Stock Talk - Why Boomers Love Doomers like Harry Dent, Robert Kiyosaki, and Robert Prechter

Starting point is 00:00:00 Hey, investors, Harry Dent, demographic economist, book and newsletter writer. Robert Kiyosaki, bookwriter, serial entrepreneur, and seminar promoter, Robert Prector, financial author and newsletter publisher. They all have four things in common. First, successful self-promotion of their financial acumen. Second, horrible long-term track records of their predictive abilities. Third, to the best of my knowledge, none currently manages, or has managed substantial amount of monies for others successfully in their careers, and fourth and foremost, they can be lumped

Starting point is 00:00:34 in to the category of financial soothsayers I label as Dumer's. Dumerism actually now has a definition. It is defined as an extreme form of pessimism or predisposition to catastrophizing a threat response. Call it, the end is always near way of thinking. Jeremy Grantham, co-founder of GMO asset management, Nassim Tili, author of The Black Swan, the high impact of a high-impact of a high improbable, and Ray Dalio, founder of Bridgewater Associates, also have some things in common. They actually have founded or been advisors to highly successful investment management firms during some time period over the last 30 years. In Grantham's case, he now predicts a stock market crash almost annually.

Starting point is 00:01:16 He was right twice earlier in his career, which is two times more than most of these financial profits in many relatively timely fashion, so many investors in his age demographic still listen to him. In Nassim Taleb's case, he's an advisor to Mark Spragnaigle, Universal Investment, founded after Taleb's book was published. These three, while having run other people's money during their careers, I also lump them into the category of Dumers. Other notable perma bears over the last few decades

Starting point is 00:01:44 who continue to be promoted for their financial prowess by CNBC and other financial networks are Mark Faber of the Gloom Boom and Doom Report, Gary Schilling, and Dr. Doom, Nureal Rubini. However, while these six individuals have been quite visible and loud over the last 10 to 25 years, depending on whom we're discussing, they have all been largely and consistently wrong in their outlooks, generally wildly negative outlooks for the U.S. economy and the U.S. stock markets. First, let's quickly recap Harry Dent's forecasting ability over the last 20-plus years. I'm going to pick on Harry Dent because he's near the top of the list of doomers that our clients

Starting point is 00:02:20 seem to ask about time and time again, regardless of how wrong he's been. As full disclosure, for a short time period, I was one of a group of portfolio managers during the early launch of the AIM Dent demographic funds in 1999. You can do a timeline Google search and see for yourself, while loudly and confidently broadcasting in books and on TV and elsewhere, how poorly Mr. Dent's forecast had been, where you can read from Roger Wooler's research from his December 2021 article, Harry Dent's stock market economic predictions, 1999 through 2021. How do they turn out?

Starting point is 00:02:54 I'll drop a link in that great article in the description below. Festers, let's backtrack almost 25 years when Mr. Dent released his best-selling book, The Roaring 2000s, Building the Wealth and Lifestyle You Desire in the greatest boom in history published in October of 1999. He predicted that the stock market would experience a significant boom during the 2000s. Based on demographic changes, Mr. Dent predicted that the Dow would hit 35,000 in the upcoming decade. He cited the baby boomer generation reaching their savings window for his own. optimism. At the time, the Dow was trading around 11,000. Well, what happened? The Dow peaked at just under

Starting point is 00:03:30 12,000 in January of 2000 and went? Absolutely nowhere with very high volatility for the next 10 years. 2000 didn't enter into the roaring 20s, as Mr. Dent surmised, but instead, the lost decade of no stock returns net. Mr. Dent published another book, which is similar optimism in January of 2006, the next great bubble boom. How to profit from the greatest boom in history. He followed his advice. He did have a good 18-month run in markets before the onset. The great financial crisis started in mid-2007

Starting point is 00:04:02 and before the market truly crashed in the second half of 2008 in the first quarter of 2009. Investors, so now having been twice burned by being overly optimistic about the economy and the stock markets, Mr. Dent pivots to the doomer side in his next book, The Great Depression ahead, How to Prosper in the Crash, December of 2008. Of course, this could be Mr. Dent's worst call in the last 25 years, as since the stock market bottomed in March 9th, 2009, we've seen returns in most U.S. stock markets big time.

Starting point is 00:04:33 In Harry Dent's 2011 classic, Dumer book, The Great Crash Ahead, he predicted the Dow would drop from 11,000 to 3,500 by 2013. Oops, that call proved a little off base. More recently, Harry Dent's articles and headlines, December 2016, Donald Trump was elected president. Mr. Dent predicted Dow Jones, 3,000 to 5,000 on CNBC. As of this writing, the Dow is about 10 times higher than that range, sitting at nearly 40,000. In March of 2021, Mr. Dent called both price and time for his next crash. The market would drop by over minus 45% by the end of June, 2021, making the great financial crisis look like a cakewalk. Of course, that didn't happen. Oops. Harry was unflestered and doubled. down in July of 2021, calling for equities to fall by, yes, minus 80%, 8,0 before Thanksgiving at

Starting point is 00:05:28 2021. Why not? Didn't get the call right four months ago, but I'll go all in with your money. Get out and what happened. The market went on to make major new all-time highs, S&P 4,800, into year-end 2021. Unfortunately, for investors' intent on following Mr. Dent's advice, in 2023, he doubled down and predicted both a recession in 2003 and a number. another big wave down for stocks in 2023.

Starting point is 00:05:54 Dent predicted that Bitcoin and cryptocurrencies in generals would be the hardest hit assets in 2023. Wrong on all accounts in a big way. Bitcoin rallied over 200% in 2023. The S&P 500 rallied over 20%. Of course, many other financial soothsayers got 2023 wrong as well. Either to the economy or stocks or both wrong, like Kerry Dent.

Starting point is 00:06:16 Before we continue, I want to give a shout out to the entire Oak Carvest team as A few weeks ago, the USA Today ranked us as one of the best financial advisory firms in 2024. The award is given to the top RIA's firms in the United States based on two criteria, recommendations from individuals among 25,000 financial advisors, clients, and industry experts, and growth in assets under management over the last year and five years, respectively. I personally am looking forward to helping us move up this list over the coming years

Starting point is 00:06:45 by helping our current and future clients take care of their financial assets. Another financial dumer often quoted by the financial press is Robert Prector. Yes, that Robert Prector from Elliott Wave charting fame, who got it right once way back in late 1987. Folks, for the better part of the last 20 years, Prector has taken an apocalyptic view of the future. In 2002, he published Conquer the Crash, You Can Survive and Prosper in the Deflationary Depression. Oops, baby boomers looking back at 2002 now, could only wish they ignored Robert Prector's advice and dollar cost average into stocks during that coming lost decade, which was a grind for most,

Starting point is 00:07:26 but was not a prector predicted 1930s-like Great Depression based on his opinion of Elliott Wave Theory. In 2010, he doubled down foreseeing the Dow Jones Industrial Average cratering to 1,000 by 2015. Oops, another whiff by prector analysis in the use of his own methodology. But he's pretty much doubled down on this doomer and depression theory each and every year in the last decade, including, again, in 2017 in this interview on Market Watch, where he was referred to as a legendary chartist. I drop a link to that interview in the description below.

Starting point is 00:08:01 Robert Kiyosaki's track record on predicting stocks, I'm not going to give you the nitty-gritty details on that, but I will leave a link in the description below. The Oak Harvest Financial Group's client base is loaded with individuals who are labeled baby boomers. Folks, that's the demographic born between 1946 and 1964, currently between the ages of about 60 and 80. So looking back in time, most of these investors entered the workforce at, say, age 23 between the years of 1970 and 1987. Let's look at the stock returns of this cohort over time and maybe ask the question of why so many boomers I meet are doomers in the economy and the stock markets. If you first invested on January 1, 1970, way back when inflation was running double digits, each dollar in the S&P 500 has gained over

Starting point is 00:08:50 28,000% in total return, and over 5,880% in price terms to compound at close to 10.9% per year near the high end of the often quoted 8 to 12% annual returns for stocks. So say you were unfortunate enough to be born near the end of the baby boom in 1964, thus making your entry into the job market right before the 1987 stock market crash in early 1987. My trustee Bloomberg calculates your total return on your initial investment has then returned almost 5,000% since 1987, composed of 2,175% in price and the rest in dividends. Your annualized return was, yep, you guessed it, 11% a year, almost identical to the early baby boom demographic.

Starting point is 00:09:42 So investors, if almost every cohort of investors in the baby boom generation who stuck by their allocation for decades as near the same equity compound annual growth rate in return, why are so many boomers attracted to the doomer message on TV? My thoughts are this. First, they recall the hyperinflation days in the 1970s when they were in middle school and in college, just beginning their work careers. Second, they all lived through the October 1987 stock market crash where stocks dropped minus 35% in a few months. But few of them remember that the market was up over 30% year-to-date in

Starting point is 00:10:18 1987 before the crash, and it closed flat on the year of that year. Third, the 2001-2-2-com bubble collapse happened just as many of the earliest baby boomers were thinking of taking early retirement around the age of 55 and shocked the youngest boomers who were dealt the second major stock market setback in their 15-year investment careers. And fourth, the great financial crisis in 2007 and 8 rocked most investors' confidence in the financial and global banking system right as the first boomers took early retirement around age 60 and extended younger baby boomers investors churning into a lost decade of returns from 2000 till about 2012. Finally, fifth, the global economic lockdown during 2020 COVID pandemic showed how intertwined

Starting point is 00:11:07 and fragile the global economies and stock markets have become. By 2020, The oldest baby boomers were now, almost 75 and retired, and the youngest baby boomers were about 56. We're looking at retirement squarely in the eye. Over the last 40 years, boomers had to weather stock market drops of minus 36% in 1987, minus 50% in 2000 through 2002, minus 55% in the great financial crisis in 07 through 2009, minus 35% in 2020 and minus 27.5% in 2022, not to mention a flash crash in 2010. On their way to do their 11% annual gains in the S&P 500. Investors, remember, pain is much more vivid and memorable to the human brain than pleasures. Marketers know this. This is why financial networks and

Starting point is 00:11:58 social media loves promoting those with the impending doom magnitudes more than those with optimistic outlooks. Investors fear sales. Will Mr. Dent and other doomers finally be correct in their views of stock markets in some year in the future? Yes, we have not circumvented economic cycles forever. We will have more recessions in the future. Recessions in the stock market are minus 30 to minus 35 percent down moves at a minimum. We will most likely get another financial crisis by lifetime given the spending path that both political parties have in the U.S. I'm sorry Janet Yellen. There will be a crisis again in my lifetime. But should you rely on the likes of Harry Dent, Robert Kayasaki, Robert Prector, and Jeremy Grantham, who have been wrong for not just years, but decades

Starting point is 00:12:46 for your financial advice and predictions? Smart or rich people you've never met to help you make financial decisions about your future and financial plan? No, not in my opinion. They're not your fiduciary. And with that, as we previously discussed, if you're a retiree or near retiree who's had a tendency to get emotional about your investments when the markets are down and volatility is high. When you look in the mirror and honestly reflect on your own personal outlook, are you a dumer or are you more rational actor when it comes to investing? Does it take every ounce of willpower not to sell the lows? Dot com bust, great financial crisis recession, COVID pandemic. If over the years you found yourself reacting emotionally in your portfolio to presidential elections

Starting point is 00:13:29 and their uncertainty, now is the time to talk to your advisor, to walk through your financial plan. Give your advisor a call and meet with them. Well in advance of other investors concerned, what will likely be a third quarter of this year, soft-landing pullback that refreshes or the beginning of a much more painful economic market downturn. Discuss how much risk is in your allocation plan

Starting point is 00:13:50 under downside market scenarios just in case the economy rolls over in late 2024 and 2025, regardless of who's elected in November. While most third-quarter sell-offs are just cyclical corrections and short-term pullbacks and otherwise long-term bowl markets and economic expansion, it's virtually impossible to tell if that sell-off is a mild correction and a soft landing, or if it's the beginning of something more dire like it was in 2000 and 2008. I will debate with all takers that it didn't matter who was elected in the years 2000,

Starting point is 00:14:23 Bush or Gore or 2008, Obama or McCain. The ultimate winner was already dealt a bad hand by the Federal Reserve and the economy by the time they were elected. Investors, as I've message for the last month, with markets making fresh all-time highs, if you're going to make a reallocation decision to shift money out of stocks and equities and the less volatile assets,

Starting point is 00:14:43 it's best to do it when indexes are up and volatility is low, not the other way around. Investors, if you're a retiree or near retiree, uncomfortable with a wider range of possible equity outcomes, the Ocarbist investment team has launched a new strategy that retains the ability to go long stocks, short stocks, as well as buy partial hedges and shock absorbers for a stock portfolio. Information on this new strategy of ours can be found at oak harvest funds.com.

Starting point is 00:15:09 For myself, from Eric behind the camera, Corinne, who does the thumbnails on these videos. And from our whole team here at Oak Carvis, thank you and have a great weekend. All content contained with an Oak Harvest podcast expresses the views of the speaker and is for informational purposes only. It is based on information believed to be reliable when created, but any cited data, indicators, statistics, or other sources are not guaranteed. The views and opinions expressed herein may change without notice. Strategies and ideas discussed may not be right for you,

Starting point is 00:15:42 and nothing in this podcast should be considered as personalized investment, tax or legal advice, or an offer or solicitation to buy or sell securities. Indexes such as the S&P 500 are not available for direct investment, and your investment results may differ, when compared to an index. Specific portfolio actions or strategies discussed will not apply to all client portfolios. Investing involves the risk of loss,

Starting point is 00:16:10 and past performance is not indicative of future results.

Stock Talk - Why Boomers Love Doomers like Harry Dent, Robert Kiyosaki, and Robert Prechter

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