In June of this year, a tropical storm slammed into Southern California, bringing 35 mph winds and a year’s worth of rain in two days. The newspapers called it a “once-in-a-century event.”
Flash flood warnings were issued for Ventura County, which experienced “exceptional drought” and water restrictions only two years prior. Waves began to lap over docks in San Diego. The parking lot at Dodger Stadium became a pond.
But for all the considerable damage, readers could easily imagine the silver lining.
For a region beset with years of drought, Southern California now had more water than it knew what to do with. That is, of course, if it could capture it.
Sadly, it didn’t…
You may not be surprised to learn that California has underinvested in water capture infrastructure for years.
With the heavy rains in January, some 8.4 billion gallons were captured behind 14 large dams. Sadly, tens of billions of gallons more washed straight out to the Pacific.
The New York Times summed up the situation:
The era of great dam building passed long ago, owing largely to the multifronted environmental wars California is fighting, and the county has been slow to adopt alternatives. The bulk of the roughly $1 billion collected from Los Angeles County taxpayers over the past four years to store more water has gone largely unspent.
One might think that capturing storm waters to sustain California’s $50 billion agriculture industry – not to mentions its residents – might rank high on the list of priorities.
This Too Shall Pass
In some ways, it’s understandable. When something lasts long enough, you assume it will last forever.
During drought, you forget the flood years. And when the waters rise, drought is a distant memory.
When the sun shines for years, you forget to build levies. When volcanoes lie dormant for centuries, you erect towns in the foothills.
And when markets march higher for a decade or more, investors forget the pain of the last crash.
Panics, crashes, and once-in-a-century storms don’t happen often. But they do happen. And you simply can’t prepare for that which you can’t predict.
So, what are investors not predicting right now?
The New Paradigm
The central premise of our research is that we have entered a “new paradigm.” And in this new paradigm, the “rules” of investing will be very different.
For some 30-odd years, the proverbial winds have been at investors’ backs. Certainly, there were panics, crashes, and recessions along the way.
But for the past several decades, the “primary trend” was clear: Stocks will go up reliably. Every downturn was a buying opportunity.
But ask yourself this: Does our landscape today even remotely resemble what we have seen these past few decades?
The ground is moving beneath our feet. The paradigm is changing. Something is coming.
At a very high level, we predict we’ll see a “replay” of the 1973–1983 period.
From January 1973 to the end of 1983, the Dow climbed only 26%. That represents an abysmal annualized return of just 2.34%.
But this nominal return hides the true carnage. Adjusted for inflation, the Dow declined by some 50% over those 10 years.
Most investors could not imagine such a thing happening today. How could they? They’ve never seen anything like it.
But we have.
We got our start in finance after graduating from Harvard Business School in 1972. And we had a front-row seat to the treacherous market of the 1970s and early 1980s.
It wasn’t pretty…
But that isn’t to say that there weren’t fabulous opportunities to profit along the way.
$100,000 Into $13 Million
In an interview we had on August 14, 1987, with CNN, we said (emphasis added):
What we think will happen is that we’ll get an important top somewhere around August 24 or 25.
If I had to guess the final top, it would be the first or second week of October. When I say “the final top,” that would precede a correction of 15% to 20% minimum in the [Dow].
As it happens, the Dow topped out at 2,722 precisely on August 25 of that year.
I’m sure many of us remember what happened next…
On Monday, October 19, the Dow collapsed by 508 points, or 22.6%. It was, and remains, the worst one-day drop for the index in percentage terms.
Black Monday had arrived.
Many investors were ruined. But those who prepared for the crash could have made a fortune.
In fact, we later had a client brag about how her traders had turned $100,000 into $13 million over the course of a few weeks by following our research.
Now, that’s a dramatic example. But it goes to show what is possible if you can predict when the storm will hit.
So, what are we predicting next?
The Market Event Nobody Sees Coming
Starting on November 22, we predict a market event will begin to unfold that will surprise everybody. And for those of us who prepare, it could be an incredible trading opportunity.
To help you prepare, we’re hosting a special event tomorrow at 8 p.m. ET. At the event, we’ll share our prediction for the next six months. We’ll also give you precise dates to look out for.
Most importantly, we’ll reveal our “new paradigm strategy” to profit while most investors are caught flat-footed.
You can reserve your seat with one click right here.
As always, thank you for being a reader. We will speak again soon.
Founder, New Paradigm Research