Starting with this column, I’m introducing a new feature called “Mike’s Moves to Make.” It takes the big-picture ideas in my columns and distills them down to simple, actionable information to help you build (and preserve) your wealth. You’ll find a box with those steps to the right.
Now, let’s get down to business …
Mike’s Moves to Make
Buy: Cash, Short-Term Treasuries, Short Real Estate ETFs
Sell: Autos, REITs, Construction stocks
The prediction game isn’t always easy. But if you have a battle-tested approach based on decades of knowledge, experience, and proven techniques, it can pay off big time for investors.
My background is in analyzing the credit markets and credit cycles. I’ve spent decades watching, analyzing, and forecasting every twist and turn in the bond, rate derivatives, mortgage, consumer lending, and real estate markets.
My research suggested more than a year ago that two industries in particular were facing a major day of reckoning – commercial real estate and autos. So I urged you to dump any stocks with exposure to those two industries, including wildly popular Real Estate Investment Trusts (REITs) that investors have flocked to for income in a low-yield world.
How’s that paying off? Well, just look at the iShares U.S. Real Estate ETF (IYR) and how it’s giving up the ghost. The benchmark REIT ETTF has plunged more than 11% just since August, leaving it essentially flat on the year. Meanwhile, one of my favorite ETFs that rises in value as REITs fall has surged almost 23% in just a couple of months.
It’s not just commercial real estate stocks that are having problems, either. Check out the SPDR S&P Homebuilders ETF (XHB). It has given up every penny of the gains it had, and is now down 2% on the year.
How about autos? I’ve been slamming the sector for more than a year, given the ridiculous lending, surge in leasing, jump in incentives, slowing sales, and rampant overproduction we’ve seen.
Sure enough, shares of General Motors (GM) have massively underperformed the market throughout 2016, losing almost 7% year-to-date. I’ve been even more bearish on Ford Motor (F), and it has plunged roughly twice as much as GM.
As for Fiat Chrysler Automobiles (FCAU), its shares have lost more than 30% of their value this year alone! Parts-makers like Lear (LEA), BorgWarner (BWA) and Delphi Automotive (DLPH)? They’re down more than 3%, 17%, and 21% respectively.
According to the National Geographic, the enormous energy of a tsunami can lift giant boulders, flip vehicles and demolish houses. But from a financial standpoint, the K Wave will be even worse: Millions could lose their homes. Millions more could see their lifesavings wiped out in an instant. Businesses, large and small, could close their doors. Even the bare necessities of life — food, water, clothing — might become scarce. That’s why it’s so important that view my new presentation “STOCK MARKET TSUNAMI” right away, click here to watch now!
Dodging losses like those is absolutely essential to preserving your wealth. But there’s another reason why my warnings on these sectors are incredibly important to you: They’re eating away at the stock market’s internals.
For example, this summer, I recommended caution when it came to chasing the July/August rally. I also said that the volatility crush which followed was one of the most abnormal market events I’ve ever seen, and simply couldn’t last.
Now, the Dow and S&P 500 have given back their entire summer rallies. The VIX index of volatility has surged more than 50% from its August low. And everything from election-driven uncertainty to a renewed crash in the British pound to the ongoing meltdown in European banks has rattled investor confidence.
So what’s next? Buckle up. The renewed rockiness and intense selloffs in weak sectors and stocks that I flagged many months ago should just be a taste of what’s to come. My indicators tell me the economy is poised to decelerate, the busts in sectors like commercial real estate and autos are just getting started, and that you have to either protect your wealth from those threats — or turn them into profit opportunities.
You’ll find specific, protective recommendations to take in my Safe Money Report. And you’ll find more aggressive profit-targeting recommendations in my All Weather Trader, where my subscribers have had the chance to bank multiple rounds of double-digit and triple-digit profits from the unwinding of the easy credit cycle.
Finally, make sure you keep up to date with my latest suggestions and guidance. You’ll get my weekly columns Friday mornings in your inbox. Plus, I’ll post more interim “Mike’s Missives” updates on daily developments at the Money and Markets website.
Until next time,