Is This the Death of a Do-Anything America?
Editor’s Note: Marc did it… again.
At the beginning of the month, Marc saw the writing on the wall for General Electric (NYSE: GE).
In his November 1 Safety Net column, he wrote, “GE doesn’t have the cash flow to sustain its dividend and has shown a willingness to lower it in the past. GE investors should expect a lower dividend in the near future.”
Roughly two weeks later, GE announced a 50% dividend cut.
And as friend of Wealthy Retirement and founder of Manward Press Andy Snyder points out in today’s guest essay, it’s part of a much bigger trend.
To learn more about how to overcome the death of what Andy calls a “do-anything America,” click here now.
– Rachel Gearhart, Senior Managing Editor
What do the years 1939, 2009 and 2017 have in common?
If you’re an investor… it isn’t good. In fact, it’s downright ugly.
Just before Thanksgiving, the folks at General Electric (NYSE: GE) hit us with what may be the worst news of the year.
The company – a supposed stalwart of every conservative portfolio – told us it is slashing its dividend.
And it’s not just a trim… it’ll be cut by 50%.
As we hinted at the top, this marks just the third time in the company’s storied dividend-paying history that it’s cut its payout.
GE’s first dividend cut came with the Great Depression. Then came the Great Recession. And now, what’s this, the “Great Disappointment”?
We’ll let the financial hacks cover why the company’s out-of-whack balance sheet requires such a massive move.
That’s not our beat.
Instead, we’re interested in seeing what it all means. What effect does such a move have on our ability to generate Liberty-granting wealth?
What does GE’s Great Disappointment mean for folks seeking a secure income… and, perhaps, a modicum of growth?
Ah, the news isn’t good.
We see what’s happened with GE merely as a headline-grabbing example of what’s happening all across America’s economy and her culture.
It’s the death of something great.
It’s the death of a do-anything America.
Get this. Just five stocks are responsible for some 60% of the Nasdaq’s gains this year.
Without the earnings power of Apple (Nasdaq: AAPL), Microsoft (Nasdaq: MSFT), Amazon (Nasdaq: AMZN), Facebook (Nasdaq: FB) and Google parent Alphabet (Nasdaq: GOOGL), the record-breaking run we’ve enjoyed in 2017 would all but disappear.
We don’t need to scratch our heads and ponder what those companies have in common.
They’re tech giants. With the exception of Apple’s, their products aren’t physical. What they “make” lies entirely in the digital realm.
That’s certainly not true of General Electric… the company synonymous with America’s once-great industrial might.
The idea becomes even scarier when we toss in what is perhaps the year’s biggest millionaire maker – bitcoin and its cryptocurrency brethren.
For most investors, what’s happening isn’t all that scary. They’re making money, after all.
We should say, though, that they’re making money… for now.
There’s no doubt these companies have changed our lives and the nation’s economy. The technology they created is absolutely revolutionary.
But the tech sector is a fickle beast.
Take Netflix, for instance. With gains of well over 50% so far this year, it’s led the sector.
But investors have – rightfully – worried that it’s one competitor away from becoming the next Blockbuster (the now-defunct behemoth Netflix’s technology stomped out of existence).
For investors looking for reliable income that won’t be here today and gone tomorrow (we’re looking at you, bitcoin), the tech sector is a scary place to be.
And yet we fear many, many investors are looking at the recent gains and are pouring into the sector.
It will cause trouble.
If we peel back the layers just a bit, what we’re talking about in all of this is the failure of the American economy. While it was once robust and highly industrialized, we’re now dependent on new technology replacing the old.
We think GE is right. The stock market of 2017 may not look anything like it did in ’39 or ’09… but the pain could be just the same.
The Great Disappointment won’t be a label that’s slapped only on a former industrial giant. No, investors could soon wake up to trouble throughout their portfolios.
Our solution lies in an asset class that few folks are aware of. Most folks have never heard of the “1531(b) program,” but it offers a shot at ultra-reliable income… and it exemplifies what we believe is the only way America will get back on track.