History can teach you a lot about the future. The S&P is at an all-time high right now. The stock market is roaring at over 20,000 points. I was in New York last week and talked to a lot of people—guys high up, we’re talking the top guys at Goldman Sachs and Morgan Stanley. They all think it’s going up big this year, even though we are already at all-time highs. Some were telling me the S&P will be going to 2700.
The end is near when people start hitting exuberance. Exuberance is beyond optimism, beyond enthusiasm—it’s the attitude of “there’s no way we can lose”. When people start thinking we’re always going to keep winning, that’s when you know the end is coming. When a bubble has been stretched beyond imagination, there is great opportunity soon to be had for those that are prepared for it.
I’ve read a book this week that I want to tell you about today that has got me thinking.
I like to read a lot because it makes me evaluate things, it keeps me from stagnation, and I can always learn something new. Even if I only learn one new piece of information from a book, it’s worth the $20 or $30 spent. Ideas are valuable. I don’t always agree with the things I read but I try and apply the information to my life today, even if the book is 50 years old.
The book I want to tell you about today is written by Harry S. Dent Jr. and it’s called, “The Sale of a Lifetime: How the Great Bubble Burst of 2017-2019 Can Make You Rich”. I love the book. I don’t agree with everything in the book, but I love the book.
The S&P 500 is at an all-time high. How big can this thing get before the next crash?
The book talks about how there is a once-in-a-century chance coming up to gather immense wealth. The current debt bubble is the biggest since 1929 and much worse than 2008. The stock market is at 20,400. He thinks it can fall to 6,000. He believes an economic winter is coming of mass proportions, and that it will be a bigger bust than 2008.
Harry talks about economic cycles like they are seasons. We know that seasons are predictable, they come in cycles time and time again. The same is true for the economy, and we are now entering the winter season of the 80-year four season economic cycle. Harry says, “After the roaring twenties came The Great Depression, after the roaring 2000’s came the Great Recession.” We’ve had a bull market since 2009. What will the next crash be called?
“We are now preparing for a shakeout unlike anything we’ve seen before. We’ve had 8 years of unprecedented government stimulus and money creation.” — Harry S. Dent Jr.
He talks a lot in his book about millennials, baby boomers, and China. He makes a case for debilitating deflation. This is at the same time I hear CNBC and the Wall Street Journal saying we are going to see an inflationary period with interest rates continuing to climb. He mentions how Chinese debt is worse than America’s, and that their debt to GDP ratio is over 300%—twice that of the United States. What is the point of that? When I was talking to all these smart guys on Wall Street last week nobody was talking about debt.
I love the book because it puts me on high alert. What I didn’t like about the book is he talks about real estate like it’s going to get hammered. If you don’t understand real estate, you can read this book and believe all forms of real estate are a terrible investment. This is too simplistic. I’m on high alert but I’m still getting into real estate—but only certain kinds of it.
The biggest takeaway you and I can takeaway from this book is that you need to know what you’re doing. We are living in interesting times. What the next few years hold is uncertain, but there’s a great chance you can get massively rich—if you’re ready for it. I missed my chance in 2008. I’m not going to miss the next one.