New Year’s Commentary

By the gentle touch of His grace you will find happiness on your path.

His love gives us confidence to embrace a great new year.

Three years ago, today, I had made a decision to significantly change my professional course and to voluntarily end a part of my career that existed for almost 25 years – a so-called expert in the metals and mining arena. As I begin my 34th year in, and around, the financial services industry, my prayers for guidance have been validated since my decision is now bearing fruit.

Encouraged by my progress, I now believe that I must remain bold and continue openly living my faith, with the knowledge that such a decision is not likely to have any “earthly” reward.

“The greatest legacy one can pass on to one’s children and grandchildren is not money or other material things accumulated in one’s life, but rather a legacy of character and faith.”  –  Billy Graham

 A Retrospective

2016 witnessed the fruition of my life-long dream of living, or working, in a Rockwellian, New Jersey town named Spring Lake. After months of planning and consultations with interior designers, planners, contractors and other professionals, we opened the doors to our new storefront office in April 2016 and much of my dream became reality. Praise God!

We immediately became intertwined in this picturesque town and we conducted numerous events in partnership with other town business owners that created a sense of fellowship, expanded community service and special fundraising that impacted lives of those who came to us for social assistance.

Yet, as 2016 comes to, what appeared to be, a successful conclusion, I have a nagging sense that our desire to become a true, “Christ-centered” pair of companies, was not yet fully in practice.

Yes, the risk of wearing God on one’s sleeves nowadays will cause a fair amount of people to turn away and others will quietly question the sincerity of our motives. Despite my once-regularly turning the “Ten Commandments” into the “ten suggestions”, it has been my firm belief that God has a plan for me to incorporate His teachings into all of my business life, as it already had in my personal life.

With that in mind, I have rededicated myself to remain fully-focused on my Lord & Savior, Jesus Christ, and to remember my favorite biblical verse whenever the evil and the secular world would like me to think otherwise:

“What then shall we say to this? If God is for us, who can be against us?” Romans 8:31

2017 Outlook

I know that despite hanging up my “soothsayer” suit, some people still seek my counsel regarding the financial markets, the economy and matters of finance. For them, I can only express an opinion as an individual and not a Registered Investment Advisor (and you will still need to pay full price for a cup of coffee. No jokes, please, about being left only with a tin cup).

But before I continue, one must fully appreciate the ground rules that I personally fully employ and that I believe you must follow, if you will have any chance to experience truly-legitimate financial success. If you choose not to heed the following ground rules in their entirety, then I would suggest that you should consider to unsubscribe from our blog immediately and know I will still be praying for you when you deal with the financial services industry – you will need it!

  • Only God knows the future. Anyone who holds themselves as such, in finances, or any other matter, must be avoided. This does not mean that you should discount a professional’s “educated guess”, but don’t treat their financial predictions as “gospel”, or anything close to a certainty, despite all the marketing propaganda that has been employed to make it appear otherwise.

“Since no one knows the future, who can tell someone else what is to come?” – Ecclesiastes 8:7

 

o             To fully-appreciate the success of those in the prediction racket, one only has to uncover their “actual” performance versus the crafty ads that are employed by the financial services industry to capture assets.

o             About 80% of equity fund managers and 85% bond fund managers, underperformed when compared to diversified, low-cost index funds.

o             And, the minority of the bond and equity fund managers who do outperform the low-cost index funds in any given year, tend not to repeat their success in the next cycle.

  • The financial services industry would like you to believe that the person driving the bus can never be as happy as the person owning the bus company because of a lack of wealth. When, as a matter of fact, numerous social, economic and spiritual studies have shown that more wealth does not lead to an increase in happiness and, on many occasions, excessive wealth eventually leads to serious psychological and/or medical health issues that are rarely experienced among the so-called working class.

“No servant can be the slave of two masters: he will either hate the first and love the second, or be attached to the first and despise the second. You cannot be the slave both of God and of money.”  Luke 16:13

To fully appreciate the “ground rules” that I employ for my businesses and personally, I encourage you to read these two publications of mine:

Okay, for those who remain and haven’t flipped back on Tout-TV (CNBC) in order to relive the fantasy and avoid the reality, the following opinions are derived from my personal observations on financial markets and other matters.

As previously noted, this is the start of my 34th year in and around the financial services industry. While I had documented the lows and highs of much of that career in my book, “Confessions of a Former Wall Street Whiz Kid”, if I were to create a “fourth” edition, it would chronicle the events from Election eve, November 8, 2016, until now. Why? Because despite some crazy periods such as stock market crashes, Internet mania and even when the world economy was approaching the precipice of financial abyss in 2008, none of that could equal what had taken place on November 8, 2016, on live television, when a frenzied, and incredulous, Wolf Blitzer became unhinged as the election results began to strongly imply that Donald Trump would become the 45th President of the United States of America.

I was (and still remain) a believer that Obama had taken this country to the edge of Constitutional destruction and a Clinton win would have simply ushered it in. So, in that regard, I’m content with the election results. But, as I noted throughout the campaign, I was not a Trump groupie. And to be quite frank, nothing has changed on that front.

To best-describe where I believe we truly stand after all this, I will borrow a classic comical line from my favorite comedian of all-time:

“The rabbit didn’t die but it’s in critical condition!” – Rodney Dangerfield

F.Y.I.: If you’re too young to remember, rabbits were once injected with the woman’s amniotic fluids to tell if a woman was pregnant. The old wives’ tale goes that if the rabbit died, she was pregnant.

Whether or not anyone truly-envisioned Trump’s win, and could have predicted what has taken place from then up until now, is of little importance at this point. Trying to make well-thought-out, “educated guesses” on what it may lead to is, at best, what we can attempt here.

As we entered Election Eve, I had no doubt America had already entered its worst-ever social and political era. Believe it or not, IMHO, this perception is one of the main reasons that Trump was victorious. Economically, we were heading towards a worst-ever financial era, but for reasons that I had pointed out multiple times, three factors were preventing the stock market from going substantially lower and the ensuing continuing rise was giving a false foundation that would crumble once one or more of those three factors reversed.

IMHO, all the issues that greatly-concerned me haven’t actually changed one iota.

What has changed significantly is a belief Trump’s election will bring dramatic, positive change and speculation of that has already lifted share prices to levels that seem to take that belief as already signed, sealed and delivered.

Call me crazy (it’s okay, I’ve been called a lot worse), but my last 34 years has molded me to be a far more “doubting Thomas” than a Joe “Certainty”.

Yes, Trump’s “honeymoon period” can possibly extend into early spring. But, given what the markets have already done in this short time, we could see a sharp correction or worse, a top in equity prices for a very long time if the markets sense that Trump starts to experience difficulty to deliver on his campaign promises or if he cannot bring change for the better as has been perceived up until now.

Is it possible that Trump could be “messiah-like” similar to Kennedy’s or Reagan’s style that leads to bigger and better things? Yes, it’s possible. But, in my opinion, it would be similar to seeing a Browns versus Jets AFC Championship game in my lifetime. Can’t deny it, but I wouldn’t bet on it.

Okay, now that I’m down to maybe 5% or 10% of the people who first started reading this commentary, let me bring that even lower by making the following “observations” on markets that, at one-time, I was actually paid good money to pontificate on them.

U.S. Stock Market

Keeping in mind the futility, I believe that the facts don’t support trying to actively manage stock market investments for most. It is however, still worthy to consider whether the market is undervalued, fully valued or overvalued. That, in itself, is mainly in the eyes of the beholder. But, I do think there’s one factor all types of eyes should be “focused” upon – valuations.

Yes, factors today that make up valuation may not have existed, or may not have been relative, in the past, but sometimes there’s an overwhelming factor that, no matter how you try to beat it down, it keeps popping back up. For me, that’s the “CAPE Index”.

Back in early December, this article did a good job on why an indicator that goes back 150 years needs to be seriously considered. It doesn’t mean we can’t rally further but if there’s still anyone who cares about the next 10 years versus the next 10 hours, 10 days or 10 weeks. I pay great heed to it.

I stated through much of 2016 that the run in equities was being held together by three factors.

We’re now seeing at least one of those three becoming less of a factor, if not completely removed from the equation. Again, there’s no reason to think it all comes unglued at once, but, if 34 years taught me anything, it’s better to be a year too early than to be a day too late.

U.S. BondsA 40-year run came to an end last summer even though no bell was rung for all to hear. Bonds went from a good buy to a good-bye. While not in the camp that thinks that interest rates will rise dramatically to the point where they give us toasters again if we leave our money in the bank, it’s hard to imagine we haven’t seen the lows at least in my lifetime (at age 60, I live now with waking up another day as a good thing).

U.S Dollar – Long live the King! Well, at least for the foreseeable future it should be king as the end of the European Union as we know it is now. When it ends, not “if”, in my book.

Oil – As stated in early December, the only way we see $29 again is if it has a 1 in front of it ($129). But, it’s also not on a fast track to much higher levels any time soon. I simply believe we get a bigger trading range in 2017 with $40 as a bottom and $60 as a top.

Gold – I feel like this every time I think I finally totally divorced myself from the three decades of being a part of the metals and mining industry (or what’s left of it). As noted earlier this month, I would risk my two most precious assets on the belief gold is a better performer over the next one, three and five years versus general equities. I think this analogy  is worthy and helps point out some of the reasons I feel the way I do.

I also think the overwhelming # of gold bears (who truly hate gold and the handful who still even mention it as a potential investment) are ignoring key bullish factors, including declining supply.

Base Metals – As noted in my November 27, 2016 commentary, copper and zinc were way overbought and not expected to hold their lofty levels, They indeed corrected and I don’t see how they get much above their highs made back then. On the flip side, we’re far off their lows of earlier this year and I don’t think we get near them again in the cycle.

If you have read this commentary from start to end, you are:

  • A loyal client,
  • A small minority who hasn’t fallen prey to the “Don’t Worry, Be Happy” crowd that makes up much of the financial services industry,
  • Just curious (But, remember, curiosity killed the cat).

Reminder

Through Peter Grandich & Company, we provide specialized financial services through a team approach. We do just three things but we believe we do it extremely well and are second to none at it:

  • We deliver unique and verifiable strategies to increase wealth over and above what most are currently on track for
  • We do this without taking on more risk. In fact, we usually lower the risk(s) that you are currently exposed to.
  • We will achieve the above by not only avoiding sacrificing your lifestyle, but improving it over your lifetime.

We welcome hearing from you. Email us at peter@petergrandich.com

While we specialize in “retirement planning”, among many factors that separate us from others on how we approach it (and some potential clients avoid us because we stress this), is not to get caught up solely on the “red part”. Watch here to appreciate the red!

Great AdviceCry Wolf

“One evening an old Cherokee told his grandson about a battle that goes on inside of people. He said, “My son, the battle is between two wolves inside us all. One is Evil. It is anger, fear, envy, jealousy, sorrow, regret, greed, arrogance, self-pity, guilt, resentment, inferiority, lies, false pride, superiority, and ego. The other is Good. It is joy, peace, love, hope, serenity, humility, benevolence, empathy, generosity, truth, compassion, virtue, and faith. The grandson thought about it for a minute and then asked his grandfather. “Which wolf wins?” The old Cherokee simply replied, “The one you feed.”

May I Know, Love and Serve (and you too!)