Don’t Let the Big Red Ball Crush You

Rodney Johnson | Monday, April 22, 2013 >>


I never understood people who don’t vote. Particularly people who don’t vote in local elections, but then get all caught up in national campaigns. Don’t they understand that the local issues are the ones that most affect their lives and that local elections are where their vote counts the most?

Don’t they get that, numerically speaking, they’re just shy of non-existent in a federal election?

Of course, there are the people who actually do vote but seem to take special pride in being completely ignorant of all relevant facts concerning major issues or the positions taken by candidates.

Winston Churchill once quipped, “The best argument against democracy is a five minute conversation with the average voter.” How true! But it is the best system we have, so we stick with it. Individuals are allowed to make decisions no matter what their level of knowledge.

The same is true in their economic lives, which can be even scarier.

Some people break the mold though. They actually go in search of information and logic so they can make reasoned, well-considered decisions.

I know this to be true, because I’ll have the pleasure of spending time with them this Wednesday and Thursday in Phoenix, AZ…

Back in 2007 I had a message for audiences: be afraid… be very afraid.

I would often start presentations with a slide that showed a large red ball and off to the side would be a small stick figure. As I told people, “Think of the ball as being the economy and the stick figure as you.

When the big red ball rolls over you, there is not much you can do about it. It flattens you. You either did not see the ball, no matter how big it is, or you chose to simply stand there. The key to winning is to get out of the way before that ball starts to roll!

In the summer of that same year we held our Demographics School conference in a cool hotel in Minneapolis. The Graves 601. The audience was diverse, with people from across the country and different walks of life. But they had one thing in common: they were very interested in determining where our economy was headed next. They wanted to make sure the big red ball didn’t roll over them.

My presentation started with the background of how governments view economics. That is they take a very Keynesian approach because it requires no pain whatsoever… just borrow a bunch of money and blather about “multipliers” until people stop asking questions.

The problem was that politicians never seemed to understand that they are supposed to save money in the good years!

Then I discussed how the Fed had not saved our economy over the 1990s and early 2000s. It had simply been present while consumers did the heavy lifting.

Finally I got to the heart of it…

We were running toward an economic cliff. How the people in that room positioned themselves right then, in 2007, would determine whether the economic ball rolled over them or past them.

The government would not save them.

The clock was ticking.

Some people talked about reallocating investments to be more conservative. Some people asked about industries and jobs that would grow in the future. But there was one question that stuck out, “What about real estate?”

At the time, real estate was already showing some weakness. As is typical, market pundits and the National Association of Realtors were crowing about “buying the dip.” Our view was a lot darker.

“If you own real estate, sell it if you can,” we warned. “If you’re considering buying real estate, don’t. If you have a contract, walk on the earnest money.”

The message was as clear as it was negative. There were no caveats, no hedges.

One of the attendees returned to his home town and promptly cancelled plans to build a new office building in South Florida.

Remember, this was in 2007. The markets were moving higher and the U.S. economy was doing well. Yes, residential real estate was taking a breather, and commercial real estate was at a plateau, but there we were, planting our flag in the ground… declaring for all to hear that up ahead was not just a slowdown, or a bumpy patch, but a full blown catastrophe.

The people in the room listened, as I knew they would.

I knew that many in the audience over those two days would take what we had to say to heart and then take action. It was almost inevitable because they were in the room. They had self-selected to attend.

This conference, Demographics School, was and still is a seminar about how our economy works and what we can expect in the years ahead.

There is no question that the topics we discuss will have a profound affect on everyone in the room on many different levels. Their livelihoods, their standard of living, and the well-being of their children, are all tied to the information we discuss.

And yet we know one thing for sure – most people never pay attention. They never find themselves in a conference room on a bright sunny day, discussing economic trends and what lies ahead. Instead, they find themselves somewhere else – underneath the big red ball as the economy steamrolls right over them.

I look forward to seeing those people who do pay attention – who want to stay out of the way of that big red ball – this Wednesday in Phoenix. For those of you who aren’t able to join us this week as we host our April Demographics School at the Renaissance Downtown… we’ll miss you.

But we haven’t forgotten you. We’re recording the two days and will give you the opportunity to get your copy of these in the next few days. Watch out for them. You’re going to want to hear what’s we say.

Rodney

P.S.Our colleague, Teresa van den Barselaar, will be reporting to you on the ground from Demographic School this week to make sure you get some of the pertinent details we’ll be sharing with those who were able to attend. Keep an eye open for her correspondence. There is so much life-changing information we share at this conference, I assure you, you don’t want to miss any of it.

 

 

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Categories: Economy

About Author

Rodney Johnson works closely with Harry Dent to study how people spend their money as they go through predictable stages of life, how that spending drives our economy and how you can use this information to invest successfully in any market. Rodney began his career in financial services on Wall Street in the 1980s with Thomson McKinnon and then Prudential Securities. He started working on projects with Harry in the mid-1990s. He’s a regular guest on several radio programs such as America’s Wealth Management, Savvy Investor Radio, and has been featured on CNBC, Fox News and Fox Business’s “America’s Nightly Scorecard, where he discusses economic trends ranging from the price of oil to the direction of the U.S. economy. He holds degrees from Georgetown University and Southern Methodist University.