Written by DML
This is a long article, one of the longest I have ever written on my website. It is very important, and therefore I ask you to share it now.
I am not a licensed stock broker, I have no formal education in the area of financial planning. That’s my disclaimer. I add by saying I am no Warren Buffet. I have not made billions in the stock market, but then again I have never tried. More importantly, I am an award winning businessman. I started my first business when I was eighteen-years-old and never looked back.
I have been an entrepreneur for a span of thirty three years. I have struggled from time to time, but overall I have weathered every economic downturn I have faced. Most of my businesses have done well, and I am one of the few lucky entrepreneurs who has survived the downsides of COVID19. The word “luck” is subjective, I had to work my ass off in finding news ways to operate. Either way, thankfully I remain in business.
When combining my 33 years of experience with my ability to fight through and survive the last year, I think it’s fair to say I understand business cycles good and bad. This article is based on my track record, good and bad experiences, and what I understand to be true about cyclical economies.
When Donald Trump took over the White House in 2017, there was no question in my mind about how well the economy would do. As a billionaire developer and brand developer, I knew Trump would be pro-business. I knew his cycle would include ripping away the Obama regulations that stifled economic growth, and that he would support legislation for lower taxes. I was correct — he did both.
Trump led our country into an economic boom; the greatest boom I’ve seen in my 33 years of operating businesses. And then the COVID19 nightmare surfaced.
In March 2020 we felt the first cycle of hurt. Your favorite corner bar closed. Your gym shut its doors. Nail salons, hair salons, massage and yoga studios all closed. Every restaurant took a beating of some kind. Cleaning services cut back. Independent contractors lost customers. Tradespeople put away their tools. Schools and universities went to online classes. The list of hurts is long.
Nearly one year later many of these businesses, contractors, and schools remain shut down, or they offer restricted access and operations. Some of them have closed forever. This pushes unemployment higher. This trickles down to property owners and banks who can’t count on monthly rents and mortgages being paid. The question becomes, “How long will this cycle continue, and will it get worse?” My experience tells me it will get terribly bad before it gets better. We are in for a really bad cycle.
What confuses me most are the conversations I have with friends who operate in the industries doing well. My buddy who sells cars for a Chevy dealership says 2020 was his best year ever. The same can be said of my friend who sells boats and yachts. The real estate market is insane, prices are skyrocketing like nothing we’ve ever seen. My friends who sell real estate are printing money. For example, a realtor told me about a house that went up for sale in late 2019 but eventually went off the market due to COVID19 restrictions. A few months ago it relisted and sold overnight for 40% more than the asking price in 2019. How does that happen? How will that remain happening? Where is this money coming from? Are people depleting their savings, or are they simply shifting their spending habits from going on vacation to buying SUVs. My guess is most Americans are running up debt on the credit cards and borrowing money by drawing down from home equity lines.
When I look back over the 33 years I’ve been in business, it’s times like these that led to recessions. But then again, has there ever been times like these? I answer my own question: “No!”
I say with complete certainty that the United States has not felt the true impact of the 2020 closures, cutbacks, restrictions, and borrowing. Crazily, it all continues in 2021, nothing is changing. But make no mistake, this cycle we are living in right now is set to pop in a bad way. This economy is like a huge tsunami, you may not see it forming but it’s there. The veteran entrepreneur in me feels the tsunami building momentum and I think it’s going to hit land real soon.
Lets look at the facts.
Not only have business owners been hurt, but the employees working at these places have found themselves on the sidelines waiting for the government to send a whopping $600 stimulus. Biden vows to up the stimulus to $2,000, but two thousands bucks spread over twelve months doesn’t go too far. In other words, it won’t work.
And then we have the Payroll Protection Program, which basically gives businesses free money to pay their employees. But how long can the government pay our employees if we can’t fully serve our customers? Are these employees taking the paychecks and putting it back into the economy or simply catching up by paying overdue bills? A country that is “part-open” is a country that is “part-closed.” If businesses don’t have full-time customers, businesses don’t need full-time employees. These are the fundamental rules of business, but everyone on Wall Street seems to ignore these rules when forecasting how wonderful things will be in months to come.
The only way to get this economy growing is for the economy to open fully. I don’t see this happening anytime soon. For example, my daughter’s school opened in September 2020 by offering kids three days online, and two days in school. Meaning, two days of face to face in class learning is all my daughter could get. But that has now changed. This week the school closed due to a spike in COVID19 cases. This week she has been subject to full time learning from home. She is “virtually” attending school via her iPad. I think the school system here in East Hampton, NY has roughly 2,000 students. How many parents are now struggling to find a daycare center or child sitter to watch over little Johnny or Jenny while mom and dad go to work? Tons! Thus, the parents are hit with another expense or forced to leave their jobs.
With my daughter’s school in mind, I want you to think about all the vendors and merchants who rely on schools being open. For example, across from my daughter’s school is a small pizza parlor where the kids gather after classes. The walk in traffic is a huge revenue grab for the pizza parlor. It now loses all that revenue because kids are learning from home. It also loses the lunchtime revenue from teachers who would walk over each day to buy a slice. These loses add up.
The little pizza shop is a small example of a massive widespread problem that will ultimately impact this country for a very long time. And when it hits we won’t have Donald Trump to rely on. Unlike Trump, when it comes to small business and boosting the economic growth of a country, Joe Biden has no idea what he is doing.
In what I consider to be a racist speech, last week Mr. Biden told America’s small businesses that he is targeting his COVID19 relief efforts towards Black, Asian, Hispanic and female entrepreneurs. In other words, white men with small businesses go to the back of the bus.
In 2017, the Washington Post reported on a then recent study worth mentioning. It states that although the U.S. is becoming more racially diverse, entrepreneurs are 80.2 percent white and 64.5 percent male. Therefore, in an attempt to be “woke”, Joe Biden is ignoring the economy’s greatest producers. How does Joe’s racist view towards business recovery help our economy? The answer: It doesn’t.
Regardless of everything I’ve explained above, somehow the stock market is soaring right now. I can’t believe my eyes each and every day when the DOW, S&P and NASDAQ hit news highs. Where is the euphoria coming from? What are the markets basing these huge upticks on? I think it’s a house of cards — the fundamentals are being ignored.
Lets look at the facts again.
For starters, there has been a slow and inefficient delivery system for the COVID19 vaccine. Plus, older folks are first in line, rightfully so. But older folks are not the engines who power the economy. All in, I see no improvement in the distribution of the vaccine coming anytime soon with Joe Biden in charge. If anything, it is bound to get worse as Democrats destroy most everything they touch. Then tack on how many people will reject the vaccine — what happens to the 150,000,000 consumers who refuse to take the vaccine? Will they not be invited into stores?
Couple the above with the statistics. Reports show a spike in COVID19 cases this month, and new strains are popping up in various states and around the world. Joe Biden, who has no business experience or proven success in leading anything other than a campaign from his basement, is in love with spending money on things that do little to nothing in boosting the economy. For example, giving away taxpayer money to programs that offer free healthcare to illegal aliens. How does that help you?
Biden wants to fund programs that are insanely stupid and won’t do much for small businesses. How is the local nail salon going to benefit from billions of dollars sent overseas in foreign aid? How is a small pizza parlor going to benefit from huge investments in climate change programs?
The economy and the stock market will simultaneously run into a brick wall by the end of March. By March, even the most radical lefty voters will all have a clear view into how clueless Biden is as a leader. Biden will scramble in March when the tsunami hits. He will look to get Congress to pass more stimulus, and his only course of action in paying for all the free money is a huge tax hike placed on the rich, successful business owners, and even the upper middle class. In short, he will punish the bucket of successful people who are keeping the country afloat. I have news for Biden voters who support this idea. Based on my experience, Joe’s course of action results in a massive collapse.
If Biden lifts taxes in the manner I explained above, which is a reflection from his playbook, I am 100% certain the house of cards will fall by April 1, 2021. If Joe kills the Trump tax cuts, people who run successful businesses will pull back. For example, at the end of last year I placed an order for two new mixer machines to help mass produce our very popular Miracle Me CBD Body Oil. However, after hearing Biden vow to prioritize relief funds towards minority owned businesses, I decided to cancel one of my orders for the mixer machines. Instead of buying two mixers, I am buying just one — and it’s the cheaper one. I cancelled my order for the $75,000 mixer machine because most businesses are run by white males. If Joe is placing white guys who produce jobs to the back burner, then I am heading for a wallet lock down. Note: My cut in spending will have nothing to do with race.
If the small businesses run by “white guys” continue to take a hit, then so shall the economy. The trickle down effect leads to more jobs being lost and less people having money. For me a business owner, this means I will sell less items. This means I will cut back production. This will hurt the vendors who supply me with materials. And that is forward looking. Look at the immediate: By me cancelling the mixer machine I have hurt the manufacturer and the sales guy who sold it to me. I’m sorry but I have to survive too.
The media did it’s job to kill Donald Trump’s presidency. They focused their op-eds solely on the parts of his personality they hated. Joe is now the guy in charge. The media will pay a price soon as ad money begins to dry up. One thing I have learned about cycles: What goes around comes around. The media deserves the loss.
If the majority of small business owners are left to deal with the tsunami as I paint it here today, my experience says the country will go into a mental depression as the economy slides into recession. When small businesses die a slow death, and when people lose their jobs with no prospects in sight, people get scared. Parents wonder what the future holds for their kids. This sort of uncertainty drives down consumer confidence. This fact is not friendly to the markets or the economy.
You watch, when Trump is gone and the idiots who stormed the Capital no longer dominate the headlines, the Biden economic plan will be in full focus. Problem is there is no plan to focus on. Biden’s economic principles are based on everything Trump hated. In short, we will see more regulation and higher taxes.
The economic future pushing out two years looks dim to someone like me. And so not only I am planning to cut back on everything, I remain baffled about the stock market. How can they see a promising future under Joe Biden? We are 14-days into the new year and the markets are skyrocketing. What do they see that the rest of us are not feeling? Do they know something about Biden’s economic plan that we don’t? The answer: No. They don’t. What they see is a chance to short the market in the coming weeks.
Mortgage rates are starting to rise, this means buyers may decide to pull back and the housing market will cool. If this country couples a housing slowdown with an unemployment number set to get worse, and then lumps on all the banks and landlords struggling to collect rent and mortgages, and the credit card companies not being paid each month from cardholders, then I assure you the stock market will drop like a rock in a pond. Tack on a new stain of COVID19 and the inability to get Americans their vaccines in large numbers, and then tack on a fresh set of restrictions on small businesses who are barely holding on. The house of cards is set to fall.
I am forever a sunny eyed optimist. But I see nothing but rain. And when the rain ends there will be no rainbow with a pot of gold unless your a big wig trader on Wall Street who placed bets on the market tanking.
I love America, but I am betting against the U.S.markets while at the same time praying for my fellow entrepreneurs and citizens. Sadly, my prayers will go unanswered for the time being because I can’t have it both ways. There is no way the markets prevail with Biden in the Oval Office. Without the Trump economy small businesses will struggle.
As you can tell I have zero confidence in Biden. It’s not only me. I know of not one business owner who trusts Biden will prevail when it comes to the economy. Meanwhile, I have tons of confidence in the ugly side of Wall St. I trust in my experiences over the 33 years. This experienced guy says the bankers and hedgers are running this market up only to later reverse gears and short it in the weeks to come. In the same way they made a fortune running it up, they will make a killing when the house of cards crumbles. You watch.
If reading this article is triggering a ringing in your ears, my experience tells me that sound you hear is economic disaster brewing.