Feeling Low…

 

I’ve been feeling low. My numbers (on my mood scale) have dropped from the 7.5 to 8.5 range to 6.5 to 7.5. That’s the difference between “Ready-to-go!” and “Why-should-I-bother?”

Because I track my moods so closely, I am not worried about this lingering malaise. I know from experience that I will get past it eventually. And in the short term, I can boost myself from 6.5 to 7.0 in a single day by doing the same things that have worked in the past.

Although I believe that severe depression is almost never “caused” by an individual event, moderate drops in mood can be. In my case, there is some residual psychological detritus from feeling close to death. And then, while I was pulling myself up from that, I had to deal with the news that two friends of mine had died.

 Margie ran our English language program at FunLimón, the community center that my family established in Nicaragua, across the street from Rancho Santana. She was in her late 80s when, about two months ago, she had a stroke, from which she eventually died.

 Margie was an astonishingly vibrant and accomplished woman. She was a mother and a nurse and a teacher, but she was also an adventurer, a pioneer, and a ball-busting business partner. (I did a deal with her once. That was enough!) She was also a wonderfully giving person, who spent her last 15 years living in Nicaragua – teaching, befriending, helping, and caring for the locals. At her funeral, half the town showed up.

 Two years ago, I had the idea to make a small-scale documentary film about the lives of some of our eldest residents of Rancho Santana. We spent a year interviewing and filming them. Margie was one. (When the movie is finished, I’ll give you a link to it.)

 And then, just yesterday, I received word that my good friend Joselito had died.

 Joselito was another amazingly accomplished and astonishingly loving and giving person. He passed from esophageal cancer, which he’d been battling for about a year.

 I’d known Joselito for about 25 years. He was one of the first Nicaraguans I met outside of my Nicaraguan partners. He was a singer and guitar player whose repertoire of Spanish love songs was endless. For 25 years, he would travel every weekend for four or five hours to get from his home to the Ranch. And he would spend two or three days playing and singing for our guests, performing at small functions, and selling off-brand cigars on the side.

 Joselito had a beautiful voice and a unique way of playing the guitar (as I’ve been told by guitar players). He wrote songs for and about people, including one about me, one about Rancho Santana, and two love songs for Number Three Son’s girlfriends, the second of whom became his wife. About 10 years ago, I arranged for Joselito to travel to New York City with me, so that Number Two Son could produce an album of some of his best songs and covers. Number Two Son had arranged for some of the finest Latin musicians to accompany Joselito, including Tito Puente’s drummer. The record came out very well. (I have copies for sale if you want one.) But that weekend, itself, watching Joselito charm everyone around him in the Big Apple, was an experience I will never forget.

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Feeling a Bit Better…

That’s odd. Writing about the recent death of two friends somehow improved my mood. I have the mental energy now to get back to the gloomy subject of my last two blog posts.

Last week, I told you what I think about the state of the US economy. And I made some predictions, none of which were good. I predicted:

* Higher inflation

* A deeper recession

* Deflation of real estate

* The collapse of NFTs and most cryptocurrencies

* At least one more major stock market plunge – as much as an additional 30%

* And, possibly, the end of the dollar as the world’s reserve currency

The CPI index, which is now 8%, will move towards double digits next year. The negative GDP growth we’ve experienced over the last two quarters will continue. And those “robust” job reports that the Biden administration has been touting – they will soon be inverted into massive layoffs and record-breaking unemployment.

The stock market will drop at least another 30%, bringing investor assets down to half of what they were a year earlier. Government bonds and savings accounts will offer paltry returns of less than 5%, while inflation passes 10%. Gold might go up. Some commodities might go up. Energy stocks might do well. But none of that seems certain.

What does feel certain is that, because of the size of the problem this time, the US economy is not going to spring back to pre-2022 levels in a year or two, as it did in past corrections.

It’s foolish to try to predict both the level and the timing of a future economic event. But I’m going to go out on a limb and say that the stock market (and other financial markets) will not regain the losses they will be suffering in 2023 for at least five, and possibly as many as 10, years.

And that will all happen even if the dollar somehow manages to hold its place as the world’s reserve currency. But there are many reasons it may be toppled this time. And if that happens, things may get even worse than the grim picture I’ve just painted.

Why trust me? 

You shouldn’t take what I’m saying here as gospel. But you should take it seriously. Because if I’m right, it’s going to affect your life in a very substantial way. It’s not as though I’m an economic analyst who has won a Nobel Prize. (See last week’s bit on Bernanke.) I did predict the last big market crash prior to 2008. And I have been able to manage my investments in such a way that they have always gone up. But I could be wrong going forward. Keep that in mind as you read on.

As you probably know, I’ve been in the investment publishing business for 40 years. During those four decades, I’ve had a catbird’s seat to watch all the major corrections. I was watching and writing about the stock market on Black Monday in 1987. I was managing a crew of market analysts during the eight-month drop that took place three years later. I was supervising a larger group of analysts during the dot.com crash of 2000.

I was also there when the sub-prime bubble burst at the end of 2007 and ushered in the Great Recession. That led to the $10 trillion sell-off of 2015 and 2016, the cryptocurrency crash of 2018, and the 20+% correction (so far) this year.

If you were reading my thoughts about the economy and investing during that time, you know that my position has always been to leave the money I already had in stocks in stocks. There were some minor positions I had in speculative companies. But for 90+% of my stock portfolio, my position was to hold on and wait.

There is, by the way, a ton of research that supports that position. Investors that diversify their stocks and hold onto them through down periods have always done much better than investors that have tried to sell high and buy low.

And until now, I’ve felt the same way. For good reason…

Since the stock market was created in 1792, the US economy has been in a state of non-stop growth. We’ve had recessions, and even the Great Depression. But the economy has always bounced back from every downturn and then gone on to achieve new heights. The stock market has followed suit. Despite minor corrections every two years or so, and major corrections every eight to 10 years, the overall trend has been upwards for 230 years.

So, yes, the US stock market has always recovered from its dozens and dozens of crashes and corrections. And there are good reasons to believe that it will recover from the current correction. The question is: When? How long will it take?

This time, things just may be different. The big problems we are facing – in terms of federal debt, private debt, and corporate debt, combined with so many negative political issues, such as the war on fossil fuels, the cost of mass immigration, the likelihood that the US will get even more involved in Ukraine or Taiwan (or elsewhere) – loom large. And the very real possibility that the dollar will be abandoned in favor of national digital currencies could mean we won’t recover as before.

These challenges could be how things are for another five to 10 years. Maybe longer. So, here is how I’m changing the advice I’ve been giving for anyone that expects to tap into their stock account inside the next 10 years. If you are counting on the value of your stock portfolio to stay, more or less, at its current level into the 2030s, you should seriously consider converting some of your stock positions to financial assets that will not be diminished by falling stock prices.

Click here for an article by John Csiszar that identifies eight places you can put your money that will keep it safe from stock market dips and crashes: Treasury bills, CDs (Certificates of Deposit), high-yield savings accounts, TIPs (Treasury Inflation-Protected Securities), fixed annuities, money market accounts, high-dividend stocks, and preferred stocks.

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Kleo 

Netflix series – 8 episodes

Premiered Aug. 19, 2022

Starring Jella Haase

Someone whose opinion I value recommended Kleo to me. Was it one of my sons? He described it as “great but quirky.” As in: “You may not like it. If you don’t, it’s because you are not sophisticated enough to appreciate its subtleties.”

I was not disappointed.

Kleo is a German spy/revenge thriller/comedy TV series. It is smart. Stylish. And clever.

It is also unique. I’ve never seen anything exactly like it. Yes, Killing Eve was an inspiration. So was Kill Bill. Ultimately, Kleo is sui generis.

 It takes place in the late 1980s. Kleo, the lead character, is an agent working for the Stasi, the East German secret police. On the eve of the collapse of her country, she is arrested and imprisoned by her own people without an explanation. After the wall comes down, she is released. And she wants to find out why she was targeted. The series is about her mission.

Kleo works as a spy thriller. It has the necessary twists and turns and the suspense. It also works as a revenge drama. She has the motivation. And all her killings are well deserved. It provides plenty of references for movie buffs and TV enthusiasts. And, finally, it works as a parody – a likeable spoof of what I assume was German pop culture in the 1980s.

 Critical Reception 

* “There has been a litany of revenge thrillers over the years, especially those told from a female perspective. From Kill Bill and Hard Candy through to Carrie and Killing Eve, this genre has been mined to death. This automatically puts Netflix’s new German thriller, Kleo, on the backfoot. Somehow though, this show manages to both feel refreshingly new and overly familiar at the same time, taking a simple but effective formula and spinning that into a bloody, twisty-turny thriller.” (Greg Wheeler, The Review Geek)

* “The series is a definite watch. Jella Haase completely owns the show and is the main reason behind the captivating drama. Her acting with diverse expressions really humanizes the character and makes the audience relate & empathize with her. Unlike many spy revenge drama leads, she is equally scary & dangerous as a lethal assassin but also displays deep emotions & vulnerability.” (Ameen Fatima, Leisure Byte)

You can watch the trailer here.

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Sui generis (soo-wee-JEN-uh-ris) – from the Latin for “of its own kind” – is a fancy way of saying “unique.” As I used it in my review of Kleo, above: “Yes, Killing Eve was an inspiration. So was Kill Bill. Ultimately, Kleo is sui generis.”

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Looking for a different way to spend the holidays?

Consider Rancho Santana, ranked one of the 100 best resorts in the world! This year, we will be celebrating our 25th anniversary. Lots of fun things planned. Check it out here!
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Re this series of essays I’ve been writing about the current state of the economy (see #3 in the series, above): 

“You really nailed it! Our economy is in deep trouble. What I honestly fear is war. We are as poorly prepared to defend ourselves as we have been in our lifetimes, not only militarily but psychologically. I am not sure our children believe our country is worth defending. I pray I am wrong.” – JM

 

“Good blog today, I expected you to go conservative/republican when you addressed the cost-of-living issue. You stayed pretty neutral. Good job.” – AF

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