Grandich Observation

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Posted by Peter Grandich

on Wednesday, 12 February 2014 08:31


The “Don’t Worry, Be Happy" crowd that runs rampart on Wall Street and much of the financial media that follows them had a banner day yesterday. Their new “Pied-Piper Yellen picked right up where Helicopter Ben left off and the “Happy” people didn’t miss a beat.

The Japanese stock market hit its high in 1989 and for 25 years we’ve been told both it and their economy will recover (but nothing could be further from the truth). Ironically, similar failed monetary and fiscal policy practiced there is now what the FED is doing here and I believe we shall see similar results.

I received dog poo in September 1987 as a description of what they thought of my dire stock market forecast. In early 2000, I was laughed at when I warned of the end of the great bull-run and told the NASDAQ would rise 10%-20% for years to come. In late 2007, when my fear was so great I dared to suggest for only the second time in my career for the average investor to short the U.S. stock market, I received “stained” underwear with a note that will be mine after how high I see the stock market rise after my short recommendation.

In recent days, I received the usual batch of emails one gets from card-carrying members of the “happy crowd", called a ‘fear-mongrel” from a financial reporter and for the first time ever, my own wife has asked “could I’ve gotten it wrong this time” by suggesting this?

To my love-of-my-life wife, friends and readers, as I approach starting my “fourth” decade in and around the financial arena, I’m here to tell you America is on the threshold of its worse economic, social, political and spiritual crisis in its entire history. There’s no quick fix. The longer we avoid the inevitable the more painful it shall be for our children and grandchildren. The FED is not the “Savior” but actually a main culprit of what shall come.

I never liked “cookie-cutter” style financial advice when I was in the business of giving advice so I’m not going to start now, but I do believe for most people greatly lowering general U.S. equity exposure should turn out to be a good thing in the coming months and years.

U.S. bonds may go sideways for a time being, but here too less should end up more over time.

Precious metals have made a major bottom and as painful as it was to endure the last couple of years, I believe it shall prove to be the pause that refreshed and new, all-time highs are likely in the next two years.

I continue to choose for myself holding a substantial amount of my cash in Canadian dollars versus in U.S. dollars. While Canada can catch a cold when we become quite ill, I believe they have done a much better job of securing their economic future.

Finally, I’ve grown concern about China and believe it now bares close watching over this.