I’m sitting here writing this to you on tenterhooks.
You see back on December 23, 2018, my colleague Shae Russell put out the following tweet:
‘The Prime Minister of Australia has urged Aussies to get out there & ‘spend’ before Christmas. That’s not normal. Alarm bells are ringing… My guess is consumer consumption data is looking worse and worse each month. Recession in 2019 or 2020?’
By the way if you want to follow Shae’s magnificent Twitter feed, just find her at @shaerussell.
I couldn’t resist.
I followed up with a tweet reply:
‘Won’t be a ‘technical recession’ but it’ll be alternate quarters of neg growth. 2019.’
Oh and by the way if you want to follow my witty, informative and sometimes crazy Twitter feed, you can find me at @techinsider_sv.
Our little thread continues on with Shae predicting consecutive quarters of negative growth starting in either Q3 or Q4 2019. I was a little more specific. I said negative growth in Q2, a tiny bit of growth in Q3, almost consecutive quarters of negative, but only just scraping through in the positive. And then another quarter of negative growth in Q4.
My view is that Australia would be in a recession, albeit not a technical one due to the lack of consecutive quarters of negative growth. This would allow politicians to crow about the strength of the economy.
The battle is likely to be long and protracted
But the reality is that the economy is struggling along. No matter which way you look at it, the Aussie economy is now reflective of our national ethos of being a true-blue Aussie battler.
And long term we will come out on top of it all. But the battle is likely to be long and protracted. Even more so if Australia’s Reserve Bank moves to ‘unconventional’ Monetary Policy, looking at quantitative easing, negative rates and other magic marvels of economic management.
But I bring this all up and the bet with Shae (winner gets a slab of beer) because this week the Q2 GDP growth (or lack thereof) statistics come in.
In other words, this is going to keep me alive in our little wager or knock me straight out from the get-go.
Some are saying that recent inventory statistics mean an unexpected negative growth rate. That’d do well for my prediction. Others are saying the numbers will be ‘soft’. That’s code for the number has declined from the previous quarter and previous year-on-year figure, but is still above 0.
That would knock me out.
However, amongst all the headlines about GDP and whether there is growth or no growth in the Aussie economy, let me ask you a simple question…
When GDP figures come out this week what does it really mean to you? What impact is it going to have on your week? On your month? On your year?
Do you really feel these numbers and figures? Or are these really just an excuse for politicians to talk about something for a while? Is it just a smoke screen to distract you from the fact that it really means diddly squat to you right now?
I have another question. What impact will GDP numbers have on your investment strategy?
If GDP is good, bad or otherwise will you sell down all your shares? Will you hoard more cash, buy more gold, load up on risk or de-risk your portfolio? Or will you do nothing?
My guess is that whatever the GDP figures are, it won’t change anything about your portfolio. At least not yet.
And frankly, it shouldn’t.
What you won’t get from statistics
Statistics from the Australian Bureau aren’t going to help you decide on whether to invest in a brand new stock opportunity or not. They’re not going to outline for you the detail around the potential return that investing in cryptocurrency markets could deliver to you.
They won’t tell you about bitcoin’s role in modern portfolio theory. They won’t tell you about how the world of fintech, neo banks, and alternative financial systems are set to revolutionise global finance.
It’s not going to uncover the breakthroughs around the world from autonomous machines to machine communications to transhumanism and the augmentation of biology and bionics.
These are all the kinds of global opportunities that don’t give a stuff about GDP. They are the kinds of technology and investment trends that supersede the importance of quarterly economic statistics.
They are all investments that allow you to ride through recessions, that present opportunity in bear markets. And open up revolutionary gains when things turn around and are flying again.
Mark my words, Australia, Europe, the UK, the US, China, and Asia could all head into recession and there will still be investment ideas and opportunities to make money from.
That’s what you need to focus on as an investor. While the headlines spout out numbers at you that you should care about, you need to turn the other eye. You instead should focus on where the openings are to make money while everyone else is distracted from the noise.
And that’s exactly where we come into play. In tumultuous markets we’ve seen stock returns and cryptocurrency returns all in excess of 1,000%. Heck, I’ve recommended several of them to my subscribers.
There is money to be made if you know where to look. The only thing you should care about this week when you hear the GDP number is whether or not I’m getting a slab out of it.
Editor, Money Morning
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