“Stocks keep going up, and investors keep saying no thanks”.  At least, that's what a story from the Associated Press says. What's the evidence, and why are the booming results of Wall Street being rejected so broadly?  And most importantly... what superior alternatives exist?  I'm Bryan Ellis.  I'll give you the answer RIGHT NOW in episode #222.

Hello, SDI Nation!  Welcome to the show of record for savvy self-directed investors like you, where we help you build wealth WITHOUT Wall Street!  This is Episode #222, so all of the notes and resources from today’s show can be found there at SDIRadio.com/222.

The first such resource is a really interesting AP story published today at CBSNews.com entitled “Stocks Keep Going Up and Investors Keep Saying No Thanks”.  This one caught my eye because ANYTIME a large group of people do exactly the opposite of what you’d reasonably expect them to do, you’ve got to consider the big question of WHY?

So first, the facts:

The stock market is booming, with the S&P 500 hitting an all-time high on Monday and having been on a very strong trajectory upward since February.

So what gives?  Why is it happening?

Is it because the economy is strong and everyone is investing confidently?  Hardly.  GDP grew by a HORRIBLE 1.2% in the 2nd quarter of this year, and it was even worse in the first quarter.  In fact, Obama’s economic policies are on track to make him the first president in ALL OF US HISTORY not to produce a single year of at least 3% GDP growth.  So the stock market isn’t booming because the broader economy is strong.

Is it because of improving unemployment?  It could be that, because unemployment has finally dropped below 5% for the first time since in 8 years.

Wait a minute… I take that back.  It’s definitely not unemployment, because it turns out that the dirty little secret is that there are MORE PEOPLE NOT WORKING NOW than at any point in history, with an all-time LOW in labor force participation happening this year, with no end in sight.  If you can’t reconcile the fact that there are more people totally out of the labor force than ever before, and yet the unemployment rate is going down… well, you’re not the only one.  There’s no way to reconcile those facts with one another, unless you just desperately feel the need to believe political spin.  I, for one, do not have that need.

So why’s the stock market still going up?

Without citing the highly technical justification known as hocus pocus, AKA smoke and mirrors AKA utter hogwash, it’s safe to say that the US stock market is still riding high on the lingering fumes of QE along with the fact that the U.S. market is clearly viewed as the least bad alternative in the world right now, with economic uncertainty strongly reverberating on account of Britain’s exit from the European Union and the constant reality of China’s deceptiveness about its own financial situation.  Basically, the whole world stinks economically, but the USA stinks a little less… and that’s why big-dollar investors are still pouring money into stocks here and driving up prices.

But didn’t I just tell you that LESS money is flowing into stocks?  Yes, I did… and there’s no conflict.  Where the inflow of capital has substantially slowed and even reversed in many cases is with mutual funds that invest in stocks.  That’s where investors are turning away.

That’s important because by and large, mutual funds are fueled by the capital of individual investors… so it’s the INDIVIDUAL INVESTOR – that’s you and me – who is rejecting Wall Street right at the time when it’s reaching new highs.

So what are they – what are YOU – doing instead?

This article says that some investors are merely shifting their investments around, opting for index funds rather than actively managed stock funds.  But clearly there’s something bigger than that, because a whopping $47 BILLION dollars has left stock funds altogether in the last 12 months.

Where there have been much bigger inflows is into BOND mutual funds, which are perceived as offering more safety and reliability.  But interest rates are so low right now that bonds simply aren’t producing much in the way of income, relegating the investors who are opting for bonds to a position of treating bonds like stocks, and profiting primarily from the changes in the bond prices themselves rather than from the cash flow the bonds create.

BIG EXHALE…. I don’t know about you, but all of this makes me really glad I don’t depend on Wall Street for financial security.

What could those investors be doing instead?

I have 3 quick suggestions.

1. The simplest path to simple, safe and strong returns for them would be to do some real estate secured private lending. For example:  If you have $100,000 to invest, lend that to somebody who has $150,000 worth of real estate collateral so your money is safe, and charge them 6 or 8 or 10 percent interest.  That’s a real gimme.
2. Another great path, which is similar in many ways to buying bonds, is to buy real estate notes that already exist and are paying. All that means is that SOMEBODY ELSE did what I just recommended to you… they lent their money to someone in exchange for collateral and a great interest rate, and now they’re selling that note – similar to a bond – to you.
3. And for those of you who don’t quite “get” the notion of real estate-secured debt, you should consider buying a good high-yielding turnkey rental property. Right now, with no trouble at all, there are several great turnkey properties available that are fully renovated, occupied by a paying tenant with a GOVERNMENT GUARANTEE for payment of the rent and a professional, experienced property manager handling the whole thing.  That means you don’t have to be a LANDLORD, you just get to be an INVESTOR.  And as an investor, the deals I work with routinely generate 10%+ NET INCOME from cash flow alone… that doesn’t even factor in appreciation of the property.  So the numbers here can be really, really attractive.

Here’s why I mention those options to you:  You’ve got to begin thinking OUTSIDE of the Wall Street box… and look at other avenues for growing your capital that are SIMPLE, SAFE and STRONG… because Wall Street, while going through a relative period of strength at the moment, is not now and never will be SIMPLE or SAFE… and wise investors who truly respect their own capital demand all three:  SIMPLE, SAFE and STRONG.

So if that’s you and you’re looking to redeploy some of your capital into opportunities that are SIMPLE, SAFE and STRONG, I’ll be happy to help you.  Just stop by SDIRadio.com/consultation and set up a time to talk with me.  I can help you out whether you're investing on behalf of your self-directed IRA, self-directed 401k or any other capital you're looking to profitably deploy.

My friends, invest wisely today, and live well forever!

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