“Never underestimate the size of a panic, nor the power of a politician.” – Sir Harry Schultz
Late last year one of my Utah cousins pointed out to me that 244 AD was a special year in Book of Mormon history. According to Mormon, it was a turning point in the story of the Nephite nation, when “the more wicked part of the people did wax strong, and became exceedingly more numerous than were the people of God” (4 Nephi 1:40). It was downhill after that, eventually resulting in the extinction of that great race.
Here’s the interesting part: My cousin noted that if you add 244 years from the birth of our nation, 1776, what year do you get?
He suggested that perhaps 2020 was also a turning point in our long history. Are we facing the decline and fall of the American empire, as has been prophesied in the Last Days, and if so, how should we be prepared financially? Should you sell your stocks and bonds, and buy gold, silver and bitcoin? Should you eliminate your debts, pay down your mortgage, build up your food storage, and prepare for rough times?
Most empires last only 250 years, as Cal Thomas points out in his book, “America’s Expiration Date.” Is America’s good years behind us?
For the past 41 years, I’ve been writing a monthly investment newsletter entitled “Forecasts & Strategies.” In each issue, I offer my outlook for the economy, interest rates, and the markets, and then offer specific investment advice. I’ve made my share of predictions, but my crystal ball is not always clear. As Paul said, “we look through a glass, darkly” (1 Corinthians 13:12).
Are You an Optimist or a Pessimist?
One thing I have learned in my long career in the markets is that no one can predict with any precision the top or bottom of markets, and when the American era of prosperity will end.
I’ve also found that during my lifetime, the Cassandras of the world have repeatedly predicted Apocalyptic scenarios of doom and gloom, and have proven to be premature, or just plain wrong.
One major prophecy of the Book of Mormon has been accurately fulfilled: America has become a land of promise, a land choice above all other lands, into the 21st century (1 Nephi 12:1; Ether 2:7).
A recent study of 34 stock markets around the world found that the United States outperformed all over countries since 1900—by a long shot. That’s why I have been largely bullish since I started writing my newsletter in 1980.
In latter-day scripture, the Lord declared, “And, as I, the Lord, in the beginning cursed the land, even so in the last days have I blessed it, in its time, for the use of my saints, that they may partake the fatness thereof” (Doctrine & Covenants 61:17).
I don’t recall this verse ever being read in Church, but it certainly is a good description of the prosperity we have enjoyed since the founding of the restored gospel.
We have certainly grown fat in many ways in the latter days!
But let us not become complacent or vain. The Book of Mormon has warned us repeatedly that prosperity can turn to hardship and depression, and that we must guard against pride and wickedness.
The latter-day scriptures are full of warnings about the “calamity which should come upon the inhabitants of the earth” if we aren’t careful and prepared (Doc & Cov 1:17, and many other sections).
I do not know if 2020 is the beginning of sorrows and a sharp decline in our culture and our civilization – we have faced worse setbacks in our history, such as the Civil War, the Great Depression, and two world wars.
Are We Headed for Another Roaring Twenties or a Great Depression?
The best advice I can offer is to know the signs of the times. We need to weigh the good and the bad, and decide on net balance where we are headed. In many ways, it is better to be prepared than to predict.
On the positive side, inflation and interest rates are low, businesses are recovering from the lockdown, and jobs are coming back.
On the negative side, government spending is out of control and the national debt is over $27 trillion. The Federal Reserve is inflating the money supply rapidly and keeping interest rates artificially low. Can inflation be far behind?
We must never forget that there’s no free lunch. Deliberate inflation and spendthrift policies cause a boom-bust cycle. Eventually the boom must come to an end, and sometimes it ends badly, and you can lose 50% of your stock portfolio, as was the case in 2008-09.
You Must Adjust Your Investments From Time to Time
Last year like many of you I had to adjust my investment portfolio with the rise of the virus scare. Many high-income stocks, including energy, had done well previously but then fell sharply in 2020, while technology companies that focused on e-commerce, the internet, and healthcare skyrocketed. Real estate, bitcoin and precious metals also did well.
Now that we have a new administration in Washington, we again need to reassess our investment strategy. The Democrats now control all three branches of government, and they offer a different and perhaps more radical agenda than Trump and the Republicans, including a $15 federal minimum wage, a Green New Deal, higher taxes on investors and the rich, and more regulation of business.
President Biden and the Democrats are encouraging alternative renewable energy, but windmills, solar panels and electric cars still use up traditional oil & gas resources, so I continue to recommend major oil and pipeline companies.
At this time, I still remain fully invested in a diversified portfolio of growth tech stocks, exchange traded funds, and mutual funds, as well as gold, silver, and bitcoin (its blockchain technology holds great promise in the future).
I also have a small cash position to take advantage of special situations.
For those who depend on regular income, bank certificate of deposit (CDs) and money market funds simply don’t pay enough interest these days.
As an alternative, I recommend income and growth stocks that pay monthly or quarterly dividends, and have a rising dividend policy. Be sure to invest in companies that are profitable and can afford to continue to pay its dividends.
A Word of Warning
One word of warning: Do not go overboard in investing in alternative investments such as precious metals, digital currencies, or companies that are losing money.
Beware of investing in high-risk managed accounts that promise high monthly or quarterly payouts, but are not insured. Remember, nobody is more concerned about your money than you are. Some money managers and mutual funds have great track records, but don’t go overboard. It always pays to have funds in a variety of accounts.
Better to keep most of your funds with a major discount brokerage firm, and manage your own money as much as possible.
Be alert to new trends, stay diversified, live within your means, make sure you have enough medical and life insurance, and don’t get too deep into speculative ventures. Play it conservative.
If I can recommend one of my books, it would be The Maxims of Wall Street: A Compendium of Financial Adages, Ancient Proverbs, and Worldly Wisdom, now in its 10th anniversary edition. It’s non political and has been endorsed by Warren Buffett, Jack Bogle, Barron’s, and The Wall Street Journal. The price is $20 and can be purchased through Amazon.com. I autograph and number each copy if you order through www.skousenbooks.com.
I like this quote from Kevin O’Leary of Shark Tank fame: “Getting rich is easy if you follow these three rules: spend less, save more, and invest the difference” (p. 26).
I also produce a conference every July called FreedomFest, “the world’s largest gathering of free minds.” It’s an intellectual gathering where we discuss current events, where we are headed, and what we can do about. It includes a 3-day investment workshop with top experts discussing stocks, bonds, precious metals, real estate, bitcoin, insurance, and taxes. This year we are holding the conference in Rapid City, South Dakota, near Mount Rushmore. Almost 1,100 people have already signed up. For more information, go to www.freedomfest.com.
About the Author
Mark Skousen is a presidential fellow at Chapman University, where he received “My Favorite Professor” Award in 2019. Since 1980, he has been the editor in chief of Forecasts & Strategies, an award-winning monthly newsletter (www.markskousen.com). He is currently the Gospel Doctrine teacher in the Peter’s Canyon Ward in Orange Stake, California.
Email: [email protected].