Latest / Financial Survival Network / Contrarian Investing Mastery: Navigating Economic Downturns with Elliot Kallen of Prosperity Financial Group #5936

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Contrarian Investing Mastery: Navigating Economic Downturns with Elliot Kallen of Prosperity Financial Group #5936 · Financial Survival Network

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  Everything that we do in this world revolves around energy, and primarily oil and
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  oil and gas. It even gas has gone up a little bit, even
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  though natural guests has always been super low. And if you take that again
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  in there right now is a great time to buy and hold, but not
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  for a quick turnover. But I do think that you're going to see some
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  nice returns coming in for technology next week when you all start reporting, you'll
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  see a quick fix in there at the end of the month or the beginning
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  of November. You are listening to Carrie Lutz's Financial Survival Network where you get
• 0:30
  valuable information you just can't find anywhere else to thrive in today's trying times.
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  You need the Financial Survival Network now more than ever. Go to Financial Survivalnetwork
• 0:43
  dot com and get your free newsletter and gift. Financial Survival Network now more
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  than ever, and welcome. You are listening to watching the Financial Survival Network.
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  I'm your host, Carrie Lutz. We're just about at the end of
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  October. No crash yet, but there's still how many more trading days are
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  there? There's two more trading days after today, so you never know.
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  October twenty ninth, nineteen twenty nine was a date to live in infamy.
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  Hey, it always beeds to be a contrarian. Sometimes not in the short
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  run, but in the long run. Always. We've got the king of
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  contrarian investing with us now. His name is Elliott Callen. Maybe not the
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  king of it, but certainly a master of contrarian investing. Between both of
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  his entities, he's managing close to a billion dollars. Elliott, great to
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  have you on the show. Pre call, we were talking, we came
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  from the same area in Essex County, New Jersey, so we got a
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  lot in common here close in age of Hey, is the market going to
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  crash at this point? Or is this the tide to be rushing in?
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  You know where wise men fear to go fools. You know where wise men
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  fear to go, fear to travel, fools rush in? Right? Well,
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  Kerry, thanks for having me on. I appreciate that. So as
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  we're talking about New Jersey, now that I missed the New York cheesecake,
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  so you're making me hungry as we're talking here, I'm most ad deli.
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  You know, we have it here in Florida, just not quite as good,
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  and now in California has none of it, so I get it in
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  California. Here's where I think we are asked me for my market to be
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  a prognosticator here and I do a little bit. We do a lot of
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  research. I just came back from a three and a half day confidence in
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  Philadelphia with the Schwab organization, which we do our custodia work with. I
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  think we're I think we're at a little positive interest rates. Here's here's the
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  good news for investors right now is the markets have been beaten up. If
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  you nobody expected this year that AI companies, you know, the Microsoft's of
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  the world would zoom the first year for the year. But everybody thought that
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  that the low tech, high dividend paying companies would that was the place to
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  be. So what did all of us experts do. We sold out of
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  tech early on this year, We bought into everything that based dividends. What
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  did the market actually do. Dividend paying stocks junked out, they were terrible,
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  and AI went crazy with a twenty three to twenty seven percent gay Wow,
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  totally different. What's happened in the last ninety days is basically all the
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  AI stocks for the most part, not specifically, but for the most part,
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  gave all the money back and they did s ANDP. Now with down
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  below where it started the year, and it was up into double digits for
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  a while, and then what's starting to come back the broader market a little
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  bit with dividend pay So all the experts have been wrong, All those guys
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  with economics degrees have been really wrong on what we're doing. But with eighty
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  dollars a barrel oil, right it is possible for the Federal Reserve to drop
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  interest rates. It's impossible because plastics, metals, everything that we do in
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  this world revolves around energy, and primarily oil and oil and gas. Gas
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  has gone up a little bit, even though natural gas has always been super
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  low. And if you dig that again in there, right now is a
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  great time to buy and hold, but not for a quick turnover. But
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  I do think that you're going to see some nice returns coming in for technology
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  next week when we all start reporting, you'll see a quick fix in there
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  at the end of the month or the beginning of November, and that shul
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  hold us through the end of the year. So I'm a buyer today,
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  but I'm a cautious buyer with a very diversified, spread out portfolio, not
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  just trying to pick sectors and winners, but try to spread the news out.
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  All right, So did you see since you're a contrarian and you were
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  presumably you weren't buying dividend stocks when everyone else was rushing in there, did
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  you see any of this coming? It's hard. I saw the technology coming,
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  but everybody did, but nobody believed it was going to last for six
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  months. Everybody thought, well, we have a one week, a two
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  week, a one month gain. What I did is I cautiously bought in
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  so well, the SMP basically is beneath the water today and the SMB and
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  the NASAGIK is for them almost beneath water. We're up eight percent, so
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  we really out pasted by eight hundred basis points over the most of our indexes.
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  So sometimes you win by not losing. In other times you lose by
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  not winning, right, that's correct. Then you also can't bet on mergers
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  and acquisitions. That's a sector that is due for a big rally, but
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  not today, probably next year. That's the place you want to be.
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  Take advantage of miss printing, and there's a way to do that. And
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  we could talk separately, how do you take advantage of mergers in the mergers
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  and acquisition market, which is a good thing. I know, you like
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  we talked about this. You like mining stocks, you know, I like
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  them, but I am invested in them to some extent. Yes, and
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  gold is generally does well. I think you know you not have more world
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  volatility, don't forget, and more world multity is generally good for mining stocks
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  on the leg. They haven't performed as well, but they're good on the
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  leg. So you're actually probably saying something for the next six months. Well,
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  the world is more volatile. If it doesn't get more volatile than it
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  is, mine should be a very good place to be. Okay, So
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  you don't think the world's coming to an end? What about the ceaseless wars
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  the Middle East? Ukraine, Russia? And the market just shrugs it off
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  here, Elliott, Right, So the biggest problem we have is if the
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  war spreads. So Ukraine and Russia have been doing this for over a year
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  and it did not really affect the markets. As a matter of fact,
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  what it's going to do, it's going to dramatically help out the US defense
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  industry because we've got to catch up on all new armaments. That's a great
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  place to play right now, and they're high dividend bank stocks those but that's
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  a great place to play. The other place to play is to lessen your
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  portfolio of Taiwan. If China decides to become ward wrestling, because we have
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  two carrier battalions, carrier fleets over in the Middle East, we're a little
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  more vulnerable that it would be a smart play for China, But they don't
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  want to create war either. I don't think, but I don't trust anything
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  coming out of China. But again, the defense industry one US industry that
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  will be the biggest winner from all this volatility, and they've already been big
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  winners before write anything. Yeah. I mean you look at Raith the on
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  McDonald douglas. GEI had that one of the biggest quarters in her history,
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  and they have stunk for ten straight years. They've been doing great. You're
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  just going to see more and more of defense related contractors have record profits probably
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  for the next twenty four to thirty six months. Okay, So let's just
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  go shoot back to interest rates for men in Italy. So the two years
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  bumping up and the FED can't allow the two year to get ahead of the
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  Fed funds rate. Right, the yield curve no longer inverted as it was
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  for the past fourteen months. I think, do you think we're in a
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  recession right now or are we heading for one? No, I don't think
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  we're in a recession. I've heard now for the last two years. Fourth
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  quarter of twenty two, there's gonna be a recession. It didn't happen.
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  Fourth quarter of twenty three. There's gonna be a recession. Now you have
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  some experts talking about the fourth quarter of twenty four. Sooner or later,
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  they're gonna get it right. You just keep saying that you're gonna have a
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  flat tire sometime on the road. If you keep saying, I'm gonna get
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  a flat tire. But I think you're going to slow down today. There,
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  I'm sorry. Sure, we're gonna have to slow down today, a
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  traditional slowdown. I think we're kind of at a little bit of a malaize.
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  You know, you don't like they're here, but you don't do anything
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  about it. That's kind of the malaser ll in. So we're gonna look
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  at one one and a half maybe two percent growth for the next two years.
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  We do have an election coming, We're not gonna have four and five
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  percent. That's not in our willing today. It's just not. We have
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  to have some changes at the leadership level to rebuild the US energy again,
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  and then you'll see oil come down. But as well as we are depending
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  ourselves on four oil, you're going to see high oil race, which is
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  going to be a slow down in the interesting e raise oil. Okay,
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  back in the seventies when we had the dual of Middle East oil embargos that
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  really put the herd on the US economy led to recessions both times. Arguably
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  the first one never really ended and the second one started. I think it
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  was seventy two and seventy five when we had those embargos. Memory serves may
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  correct. I might be off a little bit on the seite. Right.
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  It was once under the Dixon campaign because gave permission to the Shaw to form
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  OPIC and they immediately did an a bargo and then once starting to fod campaign
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  following on when he rescued the US ship in North Korea. Right, Okay,
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  so, but what happened since then? Yes, oil consumption has continued
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  to go up. However, natural gas has become much more essential, much
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  more are important, and in many ways has eclipsed oil. Other than in
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  the transportation sector, that gas way more important. The discount of that gas
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  per BTU to the price of oil, you know, it's pretty substantial,
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  and it's stayed very high over the years, so that gas is low.
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  What does that mean, Yes, people might drive less, but cars are
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  more efficient. I'm just not sure that the oil impact from eighty one hundred
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  dollars a barrel oil is as great as it once was. So the world
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  used or the UF uses, well, that's called developed world. The developed
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  world uses forty million barrels of oil a day a day, so staggering.
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  Now now we add electric cars, we add gas, which are absolutely correct.
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  We're borrowing more clean gas that we've ever brought to the United States,
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  particularly less cold. China's bring more of it on both on oil ends,
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  but we're not any of the bring more of it. Africa's boarding more of
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  it. The prediction is that in twenty five years from now, with all
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  the electrical changes that are going to be happening in your car and maybe hydrogeneral,
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  so who knows, we're still going to be using thirty six to forty
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  million barrels a day. Yeah, and that's it's not going to change,
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  Okay, But the percentage of energy, you know, not gas, is
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  definitely higher in Europe. You know, with the Ukraine Russia war last year,
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  it was a near disaster. Was only you know, NonStop LNG ships
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  leaving the US that really saved their bacon last winter. So in many ways
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  that gas more important than oil. I'm not downplaying the importance of it.
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  I'm just saying it's not exactly the same situation as it was back in the
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  oil embargo days. Forget the energy that's been cowered, and you make a
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  really good point there, Kerry. The energy that's being that's powering the US
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  economy is really much your right, is much more natural gas. You one
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  hundred percent right on that. You know, in calum in California, you
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  couldn't build an oil refinery if you wanted to. You could not build an
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  oil power plant if you wanted to. It's going to be natural gas as
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  some solar and a lot of the country is going out way. Coal is
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  basically dead, a dead product in the US. Not dead for export only,
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  it's only for export. It's like Heineken. The beer that we get
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  here in the United States from Heineken, they call it export, and it's
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  nowhere near as good as the beer that they keep in Holland. Well,
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  I think that you can make a good point on natural gas. I think
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  from an investment standpoint, natural gas is a lousy investment and has been for
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  a very very long time there now or now. Yeah, So I am
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  not an investor in natural gas, but I have played the oil markets over
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  the last few years. Yeah, yeah, I mean, I'm not down
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  playing the importance of oil by any stretch. I'm just saying it's not what
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  it used to be. Plus, vehicles get much better mileage. But I
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  totally agree. Consumption has continued to go up, although it peaked at the
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  gasoline consumption peaked at the Great financial collapse, and it's never gone over that
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  least the last time I looked at the chart. Yeah, Now, we
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  do have carrier. To be fair, we do have a really big set
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  of head winds in front of us that could spell session, and that's real
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  estate also commercial, especially right it's going to start with commercial and then we'll
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  see where the contagion continues from there. But you know, in the office
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  space across the US, there's about a forty percent vacancy rate in California.
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  Our building, I'm about forty percent empty the building. It's a large building.
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  The older of these buildings now had eight buildings like ours. He's downs
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  fol six of them off add less than he borne for. Yeah, that's
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  happening side down. Everything is upside down there, right. New York is
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  going to be like that. Florida might not be as much because you're really
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  much more a strip wall state rather than big office park state, but most
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  of the country still works on office parks. There's going to be a gigantic,
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  you know, come to Jesus situation in the second or third quarter of
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  twenty twenty four when a third of these buildings have to be refinanced and they're
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  not worth that much anymore. And that could spill over into the personal housing
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  market. And it wouldn't be so bad to have a housing correction happen where
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  houses go down in the US, because that would open up the opportunity for
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  more buyers, which is not there today. So that bad news could spell
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  good news for demand, even though it breaks havoc on supply. Yeah,
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  Yeah, there's a like you said, a lot of the potential economic headwinds.
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  But going back to what you said initially, you know the economists,
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  remember that old saying economists they have successfully called five at the last two recessions.
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  Well, I you know that's that there are a lot of jokes about
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  economists. You put twenty in a room asking what tom it is, and
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  you only get the approximate time. I's no, what you don't actual time
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  I listen to I get about one hundred and fifty economic reports daily. It's
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  impossible to go through all of them. And I talk with them, I
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  meet with them, and I do everything all the time. And my afternoon
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  can be the exact opposite of my morning depending on point of view. So
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  some of this isn't going to yeah, no, hey, I couldn't agree
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  with you more. But and the one thing that most economists never look at
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  as the actual flow of funds that is coming from the rest of the world
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  because of the uncertainty. You know, when you're parking money in a bank
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  overnight, you're not gonna park it in Deutsche Bank for the weekend, right,
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  You're gonna park it at JP Morgan or Wells or one of them,
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  even though our banking sector is certainly ailing, or you're gonna be parking it
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  in treasuries, You're not going to be parking parking it in in Chinese government
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  debt or Chinese real estate debt, right for sure, and ended fine something
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  percent in you were short term treasuries. That's a really attractive number. All
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  right. So when we have this conversation, the come next October, where
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  you think we're going to be at, Elliott, I think where you're going
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  to be higher and better off today because we'll be a month out of the
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  election next October, and right there's an election. Well, I consider myself
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  trans I am trans political. I've moved beyond it. I don't even think
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  about politics anymore because everything always comes down to economics. Elliot, you have
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  the podcast, you're a website. How do we find you? Right?
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  So, best place to reach me to the website is Prosperity Financial Group dot
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  com or Elliott E. L. L IoT at Prosperity Financial Group dot com.
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  And there's a website. There's a phone number on a website. I
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  take phone calls. It's a lot of fun. Love to talk to anybody
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  at any time, all right. Hey, appreciate you coming on. I've
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  got a question for Elliot. Shoot me an email. Kl at Carrie Lutts
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  dot com. Show notes to this interview on Financial Survival Network dot com dot
• 17:18
  com. You will find Elliot's site. Just click through to it and hey,
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  questions, comments, whatever, criticism. We don't really accept criticism lightly,
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  but we always accept it. It's kl at Carrie LUTs dot com.
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  Elliot got at absolute pleasure. We'll have you on again soon. Thanks so
• 17:36
  much for stopping by. Thank you so much, Carry thanks for listening to
• 17:40
  Carrie Lutz's Financial Survival Network, your solution to today's trying times. For the
• 17:45
  latest, go to Financial Survivalnetwork dot com. Financial Survival Network now more than ever