Grow Your Portfolio the Intelligent Way

Eww, That’s Gross!

By Jim Woods

When I was in grade school, I remember the in-vogue expression among the girls in my class was, “Eww, that’s gross!”

The term was used to convey dislike and disgust towards a variety of behaviors from uncouth school-age boys. And, looking back on the silly things that boys do in their formative years, I can retroactively sympathize with the girls.

Yet fast forward a few decades to adult life, and I’m now proud to actually promote something that’s also “gross,” i.e. I am proud to tell you about “Gross Output,” or simply “GO,” which is a new and better way of assessing the health of the economy. Now, in the interest of full disclosure, GO is a tool promoted by my Fast Money Alert co-editor, the always-brilliant Dr. Mark Skousen.

But what, exactly, is GO and why is it a better measure of the economy? To understand GO, I will quote from Dr. Skousen’s website on the subject, Grossoutput.com.

“In economics, gross output (GO) is the measure of total economic activity in the production of new goods and services in an accounting period. It is a much broader measure of the economy than gross domestic product (GDP), which is limited mainly to final output (finished goods and services). 

GO is defined by the Bureau of Economic Analysis (BEA) as “a measure of an industry’s sales or receipts, which can include sales to final users in the economy (GDP) or sales to other industries (intermediate inputs). Gross output can also be measured as the sum of an industry’s value added and intermediate inputs.”

So, when we analyze GO and GDP simultaneously, we can get a much fuller, much more accurate picture of what is really going on in the economy. The key here is that GDP accounts for final output only: the finished goods and services bought by consumers, business and government. In contrast, GO measures total spending at all stages of the supply chain.

What I find most interesting about GO is that it allows us to know much more about the true condition of the economy. Moreover, GO is especially significant during economic downturns.

As Dr. Skousen wrote in a recent Wall Street Journal op-ed, “In past recessions, GO declined much faster than GDP and gave an earlier view of the depth of the recession. During the financial crisis in the fourth quarter of 2008, GO fell 6.6%, compared with a 2% drop in GDP — more than three times as fast. The GO decline showed that even while consumer sales held up, businesses were slowing investment in future production.”

So, what is GO telling us about our current COVID-compressed economy? 

As Skousen writes: “In 2020, that trend is clearly reversed. In both the first and second quarters, GO fell slightly less than GDP. In the second quarter, real GO declined by 8.4% while real GDP decreased by 9% (in quarterly, nonannualized terms). GO didn’t collapse by multiples of GDP as it has in past recessions. The decline was close to 1-to-1, rather than 3-to-1.”

Skousen concludes that while it is clear that consumer spending dropped sharply in 2020 as a result of the COVID lockdown, businesses were wise enough to think long term and toward an expected recovery — and thus to adjust accordingly.

So, despite the headline GDP “bad news” in the economic data, the GO “good news” suggests the recovery from this recession will be faster than most analysts thought. And as Skousen writes, “The sooner states open up their economies, the faster we will see a return to a dynamic American economy.”

A dynamic American economy — now, there is nothing gross about that!

P.S. The presidential election, and more importantly, our Post-Election Summit are only three weeks away!

Today, I am cordially inviting you to our private, in-person, “off the record” financial summit sponsored by the Investment Club of America. This confidential meeting will take place on Nov. 6-7 (right after the elections) in an undisclosed location in Las Vegas.

Why is this gathering so secretive? Because our First Amendment rights are being abridged by power-hungry politicians, and we need to maintain a low profile in an era of big government.

We live in dangerous times, in which our freedoms and wealth are threatened as never before. The November election has become the most important one of the 21st century due to the stark differences between the two political parties. President Trump and the Republicans are struggling to maintain power in the face of a never-ending pandemic. Their policies of tax cuts, deregulation and appointing conservative justices could be overturned soon.

As it stands today, the election betting odds still favor the Democrats. If the Biden/Harris ticket wins and the Democrats take over the House and the Senate, what will this mean for investors, entrepreneurs and the citizens of America? Will the stock market crash and gold soar?

Biden & Co. have promised massive tax increases on wealthy entrepreneurs, elimination of the long-term capital gains ‘break’ on stocks, bonds, gold, silver and real estate (with tax rates exceeding 50%). They have also promised socialistic programs such as Medicare for All, free college tuition, a New Green Deal, a wealth tax, severe limitations on free speech, a new Supreme Court, all on top of out-of-control government spending.

That’s why we are holding this Post-Election Summit. It is critical to your pocketbook and your way of life.

And to help make sense of it all, we have brought together some of the world’s top experts to discuss the outcome of the November elections. What will it mean in terms of our citizens’ rights to speak out, to run our businesses, to invest, to travel, to assemble and to be left alone?

Will our freedoms and standard of living be curtailed due to new government policies? Will our wealth come under attack with new taxes, inflation and regulation? Will tech and gold continue to be the favorite stocks after the November elections? 

We have brought out the best and the brightest analysts in finance, economics and politics to provide their analysis and answer your questions.

The Post-Election Global Financial Summit is an “in person,” face-to-face event — not a “virtual” conference. Due to legal restrictions, attendance at this in-person event will be limited. We urge you to register now and not be disappointed.

The price for this two-day event is $299. There are no discounts and we expect to sell out quickly. To learn more about the conference, go to https://globalfinancialsummit.co/.

After you register, you will be given the name and location of the Las Vegas hotel, and you then can reserve your room and make your travel arrangements. The hotel is only $99 per night, plus tax. There is no resort fee. Parking is free. We arranged a great deal for you!

Special Note: Please do not discuss this conference on social media. This is a private conference by special invitation only. Thank you.

Our Confirmed Speakers for This Event:

Mark Skousen, veteran editor of Forecasts & Strategies and the producer of FreedomFest, will analyze the impact of the November elections on the economy, the dollar, taxes and your wealth. He will give specific recommendations — what to buy, what to sell and what to expect in the next year for stocks, bonds, the dollar, real estate and commodities.

Jo Ann Skousen, associate editor of Forecasts & Strategies and director of the Anthem Film Festival, will discuss her greatest concerns for the future — the protection of the twin pillars of freedom.

John Fund, senior editor of National Review and the nation’s foremost authority on politics and elections, will assess the good, the bad and the ugly coming out of the November elections.

Sean Flynn, an economics professor at Scripps College (Clermont) and principal author of the top economics textbook in the country, will assess the “New Normal” after the elections — how to survive and prosper in an age of higher taxes, growing deficits and more regulations. As the author of “The Cure That Works,” he will update us on the future of health care and the pandemic.

Hilary Kramer, editor of the popular 2-Day Trader, a talk show host and a graduate of the MBA program at the Wharton School of the University of Pennsylvania, will discuss how the November elections will be a “GameChanger” (the title of her most popular book that was #1 on Amazon this year and was also on the Wall Street Journal bestseller list).

Bryan Perry, editor of the prestigious Cash Machine advisory service, will offer his best post-election investment choices in high-tech and high-income.

Adrian Day, founder of Adrian Day Asset Management and the world’s top authority on global investing and mining stocks, will offer specific advice on the outlook for global investing, the dollar, and commodities, with specific recommendations from blue-chip miners to penny stocks that are likely to double or triple in the coming year.

Barbara Kolm, vice president of the central bank of Austria, who will give us an update on Europe.

And of course, yours truly, your humble Renaissance Man, will be there as well to discuss my favorite investment strategies for 2021.

More speakers will be added soon and Roger Michalski, publisher of Eagle Financial Publications, will moderate the event.

Time is short, and now is the time to act if you wish to be part of this historic gathering. Attendance is strictly limited, so sign up today at https://globalfinancialsummit.co/.

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Profit Off Health and Wellness with This Fund

The Global X Health & Wellness Thematic ETF (NASDAQ:BFIT) seeks to harness the effects of changing consumer lifestyles by investing in companies geared toward promoting physical activity and well-being.

The fund aims to provide investment results that correspond generally to the price and yield performance, before fees and expenses, of the Indxx Global Health & Wellness Thematic Index. BFIT enables investors to access high-growth potential through companies at the leading edge of a long-term, health and wellness trend affecting multiple sectors of the global economy.

Composition of the exchange-traded fund (ETF) transcends classic sector, industry and geographic classifications by tracking an emerging theme. In a single trade, BFIT delivers access to dozens of companies with high exposure to the health and wellness sector.

Only 41% of the fund’s portfolio is invested in U.S. companies. BFIT’s other holdings are in foreign emerging markets.

This strategy reflects that many industry powerhouses are based elsewhere. For example, Puma SE and Adidas AG are headquartered in Germany; Shimano and Asics Corp. are in Japan and Fila Holdings Corp. is in South Korea. This exchange-traded fund provides diversification domestically and across the globe. Better yet, no individual stock represents more than 4% of the portfolio.

The fund has $19.6 million in assets under management, a 0.35% average spread and 58 holdings. BFIT currently trades around $23 and has a 0.55% dividend yield. The fund has been growing steadily since its inception in May 2016. It is up more than 50% since then, and with an increasing interest in healthy living and general wellness, the fund looks poised to continue growing higher.

Chart courtesy of www.stockcharts.com

The health and wellness ETF tracks an index of equities from companies that promote physical well-being. Its universe of holdings includes small-, mid- and large-cap public companies from developed countries that earn the majority of their revenue from the market niche or whose stated business objective relates to good physical health.

Health and wellness crosses the sector boundaries found in traditional classification systems to include nutrition and weight loss, nutritional supplements, fitness equipment and apparel, among others. BFIT has a high expense ratio (0.75%) in comparison to other exchange-traded funds and, as a health and wellness fund, has a very different investment strategy than others in this segment.

I urge interested investors to exercise their own due diligence in deciding whether this fund fits personal portfolio goals and risk tolerance.

As always, I am happy to answer any of your questions about ETFs, so do not hesitate to send me an email. You just may see your question answered in a future ETF Talk.

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Meet the Bard of Fine Cigars

There is perhaps no more iconic symbol of the ethos of celebration than a fine cigar. 

In the new episode of the Way of the Renaissance Man podcast, I speak with tobacconist, historian and purveyor of the Way of the Renaissance Man brand cigars, David Haddad, creator of Fumar cigars.

David is a most interesting gentleman. He’s a man that can regale you with true stories of his interactions with U.S. presidents, military leaders and world diplomats, as well as the key role he and the cigar have played in recent diplomatic history.

Through developing a new business model with the luxury cigar experience at the epicenter, David has traveled the world, bringing the celebration of the cigar to some of the most hostile, war-torn places on the planet. 

A former child actor, former golf pro, current entrepreneur and philanthropist, this is one Renaissance Man who has truly earned the moniker.

I very much enjoyed my conversation with David, and I suspect you will too.

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The Virtue of Enemies 

“A man who has made no enemies is probably not a very good man.”

— Supreme Court Justice Antonin Scalia  

While I don’t think one has to be purposely disagreeable, I do think it’s the case that if you are a person of strong conviction who actually takes a stand in the world, there will be people who disagree with you. Some of those who disagree will do so vehemently and can be considered your enemy. And while I don’t seek to make enemies, I do seek to make the world a better place. That often means taking positions that not everyone will like — and that’s what I consider “the virtue of enemies.” 

Wisdom about money, investing and life can be found anywhere. If you have a good quote that you’d like me to share with your fellow readers, send it to me, along with any comments, questions and suggestions you have about my newsletters, seminars or anything else. Click here to ask Jim.

 

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