I recall my first experience with a stock market crash as an adviser 22 years ago. It was a time of “irrational exuberance” as then Federal Reserve Chairman Alan Greenspan stated. It was a time of the birth of the Internet, and everyone was trying to grab a piece of the action. As for me, I had no idea what it was and luckily never invested any of my client’s money into the hot sector even though one mutual fund returned close to 200% the year before the big crash.
I had joined the investment world in 1995 after a 14-year career with a CIBC as a banker and formed Cooper Wealth Management. I remember my first Presidents Council meeting in San Diego in 2000 at the top of the market and right before the crash. At that conference veteran Economist Don Coxe debated then a much younger economist, Dr. Sherry Cooper on the sustainability of this overpriced market.
Sherry Cooper was the rock star economist that was often found on television stating that it was different this time. The markets were different, and these prices were sustainable while Coxe, a man who’d been through a few wars warned us to be careful of the undertow and warned us to get out of the market. The debate was amazing and often heated. And while Coxe may not have won the debate we all know who was right in the end and he knew it, it just took a while before he was proven correct.
I bring this story up as history has a strange way of repeating itself, and lessons learned in life cannot be trained, only experienced. And here we are today, 22 years or so later and I am the veteran with a battle scar or two singing the warning signs of what is to come. I now understand what Dox Coxe must’ve felt like back then as he dealt with people that thought of him as out of touch and peers that truly believed that the market would sustain itself forever.
Today we have a similar situation. We have “experts” that see all the new currency that was printed the past 2 years by the G7 nations and believe that with all this cash kicking around the stock market will continued to be buoyed up. And there is also a swath of retail investment advisors that have never been through a major crash that lasted longer than a few months. This is a dangerous cocktail and so reminiscent of 2001.
Don Coxe’s advice should have been heeded as shortly after that debate the market crashed and it took 3 years to start up a new bull market only to be met with another crash 5 years later in 2008 that lasted over 18 months.
Two crashes in a decade were tough on young advisers many never survived. But those of us that did, learned a lot, and that experience is the greatest benefit I bring to the table today for my clients. My clients are protected from what is to come as I learned that the mantra of "Buy and Hold" is the worst lie ever taught to retail investment advisors and the most insidious and damaging money management system for their clients. I don’t know how else to say it other than that bluntly, if you are sitting there because you are being told that everything will be okay as it always comes back, please read the rest of this blog.
Back to the year 2000, August of 2000 was the peak month, and you were a Buy and Hold investor it took you until February 2013 until you got back to even. 13 years! But that was mild compared to the Great Depression. One thousand dollars held in the S&P500 in April 1929 never became one thousand dollars again until July 1954, or 25 years! Ironically it was 1952 that Harry Markowitz published “Portfolio Selection: Efficient Diversification of Investments” which was the fathering of Modern Portfolio Theory which spawned into this Buy and Hold insanity.
If you have 13 or even 25 years to wait to get your investments back to par, let alone not make any money, then the rest of what I am about to share will be of little value. There are a lot of investment advisors out there, likely 90% or more of them that will gladly follow the markets down with the belief that every downturn is but temporary. The reality is that what we have upon us will be worse than 2000 (40% decline) and 2008 (48% decline) and will rival 1929-32 when the decline was 89%. Why? Because we are at the end of an age in the life cycle of a financial system that will be forever changed.
We have what is called an Everything Bubble which simply means, everything is expensive. Not just Technology stocks like in 2000, or Financial stocks and Real Estate like in 2008 but all of them and then add in Bonds (Debt) as well as Currency (Over supply and debased). In fact, 1929 had all of those elements except one, the currency was stable as it was backed by gold and silver. And Precious Metals such as gold and silver are the one arena that is not in a bubble and are expected to move higher when the inevitable crash to everything else happens.
From 1947 until 2021 the International Bank of Settlements (IBS), the Central bank of Central Banks based in Basel, Switzerland had only one tier 1 world reserve currency that was considered “riskless” and that was the United States Dollar. And everything from oil to pork bellies traded in US Dollars and still does.
In 2021 very secretly and without any media coverage the IBS added another tier 1 world reserve, "riskless" currency and it was Gold. Gold was elevated from tier 3 to tier 1 and they never told you and I. but they did tell their friends at the central banks as they have been on a terror buying up record amounts of gold, the most since 1967 when gold backed the US dollar which it doesn’t any longer. 673 tonnes of gold bought by Central Banks, and we don’t know how much by their friends in high places. At the same time, they are dumping US treasury bonds with Japan and China selling $118 billion in September alone.
So as mentioned, in addition to having an over-valued stock market, a real estate bubble already starting to pop, a Bond market getting crushed by rising interest rates we also have what appears to be evident, a changing of the guard of a world reserve currency from the US Dollar to a Gold backed currency. We just haven't been made privy to the details, but the evidence appears to back up this assessment. This short video explains a lot more about the transfer taking place. Daryl Cooper (vimeo.com)
A change like this will be devastating to the US Dollar and the G7 nations that have had their way with the world for hundreds of years and as individuals we best do our part to protect our families from the financial devastation that wiped out the middle class during the last Great Depression, in 1929.
There is a plethora of financial data that is available but they say a picture is worth a thousand words so I will share some graphic tales that tell a story better than any more words can.
The first two graphs show how todays stock market has tracked 2008 and 2001 very closely and how close we are to falling off the cliff if this trend continues to follow history.
This chart below is another comparison to history of the Volatility Index which spikes when the markets crash. If history continues to repeat, then this chart suggests any day now we could see panic and fear grip the market.
The chart below is of the same as the one above but with a deeper illustration.
The chart below illustrates the 10-year to the 2-year US Bonds. When 2 year bonds yiled a higher rate than 10-year bonds they became what is called inverted and are a signal of a recession. Notice that we are now in worse inversion than in 2000 and 2007, the previous two crashes.
Another strong indicator of a recession and market drop is the 10-year lending rate and bond yield along with the previous times and years that the rate got to this point.
I will leave you with this as a wrap up:
- We have record worldwide debt
-We have a real estate bubble ready to crash under the weight of rising interest rates
-We have a very expensive stock market that isn't getting the support of the Central Bankers anymore as their attention appears to be on something much shinier.
-That "shinier" object has been Gold
-So ask WHY?
-The answer appears to be that the US Dollar is going to be replaced with Gold as the world reserve currency.
-Then what should you do? Buy something that is going away or invest into what the Central Bankers and their friends in high places are investing into?
Here is that short clip again that explains in more detail the currency issue and even has a stock tip at the end from him, not me.
If you want more information, please call me anytime at 306-343-7800 to arrange a free consultation. We offer a one-of-a-kind investment package that is that can keep you safe from the storm using all the tools and experience available.
And if you have anyone in your sphere, family, friends or co-workers that you think could benefit from a consultation then please pass on my information. My mission statement is to help as many people as possible avoid the losses that the middle class experienced from 1929-32 or even the much more minor crashes like 2008 and 2000. Time is of the essence.
Yours in Faith, Family and Finance,