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presented by Harry S. Dent, Jr.

presented by Harry S. Dent, Jr. The Demographic Cliff How to Survive and Prosper During the Great Deflation of 2014-2019. (January 2014). (November 1992). Telling the Truth. Babies Are The Key to The Future. Average Annual Family Spending by Age (5-year age groups). 40. 50. 60. 70.

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presented by Harry S. Dent, Jr.

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  1. presented by Harry S. Dent, Jr. The Demographic Cliff How to Survive and Prosper During the Great Deflation of 2014-2019 (January 2014) (November 1992)

  2. Telling the Truth

  3. Babies Are The Key to The Future

  4. Average Annual Family Spending by Age (5-year age groups) 40 50 60 70 80 30 20 Age 46-50 Data Source: Bureau of Labor Statistics

  5. Immigration-Adjusted Births Immigration Adjusted Births Data Source: U.S. Census Bureau

  6. The Spending WaveBirthsLagged for Peak Spending Dow Adjusted for Inflation Immigration-adjusted Births Lagged for Peak Spending Data Source: Dent Research, U.S. Census Bureau, Bloomberg, 2014

  7. Inflation Indicator LABOR FORCE GROWTH 2.5-YR LAG, left INFLATION (CPI), right Data Source: Bureau of Labor Statistics, Dent Research, 2014

  8. Inflation Forecast 20 Year-Olds on a 3-Year Lag Minus 63 Year-Olds Inflation Annual Inflation (%) Annual Labor Force Growth Source: U.S. Census Bureau and U.S. Bureau of Labor and Statistics

  9. Forecasting is a Delicate Balance

  10. Who Sees the Truth

  11. Demographic Cliffs Around the World Source: U.S. Census Bureau, United Nations Population Division

  12. 80-Year Four-Season Economic Cycle Consumer Prices/ Inflation Generation Spending Boom Stocks/ Economy Summer Spring Fall Winter Source: Dent Research

  13. Consumer Life Cycle of Spending Trade-up Home; Potato Chips/Groceries Mortgage Interest 42 41 33 Spending 31 Childcare/ Babysitting 28 First/Starter Home 26 25 Childbirth- Infant Furniture 20 Marriage First Car Workforce Entry 20 25 30 35 45 Age Data Source: Bureau of Labor Statistics, Dent Research, 2013

  14. Consumer Life Cycle of Spending 46 48 51 Autos Motorcycles; Vacation Homes Furniture; Tires 54 College Tuition 53 Spending Home Improvement 54 43 45 48 51 Age Data Source: Bureau of Labor Statistics, Dent Research, 2013

  15. Consumer Life Cycle of Spending China/ Dinnerware 55 Life Insurance; Doctor’s Fees Hospitals; Travel 58 60 Vacation and Retirement Homes Spending Cruise Ships 65 Medicare Co-Pay 70 77 81 84 74 Prescription Drugs Garden/ Lawn Care Nursing Homes 55 60 65 70 75 80 85 Age Data Source: Bureau of Labor Statistics, Dent Research, 2013

  16. Best Aging Markets for Next Decade • Discretionary healthcare, wellness and weight loss • Overseas travel • Health, life insurance and financial planning • Recreational vehicles (RVs) • Cruise ships • Downtown town homes/condos and exurban retirement communities • Landscaping and home maintenance services • Convenience and drug stores • Pharmaceuticals and vitamins • Funeral homes and cremation services • Nursing homes and assisted living facilities

  17. The Great Real Estate Bubble and Outlook Looks Like Real Estate is Getting Ready to Fall Again

  18. Japan Residential Land Price National Index Prices rose 2.6 times in 6 years Bubbles tend to go back to where they started Source: Japan Statistics Bureau

  19. Japan Net Housing Demand Peak Buyers (42) minus Di-ers (84) 100=2005 Data Source: Ministry of Health, Labour and Welfare, Japan, 2013

  20. Borrowing Power of a Typical Home Purchaser Pre-Tax Income Borrowing Power 2.8 times Source: Amherst Securities

  21. U.S., Net Housing Demand • 41-year-olds minus 79-year-olds 100=2005 Data Source: US Census Bureau, Dallas Federal Reserve, 2014

  22. Case-Shiller, 10-City Index1996-2012 -34% -34% Data Source: Standard & Poor’s Case-Shiller US 10-City Home Price Index, 2013

  23. Case-Shiller Top Metro AreasPercent Decline from Peak Values Data Source: Standard & Poor’s Case-Shiller US 20-City Home Price Index

  24. Case-Shiller Top Metro AreasPercent Decline from Peak Values Decline from Peak Value to Present Data Source: Standard & Poor’s Case-Shiller US 20-City Home Price Index

  25. Case-Shiller Top Metro AreasPercent Decline from Peak Values Decline from Peak Value to Present Data Source: Standard & Poor’s Case-Shiller US 20-City Home Price Index

  26. Miami

  27. Dallas

  28. The Greatest Debt Bubble In History

  29. Debt vs. GDP Growth1983-2011 Data Source: St. Louis Federal Reserve, Treasury Direct, 2013

  30. U.S., Debt to GDP Ratios of Major Categories 358% Total Combined Debt to GDP! Percent of Selected Debt to National GDP Data Source: Federal Reserve Flow of Funds, Treasurydirect.gov, 2014

  31. Debt Ratios Around the World 626 560 489 Debt to GDP 379 369 358 347 328 315 314 283 277 276 274 266 152 130 78 Data Source: “Measuring the Unfunded Liabilities of European Countries,” Jagadeesh Gokhal, OECD, “The debtor’s merry-go-round,” The Economist, 9/29/2012. National Central Banks, 2013

  32. U.S. Unfunded EntitlementsPrivate Estimates $66 Trillion!!! Source: Kleiner, Perkins, Caufield & Byers - www.kpcb.com, USA Inc. February 2011

  33. Total U.S. DebtPublic and Private • Total Government Debt $19.8T • Total Private Debt $39.4T • Foreign Debt $ 2.3T • Unfunded Entitlements $66.0T • Total $127.5T 8.2x GDP!! +

  34. The Great Cover Up

  35. Central Bank Balance Sheets Globally In Trillions of Converted USD* Data Source: Federal Reserve, People’s Bank of China, Bank of England, European Central Bank, Swiss National Bank, Bank of Japan, Bloomberg, 2013; *Foreign Currency Amounts Converted in 7/2013

  36. Blowing Smoke: More Debt to Cure Debt Crisis?

  37. The Limits of Stimulus

  38. Debt is Like a DrugGDP per Dollar of Debt Change in Billions Data Source: St. Louis Federal Reserve, 2012

  39. Cycles of Inflation and Deflation Source: Minneapolis Federal Reserve, 2013

  40. Velocity of Money1900-2011 Source: Courtesy of Hoisington Investment Management

  41. The Great Bubble is About to Burst Again

  42. What is This?

  43. Masters and Johnson Sexual Response Cycle Orgasm Excitement &Plateau (Arousal) Desire (Appetitive)

  44. Bubbles Are Like OrgasmsMasters and Johnson Sexual Response Cycle Orgasm Excitement &Plateau (Arousal) Desire (Appetitive) Source: Japan Statistics Bureau, Masters and Johnson

  45. 10 Principles of Bubbles • All growth and evolution is exponential, not linear • All growth is cyclical, not incremental • Bubbles always burst; there are no exceptions • The greater the bubble, the greater the burst • Bubbles tend to go back to where they started or a bit lower

  46. Financial Bubbles tend to get more extreme over time as credit availability to fuel them expands as our incomes an wealth expand • Bubbles become so attractive that they eventually suck in even the skeptics • No one wants the “high” and easy gains to end, so we go into denial as the bubble evolves, especially in its latter stages • Major bubbles occur about once in a human lifetime, so it is easy to forget the lessons from the last one • Bubbles may seem fruitless and destructive when they burst, but they actually serve a very essential function in the process of innovation and human progress

  47. Stock Prices since 1700 Source: Conquer the Crash by Robert Prechter, with projection by Harry S. Dent, Jr.

  48. Long-Term S&P and Geopolitical Cycle Data Source: Bloomberg, 2013

  49. 10-year Sunspot Cycle1900-2013 Sunspot Number Data Source: NASA.gov, 2013

  50. Sunspot Cycles1997-2019 Data Source: NASA.gov, 2013

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