Michael Lombardi and Critical Warning Number Six
By Michael Lombardi for real estate investing | Jan 16, 2013
Michael Lombardi, author of many famous newsletters; “Profit Confidential” being
the chief amongst them is the successful predictor of five major economic events in
the past. A brief summary of the same is as follows:
In 2002, he advised his readers to invest in gold and related investments. At that
time $300 was the rate at which gold bullion sold. Michael invested all his
retirement money in gold. In 2006, he asked them to retreat from the housing
market when he foresaw that the stocks of the new home builder stocks would drop
in prices. At that time, people had never thought that the real estate prices would
dip low in the future. Michael also predicted that America would go into recession in
late 2007. This was long before the actual recession. In the fall of 2008, he directed
his readers to get out of stocks and in March 2009, Michael advised them to again
invest in stocks. All of Michael Lombardi’s five predictions came true and his words
of advice started being looked upon with respect and appreciation.
For the once- stock market-immature seventeen year old lad who had had to bear
the loss of half of his summer job savings of $2,000 to his maiden stock, this was a
moment of truth. That he had not become embittered with his first failure with
stocks and vowing never to lose money on stocks again, he had painstakingly taken
efforts to gain good knowledge of this field - had proved to be a blessing. With
exhaustive research in the stock market; reading all accessible books associated with
the same and enrolling in every possible course that gave information about stocks,
Michael left no stone unturned and success soon followed him in the form of profits
with invested stocks. He even launched a newsletter on the stock market.
The scenario today is that of Michael, a seasoned stock market analyst and stock
picker whose recommendations have posted gains above 500% and who is the author
and publisher of 1000+ money-management and investment articles. He is an active
investor in real estate, art, precious metals and various businesses. He built a
publishing house-Lombardi Publishing Corporation, which has over one million
customers in 141 countries. Successful stock-picking is Michael’s forte. With all
these credentials to back him, when Michael has issued his sixth prediction titled
“Critical Warning Number Six”, it is but natural that his readers will take utmost
interest in what he wishes to convey. A short gist of the same is as follows:
The U.S. today is in the midst of a number of problems. Its economic situation is not
quite strong even with the quantitative easing rounds by the Federal Reserve in
order to ease its monetary condition. Many sectors have been hampered in their
growth to recovery. Although there is slight recovery in the housing market, it will
be quite some time before it recuperates completely. The consumer spending of the
U.S. despite the festive season of November and December has not been very high
and as this is a factor that aids the economic growth of a nation, it certainly presents
a cause for worry. Another reason for the lack of enthusiasm in spending is due to
the rate of unemployment and the number unemployed in the U.S. As compared to
the previous month, December 2012 saw no change in its rate of unemployment at
7.8% as per the U.S. Bureau of Labor Statistics. This rate has been somewhat
constant since September. The number of unemployed persons too was 12.2 million,
more or less the same since November. In addition, commodity prices are expected to
The credit crisis in the euro zone has had long lasting effects on many of its nations.
Still, it is a relief of sorts when the bond auctions in Spain and Ireland looked
successful and the borrowing rates of the former nation saw a drop below five
percent, while the latter had the satisfaction of investors returning due to a regain of
trust in it.
The U.S. dollar is getting devalued with respect to other major currencies of the
world. It is mainly due to the Fed adopting the monetary easing and asset purchases
strategy; the amount of which is nearly trillions of dollars; done with a view to
support its economy and flow of capital money to the emerging nations.
Consequently, it gave rise to liquidity and hence inflation.
In the past, some American banks had automatically signed off on foreclosures and
at that time they did not legally review the concerned documents. Consequently, due
to these Robo –signing acts, homes of innumerable Americans were seized. A few
days ago, the U.S. banks have agreed to pay $8.5 billion as settlement charges for
these unlawful foreclosures. Though this could be a step towards elimination of huge
potential liabilities for the banks, there have been some complaints from consumer
activists that the settlement price by the regulators was very low.
The estimates for the fourth quarter earnings of the banking sector have been
reduced from 15.9% to 8.7% which, as per FactSet, is considered to be the largest
decrease of the ten major corporate sectors.
In 2011, the credit rating AAA of America was downgraded by the S&P. Presently
the interest rates are near zero. But for how long will they so remain? A time will
certainly come when the nation will have to bow down to the pressures of the
international bond market and hike the interest rates.
The national debt of America is presently $16.44 trillion. The recent aversion of the
fiscal cliff by a deal was nothing but a strategy to stall the frighteningly real cliff
that is just around the corner. With America losing out its once leading status in the
manufacturing sector; with an astounding spending of $80.4 billion on food stamps
by the U.S. in fiscal 2012; with the inflation increasing day by day and the U.S.
dollar suffering a losing valuation, U.S. certainly is seeing its worst days ever. Still,
the wise investor will find ways to protect his investments and secure himself for the