(Editor's Note: Paul Schatz, President of Heritage Capital, LLC, in Woodbridge, will be contributing to Fi$callyFit every Friday. Read his biography here)
For the past 23 years, I have been fortunate enough to make some truly outstanding market calls. Buying at bottoms, selling at tops. Forecasting major economic changes. Identifying bubbles right before they burst. It’s been one heck of a run. What I never shared before was that I had help, serious help. My whole life, I have always been a believer. When I found time to sit around and watch TV, I gravitated towards those infomercials and bought and bought and bought. From Ginsu knives to the juicers to abdominal machines to weigh loss without work, it’s all been through my house.
While travelling through Europe in 1987 as a student, I met a mysterious man named Sloo Flipra who changed my life. If you saw him, you would not have believed it. At first, it started out as casual conversation on a train about secret societies and how governments are just puppets for the real folks controlling the world. I was more than curious. I was captivated. He seemed to know everything and I mean EVERYTHING. He told me the hidden truth about world leaders being assassinated and the myriad of cover ups for things that were really going on militarily. He clued me on the manipulation in the financial markets and economy. He even offered that his sports predictions were more than 80% accurate. He discussed things that would only be credible in a Tom Clancy novel.
But it wasn’t just the past. He gave me a laundry list of forecasts and predictions for the coming years. I was hooked! We exchanged names and addresses and vowed to stay in touch. When I called my parents the next day and told them about the man I met, my mother asked me if I was taking drugs. My father thought a cult had snatched me up and I was brainwashed. “How much money did you give him?” my father demanded. “Nothing” I told him. “He didn’t ask for anything”.
After the exchange with my parents and getting back to my life, the bloom was off the rose and I didn’t pursue speaking with my new friend. That was until October 1989 when the stock market saw a mini crash after hostile, leveraged buyouts of United and American Airlines came crashing down. Panic hit Wall Street that this Blue Friday was going to lead to another Black Monday.
I received a note in the mail that said something like “#2 off the list”. During the summer of 1990 as the Dow was making new highs above 3000 for the first time ever, a note arrived that said “#4 off the list”. This time I paid attention and found the laundry list of predictions my friend from the train had made three years earlier. #5 was war in Iraq. When Saddam Hussein invaded Kuwait in the summer of 1990, I sent my friend a letter asking to meet. All I got in return was a note that said Dow 2400 this year. Two months later, the Dow saw its bear market bottom at 2350.
At the same time George Bush I’s approval rating was approaching 90%, yet another note arrived that said something like “Bush goes home a loser in ‘92”. This was beyond eerie. It was like having your own crystal ball. But I also became a little freaked out that this man could be in danger and I wouldn’t be far behind.
Although the curiosity was killing me, I stopped reaching out and after a few more notes, so did he. When I moved out of Manhattan in 1993 as the Yankees were decade long doormats, my friend’s final note at that time was filled with names of minor league players in the Yankees farm system, Jeter, Williams, Rivera. He said “rings, rings and more rings. The glory years are coming back shortly.” And he was right yet again as a dynasty was born.
One of the unfulfilled items on his huge list, which I am only mentioning the really big ones, predicted a decade long boom in the global financial markets, capped off by Dow 10,000. Not surprising, check out the chart below.
I don’t want you to think he mostly mentioned market related items. He gave me tons about politics and a few sports related items and entertainment and science, much of which I did not understand. He knew I was a golfer and told me a Cardinal would soon dominate golf like nothing since Nicklaus. Obviously, that became Tiger Woods.
Finally, after years and years of no contact, I sent my friend a letter in late 1999. Usually, I would hear back right away, but this time, there was no reply. Maybe he moved? Maybe he was ill? Maybe he passed away?
It took three months, but he finally did write back, wondering why I stopped communicating and why I was back. I think he was hurt. By this time, I had matured a lot (or at least I thought so) and figured this guy was my goose that laid the golden eggs. I had to capitalize on his gift.
I also wanted to dispense with the letter writing and either use the phone or email. When I asked about email, he told me to look at the original list from 1987 where it said electronic mail delivery will rule the world. Just incredible! We began to communicate fairly often via email. In early 2000, he told me to buy real estate for the run of a lifetime. He said that a multi-year bear market was about begin, led by the most horrific blow up in Internet stocks. Multi-year? Since I entered the business in 1988, the longest bear market had been measured in months. He was talking years.
During the election of 2000, when we did not know who our next leader was going to be, my friend emailed me and said “Bush I calls in favors for Bush II”. Another comment said, “Madoff a fraud”. At that time, I only knew Madoff as a legitimate securities market maker, nothing of the other business he was building.
The glaring miss my friend had was 9/11. It totally blindsided him and I think that caused him to retreat. In some way, I think he thought he was partially responsible for not being able to see it ahead of time and alert the authorities, which he had done for some of the previous threats against our country.
Over the next few years, he had little to forecast. He barely left his house and didn’t say much in our emails. When stocks bottomed in 2002, he said nothing. No warning about the Iraq war. No comments about housing or mortgages or leverage. He basically retreated into a shell and I figured he would never make a prediction again.
That was until late 2007 when I received an email that said “sell everything; don’t question; don’t ask questions; don’t contact me”. After almost 20 years of beyond belief predictions, I was in a total panic. My first reaction was nuclear war. What the heck does he see happening in 2008?
In early 2009, guess who emailed me? “Safe to go back in the water. 100% on the way”.
Just last week, my old friend emailed me again with an updated photo of himself. This time, it was a laundry list of market predictions, global events, natural disasters and the Final Four results. I have not slept since and I am really shaken up. What should I do?
The final item on his list simply said, “Check the date of this blog entry”. The world is such a serious place. I hope you enjoyed reading! I’ll be back next week with usual commentary. I think it’s time for some real estate comments as the spring season is upon us.
Go UCONN!
FYI, I will be on CNBC’s Squawk on the Street on April 5 at 9:35am.
Feel free to email me with any questions or comments at Paul@investfortomorrow.com.
Until next time…
Paul Schatz
Heritage Capital LLC
http://www.investfortomorrow.com/
http://RetirementPlanningConnecticut.com/
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(Editor's Note: Paul Schatz, President of Heritage Capital, LLC, in Woodbridge, will be contributing to Fi$callyFit every Friday. Read his biography here)
