185: Zero Hour and the Demographic Cliff!

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Wealth Formula Episode 185: Zero Hour and the Demographic Cliff!

Catch the full episode: https://www.wealthformula.com/podcast/185-zero-hour-and-the-demographic-cliff/

Buck: Welcome back to the show everyone. Today my guest on Wealth Formula Podcast is Harry S. Dent. Harry is the founder of Dent research and the newsletter Boom and Bust. He’s also a prolific writer, authoring numerous best-selling books over the last few decades including The Great Boom Ahead in 1992, The Demographic Cliff in 2015 and The Sale of a Lifetime in 2016 and most recently, Zero-Hour which was published in 2017. He also has another publication that’s available on Amazon called Spending Waves where he shares decades of extensive research covering over 200 businesses across 14 different industries to give readers a usable tool to find the most lucrative opportunities over the next 20 years. Harry, welcome to Wealth Formula Podcast.

Harry: Yeah, nice to be here, Buck.

Buck: Yeah so you know it’s nice to talk to you. I’ve read some of your books in the past and you know you have a pretty unique approach to your work that I think for non economist and I think even though you’re not an economist you’re closer to one than we are. You’re a finance person, you have a pretty unique approach and that really makes a lot of sense to I think common sense you know smart people that is focusing heavily on the role of demographics and the outcomes of economies. In particular, as I recall, you helped predict are you actually predicted you were one of the few if not the only one really to predict Japan’s decline in the 90s when others didn’t really see it coming. Can you talk about some of the concepts that make up you know demographic predictions based on demographics and ultimately I guess what went into the demographic cliff book that you wrote back in 2015.

Harry: Yeah you know I focused way back from consulting to fortune 100 companies and then to new ventures where I really learned about the up-and-coming baby boomers back in the early 80s that were just coming into the economy back then how big they were, you know I ended up studying for my clients you know consumer trends and technology trends, these are the things that really drive our economy. Seventy percent of our GDP is consumer spending ten percent on average is business investment in response to increase consumer spending, because they don’t without that only 20 percent of its government. Economists do nothing but stubborn government policies and monetary policies and fiscal, all nice stuff of the point but consumers drive the whole train and government only gets its revenues from taxing consumers and businesses. So that’s what I look at in the first breakthrough I had in the 1980s was what I call the spending wave. I knew exactly when people spend the most money from government statistics had only been available since 1981. Every year they do surveys and then I can now project when new generations like the baby boom or the Bob World War two generation before them or the Millennials coming effort, when these generations will spend more money, when they will peak at age 46 for the Boomers, 47 for the Millennials and for the early so millennials, the next wave after them it looks like 48 at this point, we’ll know better in a few years, but we know exactly when this happens and that told me in 1989 when I came up with this spending indicators back in 1988, again my first breakthrough it told me that after a brief downturn the US and Europe and most the world we’re gonna see the greatest boom in history in the 90s, it wouldn’t peak until 2007 and momentum from baby boomers and at the same time Japan had its baby boom a decade and a half before us, had its whole bubble from them and real estate and stocks and had their crash coming in the 90s, I was the only one to see that crash coming but more important because somebody that really understood bubbles could have caught that. I was saying that when I said the rest the world’s gonna be in the greatest boom in history. So that was really too contrary things that it came from one simple indicator, average person enters the workforce today you know around age 20 between high school and college graduation and they will have kids get married earn and spend money till about age 46 for the boomers and they’ll spend less predictably so we could predict an economic boom the strongest in history in theUS from 1983 to 2007 and then growth would slow with the peaking of the baby boomers and guess what we’ve been living off a quantitative easing endless money printing juicing up financial assets to at least create a wealth effect while the everyday person spends less and their incomes have gone nowhere for a long time. So this was all foreseeable stuff and the biggest disagreement I had and why I did start taking economics in college. It was my major until the third course and I said enough of this. Economists don’t think anybody can predict the economy past the next election because they think it’s too complex. So longer-term factors like technological innovation on a 45 year cycle, I found like a clock you know steamships, railroads, automobiles, jet airplanes and transportation, stuff like that, generation cycles about every 40 years but we can project them for each country and they are different in degree and Peaks although a lot of countries peaked around the baby boom and in 2007 or so and in the emerging world even more importantly, I can predict which countries are urbanizing the fastest which is their biggest driver, we’re already urban in the developed world, and how fast their productivity and GDP per capita is growing and it’s a very predictable straight-line relationship in 90% of countries so I can tell you today that everybody thinks China is gonna be the largest country in the world and the number one, yes they will be for a while after a huge setback and I’ve got a whole thing on that if you want to know, well one is over bill actually here that’s the biggest country in the world

Buck: Yeah okay so now do you think India will be the biggest economy in the world?

Harry: Yes the largest economy and as wealthy or slightly more wealthy per capita than China. The difference between India and China is India’s thirty five percent urban China sixty percent and so everybody thinks Oh India’s backward, no they’re just rural. India is richer at 35% urbanization than China was and is beating all the other Asian countries most of them in their growth in GDP per capita organization and they have stronger English and English language and systems background in from every angle, if India doesn’t totally screw it up which is possible, it will be the largest country when Asia dominates the world in coming decades and they will surpass China probably around 2070, that’s a long way away, but they’re gonna have way faster growth. What China just did in the last three three and a half decades India’s gonna do in the end in the three to four decades in the next boom after we see a global crash.

Buck: So these just adjust to ask this question I think one of the things that comes to mind when you talk about China, and I’m very curious about this because for a generation at least I don’t I don’t recall when they started it but they had the whole one child per family rule and I guess when do the chickens come home to roost on that if you’re looking at this purely from a demographic plunge drain?

Harry: That’s a great question, Buck. Already has. Their spending way, the first emerging country in the world to peak in demographic trends of growing workforce and earning and spending is China they already peaked in 2011 they’ve been declining and workforce ever since their populations gonna follow after 2027 so they’re already demographically in decline. Now they have gone rapidly from 20-some percent urban in the early 80s to now sixty percent that has been all of their growth but they have over built that way in advance about ten years over capacity and everything from condos to factory capacity and infrastructures so they’ve seen a good bit of their urbanization potential and they’ve over built so I think China is going to be the slowest to recover from the next downturn and India is going to be the growth engine of the world like China was the last three and a half decade, it’s already built into the cards. China is the same thing I saw Buck back in 1989 in Japan Japan had urbanized rapidly and over built and over stimulated and therefore had all these big bubbles and stuff but they are at the peak of their demographic curve just like the Chinese today but they were also unlike the Chinese at the peak of their urbanization curve so Japan was at its best in 1989 with only down to go and with the bubbles they had I’m like nope Japan’s gonna collapse and they’re not gonna come back for a long time and you know 30 years later with an aging population they’ve still not coming back they never come back and then they’re living off of way more stimulus and money printing than we are and still growing at zero to one percent with zero to one percent inflation at best.

Buck: Let’s talk about the good picture let’s talk about the US real quick you know you brought up the Millennials. The millennial generation is not quite as big as the baby boomer generation is that accurate? But it’s it’s it’s pretty big

Harry: There’s a lot of misinformation but yeah Millennials I look at waves how much of a wave does a new generation create the Bob Hope generation back then seem large but no they were like a three-foot way on the beach. The baby boom was a ten foot wave they went from very low birth rates to the highest in history and the Millennials started at much higher birth rates but they’d only been and they were born over a longer period of time but they only bring us back and peak births back to where the boomers were and when you calculate in less immigrants into that generation rate because of a decline in immigration since 2001, the Millennials will never take us higher than we are today when they peaked fully and they peak around 2030 six to thirty seven in the next boom, we will never need more homes in this country never need more cars and of course they don’t even buy cars as much and they were more and they’re buying smaller homes and buying them later so again and in total numbers they are larger than the baby boom but as a way for economic growth they don’t even compare. We peaked with the baby boomers we plateau with the Millennials as a country, that is way better than Europe which is already peaked with their baby boom generation and will go down much faster than we do in the first in the future slowing. Japan peak way back actually in 1990s between 1989 and 96 and their demographic wave and only go lower forever. So we’re the best house in the developed world but in the emerging world it’s all about Asia ultimately Africa down the road but they’re still going to be poor for a long time and India and Southeast Asia by all of my projections will be where investors should be focusing in the next boom but we got to wait. India’s at new highs and they’re gonna crash we’re in new highs even when you’re a visit and we’re gonna crash everything’s gonna crash because the worldwide bubble in stocks and real estate just like happened in Japan back in 1989 that only I called because I understood bubbles and I understood demographic trends and new Japan was at their best in the US and Europe and of course the emerging world coming was just coming along with their baby booms and and could see this huge transition. Japan going down the rest of world going now China is the one that’s going to suffer the biggest loss is Europe’s gonna be very slow to come back u.s. best in the developed world but Asia especially Southeast Asia and India are going to be where most the growths going to be in the in the new emerging world which is going to become close to developed country standard of living in many countries. So that’s a positive picture but big crash first and resetted bubbles and will never grow as fast as we did from 1983 to 2007. We’re basically almost all the world was on fire at the same time. Developed countries are going to be much slower in the future emerging countries yes rapid but still not growing as fast as demographically in the future. So demographic slowing is going to take trade the next boom that will be strong if you’re in the right areas but it will not, we will not see a repeat of 1983 to 2007.

Buck: So you know a lot of economists or influencers you know like yourself and Peter Schiff and Jim Rickards, they’re all sort of you know they’re all predicting some sort of significant recession or potentially some sort of even some sort of global financial reset you all yet even though you all agree on that presumably because of the bubble that you just discussed you all have different flavors of what that looks like specifically when you talk about a guy like Peter Schiff you know his old ideas is a currency crisis that creates an acceleration inflation, but you don’t see it that way do you?

Harry: Well I tell you I don’t know why anybody sees it that way we already saw the beginning of what I call this winter season debt deleveraging excessive debt starting to deleverage demographic slowing, that was all happening in 2008. In 2008 looked just like 1930 until central bank’s stepped in and his sense printed 19 trillion dollars to cover over the debt crisis and to compensate for the slowing demographic trends by creating a wealth effect not more lending in developed countries only overseas. So this is a whole different era where and we’re in an artificial bubble. So what what I had say the gold bugs like Schiff and Rickards agree on you can’t live on debt and artificial stimulation, it’s got diminishing returns and it’s like taking a drug it takes more and more to create less and less until you overtax a system class. The difference and this is a huge difference between me and them they see an inflationary outcome because they say well governments are printing money but they’re printing money that’s not causing inflation. Why? The government is putting money not into the economy the banks aren’t lending because we all borrowed too much consumers and businesses over-expanded in the grape bloom from 1983 to 2007, the money’s gone, the central bank’s literally buy financial assets, they buy Treasury bonds, sovereign bonds mortgage-backed bonds. Japan’s buying their stock market and Europe starting to do that they’re putting the money in the financial system to goose up financial assets bonds go up and value stocks go up the most real estate benefits from pushing long term and short term rates down putting more money in the system to chase these financial assets and at least the top 20% that own, which is your audience own 88% of these financial assets are doing better particularly in wealth and they are spending marginally more and that only keeps us at a 2% growth rate. So why would Peter Schiff be worrying about inflation when even with all this the greatest stimulus fund on history we’re only growing at 2%, Europe’s growing at one and Japan’s growing still at near zero and how much inflation do we have after 19 trillion dollars printed out of thin air, none. We have still at 0 to 2%. We’re not creating consumer inflation we’re creating asset inflation and that’s what’s going to cause the bubbles to burst that’s not sustainable and the big losers are affluent investors when these bubbles burst because Homer Simpson doesn’t own that many stocks and doesn’t own that much real estate.

Buck: But one of the arguments that I’ve heard on the other side of the idea that the stimulus has not really affected or put us into an accelerated inflationary environment is that money really never went to directly to people, it went to banks and then they didn’t lend it out. Would it be different if it was more Ben Bernanke’s “helicopter money” type injection into the economy well?

Harry: Ok all of this is artificial. All of it causes over expansion over debt and things only makes the bubble, we were already in a bubble before quantitative easing. What happened was the central banks their intention was to put money in a system and hope that banks would lend it out until they realize well no to borrow at least not in developed countries like the US and Europe. So but I don’t think they intended this the real impact happened because a goose financial asset so much there was a wealth of talent we’ve treated like in the US like thirty six trillion dollars in financial asset increases in the last nine to ten years way more than any impact on growing GDP or in to money supply or bank loans or anything like that, that’s been the effect. They didn’t intend that but once it happened it worked enough to keep the economy from collapsing and have to you know write down debts and have banks fail like the 1930s which is what happens in a deleveraging and should happen up to a point. So they’ve just been forced to keep this going because at least the wealth effect seems to work, well until the bubbles burst. So now we just got we have a greater stock bubble than ever and you know what and I’ve got all the stats on this. I’ve shown this in my newsletters up and down the street the entire stock market boom from early 2009 when it bottomed and QE started has been corporations they’ve been the only net buyers of stocks over time corporations are using increased cash flow from free money and cheap borrowing to buy their own stocks back and reduce the flow of the stocks and create earnings per share that has literally but grown a hundred nineteen percent faster than actual corporate earnings. GDP has been growing at two percent real for over ten years, the same rate from 1929 through 40 the Great Depression. We are in a depression with inflated financial assets which at least makes keeps the economy going somewhat and keeps the rich feeling richer and you know we we look at buying in all sectors demographically. Carbine used to peak at 51 after kids got out of college for affluent people and now they’re peaking at 64 when their net worth peak because their net worth has been goosed by quantitative easing which is Goose financial assets. So all of this is unsustainable by I would say I would have rather if the government’s are gonna print money for free and throw it in the economy they don’t give it to the financial system and financial speculation that’s where it’s gone not bank lending which would have benefited maybe consumers and businesses all they didn’t need. It would have been better if they just sent the checks to Homer Simpson that would have been real money real spent even though I hate to say it would have still been wasted. You don’t try to get people to spend more money than they need to or they can afford to or encourage more debt without making the system already more perverted than it was, it was already back in 2007 I was already in my book showing, had the highest debt ratios in history around the world emerging countries especially developed countries and makes 1929 bubble and debt bubble look like nothing, we were already cruisin for a bruisin what they did was found that goosing financial assets kept the bubble from bursting but now we have much bigger bubbles, a bigger bubble in real estate people tell me Oh Harry real estate’s only about the same level that it was at the last bubble tops in the economy’s a little larger so it’s not that big a deal. No. Net demand which I can measure from older and younger people trading off older people who sellers younger people and buyers is we’re 40% overvalued in real estate compared to the real market versus 20% in 2006 when I did call the real estate peak as well back then. And stocks are a hundred twenty percent overvalued versus where my indicators show they should be historically with the demographic cycles so we have a bigger bubble than ever and when it bursts I’m telling you, in the world we’re gonna see over a hundred trillion dollars of assets disappear and in the United States financial assets 50 to 60 trillion dollars is going to disappear in net real-estate value stock value things like that and all of a sudden you’re gonna see a deflationary crisis and even rich people are gonna stop spending money and they’re the only ones still increasing spending. Homer Simpson’s been out of the markets and out of the spending cycle pretty much for two decades now.

Buck: Yes you’re you know the the the one question I think I that always comes to mind when I think of you know even if there’s a deflationary pressures if there’s long as there’s a deflationary pressures I would just think that the US government or the US monetary and fiscal policy rather would do anything and everything to prevent actual deflation because of course that then makes our sovereign debt harder to pay, right? So I think I think that’s one of the thing that you have to kind of get over and say well is it even feasible, wouldn’t we do something just absolutely you know some sort of complete paradigm shift to avoid that kind of scenario.

Harry: Here’s the problem with that, we already did that. This has never been done before printing this much money to stave off a recession which really was a depression in the making and to prevent literally tell banks you don’t have to mark the market you don’t have to write off balance, we still have all these bad loans and we have 80 to 90 percent of these derivatives, 650 trillion dollars in crazy leverage derivatives still in the system because we never see a deleveraging. Is like detox for an addict when you get out of balance you got to get the bad stuff out of your system excessive unproductive debt we still got a ton of it from over borrowing and speculation is still in the system, if you don’t get it out you can’t grow again. Japan actually should have had a demographic turn from a smaller but still substantial millennial generation into 2020 from 2003 and they still haven’t had a turnaround and real estate at all very little turnaround economy because they’re still carrying all these zombie banks and zombie debt which is weighing down the economy while their population continues to age, the government does nothing to boost births, young people have lost all their benefits to the older generation and they won’t even have sex nevertheless have kids or date or get married. So they’re in this this emergency room coma and they’ve been four three decades now. So it shows that money printing will not take you from a winter season to the next spring boom which is what happened in the 30s to the 40s 50s and 60s. Japan never made it because they never deal every debt so by not be leveraging debt, the central banks are hampering our ability to ever recover from this and in summing us to one to two percent zombie growth until these bubbles birth and that will tank the system. So you say okay okay well the system does tank we start to get deflation and things melt down, well then they’ll just print more money. Okay they printed 19 trillion dollars collectively in the US alone four trillion dollars and that wasn’t enough? So in this situation the numbers I just quoted about a high say 120 trillion set to disappear just in financial assets and failed loans, 50 to 60 trillion in the US but say I mean so you get to print that much so they’re gonna put 60 trillion disturb you go to the public and and you say well last time we printed more than history went crazy suppressed interest rates to zero or negative and it still didn’t work so you know what folks we just got to do twice three times five times as much. I don’t think people will buy that. That’s my position. They had their chance if we end up in a crash which I see happening in the next year to maybe done I’m gonna quit my profession dammit, we don’t see a major crash set in by 2021 I’m just gonna give up and quit because if it does you’re gonna see a bigger crash, a deeper downturn and people gonna say well wait a minute you already printed money to try to fix this and we’re in a worse, why would we believe you this time I’m sorry nope let the damn banks fail and if you’re gonna print money as you said earlier send it to us please.

Buck: Right. And let me let me ask you the question of follow up on this prediction in the next two years. Of course you know the last book who’s called Zero Hour so presumably you know you this is zero hour that we’re in right now, what is it? What’s the trigger now? In fact you know to me when I think about you know what is this zero hour now I think well I don’t know Donald Trump is president and the next thing that’s probably gonna happen is there’ll be a little bit more injection through elimination of payroll taxes or something like that. This is something that is extremely I think in my view very difficult to predict on a timing basis. Why do you think a year to two years what what gives you those that that projection?

Harry: Well you know one of the things I did in Zero Hour, I collaborated with a cycle friend I met from London and at a major seminar in Miami in 2008 and we kind of collaborated on our he had great long-term cycle ahead great about 80% of them overlap, but he kept pushing that WD Gann the greatest cycle and trader guy from the early nineteen hundred’s insisted that 30 and 60 year commodity inflation cycle yeah I got that one but he insisted 45 and 90 year cycles were very important. So when when this guy Andy Pancholi my co-author Kevin say that I went back I got more research and back statistics than anybody in the world and I found oh my god this 45 year with peak steamships railroads like I said autos jet travel this sort of stuff ah there’s a 45 year cycle but most important I found the most important cycle I’ve ever found, every other 45 year technology cycles you know like steam ships and railroads work together to transform world travel and in transportation. Well electoral electricity electrical appliances first but then computers in the ultimate internet smartphones on the Internet, the ultimate connected global appliances changed the world together. You get major super bubbles every 90 years and then I knew this from history I just didn’t know why, I had a chart from the beginning that showed the biggest bubbles and depressions and births the following were 1837 to 1847. And then 1939 to 1932 and now I’m predicting somewhere around 2020 into 2022 or 23, those are almost exactly 90 years apart especially at the bottoms in the crises. So that’s why I think this cycle the central bank money printing and the extension of the internet with social media which is the hot thing now but really nothing like the impact of email and Google in the real internet cycle, the peak first. Social media has been hyped up now now blockchain and crypto currencies are being hyped up which they are the next Internet 2.0 and in what I call the Internet of money and digitization of finance and financial assets but they’re in the super early stages like the first Internet companies which almost all failed bubbled up and totally failed, we’re at that stage we’re in that hype stage. So this is ahead of us this is the time where this cycle peaks and I have in my books you’ll see in Zero Hour and I got another one probably coming out early to mid next year called Probably the Tipping Point. My key three long-term cycles geopolitical demographic spending waves and technology cycles they peak in succession. The geopolitical cycle peak in 2001 on it’s good cycle and turned bad with 9/11, we’re in the bottoming of that process now but it’s still very negative. The demographic cycle peaked right on cue I predicted it 20 years before in 2007 the US, doesn’t bottom until 2023 a few years from now. And the technology cycle is the last peak right now between late 2019 and early to mid 2020 it will take longer to turn around. All this will be the last of the cycles to peak in this fed printing and central bank printing is literally played into this super bubble cycle and that’s why I say I give this one year tolerance between late 2019 and late 2020 we don’t see a peak in these markets by late 2020 or 2021 and a big crash, then I’m gonna say you know what governments have defeated the recession and bubble cycle congratulations, it’ll never happen. I do not believe that’ll happen. You do not win by avoiding the truth. You do not win by not facing a problem or deleveraging excess debt. You don’t win by printing money, it’s like you don’t win when you’re already an addict by taking more of the same drug that got you in trouble. You win by detoxing even if it’s painful and there’s better ways and worse ways to do that. And there’s better ways to de-leverage the economy than the Great Depression but we’re taking the easy way out and that only makes things worse it makes a bigger crash, but again if I look at all three of my major now proven long-term indicators they coalesce between 2020 and 22 for financial you know for the stock market and in 2023 bottom roughly for the economy in the US and that’s what I’m looking at That’s why I say we don’t see in that weakest period these bubbles burst and then the government’s have done something to stave it off but, even if they do succeeded that it’s the worst scenario because you end up like Japan. Japan has been in a long-term off and on recession for 30 years. Their bubbles collapsed but they didn’t have a deleveraging of their banking and debt system and hence they’re in a coma economy for 30 years. That’s the worst cycle. If we go through this crash and bubbles we will get rid up a lot of debt these bubbles will diffuse and that will allow our economy to grow again with the millennial generation, which is not going to be the baby boom in growth, but it will take us back to at least the heights we’ve achieved here and that’s going to look very good after this crash and of course the emerging world is going to take us the total new heights. Most of six billion people in the world aren’t going to peak in spending until many decades from now. They’re in the emerging world. That’s the next boom and I’ve already I can already predict which countries and win with the urbanization and spending will dominate that boom and for the next boom especially into 2036–37 it’s going to be Asia led by India and Southeast Asia.

Buck: So my listeners are listening right now thinking well gosh what do I do about this we’re happily for the most part my group is heavily invested in apartment buildings multifamily real estate and do you have a forecast for what happens? When I look at it I think to myself well people tend people seem to be moving more and more into apartment buildings even the older ones that may be used to you know, they’re downsizing more and what’s your take on multifamily real estate in particular and maybe some other investments that will do okay?

Harry: You know every other sector other than hotels and and ultimately cruise ships which are floating hotels and ultimately assisted living in nursing homes is the best demographic. The aging baby boomers are still going to be the strongest way because they are that it’s just they’re gonna shift from their peak spending into aging spending which are things like that. So that’s that’s number one. In real estate the only strong sector has been Millennials driving apartments. Now that is peaking because that Peaks where the Millennials are already at that kind of peak marriage kind of age 27–28 and having their first kids and stuff that starts to peak, but there is a new trend that’s never happened before and I just reported this in my a special report to our newsletter subscribers that baby boomers are of course living longer but they, as they are selling their McMansions because they don’t need them as their kids leave the nest and saving or preparing or entering retirement, they, a growing percentage of them are saying oh wait a minute we never saved enough for retirement because we grew up in good times and didn’t save like our Bob Hope World War two veteran parents did, and so you know what the best way to bridge our gap we sell that McMansion at a huge profit at the top of this real estate bubble, which I’d say kudos perfect time to do that, we invest that money in our retirement account to give us our retirement we saved enough for, and so why not rent our retirement home at least at first if not forever because hey gives us more flexiblity anyway and we’re downsizing anyway. A lot of people would downsize, sell that McMansion in by a smaller retirement home, maybe closer to the city or maybe a townhouse out in the suburbs too many other kids, but a lot of them more of them are renting and those are the best renters for apartments. They are higher income, higher quality, want more service, they’re more loyal, they stick with you longer, you know they don’t default they don’t get drunk and burn down the apartment as often as younger people and all that stuff is anybody knows in that business it’s that this is the best place to be done number one when you have deflation or what I call the winter season, very few financial assets do well because you’re deflating bubbles. Well high-quality bonds are the safe haven because they like deflation interest rates go even lower with deflation than they did in low inflation, government and high quality bonds don’t default like corporate bonds and especially junk bonds which are the dominant bonds now out there today in the private sector so they’re the safe haven as they were triple-a corporate and Treasury bonds pretty much roughly doubled in value in the 1930s when you count the interest while most assets deflated and then did terrible so it’s the best place to be the only place in in real estate not only because of demographics but more so it’s also the safe haven cash flow positive real estate. When the economy collapses banks get even tighter in lending as we know from 2008–9. People are scared to buy and they rent even more and these aging baby boomers will do the same and these Millennials will continue to propose or not. So will apartment rental multi-family real estate holds up the best and may even appreciate a bit but certainly with your rentals, if it’s cash flow positive. Now if you’re in California certain bubbly areas and you have to rent a negative cash flow and are relying on the appreciation then that’s the wrong stuff, but if you have cashflow positive real estate in not so bubbly areas you have the baby boomers now on an increasing renting trend that’s never happened in history to replace the Millennials and you have the Millennials who are going to continue to rent versus buy in this downturn. So those the only places I recommend. High quality bonds and cash flow positive rental real estate. Everything else is going to get clobbered. The mansions are going to get clobbered the most in real estate commercial always gets clobbered the most and of course the stock market kids clobbered the most as it did from 1929 and 32.

Buck: Harry how do we get that report you’re talking about the one the one regarding the older people moving into apartment buildings instead of downsizing into smaller homes?

Harry: Buck I will make that available to you and you can make that available to your listeners.

Buck: Okay fantastic. And so the book obviously is Zero Hour available everywhere including amazon. I also would like to recommend the Demographic Cliff in 2015 because I think that’s really interesting stuff that you know most people don’t cover and I think it’s absolutely fascinating.

Harry: That’s the most global outlook which I agree with is important for people to get. The other thing we have buck is I have a free dailies newsletter. You just go to Harrydent.com put in your web and you know your email and you’re on and that way you can get to know us and get some updates about what we’re think because you’re right this peeking process is very hard to predict especially when governments are fighting it tooth and nail but they are fighting a losing war like any addict because there’s diminishing returns, they’re taking more and more of a lethal drug to keep you from coming down from a high and we are high on this bubble and people are high and you know when people are high on a bubble you can’t talk them out of it. You know the hardest for me to talk rich people out of is the most bubbly real estate in the most bubbly cities like London, Manhattan, San Francisco, Sydney Australia where I’m going next week to do a two-week tour and and in places like that. People just think that can never go down and you couldn’t be more wrong. The Fortune 500 are buying back their own stocks at way overvalued using their precious cash flow they’re going to need to survive this shakeout and then their shareholders gonna be saying well why didn’t you buy our stocks when it was down 80% said of when they were overvalued you squandered all of our cash flow and killed our companies. The rich are the dumb money this time around Buck I’ve never seen that out for it’s not shoeshine boys it’s not Homer Simpson or taxi drivers from the tech rec boom which which I saw at that time, is the richest people are buying into this bubble and they’re going to get crucified the most. So the people like your people who are into the safer cash flow positive real estate and high-quality bonds are going to preserve their capital and be able to buy at the sale of a lifetime I think by 2022 to 23. And get in the right markets for the future which you’re very clear if you look at our books and newsletter.

Buck: HarryDent.com is where you go to get that newsletter. Harry I would love to have you back on when the new book comes out that you said that might be coming out sometime next year, definitely appreciate all of your perspective today.

Harry: Okay and I’ll send you that report.

Buck: We’ll be right back