The Market Paradigm Shift: A Transformative Change in Forecasting Markets and Constructing Investment Portfolios
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Five-star money managers are the elite of the investment management business. Few money managers ever achieve this coveted ranking. It is the Super Bowl for money managers and was awarded to the author for applying the principles presented in this book consistently for over a decade during extreme market volatility while growing to multiple billions of dollars. His tactical investment process not only predicted the 2020 bear market but also took evasive actions for his investors to avoid the full-frontal assault of the carnage. He successfully predicted markets for twenty-five years and now wants to share his "secret sauce" and take it to the next level.
In thirty years of investing, he is making his biggest and boldest market forecast in his career, calling out The Market Paradigm Shift: A Transformative Change in Forecasting Markets and Constructing Investment Portfolios. The paradigm shift uses ten themes that are prescient in forecasting markets and constructing investment portfolios.
Know and understand these ten themes to give you an edge on world investors. Who knew that the Federal Reserve no longer uses a fractional reserve system for its commercial banks? Who knew that commercial banks create money--deposits--by issuing loans? Who knew that the most important funding currency for the "carry trade" is not the Japanese yen but the S&P 500? Why does the Federal Reserve have skin in the game to support the S&P 500 Large-Cap stocks, and what does that mean in constructing investment portfolios? Why does value investing do poorly due to its small stature and not its cheapness? What MMT is and why we can expect inflation to stay elevated for years to come, along with "sowing the seeds" for the next cataclysmic market event. Why the Fed has institutionalized "moral hazard" and why it is in the predicament of bailing out "carry traders" forever. Why owning gold and digital currencies may be critical to hedge a debased dollar in the future. Why international investing in Europe and emerging markets is destined for low returns and high risk.
The author argues that market risk--beta--is composed of size, inflation, and currency (SIC) factors. Miss these and risk being on the wrong side of the market for stocks and bonds. Understanding and implementing this will help the investor integrate the transformative changes in forecasting financial markets with constructing investment portfolios in preparation for the market paradigm shift that has occurred.
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