Our Best New Ideas in the Making

  • A bulletproof cellphone: More useful than you might think
  • Better than buy and hold: Your first glimpse at a unique new strategy
  • What was it we were saying about volatility a week ago?
  • Household income and a condescending media
  • Wells Fargo “exhausting the analytic intellect”
  • Inflation and the stock market… a new frontline report from the War on Cash… driverless cars and Wisconsin winters… and more!

You might not need a bulletproof cellphone… but if you did have one, you’d never worry about dropping it again.
A mobile phone that can bounce off a hard floor with barely a scratch was one of the highlights from a “meeting of the minds” among the Agora Financial editors these last two days. It’s not often they can gather in one location at the same time… but they converged on our Baltimore headquarters this week to exchange their best ideas in their earliest stages. Today we throw open the doors of this gathering to give you a glimpse…
The key to the bouncy cellphone is a new type of glass — stronger than titanium but also retaining an elastic quality.
Scientists at the University of California, San Diego say it has twice the resistance of tungsten carbide ceramic — the stuff used in body armor.
“The material, which is a form of metallic glass made from iron, could also be used to build new types of body armor and help protect satellites from meteor strikes while in orbit,” says a story last spring in the Daily Mail.
Fascinating, for sure. But the thing about stories like this is that they get a big, splashy write-up in the popular media, based on some scientific paper… and then they vanish as quickly as they came on the scene.
But our small-cap specialist Louis Basenese told his fellow editors on Monday that this is no airy-fairy academic exercise. It’s for real… and it’s investable.
Again, this is an early-stage idea. There’s more research to be done. But we’ll be bringing it your way in the weeks and months to come.
[Ed. note: While we await the bouncy cellphone, there’s ample buzz about the iPhone 7, due to hit stores this Friday. And when that happens, Ray Blanco of our science-and-wealth team says it will set off a phenomenon that could prove immensely lucrative. It’s a longer-term opportunity… but it gets underway on Friday. We urge you to check it out before then.]
The problem with buy-and-hold investing, says our income specialist Zach Scheidt, is that it requires “a lot of work, a lot of luck and a lot of timing” if you want to pull down really big gains.
At our Baltimore editorial meeting, Zach told his colleagues about a one-of-a-kind strategy he’s developing. It’s as easy as buy-and-hold… but with better results and an extra kick.
“Imagine for a second,” he said, “that you could set up a portfolio where you don’t have to do anything. You simply put it into place, sit back and collect cash for quite literally the rest of your life.
“Frankly, it’s just as good as burying gold in your backyard… only it’s like burying gold in your backyard that electronically deposits cash in your bank account every month like clockwork. And best of all, you never need to dig it up. At maturity dates of your choosing, this ‘gold’ rises from the ground — and fills your bank account with even more cash.”
Again, this is an early-stage concept. Much research remains to be done. Ditto for our trend follower Michael Covel — who recently dug up an old audiotape revealing a new and intriguing twist on the strategy that’s already proven so profitable for his readers since he joined our team at the start of this year. We’ll keep you up to date on all of it here in The 5 in the final four months of 2016.
To the markets, where the volatility of late is taking a breather — but not for long.
Let’s see… Friday, the Dow dropped 395 points. Monday, it rose 240. Yesterday, it fell 259. This morning, it looks positively placid, in the green by 57 points as we write, at 18,123.
What was it Jim Rickards was telling us only a week ago today after nearly 40 days of small seesaw movements? Oh, yeah, “It’s when markets are most complacent that they are most vulnerable to shocks.”
And these weren’t even “real” shocks. They were just traders reacting to the latest speech by one or another pooh-bah on the Federal Reserve, as if the Fed would really raise rates at its September meeting a week from today. (Jim is certain it won’t.)
Today’s lull notwithstanding, the volatility might soon feed on itself, according to today’s Wall Street Journal — which says all these ups and downs “could force sales by a breed of hedge funds that use borrowed money to boost returns.”

Leverage — it’ll get you every time. Anyway, you read it here first.
By the way, Jim’s presentation to the Agora Financial editors this week was the most time-sensitive. He’s seeing rumblings from Russia that could deliver a significant market shock. The timing is urgent enough that he’s convinced our logistical team to arrange an online briefing before the end of the month. Again, you’ll hear about it first here in The 5.
Um… About that “surging household income”…
That was one of the big financial stories yesterday afternoon. The Census Bureau said median household income rose 5.2% in 2015, to $56,516. It was the biggest annual gain in records going back to 1967.
The media reaction was best encapsulated in the Financial Times lead, which said the numbers suggested “American middle-class fortunes are improving in defiance of the dark rhetoric that has dominated the presidential election campaign.”
The part about “Why are all these rubes up in arms?” was merely implied.
The answer to that question lies in the figures going back more than just one year. Adjust for inflation and median household income in 2015 was still 1.6% below pre-Panic of 2008 levels. Heck, it’s 2.4% below the all-time high in 1999. So it’s been a long, hard 16-year grind.
There’s less than meets the eye to other parts of the Census report as well. The poverty rate is down, but it’s still higher than 2008 and 2000 levels. And yes, more people have health insurance… but that says nothing about how much people are paying, or what they’re getting for their money.
Which brings us to a record level of credit card debt — $34.4 billion racked up by Americans during the second quarter.
That’s the highest level in the second quarter of any year since records began in 1986. The website WalletHub tells us Americans’ outstanding credit-card balances will top $1 trillion for the first time by the end of this year. Among households carrying balances, the average will run $8,500.
Even more concerning are the parallels during the run-up to the “Great Recession”…

“It is not a question of whether consumers are weakening financially,” WalletHub concludes, “but rather how long this trend toward pre-recession habits will last and just how bad it will get.”
Memo to Wells Fargo CEO John Stumpf: The “It’s not my fault” defense won’t restore your market cap to its previously lofty levels.
“There was no incentive to do bad things,” he tells The Wall Street Journal — a few days after his firm forked over one of those cost-of-doing-business fines for “bad things,” in this case $185 million. WF employees did “bad things” like opening accounts for customers without their permission.
For the sake of appearances, the firm is putting an end to sales goals that pushed employees to cross-sell products — i.e., plying a CD holder with a home equity loan.
Heh… Deep in The 5’s voluminous archives we find this photo snapped by Laissez Faire Today editor Chris Campbell at a Wells Fargo branch on a sleepy summer day in 2013…

Description: 071213_fmf.png

We likened this to a Zen koan, defined by Encyclopedia Britannica as “a succinct paradoxical statement or question used as a meditation discipline for novices… intended to exhaust the analytic intellect and the egoistic will.”
We mused whether Wells Fargo was commenting on the dollar’s constant devaluation under Federal Reserve “leadership” the last 100 years. Or whether it meant that if you invest the dollar unwisely, it will have less value in the future.
In the end, we suspected the intent was to “exhaust the analytic intellect” and induce you to buy, buy!, BUY! whatever packaged products WF was peddling at the time.
And we thought we were making a joke…
“Did the stock market rise in accordance with inflation in the 1970s?” a reader writes after we recently anticipated the dollar’s endgame, “or was the value of money invested reduced by the same 70% loss in the dollar’s purchasing power?
“Thanks. Love The 5.”
The 5: We don’t have the figures in front of us, and deadline is fast approaching… but the stock market was a terrible place to be in the ’70s unless you were lucky enough to buy at the bottom in 1974. And even if you’d held off buying until 1982, you didn’t miss much.
“What Warren Buffett says and what he does are probably two different things,” a reader writes after we noted the Oracle’s routine dissing of gold.
“Obviously, there is no way of knowing, but I would guess he has his own personal stash — just in case.”
The 5: Perhaps. Some years ago, Jim Rickards pointed out Buffett does have a liking for hard assets, if not necessarily gold. The Burlington Northern Railroad, which Buffett bought in 2009, is a collection of hard assets like track and land that moves around other hard assets like grain and oil. That’s wealth preservation for you.
“I was heading out for the Labor Day weekend and stopped by the bank (U.S. Bank in Kirkland, Washington) to get some cash,” a reader writes.
“When I told the teller I needed some cash, she looked at me at said, ‘Sorry, we are all out.’ Being speechless for a few seconds, I finally spit out that this is a bit like Starbucks being out of coffee. I told her I only needed $300, and she said she could ‘handle’ that amount.
“Is this just mismanagement, or is this indicative of the cash(less) environment we are heading into? I am not sure, but it sure scared the heck out of me. Just imagine if there really were a need for multiple people to draw out cash from their accounts. Methinks we are heading for a major catastrophe.”
“Can’t wait to see how ‘autonomous’ vehicles perform on black ice, snow-covered and ice-patched roads,” a reader writes.
“My bet is that there will be some great car curling bonspiels when autonomous cars meet winter driving.”
“Many times,” adds a reader from Wisconsin, “I have driven and the road was white or snowdrifts were across the road. You need to drive very carefully in this stuff, guessing where the road is, determining whether you can safely run through the drift or find another way home. Maybe you need to drive on the wrong side of the road, nearly going in the ditch to get around a snowdrift.
“What about after an ice storm? How fast can you accelerate? What do you do when going into a skid: How long will it take you to stop, what is a safe speed? We train our kids about driving in ice and snow by driving on the lakes in January when they are frozen over and you can’t hit anything!
“Driverless cars are great in warm climes, but in frozen tundra, it is a real challenge. Come up sometime and try it, and don’t let minus-10 weather scare you!”
“Being a sports car/muscle car enthusiast,” writes another, “much like the NRA supporters, they’ll have to pry the stick shift from my cold, dead hands.”
And our final correspondent wonders, “So how are people going to hitch hike, then?”
The 5: People still do that?
Best regards,
Dave Gonigam
The 5 Min. Forecast
P.S. After 72 years of dominating the world financial markets… that wrinkled green money in your pocket… and your bank account… is on track to “retire.”
Exactly what do I mean by that?
In short… You’ve got just days left before a brand-new form of dollar “replacement” currency goes live. When it does, every dollar-denominated account in America could plunge in value.
It’s not just me saying that — I have this on good authority, from a high-level former adviser to the CIA and the Pentagon. I also know how you can protect yourself.
But you have to hurry —

Dave Gonigam

Dave Gonigam

Dave Gonigam has been managing editor of The 5 Min. Forecast since September 2010. Before joining the research and writing team at Agora Financial in 2007, he worked for 20 years as an Emmy award-winning television news producer.

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