Just a few days ago, we brought together some of the best minds in the investment world for two days of intensive meetings.
Our task: To peer into 2014 and beyond; take a cold, hard look at current trends without bias; and give you a vision of what to expect for the future.
Here are the fundamental conclusions I came away with:
The Greatest Government Blunders of All Time
Governments of major nations have trashed normalcy. They have made fatal, history-changing blunders — not just the greatest deficit spending of all time, not just the most massive money printing since Weimar Germany, but also many more.
They will ultimately pay dearly for those blunders. Their judgment day will come. And when it does come, the consequences for investors will be chaos.
Big Losses for Bond Investors
The first to feel those consequences will be holders of long-term bonds. Bond prices are already falling as long-term interest rates rise, and the Fed’s just-announced action to taper its bond-buying program will only accelerate that trend.
But as investors exit the bond markets, they will shift their money to other assets, including stocks and gold. (More on these in a moment.)
Higher Interest Rates Not Yet Bearish for the Economy
It will take some time before rising interest rates become a drag on the world economy.
Why? Because right now they are at extremely low levels, still near the lowest levels in modern history. So they have quite a ways to go before they begin to bite — before they start impairing government budgets or making a dent in corporate profits.
Foreign Governments in Worse Shape Than Washington
The U.S. government’s finances are bad. But the predicament of other major governments is far worse.
Western Europe could break up. Eastern European countries could default. Japan has double the debt burden of the United States.
So in a global beauty contest of major investment centers, it’s the United States that wins the prize — the prize of the LEAST UGLY.
U.S. Markets Are Most Liquid Haven in Times of War
The U.S. also wins the prize as the most liquid large haven in times of spreading global conflict; and right now we are headed into a rapidly rising cycle of conflict: Wars, cold wars, hot wars.
Look at Iraq! We thought we had saved Iraq from disaster. But now it’s plunging into a second civil war.
Look at the Syrian civil war and how it is spreading to neighboring countries!
Look at Iran and Saudi Arabia! Any nuclear pact that we make with the Shiite government in Iran will enrage the Sunni government in Saudi Arabia, dragging them into war or war-mongering.
Look at the new cold war emerging between Russia and the West — including major battles over former states of the Soviet Union like the Ukraine, Georgia and Moldova.
And consider East Asia: We have China, South Korea, North Korea and Japan all now arming themselves to the teeth, all escalating a four-way Cold War so quickly that experts now fear armed conflicts could break out at almost any time.
Here’s the key: No matter what the final outcomes of these regional confrontations, a tremendous amount of GLOBAL scared money is going to flow into gold and into U.S. stocks.
U.S. Economy Improving
As we’re tired of knowing, the U.S. economy is growing for all the wrong reasons and in the wrong way — funny money, hot air, giant bubbles. But right now, the inescapable fact is that it IS improving.
Stock Market Rising
Most U.S. stocks are going up. That is the prevailing trend.
How long will this trend last? How far it will go? These are questions that are definitely worth debating. But they are not issues that will pertain to our current investment decisions. What counts the most for us right now is that the dominant trend IS up.
We now have THREE major, highly profitable megatrends underway — or on the way — and least two of those are very sustainable:
Interest rates are going up for the long term …
Gold will be going up, also for the long term, and …
Stocks are going up — at least for now.
In all three, since we have so many LIQUID investment vehicles to choose from, we can easily get in while the trend is up and get out when the trend turns down.
And since we have one of the most powerful selection tools at our immediate disposal — I am talking about the Weiss Stock Ratings — we can also select the SAFEST stocks, the stocks most likely to hold their value even when the market turns.
In sum, with caution and with a big cushion of safety, there is now big money to be made in the world’s safest stocks.
Plus, there is even bigger money to be made in current and coming bull markets that are very sustainable — the current bull market in interest rates, and the coming bull market in gold.
Good luck and God bless!
by Charles Goyette
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