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The Whaley Report: Cape Fear

One of the things in the media that drives me absolutely bonkers is fear mongering. You know what I’m talking about: “In this 20-minute video, Bob ‘I Can Find the Negative in Everything Including a Labradoodle Puppy’ Smith will reveal the three economic indicators that are signaling that the end of the Earth is just around the corner.”

During the first week of the new year, there was plenty of fear being spread around. I can’t imagine being an individual investor trying to make sense of something as complex as the global economy and financial markets, and having to rely on websites that scare people into reading their “research.”

Do yourself a favor and stay away from articles telling you the economy is going to collapse and a 50% decline in the stock market is imminent.

Managing your portfolio with the expectation that an economic collapse of epic proportions is right around the corner is the same as assuming that every time you step outside your house you’re going to get hit by a bus. There is about a 0.00002% chance of that happening.

Spend your time better understanding what is happening right now. As we discussed last week, markets are fleetingly reversing their Q4 2016 trends. By staying data dependent, you’ll be able to see that this reversal is providing us with an excellent opportunity to enter the best trades for Q1 2017 at prices that skew the odds of profitability in our favor.

Prepping Hard

I recently came across an article that stands for everything that is wrong with these “bunkerandcannedfoods.com” websites that are always touting the end of the world. I don’t know Daisy Luther personally, but her The Organic Prepper website provides no value for individual investors trying to traverse the financial market terrain.

Here’s the executive summary: She cherry-picked 12 “economists” who think the U.S. economy is going to collapse during 2017 and drag the stock market with it. One of the people she quotes is Marc Faber. This guy tours around investing conferences year after year touting the end of the USD and of the global economy. He has never known a time period when he didn’t want to buy gold. His nickname is literally “Dr. Doom.” Enough said.

All of this leads into what she’s really selling.

“Personally, I’m prepping harder than ever before. I’ve spent too much time researching the collapse of Venezuela to sit idly by and let my family face the same hunger and desperation that is rampant there. Right now, a few rocks are falling, warning of an imminent disaster… My suggestions are: Reduce your expenses to the bone. The less monthly overhead you have, the longer you can live on your savings. Start building an emergency fund. The rainy day may be here sooner than you think. Stockpile food, OTC medications, and other necessities. (Sign up here to get a free report on what they ran out of first in Venezuela. You can use this to build a collapse-proof shopping list.) Get prepared to protect your family. When the economy declines, crime increases.”

Are you kidding me?! Do we live in Venezuela? No offense to the Venezuelan government, but I’ve seen better-run fifth-grade boys’ clubs in treehouses with “No Girls Allowed” signs on the door. Daisy doesn’t give us the benefit of her process for drawing the conclusion that the U.S. is on a collision course to becoming Venezuela, but I have to respectfully disagree.

As for “protecting your family” during an economic decline, I have one question. Did your family survive from March 2015 through July 2016? I’m assuming that’s a rhetorical question and I sincerely hope it is. During that time the U.S. GDP growth rate declined by 61% over five consecutive quarters from a healthy +3.3% down to +1.3%, before bouncing higher in Q3 2016.

Landon Whaley

Landon Whaley is the Founder and CEO of Whaley Capital Group. Mr. Whaley launched Whaley Capital Group in the aftermath of the 2008 Financial Crisis because he wanted to provide real value and a unique client experience in an otherwise highly commoditized industry. Whaley Capital Group delivers on this mission by following a rigorous investment strategy that is committed to a global macro-style of investing, while simultaneously providing a world-class, boutique-style client experience. You can contact Landon at: landon@whaleycapitalgroup.com