Let’s see, 2008 + 7 = Yikes!
I normally would just chalk such a scenario up to an interesting coincidence. However, the story gets a little stranger when the managing director of the IMF (International Monetary Fund, you know - the group the Brookings Institution calls the world’s “Unelected Government” and who holds the power to dictate which currencies are the world’s reserve currencies) Christine Legarde goes into deliberately slow detail to explain numerology and 7 year cycles at beginning of one her speeches early last year. You can easily find this speech by searching YouTube.
The story gets even more interesting when I pick up one of my favorite investment newsletters this morning with my cup of coffee and read that the writer (who has a stellar track record) predicts that the IMF will announce a new world currency in October this year. Why this matters? Because the U.S. dollar is currently the world’s reserve currency currently, if and when this changes then billions of dollars will move out of the U.S. dollar. That would be a MAJOR event!
*For more background on the global currency system, I highly recommend you research the SDR (Special Drawing Rights) and the books written by James Rickards, if you feel motivated.
Legarde confirming importance of 7 year cycles
2015 being 7 years after last cycle
Major announcement in October about new world reserve currency
Perhaps an interesting Fall Season!
Having said that . . . nobody has a crystal ball and I have never met anyone who has retained their sanity by managing their portfolios by getting worked up and going “all in” on a strategy or two based on future predictions.
The famous problem that traders who rely on charts (known as technical traders or chartists) always have is that they run into the right side of the page. Meaning, we don’t know what comes next. All of this could come to fruition or be a cute story like the Mayan Calendar was in 2012. Either way, we disciplined investors will not lose our focus. If it your portfolio management protocol is properly constructed, I don’t recommend changing your game plan.
In my book Unconventional Investing I lay out solutions that allow investors to better navigate the market turbulence that we can be rest assured will always be there (and for some reason amplifies every 7 years). Although I do believe that we live in abnormal times when it comes to currency valuations (as outlined in Chapter 4), no matter what lays ahead I still promote two core principles:
1. Remove emotions from your portfolio management. In other words, stick to systems and ignore the noise of the daily news (Research firm Dalbar has consistently proven the validity of this).
2. Play both offense and defense to help reduce the temporary drawdowns. This can be achieved by increased diversification (beyond the traditional 60/40 balanced portfolios), with added asset classes both in the global and alternative spaces. In addition, consider implementing stop order, long/short, moving average, and asset rotation strategies to your arsenal.
In the meantime (for entertainment purposes) let’s keep our ear to the ground and circle back to this topic in the fall (pun intended).
Tim Higgins, Author of Paying for College Without Sacrificing Your Retirement and Unconventional Investing