AFTERSHOCK INVESTOR –RELEASED SEP 2012 –AUTHORS:
DAVID WIEDEMER, ROBERT WIEDEMER, CINDY SPITZER
This is another Wiedemer masterpiece – 3rd of 3 Aftershock books, each with an updated and exhaustive analysis of the US and world economic scenario along with forecasts of what to expect over the next several years. Yes – a lot of gloom and doom is expected; however, the US will rise rise to the challenge (a Wiedemer prediction). This will be a radical restructuring our economic and political structure following a severe economic collapse; the US will once again lead the world in economic prosperity. Reference the powerful , optimistic 2 page Epilog.
This 3rd Aftershock book concentrates on more practical investment decisions one should consider in light of pending Aftershock bubble pop economic collapse, during the collapse, and as we come out of the collapse.
Click on the AfterShock Economy Tab in https://economics501.wordpress.com/category/aftershock-economy/ to catch up on the core economic analyses from the 1st 2 books.
This is a must read for all. The Wiedemers (W), renowned financial advisors, in 2005, precisely predicted the 2008 economic debacle; then in 2009 precisely again predicted fiscal and monetary policies which have placed us in a more precarious environment now, than 2008. W debunk a new ‘Monetarist’ economic theory that increasing our money supply is the answer to our slow economy. This Monetarist theory is an extension of Keynesian economics gone astray. W argues and proves that the only way an economy truly grows is via productivity increases and not artificial stimulus (our government fiscal and Fed dollar bubbles). In the US productivity is flat or down. Why? Median incomes will rise with productivity increases. They have significantly fallen in the past 4 years especially for the middle class.
These 2 bubbles (government and dollar) will eventually lead to (1) significant 10% inflation and much higher) and (2) with our creditors abandoning our dollar (already occurring on an increasing scale).. Note the Fed purchased 77% of the Treasury’s debt in 2011. W notes also that since 2009, monetary stimulus has increased 3.9 Trillion counting the Fed, ECB, Banks of England and Japan. W also details a Chinese ‘construction’ bubble where a planned economy has pumped in money in projects that have little to do with increasing productivity. W main point here is that we are in a major world debt bubble and economic slowdown.
In W 2nd book (Summer 2011) W predicted an economic collapse the 2013-2015 time frame, with only a sliver of a window to ease (and only ease) the pain the world will experience. A major point of that book was that inflation would significantly escalate to 10% and over with an 18 -24 month lag post major $ expansion. QE 2 ended Summer 2011 tripling the Fed balance sheet hence that would project to significant inflation in 2013. In this 3rd book W predict this significant inflation to occur in approx 2 year time frame but possibly even 2013. W does not explain the forecast revision. However in all fairness to W we are in uncharted territory. So many factors are in play right now impacting investment decisions including the European debt crisis which may be a factor in keeping T bill rates still low as a safe haven. Nevertheless note the increasing inflation in food and energy. Realize also the US gov faulty CPI calculations. All and especially the poor and middle class are most impacted by the food and energy inflation. These commodities are presently feeling the most impact of more dollars chasing same supply. The price of oil has doubled in the last 4 years primarily due to monetary expansion. And why is the Fed increasing the money supply? A prime reason is due to fact that our $6 Trillion total debt growth in last 4 years can not be financed by private creditors; hence the Fed steps in to avert a severe recession if not depression. If only the US Gov would take action to slow down debt and increase productivity! However as W points out again our politicians lack the will and our electorate expects entitlements. W still feels strongly we are at point of no return – economy will collapse; we will experience severe pain few years or more, but then we will drastically restructure our economy, jettison non productive aspects, and lead the world to a new age of economic prosperity.
But right now …
So with productivity and profits down, inflation on way up, the dollar down, most bond and stock investments are not wise long term (more than 1-3 years and maybe a lot shorter). W then again provides an exhaustive analysis yielding an Aftershock Investment portfolio. This includes:
- Short Term Treasuries
- TIPS (Inflation adjusted Treasuries)
- Hi dividend yield stocks
- Select commodities
- Foreign exchange for hedging
- Shorting stocks and bonds especially via short ETF’s
Per W …
For the latter (shorting ETF’s) one should be careful in timing these investments as the stock and bond markets may have some volatile life in them up until Summer 2013. Portfolio diversification is recommended in the short term along with decrease in stock and bond exposure. Most ETFs are EZ to invest in and liquid for now.
My favorite W portfolio selection (for myself): physical Gold – secure and physically hold. W explains why Gov confiscation is unlikely. Why? Gold is not as important as in early 20th Century. To maintain the economy the Fed has other assets to inflate that would be more effective than confiscating gold.
W notes that The US bond market is 30 times greater than all gold the US has at present. Nevertheless on a global scale gold will increase as a safe haven especially during and after dollar depreciation and collapse.
W is not keen on Whole Life Insurance as the core investments are mainly stocks and bonds which will depreciate. Also give the relative spike in real estate 2000 – 2006 and 2009-12 Fed artificial $ expansion real estate values will continue to decrease over next 1-2 years at the minimum. Therefore if you are looking to sell real estate W recommends you do it now. You may be able to buy it back much cheaper in 2-3 years.
** I am not making any recommendation for any investors as I can not in this web site. These are just my views. I have 29 years experience in essentially Wall Street IT.
In addition to financial investments W also elaborates on how one can hedge the likely economic debacle via personal job skills investment. Core necessities such as health care, education, utilities, transportation, and government jobs will be among the better job prospects during the Aftershock post bubble pop economy. W stresses a very important point: if you choose to upgrade your job skills do it in a shirt time period (target 1-3 years) as there is not much time left.
Per Oct 15, 2012 interview with Investors Business Daily (IBD) — http://news.investors.com/investing-etfs/101512-629333-aftershock-investor-author-wiedemer-sees-gold-soaring.htm
W does not completely dismiss the possibility of averting a severe economic collapse (worse case – 50% unemployment, $ loosing 90% or more if its value). Or perhaps he addresses a scenario where the economy is drastically on its way down, falls into a severe recession but with some quicker than expected much needed fiscal/monetary actions that may avert the worse case scenario. IBD asked what would be positive signs. W replied
if the federal deficit declines by 50% and economic growth is going up significantly, that is also a sign you are getting real economic growth and not just growth due to printing and borrowing.
*** Please read the book and blog to my site – Economics501.wordpress.com and also advice Congress that we are not economic illiterate and demand courageous action on their part.
*** Time permitting I respond to civil comments.