...quickly review the investing challenges as I see them. First, there is the massive imbalance between the debts governments owe and the promises governments have made, sure to cause enormous market turmoil, the timing of which will be somewhat unpredictable.
Second, ... Premature optimization is a major portfolio problem...
Third, we must understand that the underlying core investments in most portfolios are undergoing radical changes, which makes any backward-looking portfolio model essentially worthless. ...
...The only way we can grow our portfolios and income, other than by being involved in our own businesses, is by saving and investing our earnings....
The Great Reset
We are coming to a period I call the Great Reset. As it hits, we will have to deal, one way or another, with the largest twin bubbles in the history of the world: global debt, especially government debt, and the even larger bubble of government promises...
...We are also going to have to restructure our economies and in particular how we approach employment because of the massive technological transformation that is taking place. ...
...within the next 5–10 years we have to confront the ending of the debt and government promises supercycle that has been developing since the late 1930s. This is a global problem, but it will be felt most acutely in the developed world and China....
...The Congressional Budget Office estimates that every percentage point hike in rates will cost $1.6 trillion over the next ten years!...1% rate hike will take roughly an additional 3% of our current tax revenues every year....
...How long will younger generations tolerate carrying older generations when the government is taking two thirds of their paychecks? ...
...These obligations simply cannot be paid. ...Will voters decide to tax “the rich” more? Will they increase their VAT rates and further slow growth? Will they reduce benefits? No matter what they decide, hard choices will bring political turmoil, which will mean market turmoil....
... The Great Reset will bring an increase in volatility, and the correlation among asset classes will once again approach 1.0, as it did during 2008–2009...
... I can think of at least three or four ways that politicians and central bankers could react during the Great Reset, and each will bring a different type of volatility and effects on valuations. Flexibility will be critical...
...I think the answer lies in diversifying among noncorrelated trading strategies that can invest in any asset class...
...a combination of several managers is much better than just one. I have assembled a portfolio of four active ETF asset managers/traders with radically different styles.
Mauldin Smart Core is now available on a growing number of platforms where we trade directly for larger investors and brokers and advisers. We also have a mutual fund that I will tell you about in the free white paper that is available now on most of the popular platforms.
I have assembled a professional team to help you get your questions answered. We are especially looking for investment advisors and brokers. While we are just in the US at this moment, we will soon be available in most parts of the world. I am amazed at how technology allows us to do that today.
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