney on opportunities that you can find despite the seemingly endless intervention of central banks around the world. He explained that these banks have taken on their absurd monetary policies because of a very real fear of deflation.
I don’t know about you, but I don’t think that makes the pill any easier to swallow.
He went on to say that the most you can do in this low-growth, low-inflation environment is to have a diversified portfolio that’s broken up into different asset classes. It may not be a complete guarantee against disaster, but it’s about as good as you’re ever going to get.
Up next was our very own Chief Investment Strategist, Adam O’Dell. The thing that really stands out about Adam is that he’s not just interested in making money. He actually digs into the heart of investing by analyzing the psychology of the markets.
You see, people are inherently poor decision-makers when it comes to managing their money. But as Adam explained this morning, that’s not entirely their fault.
It all comes down to one basic, instinctual driver… fear.
As soon as volatility comes into the markets, investors are subconsciously gripped with fear. They’re terrified of losing all of their money and, as Adam likes to say, “being left with only cat food and ramen noodles to eat in their retirement.” That one got quite a few laughs from the audience.
The question comes down to this: how do you manage your fear response and avoid acting irrationally? This gets especially difficult because, as Adam stated, you’re not always even aware on a conscious level that your decision-making has become compromised.
The solution is actually surprisingly simple: Pick an investment strategy that you feel comfortable with, and then follow his two rules…
- Follow a systematic approach, and
- Exert discipline to follow that strategy.
Now, don’t get me wrong. I realize that it’s not always easy to follow through on a trade when stock prices fall out of bed, but if you follow Adam’s advice, you’re more likely to make – and keep – your money in the long-term.
Adam answering a subscriber’s question.
Finally, Rodney closed out our morning sessions with his talk on “The Recurring Death of the Dollar.” We get a lot of questions from our subscribers on where our editors see the dollar going in the future, and Rodney clearly set the record straight today.
Very simply, the dollar’s not going anywhere.
The big fear right now for investors is China. But, as Rodney explained, the last thing that the Chinese want to do is dethrone the dollar. In reality, they really want to devalue the yuan. And the whole idea of any forthcoming Chinese attack on the dollar ignores the fact that SDRs (which are based on a basket of currencies) aren’t big enough to cause a problem for any of the five currencies that they’re comprised of.
Seriously, get this: the amount of SDRs in existence only adds up to $285 billion…
As Rodney put it: “That’s like a rounding error, right?”
I hope you’ve been able to tune into these presentations (if not, you can always watch them at your leisure with the 2016 Irrational Economic Summit Digital Replay Kit we’re making available during the conference). With such a wide range of speakers and topics, I can’t imagine that you wouldn’t be able to find a strategy or investment that really speaks toyou.
We’ve already absorbed so much information from our speakers this year that it’s hard to believe there’s still another day to go. But that’s the kind of quality advice we feel you deserve, so that’s exactly what we’re going to deliver.
This afternoon Real Vision TV founder Raoul Pal discussed his global macro view of the economy.
And Joe Wirbick filled us in on everything you’ve never been told about retirement.
Then John, our resident forensic accountant, told everyone how to invest in companies that actually pay their shareholders first. If you’re tired of trying to turn a profit with companies who don’t give a damn about their investors, then you’re going to want to hear what John has to say.
Stay tuned for my next email. I’ll give you all the details on this afternoon’s sessions tomorrow morning.
We’re only halfway through the Summit and there’s still so much left to report!
Your 2016 IES On-the-Ground Reporter
P.S. I’m sending you what highlights I can, but nothing that I write can compare to actually watching these guys in action. Sign up to receive our 2016 Irrational Economic Summit Digital Replay Kit. When you do, you’ll also gain access to six exclusive workshops, plus a digital copy of Harry’s new bestseller, The Sale of a Lifetime. Hurry though, because this offer will only be available to you for a few more days!
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