The United States and the worlds economy could be facing severe issues later this year.
And that's why I sold my stocks.
Before commencing I’ll give you a short introduction about myself.
I’m a 32 year old European male. I work in IT and have always been interested in the financial markets. Both regular stocks and Bitcoin/Altcoin.
I’m that buy-and-forget kind of person. Over a course of 10 years I bought shares of several companies (no trackers or ETF’s) for a total amount of a couple of thousand euros (<5000).
Last week, I’ve sold all of them, with over 100% profit.
I sold everything because during the last 2 to 7 years each of them went up more than I could find reasons for.
Since a couple of months however I started noticed a stagnation or even a price drop for some. I’m aware that markets fluctuate, but there seemed to be downward trend developing across my entire portfolio.
That’s when I started doing some research, the results of which you can read here.
Let’s rewind to the recession of 10 years ago.
The cause of the crash back in 2008 can be traced back to mid 2007. Before then, the interest rates on American mortgage loans were frozen, kept low artificially by the government to jumpstart the economy and to encourage the population to spend and invest their hard earned money.
When that freeze period came to an end in 2007 interest rates skyrocketed. This caused millions of people to see their monthly expenses due to the loan to increase by more than they could afford. Even though the original loans and lower interest rates were already optimistic at best. Unable to repay their debts, they became insolvent and many of them ended up losing their homes.
The financial institutes who foreclosed these loans were suddenly running a great loss as well. Fearing they would go bankrupt they bundled many of the above mentioned “bad loans” into CDO’s. Which were oddly enough given an AAA credit rating again. Those AAA investments were the resold to other financial agencies. When the CDO’s came tumbling down against all odds for the new investors, who had no idea what was actually in these bundles, they triggered the domino effect we saw in the following years.
(interesting movies about this subject: The Big Short en Inside Job)
Fast forward to March 2017.
American government officials are again talking about raising the interest rates to stop or at least slow down the growing national debt. Some experts have expressed their opinions that the US would not need an interest hike, they state it would take 3 increases in 2017 alone to keep the economy going.
(source: http://www.cnbc.com/2017/03/06/fed-interest-rate-hike-in-march-is-big-deal.html)
(source: https://www.forbes.com/sites/kellyphillipserb/2017/01/17/millions-of-workers-will-pay-more-taxes-in-2017)
US government reports that the nations unemployment rate is at and all-time low of 4,5%.
I’ve tried to verify those numbers but came up with something entirely different.
The 4.5% mentioned earlier seems to be an ‘alternative fact’, the real ratio is closer to 9%.
(source: https://data.bls.gov/timeseries/LNS14000000)
(source: http://www.gallup.com/poll/189068/bls-unemployment-seasonally-adjusted.aspx.aspx)
What this means is that the US population has not recovered from the previous recession yet.
(source: https://www.lombardiletter.com/5-signs-u-s-economic-collapse-2017/5229/)
Donald Trump talked a lot about in-sourcing. More goods will be constructed in America and less goods would be imported. This was good news for the US stock market is it soared to new heights.
However when the American companies and investors realize that talk is cheap and reforming a country is more difficult than it seems, take Obamacare as an example, I believe this will cause a slow but major downturn for the currently overpriced stock market.
Even though I may be off on half of everything that I mentioned before, even if only half of it would come true this would already cause a big blow to the American economy.
It would have an enormous financial and economic impact, not only in the US but in Europe as well.
It’s nearly impossible to project how big the drama or how small the correction will be.
But I for one am not willing to take that risk.
Afterwards, when the dust has settled I can reinvest the money I got out of it before it was too late.
So what can you do in the meantime with your saving?
We could follow some prominent examples like Jacob Rotchchild and invest in gold. The Rothchild family is closely intertwined with the central banking system and even they are expressing their doubts.
(source: http://www.silverdoctors.com/gold/gold-news/trillionaire-rothschild-dollar-collapse-buying-gold/)
Unfortunately, even that’s not a certainty
History shows us that during the crash of '80-'82 gold lost 46% of it’s value.
(source: http://economyandmarkets.com/exclusives/harvard-economist-warns-700-gold-by-2018/)
(source: http://jaytaylormedia.com/if-the-stock-market-crashes-what-happens-to-gold-and-silver/)
Even now the price of gold fluctuates massively,even during the past 10 years of "economic recovery".
(source: http://goldprice.org/gold-price-chart.html)
In conclusion
It’s impossible to foresee what’s coming and how things will turn out.
Nor does anyone know which sources have the correct information.
What is sure it that the US and the global economy are facing hard times.
Strengthened by the info about previous crashes and recessions I have made the decision not to be involved in this one.
Even though I sincerely hope that a crash can still be avoided, to
This letter is in no way meant to be financial advice nor is it meant to finger point at someone.
So, as always, please do your own thorough research before making any financial or other decisions.
This was just my 2 cents.
TG