Copyright © 2014 by David Wiedemer, Robert A. Wiedemer, and Cindy Spitzer. All rights reserved.
Published by John Wiley & Sons, Inc., Hoboken, New Jersey.
Published simultaneously in Canada.
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The authors thank John Silbersack of Trident Media Group and David Pugh, Laura Gachko, and Joan O’Neil from John Wiley & Sons for their relentless support of this book. We would also like to thank Stephen Mack and Jeff Garigliano for their help in writing this book. We thank Jim Fazone, Jay Harrison, and Nancy McSally for their work on the graphics; Michael Lebowitz for his help on the data; and Beth Gansner for her help in proofreading. We also want to acknowledge Christine Peglar’s and Jennifer Schoenefeldt’s help in keeping us organized.
I thank my co-authors, Bob and Cindy, for being indispensable in the writing of this book. Without them, this book would not have been published and, even if written, would have been inaccessible for most audiences. I also thank Dr. Rod Stevenson for his long-term support of the foundational work that is the basis for this book. Dr. Jeff Williamson and Dr. Lee Hansen also provided me with important support in my academic career. And I am especially grateful to my wife, Betsy, and son, Benson, for their ongoing support in what has been an often arduous and trying process.
I, along with my brother, want to dedicate this book to our mother, who died late last year. She inspired us to think creatively and see the joy in learning and teaching. We also dedicate this to our father, the original author in the family. We also want to thank our brother, Jim, for his lifelong support of the ideas behind this book. Chris Ruddy and Aaron De Hoog have been enormous supporters of Aftershock. It’s been great to have such support. I also want to thank early supporters Stan Goldstein, Tim Selby, Sam Stovall, and Phil Gross. I also want to thank Dan Cohen and Michael Calkin for their support of this book. I am most grateful to Weldon Rackley, who helped my father to become an author and who did the same for me. A very heartfelt thanks goes to John R. Douglas for his very special role in making our books a reality.
Of course, my gratitude goes to Dave Wiedemer and Cindy Spitzer for being, quite clearly, the best collaborators you could ever have. It was truly a great team effort. Most of all, I thank my wife, Sera, and children, Seline and John.
Thank you, David and Bob Wiedemer, once again for the honor of collaborating with you on our fifth book. It is always an exciting experience, and I look forward to many more.
For their endless patience and support, my deep appreciation and love go to my husband, Philip Terbush, our children, Chelsea, Anya, and Zachary, and my dear friend Cindi Callanan.
I am also filled with a lifetime of gratitude for two wonderful teachers: Christine Gronkowski (SUNY Purchase College) and two-time Pulitzer Prize winner Jon Franklin (UMCP College of Journalism), who each in their own ways helped move me along a path exceptional.
My appreciation also goes to Beth Goldstein and Christie Chroniger for their ongoing help with all things great and small.
We wrote our first book, America’s Bubble Economy, back in 2004 and finished it in 2005, long before the housing bubble was visible to many people. We asked our publisher, John Wiley & Sons, to hold the book as long as they could because we were concerned that nobody would buy it. Few people believed there was a housing bubble at that time, much less a whole bubble economy. They wouldn’t hold it any longer than fall 2006, and so it was published.
With that first book and Aftershock (Wiley, 2009 and 2011), we have built up a good track record of predicting much of what has happened since then, certainly better than most analysts. Almost no economists or analysts wrote an entire book about such issues at the time, although many have written books since. But many of those books are more historical than predictive. It’s still scary to predict the future. It’s much easier to review the past.
We have been criticized by some as being one-trick ponies—that we made one good prediction and that’s it. Certainly, there have been cases of this in the past, such as Elaine Garzarelli, the market analyst who famously predicted the 1987 stock market crash. But we’re not trying to predict a crash. What we are trying to do is predict a far larger change in the entire economy. Yes, an earlier real estate crash and stock market crash was part of that, but there is much more to what’s going on in the U.S. economy and world economy. Anyone who reads our books will see that.
Some people may say we were right about one prediction, but in fact, it was a range of related predictions, many of which we predicted will not occur for years more. We’ll have to wait to see if those come true. But even if we got only one prediction right, that’s better than many people who get far more attention for their predictions than we do, such as Ben Bernanke. He predicted, after the Bear Stearns collapse in June 2008 and just four months before the biggest financial crisis in our history, that all was fine with our financial system. Well, it’s better to be right once than never. At least it should give us more credibility.
But our forecasts are not meant to cheerlead or paint a rosy picture, and we know that leads many people to giving us less credibility, for obvious reasons. They would rather listen to a more bullish outlook, such as Mr. Bernanke’s, especially on the stock market. As one of our good friends on Wall Street said, “Nobody likes a bear, especially when they’re right!”
We’re not trying to be a bear or a bull, we’re just trying to help people better understand the economy. As another friend on Wall Street said, “What you’re really doing is teaching people.” And that’s exactly what we want to do. Some people have said we are arrogant, but we try not to be arrogant. Of course, maybe in the act of teaching something very new that others aren’t teaching, there is a certain inherent arrogance.
The best teachers have a passion for what they teach. And when you have a passion, you try to make strong points of great substance that will stick with the people you are teaching. If we have overreached in some of our chapters and appeared arrogant, we apologize. We try to keep the book as nonarrogant and easy to read and enjoyable as possible, while still getting our message across. In fact, we think that is critical to good writing and good teaching.
We don’t try to attack anyone personally. If we do make a reference to someone personally, it is to make a larger point about the economy or the way people look at the economy, not to personally put anyone down.
We try to be as fair as possible because we need to be as believable as possible. That is absolutely critical to teaching anything new.
In this book we hope to expand on what we have taught in the past, and we hope more people will benefit. The greatest joy of writing a book is that someone benefits from it—whether that’s because they are entertained, or live a more financially secure life, or simply have a better understanding of the way our society works. It’s all about feeling that you are somehow better off after reading the book than before.
We wrote this latest book, The Aftershock Investor, Second Edition, in response to our readers’ demands for more details about how to put the ideas in Aftershock into action. The old ways of investing based on conventional wisdom are becoming increasingly ineffective and even dangerous. For those lucky enough to see what is coming, we need a new investing approach. Rather than passively waiting for things to get better, we need to actively manage our investment portfolios, based on the correct macroeconomic view of the current and future economy. For that, we now offer you The Aftershock Investor, Second Edition.