If you are not sure what to do, then do the opposite of what everyone else is doing.
No, this is not some line that I got from Benjamin Franklin. This is reality. A matter of normal distribution. A statistical concept that implies there are outliers (1-10% on both sides) and then there is the masses (80%).
Every population follows this distribution.
Wealth is distributed this way, as well as height, weight; etc. etc.
This implies that in a room full of 100 people, only 1-5 people are worth getting advice from.
Therefore, when the masses are exuberant about the market - you should probably consider the merit behind their blithesome spirits.
All of that said, this is NOT the primary reason for my prediction.
My prediction is based on Ellis’ magnum opus, “Ahead of the Curve” which describes how the economy is driven by spending and therefore if you want to predict where the economy is going, then look no further than consumer spending.
He breaks this down as follows -
The U.S. economy is comprised of consumer spending (70%), industrial spending/production (15-20%), and government spending (15-20%).
People spend and then businesses respond.
Wages increase, capital investments increase, and employment increases which further feed into more people spending and a bull market.
Therefore, bull markets and bear markets follow spending peaks and troughs.
When spending peaks, a bear market follows.
What goes up, must go down.
When spending troughs, a bull market follows.
There’s only one place to when you are at the bottom.
See for yourself below…
Of course, consumer demand is increasing and people are spending more, but relative to what?
Relative to the unprecedented stimulus and corresponding spending… it does not compare.
Have we peaked?
It looks like it… you tell me. You know what I’m predicting.
PS: Think about the power of information. It can save you money, time, and heartache. Get wisdom at all cost.
ABOUT THE AUTHOR: Joe Gallegos is a founding Partner at JAG + Argueta CPA Firm. He has created tax strategies and operating systems for businesses that have saved taxes, increased cash flow, and profits. As the Managing Partner of Tax and Consulting for JAG + Argueta CPA Firm , Joe has taught hundreds of business owners his step-by-step strategies for creating their own success and obtaining more time and more profits. For more profit creating business tips, tactics and strategies, sign up for this Report.