Wednesday, June 29, 2016

We’re Already in a Crisis

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Economy and Markets

Our Demographic Research Shows
We're Already in the Midst of a Crisis

By Rodney Johnson, Senior Editor, Economy & Markets

EditorOne of the best parenting insights I ever heard was: "Kids don't go to school eating mushed peas and carrots." That is, parents shouldn't obsess over whether their child walked at nine months or 18 months, or could count to 100 by the time he was four years old.

By and large, kids will follow a very normal path as they grow up. But the predictable path doesn't stop in kindergarten.

We all know of child prodigies who graduate high school at 10 years old and finish their Ph.D. at 16, but those are outliers. Typically kids finish high school at 18 and college (if they go) at 22. These milestones are ingrained in our culture. If we look further, we find other milestones, or stages, in life that are also very predictable by age, and have huge implications for what happens in our economy.

Harry Dent's Most Disturbing Prediction in Years

Harry Dent, one of the most respected economists in the industry, has uncovered a disturbing market event that could soon devastate millions of investors. In short, he has undeniable proof that one of the market's safest and most popular investments is about to get slaughtered… and it will have dire consequences for those who don't prepare right away. 

For full details on the event Harry's dubbed as the "Safe-Asset Slaughter"… and to ensure you escape the coming carnage, I urge you to watch this special presentation.

We enter the workforce on average between the ages of 20 and 22.

We get married around 26 or 27.

We spend the most on baby-related items in our late 20s.

We buy our first home around 31, and spend the most on breakfast cereal at age 38.

We buy the most potato chips at age 42, and dramatically increase our spending on motorcycles at 46.

We spend the most overall around 47, and then gently decrease our spending until about 64.

Do you see yourself in these statistics?

Well, that's what gives us the power to predict. On average, people behave in very predictable ways when it comes to spending money. They pass through distinct stages of life at certain ages, and each stage is associated with specific spending patterns. When this information is combined with a detailed breakdown of demographics and several other cycles that Harry monitors, we can develop an accurate picture of where our nation stands economically today, and where it is headed tomorrow.

We can practically see around the corner, and we'll help you do the same every day with your Economy & Markets letter. In turn, you can use that information to make very smart personal, business, and investment decisions.

Of course, I'd understand if you asked: "Can it really be that simple?"

The short answer is: Yes! It can.

Take the massive baby boom generation for example…

Voodoo Economics at Your Fingertips

Baby boomers were born between 1934, and 1961 when they peaked (the generally accepted years are 1946 to 1964, but we count them differently, from the bottom of the wave of births, to get a more accurate numerical picture). This massive wave of people – some 109 million – have been moving through our economy ever since.

Using 1961 as our anchor year since it contains the highest number of boomers, we've spent the last 20-plus years successfully forecasting major changes in the economy based largely on what this group will typically buy as they age!

Starter homes topped around 1992, when the peak number of baby boomers, those born in 1961, were 31 years old… as we said they would. Trade-up homes peaked in 2005, when the top number of boomers were 44... as we said they would.

Motorcycle sales enjoyed a good ride until 2007, when those born in 1961 were 46. Just look at Harley Davidson's run up to that point if you're looking for the proof. Around the time of the company's precipitous fall, its CEO, Keith Wandell, warned shareholders that the iconic motorcycle maker faced tough economic headwinds.

These forecasts came from our study of demographics and consumer spending patterns alone. In total, we have a hierarchy of four cycles that have, to date, enabled us to call the 2008 crisis, the Japanese collapse, the gold meltdown, and the recent price slide in oil, to name but a few.

Those same cycles – the 39-year generational spending wave (demographics), the 36-year geopolitical cycle, the 45-year innovation cycle, and the 30-year commodities cycle – give us a very clear picture of what lies ahead.

For those who don't know the methods behind our special brand of (powerful) madness, it may appear to be voodoo economics… but really it's a combination of deep-level research and a study of predictable trends… and then making financial and investment decisions accordingly.

That's why we write our monthly newsletter Boom & Bust. It's why we write our daily Economy & Markets letters, and why we're thrilled that you've signed on to receive this invaluable information from us.

Ultimately, our unique view of the economy and markets will give you the edge you need. It will put you head and shoulders above others in the market. And right now, you need that edge, because Wall Street and the mainstream media are dishing out incomplete information that can lead you down the wrong, and very painful, path.

Urgent: Take Note and Action Now

The boomers who were born in 1961 are now 54, and are struggling with the hard facts of preparing for retirement.

This explains why credit card debt has fallen almost every month since the financial crisis (boomers trying to pay down debt), and why record low interest rates have not spurred tremendous consumer spending. The largest group in our economy – the boomers – are more worried about having enough money to last through retirement than they are about having the newest flat screen TV. As a result, they're having an enormous impact on the following sectors:

Real Estate – Boomers passed through their demand stage for trade up homes a decade ago, which is part of the reason for the housing meltdown we suffered after 2006. There simply weren't enough consumers in the group behind the boomers to keep demand at such a high level.

We should see strength in retirement communities in the years ahead, as well as in starter homes as the next generation, the millennials, form their own households. But eventually we'll see the construction industry falter again as the number of boomers dying leaves an increasing number of homes up for sale.

Our advice: Consider selling any real estate you own now. There will be time later to buy it back at substantial discounts. When the time comes, look to grabbing property for income purposes.

U.S. Dollar – Like I've said already, while slowing down their spending, boomers are also paying down their debts. This makes it very hard for interest rates to rise because there's less demand for loans and more demand for investments that pay interest. All of this leads to a stronger U.S. dollar.

There are several other reasons – one of which has to do with the number of aircraft carriers the U.S. has – for why we believe the dollar's best years are still ahead, a point of view that is contrary to many industry experts and members of the mainstream media.

Our advice: Invest in a strengthening U.S. dollar, and be sure to read Economy & Markets emails regularly, because we give you details of how to do just that.

Oil, Gold, and Other Commodities – As the U.S. economy slows, the demand for raw materials used for construction and commerce also slows, which weighs on the price of goods like oil, copper, etc.

The implications of a slowdown based on an aging society don't stop at the shores of the U.S. Most major developed nations have an even bigger issue with an aging population, since they have more people in the later stages of life and fewer children. This is especially true of Germany, long considered the strong man of Europe, and Japan, which has suffered with issues related to an aging population since the early 1990s.

The fact that the developed world is aging together means that the world economy is struggling for growth, and will for years to come. This weighs especially heavily on emerging markets that tend to serve as the labor force and raw material vendors to the developed world.

Our advice: Steer clear of investments in the emerging market, and don't bet on gold soaring to the moon anytime soon.

Luckily, there are some positive outcomes to look forward to as well, but we'll tell you more about those another time, so look out for them each day at around 4:30 p.m. Eastern.

We look forward to talking to you again tomorrow.


P.S. We have a strong team of experts on call to help you make sound financial and business decisions. This is particularly important considering the safe asset slaughter on the horizon. Besides Harry Dent and myself, our roster includes…

Adam O'Dell, a technical analyst who has fine-tuned a strategy that plays on the cyclical nature of nine market sectors. As such, he is our chief investment strategist and editor of the hugely successful Cycle 9 Alert service, as well as the even faster-paced Max Profit Alert.

Charles Sizemore, our fundamentals analyst, a vital cog in our ability to provide you with well-rounded, powerful research that you can use to improve your financial and investment decisions. Charles manages the Boom & Bust portfolio with help from Adam, and writes the portfolio review. He's also the editor of Dent 401k Advisor, a quarterly addendum to Boom & Bust.

Lance Gaitan, the team member who works with U.S. Treasurys and the bond markets. He's developed a system called Treasury Profits Accelerator that can capitalize on micro-moves in interest rates, as much as 100% in four days.

John Del Vecchio, an elite shorting strategist we recruited to profit from the market's inevitable turn downward. John manages the AdvisorShares Ranger Equity Bear ETF. For Dent Research, he runs a trading service called Forensic Investor, where he looks behind the numbers to find which market giants are fudging their numbers, hence providing valuable shorting opportunities.

And Ben Benoy, our resident U.S. Marine, who is the creator of a trading platform that uses social media (yes! you read that correctly) to identify opportunities in the biotech field.

Together, they bring you their unique point of view and research approach in the "Market Insight" section of Economy & Markets every day… so be sure to look out for it.

Follow me on Twitter @RJHSDent


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