Declare Your Own Independence

Let me start with some good news about the Great Depression. On a per-capita basis, more Americans became millionaires from 1929-32 than any other time in history, opined Rodney Johnson, Senior Editor, Dent Research. By itself, the statement is fascinating. It’s also encouraging. It is logical to this observer that for those with cash in their pockets, opportunity can appear thanks to dramatically lower price tags, which means buyers enjoy catching the next wave to new heights. You’ve heard that cash is kind. Notice, when it comes to equity there are only crickets.

If there is only one job I can do it is to help you prepare your own independence. Despite the good, the bad, and the unforeseen. Once you know you are on track to make work optional or you have good reason to believe you can maintain your financial success I can rest well knowing I have helped get the job done.

Speaking of sleeping well, it’s most interesting to note that “71 percent of financial advisors and 57 percent of investors today feel more negative stress compared with a year ago,” according to research recently released by the Financial Planning Association, Janus Henderson investors, and Investopedia notes ThinkAdvisor, May 24, 2019. From the same source, “The results indicated that investors’ chief concerns centered on how to maintain lifetime income that meets expenses, but also showed they were not confident in their financial knowledge, leading to financial insecurity and increased stress levels.” We are not part of the majority of financial advisors who are worrying these days.

Expect the unexpected. Suppose it’s not a recession around the bend, but it could be the Great Depression II that is baked in the cake. Imagine it’s not the U.S. alone, but the next one goes global. Please know, it’s not about the prediction. It’s all about the preparation. In fact, you don’t need to predict the future to better prepare for the next act of man or nature, to include earthquakes and hurricanes.

Let’s not be complacent. And let’s look beyond some of the pundits. Especially those who have a fine government job they want to keep. “I’m not encroaching on Fed independence, said Larry Kudlow, President Donald Trump’s top economic adviser. For what it’s worth, I have met Mr. Kudlow. He won’t remember meeting me, but I will always remember meeting him. “They should take back the interest rate hike. With a weak global economy, taking out an insurance policy is not a bad thing,” Kudlow said on Bloomberg, July 5, 2019.

A couple of hours after the Bureau of Labor Statistics report out the day after the fourth of July, we got from President Trump, “JOBS, JOBS, JOBS!”

Half the payroll gain came from the ‘Birth-Death’ BLS guesstimate; and prime-adult male employment actually sagged 97k in June, collapsing 338k over the past three months, which hasn’t happened since September 2009. Lift open the shiny hood and check out the sputtering engine, tweeted David Rosenberg.

You may remember my writing about a billionaire founder of a money management firm who suggested 2018 would see a market gain of 15 percent, but end the year in the red. Now he says, “The three-month bill yield compared to the 10-year Treasury yield has every bit the look of a recession coming within 12 months and maybe within six months because that rate is inverted,” said Jeffrey Gundlach, who I have also met, co-founder, DoubleLine Capital, June 19, 2019. The Fed’s quantitative easing, which serves as an insurance policy against a recession, will put the icing on the cake for a future recession, Gundlach said

“Ironically, a lot of people think if the Fed eases it’ll be an insurance policy against recession. But if past patterns are prologue, if we actually start steepening out the yield curve from an inversion three months to 10 years, that’s actually highly coincidental with the coming recession, said Gundlach.”

In Barron’s, July 5, 2019, there is an interesting article, Trouble is Lurking Under the Stock Market’s Surface. The S&P 500 and the DOW closed at all-time record highs July 3, 2019, with the NASDAQ close to its own new high. As we have said before, look out for bad breadth. “The average stock is doing much worse than most people realize,” warned Andrew Lapthorne, quantitative strategist at SG Securities. “In the U.S. and around the world, most stocks are ‘struggling,’ and they remain well below levels from 18 months ago,” said Lapthorne.

The S&P 500 has risen about 11 percent since January says Barron’s. “But among the broad universe of U.S. stocks worth more than $50 million, just over half are still in the red over that time, submits FactSet data. And the median stock price is down 0.7 percent over the past 18 months. At best the S&P 500 is a small piece of the puzzle. Which means, it just may not be a very good barometer of global prosperity. There are “11,000 other companies that are not doing so well,” opined Lapthorne.

Don’t be mesmerized staring at the calendar. Winter is coming.