Dear Reader,
I was talking to a buddy last night who’s a big Wall Street trader, and he asked me if I saw David Einhorn’s article this week saying we’re in “the most expensive market of all time.”
David Einhorn is a super smart, successful, big hedge fund manager – one of these guys who’s worth billions and billions of dollars.
And you have Warren Buffett saying when the market’s at 200% of GDP like it is now, you’re “playing with fire” …
Here’s what the smart money is doing now…
So we have David Einhorn calling the market “really, really, really pricey”…
We see Warren Buffett and Jamie Dimon freezing all buybacks.
This is, without a doubt, a “playing with fire” stock market.
There’s animal spirits going on…
It’s like being at a party, and everybody’s a little too drunk.
And what I try to do here with my experience is try to not have you get as drunk as everybody else.
Because it doesn’t matter who the president is…
If you lose half your money, you’re the one who’s going to have to work at the local supermarket…
You’re the one who’s not going to be able to afford to go on vacation.
It is on you. It is on me, to manage our resources, to be careful, not to believe the hype…
To look at historical precedents and facts and understand that we have the power and experience based on objective analysis of facts over the years to make our own determination.
So we could say to ourselves heck, you know what? This is a bull market – no doubt about it.
There’s a lot of cheap money flying around.
We could also say this is one of the most expensive markets in decades.
We can say, the market looks like it wants to go higher, but we can also say at the same time, “we are playing with fire.”
So we better be very careful.
We better pick our spots.
We better not get crazy, drunk behind the wheel of our own retirement accounts and drive them right into a wall.
Because again – it doesn’t matter who you voted for – no president’s going to help you not work at the grocery store if you lose half your retirement.
So we’ve got to be stewards of our retirement.
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That means that sometimes, we’re not going to get the biggest wins.
But again:
Rule #1: Don’t lose money.
Rule #2: Don’t forget Rule #1.
And one of the things my friend said to me last night that I really wanted to talk to you about…
He said, “look – The Great Depression started with a market crash.”
And I thought, wow – he’s really wrong about that.
The Great Depression did not start with a market crash.
Think about what happened before The Great Depression.
A lot of companies were drowning in debt after World War I.
That was the kindling that lit the fire.
Debt is always the kindling.
You want to be careful with debt – it’s like heroin for investors; when you see guys blow up, it’s usually because they’ve taken too much debt.
But just as the debt was really starting to hit, the United States restricted monetary policy with gold, but then the real killer was, they slapped tariffs on imported goods.
Remember those Smoot-Hawley tariffs?
That got other countries to react by doing the same.
Tariffs act like a tax on millions and millions of households.
And just to give you an example, Trump has talked about slapping 60% tariffs across the board on everything coming from China…
That that would make an iPhone cost an extra $260, $270.
Even a 20% tariff which he said was the minimum, would add $50 to the cost of an iPhone.
So basically, we have a lot of parallels between now and The Great Depression.
Countries were choked on debt…
New administration came in and started slapping tariffs on imports…
Other countries reacted by slapping their own tariffs…
Trade nosedived and all of a sudden profits started to go down because consumers weren’t spending as much.
That’s what caused the great crash in 1929.
And we have a lot of parallels now.
So remember your history.
Don’t let misunderstanding or misinformation color your history.
By the time the market crashed in ’29 the U.S. was already teetering.
We are leaving the post-WWII phase of free trade.
We are leaving that regime.
It seems like all these countries are starting to close their shutters, pull in their sails, say “we don’t want trade – we’re going to slap tariffs everywhere…”
Human nature, unfortunately doesn’t change.
It just repeats itself.
And it seems like we are entering a phase much like we did right around WWI.
Especially with China trying to rise, just like the Kaiser’s Germany did which started the first World War.
There are a lot of risks rising out there.
That’s why in my Midnight in America book I actually published my exact playbook for bear markets.
It’s the playbook I used to make a gazillion dollars during the 2009 Great Recession.
And remember, I called that one a year and a half before it happened.
You don’t have to time this thing perfectly to make a killing. Just don’t be late!
That’s why when the risks get above a certain level I start to say, “the Red Coats are coming… the Red Coats are coming!”
And this is certainly a “the Red Coats are coming!” situation.
And this is something, I am not exaggerating, I am handing down to my children.
If you haven’t gotten a copy, I urge you to get one now, because getting crashes right can truly make the difference between bagging groceries till you can no longer stand, and enjoying the total freedom of wealth in retirement.
“The Buck Stops Here,”
P.S. You could take $10,000 into the next crash and turn it into $100,000…
You could take that $100,000 into another recession and turn it into $1 million….
You could turn that $1 million into $5 million on the crash after that.
This is how fortunes are really made, in my experience.
That’s why I laid it all out for you in my playbook.
Don’t wait till it’s too late to start taking these steps.
