Nick Russo (480-816-1619) is one of Wall Street’s most respected stock traders and is considered an authority on trends and the market place and co-authored “A Life Plan of Wealth and Success for the College Graduate”.
Nick calls the period just after World War II to now the “Grand Supercycle” of growth and prosperity in the United States. He has talked about it for many years, until now. Today, Mr. Russo believes that the cycle is over and we are facing a Big Rollover which is now underway. He predicts that this rollover in 2008 will be as devastating as anything seen in the Great Depression.
The wealth gap between the haves and the have nots seems to be getting worse, as the middle class is getting crushed and the rich are getting (fabulously) richer. Why? As inflation and prices for goods and services have continued to climb over the past 25 years, incomes, in constant adjusted for inflation dollars, have actually trended down. No wonder we have no net savings rate as a country and mounting consumer debt. People have been using their credit cards to plug in the shortfalls from their earned income.
So, as the Big Rollover approaches, what does Mr. Russo suggest that we do and how do we prepare (protect wealth) and profit from it?
First he explains that inflation was able to mitigate debt over the past several years. Now, deflation will evaporate net asset values. He also thinks that China will cool in two years, from 9% to 4% growth. (peaking at the time of the Olympics?). He reminds us that the downside is always faster. And, recommends reducing debt now to survive the drop.
What to do now?
1. Sector investing is more important than ever.
2. Look at Master Limited Partnerships and Trusts.
3. Generate cash-flow from covered call writing.
4. Investing in special situations in real estate – Strategic Real Estate.
5. Find alternative ways to finance real estate.
6. Investing in Precious Metals (insurance).
7. Investing in commodities (2001-2010).
8. Buying physical Gold & Silver (wealth preservation).
9. Investing in the aging population (special situations in health care & biotech).
10. Do things that will make you happy.
11. Create a backdoor escape (to get out of the urban living if and when things get bad or for retirement. Nick believes that people are not happy in their urban lives).
12. Stop our false sense of entitlement.
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