Acknowledgments xi
Introduction xiii
Part I: Aftershock
Chapter 1 Bubblequake and Aftershock—A Quick Review of How We Got Here and What’s Next: Why Read This Book? Because We Were Right, Now You Can Be Right, Too 3
You Are Not Asleep with the Sheep 4
Bubblequake! First a Rising Bubble Economy, Now a Falling Bubble Economy 6
Future Infl ation Will Cause Rising Interest Rates 17
From Boom to Bust: The Virtuous Upward Spiral Becomes a Vicious Downward Spiral 19
Why Don’t Most Conventional Investors See This Coming? 25
What’s a Savvy Aftershock Investor to Do? 26
Chapter 2 Since We Last Spoke . . . : Aftershock Update: They Read Our Playbook, the World Is Printing Money 27
Ignoring the Massive Money Printing (the Dollar Bubble) Is a Key Goal of the Cheerleaders 30
Potential Triggers That Could Accelerate a Downtrend in the U.S. Economy 33
A Closer Look at the Current U.S. “Recovery” 40
Bottom Line: “Recovery” Is Still Driven by Massive Borrowing and Massive Money Printing 45
Our Investment Outlook 46
The 2012 Presidential Election 52
In Conclusion 54
Chapter 3 Conventional Wisdom Won’t Work This Time: Introducing Aftershock Wisdom Investing 57
The Key to Conventional Wisdom: The Future Will Be Just Like the Past 59
The Myth of a Natural Growth Rate 61
Real Productivity Growth Is Slowing Down, Here and Around the World 63
Warren Buffett: Master of Conventional Wisdom 65
The Key to Aftershock Wisdom Investing: The Future Is Not the Past! 69
This Debate Is Really Not About Inflation or Deflation, It’s About Protecting the Status Quo with Denial 78
How to Invest in a Falling Bubble Economy 86
What’s a Savvy Aftershock Investor to Do? 90
Part II: Aftershock Investing
Chapter 4 Taking Stock of Stocks: Facing the Future of Stocks, Mutual Funds, and Index Funds 95
Love Story: How Stocks Became the Heart of Most Investment Portfolios 96
How Are Stocks Valued? It’s All about Earnings 99
Conventional Wisdom on Stocks 104
Why Conventional Wisdom Is Wrong 108
What’s a Savvy Aftershock Investor to Do? 115
Our Current Recommendations 116
Chapter 5 Bye-Bye Bonds: Why Bonds Are Getting Risky and When to Get Out 119
What Are Bonds? 120
Conventional Wisdom on Bonds: The Safety of the Recent Past Means We Can Count on More Safety Ahead 129
Why Conventional Wisdom on Bonds Is Wrong 132
The Final Two Bubbles in America’s Multibubble Economy Will Pop 134
Bonds Will Fail in Three Stages 137
What’s a Savvy Aftershock Investor to Do? 141
Chapter 6 Getting Real about Real Estate 147
What Really Drives Real Estate Prices? 148
The Real Estate Bubble Rises 149
Conventional Wisdom about Real Estate: Continued Low Interest Rates for as Far as the Eye Can See 151
Why Conventional Wisdom about Real Estate Is Wrong 152
What’s a Savvy Aftershock Investor to Do? 155
Timing Your Exits Out of Real Estate 165
The High Cost of Doing Nothing 169
Chapter 7 Threats to the Safety Nets: The Future of Whole Life Insurance and Annuities 171
All Insurance and Annuities Are Essentially Investments in Bonds, Stocks, Even Real Estate 172
Conventional Wisdom on Whole Life Insurance and Annuities: Perfectly Safe and Worth Every Penny! 173
Why Conventional Wisdom Is Wrong: Facing the Real 800-Pound Gorilla in the Room 179
What’s a Savvy Aftershock Investor to Do? 182
Chapter 8 Gold: The Once and Future King 189
Gold Was Golden for Centuries 190
Current Conventional Wisdom on Gold as an Investment: Warren Buffett Says Stay Away! 192
Why Conventional Wisdom on Gold Is Wrong 194
What’s a Savvy Aftershock Investor to Do? 197
How to Buy Gold 200
Owning Gold as Part of a Well-Diversified Actively Managed Aftershock Portfolio 204
How High Will Gold Go? 205
Part III: Your Aftershock Game Plan
Chapter 9 Aftershock Jobs and Businesses 211
The Rising Bubble Economy Created Huge Job Growth; Now the Falling Bubble Economy Means Fewer Jobs 212
Conventional Wisdom about Future Jobs Is Based on Faith that the Future Will Be Like the Past 213
Why Conventional Wisdom on Jobs Is Wrong 214
What’s a Savvy Aftershock Investor to Do? 216
The Falling Bubbles Will Have Varying Impact on Three Broad Economic Sectors 218
Opportunities after the Bubbles Pop: Cashing In on Distressed Assets 228
Should I Go to College? 229
Chapter 10 Aftershock Retirement and Estate Planning 231
Types of Retirement Plans 232
The Conventional Wisdom on Retirement Plans 235
Why the Conventional Wisdom on Retirement Is Wrong 236
What’s a Savvy Aftershock Investor to Do? 238
Retirement Q&A 245
Estate Planning: Making the Most of Your Assets for Yourself and Your Heirs 247
Chapter 11 Your Aftershock Investment Portfolio 253
Aftershock Portfolio Strategy 254
Key Components 255
Do It Yourself or Bring in Help? 259
Timing—Better to Move Too Early than Too Late 260
The Last Resort: The Stock Market Holiday (the Ultimate Reason Why You Need to Move Early Rather than Later) 266
The Moral 269
Epilogue 273
Appendix Additional Background on Stocks and Bonds 275
Stocks 275
Bonds 282
Inflation, Interest Rates, and the Aftershock 290
Index 293
