Famed Harvard Economist Predicts Greatest Stock Market Collapse since the Great Depression
Well, he’s back. Harry Dent, the gloom-and-doom-Harvard economist who has correctly predicted major market trends over the last 30 years, produced a video at the end of April that went viral. He’s predicting the “greatest stock market collapse since the Great Depression.”
Predictions based on banks’ not having learned from 2008 crisis
Dent predicts that gold will sink from its current high of $1,206 to $750 an ounce and unemployment will skyrocket. “The market will plummet to 3,300, the real estate market will collapse.” He believes we didn’t learn from the mortgage industry fiasco of 2008; financial institutions are now back making questionable loans and risky investments. These practices will lead us straight back into a second financial crisis—and this time there won’t be any bailouts. Unemployment will soar to 15% or higher as the work pool continues to shrink and companies lean towards employing people with experience—leaving college grads with nothing but a diploma in their hands.
Just when we were getting comfortable . . .
These predictions come just as Americans are getting comfortable with an improved economy after the dismal post-2009 years. Consumer confidence has begun to feel sustainable. Construction is up, and homeowners are scheduling long overdue kitchen and bath remodels. Retailers are expanding to meet the demands of eager shoppers with bulging wallets. The tech sector is exploding, and glitzy new restaurants are packed with happy diners. Look around–people are happy and well-dressed, delighted to be making and spending money again.
Let’s say Dent is right. Can we profit from his prophecy?
I highly doubt it. If Dent is right, apparently other market participants (who have collectively decided that the Dow should be at about 17,903) must be brain-dead. Nothing in Dent’s book is a secret, at least not after the book was published. They can’t see what Dent sees. If they don’t see it today, there is no reason to think that they will see it in the future. If they don’t ever see it, the Dow will never go down to 3,800. Think of it–if Dent were to pass away today, the world might lose the only person who knows the real value of the Dow. Don’t rush to short the index just yet! What do you think? Share your thoughts below.
How should you be investing?
Here at Palma Financial Services, our economic forecast is not as dreary as Dent’s. Why? Because our philosophy is a conservative one; we’re carefully investing our clients’ hard-earned money according to their risk tolerance—not ours. For the most part, we don’t invest in the latest startups that have just gone public—no matter how sexy they might seem at the moment. We know from many years of conservative investing that time is our friend.
Palma Financial Services’ investing strategy is based on a few sound principles:
- We have a robust college-planning division, and we encourage our clients to begin working with us early because we want them to both send their kids to college and save for retirement. We help them do both.
- Grow your own business. Put money back into your business and continue to build its value.
- Invest in life insurance and annuities. We believe in investment strategies where you don’t get heavily taxed for accessing your own money later on in life when you need it.
- Create a Living Trust and fund it; continue to update it for all major life events. Plan for your heirs to avoid Probate. Be proactive–include an Advanced Healthcare Directive and Power of Attorney.
- Liquidity. Don’t tie up all of your money; there is a very good chance that there will be an emergency, an opportunity or that you will need financing for big-ticket purchases.
Additional considerations of Palma Financial Services
Other Palma Financial Services investment portfolio considerations include safety and guarantees on the principal – so you can’t lose your investment to downside market risk. We also look at guarantees on the growth – for at least a competitive long-term return that is predictable. No contribution limit – in contrast to qualified plans (IRA, 401k, etc.), there is no limit on how much can be contributed per year. We also think it’s important to have no limitations on distributions–take distributions when you want, whatever amount you want; or don’t take them at all.
A summary of Palma Financial Services’ investment philosophy
Some overarching themes: We never lose sight of the fact that this is your money—you shouldn’t be punished for accessing it. We want to make your money grow during your most productive years and help you get your kids through college without pirating your retirement plans. Our goals are really the same as yours: we want you to live a long, happy, life and be able to enjoy your retirement.
Is it time to take a look at your portfolio, examining risk and vulnerability? Contact Palma Financial Services today for a complimentary consultation: 925.307.5454. We look forward to talking with you.