Mendel: Diversify and Defend Yourself

The long-awaited Mendel Lecture at the Marcus Jewish Community Center brought out the interesting and the interested crowd Thursday, Sept. 29, with open ears for financial guru Ed Mendel’s topic, “Don’t Obsess About the Election: Focus on Your Financial Future.”

Eddie, co-founder of Ned Davis Research and David, Mendel & Regenstein, one of the biggest research firms in the world, is also a minority owner of the Falcons and a life trustee of the Marcus JCC and Pace Academy.

What makes him really famous are his periodic lectures to the community about how to protect assets in our uncertain world. He is not selling anything or anybody, so we know his advice is not from any contrived point of view.

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He also parses out “Eddieisms” and medical advice throughout his presentation.

Eddie’s Observations

• Israel is seeing the dawn of a new era, with 117 countries (including some Arab nations) coming to Israel for cybersecurity, recycling of water, and advice on terrorism and technology.
• The Federal Reserve has done more harm than good. The Fed is like a heroin junkie, and it will take a crisis before real change occurs.
• We are already borrowing $70 billion a year for the Social Security system to make payments. The crisis is here and now and provides a great example of the unintended consequences of zero interest rates: The trust fund is not earning enough to make distributions. Read Page 163 of the Social Security annual report.
• Don’t believe the polls. Many people will not admit they are voting for Trump, but whoever wins in November will still have to deal with the aftermath of all the bubbles the Fed has created.
• Don’t believe that this election will decide the Supreme Court for generations. If the Republicans hold the Senate, no Democratic nominee will get a hearing, just as the present nominee, Merrick Garland, hasn’t gotten a hearing since March this year.
• Japan is a great example of the system not working. It went to negative interest rates, but instead of consumers spending more, banks are lending more. Instead of the currency weakening to help exports, exactly the opposite has occurred.
• Most of the banks in Europe are weaker than they were in 2008. Many will have to be nationalized in the next crisis.
• Bernie Sanders’ supporters are not going away. They hear the promise of free college and relief of their student debt, which totals $1.4 trillion and is a big reason why 30 percent of millennials are living with their parents.
• Diversify — have a portfolio of real estate, bonds, securities and gold. Real assets are how Jews survived over the decades.
• Do not stretch for a high yield now. The best idea is to hire a distress manager to take advantage of opportunities in all the reorganizations that will inevitably happen in the credit markets. Do not confuse distress managers with junk bond managers, who are creating the bubble in bad debt. Remember that people made fortunes on buying bankrupt railroad bonds in the Great Depression at a penny to a nickel on the dollar.
• Do not blindly believe your advisers about the stability of their companies. Do your own research.
• Gold will fluctuate, and it is a currency. It has no Federal Reserve debasing it by printing trillions of paper dollars every year. It is a store of value that is real and tangible.
• Keep some of your stock certificates in a safe-deposit box at home or at a bank.
• Diversify your brokers to Vanguard, Fidelity and Schwab, companies that have no counterparty risk or derivatives.
• Read Malcolm Gladwell’s book “The Tipping Point.” All bubbles end in tipping points.
• Follow the financial analysis website of Jeff Gundlach, the “smartest investor on the planet.” Sign up for his webcasts at www.DoublelineFunds.com.

Eddie’s Medical Lesson

Ed Mendel always has a health lesson in his talks.

Ed Mendel (right) catches up with Bruce Weinstein while mingling with the audience before his presentation Sept. 29. (Photo by Marcia Caller Jaffe)

If you suspect that you are having a heart attack, do not lie down. Take noncoated aspirin, drink a lot of water, and sit at the front door to wait for emergency medical services. Do not have a family member drive you to the ER or drive yourself.

At the hospital, request a cardiologist, who should be on call and be there within 15 minutes. You have the right to be seen by an M.D. when entering the emergency room.

Audience Response

“Mendel’s presentation was very informative and helped paint a picture about how global trends will impact the United States and other world markets,” said Jacob Ginsberg, 23. “Having listened to a well-respected business leader will certainly go a long way as I begin to think about investment opportunities and retirement funds. While some of his conclusions reflected a less-than-optimistic outlook, I agree with his opinion that the U.S. is a resilient country, and I know that the sky is the limit when it comes to opportunities in business.”

Lawyer Steve Labovitz said: “This was rather depressing, but it’s smart to listen and gain knowledge, since the facts are there. It’s uplifting to be reassured that America is still the best place to be.”

Eddie ended with resounding applause by saying, “America is still the best-looking horse in the glue factory.”