Mutual Funds

Signs Of The Time, Part 87

It’s been interesting watching the run-up to the recent carnage on Wall Street.

For some time now, the “crash prophets” who correctly-called the housing market bubble and 2008 economic crisis have been warning the stock market was frothy, if not in bubble territory.

Meanwhile, the Pollyannas who didn’t see either of those events from the last decade convinced themselves that not only had the United States managed to get on solid footing again after the blatant “papering over” of the debacle that reared its ugly head seven years ago, but that U.S equities and their valuations were a fair reflection of an economic “recovery” that was charging “full-steam ahead.”

At the same time, the Pollyannas (with the assistance of the financial mainstream media) ridiculed the “prophets” at any chance they got.

Reminds me a lot of that time period from roughly 2004 to 2008, until the Pollyannas got spanked hard and many of their mouthpieces were put out to pasture.

Make no mistake about it, America’s financial crash is coming.

The powers-that-be can only “kick the can down the road” until the road runs out. And that time is almost here.

Is the recent stock market plunge the event that pushes us over the edge?

I’m not sure it is. That being said, the dive has resulted in some serious financial losses. Steve Goldstein, the D.C. Bureau Chief for the MarketWatch website, wrote this afternoon:

As of March 31, households and nonprofits held $24.1 trillion in stocks. That’s both directly, and through mutual funds, pension funds and the like. That also includes the holdings of U.S.-based hedge funds, though you’d have to think that most hedge funds are held by households.

Using the Dow Jones Total Stock Market index through midmorning trade, that number had dropped to $22.32 trillion.

In other words, a cool $1.8 trillion has been lost between now and the first quarter — and overwhelmingly, those losses occurred in the last few days…

(Editor’s note: Bold added for emphasis)

$1.8 trillion. Whew. After riding the bull for so long, it looks like the Pollyannas weren’t expecting the beast to pull an abrupt about-face… and gore them.


The White Stripes, Conquest (2007)
YouTube Video

Christopher E. Hill
Survival And Prosperity (www.survivalandprosperity.com)

(Editor’s note: I am not responsible for any personal liability, loss, or risk incurred as a consequence of the use and application, either directly or indirectly, of any information presented herein)

Source:

Goldstein, Steve. “Households just saw $1.8 trillion in wealth vanish as stocks fall.” MarketWatch. 24 Aug. 2015. (http://www.marketwatch.com/story/households-still-hold-22-trillion-in-stocks-even-after-market-rout-2015-08-24). 24 Aug. 2015.

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Gallup Poll: U.S. Adults Think Real Estate, Followed By Gold And Stocks, Is Best Long-Term Investment

Gallup just conducted an Economy and Personal Finances telephone poll from April 3-6 where they asked 1,026 U.S. adults the following question:

Which of the following do you think is the best long-term investment — [ROTATED: bonds, real estate, savings accounts or CDs, stocks or mutual funds, (or) gold]?

Their findings?:

30 percent said real estate
-24 percent said gold
-24 percent said stocks/mutual funds
-14 percent said savings accounts/CDs
-6 percent said bonds

Now here’s something interesting. Rebecca Rifkin reported on the Gallup website yesterday:

Lower-income Americans, those living in households with less than $30,000 in annual income, are the most likely of all income groups to say gold is the best long-term investment choice, at 31%. Upper-income Americans are the least likely to name gold, at 18%…

Upper-income Americans are much more likely to say real estate and stocks are the best investment, possibly because of their experience with these types of investments…

(Editor’s note: Bold added for emphasis)

Last April, real estate (25 percent) edged out gold (24 percent) in the poll, with stocks/mutual funds coming in at 22 percent.

In April 2012 and 2011, gold (28 and 34 percent, respectively) beat out runner-up real estate (20 and 19 percent, respectively) by significant margins.

Anyone else starting to think that the overall selection of “best long-term investment” for any particular year may be correlated with recent performance?

By Christopher E. Hill
Survival And Prosperity (www.survivalandprosperity.com)

(Editor’s note: I am not responsible for any personal liability, loss, or risk incurred as a consequence of the use and application, either directly or indirectly, of any information presented herein)

Sources:

Riffkin, Rebecca. “Americans Sold on Real Estate as Best Long-Term Investment.” Gallup.com. 17 Apr. 2014. (http://www.gallup.com/poll/168554/americans-sold-real-estate-best-long-term-investment.aspx). 18 Apr. 2014.

Jacobe, Dennis. “Gold Loses Luster in U.S. as Investment; Real Estate Gains.” Gallup.com. 16 Apr. 2013. (http://www.gallup.com/poll/161909/gold-loses-luster-investment-real-estate-gains.aspx). 18 Apr. 2014.

Saad, Lydia. “Gold Still Americans’ Top Pick Among Long-Term Investments.” Gallup. 27 Apr. 2012. (http://www.gallup.com/poll/154232/gold-americans-top-pick-among-long-term-investments.aspx). 18 Apr. 2014.

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Peter Schiff Recommends This Much Hated Investment

This week, we’ve already heard from “crash prophets” Dr. Marc Faber and Jim Rogers. I musn’t forget the CEO of Euro Pacific Capital, Peter Schiff, who appeared on CTV’s Canada AM yesterday. Discussing the Commerce Department’s report that the U.S. economy grew by 1.7% in the 2nd quarter and the popular notion that we’re in a recovery, Schiff pointed out:

If you look at the fundamentals, if you look at the contracting labor force, the declining use of energy, the explosion of poverty in America and income inequality, all the record number of people on food stamps and on disability, all the part-time jobs that are replacing the full-time jobs that we’ve lost. All of this is consistent with a shrinking economy. But the government won’t admit it.

Meanwhile, the cost of living is rising rapidly in America, and we pretend that there’s not enough inflation. And Ben Bernanke is out there trying to lay the foundation for more QE, because he knows he can never taper. He’s just bluffing. He can’t tell the market the truth that the U.S. economy is completely addicted to his monetary heroin. And the moment he takes it away, it’s going to be a complete economic withdrawal.

It’s a familiar message from Schiff. However, he also warned whoever would listen about the housing bubble and economic crisis that roared its ugly head in the fall of 2008 until he was blue in the face… and it eventually happened.

And here’s what the author of The Real Crash: America’s Coming Bankruptcy—How to Save Yourself and Your Country icon is recommending Americans do to protect themselves before the next leg of the financial crisis commences:

Buy precious metals.

Okay. He’s been saying that for a while too.

But in an interview with Greg Hunter of USAWatchdog.com that was published on YouTube.com on July 28, Schiff, who’s also the CEO of Euro Pacific Precious Metals, tells viewers about one precious metals-related investment opportunity in particular that he’s incredibly-bullish on, even though others despise it right now. From the exchange:

I think right now you’ve got the best buying opportunity of the entire bull market in gold mining stocks- gold and silver stocks. That’s why, for the first time ever, I just launched on Friday of last week my first gold mutual fund. The Euro Pacific Gold Fund [EuroPac Gold Fund] invests almost entirely in gold and silver mining companies. You know, I started my mutual fund company about 3 years ago. But at the time, gold stocks were near their highs, they had a big run. So from a timing perspective, I didn’t want to come out with a fund right after a big run. I wanted to wait for a decent pullback, so we can start the fund at a relatively low point. And then have a nice track record.

You know, most people in the financial industry, when they launch a fund, they want to sell what’s hot. Because it’s easy. It would have been easy for me to launch a gold fund 3 years ago because everybody wanted to buy gold stocks. But now is a better time as an investor. It might be a harder sell, because everybody hates gold stocks right now. But that’s when you buy in cheap- when everybody hates it. But I’m willing to educate people so that they know what they should do. I don’t want to sell people what I think they want. I want to educated people and convince them to buy what I know they need. So it might be a harder sell, but this is a great time, I think, to be investing.

You know, they say on Wall Street, it’s easy to make money, all you got to do is buy low and sell high. Well, it’s easier said than done. Because you can’t sell high until you buy low. And I’m convinced, we are buying really low right now by buying the mining stocks. So people can buy themselves or check out some information on my brand new mutual fund that came out on Friday.


“Peter Schiff: Buy Gold and Silver Now, Money Printing Until We Have A Currency Crisis & More”
YouTube Video

By Christopher E. Hill, Editor
Survival And Prosperity (www.survivalandprosperity.com)

(Editor’s notes: Info added to “Crash Prophets” page; I am not responsible for any personal liability, loss, or risk incurred as a consequence of the use and application, either directly or indirectly, of any information presented herein.)

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Vanguard Founder’s Advice For Weathering ‘The Worst Time For Investors That He Has Ever Seen’

I predicted last summer that this would be my 10th bear market. But this one is different. The others were more marketlike, reflecting problems in the market, not problems in the society and the economy as this one does. As a result, we’re in for a much more troublesome era than after the other big bear markets.

-The Vanguard Group’s John “Jack” Bogle, in a July 20, 2008, New York Times web article

Back when I ran Boom2Bust.com, “The Most Hated Blog On Wall Street,” I used to talk about Jack Bogle, the founder of The Vanguard Group and President of Vanguard’s Bogle Financial Markets Research Center, every once in a while. In case you’re not familiar with Vanguard, it’s one of the two largest mutual fund organizations in the world.

The reason I blogged about Bogle was that he would warn about the global financial crisis that would be full-blown by autumn of 2008 when most other financial types weren’t.

And these days, Vanguard’s founder is sounding the alarm again.

Bogle, now 83, appeared on the New York Times website again this past weekend. Jeff Sommer wrote:

“It’s urgent that people wake up,” he says. Why? This is the worst time for investors that he has ever seen — and after more than 60 years in the business, that’s saying a lot.

Start with the economy, the ultimate source of long-term stock market returns. “The economy has clouds hovering over it,” Mr. Bogle says. “And the financial system has been damaged. The risk of a black-swan event — of something unlikely but apocalyptic — is small, but it’s real.”

(Editor’s note: Italics added for emphasis)

I happen to agree with Mr. Bogle here- if only because many previously-classified “black swan events” have now been “outed” as real, potential threats (a derivatives crisis comes to mind here) to the U.S. economy and larger financial system.

And I believe one of these more visible threats is likely to torpedo the economy/financial system than a remaining black-swan event.

The inventor of the first index mutual fund- the Vanguard 500 Index Fund- recommended in the Times piece that long-term investors continue to hold stocks, predicting equities will likely produce better returns than other alternatives.

(Editor’s note: I am not responsible for any personal liability, loss, or risk incurred as a consequence of the use and application, either directly or indirectly, of any information presented herein)

Source:

Sommer, Jeff. “A Mutual Fund Master, Too Worried to Rest.” New York Times. 11 Aug. 2012. (http://www.nytimes.com/2012/08/12/business/john-bogle-vanguards-founder-is-too-worried-to-rest.html?_r=1&pagewanted=all). 16 Aug. 2012.

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Christopher E. Hill, Editor

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