Dow theorist Richard Russell describes a critical paradigm shift in his latest letter.
We've entered "the great leveling era," when the standard of living is rising in Asia and Africa as it declines in the developed world.
In this context investors should focus on keeping wealth, not gaining it:
Up to 2009 I think the idea in America was to make as much money as you could and to live as well as you could. The US was the land of leveraging, borrowing, credit and opportunity. From 1982 to 2007 the stock market climbed steadily higher, and those who owned stocks prospered.
After 2009 it was a different story. I believe that from now on, the idea will be to hang on to as much of our wealth as we can. In other words, from here on the trick will be to avoid losing money. He who loses the least will be the winner.
Russell also names the ways investors will lose money:
(1) Through both inflation and deflation.
(2) By owning the wrong assets at the wrong time.
(3) By trading poorly.
(4) By listening and acting on the wrong advice.
(5) By thinking you can make money (as in the old days) by remaining in the markets.
(6) By being leveraged in items that are subtly declining.
(7) Simply by being greedy, stupid or impatient.
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