You’re probably familiar with Noah: He was the Biblical guy who knew a huge flood was coming and built an ark to help him and his family (and a bunch of animals) survive. I feel a little like Noah: In November 2007, I advised Money Matters’ clients and my newsletter subscribers and listeners of my radio show to get out of the market. I hope that my advice helped them avoid large losses during the 2008 crash. But as with Noah, a lot of people were skeptical and so didn’t get into the boat/out of the market. I think another flood/big bear market is coming, so I’m launching the “Noah’s Ark Project,” where I’m going to try to get as many people in the boat with us as I can.
Why do I see a big bear ahead? The current market is the third highest-rising bull market in history. The top five highest-rising bull markets (not counting this one) all ended in bear markets that were bigger than average. In other words, the higher the markets rise, the further they tend to fall.
There’s also a law of nature that says when an action occurs there’s an equal and opposite reaction. According to research conducted by Ray Dalio, who runs the biggest hedge fund in the world, whenever a government tries to fix an economic problem with major stimulus, the eventual consequence is a bear market—an equal and opposite reaction. Taking this view, the 2008 bear was the result of the U.S. government trying to counter what happened in Y2K. During the recession after the Y2K crash, the government decided to stimulate the economy by jumpstarting the real estate market. “Let’s lower interest rates,” the Fed said. “Let’s make it easy for people to get loans.” I, therefore, believe the 2008 crisis was the equal and opposite reaction to that stimuli. It’s now 10 years since the last bear market, and since then the government has borrowed enormous amounts of money and created what I believe are artificially low interest rates. The equal and opposite reaction could be a significant bear market.
If there is a big bear market ahead, I want to get as many people into the ark as possible. What exactly is the ark? It’s a market alert email, delivered right to your inbox. Every week, I’ll tell you what I think about the latest market news, and I’ll warn you when I think it’s time to get out of the market (like I did for subscribers back in November 2007). If you’d like a place on the boat, sign up for my market alert email today.