The Gekko Manifesto

Postby Gekko » Fri Apr 29, 2016 10:22 am

***I am not a financial advisor, nor a doctor. I'm just an average Joe trying to make it in the world. Please consult industry experts before making any changes***

It's clear to me a financial disaster will be on our doorsteps in the near future. No one knows when it will occur as politicians/financial institutions are experts at "extending" the game. Artificial Zero interest rates were their last bullet. See throughout history, our government could always lower interest rates to spur the country out of a recession. Low interest rates pulls forward future demand from both a consumer and business standpoint. With zero interest in place for years now, there is virtually no more "demand to pull forward". It has been exhausted. I'm addition, for pension funds to keep returning their "promised" 7%-8% every year is not sustainable in a zero interest rate environment. This time in our nation's history is indeed truly different.

Although the following ideas can be utilized anytime, they may prove to be most effective should a financial tsunami strikes:

1. Get out of debt. When the depression is fully realized, many jobs will be lost as well as a decline in salaries for folks fortunate to still have a job. Good luck making those loan payments while unemployed or making less money.

1a. It's tough for some parents to hear, but not every kid belongs in college. Exercise due diligence when determining if college is for your kid. What field do they want to study, what's the job market look like in that field, and how much is the "college experience" going to cost in terms of money and time commitment. The rise of College tuition is an absolute joke. Think about it before allowing your kid to be a financial slave

2. Limit financial exposure in assets that can lose money. When the tsunami hits, I believe it will be in the form of severe deflation (not inflation). All assets (stocks/equities/homes/etc) will lose significant valuation. "Cash is King"

3. Change your lifestyle/diet to ween yourself off whatever prescription drugs you can. The less you are reliant on the rigged medical industry, the better. Personally, a low carb diet with exercise allowed me to shed a significant amount of weight and bingo I was able to get off the blood pressure meds I had been taking for 10+ years. Also, more data is coming out showing that the "food pyramid" was/is a shame. its easy to understand... The medical industry (and government) WANTS you sick. They NEED you sick. They NEED your revenue stream from dr appointments, medical tests, surgeries, hospital stays, and prescription drugs. Follow the money and think about it.

4. Keep a "When all else fails lock box" In your home. Consider gun/ammo/cash.

5. The financial crisis of 2007/2008 was a warmup. Nothing has changed.

Enjoy! (Hopefully I'm wrong about the tsunami)
Last edited by Gekko on Fri Apr 29, 2016 3:14 pm, edited 1 time in total.
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Re: The Gekko Maifesto

Postby KJ Duke » Fri Apr 29, 2016 2:59 pm

Gekko wrote: It's clear to me a financial disaster will be on our doorsteps in the near future. No one knows when it will occur as politicians/financial institutions are experts at "extending" the game. Artificial Zero interest rates were their last bullet. See throughout history, our government could always lower interest rates to spur the country out of a recession. Low interest rates pulls forward future demand from both a consumer and business standpoint. With zero interest in place for years now, there is virtually no more "demand to pull forward". It has been exhausted. I'm addition, for pension funds to keep returning their "promised" 7%-8% every year is not sustainable in a zero interest rate environment. This time in our nation's history is indeed truly different.


Low interest rates can pull forward demand as we saw in the housing debacle of a few years ago, but modest growth in corporate capital spending and conservative balance sheets for the most part argue against that at this stage. Likewise, consumer balance sheets are not extended as they were 10 years ago, so this premise as the cause of impending doom doesn't fit.

Investment return assumptions are no doubt still too high, so defined benefit pensions are certainly a problem both at the corporate and Fed govt level, agreed that's a meaningful problem. Likewise, near-zero rates eliminates a monetary tool for spurring on growth, but in reality reducing rates hasn't worked very well anyway in the last decade (other than inflating the stock market) so I'm not sure that's a huge risk. And fiscal stimulus is still an option. Rates are in part low because demand for capital is low (most growth businesses are far less capital-intensive with the service economy driving growth) and saving is increasing (boomers getting old). Rising rates is a big risk given the level of govt debt, but the only forseeable catalyst for that in the coming years would be the dollar tanking, and that doesn't look likely because most global currencies have the same or worse problems that we have.

I have been arguing for more than 5 years that growth estimates put forth by the Fed and "blue chip" economists are ridiculously too high ... they've been projecting 2.5-3.0 growth annually throughout this entire time. That hasn't happened, we've been stuck in the 1.5-2.0 range consistently and I don't see that changing for several years. There is a chance we could see an uptick in growth starting somewhere near the 2017-2019 years as millennials become a growth factor in consumer spending. Until now, the downward pressure of old boomers spending less has been a constant drag. What could derail that uptick is the new generation's anti-consumerism way, and the aforementioned problems with retirement assets.

Of course, if we could fix the political landscape (improbable) we could open a tremendous amount of untapped growth potential.

So the Duke manifesto :) would be as such: We are probably stuck in the same sort of growth malaise for at least a couple more years, at which point things could begin to get better, worse or stay about the same depending on which of those new developments weight more heavily or perhaps just cancel each other out. Meanwhile, expect investment returns to be low for the foreseeable future, so maintaining fiscal conservatism (including not getting sucked in on overpaying for a questionable education for your kids) is no doubt good advice.
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Re: The Gekko Maifesto

Postby King of Queens » Fri Apr 29, 2016 3:10 pm

KJ Duke wrote: at which point things could begin to get better, worse or stay about the same


:lol:
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Re: The Gekko Maifesto

Postby Gekko » Fri Apr 29, 2016 3:11 pm

KJ Duke wrote:
Low interest rates can pull forward demand as we saw in the housing debacle of a few years ago, but modest growth in corporate capital spending and conservative balance sheets for the most part argue against that at this stage. Likewise, consumer balance sheets are not extended as they were 10 years ago, so this premise as the cause of impending doom doesn't fit.

Investment return assumptions are no doubt still too high, so defined benefit pensions are certainly a problem both at the corporate and Fed govt level, agreed that's a meaningful problem. Likewise, near-zero rates eliminates a monetary tool for spurring on growth, but in reality reducing rates hasn't worked very well anyway in the last decade (other than inflating the stock market) so I'm not sure that's a huge risk. And fiscal stimulus is still an option. Rates are in part low because demand for capital is low (most growth businesses are far less capital-intensive with the service economy driving growth) and saving is increasing (boomers getting old). Rising rates is a big risk given the level of govt debt, but the only forseeable catalyst for that in the coming years would be the dollar tanking, and that doesn't look likely because most global currencies have the same or worse problems that we have.

I have been arguing for more than 5 years that growth estimates put forth by the Fed and "blue chip" economists are ridiculously too high ... they've been projecting 2.5-3.0 growth annually throughout this entire time. That hasn't happened, we've been stuck in the 1.5-2.0 range consistently and I don't see that changing for several years. There is a chance we could see an uptick in growth starting somewhere near the 2017-2019 years as millennials become a growth factor in consumer spending. Until now, the downward pressure of old boomers spending less has been a constant drag. What could derail that uptick is the new generation's anti-consumerism way, and the aforementioned problems with retirement assets.

Of course, if we could fix the political landscape (improbable) we could open a tremendous amount of untapped growth potential.

So the Duke manifesto :) would be as such: We are probably stuck in the same sort of growth malaise for at least a couple more years, at which point things could begin to get better, worse or stay about the same depending on which of those new developments weight more heavily or perhaps just cancel each other out. Meanwhile, expect investment returns to be low for the foreseeable future, so maintaining fiscal conservatism (including not getting sucked in on overpaying for a questionable education for your kids) is no doubt good advice.


Kev - thanks for the response.

two things we agree on are a problem (however I'm thinking they are bigger problems than you)...

"Investment return assumptions are no doubt still too high, so defined benefit pensions are certainly a problem both at the corporate and Fed govt level, agreed that's a meaningful problem."
***WHEN THE SHIT HITS THE FAN, AND ALL THE UNIONS EMPLOYEES / GOVERNMENT WORKERS FIND OUT THEY GET 50 CENTS ON THE DOLLAR (OR WORSE), THERE WILL BE CIVIL UNREST AS WELL AS SIGNIFICANTLY LESS CONSUMER SPENDING.

"Rising rates is a big risk given the level of govt debt"
***RATES REMAINING LOW ARE IN DIRECT CONTRAST TO DEFINED PENSIONS; HOWEVER LOW RATES ARE THE ONLY WAY FOR GOVERNMENTS (SCHOOLS)/CONSUMERS/CORPORATIONS TO SERVICE THEIR DEBT (WHICH COINCIDENTALLY NEVER GETS PAID BACK, IT ONLY ROLLS OVER). IMAGINE A SCENARIO WHERE RATES RISE TO 5%. CALCULATE GOVERNMENT "INTEREST PAYMENTS" :twisted:
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Re: The Gekko Maifesto

Postby Gekko » Fri Apr 29, 2016 3:11 pm

King of Queens wrote:
KJ Duke wrote: at which point things could begin to get better, worse or stay about the same


:lol:


YA, IS THIS DOUGHBOYS :lol:
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Re: The Gekko Maifesto

Postby KJ Duke » Fri Apr 29, 2016 3:33 pm

Gekko wrote:
King of Queens wrote:
KJ Duke wrote: at which point things could begin to get better, worse or stay about the same


:lol:


YA, IS THIS DOUGHBOYS :lol:


If you study complex systems for awhile, you learn to make far less certain predictions when you have the inter-play of various but yet to occur potentially offsetting variables. This is a natural phenomena in nature and we see it in economic systems as well, where at times seemingly innocuous changes can crash an entire system and seemingly bigger challenges are adjusted to with ease. So while I can easily go all Peter Schiff/Alex Jones on everyone, it's not that simple in reality. What I do see is more of the same in the interim couple of years until these looming opportunities/challenges take the forefront, at which point it may be more predictable which way it's tipping.
Last edited by KJ Duke on Fri Apr 29, 2016 3:53 pm, edited 1 time in total.
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Re: The Gekko Maifesto

Postby KJ Duke » Fri Apr 29, 2016 3:40 pm

Gekko wrote:
Kev - thanks for the response.

two things we agree on are a problem (however I'm thinking they are bigger problems than you)...

"Investment return assumptions are no doubt still too high, so defined benefit pensions are certainly a problem both at the corporate and Fed govt level, agreed that's a meaningful problem."
***WHEN THE SHIT HITS THE FAN, AND ALL THE UNIONS EMPLOYEES / GOVERNMENT WORKERS FIND OUT THEY GET 50 CENTS ON THE DOLLAR (OR WORSE), THERE WILL BE CIVIL UNREST AS WELL AS SIGNIFICANTLY LESS CONSUMER SPENDING.

"Rising rates is a big risk given the level of govt debt"
***RATES REMAINING LOW ARE IN DIRECT CONTRAST TO DEFINED PENSIONS; HOWEVER LOW RATES ARE THE ONLY WAY FOR GOVERNMENTS (SCHOOLS)/CONSUMERS/CORPORATIONS TO SERVICE THEIR DEBT (WHICH COINCIDENTALLY NEVER GETS PAID BACK, IT ONLY ROLLS OVER). IMAGINE A SCENARIO WHERE RATES RISE TO 5%. CALCULATE GOVERNMENT "INTEREST PAYMENTS" :twisted:


Civil unrest already has been increasing. That is why Trump and Bernie are in contention. The middle class is getting pushed down, the upper/upper class is richer and better off than ever. Discretionary spending for the middle class has been moving down, but it's been offset by the super-rich spending along with big inflation in basic goods like food, health, education. Nothing to suggest those trends are changing, other than basic goods inflation finally slowing.
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Re: The Gekko Manifesto

Postby Edwards Kings » Tue May 03, 2016 7:58 am

Thanks KJ. Very informative.

Mark, a few questions:

1) How will the zombie apocalypse impact the economy?

Image

2) How long in your bunker will you have to stay before you become morlockian and eat the rest of us that stayed on the surface?

Image

3) In the end-times, do we get really cool cars in the basic survivalist kit, or is that an add-on package?

Image

You know I am just pulling your chain. :D

I share many of the same concerns.
Disillusionment is what little heroes are made of. E. K. Hornbeck - Inherit the Wind (1960)
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