Five Reasons To Be Afraid

Reading did not come easy to me.

When I was growing up in the 1980s in the Illinois I thought anyone who could spell or read outloud must be a genius. If you knew how to spell “kitchen” and you weren’t an adult then you must be really smart… and definitely smarter than me.

I didn’t know at the time that I had dyslexia.

And to be honest, I didn’t become a better reader until I started reading baby and kids books outloud to my son dozens of times over and over again.

And that is why I’ve always leaned towards images first and then words. And with investing there’s one particular image that stands out more than any other to me.

Every time I look at it, it’s still hard to grasp. I understand the information I’m looking at. That’s not it. I understand what the information represents, so that’s not it. And I know how the information was gathered. So the confusion to my brain has nothing to do with the information or the presentation of the information.

And still. It can’t be true. Can what I’m looking at really represent what I think I’m looking at? This doesn’t make sense.

I’m going to show you the image, but before I do I want you to start to understand how hard a powerfully simple approach can be.

Why is simple so hard…?

Because…

…We Get Slammed with Scary Information Daily

If you are reading this post after 12pm then there is almost certainty that your brain has already gotten slammed with information that is currently scaring the hell out of your brain. And your brain does not like it.

To sooth the brain, people do things, like buy and sell ticker symbols. Or buy another newsletter, or put all of their investments in cash and then double down on reading the scary stuff to justify the ‘all cash’ position.

I want you to understand this fear is not starting from within. Its starting from outside you. You read something that Harry Dent sent and your brain went into defense mode. You read yet another Porter Stansberry research paper and you got even more worried.

Do you get it? The fear did not originate from within. This is important for some to realize because they might not even be aware of why they are living in an almost constant state of fear. And this loop, which I call the fear-fear cycle, is what’s killing people’s futures. NOT. THE. STOCK. MARKET.

Do I Buy the Cryptocurrency Newsletter Next?

Start noticing, gosh every time I read Porter or Dent or Zerohedge I get sick to my stomach. I get scared. I don’t know. Do I buy the cryptocurrency newsletter now? It’s my 12th newsletter. But maybe this one’s the one.  

Newsletters are like tattoos. You just can’t have one. And like tattoos your first one is usually the cheapest. Then each one you get after that gets more and more expensive. And before you know it, you are buying a lifetime subscription to an entire library of newsletters.

And here’s the crazy part, most of those newsletters collectively don’t even get fully read each week or month. And you know why? Because its exhausting.

Don’t Blame Yourself.

The reason people buy two, three, four, five ten newsletters is to temporarily attempt to extinguish the fear in their body. BUT IT’S THE NEWSLETTERS THAT PUT THE FEAR THERE.

This is crazy.

So how can you stop the insanity? (get a powerfully simple investment approach). But if you’ve already done that or you don’t want to do that, then I want to show you the image I was referencing at the beginning of this post.

What’s the image? A chart showing the results of 10,000 flipped coins. The price chart goes up with a heads and falls with a tails.

coin flip

If something as random as coin flipping can trend far longer than anyone could have ever imagined. THEN why can’t the S&P 500 trend longer or higher OR LOWER than anyone could ever imagine? Why not?

This is not just a “thought experiment.” The S&P 500 does trend longer than anyone is comfortable with. Just like with coin flips. This is not how it’s suppose to be, says the human brain.

But it is.

Just look at that image below. Coin flips trending higher for 1,800 coin flips. That’s crazy. And yet it happens.

coin flips chart

Whatever the S&P is priced at today, or the Brazilian stock market or the Japanese stock market, those markets are there as a result of ten’s of thousands of coin flips. But instead of “it” being a coin and a flip “it’s” an unconscious question by hundreds of millions of people getting answered.

The question comes in various versions but a simple one is, “Is it safer to be in stocks today or bonds today?” A question that is repeated hundreds of millions of time across the planet. All random coin flips by themselves. But collectively… a trend.

Five Reasons To Be Afraid

#1) The P/E ratio today is the same place it was in 1997.

The markets were crushing it in ‘98 and ‘99. And all that price appreciate happened above the 1929 P/E ratio. At the time, the market didn’t have a dot com crash to look back upon and say, “things will recover.” So of course this is scary and were just flipping coins.

1997 p/e ratio

#2) Manufacturing Jobs Are Gone For Good.

Just look at the price chart below. The United States is almost back to its height of manufacturing production but notice that jobs have been decreasing since 1997. This is scary for the middle class and the companies that sell to them.

Manufacturing Jobs

#3) Bitcoin, Blockchain and Decentralization is going to crush entire industries and investors.

We’re just not sure which industries and which investors. Just look at the price chart below of Bitcoin. This is not a trend that can continue.

bitcoin

#4) Technology is killing jobs.

And will continue to. Below is a chart showing how many are people are employed in the Oil and Gas Industry (red line). And then notice how many more rigs are operational today. That rig count to employees ratio is great for the bottom line of the energy sector but not good for the people that are assuming their jobs are safe. oil & gas

#5) Peak Employment?

Since 1999 fewer and fewer eligible workers are employed. I’m not sure how this turns around. Maybe it will. I’m not sure. I can understand why so many workers are worried about the future.

All Up And To The Right  

Germany. Life Time Highs.

germany

Japan. 25-Year Highs.

Brazil. Life Time Highs.

India. Life Time Highs.

Follow the Source of Fear

Here’s the thing… If you are feeling fearful then go and look at some stock market price charts. There are many things I love about price charts and the one that often stands out the most to me is, these price charts already know about all the scary data that doesn’t matter until it does.

Look at the price first and not economic data. Harry Dent, Porter Stansberry and ZeroHedge are already showing you the economic data. It’s now your job to look at the price data. BECAUSE the price data includes the [scary] economic data.

Consistency is Key

Stock market fear doesn’t start within you. I want you to identify that consistent source of fear.  Because when you do, then you are able to start to take back control over your future and your money. Be consistent. And notice where that damn fear coming from?

And make it a habit. Get a habit started by noticing. Where did that fear start? What did I read or see that made me put 100% of my money in cash. Trump’s election? Porter’s call for a market crash? Dent’s call for a market crash. Look. Because this stuff matters.

If you are wondering, how investing can be different. How it can be without fear or at least a lot less fear. And confusion. And stress. And overwhelm. Then you may want to check out our research. Because it’s based on asking the only two questions that matter.

  1. Should I be in or out of the stock market.
  2. And if IN, then where? And if OUT, then where?

If you get those two questions right. You get 95% of the entire game right.

In Your Corner,

RCPeck-Dig Signature.JPG     
RC Peck, CFP

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