Events Are Finally Aligning Better With Our Predictions

5 posts / 0 new
Last post
Adam Taggart's picture
Adam Taggart
Status: Peak Prosperity Co-founder (Offline)
Joined: May 26 2009
Posts: 3210
Events Are Finally Aligning Better With Our Predictions

Chris and I have been clear about this: the central banks inflated the post-GFC "recovery" much higher and for much longer than we thought possible.

Multiples higher. And years longer.

So to much of the world, Peak Prosperity's warnings of the inevitable repercussions were dismissable. Hey, the sky's not falling and my portfolio continues to go up each month. Therefore, you guys are wrong.

Hard logic to argue with when the ears are then shut.

So we've simply persevered, confident that once the central banks' happy juice begins to wear thin, the reality we've been predicting will re-assert itself. And those who have been listening to us and following our advice will be the better prepared ones.

And it finally seems like that time has arrived.

Many of the developments we've predicted are fast unfolding. Such as:

  • Last November, in Earn More On Your Cash Savings (With Less Risk), we noted that interest rates had bottomed and were likely headed higher. We pointed out the wisdom of purchasing short-term Tbills with your 'dry powder' cash reserves using the TreasuryDirect program to get 20x or higher returns than the banks offer. Since then, interest rates have continued to rise and are now nearly double what they were when we issued our report.
  • Last December 9th, in If You Don't Own Any Bitcoin Read This, we counseled folks to resist the FOMO, warning of a coming South Sea-style bubble burst price wipeout in the crypto space. The Bitcoin mania topped out a week later, and is since down 75%. The other cryptos are down substantially more.
  • This June & July, in A Hard Rain's a-Gonna Fall and The Case For Starting To Build A (Small) Short Position, we noted the mutiplying fundamental and technical reasons why the markets looked weak. So weak that we felt those with a speculative bent and sufficient reserve capital could consider taking a short position. Two months later, the markets began rolling over and are down ~10% from recent highs.
  • Concurrent with our general market warning, in The FAANG-nary In The Coal Mine, we specifically cautioned investors about the vulnerability of the perennial-darling FAANG stocks. Since then, most FAANG stocks are down ~20%

The point here is that developments are finally beginning to align much better with the reality-based lens we look through here at PeakProsperity.com.

Should that continue from here (and we think it will), expect the world to get a lot rockier in the coming months...

And we'll be here, chronicalling events and predicting which developments will be most likely to happen next.

Things are finally getting interesting.

pgp's picture
pgp
Status: Silver Member (Offline)
Joined: Mar 2 2014
Posts: 219
I don't think many people disagree

I don't think many people with their eyes open disagree with the predictions/observations made by PP.  The problem we face is more one of time-scale.  Knowing there is an end doesn't help without an end-date.  Every investor knows that reacting too soon is often just as damaging to financial success as taking action too late. 

The global financial sky should have fallen years or even decades ago, but it turns out that collapse is always preceded by a long period of decline.  Not just from doomed to fail government intervention but because it takes time for people to let go of propsperity, real or manufactured.  It is important to survive that period of decline, not by preparing for an early end but by accepting the fate that humanity has created for itself and adapting where possible.

In every decline there rises a rich man.  In every prosperous period there are the indigent.  In every war there are survivors.  Often the lucky are just that, unplanned winners.  Ultimately contentment (happiness to the layman) doesn't come from analysing predictions and planning for the worst, it comes from intelligent acceptance.

Uncletommy's picture
Uncletommy
Status: Platinum Member (Offline)
Joined: May 3 2014
Posts: 633
Black Friday; aptly named!

To gives thanks on Thursday and to acknowledge the contentment of what you have has lost its meaning in the buying frenzy of the pre-Christmas rush. Consumption used to be a medical condition. It has, now, become a psychological malady.

brushhog's picture
brushhog
Status: Bronze Member (Offline)
Joined: Oct 6 2015
Posts: 41
Mostly right on

The only point I take exception to is the advice on short term treasuries. If you bought them last year, then they are down in value and you arent getting the interest rates that are being offered now. Not a huge deal but the timing was a little off. The best time to buy treasuries is right now, as interest yields have probably peaked and values are down. Buy them up now and get close to 3% on the 2 year with a chance of rising value over the next year when they start slashing rates.

Adam Taggart's picture
Adam Taggart
Status: Peak Prosperity Co-founder (Offline)
Joined: May 26 2009
Posts: 3210
brushhog wrote:The only
brushhog wrote:

The only point I take exception to is the advice on short term treasuries. If you bought them last year, then they are down in value and you arent getting the interest rates that are being offered now. Not a huge deal but the timing was a little off. The best time to buy treasuries is right now, as interest yields have probably peaked and values are down. Buy them up now and get close to 3% on the 2 year with a chance of rising value over the next year when they start slashing rates.

brushog --

Let me clarify as I disagree with several of your points. Mainly, I think you're confusing short-term T-bills with longer duration Treasury notes and bonds:

  1. We recommended putting bank cash into short-term Treasurys instead for several reasons, the prinicipal one being that Treasurys at the time were yielding over 20x more than the average bank savings account. Short-term Treasury yields have nearly doubled since then, making the comparison even more attractive vs bank accounts.
  2. We focused on short-term Treasurys because they are designed to be held to maturity, which is easy to do as their durations are very short (a few weeks to a few months). If you stick to that plan, you always get the interest + 100% of your principal back. So you don't lose any money from any bills you buy "going down in value" as interest rates keep rising.
  3. We proposed considering creating a rolling ladder of T-bill investments as long as interest rates are rising, with the proceeds being automatically reinvested. This way, you benefit over time by rising rates -- getting a higher yield every time your bills rollover. (And of course, should rates suddenly fall, your current bills won't lose you any money if you hold them to maturity. You may want to stop the reinvestment schedule, though.) This is what I personally have been doing.

Those who have followed these steps since we first suggested them have benefitted very well vs had they kept their money in a low-yielding bank savings or money market account. Plus they've had the peace of mind knowing their money isn't subject to bank failure/bail-in risk. So I still stand by this call by PP.com as being very sound.

Last, your proposed strategy of buying now and gaining appreciation as interest rates start going down applies to Treasury notes and bonds. In this case, you're speculating -- and T-bills are not the right vehicle for this. Primarily due to their very short durations

 

Comment viewing options

Select your preferred way to display the comments and click "Save settings" to activate your changes.
Login or Register to post comments