Now that winter is upon us, how do we navigate this difficult phase of the Kondratieff wave cycle? This section is intended to provide guidance and insight for the same purpose.
First, we should not allow fear to enter our condition and our decisions because obsessed with our problems prevents us from taking more objective decisions for our prosperity. It's not funny either. And the central theme of the Kondratieff Wave theory is that the destruction phase is more beneficial, providing the means for the renewal of prosperity that follows. Purge excess of the system that allows more creative progress develops create greater prosperity for us all very necessary. Because the historical evidence supports this, we must embrace rather than fear. Ideally, I would prefer the hardest, fastest in the rear as possible so we can start over with a better basis before the coup. Until then, we must adapt to the reality of the conditions prevailing in the market so that we can preserve our wealth and prepare the Kondratieff spring around the corner. So let us now examine these conditions to help define where we are in this cycle of winter, so we can better manage our financial affairs.
We entered the cycle period marked by a deflationary bust of assets and global GDP growth slowdown. paper assets, including fixed assets, such as houses and land were appreciated for decades and were due to reverse course. But debt levels have increased over the last decades at record levels and asset prices led even much higher than they would in previous cycles. Home prices in the US increased every year since the end of the depression in the mid-1940s to 2006, more than 60 years, so they can still slip away until equilibrium is found. The wave of debt peaked recently was driven largely by the new financial alchemy of structured financial products which worsened leverage. Obviously, the great asset deleveraging will remain for the foreseeable future and, therefore, it is prudent to avoid making any securities lending processes related to the investment until the debt has followed its course and the global banking system is on more solid ground.
It may seem tempting to negotiate the budget and other financial stocks in sectors that are dependent on funding, but to maintain that they are a trap value until proven otherwise. These include manufacturers, durable goods manufacturers, retail, insurance and consumer discretionary and other sectors that have no significant exposure to the US economy. The sectors that are more favorable include utilities, health, biotechnology companies consumer goods companies with substantial foreign exposure and energy. Most preferred companies are those with a positive cash flow from operations, or in areas of the stage of development, such as mining or biotechnology, have at least two years of cash to do the worst this credit cycle. Otherwise, they may experience excessive current shareholders to raise capital to levels that could cause dilution capital structure.
I review some apparent secular trends that are sure to support the future short and medium that can provide a basis for investment decisions based on this winter. These issues have been reported on this site in length, but worth repeating here:
Gold proved to be the best winter asset class is made for a Kondratieff
Stocks, particularly in the US, GDP growth will suffer recruitment and discomfort
Capital flows into the asset classes in order to lower the liquidity (see pyramid below)
Hyperinflation is possible if governments use monetary re-inflation fight against deflation
Preserving wealth than the central ROI strategy
Investors should remain more flexible than ever due to rapidly changing market conditions
Investing is against unsustainable trend or sustainable
Specific ideas for your portfolio
The following symbols are money (currency ETF) representing specific sectors traded:
NYSE OTC exchange traded fund (ETF), which is a bonus bet against long 30 years
NYSE GLD ETF is a direct proxy for physical gold. Each purchase of units of 1/10 ounce of gold
GDX ETF in gold mining companies first line
GLD ETF SLV silver equivalent
MOO ETF in seed sector agribusiness First, fertilizer companies
DXO ETF on the price of oil / barrel (double leverage)
UNG ETF on the price of natural gas
Some content in this section is to make our readers aware of some role-related principles and activity of central banks that threaten the purchasing power of all Americans fiat money. After all, we received our salaries in dollars and buy all the goods and services they receive in USD so since we have all this great exposure to USD, you really want to have all or most of our assets also in USD ? I encourage our readers to seriously consider some form of hedge USD or by gold or OTC, particularly if fixed income or S bond interest income.
If you think we do that it is time for a major investment in paper assets to tangible assets, then you can consider the above values. Note: This is not a solicitation or recommendation for these values. The author notes it for its own portfolio, but it may not be appropriate for everyone. Please consult your financial advisor before making any changes to your portfolio.
Reverse Pyramid liquidity John Exter
The graph above shows the best way to invest during this period. In contrast Pyramid liquidity John Exter, gold and cash is king. This table shows that during the period of investors increasingly the business cycle of the winter for safety, sorting the class most liquid investment and avoid riskier assets. What we saw last year? Investors dumped emerging market equities and bonds, stocks, OTC, real estate, etc., and rush for gold, US cash and bonds, even driving yields of all inflation maturities less suggesting that they are willing to pay someone to keep their money. Such is the folly of a Kondratieff Winter. Much more is expected later in this section of the pyramid of Exter.
Hopefully the above ideas can help preserve your wealth in these chaotic and difficult time. I would like to propose an idea more for our readers to consider, especially those who are in the most difficult times. I found that many of the books written by Catherine Ponder are ideal to guide us in these extraordinary times. It remains the most prolific book author and prosperity ever to success messages are timeless. I would say that anyone seeking guidance to find their way during periods of economic difficulty reading Secrets prosperity of age, one of his great works. Others include the dynamic laws of prosperity and millionaires of Genesis, among many others. They emphasize a positive mental approach and using his superior mind to get what they deserve. This wonderful material can be more useful than anything you can find on this site in practical terms.