American Consequences - November 2020

relative to other currencies, the price of gold tends to rise. It’s a great way to diversify a portfolio that’s full of stocks, bonds, and real estate. There are lots of ways to own gold (click here for the best gold stock to own right now per Bill Shaw, Stansberry Research’s gold expert)... but however you do it, be sure you own some. China It’s only a question of time – and mathematics – before China is the world’s largest economy. There is a massive wall of Chinese domestic money going into the country’s stock market... And meanwhile, foreign money is also increasingly buying Chinese shares after years of largely ignoring the stock market of the world’s second largest economy. The Chinese stock market on a CAPE basis is about half the valuation level of the U.S. stock market. Since China’s economy is still growing fast (6% per year pre-coronavirus), corporate earnings have the wind at their back... and that’s great for share prices. If there’s a global stock market correction, Chinese shares will fall as well... But over the long term, you’re missing out if you don’t have some money in China. Cash It’s no good if you’re land- (or asset-) rich, but cash-poor. Owning real estate is great – and necessary – for you on that 1,000 times-in-waiting little crypto. But make sure you always have enough crisp Ben Franklins – the most spoken language in the world (for now, at least) – nearby, for whatever might happen. It’s far better to have them and not need them... than to need them but not have them.

U.S. stocks For now and until there’s a viable alternative, the American stock, bond, and currency markets are the world’s biggest and most important. They’re a magnet for capital. Continued stimulus from the Fed will prop up valuations. And there are pockets of safety within U.S. markets where the challenges we’re talking about here will matter a lot less... in capital-efficient companies, in free cash flow powerhouses, in dividend kings, and in other bulletproof stocks where you’ll be insulated from the changes of coming years. Dr. Steve Sjuggerud, who has been in the pages of American Consequences many times before, recently shared a game plan for how to preserve your wealth heading into 2021. Let Time Work for You... OK, so it’s all right to be concerned about the direction of the world... But it’s not all right to act that way with your money. When you find an investment that you’re comfortable with that will survive the noise of politics and macro instability over the long term, stick with it so that the magic of compounding can work for you. Compounding, which Albert Einstein called “the greatest mathematical discovery of all time,” is simply staying invested and reinvesting your returns, instead of taking them out of the market. And it’s probably helped more people build wealth than all the other investment strategies in the world put together. In challenges, there are opportunities... but you have to see both to thrive.

American Consequences


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