Peter Grandich joins Robert and Kim Kiyosaki to talk about the economy,
Wall Street and where we may be headed.
Peter Grandich is the author of Confessions of a Wall Street Whiz Kid, and offers an inside look
and insight into Wall Street. The motivation for writing Confessions of a
Wall Street Whiz Kid, he says, was not money.“It was actually a person
that was working for me,” he says. The story is long, he remarks, but in
his youth, he found himself losing a small fortune in penny stocks, finding
his way to Wall Street and in his first four years, he forecasted a stock
market crash and subsequent comeback.“The Business Editor of Good Morning
America gave me this moniker called The Wall Street Whiz Kid...a lot of
people liked interviewing me...a kid that didn’t even finish the tenth
grade.”
As Peter tells it, he made and lost millions, not once but twice, and found
himself in a deep depression that called him to reevaluate his commitment
to Christianity. He began to write the first draft of the book and reboot
his faith in the early 2000’s, while working with professional athletes.
“But it was really never written for...profit. It’s been a way of telling a
story, an unusual story that you don’t normally hear on Wall
Street.”--Peter Grandich
Kim suggests that losing a lot of money originally in the penny stock
market was motivation to get educated, into investments and into the stock
market. Peter says it was not as difficult to get over the financial loss.
But realizing what and how ‘they’ did it to him made him more aggravated
than “any amount of money that was lost.”
When the inevitable downturn comes…
“Almost half of the people licensed to give financial advice these days
have only been practicing since the last financial crisis, and less than a
third since before the new Millennium.” Peter describes it as learning to
drive on a one-way street. When you ask someone to remember the first time
they learned to drive, or when they approached their first traffic circle
(round-about), they would say they panicked. “You didn’t know what to do.”
Peter says that is going to be a part of the ingredients for this
inevitable downturn.
“This downturn is going to come out of what I think may be the biggest
financial bubble of all time.”--Peter Grandich
Peter says the lack of professional experience to handle it, the struggles
we have socially, politically, and economically in America, will come into
play. Because we are so divided, “all of the ingredients that might have
saved us last time there was a sharp drop in the market, I don’t think will
be there.”
Baby Boomers
"What's going to happen to the Boomers? Because they actually had it the
easiest of any generation I've ever seen."--Robert Kiyosaki
The difficulty, Peter says, is that they have grown accustomed to a
lifestyle. The idea was that by this point, Baby Boomers could move toward
more fixed income types of investments and preserve the principle. The
Federal Reserve destroyed the fixed income market, and baby boomers have
had to resort to taking tremendously more risk of principle.
The general financial thought, Robert says, was that you “ride it up on
stocks” and “shift to bonds for fixed income”. But there’s no bonds; bonds
are performing less than inflation.
Peter says the other difficulty is that normally you hope that the
generation coming up behind them has done better, is wealthier and able to
absorb this. Not the case, he says, and many parents and grandparents have
their kids living with them again at 35 years old. A very small percentage
of that upcoming generation has benefitted in the last few years.
“40% of all the money in existence in the US has been created in the last
18 months.” --Peter Grandich
So, how can there be inflation, people ask? Peter says it is textbook
inflation: you have so much money and so fewer goods.
What are the indicators that we are going to see this economic crash?
We need to pay attention to the single biggest indicator, Peter says, and
it just came out in the last week. “To know that the Federal Reserve
Members, including the Chairman, were actively buying and selling stocks
while making their decisions.”
No group in the whole world combined has more influence on where stocks may
or may not go than them.
Peter says the way America is and has moved away from Christianity,
combined with the economic factors is a recipe for disaster.
“It’s a question of when, not if,” he says. The lockdowns, Peter says,
combined with stopping people from working around the world, is key. “You
wonder why there are shortages and why we can’t get certain supplies?” The
problems are political, social and economical and have never been worse in
America than they are now.
“Hope is wonderful. You need that to live a spiritual, good life. But in
investing, it is the last strategy you should be using if you want to be
successful.”--Peter Grandich
Robert says if you have a 401k, this information could be a lifesaver right
now. “If you have friends, family or business associates who are counting
on the stock market going up, or are planning on shifting to bonds to
retire on, this is a very important program...it may save your butt in the
future, especially if you are a baby boomer.”
What was happening with gold, silver, and JP Morgan?
As a Wall Street insider, Peter says he was able to see and debate those
that claimed there was no such thing as manipulation. “The markets are
okay. Nothing is done wrong. And we would just witness the way gold would
trade, and silver at times, and say that there is no rhyme or reason for
that to happen.” We have learned over the years, he says, that there was
plenty of manipulation, and we saw it in other commodities, other metals.
To think somehow it stopped just at gold and silver pits was foolish. The
last financial crisis, we saw financial service firms putting people into
mortgage related investments and products that had little to no chance of
being able to be repaid or have obligations met.
“We were looking into the Abyss.”
If the government doesn’t bail out the major banks, who knows what would’ve
happened, we thought. But we later found out that those institutions not
only sold those mortgages to people without actually owning them,
(shorting), they profited off the commissions they made plus the fall of
the price.
As an example, Peter says, imagine you went home tonight and heard the
major car companies built cars knowing they were going to crash, but they
made the people that bought those cars buy life insurance. So, they collect
twice when they crash and die. That is what the financial firms were doing.
“There were investigations and charges and some small, low level people
were found guilty, overall, no one really paid a price.”
Now, people tell Peter that Bitcoin is the answer. He agrees that when it
was cheaper, around $6,000, it may have been good, because now it’s worth
so much more. But the problem Peter sees is that it is universally pushed,
with few oppositions to it. The terminology, he says, is much like the same
terminology from twenty years ago when they said the same things about
Penny Stocks.
“It’s an industry,” he says. “Just like the internet was. It’s new. It’s
gone through the roof. It’ll have to go through a shakeout.”
Bitcoin is the AOL of coins because it’s technology is not anywhere near
the newer coins. After the ‘shakeout’, he says, those other coins will be
more embraced. So, if nothing else, if you’re going to be in that market,
be diversified, don’t be all in Bitcoin. “The price is too high and there
is no opposition.”
If you need a perfect scenario for it to continue, that is the big warning
signal. If everyone is in one boat (Bitcoin), you need to look to the other
boat on the side. That boat is gold, he says. It worked for over 2000
years, but all of a sudden people say it’s not going to work anymore and
you should avoid it. This might be a good reason to have gold over Bitcoin,
he says.
Peter says whether it crashes or rolls over, it will end up being a lot
lower than where it is now, Peter says. Unlike 2008, when our political
parties and the bankers had to go into a room and literally create an
answer, we won’t have that ability. We created quantitative easing and all
the monetary heroin. Peter doesn’t think the political parties could go in
a room now, no matter how bad the crash, and come to any solution.
Whenever the market goes down to whatever level it will go down to, the
repercussions of the way we lived and all the things that have been done
wrong for a lot of years will come into play.
As an example, Peter says, look at how many people are now dependent on
government aide, in one way or another. Also, now, people have gotten used
to too much stuff. There was a time when people (our parents and
grandparents) lived in smaller homes with less stuff, but now, people are
just too accustomed to ‘things’.
“We’ve been convinced by Madison Avenue and Wall Street...that more money
equals more happiness.”--Peter Grandich
Peter thinks this mentality is going to play out, and he feels our children
and grandchildren will pay a bigger price than anyone.
How do we get out of debt, Peter asks, when we have 30 trillion in debt,
and in our best tax revenue year ever, we only took in 3.1 trillion. Our
GDP to debt ratio is now 135%.
“The social aspect is that there is no more middle class. There is no more
middle thinking. You are either left or right.”--Peter Grandich
There’s nothing left in the middle, Peter says.