In December of 2015, Mullaney Trust stopped taking new clients and is no longer a “registered investment advisor”.
Now and for the foreseeable future, I am focused on helping people develop income producing real estate portfolios. I continue to be involved in the minerals exploration industry and I give speeches on economics and investing.
Why I closed Mullaney Trust:
- Washington & Wall Street operate irresponsibly and dangerously.
- Our financial and political systems are broken and very fragile.
- The great majority of stocks are grossly overpriced, and
- The Stock Market may fall by 40% or more.
I do not know when this will occur. You can find reports that I’ve written over the past 30 years which explain why I believe, unless radical changes occur, our nation will suffer a major economic and social decline.
Below I’ve provided a brief outline of my views on the US Economy & Stocks, as of December 2015.
Economic Facts – 10 Irrefutable Rules for Every Country
- A country must produce at least as much as it consumes or risk collapse.
- No country can borrow ever-increasing amounts of money each year to provide food, clothing, transportation, housing, education, entertainment and health care for the fastest growing segment of its population.
- A country where small businesses are closing at a faster rate than new small businesses are starting will fail.
- A country where, increasingly, average working families make less money and go deeper into debt to pay for basic necessities, will eventually decline.
- A country where the population of its least productive and most dependent citizens reproduce at more than twice the rate of its most productive citizens will eventually collapse.
- A country where all economic decisions are made to ensure that the richest 1% of the population become richer at the expense of everyone else will eventually collapse.
- A country that significantly increases the number of immigrants that are non-English speaking, largely illiterate in their own language and who are from the most violent cultures on earth and who are completely dependent on government spending for all of their needs, is certain to eventually collapse.
- A country whose population is increasingly obese, sickly, and/or dependent on legal and illegal drugs, and whose population is either violent or show little regard for their fellow citizens or their property, is certain to collapse.
- A country where Wall Street money changers, Hollywood moguls and useless athletes earn hundreds or thousands times more than nurses, carpenters and teachers, is certain to collapse.
- A country where, decade after decade, government spending increases at a far greater rate than the incomes of its citizens will eventually collapse.
This describes America. So, unless radical changes occur, we will collapse.
During the crash of 2008-09, America’s economic system ground to a halt! It failed because people in Washington, on Wall Street and on Main Street violated the two most basic rules of economics:
1) One cannot, permanently, consume more than they produce, and
2) One cannot borrow more than they can repay, without defaulting in the future.
We’ve learned nothing from the past.
Here is the reality!
In 2009, the US GDP was $14.4 trillion. In the past 12 months the GDP was $18.2 trillion. The GDP increased $3.8 trillion over the last six years. Over the same period, government borrowing and spending increased by twice this amount. The government is borrowing and spending to “stimulate” the economy. They said they believed that this would bring about self-sustaining GDP growth. They call borrowing and spending money from future generations, “priming the pump”. But it has not worked, the economy is not on a path of self-sustained growth. Therefore their borrowing and spending is not sustainable. Clearly, we cannot borrow our way to prosperity! “Anything that most stop, will stop”. When the debt bubble bursts, so will Wall Street and both political parties. Inflation will rise; we may even have hyper-inflation.
100% of the so-called “recovery” that Obama takes credit for occurred due to additional borrowing and spending. Since 2009, America has been consuming far more than it has produced, and it has taken on far more debt than it can possibly repay. This will certainly cause an economic crisis in the future.
Since 2009 real wages have fallen. Newly created jobs pay less than old jobs that were destroyed. Obama made the super-rich even richer, the percentage of people in poverty has grown, and now America has far more debt than it can possibly repay! Great trouble lies ahead. No stocks are safe!
Stocks Facts & Investing
- In the past 5 years, most US corporations have added more debt than equity to their balance sheets.
- Most US corporations have increased earnings by reducing employees.
- Many US companies take on debt at a faster rate than the rate of revenue increases.
- Most US companies have far more debt than equity.
- Most non-financial US companies have sales growth of less than 2%.
- Most US companies have very little equity and will go out of business if the US economy contracts even a small amount over a few years.
- Many, perhaps most, of the largest US companies pay dividends with borrowed money.
- Most US companies are worth far less than their share price.
- All assets may be overpriced because of low interest rates. When interest rates rise, and they will eventually, stocks prices will fall significantly.
- It is impossible to predict the timing of movements in interest rates, commodities or the stock market.
- An investment which is made after major price decline is likely to produce greater returns than investing in assets that have seen major price appreciation.
- Over the long term, unleveraged income-producing real estate has provided great safety, significant appreciation and tax-sheltered income.
- Most investment advisors who share my views on the economy are “gold bugs”. I believe that all necessary commodities may, not will, but may appreciate over the long term. However, over my career I’ve learned nothing is predictable, and certainly not gold prices. It does seem prudent to have some of one’s capital in gold and precious metals.
- Holding unleveraged income-producing real estate appears to be the safest asset class with the potential of appreciation exceeding the inflation rate.
As of December of 2015, Mullaney Trust will no longer take new clients. We continue to provide investment counsel to a few families.
Now and for the foreseeable future, I am focused on helping people develop income producing real estate portfolios.
I continue to give speeches on economics and investing.
Please visit www.RayMullaney.com.