That seems to be the common question being asked today and one that we have been spending a great deal of our time trying to find the answers to.

We recently attended the New Orleans Investment Conference which is the oldest investment conference now in the world. It was our fifth time attending this event and the reason we go is that we do not know of any other place where a more consolidated group of extremely smart thought leaders are “in the trenches" when it comes to our world economy.

There were numerous speakers and panels who took the stage over the four-day event that mainly focused on the national and world economy as well as commodities such as mining, oil and gas, and precious metals. Of course, the stock market and real estate are also included in this mix.

The main theme this year was centered around the Fed and the changes that have taken place in our economy over the past year. Unlike the prior two years when individuals and panelists almost unanimously agreed that there was no way to really predict which way things are headed, there were much stronger opinions that were not all in agreement with each other.

There is no way to recap the 28 pages of notes I took in one article, so I'm going to share highlights over a series of articles focused on some of the speakers and panelists that I hope you will find useful in preparing yourself for what may lie ahead.

To begin with, I thought it would be helpful to preface this series with some thoughts and perspectives from Brent Johnson who is known for his “Dollar Milkshake Theory” which was not the main topic of his presentation but rather, “Psycho: How Market Participants Are Losing Their Minds…”

The reason I start here is that in his concluding remarks he quotes F Scott Fitzgerald who famously wrote: “The test of a first-rate intelligence is the ability to hold two opposing ideas in mind at the same time and still retain the ability to function”. 

This resonated with me primarily because I have always held to a similar statement made by Robert Kiyosaki who says: “There are three sides to a coin: heads, tails, and the edge. Learn to see both sides by standing on the edge.”

Because of some of the opposing views that I will share from other participants and panelists, hopefully, this will help you to keep a more open mind in order to determine the best path for you moving forward.

Highlights From Brent Johnson

First off, Brent still believes that his dollar milkshake theory will still play out which implies that, as the US Fed tightens monetary policy faster than other major central banks, the milkshake of liquidity created globally by central banks' loose policies, will flow into the US shoring up the dollar.

He went on to mention that despite all of the QE programs, helicopter money, social unrest, and predictions of the dollar's demise, the dollar is up 20% over the last 13 years and since QE even began. This is what he is referring to as “psycho” because many people have a hard time dealing with this and it's driving them crazy. Keep in mind, you always have to ask “compared to what?” The dollar is strong on an international level.  As far as the US citizen is concerned, it has lost 96.5% of its value since 1964. (When they took the silver out of the US coins)

Another concern he shared was that there are professionals all over the world working at fixed-income trading desks who have never known anything about QE. There are also many others who have never seen interest rates rise for more than a year or two before heading lower. Many of these people are writing recent research reports, sitting on investment committees, and speaking at conferences telling you what's going to happen next if rates do continue to rise.  How could they possibly know if they have zero experience with any of this?

Finally, Brent reminded those of us who were at the conference last year that the narrative and climate were very different. Asset and real estate prices were going through the roof and the very thing that we all seemed in agreement with regarding the Fed not being able to raise interest rates has been proven untrue.

He suggested that people get to a point of mental flexibility and not be so certain about anything. He said, “The more certain you are about something, the more you should question it. Especially with regard to the things you feel most strongly about.”

Mr. Johnson concluded his talk with a quote from David Gross who won the 2004 Nobel Prize in Physics saying: “Indeed, the most important product of knowledge is ignorance.”

We have much more to share with you about lessons learned from this conference and other sources we’ve sought out to figure out “which way the puck is headed.” Why do we feel this is so important? There is no question that major changes lie ahead and it’s best to be prepared as and informed well as you can. For those of us who are prepared, we believe that great opportunities lie ahead.

“In the midst of every crisis, lies great opportunity.”
― Albert Einstein

More to follow…

If you have questions about any of this or would like to learn more about taking advantage of the possible financial opportunities that lie ahead, please email me at the address below or schedule a call.

Investing for Impact,                                                  

Randy Hubbs
[email protected]