Dan’s Blog

Exercise & A Healthy Diet

Dan Calandro - Monday, January 06, 2020

Success is a constant pursuit, not a moment in time – especially when it comes to investment. 

Those looking for overnight success are gamblers, who must rely on luck to win. And that is the riskiest approach to take with investment.

The least risky tactic, therefore, is one that seeks success over a long period of time that relies on something more easily had than a blessing from the heavens – like logic, math, historical fact, or better yet a combination of all three. 

Let there be no doubt, a long-term perspective is the safest method with the highest probability of success because the extended view affords the investor more margin of error and plenty of opportunity to adjust course should things go awry. That kind of wiggle room provides some much needed comfort for what many individuals perceive as a very scary world of investment.  

Comfort is an often-overlooked element to success. Let’s face it, no one wants their heart surgeon to be wearing tight shoes in the operating room. It’s hard to be successful without comfort, and with investment a long-term view helps provide it.

It is also comforting to know that even a little luck isn’t required to be successful with investing. In fact, most investors who consistently fall short of their objectives do so for two basic reasons: either they don’t employ a winning strategy, or they fail somewhere in the planning process. 

And what better time than a New Year for a blog focused on planning, establishing objectives, and implementing strategies and tactics to bring about success? 

That is today’s feature.

All plans have one mission: to achieve the objective. The first step towards that end is to define the desired outcome. Goals should be reasonable, clear and concise.

Next the plan must include strategies and tactics that support the mission. Once employed those strategies and tactics need to be tracked, measured, and evaluated. Performance compared to your benchmark or target is the report card for your plan. Only after its review is it possible for an investor to have everything required to act should the need arise. 

Let’s use my portfolio for example. The mission for the 15-51 Indicator™ is to indicate how stock market strength is performing. The Dow Jones Industrial Average and the S&P 500 aim to indicate average stock market performance.

In order to succeed in its mission the 15-51 Indicator™ (15-51i) must achieve two specific objectives: 1) it must consistently produce above-average stock market returns (thus indicating a “strong” performance); and 2) it must move in a “market-like” way (thus proving market-diversification.) 

The Dow Jones Industrial Average (often referred to as “the market” and signified as DJIA) and S&P 500 are portfolios designed and constructed to produce average stock market returns. They, and to me the Dow specifically, define what “average” and “market-like movements” actually are. 

My mission is clear and exact: consistently outperform the DJIA while closely resembling its movement pattern in all markets, up or down. 

In order to succeed I employ four main strategies and tactics. First, I begin by utilizing a superior allocation model, my 15-51™ system, and then follow that by selecting a higher percentage of higher quality stocks than the DJIA does. This is easy, of course, as the Dow is stacked with mediocre performers (which is one of the strategies they employ to achieve “average” returns.) The superiority of my tactics automatically makes my portfolio stronger than the Dow Average.—And that is the reason my portfolio consistently outperforms it. 

The two strategies mentioned above support the performance angle of my mission. The next two strategies are employed to produce the market-like movement pattern I aim for. To do this I start by accessing similar market segments in similar proportion as the Dow Jones Average does – again using 15-51™ design – and then follow that by connecting directly to “the market” by including some Dow components in my portfolio (just a few of the good stocks). 

The strategies and tactics I employ, based simply on logic and mathematics, stack the odds of success in my favor. That too is comforting. But there can be no set-it-and-forget-it mentality with investment. Monitoring performance is key. A watched pot never overboils. 

Year-ends close the marking period and serve as a report card for every plan. And while one year cannot make success in a long-term venture, one year also cannot make failure. Missing a short-term target in a long-term project is not a catastrophe but a trigger to do something – review, evaluate, and possibly adjust. 

In 2019 the Dow Jones Industrial Average (my target) posted an unbelievably strong 22% gain. An impressive performance for what the world calls Average. The 15-51 Strength Indicator succeeded in its mission again last year by recording an above-average 26% return on investment. —But neither of those portfolios are the real story in ‘19. The S&P 500 bettered both portfolios with a stunning 29% gain. See below.

Even though all three portfolios moved with the same rhythm during the year it can never be called a normal occurrence when a 500-stock portfolio outperforms two the sizes of 15 and 30. That indicates stock market inflation is very broad, or very inflated, which is also referred to as hyperinflation. 

Note: If “the market” is highly inflated then so are my portfolio and yours. Investors that make this connection are less likely to be surprised when steep downward corrections materialize. 

Understanding the environment for which your portfolio operates is also an incredibly important element to being comfortable with investing. No doubt, it’s easy to get distracted. The 2020 election is in full swing, the U.S. and Iran are trading missiles in Iraq and Syria, the trade deal with China is still lingering, North Korea is still a pest, Brexit uncertainty persists, and the rest of Europe remains in disarray. 

Surrounding that mess of news stories are reports of how grand the U.S. economy purportedly is with its raging stock market used as proof positive. Indeed, the world is being dragged along by the mighty U.S. – but economic growth isn’t that strong. American GDP has averaged just 2.3% annual growth this year with damn-near full employment. Growth should better than that – especially when considering the central government continues to spend 4 Trillion with a ‘T’ dollars every single year. 

Yes, the Trump economy is better than Obama’s – but only fractionally, averaging 2.5% growth thus far in his term compared to 2.1% post-recovery growth under Obama. That’s because the Trump tax cuts were too small and added little benefit, and his regulatory rollbacks have been slow to produce only modest gains. Things are better now for sure, though marginally. And remember, the tech-boom economy grew at twice the rate of this economy while producing the same kind of stock market returns.

That’s what makes this stock market so pricey. It’s called hyperinflation (see also: Action Point Approaching).

In fact, the 15-51 Indicator™ has averaged a strong 23% gain every year since the Trump stock market began 3 years ago – that is to say a rapid rise in prices over an extended period of time. The Dow averaged 19% per year and the S&P returned 17.5% per annum during the same three-year period. See below.

Unlike the one-year chart shown prior, the picture above can be considered “normal” because strength is the highest performing portfolio and the smaller average is ahead of the larger one. That’s the way things should be. But like everything else there are exceptions to the rule. 2019 was one of them. There have been two others.

First it should be noted that it isn’t abnormal when the S&P outperforms the Dow Jones average; that has happened nearly 50% of the time since I’ve been closely tracking my 15-51i portfolio, some 24 years now. Even so the Dow out-gained the S&P during those decades 458% to 425% respectively. 

It is a rare occurrence, however, when the S&P average betters stock market strength via the 15-51 Indicator™. Besides 2019 there have been two other years when the S&P 500 outperformed the 15-51i strength indicator: in 2006, one year before the last stock market top (Oct. 2007) and three years before it bottomed (Mar. 2009); and in 2016 when Trump won election (and three years later in 2019 was the third). 

Recall that in ‘16 “the market” gained 13% and 64% of it came from election day to the end of that year. In other words, the Trump election produced a short-term burst of broad market inflation (8% return in just two-months’ time) that propelled both Averages passed Strength. 

Two of the three times that the S&P 500 outgained my 15-51i portfolio the Dow Jones average had also done it. The only time it didn’t was in 2019, which is an indication that stock market inflation is more widespread now than the other two times. See table below.

When Average > Strength









S&P 500








Anomalies happen but they shouldn’t happen all the time. If my portfolio began to routinely fall short of the S&P 500 then I would make adjustments to enhance performance because the 15-51 Indicator™ must be an unquestionable above-average performer; and because there is no legitimate reason for a 500 stock average to consistently outperform 15 strong. 

Another objective for my portfolio is that I seek to at least double the Dow’s output over 10 years running. This added element is to keep my focus on the long term, and to place a definitive value on performance success.  

During the most recent 10-year period 15-51i Strength achieved its long-term objectives in movement and performance by producing a rhythmic 420% gain compared to the Dow’s 206% return; the S&P posted a 258% advance. (As a side note, I truly believe the caretakers of the Dow Jones Average – S&P Global– are sabotaging its performance [see: Walgreens – Seriously?]. There’s simply no other explanation for a 500-stock portfolio to consistently outperform one comprised of just 30.)

The reason my portfolio consistently achieves its mission is because I have a solid investment plan that features a winning method, common sense strategies and reasonable tactics that support its mission, and a mechanism to track and evaluate performance, which makes adjusting course both obvious and easy. 

There is little doubt having a well-thought plan makes success easier to attain. But nothing provides investors with more comfort and confidence than an intimate knowledge of their portfolio’s components (i.e. stocks), their method of assembly (i.e. 15-51™), and how they relate to “the market.” (See my book for more details.)

The point here is simple: You can’t eat pizza, drink beer, and watch TV every chance you get and become a world-class athlete. Strategies and tactics must be consistent with the objective in order to achieve success. Exercise and a healthy diet is a good place to start this New Year.

Plan your work and work your plan. 

You can do it.

Stay tuned…

 The road to financial independence.™

Action Point Approaching

Dan Calandro - Wednesday, November 20, 2019

Investment is more of a discipline than anything else. You must have rules and boundaries – and you must honor them, or else they don’t exist. 

In my book I mention my rule not to invest in public equity stocks with prices less than $15. It’s a hard and fast standard, and something I just won’t do. Another bedrock principle in my market-driven approach is a rule I call “10-and-3” which goes hand-in-hand with the 15-51system and a multiple asset class portfolio.   

The greatest benefit of employing a defined diversification and allocation method is that they make portfolio issues easier to identify and decisions easier to make. 

For instance, my base portfolio is comprised of three asset classes: cash, gold, and stocks. As you know the stock market has been on an absolute tear lately. Stock market strength via the 15-51 Indicatorhas gained 21% so far this year and 22% per year since Trump won the ‘16 election. It’s up 66% thus far in his term. The Market Averages have gained 53%, or 17.5% per annum during the same time. See below. 

My 10-and-3 rule calls for action when an allocation goes 10 points beyond its target for 3 consecutive months. The allocation can be for an individual stock within the 15-51system or by asset class. 

The strong stock market performance has pushed my asset class allocations almost to a point of re-balancing. 

Employing a rule like 10-and-3 is a tactical shift from speculating on what “the market” will do to making adjustments based on what “the market” has actually done. In other words, market activity instructs me what portfolio adjustments are required, not guesswork.

Right now my individual stock allocations within the 15-51™ system are all inside my 10% rule (Google is the furthest from its target, off +4.5%, and the Technology industry is off by +8%) but my overall stock allocation is 10% over target for 2 consecutive months now, or 10-and-2. Should the current trend continue for another month it would trigger a re-balancing event to sell stocks and add to my gold position. 

By using actual market activity as a trigger takes speculation completely out of the decision making process. That makes investing so much easier – and profitable!

A re-balancing event is also a good time to re-evaluate your overall portfolio allocation scheme and risk posture. Is your portfolio positioned properly for the current Market condition and its near future prospects? 

Looking at the landscape now I just can’t imagine the establishment letting Trump make it all the way through a re-election campaign without a fiscal crisis to face, whether it’s a recession, steep stock market correction, or both. Remember, the USMC trade deal is held up in Congress and the China negotiation looks to be at another impasse with threats of more tariffs swirling – this before it even reaches the congressional floor. 

Inaction on trade deals and higher tariffs can easily throw a wrench into economic growth and cause recession. 

And because central government spending is such a significant portion of the U.S. economy ($4 trillion against a $21 trillion GDP, or 19%) any reduction in it could also derail economic growth – which grew just 1.9% last quarter (or $364 billion).  

Can’t you see a Congress in election and investigation mode so paralyzed they are unable to produce a spending bill in 2020 that would keep the money flowing to prop up the economy just to sink Trump? 

The current U.S. federal government budget deficit is $800 billion and that increases national debt by the same amount. And because Trump and the Federal Reserve want interest rates to remain low, or even lower than where they are now, these annual budget deficits will require the Fed to print more money to buy more Treasury bonds (government deficits). 

At some point the balloon is going to burst. It always does. 

This of course is not to mention that this is the longest stock market expansion in history without a major correction and economic slowdown. Yes, the economy is still growing at a solid clip. But growth is slower this year than last, and the rest of the world – which has never really recovered from the last major meltdown – is fading fast. Political strife is everywhere and economies in the biggest markets in Asia and Europe are slowing and/or teetering on recession, which will ultimately find its way to U.S. shores. 

Yet the American stock market has turned a blind eye to it all. It continues to be richly valued and is once again priced higher than the tech-boom with half the rate of underlying economic growth and twice the level of national debt. See below. 

Followers know that my investment philosophy is against being all-in or all-out of any core asset class because that makes it harder to know what to do and when. Multiple asset classes make it so much easier – but again, you need rules and definitions to facilitate the decision making process. Below are mine.




Slower Growth



























Investment, stocks, business, and simply how to make money, is defined as buy low and sell high. Profit is derived from receiving more than what it cost to produce. 

The time to be most aggressive in the stock market is when it is near its bottom after major correction. The economy is usually in or heading to recession at that time. That is the beginning of the stock market cycle (BOC) – and where all the easy money is to be made. Gold is usually still a good bet at that time but I like having at least 10% in cash all the time, just in case. 

Superior 15-51™ design affords the investor the opportunity to earn above-average returns with less risk, which is the reason I throttle back my stock market allocation once the economy recovers and begins to expand consistently. And when economic growth starts to slow later in the expansion I move to a conservative posture before getting defensive at the end of the cycle (EOC) when stocks are high – which is where we are right now. 

And so my portfolio’s posture will shift from conservative to defensive at the next re-balancing while the wait for mayhem inches along. This management approach produces more robust results in the beginning of the cycle when downside risk is less, and yields slightly less returns at the cycle end when downside risk is greater. Object: more reward early when risk is least, and less reward late when risk is greatest. 

And what does that performance look like over the course of the entire cycle?

During this 13 year cycle the Dow Jones Industrial Average gained 132%, or 10% per year. Gold advanced 119%, or 9% per annum. My three-asset-class (3AC) portfolio featuring the 15-51i portfolio, gold, and cash, grew by 461%, or 36% per year – almost 4 times “the market.” 

Do that three or four times over the course of your working life and all of the sudden your retirement is everything you hoped – and the road there was more rewarding and had more peace of mind.

Stay tuned…

 The road to financial independence.

Target Hits Bulls-Eye

Dan Calandro - Sunday, September 15, 2019

It’s a shame that so many people still feel they can’t invest successfully on their own. They incorrectly believe that managing a portfolio is high finance and stock picking is rocket science. Those false perceptions are exacerbated by a common belief that investing demands too much time that involves constant attention and tinkering. So not true – and I am living proof.

With my book and these blogs it may seem as though I live, eat, and breathe the investment markets 10 hours a day, 7 days a week. But like most of you I have a day job that dominates the majority of my waking hours; writing and blogging about investment is just a part-time passion. And trust me on this one, it takes much longer to document my investment views than it takes to actually arrive at my conclusions. In fact, it takes me only minutes a day to connect to my investments, size up the market condition, and take appropriate action if necessary. 

I proved the theory that constant attention and tinkering were NOT required to be successful with investing while writing LOSE YOUR BROKER NOT YOUR MONEY. During that seven-year period I totally unplugged from the investment world for large blocks of time (weeks, months, and half-years) for the simple reason that I could not change the 15-51 Indicatorportfolio. It had to remain constant so that I could write about its movements in a consistent, static, historical way. During that time (2004 - 2011) the performance of those stocks allocated with 15-51 design vividly proves the point: even with total neglect my method outperforms "the market" and thus the vast majority of all mutual funds. See below.

This whole investing takes too much time involving constant and immediate attention thing is a total farce. It is simply part of an advertising campaign marketed by the Wall Street establishment. 

An alternative does exist.

Written in plain language that is easy to understand, LOSE YOUR BROKER NOT YOUR MONEY details my successful methods, strategies, and tactics that cover every possible angle of the investment process, all of which can be easily worked into any busy schedule. Those techniques are practiced here, in these blogs, so that readers can appreciate how I employ them, and for what reasons. What makes me different is that I don’t tell investors what to do; I show them how I do it so that they could make investing a personal experience for themselves. That is the easiest and most rewarding way to reach financial independence. 

Looking at the world in this new way takes practice, indeed, but given the time and attention it will become second nature – and that’s when investing really gets easy, and fun – which is a feeling you can’t get by turning your money over to the Wall Street establishment. That feeling is more akin to handing your wallet over to a thief for safekeeping. Their rap-sheet is lengthy, which causes an ill feeling. And there’s nothing fun about that. 

The easiest way to succeed with investing is to make your portfolio a reflection of you, and in line with your individual beliefs, spending patterns, and objectives. Not mine. Yours. The best investments for you are close to where and how you spend money. That brings your investment portfolio closer to you and into your daily life. That kind of intimate connection makes everything related to investment easier and more rewarding. With my book and support you have everything you need to invest successfully. 

Common sense, basic math skills, and your market experiences make you more than qualified to understand and succeed -- and every investor has them. Fancy degrees from branded institutions are not prerequisites. Success only demands a plan, core principles, and a winning method of operation. All of that is practiced here. 

For instance, my decision to sell Nike was as obvious as it was easy to do, even though it had an excellent run in my portfolio (+248%). I found the actions of their management disgusting, insulting and in poor taste, not to mention bad business practice. So I sold it.

And because I am so familiar with 15-51™ design, my stock components and objectives, I knew exactly what I needed to do to fill the hole Nike left. My market experiences directed me to adidas (AADDY) and the fundamentals corroborated their sound standing. Their performance since I made the move speaks for itself; its stock outperforming Nike by a factor of 4, or 400%. 

Ditto for dumping Boeing. Their handling of the 737 MAX has been awkward, incompetent, corrupt, and insensitive. Needless to say they have been a huge disappointment. Selling it was obvious and replacing it with United Technologies was just as evident. The decision to act was once again made easier by the close connection to my investments, 15-51™ design, and clearly defined objectives. 

The Nike and Boeing blogs demonstrate how to make portfolio decisions in line with your core principals. To me disrespecting the American flag and national anthem is unbecoming, and placing profit ahead of safety is repugnant. So ridding a portfolio of those two stocks is more gratifying than just making money because I defended my core values in the process. And while losing Boeing and Nike for those reasons felt good, nothing compares to the feeling when success follows great adversity. Target is a fine example.

You may recall that Target suffered a major security breach several years ago that exposed personal information for millions of its credit card holders. The stock took a beating because of it, and at the time I considered removing Target from the 15-51 Indicator -- not just for the data breach but because of the new paradigm in retailing. It had me thinking, and I wasn't sure what to do.

To help with the decision I visited my local Target store to see firsthand how the company was handling the crisis at store level. Discounts were abound (good move) and the staff was extremely courteous, making a point to thank me for “Shopping at Target” (smart). One of the things that drew me to Target in the first place was how well they operated at the store level. That’s good management. And I was happy to see that nothing had changed. 

Staying connected and monitoring your investments can be as easy as going to the store and shopping. That’s how to invest at the grassroots of your life. In this way they’re not just stocks, they’re businesses, products, or brands that you know, use, trust, love, and now own. If they continue to meet or exceed your expectations then they remain worthy of your investment dollars. If not, it’s time to sell them.

Do you really need a financial advisor to tell you that Target is a good investment?

My decision regarding Target back then was also made easier because its intended replacement in my portfolio (amazon.com) was selling at an all-time high, and selling low and buying high is not cliché. And let’s face it, several government agencies have suffered major data breaches including the IRS, FBI, CIA, and Defense department. Target was just another unlucky victim. 

So I stuck with them back then – which also meant that I had to add to the position in 2015 when the 15-51i portfolio was re-balanced because its performance was down.—That’s another reason you must love your stocks; you must be willing to buy them at any time, in any Market condition, and especially when “the market” is melting down – because that is where the real money is to be made. 

Fast forwarding to today, health issues and day job demands have forced me to partially unplug from the investment markets (life will do that occasionally). During those times if I look for anything it's bad news. The news surrounding Target was all positive, and quite frankly, I missed most of it. But a recent pop in its stock price caught my attention and compelled me to dig deeper.

It was nice to find Target making significant advances in an incredibly difficult market segment that has been dominated by Wal-Mart and amazon.com for what seems to be an eternity. Their competitiveness and attention to detail were two things that first attracted me to them, and it’s good to see they are still contending and winning in an extremely challenging category.  

Take a look at this excerpt from a recent Fox Business article

Target is causing a big sensation with a small concept. It’s a mini-store – with merchandise targeted to a specific customer base. And it has taken off. The company just opened its 100th “small-format” store this month, with no signs of  slowing downAnd according to a company spokeswoman, “the sales productivity of Target’s small-format stores is twice our company’s average.”

Smart. Aggressive. Competitive. 

Target is gaining ground on almost every front. Their Internet sales are up at least 25% for five consecutive years now, and 42% in Q1 of this year. They’ve expanded their successful curbside pick-up to all 50 states, a strategy that has pushed sales volume for urban customers higher by five times. They are rolling out a price promotion program called TARGET DEAL DAYS to compete against amazon’s Prime deals. And they recently struck a deal to test Disney merchandise in 25 stores. Revenues for the company are growing steadily, averaging 4% this year (or twice the rate of the economy) and profits and cash flow are strong. Target also raised their dividend by 3.1% this year (about twice the rate of inflation). 

And investors have rightly rewarded them. 

The chart below is a year-to-date comparison of Target, the S&P 500 (the highest performing Average) and the 15-51 Strength Indicator. The mass merchandiser has gained 63% this year through September 13, the S&P 500 is up 20% (the highest average), and the 15-51 Indicator is ahead by 17%. See below.

When you are close to the stocks you own, the companies, brands, stores or services, you should feel as if the management team works for you – because they do. And when they succeed it makes you feel good because you believed in them, invested in them, supported them, and then they rewarded you in return – and that’s the best part of investing. By far. 

So very proud of Target’s management team that continues to hit the bulls-eye, quarter after quarter. Keep up the great work!

Stay tuned...

 The road to financial independence.

The Game Being Played

Dan Calandro - Sunday, August 11, 2019

Ever since the Federal Reserve changed policy positions in late 2018 the markets have reflected the dysfunction in their rationale. Fed chairman Jerome Powell espouses that his policy decisions are “data dependent.” They look anything but. Notwithstanding the agita caused by stock and bond market volatility nothing – and I mean nothing – in the economic numbers warrant the Fed’s decision to change posture from tight to loose and cut interest rates. In fact, anything that has changed in the economy has been slight, irrelevant, and/or positive. 

Here are the facts…

The U.S. economy is consistently growing, and while it is slightly stronger under Trump growth is still uneven (2ndquarter ’19 growth rang in at a 2% clip. Q1 was 3.1%). Obama’s economy averaged 1.9% Real growth during his presidency. Thus far into Trump’s tenure growth has averaged 2.6% per annum, a level much weaker than the tech and housing booms. Those expansions averaged 3.5% Real growth per year. Nevertheless weak and uneven have been economic trademarks of the entire QE-boom, now in its tenth year.

Steadily lower unemployment is being offset by gradually higher labor participation, a positive trend that began in Trump’s first year. The gains are small but consistent, and not a significant deviation from anything experienced in the several years prior.

Wages continue to gain, though ever so slightly ahead of inflation, which has been a persistent theme for many years now. While this metric is extremely weak compared to the prior two booms it is a common trait with this economic cycle. Again, the economic status quo has not been breached. 

And “falling inflation,” the lame excuse the Federal Reserve used to cut rates is not falling at all, averaging slightly better (2.1%) than the Fed’s target (2%) for more than two years now. 

In other words, if some legitimate basis to cut rates exists in the marketplace today then that same substantiation has been present for several years now, and long before quantitative tightening (QT) started early last year (2018). 

By cutting rates this year Powell looks to be questioning his decision to tighten monetary policy just one year ago. He looks confused, scared and unsure of what to do. 

And the markets reacted.

While the move to cut rates without qualifying data is extraordinary in its own right the one-quarter reduction is most unusual because it comes during an economic expansion – the first time in American history. But to use worries of “falling inflation” as the basis for the rate cut is most peculiar. Second quarter 2019 GDP results showed an even higher pace of inflation (2.5%) than the last several years (2.1%) – both above the Fed’s two-percent target. 

Investors need to appreciate the inside baseball being played. It affects all of the investment markets, and therefore, every piece of your portfolio pie. Take your time with this discussion, it is as complex as it is important. I’ll try to make it as simple as possible…

Easing monetary events like the lowering of interest rates have always occurred when trouble was already present in the marketplace (like recession or steep stock market corrections caused by some economic or financial malfunction). But not this time. The early timing of this rate reduction scared institutional investors because it cries out to be a preemptive strike to “soften the blow” of the next financial crisis – one that the Federal Reserve sees as quickly approaching. 

That’s the reason the stock market has been freaking out and safe havens like gold and U.S. bonds have been surging. 

The most outrageous thing about Powell’s pitch for lower rates to cure lower inflation is that higher interest rates, not lower, create more general price inflation because higher interest rates increase corporate operating costs and thus the cost of goods, which ultimately finds its way to consumers in the form of higher prices (inflation). That’s the way the world works, proven again in 2017 and 2018 when inflation finally returned to the Fed’s 2% target only after Janet Yellen started to tighten monetary policy shortly after Trump took office. 

And the most ironic thing about the Fed’s thinking is it assumes that lower interest rates via QE will actually increase market spending to a level great enough to cause general price inflation – something that never happened in the 8 years Obama served as president.

Those that understand the game know that using inflation as the basis to cut interest rates is total BS. 

The reason easy money policies implemented during the QE-boom did not raise general prices in any meaningful way is because the effect of those policies never reached the consumer; they instead remained at the institutional level within Wall Street banks, government spending programs (like healthcare), and the investment markets. Inflation can easily be detected in all three venues. 

If ever a picture was worth a thousand words it is true with the chart below. The period begins with Trumps electoral victory in ’16 and extends through today (actual date noted in red). Take a look, discussion to follow. 

There are a lot of lines in that chart so let’s take them one at a time. Allow your eyes to follow the green line, the 10-year yield trend...Yields jumped immediately following Trump’s election because he campaigned to significantly reduce tax rates for individuals and businesses. Tax savings increase currency available to circulate in the economy, which is inflationary (an impetus to the general rise in prices.) Yields immediately moved higher on that dynamic.

When income to consumers rises so does their spending. An increase to consumer spending is an increase to more than two-thirds (or 66%) of the market economy (GDP). The boost in demand for goods puts pressure on their supply, which can then cause prices to rise. 

To partially offset that dynamic central banks usually raise interest rates to restrain spending, which reduces inflationary pressure to the supply chain. The Fed did this beginning in 2017 and more aggressively in 2018, which also helped push yields higher in those years. 

Fewer taxes paid by consumers and businesses also produce greater corporate profits because more customers spend more money buying more goods (as long as inflation remains moderate). Greater corporate earnings entice investors to sell bonds (which pressures yields to rise) and buy stocks because there is more profit potential in stocks than bonds. (Remember, bond values fall when yields rise.) Those dynamics propelled stock prices to robust heights in ’17 and  ‘18 (blue, gray, and pink lines in the chart above).

A low tax environment in an expanding economy is the best time to raise interest rates and tighten monetary supply. Perhaps that is why Powell placed quantitative tightening (QT) at the top of his priority list as soon as he took office in early 2018. He believed back then, like all other reasonable people still do, that the Fed must reduce the size of its balance sheet and unwind QE. 

But then all of the sudden, and without substantive basis, a bumbling Powell completely reversed course just a few months later when the 10-year yield reached its peak for the cycle, just 3.23% – and still pathetically low by any reasonable standard. Since Powell’s fist major blunder yields have fallen off the cliff, diving 46% and now rest 3% lower than when Trump won the vote. 

Investors should expect yields to continue moving lower because that’s the way the game is being played.  

Gold is a currency hedge, often called an inflation hedge (or a hedge against the general rise in prices.) That is also to say that the value of gold generally trades in an opposite direction as the value of money. 

Price inflation is not strength but monetary weakness because it takes more dollars to purchase the same good. When money is strong, gold is weak, and vice versa. 

Gold is up 17% so far this year and 25% in the last twelve months. Its recent price resurgence indicates future monetary weakness due to inflation (the general rise in prices). It is a trend that should continue based on the new course chairman Powell just charted. 

Stocks still indicate a booming economy (which it is not), averaging a 44% return and 16% per year during the Trump surge (the gray and pink lines in the chart above). Stock market strength (blue line) added 52% or 19% per year, in what has been a wild and crazy stock market ride. However, whatever the moment, peak or trough, stock market prices remain very richly valued. Their pricing multiple to GDP remains near all-time highs. See below.

Despite the stock market’s gaudy returns it is not firing on all cylinders. Two industries have not performed well since the market drifted away from Obama’s control. Energy has taken an absolute beating during the Trump era (-15%, an indication of widespread global weakness), and Industrials (heavily reliant on sales to developing nations) are off fractionally (-2%) but well below-average in this trade war environment. The performance of all industries since Trump won the vote is shown in the chart below.

That is a very robust spread of returns in less than three years. The collection indicates an economy much stronger than the one we are experiencing, perhaps a 4% grower in Real terms. Today’s economy is well off that pace. 

That is inflation by definition, a two-percent grower priced as a four-percenter. 

So in a nutshell the economy is marginally stronger now than it was under Obama, but still uneven; stocks continue to price its underperforming economy at the highest valuations of any boom in history; yields have been volatile but haven’t moved since Trump won the vote; and gold hasn’t showed any life until recently, when Powell revived it in the fall of 2018. 

Yields are indicating dollar weakness (a lower value of money); gold is indicating higher prices to consumer goods (inflation), and stocks are priced high.

So why in the world would the Fed cut rates at this point in time, seemingly caving to the demands of a president they despise?

First some facts about the game being played, stay with me…

Currencies are weakest during times of recession and stock market correction. They are strongest during economic expansion and stock market booms.

Bond values usually decrease (and yields increase) during economic expansions to lure capital from booming stock markets into bonds. Lack of demand for bonds forces yields higher (to incentivize their purchase). Abundant demand pushes them lower.

Interest rates (yields) are normally guided higher during economic expansions to tighten spending and control inflation (the general rise in prices.) Logic expects inflation to spike during times of low interest rates, economic expansion, and full employment because money is cheap and abundant to most people, who are mostly working, earning higher wages, and spending it. 

But that didn’t happen during the entire QE-boom, spanning more than a decade. 

Higher interest rates, like higher taxes, constrain consumer spending (66% of economic activity) which reduces demand-side pressure that could force prices higher. Consider interest a tax on money. When the central bank wants to alleviate inflationary pressures in the economy it raises the tax on money (a.k.a. interest rates) so that less circulates due to its higher price/cost. This follows Ronald Reagan’s accurate assessment, “If you want less of something, tax it.”

When the Federal Reserve cuts the tax on money (interest rates) they want more money to circulate through the system so that it will spur spending and cause prices to rise. But quantitative easing (QE) doesn’t bring about the general rise in prices because it pumps money into the financial establishment (a.k.a. Wall Street) where little, if any, trickles down to individual Americans. 

Another thing to know about interest rates is that rock bottom rates – heck, zero-percent interest rates – cannot and will not stop a recession from happening or add employment to a flagging economy, just as QE cannot bring about a general rise in prices. 

Of course, Powell and his dove-like flock at the Federal Reserve know this. They just don’t care. Their policies have been misguided for a very long time (see: THE FED’S MISPLACED PRIORITY, for more.) The true reason the Fed cut rates at the present time has nothing to do with inflation. 

Here’s the game…

Trump is in a trade war and his adversaries are devaluing their currencies to combat his tariffs. Tariffs are a tax on trade. Interest rates are a tax on money. Trump wants to be the one to levy a tax on his hostile trading partners; and he wants the Fed to level the playing field by neutralizing the easy money policies of foreign nations, like China. 

In short, they are devaluing and Trump wants Powell to devalue to the same level. He wants a level playing field from which to tariff. 

Trump also knows that higher U.S. interest rates will cause rates to rise indiscriminately across the globe – and that that will cause world havoc and speed the onset of the next major crisis. And he doesn’t want to be responsible for that.

Instead Trump would rather inflict targeted pain via tariffs to specific trade violators than to cause wide scale damage that would affect countries with whom he has no issue. China is the focus now.

Trump is in the game, make no mistake. And he’s playing it his way, like it or not. 

And while the establishment is never one to rush to his aid, Trump is a spendthrift like his two predecessors. He just signed a mega-spending bill that will produce another trillion-dollar deficit this year. Big government proponents love that kind of action because trillion-dollar deficits increase Congressional influence over the economy and strengthen their powerbase. 

Congress, too, is in the game. The Trump spending deal is proof positive. 

And, of course, let us not forget that quantitative easing (QE) will be required to fund those government deficits; there is no other way to do so and keep interest rates low – which is a requirement because the rest of the world are devaluing their currencies and posting negative interest rates. As history has taught, QE increases the size and worth of the Federal Reserve’s balance sheet and thus gives them more power, influence and control over the economy. 

The Fed is back in the game. The rate cut along with the promise of more QE are proof positive.—They have to be…

The President is fighting a war, Congress wants to continue spending at twice the level before the ’08 crash, and the only way to fund both and keep interest rates low is to print new money and launder it through the Wall Street establishment via QE. 

The last few rounds of QE have been a 50-50 split between government and the financial establishment (Wall Street and the Federal Reserve), each got half of the money, between five and ten trillion each. 

Can you think of anything more corrupt? 

And with that freshly printed money central governance will takeover another slice of the free-market at the same time Wall Street manipulates the financial markets to steal another significant portion of investor capital. 

They will do so by choreographing the most dramatic investment sell-off anyone has ever imagined, this to scare investors into a panic-selling frenzy to save whatever they can of their retirement accounts. Wall Street firms will be all too willing to settle those trades – you know, to buy low. They make the market, after all.--And they will use QE money gifted to them from the Federal Reserve to fund it.

So the Federal Reserve is actually funding and facilitating Wall Street’s ability to manipulate markets in order to steal investor capital via QE.

Make no mistake, Wall Street is in the game. They broker the deal. 

The need for QE grows exponentially because as logic predicts foreign trade adversaries very active in the U.S. bond market – like China – will slow or stop their purchases of U.S. bonds to force U.S. yields higher and to make the American dollar stronger. Such action would make U.S. goods more expensive in their respective countries and lower demand for them. It’s a trade war, after all. 

The Fed will try to combat foreign actions by printing demand for U.S. bonds via QE to fill their void. 

QE is a ponzi scheme built to grow two things: government and the financial establishment (Wall Street and the Federal Reserve) at the expense of liberty and the free market. 

The game is to make it seem like anything but that. 

The Trade War has now morphed into a full-fledged currency war and at the center of it is QE – the seed of the next major correction – which is the reason gold has rallied, yields have fallen, and stocks look panicked. 

Governments are printing too much money and too much debt, and someday it will come to an inflationary head. A massive devaluation is in the cards. 

Investors must be attentive spectators to the game and how it’s being played. 

Asset allocation is key; cash and gold are safe with massive upside, stocks and bonds hold the most inflation, and the most risk.

Stay alert…

 The road to financial independence.

Nike, Kaepernick, Do It Again

Dan Calandro - Sunday, July 07, 2019

In yet another gross display of managerial incompetence Nike gave its investors another great reason to exit the stock. Their recent decision to pull shoes featuring the first American flag from the shelves during this year’s July 4th celebration is almost as stunning as making former NFL quarterback Colin Kaepernick the face of their brand. It was Kaepernick that convinced Nike to remove the sneakers from circulation because the flag, he believes, is a symbol of racism and hatred towards black people. 

Kaepernick is an ignorant fool, which is the reason he is no longer playing in the NFL. Yet somehow he is in charge of Nike’s political messaging and along with it the great power to control what products get released to market and which ones don’t. 

What has Kaepernick ever done to earn such power and authority? 

It is impossible to understand Nike’s thinking here. Only the oblivious can suggest that the Betsy Ross flag is a symbol of racism. Facts be told the American Revolution had nothing to do with black slavery. That is the reason the text of the Declaration of Independence was crafted so carefully.  Before revolution the Colonies were free to establish their own regulations under British common law, where slavery was legal. The Spirit of '76 wasn't about the north taking on southern values. It would have been futile to try and fight the Civil War at the same time as the Revolution. That was a fight for another day.

The American Revolution was instead about the People of the thirteen original Colonies uniting against a tyrannical, ever-expanding and more dominant central government. It was a fight between a fledgling thirteen-colony democracy against the big bad British Empire, in a battle for independence and self-rule. It was freedom versus oppression inflicted by a distant monarchy. Skin color had nothing to do with it. 

Independence and the right to someday abolish slavery could never have been won without the unification of southern plantation farmers that owned slaves and New England industrialists that found slavery abhorrent. They had to work together – they had to unite – if they were ever to win. 

Ratification of the Declaration of Independence did not happen without much debate. In the end the Colonies unanimously agreed by way of their signatures on the founding document. The banner for that revolutionary edict is commonly known as the Betsy Ross flag, but it is also called the Colonial Flag or the Revolutionary Flag. Whatever the correct name may be the flag is a rallying cry that certain truths are self-evident“that all men are created equal, that they are endowed by their Creator with certain unalienable Rights, that among these are Life, Liberty and the pursuit of Happiness.”

White Americans didn’t sacrifice everything for the black cause until the Civil War was fought almost a hundred years later (1861). The Stars and Stripes, and the truths it represents, won that day too. 

For Nike to spit in the face of all those Americans who believe the Betsy Ross flag is the quintessential emblem of American promise is the worst kind of sin an American business can ever commit. Alienating 50% of the consumers in the world’s greatest market is incomprehensible.

Nike stock is a “sell” in the highest order. Their management team is spineless and bankrupt, deplorable and incompetent. 

Kaepernick, who is adored by the Left wing, is perceived in those circles to be some kind of a hero or martyr for disrespecting our country, her flag, and the national anthem. He rose to fame as a marginal football player in the twilight of his failing career for kneeling during our national anthem to supposedly protest against police brutality. But now Kaepernick has shown his true colors: he thinks the American flag is a racist symbol for hatred towards blacks. That is his protest.

And Nike’s management obviously agreed with his assessment because they pulled the Flag shoes from the market during this year’s July 4th holiday.

Nike’s managers are as dumb as Kaepernick. 

Only fools and anti-American proponents shall remain invested in the stock. The Dow Jones Industrial Average and S&P 500 should immediately eliminate Nike from their market indexes because it doesn’t represent the American market in any positive or legitmate way. Having Nike in their portfolios runs contrary to their objectives. 

That is the reason Nike was eliminated from the 15-51 Indicator portfolio in October 2018 (see: GONE BABY GONE.) Since then investors have proven my choice a good one. Adidas has outperformed Nike by almost 400% since I made the move, gaining 31% versus 8% respectively. See below.

When management does something you hate, dump it. Who cares what everybody else is saying or doing. What you perceive as bad business is bad business. No one should talk you out of it. There’s no good reason to stay attached to a stock that you don’t love. There are plenty of fish in the sea.

America is the largest market in the world because it has the richest and most powerful consumers. Piss on a large number of them and it will be bad for that business, and its investors. Investing is really that academic.

By the way, shortly after Kaepernick and Nike got married adidas announced a new partnership with Beyoncé – and besides being smarter and more talented than Kaepernick, she’s also tougher than he is. 

My money is on her and adidas.

Live free or die broke.

Stay tuned...

 The road to financial independence.

Damn You Boeing!

Dan Calandro - Tuesday, May 21, 2019

GONE BABY GONE highlighted my contempt for Nike’s decision to glorify the unpatriotic action of kneeling during our national anthem with a multi-million-dollar ad campaign featuring the leader of the movement, former NFL quarterback Colin Kaepernick. That was reason enough for me to sell the stock and replace it with German competitor adidas in my 15-51i portfolio. And while I am not one to constantly tinker with my portfolio, nor do I advocate such practice, managerial malpractice has once again called. This time it was Boeing who rang the bell.

Two fatal airplane crashes, one in October 2018 (Lion Air) and the other in March 2019 (Ethiopian Airlines), prompted world authorities to ground Boeing’s new 737 commercial airliner called the MAX. A reluctant U.S. Federal Aviation Administration (FAA) – not an innocent bystander in all of this – was the last to make the decision to ground the MAX.

It smelled rotten from the very beginning.

But Boeing’s stock dropped only 7% in the wake of the first crash, as initial reports suggested it was pilot error that downed Lion Air’s brand new 737 MAX. That shift in blame, from airplane-maker to airplane-flier, allowed the stock to completely reverse that loss in just a few days’ time – despite reports of the downed plane’s irregular movement pattern beginning shortly after takeoff, and insinuations that they were connected to faults in Boeing’s new inflight software system, called MCAS.

But Boeing’s stock continued to shrug off any kind of direct indictment, and in fact, reached a new all-time high ($440) five months after the Lion Air crash, on March 1, 2019. Nine days later, on March 10, news of the second crash broke. And it has been all downhill ever since – and rightfully so. Boeing’s behavior has been as egregious as it has been appalling.

Both crashes were related to the same fault: error prone Angle of Attack (AOA) sensors were not properly programmed to overcome corrupted data. This one malfunction has highlighted systemic managerial flaws within Boeing: Flight manuals were lacking; Training was irresponsibly light; Communications were inadequate, inept, and at times corrupt.

Investors should take notice...

Boeing had a glitch in their software that when AOA sensors sent bad data to the autopilot system it was used to maneuver the plane in an attempt to correct a problem the plane didn’t have. Their new software should have discarded, bypassed, or alerted pilots of the inconsistent data being sent by AOA sensors. But it didn’t do that. Instead it used the bad data knowing it was bad.


And to make matters worse Boeing’s new MCAS software was dialed-in so strongly that it was impossible for pilots to take control over the plane even while knowing that AOA sensors were malfunctioning.

Imagine being a skilled pilot incapable of wrestling the plane away from a pre-programmed doom – all because Boeing rushed a new model to market and bought the government’s approval to do so. How else could such a thing happen in this day and age?


And it gets worse…

Additional safety features critical to override erred sensors, which had been standard equipment with every other version of the 737, were not included with the base model of their new 737 MAX.

Imagine that, with Boeing’s new MAX model vital safety features were offered as options and sold as upgrades. In other words, the brand new MAX jet came with minimal safety features.

Would love to meet the brain surgeon in marketing who thought of that.

Boeing has been such a disappointment that it hurts to watch. For instance, it was recently discovered that Boeing changed its development process with the MAX to dramatically minimize or eliminate the role of their test pilots during the final stages of development and delivery.

Can’t imagine a good reason for that.

And still it gets worse…

Somehow Boeing – the perennial airplane maker in the world, mind you – failed to communicate to Southwest Airlines that AOA sensors were not activated on their new MAX jets. The Southwest planes had the AOA sensors, of course, as all planes do. But they just weren’t connected to Boeing’s new inflight software system.

So the sensors were there, but not hooked up. Hook up was extra, and Southwest didn’t buy it because they thought they had it – for two years!


Investing is an extremely personal thing when you make them part of your life. You get to know them in a personal way because you experience them as you watch them compete in the global marketplace. Market experiences, perhaps the best way to assess value and managerial competency, accumulate over time and strengthen the relationship you have with your investment dollars. So it feels great when they make you proud.

But it hurts like hell when they disappoint you.

I am a frequent flyer on Boeing airplanes and have flown on the MAX jet with the largest buyer of that model, American Airlines, who thankfully purchased the safety options for all their planes. If I owned an airline stock it would probably be American because I fly it more than any other brand and like the way they do things. Their attention to detail in the aircraft can be tied directly to their managerial offices – who knew that safety wasn’t standard with the MAX model and worth every penny of its option price. I salute the diligence of their entire organization and their commitment to passengers like me. Shareholders of American Airlines should be very proud of their company today.

Owners of Southwest should be very skeptical of theirs. How could they not know that critical safety features were not included with their new MAX airplanes?

And then there’s owners of Boeing, who should be as angry as a stuck pig because something we thought we knew so well let us down in the biggest and worst kind of way. Our beloved airplane maker put money ahead of safety and threw caution into the wind.

Damn you Boeing!

The managerial weakness displayed by Boeing proves it is no longer fit to be included in a portfolio built to indicate stock market strength. As a result, it has been removed from the 15-51 Indicator(15-51i) as of May 6, 2019.

And while it can sometimes be difficult to replace a partner that has been so profitable for so long, that wasn’t the case with Boeing. My first instinct was to replace it with United Technologies (UTX) and I stuck with my gut.

You may recall that UTX was an original member of the 15-51i portfolio. It was eliminated in 2015 not because of anything it did or didn’t do, but because I needed to make room for Apple, which rejoined the portfolio when it was added to the Dow Jones Industrial Average. A move had to be made in my Technology allocation and either it or Boeing had to go. Boeing won the day back then because I had a closer connection to its products. That was then. Bad management has now disqualified it.  

Boeing and United Technologies service the same markets, differently, and generate revenue from the same spending classes – and both are Dow components. Together these characteristics helped my portfolio maintain the same level of connection to “the market” as it had with Boeing.

Familiarity, solid management, and a long track record of success made the change easy to make. UTX was simply a good fit.

So a new chapter in the history of the 15-51 Indicator™ begins, and that’s always a good time to review the entire portfolio scheme – especially because it hasn’t been performing as strongly as I expect, and demand. And while it remains a dependable above-average performer, the 15-51i portfolio is not without its flaws. Its year-to-date performance speaks for itself. See below.

Ironically the biggest portfolio of the bunch, the S&P 500, is the best performing so far this year; it’s up 14%. The Dow Average has gained 11% and 15-51i Strength has added just 8%. And while eight-percent is a legitimate five-month return I am way too competitive to be happy with a below-average trend, regardless of ROI.—And while I wish I could blame all of my performance woes on Boeing, I can’t…

United Healthcare began to correct just two days after THE FAILURE OF OBAMACARE SHOWN IN ONE STOCK was posted in the midst of an ever-expanding MEDICARE FOR ALL movement. Before that 3M disappointed with a big earnings miss and lowered expectations for its future. It has been the biggest loser in my 15-51i portfolio this year, down 11%. Wells Fargo and Honda Motor Co. haven’t lost much this year but their persistent lack of performance is starting to annoy me. All four stocks are under review.

But I’m not going to make any more changes right now…

Pricing anomalies always occur, especially in the short term, where larger portfolios can outperform smaller ones. While those abnormalities are infuriatingly possible, they’re not worth obsessing over as long as your portfolio continues to achieve long-term objectives. And mine has.

Remember the purpose of the 15-51 Indicator is to indicate how stock market strength is performing, not stock market greatness. It produces above-average results, not great results, because it is an above-average portfolio, not a great one. That’s why I can live with a few underperforming stocks and still succeed.

The 15-51 Indicator is a successful portfolio because it consistently delivers on its dual objective mandate: market-like movements and superior long-term performance as compared to the Market Averages, which it does reliably. See below.

In the eight-years since publication the 15-51i has produced an above-average 209% (or 27% per year) return on investment compared to the Market Average[1] of 109% (or 14% per year). Long-term success, and because industry allocations remain close to targets, are why I am comfortable not making any additional stock moves at this time. There’s plenty of time for that.

Right now it’s strictly United Technologies for Boeing – because any CEO thinking safety isn’t standard equipment is not worth the risk of investment.

Stay tuned…

  The road to financial independence.

[1] The Market Average is the average of the DJIA and S&P 500.

The Failure of Obamacare Shown in One Stock

Dan Calandro - Sunday, April 07, 2019

The only reason the whole MEDICARE FOR ALL thing has any mojo is because there’s something seriously wrong in the healthcare and medical insurance markets. The Affordable Care Act only exacerbated the faulty pre-existing condition of those markets. The law misplaced billions of dollars to no avail while screwing taxpayers, consumers, and service providers in favor of freeloaders, bureaucrats, and insurance companies.

Let’s start with some basics…Governments control markets through laws and regulations, tax policy and interest rates. Their policies change Market conditions and dynamics, and thus affect corporate performance and stock prices. This can be evidenced by showing how the healthcare insurance market performed while operating under the Affordable Care Act (a.k.a. Obamacare). Allow me to demonstrate…

The Affordable Care Act was rammed home for Christmas in 2009. And although it began taking effect in March 2010 the law was implemented in phases, with the first significant stage arriving after the law cleared courtroom challenges in 2014. You may recall that the law was advertised to save families on average $2,500 per year – a fallacy only Kool-Aid drinkers could possibly believe at the time – as it is economically impossible to expand demand by tens of millions under level supply and effectuate lower prices. Reality just doesn’t work that way.

It is equally obvious that it is impossible to lower healthcare costs to consumers (or make them more “affordable”) when a main intention of the law was to raise deductible limits and co-pays. Obamacare demonized low deductible and nominal co-pay policies as “Cadillac plans” and either made them illegal or entirely unaffordable. Such action had no choice but to raise costs to individuals.

The Affordable Care Act was a fraud from the very beginning – proof of which can be seen vividly through a stock market comparison. Four trend-lines appear in the chart below: United Healthcare (an indicator of the healthcare insurance market), the 15-5 Indicator (indicating stock market strength), the Dow Jones Industrial Average (representing the stock market average), and GDP (which is the actual market economy, or the total of all markets). The time period covered in the chart begins with the enactment of the Affordable Care Act (ACA) in 2010 and extends through today. It’s a nine-year period. First the picture then the analysis.

The bottom green line is GDP, which besides the economy, can be viewed in this exercise as the actual base price of all goods. It grew 41% during the nine-year period, or 4.5% per year. Of that number 2.4% was growth and 2.1% was inflation. In other words, Real annual growth was 2.4% and average prices increased 2.1% per year. Remember that, actual prices up 2%.

The Dow Jones Industrial Average is a stock market indicator of the economy (GDP). Consider it also the average price and the average movement in price. It grew 147% during the Obamacare period, or 16% per year. Or put another way, the average inflation rate of stocks was 16% during the ACA era, because inflation is defined as the general rise in prices.

The 15-51 Indicator produces an above-average price trend because it is comprised of higher performing stocks in higher performing industry segments. It posted a 377% nine-year return, or a stunning 41% per year. Consider it also a premium-pricing index for quality brands of goods and services. That is to say premium prices rose at a rate 2½ times greater than the average (41% versus the Dow's 16% per year).

Healthcare, via United Healthcare (UNH), posted an eye popping 763% inflationary gain over the nine-year Obamacare period, or 83% per year – an amount twice the 15-51 Indicator’s premium price performance, and 5 times greater than the Dow's average price increase. Take a look again.

Healthcare inflation is so far out of whack from everything else in the economy the Affordable Care Act should be repealed based solely on that condition. The chart above tells that story vividly, as the United Healthcare trend illustrates the jump in healthcare costs to consumers for premiums, co-pays, and deductibles, as a result of the disastrous Obamacare legislation.

But it gets worse.

In the year prior to the enactment of the Affordable Care Act (2009) United Healthcare’s net profit was $3 billion. Nine years later (2018) their bottom line quadrupled to $12+ billion. See chart below.

The Affordable Care Act did that.

And investors should have expected it.

My blog entitled, SUPREME LETDOWN, was posted after the Supreme Court’s first horrible decision to uphold the corrupt Affordable Care Act – corrupt because it had no choice but to defy its name and dramatically raise the price of healthcare to consumers (those who pay for insurance and care). It also had no choice but to stuff money into the pockets of insurance companies because besides lifting deductibles and co-pays for consumers the law also provided for greater government subsidizes of healthcare insurance to a greater number of persons.  

In other words, prices to consumers increased dramatically at the same time government contributions (subsidies) also skyrocketed. That dynamic flooded the system with an abnormal amount of profit (as can be seen in the charts above), which is what inspired me to close the aforementioned 2012 blog with, “The ‘healthcare boom’ starts today – and that includes price inflation.”

United Healthcare was added to the 15-51 Indicator™ in 2011, after it rose 57% in 2010.

Like LETDOWN, blogs like THE FARCE OF MEDICARE FOR ALL and AMERICA NEEDS TO WAKE UP are policy driven blogs. Understanding the connection of government action to stocks is the best way for investors to be ahead of “the market”, maximize opportunities and minimize risks. Party politics mean nothing to investors. Public policy matters greatly.

Free-market capitalism produces greater long-term investment results than any other market model. Policies that denigrate it corrupt markets and drain incentive, wealth, and individual liberty from the marketplace.

Many on the political Left erroneously paint all free-market capitalists as anarchists – those who advocate a total lassie faire government approach to enterprise. Nothing could be further from the truth, of course, as even the most ardent free-marketeers believe in the need for government involvement for veteran and senior citizen healthcare. The government must have a role in healthcare, but it must be measured and limited in scope (my recommendations start here.)

Those who stand against the Affordable Care Act now do so not for political reasons but because it has proven to be as fraudulent as much as a failure. It made healthcare more expensive to all and did little more than stuff more money into the pockets of administrators and insurance companies. It broke a broken system even worse, and by so doing fueled a movement for a complete government takeover of the entire industry, i.e. MEDICARE FOR ALL.

The healthcare and according insurance market are a failed socialist system and should be labeled as such. Calling it a capitalist or a free-market failure is blasphemy. There is nothing free about those two markets. Obamacare made certain of it.

The unmitigated success of United Healthcare in the Affordable Care Act era is the most glaring indictment of Obama’s deteriorating legacy. His law made insurance companies richer on the backs of the small business owner and middle class worker. 

The answer is not more government but less. United Healthcare is proof positive.

Stay tuned…

 The road to financial independence.

The Farce of Medicare For All

Dan Calandro - Tuesday, March 19, 2019

It’s a shame that the word stupid is no longer acceptable in America today. The unfortunate results, of course, are more stupidity and stupidity on a much grander scale. MEDICARE FOR ALL is a prime example. The GREEN NEW DEAL is another. The economics for both is so absurd they are impossible to initiate let alone sustain, and their ideological support is as fraudulent as it is corrupt. Ditto for their advocates, who are not the socialists they advertise to be. To prove this, let facts and honest assumptions be submitted to a candid audience…

According to industry data collector Medical Group Management, 84% of all Medicare payments made to healthcare providers fail to generate a profit for the facility – and 67% (or two-thirds) of all disbursements are below the providers’ actual cost for the services. In fact, it is estimated that Medicare payments average just 20 to 30 cents on the service dollar.—In other words, Medicare providers average just 25¢ for a healthcare service that retails for $1.

The most basic reason MEDICARE FOR ALL is doomed to failure is because it eliminates the single thing that allows Medicare to exist in the first place – the free-market.

Many Americans don’t appreciate that the current Medicare program is already a socialist system, because within it is a wealth redistribution scheme that favors certain people (Medicare recipients receiving retail-priced services at far less than market rates) over others (individuals paying more than market rates for their services to accommodate the shortfall in Medicare funding.) A lurch to the Left from here, i.e. MEDICARE FOR ALL, is to transform healthcare from its socialist form into a communist one – because it represents a complete and utter takeover of the healthcare industry by central government. It is the epitome of communist statism.

Americans should know better than anyone that nothing is as effective or efficient at satisfying consumer demand than the capitalist free-market system. Free-markets are driven by profit and return on investment (ROI), which is the overriding incentive for investors to place capital at risk to deliver quality, value, and adequate supply to markets. Care is better and more abundant when there is profit in it. Without profit potential quality is scarce and supply is limited. Only a communist would disagree.

Governments are cesspools of waste, fraud, and abuse because they are driven by politics and not profits. ROI means nothing to them because the word profit is nowhere in their vernacular. Governments spend money (as opposed to capitalists who invest it) and therefore have no profit incentive, and thus no reason to produce an abundance of great quality care. Efficiency, profit margins, and short lead-times don’t matter to them. The only thing that matters to governments is that all people receive the same level of mediocrity.

And that is why statism, which many now call socialism but is better described as communism, has always failed in the annals of history – because without the incentive of profit both quality and quantity (supply) shrink drastically. Investments in research and development for new cures and treatments are the first to go under bureaucratic spending constraints. Wait times increase in short order. And then care is rationed. MEDICARE FOR ALL is the best way to import Cuban healthcare into America.

The shift to communist takes time, in a move Marx described as a slow and methodical transition from the private ownership of industry (capitalism) to a shared arrangement between enterprise and government (socialism) before the State could finally take full control over industry and the entire means of production (communism). The conversion could take several generations to take root, as free people don’t give up their rights easily or quickly. Citizens had to be lured in…

LBJ started Medicare in 1966 and tied it directly to FDR’s Social Security Act. It began by covering only a small section of the populace: retired wage earners drawing Social Security – at the time 19 million people, or 10% of the population.

Today the program covers a wider demographic of people (not just Social Security recipients), more treatments, and serves a greater portion of the population – 58 million people, or 18% of the population.

MEDICARE FOR ALL – a huge part of the Democrats’ 2020 campaign platform – intends to add 267 million more people to the government roll.

Let’s examine just how asinine and corrupt the MEDICARE FOR ALL concept truly is. Asinine because it can’t work, and corrupt because those pitching it know it.

According to the Office of Budget and Management the U.S. central government disburses $1.1 trillion per year for Medicare and related healthcare programs. But we already know that is a deeply discounted value (20-30 cents on the dollar). In order for a self-righteous government to pay their “fair share” and entirely fund their expense obligations Medicare should actually be disbursing $5 to $6 trillion per year at the present time – this in order to maintain the same level of industry investment in quality and supply – otherwise both will suffer dramatically. That’s six trillion with a “T” dollars.

Right now the central government spends $3 trillion per year on all other non-healthcare programs, including defense. That amount, added to the true economic value of Medicare today, adjusts today’s government budget to $9 trillion per year – more than double where it stands today – and produces a massive $6 trillion annual budget deficit.—And that’s just for Medicare as it is today, covering just 58 million people.

MEDICARE FOR ALL would include covering the other 267 million people contained within America’s borders. The cost of covering 4½ times the amount of people, who in theory are younger and healthier, is at least equal to the cost of today’s Medicare due to the sheer size of the population. Add those costs to an already impossible to finance $6 trillion budget deficit and what you have is a government program impossible to fund and sustain.

And so Democrats have already begun calling for higher taxes. Alexandria Ocasio-Cortex – the Boston University economics graduate (which tells you something scary about modern American education and the worth of a $250,000 degree) – thinks a 70% income tax rate is enough to cover all government spending programs including her GREEN NEW DEAL. Bernie thinks a number closer to 90% would be enough to cover the nut. Me?  I don’t see a chance in hell that either rate could even come close.

Look at it this way…

The Trump tax cuts lowered the highest federal income tax rate to 37% from 39.6% . On top of that the “rich” also pay 2.4% Medicare tax on all of their wages. To make the math easy let’s round the sum of those two taxes to 40% for individuals. Trump also lowered corporate income tax rates to 21% from 35%. Under that scheme the central government received $3 trillion in tax revenue last year – not nearly enough to pay for Medicare today let alone MEDICARE FOR ALL.

So to cover the shortfall let’s say that central government doubled tax rates to 80% for individuals and 42% for corporations. Doing so would theoretically double tax revenue to $6 trillion – which still wouldn’t be enough to cover the retail cost of Medicare today. At twice the tax rate a $3 trillion annual deficit would still exist, each and every year.

So let’s say that government finds a way to actually triple tax rates to an impossible 120% of individuals’ earnings and 63% for businesses. Such a condition would in theory produce three times the tax revenue, or $9 trillion – and low and behold the federal government has finally balanced the budget – but that’s with Medicare as it stands today! MEDICARE FOR ALL places an additional 267 million Americans onto the Medicare rolls (not to mention all the asylum seekers flooding in from across the southern border looking for a free piece of the American pie), which represents an economic value worth at least another $6 trillion in funding per fiscal year. Where will that money come from?

“The problem with socialism is that sooner or later you run out of other people’s money.” – Margaret Thatcher

Certainly Bernie, AOC, and all other Democrats running for president understand this basic math and the obvious lessons in history and Venezuela.

Another thing many Americans don’t appreciate about socialism is that it is for the people, not the socialists. Socialists make laws that ordinary people must live by (Obamacare and Medicare) or be mandated to participate (i.e. Social Security) but they (Congress) are exempt from them all. Pedestrian social welfare programs are for ordinary people. Ruling class elites, the socialists, get something much better.

For example, I have been waiting six weeks to receive a cancer related treatment. Does anyone think former Senator John McCain, who voted against repealing Obamacare, ever waited more than a day for a cancer related service?

Of course not. The socialist gets the best of everything and ordinary working class folk get what they get – stiff premiums, huge deductibles and co-pays, smaller networks, and six week lead times. Again, socialism is for us, not them. Socialists live a very different, privileged life.

The greatest threat to modern day Americanism is that no one effectively communicates how the free-market works or how to make it work better in the healthcare industry. That conversation should begin with defining the appropriate role of government in healthcare. And to me that it is as obvious as it is logical.

1)    Until central government can adequately fund Medicare as it stands today they have no right trying to expand it.

2)    Ditto for the VA. Until government proves that they can clean up that mess and produce something affordable that every soldier wants, they have no standing to take on larger role in the Healthcare Market.

But we also know that Obamacare is a disaster and the condition prior to it was entirely unacceptable. The sad part of this whole story is that free-market proponents must rely on an inept Republican Party to beat back the communist movement. After failing to repeal and replace Obama’s treacherous healthcare law they have dropped the effort altogether, and once again are on their heels fighting against MEDICARE FOR ALL without a viable alternative. What an embarrassment.

The idea of MEDICARE FOR ALL is grand utopianism. It must be exposed as the pipedream it is (see above illustration) and then defeated with a legitimate free-market solution that will work, and that people can easily understand.

They need slogans and short one-liners that supporters can rally behind. The first item on the counter-agenda should be to gradually increase the amount Medicare payments contribute to their actual costs. In other words, Government should start paying their fair share.

Who can’t appreciate that?

Such a move would dramatically lower insurance premiums and retail costs for all other non-Medicare patients. Easing that burden would act like a tax cut and help boost other segments of the economy and tax revenues. But the effort can’t end there.

Pricing throughout the industry is in complete disarray. For instance, it is not uncommon for the same service, to the same person, performed by the same provider, to have many different prices. Put another way, today there is a different price for John Doe the individual, John Doe the union member, John Doe with insurance, John Doe without insurance, John Doe the government worker, John Doe the politician, Rich John Doe, Poor John Doe, etc. etc. For every John Doe there should be only one price for the same service by the same provider.

Fixing the pricing dilemma would go a long way to lowering healthcare costs for all – a key objective left unfulfilled by Obamacare – and another great rallying cry. Twelve more such policies are listed in my 2014 blog, Gruber Acknowledges Supreme Letdown, which are geared to expanding healthcare coverage, maintaining quality and lowering costs to consumers.

America needs to check a bearing.

“Those that fail to learn from history are doomed to repeat it.” – Winston Churchill

It is important to remember that Bill Clinton was the first to try nationalizing healthcare with his Universal Healthcare Plan in the 1990’s (some called it HillaryCare back then.) Obama got something done 14 years later with the Affordable Care Act (a.k.a. Obamacare). That was just another step forward in a Marxist movement now concealed under the label MEDICARE FOR ALL.

Self proclaimed Democrat “socialist” Alexandria Ocasio-Cortez (AOC) submitted another communist initiative to the U.S. House of Representatives earlier this year. The objective of her GREEN NEW DEAL is clear: to do away with fossil fuels in ten years and replace it with a “renewable” source of energy that U.S. federal government will own and control. It represents a takeover of the entire energy industry by central government.

AOC, defined by the policies she advocates, is a communist. Labeling her a socialist is fraudulent.

The GREEN NEW DEAL calls for every single building in America to be retrofitted to carbon neutral. Think of the amount of people it would take to achieve that feat in such a short amount of time (10 years.) Add to it the government personnel required to monitor, supervise, and inspect the massive project. Then think about how much it would all cost. Add that number to the $6 trillion deficit already incurred by MEDICARE FOR ALL after a 120% income tax rate has already been levied.

Pie in the sky policies like the GREEN NEW DEAL and MEDICARE FOR ALL sound too good to be true because they are. They have no possibility of achieving their stated objectives because government will run out of money long before. But then again those programs aren’t about achieving their stated objectives. They’re about the government taking full control over the entire U.S. economy. MEDICARE FOR ALL and the GREEN NEW DEAL are simply a means to that end.

The communist movement must defeated here and now starting with a repeal of Obamacare – because without it MEDICARE FOR ALL has no standing. If not a raw deal regarding energy is soon to follow.

The death of Liberty is not far behind.

Help spread the word. It’s our only chance.

Stay tuned…

 The road to financial independence.

America Needs to Wake Up

Dan Calandro - Tuesday, February 19, 2019

So it has been one year since the stock market first started acting crazy. Back then new Federal Reserve chairman, Jerome Powell, had yet to start his first day in office. And even though Powell was billed to arrive on the same long-term page as his predecessor, Janet Yellen, he has since ripped that page out and shredded it. In the fourth quarter of last year (2018) Powell completely reversed the Fed’s course in posture, policy, and rhetoric – and that is the big story in the investment markets today.

Powell came into office determined to implement a plan that Yellen devised but had no will to deploy. Advertised to be gradual and consistent, her plan called for a series of interest rate hikes over the course of years that were to be accompanied by an equally measured monetary tightening program to unravel the new currency injected into the system during the last crisis via quantitative easing (QE). Yellen, of course, never found the internal fortitude to unwind QE even though it was long overdue. And Wall Street loved her for it. (Bankers love easy money.)

But Powell appeared to be different. He spoke as if he was brave enough to actually do it. And so Wall Street sent him a huge message on his first day. You may recall that stocks tumbled a whopping 4.4% on that day, February 5, 2018. Wall Street's statement to the Fed’s new leader was clear – Back off with monetary tightening (QT).

But Powell didn’t flinch. In the months that followed he displayed the nerve that Yellen didn’t have. He raised interest rates four times and drained some $600 billion of QE money ($50 billion per month) from the system in 2018 – a sizeable amount by any measure. Even so, and if not for investment market volatility, the effects of this monetary tightening have been impossible to notice.

But now, just one year into a long and overdue tightening program, Powell slammed the brakes and ended the effort indefinitely. Why?

The Fed acts not because it makes sound economic sense or because it is good for America, but to advance the establishment’s big government agenda – because they are part of it. They benefit from it, and gain more power from it. Sure they have tons of great rank and file workers there. But the Brass are nothing short of lifetime establishment operators. They serve and protect the establishment, not We the People. Make no mistake.

For example, contrary to everything Powell said for the prior ten months he halted the quantitative tightening (QT) program and placed the Fed on a “neutral” bias, which he defined as a pause until future data dictates action, which suggests that most of the work has been done and that market fundamentals did not warrant further tightening, and that the Federal Reserve’s balance sheet had returned to normal.

Nothing could be further from the truth and reality.

First, unemployment is the lowest in modern history and labor participation is finally starting to increase. A normalized unemployment rate was an objective of QE, which was satisfied 7 years ago, and remains low today (4%).

Second, the economy has fully recovered from recession, returning to growth almost 9 years ago (2010). It has grown steadily since and is now pacing at 3% per annum. Objective satisfied.

Third, yields remain historically low (2.6%) – even after interest rates were raised four times in the most recent year and $600 billion of bond liquidity was removed from the market – without negatively affecting the economy one iota. Satisfied.

And fourth, inflation finally reached the Fed’s target two years ago and remains near 2%. Of course, if the Fed had raised rates earlier in the cycle inflation would have returned earlier in the cycle. That epitomizes the farce of keeping QE alive better than any. (More on that in a bit.) Nevertheless, QE’s inflation objective has been met.

If not now then when shall the Federal Reserve remove the remaining $3.5 trillion of excess liquidity and return its balance sheet to pre-crisis levels?

The answer is never. When every objective has been met, no further action is required. That’s where Powell now stands.

By halting QT the Fed has just announced the new normal size of its balance sheet is 4½ times larger than it was 10 years ago, representing an amount equal to 25% of the entire U.S. economy. In other words the Federal Reserve grew by 450% in 10 years, or 45% per year for a decade.

Am I the only one alarmed by that?

But here’s the real danger…

Several Federal Reserve governors including chairman Powell have recently advocated using QE for non-crisis purposes in non-crisis environments. In other words, QE is no longer a mechanism to save banks or the monetary system (their one and only job). But now the Fed can use it for any reason it deems “important.” This is not a new concept, of course, Yellen first mentioned it two years ago, but it’s starting to gain widespread traction.

Put another way, should the Federal Reserve decide to employ QE in order to fund the Green New Deal then that would be okay.

What gives them that kind of authority, that kind of power?

Quantitative easing (QE) is emblematic of how corrupt the U.S. establishment is these days. It was originally devised to bail the banks out after the subprime mortgage debacle (’08). Once through that (‘09) QE became about keeping interest rates low until the economy exited from recession. When that objective was satisfied (’10) the purpose for QE became about correcting unemployment. When that corrected (’12) QE was now charged with doing something that it could never actually do – raise the inflation rate in the economy.

In other words, the Fed kept changing QE’s objective to substantiate keeping the program alive. Not because the economy needed it but because they wanted it to serve a larger big government agenda. That’s the real danger with today’s Federal Reserve. Like central government the Fed is too big, too powerful, and now they’re getting too bold, too radical, and too corrupt.

Four things to know about quantitative easing (QE):

1)    QE was devised to keep yields low while the Federal Reserve funded central government deficits and Wall Street losses. Remember, banks were failing and the economy was shrinking when QE was invented. The Fed printed new money to bailout Wall Street banks and fund Obama’s big government agenda (the solution to the Great Recession). Keeping interest rates low was an objective to make it cheaper to fund trillions of the new debt that government deficit created. So the Federal Reserve printed trillions of new money and demanded Wall Street use 50% of if it to purchase U.S. Treasury securities (government debt & deficit). The Federal Reserve did this not because it was good for the American People, because it wasn’t, but instead to fund an irresponsible and feckless establishment government. Remember Solyndra?

2)    QE did not cause inflation in the economy because the money never got to the consumer. Instead the money stayed at the institutional level, with most of it caught up in the wasteful bureaucracies of banks, governments, and unions. With QE the Fed didn’t just fund government deficits but also trillions of Wall Street losses fueled by the subprime mortgage debacle. Funding prior losses does nothing to benefit a current economy. These explain the modest inflation rate during the entire QE era (1.5%).

3)   Wall Street had great leniency with the other half of QE money not earmarked for U.S. Treasuries, so it should be no surprise that a very nice chunk of it found its way into the stock market. That is where you can see the inflation that the new money created. The 15-51 Indicator gained 308% since economic recovery, while the economy gained just 22% in Real terms, and the 10-year yield fell 31%, from 3.9% to 2.7%. (Think about that for a moment: U.S. government issued $10 trillion of new bonds and rates actually went down by a-point-and-change.) See activity below.

4)   QE produced three things: a) a massive and global sovereign debt balloon; b) a highly inflated stock market bubble; and c) a weak and uneven economy.

The reason the effect of the $600 billion in QT (quantitative tightening) was barely perceptible in the economy is because the money was removed at the institutional level – from the Wall Street establishment. And let me tell you they weren’t very happy about it. So they sold stocks off at the institutional level and caused havoc in “the market” to make it look as though the world was coming to an end so that Powell would take notice and hopefully change course.

And the weak-kneed Fed chairman caved.

Powell’s either a coward or just another corrupt establishment politician, or both. But forget about that for a second and take it from someone much more eloquent than me. Brilliant economist Ludwig von Mises said it this way back in 1973,

“There is no means of avoiding the final collapse of a boom brought about by credit [debt] expansion. The alternative is only whether the crisis should come sooner as the result of voluntary abandonment of further credit expansion [QT], or later as a final and total catastrophe of the currency system involved.”

In an interview Powell once said that there was a period in his life that he was “obsessed with currency.” Surely he must have read Mises at some point in his career. Powell knows a catastrophe is coming, and he knows that tighter U.S. money was pushing it along. And isn’t it only natural to want to blame someone else for it, and if you’re an establishment guy, who better to blame than Trump?

Wasn’t it truly breathtaking to see how vulnerable China’s economy actually is, and how fragile we all knew Europe was. Growth was coming to a swift halt over there and both have huge political issues to deal with – not to mention their own QE situation to deal with, which is much worse than ours. Overseas markets were trembling and on their way to crumbling when Wall Street sent Powell a few 4th quarter flares. Hey dude, look over there, it’s time to back off.

And so he did. After all, why put himself through this kind of aggravation? If the next disaster is sure to come, and in fact was fast approaching, then why not slow it down a bit? Trump was very vocal about his desire for the Fed to stop hiking rates so fast. Powell could say he simply accommodated the president. So why not serve the next meltdown to Trump on a silver platter as he stands for re-election, where a corrupt media is sure to blame the anti-establishment candidate over anyone else?

Halting QE was purely a political move. Again, it had nothing to do with the domestic U.S. economy, which had long since recovered, and would have benefited greatly by higher yields and interest rates.

Foreign nation priority has long been a problem with Federal Reserve policy. They continued to employ QE and not reverse it because it was serving a bigger government global interest above any American interest. It wasn’t good for the American citizen or the cause of Liberty. It was globalism – socialism on a global scale.

Ronald Reagan once said, “Freedom is never more than a generation from extinction. We didn’t pass it to our children in the bloodstream. It must be fought for, protected, and handed to them to do the same.”

That fight is in full force right now. America needs to wake up because We the People are losing the battle.

Think of how corrupt the government and Deep State are today. What Obama and the FBI did to Trump during the 2016 campaign is much worse than anything Nixon did with Watergate. We should all reject that.

Fast and Furious would have sunk a Republican president but Obama and Holder didn’t even get a slap on the wrist. We all should reject that.

The real conspiracy with the Russians is with the Clintons but the FBI is falsely trying to use it to remove a duly elected president from an opposite Party. We all should reject that.

And now the Federal Reserve is using monetary policy to sink that same president, while destroying the American ideal in the process. We all should reject that.

Think about it this way… Banks were essentially nationalized when they were bailed-out in ’08. At the same time U.S. central government took title control of over $6 trillion of American land via the takeover of Fannie Mae and Freddie Mac. Obama began the takeover of the healthcare industry with the Affordable Care Act in 2010, and the next subprime mortgage disaster is brewing now with student loan debt, which now exceeds $1.5 trillion. It’s only a matter of time until defaults rise to a level that requires taxpayer-funded bailouts. And then it’s game, set, and match.

Any good communist will tell you that the easiest way to control people is by controlling money, housing, healthcare, and education. Their demise usually begins in earnest once they take control of energy, i.e. Russia and Venezuela. (hello, Green New Deal).

The cause for Freedom is losing because too many Americans are caught in a tizzy between Haters and Deplorables, and the politics of walls and tax cuts. Distracted by nonsense the American people fail to tackle important issues that greatly affect the future, like addressing the gross level of reckless spending that exists at every level of government, defining the appropriate role of government and how to reel in a runaway Federal Reserve, and addressing the failure of the U.S. educational system, which Alexandria Ocasio-Cortez (AOC) symbolizes so well.

Divide and conquer is an often used political tactic. The Two Party System employs it daily in America, and they use it effectively to divide the populous by incubating hatred between two schools of thought. And so we argue about a $5 billion wall when we have a $5 trillion problem with the Federal Reserve.

The establishment is winning because corrupt central governance is getting bigger and more economically domineering, and more powerful. Consider that Congress spends $4 trillion per year and the Federal Reserve’s net asset value is $5 trillion, together worth near 50% of the entire U.S. economy. 


Investors need to be patient and aware. The free market is shrinking and stocks and bonds are still high. There will be an opportunity to invest big in them but the Federal Reserve has just delayed it. Gold is getting into position to run.

Stay tuned...

 The road to financial independence.

If It Walks Like a Duck

Dan Calandro - Monday, December 17, 2018

Trade war. No trade war.

Trade war. Truce.

Brexit is on. Brexit is off.

Theresa May’s government looks to be falling apart. Wait a minute, she held on.—But now what?

This just in…newly released data shows economic weakness in China is accelerating – and in Europe too. Oh my God – what happened?

First things first, none of this is new news. Economic problems overseas have existed for a long time and have appeared many, many times in these blogs. The earliest they appeared here this year was in February’s feature, LURKING IN THE WOODS, followed by ECONOMIC WAR in August, and then again in TOMORROW’S LEHMAN BROTHERS in September, not to mention last month’s piece AGITA.

Of course we can go back even further to THE MILLION DOLLAR QUESTION (posted in January 2017) that highlighted problems overseas and connected them to government policies that were projected to be in effect today (and which are). That piece also quoted my whitepaper SURVIVING THE NEXT CRASH which was posted in January 2015. —And who didn’t know from the jump that Brexit negotiations were going to be extremely messy in a long and drawn out process? KUDOS TO THE BRITS! was posted at the time the British vote was cast in June 2016.

You may also remember it was back in August 2017 (THE BEGINNING OF THE BEGINNING) that I first declared we have entered the next corrective cycle. It was at that time the Federal Reserve announced it was set to begin unwinding quantitative easing (QE). In other words, the easy money era was ending. That, in my opinion, was “a game changer” that would soon be reflected in the stock market. And while it took a while to transpire evidence began to appear few months later, in January 2018. Below is a chart that shows stock market activity since that blog was posted.

Those who appreciate the global Market condition and how it impacts “the market” and their investments rarely get shaken with sudden bursts of stock market volatility. This affords the knowledgeable investor ample time and plenty of opportunity to make portfolio adjustments at reasonable valuations long before calamity strikes. It’s still not too late.

The next major correction will make the last one look like child’s play. We are at the end of the economic cycle and into the next corrective cycle – and we are moving closer and closer to the day of reckoning, a global reset that will send world investment markets into a frantic devaluation and selloff. The stock market at these levels will be seen as extremely high.

And while Trump’s trade policy may be igniting the firestorm it is not the culprit to the looming disaster. The true cause was a decade of atrocious fiscal and monetary policies initiated by America that spread to all four corners of the globe, where corrupt big government central planners sold-out generations of their people and consolidated power through leveraged shams and ponzi schemes like QE. These only exacerbated the problems with U.S. trade policy and according trade deficits.

There is no other way to put it; global trade policy has been unfairly biased against American interests for way too long. China has benefited greatly, and because of it, has become a global power looking to take control of cyberspace and the high seas on the backs of U.S. producers and taxpayers. Europe has also taken advantage, but to a lesser extent. Heck it’s high time that someone leveled the playing field. And Trump is doing that. Good. A global reset is long overdue and cannot be avoided -- tough stance on trade or not.

One more thing…

There has once again been a lot of talk about “corrections” and “Bear Markets,” inverted yield curves and what they possibly mean, so I’ll reiterate this final point…If you believe the stock market is a leading indicator of economic activity – like all on Wall Street who routinely refer to the Dow Jones Industrial Average as “the market” – then you have no choice but to believe that a recession is on the horizon – because that is what “the market” is indicating.

Below is a chart of returns on investment (ROI) by industry for the year. Five of the seven industries are negative (signaling contraction) and the only two that are positive are Consumer Staples and Services – things people need in all markets, booms and recessions. See below.

If it walks like a duck…

Stay tuned.

 The road to financial independence.    

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