Speaker 1: 0:00

Felix. Here. Ray Dalio warns we're in a period similar to the 1930s, with large wealth gaps, political polarization leading to high risk of civil conflict, and he gives us a playbook, which I've slightly adapted to fit retail investors, to make us not just survive but thrive through this period. So this is the guy who saw 2008 coming. He saw the collapse of the US housing market coming and he made money out of that. I'll show you just how much in a second, but he says there is now a 40% chance of civil war in America in the next 10 years.

Speaker 1: 0:39

This is not a doom and gloom video. This is a video to give you more clarity and more strategy, because I think this is insanely important for all of us to understand. We're looking at the greatest wealth transfer in US history coming. I will explain to you why traditional investment strategies will likely fail and how only prepared investors will survive the shocks that are coming in the next 10 years. So the next 20 minutes, if my cat will allow me to see the screen, this is Albert here, very smart, smart cat. If you're a smart cat like this guy, stick around for the next 20 minutes or so and I'll walk you through it and I'll also show you how you can actually learn more with me and take this into real, applicable rules, and that is at a live training which you can sign up to at FelixPensadogscom training. But let's just jump straight into it.

Speaker 1: 1:29

Who the heck is Ray Dalio? Well, he founded Bridgewater, managed $140 billion in investments, advised central banks and governments around the world. His 2008 prediction made Bridgewater 14%. Doesn't sound like much, does it? But the market went down 37%. So the guy made 50% plus, effectively, while the market was reading. And he's saying the times ahead will be radically different from what we've experienced in our lifetimes, and I want you to be prepared for it, because that's really our mission here is to make you better prepared and put you on the path to the financial freedom and the retirement that you seek.

Speaker 1: 2:06

So there are three big forces at play here. The first one is well. The first one is key to understanding these, because we've never seen these three things happen at the same time in the last 75 years. The first one is we have unprecedented debt levels. We're about to reach $40 trillion in the US, and what does that do? Well, it devaluates the US dollar and it erodes wealth on a massive scale, mostly for the middle classes and below. We also have geopolitical shifts which are affecting markets very significantly. We have a very, very high frequency of large conflicts going on at the same time out there, and in addition to that, we have probably the biggest tech disruption we have ever seen since the invention of I don't know, the steam engine probably something like that. So we're going to see mass job displacements, which is Wall Street lingo for lots of people who lose their jobs. 30% of jobs are at risk, according to Dalio and I think that's a conservative number. There are much, much higher numbers that I've seen. And when these forces converge, what usually happens? Well, the last time that happened, we got the Great Depression and World War II. Now I'm not hoping and praying for that, obviously, but he's saying people are fighting the last war, they're not preparing for the next one. Now you'd be different, because you're sticking with me for the next few minutes here.

Speaker 1: 3:31

So what's this debt super cycle? If you're an American, you have $109,000 of government debt right now. That's on top of your private debt. The US government debt is growing faster than in the economy, which just doesn't happen unless you're in a world war. I'm not predicting a world war. I'm just saying government is insanely irresponsible. How much money the government spends on interest is now larger than the US defense budget, which has never happened before, and that is now 30% of, or about to be 30% of, all government revenue. So 30% of all taxes paid and collected by the US will be spent on debt maintenance not reduction, just maintenance. And what happens? How do you deal with debt? Well, dalio says you either default Now we're not expecting the US to default, it isn't Argentina but it has to inflate away the debt, and that means you are going to pay for it, because inflation is actually a hidden tax on you. So how do we deal with that? How do we survive that? How do we come out of that thriving? That's what the next couple of minutes will teach you.

Speaker 1: 4:34

So as to this polarization, this risk of civil war in the US, yes, democracy, I think, is very much under pressure from lobbying and from money, but also from the polarization that the money has achieved. There is very low trust in government. The US Republicans are more conservative than ever, us Democrats are more liberal than ever and they mostly loathe the other side. There's no real conversation, there's no real debate, it is just loathing other side. There's no real conversation, there's no real debate, it is just loathing. So it's this social media echo chamber, because we only see content that resonates with what we already believe in. Therefore, we believe in it more strongly. We never actually get to hear what the other side thinks. So he is saying there is now a 35 to 40 percent chance of civil conflict in the US.

Speaker 1: 5:19

And then we have the global conflict. We have the US-China trade wars, the tech wars, the Russia-NATO tensions in Ukraine Well, tensions. We're putting a Middle East permanent war, it seems, and therefore defense spending is up 28%. Now that's an opportunity as well as a terrible thing for the humanity. We have massive supply chain disruption and currencies are more volatile than ever. Now this geopolitical instability and instability within the US. You go back historically. Well, in the 1930s the market tanked 89%. In the 1970s it was 20% down on unrest and so on. And then in 2008, for the following six years, nobody made any money. It took six years to recover back to zero. Do you want to push your retirement back six years? Is that something you want to be doing? Probably not right. So we need to be prepared, and I'll give you how to prepare for that.

Speaker 1: 6:11

Now, the AI revolution, which is brilliant in many ways. In many ways it is fantastic, but it is also putting a lot of jobs at risk 47% of jobs, it says, here. In the next 10 years we are going to get productivity gains and we are going to get a lot more AI millionaires, but a lot of people will just be. Those just lose their job and they won't know what to do because they won't know how to use AI. So what sectors are going to lose the most jobs? Well, it isn't your street sweepers, because that isn't really an AI job as yet. It's finance, it's legal, it's healthcare workers. It's retail employees. It's transportation drivers, truckers. It's manufacturing.

Speaker 1: 6:54

I read something yesterday the prediction is that Amazon will no longer have warehouse workers and Amazon will no longer have drivers in 10 years. It'll just be automated. There'll be a robot in the van that'll throw that parcel through your letterbox or whatever. This is going to happen way, way, way quicker than all the previous revolutions we've seen. It's just way faster, and the better it gets, the faster it gets. And if any of you are involved in making software, like we have a product called Trade Vision every six months, we'd have to completely change what we do because we realize the things we wanted to do are not actually possible. So we're now building things that are not possible because we know in six months they'll be possible and affordable.

Speaker 1: 7:36

So it's an amazing time for some of us, but it's also a dreadful time for many of us and I want to make sure you're in the some of us part, us part, not in the dreadful part. So, massive job losses, but a huge amount of economic value created. Now a lot of that will go to where? A lot of that will go into shares, investors, asset rich people, not the employees and there potentially are 1000% investment opportunities in the AI space. So what sectors do we look at and I'm somebody who always looks at industries first, stock. Second, it removes the FOMO. And secondly, it means we're actually where the money is flowing ai, infrastructure, automations, data center, cyber security absolutely. What's losing? Retail, the old banks, manual labor jobs, routine service jobs they losing.

Speaker 1: 8:32

So it's an insanely unfair decade we're about to enter and that's why I want to put you on a higher level where you understand you will be the loser, to make sure you're not one of those. So what does it actually mean for you. Well, the debt crisis causes higher inflation, political instability causes more market crashes, more instability and tax disruption causes huge sector rotation and huge job losses. So people who are doing the same thing the buy and hold forever well, they are vulnerable to that disruption. The bond portfolios will lose because of high inflation. Inflation will be higher than what the bonds are paying out and therefore you're going to lose money on that Cash savings. Well, that's just the worst place. Because you've got high inflation, your currency is worth less and less. It's just a terrible place to be.

Speaker 1: 9:24

Now we also want to look at domestic versus global, and I'm probably a contrarian on that, because a lot of people just say just diversify. Well, let me ask you this how much do you know about the Indian economy or the Chinese economy or regulations over there? Probably very little, right, like most people, and therefore there is a smarter way to get exposure to international stocks while still staying within a US regulatory framework. I'll teach you how to do that in just a moment. But we're expecting volatility to be three times higher than the last decade. That means there'll be more crashes, the markets will rally and it'll be wonderful, and it'll completely collapse very, very quickly.

Speaker 1: 10:00

I often call it the sandcastle principle, because you build something out of sand that looks very beautiful. One wave comes and takes it all away. That happens to most people, to winners. Sector rotation will speed up much, much faster, and alternative assets are kind of everywhere. They're becoming mainstream. A few words on that in a moment as well.

Speaker 1: 10:20

So what are we looking at? We're looking at, of course, ai exposure, cybersecurity, biotech If you are one of my students already and you see my watch list for this week, there are probably 20 biotech stocks on there, which is quite a lot. Tech innovation, etfs, precious metals We've been probably gold as one of our best performers this year. Crypto we need to talk about that too. Now, expected annual returns here are always a. Well, nobody knows what the actual number will be, so take this with a real pinch of salt, right, this is just a Dalio number.

Speaker 1: 10:53

Now, what's losing? Well, traditional retail, because people don't go into shops. Molds are a Dalio number. Now, what's losing? Well, traditional retail, because people don't go into shops. Molds are dying in the US. Therefore, the people who own the real estate, who own the molds, are dying. So be very careful with retail REITs. For example, banks, unless they adapt are also out. My cat's making a lot of noise there, if you're wondering where that's coming from.

Speaker 1: 11:15

For the moment, coal and oil are actually still winners, but we expect that to decline as new technologies become better. So I'm not making some random prediction on. You know, sell coal and oil. I'm looking at where the money is flowing. At the moment the money is still flowing into coal and oil and therefore I'm in it. When the money starts to flow out again, I'm out of it. You want to learn exactly how that process works, which is a little bit more intricate? Then join the live training that there's a link down below for it felixfrenzorg training. Where are the opportunities? Emerging markets there are some undervalued dividend stocks out there, absolutely. But really what this is about is now is the time to prepare. The next few years we're going to see max disruption and if you haven't done the preparation here, you're going to be pretty sad or pretty distressed and then, going into the end of the decade to come, the winners will become clearer and they will actually dominate. So it will pay off very nicely for those who've positioned themselves early Now.

Speaker 1: 12:21

Inflation has a huge, huge, huge impact and the government tells you inflation is 2. Something percent. Now the real inflation is significantly higher. In fact, I think it's actually way higher than the 8% here, because asset prices are going up. This year, as I'm recording this, I think the stock market is up something like 12% halfway through the year. Last year it did 25%, so last year the actual inflation was 25%. Now your job did not give you a 25% pay rise, did it, but stocks got 25% more expensive. So the people who hold a lot of stocks and the right ones they're 25% wealthier. So they're going to pay 25% more for their house and for their services and their travel, their vacations and all that stuff. And you're starting to notice all those things are getting more expensive. Nice restaurants, nice hotels, real estate is getting more expensive. That's the real inflation and that is the consequence of printing money. That's the consequence of inflation. So when the government says we're printing all this money to bail you out, well, don't believe them. M2, which is money growth, is 12%, so inflation is going to be 12% plus. Asset prices are going to go up 12%. Not all of them equally, but some of them.

Speaker 1: 13:41

So what should we do? Well, cash should be invested. We might want to diversify. Now, do you need foreign currencies? I put that in here not for everybody, because if you live in, say, the US and you earn dollars, you spend dollars. You probably just need dollars. You don't really need anything else, and otherwise it just adds more risk. But there are assets like gold and real estate that can also shield you very nicely from inflation. That tend to do quite well. What about crypto? Yeah, I think some exposure to Bitcoin and selected crypto assets can be a good thing.

Speaker 1: 14:11

Generally speaking, inflation benefiting stocks, things like energy and materials and, if you've noticed, the last few months I've been talking a lot about those that's kind of where we want to go, because the dollar purchasing power at these inflation rates, well, it's going to lose a lot, a lot. Maybe 20% every five years or something like that. So you've got to think about what's my money worth? The dollar itself in cash is worth very little. Invest it. It's a beautiful thing.

Speaker 1: 14:40

So what's the action plan here? Well, first of all, why the heck should you listen to me? I should probably have told you that at the beginning, shouldn't I? I used to be an investor and banker. I've surrounded myself with older, wiser investors and bankers who have way more than 150 years of experience working for big institutions Think Goldman and Merrill and Deutsche and all these kinds of banks. We've trained about 20,000 students. I'm also the co-founder of Trade Vision and my philosophy really is just make institutional insights available to retail investors and teach retail investors the same rules institutions apply. So we are essentially looking at particularly risk management principles on Wall Street, but also stock selection principles, and we apply those and teach those to retail investors. So what's in our portfolio? Well, I'd say most money, and this is my opinion. I'm not telling you specifically what to do, but this is just guidance based on what Dalio says and also my mentors.

Speaker 1: 15:31

70%, in my humble opinion, should be in quality stocks. Now, what is a quality stock? We can debate that for a little while, but essentially you want stocks that have high gross profit margins, good return on capital and are therefore going to survive the next winter Think Microsoft or something like that. There are also non-tech versions of that good companies. We do want some global exposure, because there is a possibility that the US at some point may lack other parts of the world.

Speaker 1: 16:01

Now, as I mentioned earlier, I'm not a huge fan of going out and buying Indonesian stocks or you know African stocks or Indian stocks, or you know even German stocks God forbid, because you don't really understand those markets and regulatory environments and taxes and policies and the many things. Or Indian stocks, or even German stocks God forbid, because you don't really understand those markets and regulatory environments and taxes and policies and the many things. So what's the easier way of doing it? You can get global exposure by buying globally exposed American companies. So if you look at somebody like an Apple or a Netflix or any of the big tech stocks, for that matter, they typically get about 40% of their revenue from foreign buggers like me. So that means you actually have that exposure.

Speaker 1: 16:46

So you want to have a look at do I already have that exposure and do I actually want more of it? And then we're looking at alternative assets. What are alternative assets? Well, gold, silver, other commodities and precious metals, perhaps Bitcoin, perhaps some other cryptocurrencies, or you can buy an ETF that gives you exposure to that. And then what we do is we rebalance this as it grows and shifts and we look at where is the money actually flowing? Because ultimately, where all the money flows is likely what's going to go up. So that's really what we look at and I'm going to go through that in a lot more detail in the live training. Otherwise this video would become like an hour and a half and I don't want to impose myself on you like that. So this is kind of what we're looking at here, and this is not a specific recommendation to you, because I don't know you, I don't know your portfolio.

Speaker 1: 17:35

This is just a general guidance based on the Ray Dalio principle, which is some blue chip stocks, they will pay dividends. I'm not a huge fan of dividends, but you can't avoid them. Why not? Because they're typically very tax inefficient. To start with, we want to have some of the money in tech leaders. We want to have some broad market ETFs, just by the S&P 500, right? So like a cheap VU or one of those ETFs and some investment grade bonds to balance out the whole thing.

Speaker 1: 18:05

We then want to have some global exposure protection from US specific risks. Now you could go for specific ETFs that gives you that overseas exposure, or you could just look for blue chip and tech leaders that actually give you this exposure and move the whole thing over there, which is the bit that I'm leaning towards personally. And then alternatives precious metals, real estate gold crypto. It gives you a nice little balance. So, like, for example, last week, the market wobbled quite a lot, some of my things were going down, my gold stocks were doing very well, and that makes you feel calmer inside and therefore you don't do anything stupid. And it is not when you take stupid action. It is not because you are stupid. I used to take a lot of stupid action and maybe you disagree with the fact that I'm stupid or not, but it's just our emotions take over. That's really the better way of putting it, and we want to make sure that doesn't happen.

Speaker 1: 19:00

So we want to start with the core holdings. We want to continue to DCA into those and build those alternatives last and slowly. So a lot of people just start here because it's more exciting, and then they don't do this bit. They start here, right, this is the bit you want to start in and we want to rebalance that and we also want to look at our exposure to any stock in any particular sector. Sounds complicated, but actually it isn't. It's a very, very straightforward process that, once you understand it, once it's been properly explained to you, you might need some handholding and do it with somebody together, which is what we do with my students, so this is kind of what we're looking at here. Implementation First of all, assess your current implications.

Speaker 1: 19:38

Have a look at how it affects your tax. If you do these things, you can talk to AI about your tax now it's pretty good and then we can start to make a plan. We begin to start buying the core assets we want to have. We might want to add some different sector exposure, maybe some international exposure, and we then look at how do we systematically rebalance this? You can do that once a quarter. I actually do it every week, I do it every Sunday, but you don't have to. You could do it once a quarter and we then down the road months five to six. We carefully start adding some alternative asset exposure, a little bit of that crypto. Maybe we start looking at some REITs and real estate and really, really hone down on the monitoring and the reviews.

Speaker 1: 20:21

Now, in terms of how much do you buy anything for? I think these are pretty good guidelines. It depends a little bit on what you already hold no more than 5% into a single stock to buy. I would let it run if it keeps running, although we want to have automated sales on those, and then we want to never be in a sector for more than 25 percent. I'd say that's probably quite a big number and I put that in there because I know a lot of people have that tech exposure and don't want to run out and sell everything tomorrow. But you might want to think about the new money where that flows, to diversify yourself away from the risk. Because if you own 10 AI stocks that's 50% of your portfolio well, you're insanely exposed.

Speaker 1: 20:57

And again I see that from students who come to me and they're like oh my God, the market was so terrible last week and I'm like it went down 2%. He said my portfolio is down 30%. I'm like, ah, okay, we need to look at your exposure because you're heavily overexposed in the sort of you know loony part of the market, and when I say loony, I mean high risk, potentially high reward. And this is also very important and something a lot of people don't you want to have about six months of emergency cash outside of this portfolio and that will make you calm because when the market drops and it will you'll be like well, I don't need to sell anything, we're fine, we've got cash, we can sit through this because we know that after every dip, there is inevitably a recovery. Now, the length of that recovery 2008 was six years. In 2000, it was 15 years, so you have to have some patience.

Speaker 1: 21:49

If you found this useful or enlightening, or maybe even a little bit unsettling, then I urge you to learn more, because that is the only thing that will make you calmer and it will make you happier. It'll make you feel more in control, because you will be. So. I'm going to run, for those of you who wish to join me, a live training which you can join at felixfriendsorg slash training, and it'll go on for about 90 minutes maybe a little longer if you ask me a lot of questions and I will teach you the three steps that I use to select stocks and then how to automate the profit taking and the risk management, and how I do this in about two hours a week on a Sunday. I like doing it when the market's closed. I think it's a much, much better thing to do.

Speaker 1: 22:35

So come and join me and, as I say down here in the bottom right corner, don't let the greatest wealth transfer in history pass you by, because every bit of change and every bit of fear and every bit of market wobble and crash, somebody's making money, and you can either be on the side of the scared and the let's hope it'll work out all right, or you can be on the side of the people who actually take control by up-leveling your skills, and that's, I think, the one true scandal that education does not cover is we do not get taught how to manage our money. Yet we all spend our entire lives managing money. Just most of us don't know where to start. So that's our mission here. Come and join me, phoenixfriendsorg slash training. I wish you a beautiful rest of your day.