SWEET HEART GUEST HOUSE, HONG KONG – Thump. Thump. Thump. Thump.
A woman is screaming. Now a man is yelling too…
My family and I were in our hotel room this morning. The kids were watching Frozen on the iPad. Kate and I were drinking Nescafé.
The noise was coming through the wall.
“What’s that noise?”
Kate and I looked at each other. Then we realized…
Cheap Hotels
Greetings from Hong Kong! Kate and I are traveling around the world, homeschooling our three kids, staying in cheap hotels, and having an incredible time.
We’re currently staying in a hotel called the Sweet Heart Guest Hotel. There are some other hotels on our street. One is called the “Honeymoon Hotel.” Another is called the “Hotel Rendezvous.” Another is called the “Darling Hotel.”
I didn’t know this when I booked it online, but we’re staying in a love hotel!
But the WiFi is fast, the shower’s hot, the room’s clean, and we’re paying $35 a night total to be in the best part of Hong Kong. We’re very comfortable.
And as for the embarrassing sounds?
Whenever we hear something, we put the kettle on, turn on the air conditioning unit, and raise the volume on the iPad. The kids don’t notice anything.
Here we are in our room (with the kettle on and the A/C unit running)…
Little do the kids know what’s happening behind those walls…
Dead Money
Turning to the markets… The U.S. stock market will be DEAD MONEY for the next 10 years.
If you hold ETFs, mutual funds, or a 401(k) indexed to the U.S. stock market, you should expect ZERO performance between now and January 2030.
I have a very high degree of confidence in this forecast. Look at the two charts below. The top chart leads the bottom chart by 10 years. In other words, where the top chart goes, the bottom chart follows 10 years later.
You can see this close “leader-follower” relationship by how similar the two charts are… almost identical… over the past 120 years.
The bottom chart is plotted only until 2010. Where will it go over the next 10 years? As I’ve explained, it’ll follow the top chart, as my arrow indicates.
The top chart shows the valuation of the S&P 500.
The bottom chart shows the annual total return of the stock market over the following 10 years. (2010 is the most recent data point.) The returns are inverted, so the higher the line rises, the worse returns are over the next 10 years.
What this chart shows is, if you buy when stocks are expensive, you get terrible performance over the next 10 years.
For 2020 to 2029, these charts are suggesting very low returns… possibly even negative returns.
I hope you study these charts carefully. They’re telling us the next 10 years will be one of the worst 10-year performances for stocks in 120 years.
If you’re 100% committed to the “buy and hold stocks” school of investing, I can’t help you. But if you’re willing to make a very simple rotation into a different asset that won’t STAGNATE, keep reading these postcards, because that’s what Kate and I are doing with our nest egg.
Of course, the “different asset” I’m talking about is gold. By the time this “dead money” period in the stock market is over – around 2030 or so – I expect Kate and I will be able to buy 4x or 5x the quantity of stocks we can buy today… with the expectation for much higher performance than the “dead money” potential on offer today.
– Tom Dyson
P.S. I’m not saying the stock market is about to crash or anything like that. I cannot predict short-term market moves (except for at sentiment extremes like January 2018 or December 2018). It’s not a comment on individual stocks or sectors. All I’m saying is the S&P 500 index will be dead money over the next 10 years.
P.P.S. Here’s the entrance to our hotel and all the other little love hotels on our block…
We’re accidentally staying in a love hotel,
paying $35 a night to be in the best part of Hong Kong
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FROM THE MAILBAG
A reader warns Tom about the “dangers” of traveling to Japan – the Dyson family’s next destination… another wishes Tom could replace Trump in the Oval Office… and yet another offers Tom some beauty tips…
Reader comment: I’m an almost-80-year-old retired guy who enjoys reading like-minded material. Hope you can keep it coming! I respect what you write and almost completely agree with you.
I am concerned about the future but do not fear it. I had high hopes for President Trump and am disappointed, but such is life. I hope our next president can learn from the past and truly begin to make America great again if that is in any way a possibility. I would vote for you but figure you are too smart to go down that swampy road.
Reader comment: Congratulations for getting reacquainted with your soon-to-be-wife-again and your kids. I envy you and the quest you have decided to take not only to give your kids an incredible experience, but with the whole family united, to get to really know each other. All of you will look back years from now and say it was the greatest time in your life.
I was at a convention about 10 years ago, and Nick Vujicic [one of the Dyson family’s heroes] was the speaker. To say he is awesome is an understatement. God bless your family, and happy trails. Leave bread crumbs for the rest of us to follow…
Reader comment: Please rethink your travels to Japan. Despite the media blackout, there are still THREE uncontained nuclear reactors in Fukushima that have melted down and are still spewing radiation. Children are most susceptible to radiation damage. Do not take my word for this, either. Have an editor or yourself research this.
Reader question: I used to read your letters from The Palm Beach Letter about selling call options. I also made some pretty good money from your advice. Is there a chance you will go back and write for The Palm Beach Letter?
Tom’s response: I’m going to work with Bill Bonner and Dan Denning next year. I will be returning to full-time analysis and research once this trip is over.
Reader comment: The kids will remember this for the rest of their lives. I have always considered home as where you hang your hat, and my kids are the same. I hope your kids will see the world as their world and will be comfortable wherever they are. FANTASTIC!
Reader comment: I’m an old pre-boomer who loves reading these postcards and the reader feedback! Thanks so much. I’ve learned so much about these other cultures you are experiencing, and not to see them as presented on TV news.
Reader comment: Great to read your honest and open postcards… very refreshing. I am a 35-year-old independent tax advisor that paid off a large part of my apartment in a major European city. I am fortunate enough that I can now choose when I want to work, and am focusing a bit more on generating some passive income. I now have a little bit of money that I want to invest. However, I come from an old-school working-class family. “Investing,” I was told, takes the form of buying property, maybe hiding some gold coins in a sock, but definitely not buying stock or gold online.
In short, I am intimidated. I have been reading your and Bill’s posts [in Bill Bonner’s Diary] for a while, and I set up an account and have been mulling my first online gold (stock) purchase. But how do I know it’s the time to buy? Hope you don’t mind giving me some general advice. Thanks, an appreciative reader.
Tom’s response: I can’t give individual investment advice. But let me just say, the time to buy is NOW. Gold has been consolidating for the last three months. It’s a good entry point.
But are you planning to start with gold stocks? I would advise anyone who is entering the gold market for the first time to start by hiding a few gold coins in a sock, which is, as you point out, the way people have done it for centuries.
There’s a very important reason for this. Once gold starts rising, the market will try to throw us from our positions by moving up and down violently. Gold stocks will be much more slippery and hard to hold on to than gold coins in a sock drawer. Trust me.
Reader comment: I am happy that you seem to be happy with your vagabond lifestyle. No question that it is a change from the real world. Please be cognizant of the fact that your new lifestyle is possible because you can afford it. It is nice to not have to work every day to make a living like BILLIONS of people around the world must do. You made good financial decisions.
Please be aware of the saying, “Show me a man who remarries a woman that he has divorced and I will show you a man that s***s in his hat… then puts it on his head.” Please make sure that you really are IN love and not bewildered by your fantasy lifestyle.
Reader comment: I love the letters. They are most inspiring!! “FAMILY” is the most important message I get from the letters. Being together with your family is worth more than money (but money does help just a “little”!!). Thank you, Tom, for your inspiration!
Reader comment: I know what you’re doing because I did the same thing. Your hair gets messy all the time, plus you’re losing it. So, you wear a hat all the time.
Get a buzz cut. Ditch the hat. You’ll look almost the same to the family, maybe better, and the rest won’t know the difference. Someday, sooner than you think, that long hair is no longer going to be there. Might as well get it over with. Trust me. You’ll love it.