I want you to take away only one thing from today’s letter: SELL YOUR BONDS.
Investors thought the tech bust was horrible in March of 2000, or that the real estate bust was horrific in September of 2008, but when the day comes for bonds to peak in price, the largest bubble in modern history will pop.
There is ZERO chance of this event not happening – with mathematical certainty, I assure you that bond investors, both individual and institutional (via bonds and pension funds mostly) will feel a drop that resembles a Discovery Channel documentary about the melting of a giant iceberg at the North Pole. It will like a massive ice sheet dumped into freezing water.
Bonds are going to crash and that will end the Summer Camp of Income, which has been one of the best trades on the planet for 36 consecutive years.
At 8.1% a year, owning bonds has been incredibly lucrative for three and a half decades. Some of the world’s richest investors have come from bonds trading, but it’s over, done, and will not repeat in our lifetime.
Instead, we’re entering an era I call Yield Armageddon. Portfolio Wealth Global sees a potential drop of 50% in bond prices. To put this in perspective, more money will be lost in terms of equity, than homeowner values sunk in 2008.
This is massive – a unique bear market hysteria, and you can look only at the central bank for answers – they’ve caused it.
Many of you have emailed me over the past 18 months, fuming and raging at how stocks keep heading higher, while mining shares, for example, keep dropping.
This is the price of being early. You see, inflation is a ground swell and you don’t get to see it, until it rears its ugly head again. For long periods, it’s tamed and contained, but once in a while, even in a developed economy, such as the U.S., it pops up for a visit and changes the rules of the game.
I’m 100% certain that central banks will not be able to stop the ground swell from hitting bathers (retirees) on the shore (their investment funds).
Deadly inflation, joined by higher interest rates is imminent.
For yield, your best solution is to immediately get rid of your bonds and move your investment funds into REITs, MLPs, close-end funds, and ETFs, especially in emerging markets.
Portfolio Wealth Global will publish a full report on our top 3 retirement stocks for high yield next week. No one will survive the bond bear market. It will affect all bondholders.
Tens of millions of people will lose significant amounts of money they had saved up for retirement, and I want to make sure I did all I could to put this reality in front of you – bonds are safe, when it comes to their low default rate, but are ultra-dangerous, when it comes to losing purchasing power and losing the price of their face value, going forward.
I want to end today’s letter with an empowering message, since the period we’re entering will shuffle the cards in our world; you should be on the receiving end of the wealth redistribution.
Make a pledge to yourself that you stop associating with mediocre people altogether, and begin efforts to network with successful individuals only.
There’s no faster way to reach the realm of open doors and opportunities than this.
One idea I had suggested to a friend of mine, 6 years ago, was to enter the tourism business in a fashionable ski town in Utah.
He started working as a waiter in a luxury restaurant, because I had mentioned that it was his best chance to mingle with successful individuals, while they’re having a wonderful time and their guards are down.
It took him one year to do it, but after nearly 12 months of waiting tables, a gentleman told him that he was a great waiter and asked if he was interested in a more challenging job. That man happened to be a real estate broker, and my friend became his sidekick/personal assistant.
Then, one year later, the boss told my friend he wanted him to manage one of his properties for him. A month later, it became 3 properties, and 4 years after he first came to Utah, he managed 25 properties, each banking him $100 a month. Six years after my initial suggestion, as of yesterday, he told me that he had 43 properties that he manages with an average fee of $135 per property.
With his increased knowledge and his deep connection with his boss, he has identified an opportunity to broker a small hotel to a group of foreign investors, which will net him more than his annual profits in one foul swoop.
Eliminate all the negative time-wasters around you. The average lifespan in the western world is 28,000 days. It will avail you nothing to waste them on gossip, lounging, or any of the myriad of ways people find to entertain themselves, when they should be promoting their skills and networking.
Here’s the best way to begin this journey. Read an investment book this week, from start to finish. Then, head to a local real estate meet up; give the book away as a present to a quality person you introduce yourself to over there and treat him to a cup of coffee.
Flex your networking muscles. Nearly 90% of the deals I have participated in throughout my life have come to me, not vice versa.
The Yield Armageddon should be a sufficient motivator for you to do as the wealthy do – start networking.