It is better to be ready and wrong, than to be wrong and not ready.
I started studying cycles back in 2006, but ignored the readings… my bad. I think my intuition was better in 2000. In 1999, I joined Merrill Lynch – that was the first job I ever had, the first time I became an employee of a prestigious firm… and I quit, because I had this crazy ‘feeling’ about the market being irrational and because I thought I could do better starting my own internet company and selling it for a few million. Instead, I went to study.
Fast forward a couple of years to 2006, I’m seeing money being made everywhere… the stock markets were booming. Things were looking good, and this time I was making money. But during a vacation to Singapore – in a bookstore, I came across this book called “The Joseph Cycle” in the investment section… strange, what would something based on a Bible story be doing there… I bought the book on impulse as I mostly do, read it for a short while and was intrigued albeit for a few hours – I then shut it and went back to life and making money.
Then in 2008, it happened… first the stock market crash after… wait, the Beijing Olympics. Hey, this feels like deja vu.
Yes, the book… The Joseph Cycle.
In a span of 7 years, the cycle had completed its course. Now, I’m a big follower of cycles… why because I’ve found the secret to making money, and it’s watching for the signs. This is biblical… in that these cycles have been going on for some time… (read the book to find out more).
So what has this to do with making money, well.. a sub-cycle is basically a trend. And ask any trader and he’ll tell you – The Trend Is Your Friend, Until It Ends.
If you can understand the cycles, you can understand the underlying trends – whether we’re in a bull market or bear market. And because timing the market is impossible, it’s better to be a bit late on the bull and a bit early on the bear. But you need to know what to watch. You need to be able to understand trends BEFORE they develop.
Why am I writing all this… because in 2008, when the market crashed – I lost (let’s just say) A LOT of money.
I was devastated, defeated and vouched never to enter trading again.
With all the negative news circulating in the media, I became curious again to find out what Simon Sim, the author was doing… true to his word, his last post was that he had sold at the top in 2008, was all in cash and gold and had gone to meditate in the Himalayas maybe… like a monk!
Ok, so we’re almost at the end of the 7 year cycle… but is it over? Well, for each 7 years, according to Simon, there’s a alway a major event to trigger the change – a turning point.
And this is where things get interesting… thanks to the power of Google, I’ve expanded my research, and in the recent years, a lot of new and interesting stuff has popped up – you may call it occult, you may call it supernatural, you may call it conspiracy, you may call it prophecy, you may call it down right stupid – but there’s a sense of something strange happening.
As a market observer… you feel something, like intuition (yes, that same feeling in 1999) – maybe it’s just the negative, doom-and-gloom sayers on youtube. Whatever it is… my mission is clear – not to fail, but to win – by protecting our wealth so it can last for generations.
So, let me introduce you to some of the findings and what each one is saying… there’s a religious connotation to some of this, so if you’re offended by that – please accept my apologies. But I have the right to share this, just as you have the right to ignore this and leave.
(I do however hope you’ll stick around and read to the end, because I’m not too religious – heck I never even went to Sunday school for Catechism. All I ask is that you be open to learning…).
My confirmation of cycles, was reinforced with the recent release of Jonathan Cahn’s Shemitah (SHMITAH) and Harbinger in 2012. For the record, he’s Jewish, but believes in Christ – or as some would called a Messianic Jew. A shemitah year is a sabbatical year, where the Jews took a year off. Both Christians and Jews share the 10 Commandments, one being – respect the Sabath (or Sabat as in Sabbatical) – they are expected to take a year off from working the land.
As a student of finance, what caught my attention was that the last day of the Shemitah for the past two Shemitahs in 2001 and 2008 fell on the exact same days as a major market collapse.
The Shemitah fell on September 17th, 2001 (days after 911) and that was the first day the US stock markets opened after 9/11 (Elul 29 as per the Hebrew Calendar). That day had the greatest one day stock market point crash in US history up to that time. The Dow fell 684 points (very close to 700), or 7% and it was a record that held for precisely seven years until the end of the next Shemitah year (if you watched yesterday’s market down 530 – still didn’t beat it!).
On September 29th, 2008, the exact final day of the Shemitah, the Dow plummeted 777 points, which still today remains the greatest one day stock market crash of all time. Noticing quite a few 7s? As well, on that day, it was the only known day on the New York Stock Exchange where the Opening Bell wouldn’t ring. Well, those sevens don’t end there, recently Christian Lagarde of IMF, gave an unusual speech about numerology…
2014 and 2015 is also a Shemitah year, because Hebrew Calendar falls between these two Gregorian Calendars. It began on September 25, 2014 and ends on September 24, 2015.
You see, cycles are a natural thing – we have four seasons in a year. And it’s natural. We have a birth-growth-death cycle which all humans follow. If you want to see the beauty of a cycle, watch this video – and you’ll see perspective change in cycles – it’s not as straight forward, but a bit when seen from an angle, you’ll see the beauty in this.
If the market has really recovered, as it looks like in the following chart:
Then you also have to look at this chart… and ask why global trade has not picked up:
You see, the BDI chart represents the real trade taking place – it’s an indicator of the shipping rates worldwide. If that is still at the bottom, and the S&P is at the top… and you believe the two shall meet – either one of these things will happen, either the S&P will crash or the BDI will start to see improvements. That means the the recovery is not “real” but inflated because of all the money printed and flowing into the stock market.
And on to my G.O.D Theory… which is a theory I have. Understanding each, you can understand the way the world works. It spells out Gold, Oil, Dollar – each one of these will be talked about and have an influence on the other. Let’s take each component and break it down to see what’s happening…
See Gold Prices since 2000 till end of July 2015.
Gold as wealth and as money is biblical. Which is why true wealth is measured in something that can not be inflated away. However, keep in mind – that the above chart is priced in USD, which means the stronger the dollar gets – the lower in value gold goes.
So if the dollar becomes stronger, gold becomes weaker (because it’s an alternative form of money/currency) – compare the curve of the above graph with the one of the U.S.Dollar Index below.
Since its peak in 2011, it has fallen almost 50%. Why, well because its the biggest threat the U.S. Dollar as the world reserve status. The only way the price of gold will go up is if there is a crisis in confidence, and the U.S. Dollar loses its reserve currency status. Gold is not a hedge against inflation, it’s a hedge against governments. So that’s “G” down for now. Next…
See Oil Prices since 2000 till end of July 2015.
A while back in 2007/2008, “peak oil” was the catch phrase, introduced by Matthew Simmons… that the world would run out of oil. And that prices would skyrocket… well, looking at the above chart shows that prices did skyrocket in 2008, but have since fallen by more than 60%.
Why, well because the U.S. have reduced their dependency on oil and because global trade has not recovered as some would like to think. The only way for oil prices to go back up is Demand Creation (which is not occurring thanks to global slowdown) or Supply Destruction (which takes a longer time). So that’s “O” down for now…
See the U.S. Dollar since 2000 till end of July 2015…
So while G & O are down, the D part of the equation seems to be making a comeback. Since it’s bottom in 2011/2012 – it’s risen almost 35%.
Why, because of competitive devaluation – where countries start devaluing their currency, so that they continue to remain competitive and help their exports. But that’s not the only reason – Martin Armstrong explains this better than I do…
The stock market is tiny in comparison to the forex market, it’s global and beyond my level of comprehension… which is where Martin Armstrong comes in. His story is amazing, watch the movie about him “The Forecaster” and you’ll understand his background better.
But if his model is true (and it has been uncanningly accurate)… what you can see is another turning point, a sovereign debt collapse or “peak debt”. What happens when economies start collapsing or going bankrupt? Money finds its level like water… but to a higher level of return.
When the Russian Ruble collapsed, where did the money flow to? It got converted to US Dollar – the world’s reserve currency, and then it goes one place – to roost in the U.S. – either in bond market or the stock market.
What happens when Euro starts to collapse, or nations like Greece start defaulting and talks are about exiting the European Union and leaving the Euro currency? It gets converted to the world’s reserve currency – the U.S. dollar.
And where does it go to roost? The U.S.’s stock market and bond market.
So despite the huge amount of printing of the U.S. Dollar – why hasn’t the currency depreciated? Now you know… there’s the graph above to show you what’s happened – it’s increased in value.
But for how long will this last, well according to Martin Armstrong – not for long. So we could see “D” down as well… just wait for it.
Ok, a side note – how do you address all this? What can you do?
If you’ve been listening to Rich Dad’s Robert Kiyosaki – then you should have bought a house, using as much debt as you can get – because Robert believes that the US Dollar is being inflated like hell and you’re going to be paying with cheaper dollars. I don’t know where he stands with this, but since 2008 / 2011 – you’ve probably been paying with costlier US Dollars if you’d taken the mortgage!
The other school of thought is Dave Ramsey – who believes debt is dumb, and will probably be proven correct if the Shemitah lives up to what it's supposed to do, a cleansing of all debt. I’m in this school of thought – and sleep easier at night.
So the BIG QUESTION: If this is what is happening around the world, how do you protect yourself? What’s the alternative? Bitcoin? Gold? Barter?
Shemitah Preparation Strategy #1: Gold (Insure)
Well, Mike Maloney may like to think it is gold. He’s a buyer and seller of gold coins, so I think he’s definitely biased. He may have good intentions, but the road to hell as they say is paved with good intentions.
His research however, is interesting. Since the beginning of history, every fiat currency created has ceased to exist – around 600 of them. And what’s stranger than fiction they usually have a maximum life of 40 years. For the U.S. Dollar we’re just about there, since they weaned the U.S. Dollar from the gold standard… so is it time for change?
The Chinese would like to think so, but their government is busy propping up their stock market for the retail investors to continue playing – sorry, but they just gave the U.S. Dollar another five or seven years of reserve currency status – which brings us to 2020 – 2022.
Wait, doesn’t that sound familiar – ah yes, Beijing was just awarded the Winter Olympics for 2022 – deja vu. I’m sure they want to make this a bigger event. Time will tell…
Think of taking a position in gold, as you would insurance, just like you take insurance for your house, stocks, medical.
Will the Federal Reserve (a private institution owned by a cartel of banks) keep the rates this low for ever? They’ve never kept this low (at just above zero level) before… and for so long. So what happens when they start to increase the rate?
Shemitah Preparation Strategy #2: Tobacco & Alcohol (Inverse)
During depressions and recessions, it’s known that the consumption of alcohol and cigarettes go up – I call these sin stocks. I’m not against them, but I’m not for them. I’m all about building wealth.
If you go deep into ethics, you can’t even own a hotel – for you don’t know what’s taking place in those rooms – you’re promoting entertainment, if you get the drift! What’s wrong and right has become another shade of grey… sit and debate as much as you want, or watch the world go by and be a victim to it (I hope communists read this and understand what I’m saying).
Anyways, during these idle, down periods – people who have a lot of free time on their hands want to get drunk, or give peace to their soul. Sad, but it happens.
Shemitah Preparation Strategy #3: Currency (Insure)
If the U.S. Dollar is doomed, you’ll still need to trade – and because the world is more sophisticated now, I don’t presume we’ll be carrying around huge bags of gold and silver for exchange – my guess is that there will be a new currency, possibly backed by gold and silver – if not at least a basket of currencies.
So which currency should you diversify into?
I don’t have the answer for that right now… sorry. Whilst I don’t think it can be Euro, it might not be Bitcoin even. You see, this is a crisis of confidence, we’re just going to wear the best dirtiest shirt.
ShemitahPreparation Strategy #4: Business (Diversify)
This is what I believe the best means to protecting yourself, be in charge of your own wealth generating assets and income producing assets. Start a business that you’ll enjoy doing and that solves a need for others – be prepared to continuously improve it for the next 7 years.
The more time you spend as an employee, your insecurity will grow (either you’ll keep getting promotions and become an expensive asset or you’ll hit the retirement age and be asked to leave).
The more time you spend building a business – your security will grow (as you become more successful, you’ll be more confident of your skills, you’ll not worry about a pension plan or social security because you’ll be paying less taxes and if you ever want an increase, you’ll just raise your prices – to adjust for inflation ;o).
So what if all this is bull shit, call it out – I don’t care. As I mentioned at the start… “It is better to be ready and wrong, than to be wrong and not ready.”
If those things don’t work out… you can share some cognac with me and we can laugh about this, just as we do about Y2K and 2012 as being the end of the world. If those thing do work out, I can at least say that I’ve done my part to save a few families, including mine and made the world a better place by sharing the knowledge.
I’m not in the prophecy business… I don’t have a crystal ball to tell you the future. I never make predictions, because I could be proven wrong at any time. That’s actually the problem with many analysts and poor investors – they want to be right, no they need to be right because they made a statement, it’s an ego thing.
All I can say, is to hell with being right (and my ego) – I’d rather make money! So whichever way the market goes – up, down or sideways, I hope we make money together! (I can also teach you how…)
It’s easy to feel hopeless, when all is doom and gloom. So to end on a brighter note – trust me on this, brighter days lie ahead. You just need to prepare for them. I even believe that after this ‘correction’ we could be entering a secular bull run – that could last for 14 years from now… for my generation, that’s a once in a lifetime chance to build wealth for generations to come.
Why a secular bull run?
Two words – Golden Ratio.