Karim Rahemtulla is out with a new pitch centered around his “America’s Reckoning” prediction. In short, he’s predicting that a so-called “economic storm” is forming and teased three companies that he suggests could be good investments.
The first is a “$3 gold stock” he likes, the second is an oil and gas pipeline company, and the third he describes as a “special way to collect income even while interest rates rise.”
The whole thing leads to a pitch for a service called Trade of the Day Plus, which costs between $49 to $129 depending on which membership option you choose.
Long story short, I was curious to know what Rahemtulla’s picks were, so I looked into his pitch more closely. And in this post, I’ll break down what he’s predicting and what I think at least one of his picks is (not sure what the other two are) based on his clues.
Rahemtulla’s “America’s Reckoning” Prediction
Karim Rahemtulla’s latest (September 2022) pitch centers around what he says could be his “most important warning yet,” which relates to an “economic storm” he sees brewing.
“… today could be my most important warning yet.
“Because whether or not you think 2022 has been bad…
“Things could get worse.
“A LOT WORSE.
“An economic storm is forming unlike anything we’ve seen for decades.”Source: https://pro.monumenttradersalliance.com/p/RECKONTO99TPULT2YRDSWARWARLTGVI/ETPUY9TC
As for why he’s predicting this, it appears to mostly center around the large debt the U.S. has accumulated over the years and high inflation, which he suggests could ultimately lead to “the worst recession the nation has seen in half a century.”
“Since 2008, our debt has skyrocketed from $10 trillion to $30 trillion in the blink of an eye.”
“And here’s the really tough pill to swallow…
“While 9% inflation is painful… it could get a whole lot worse.
“You see… when inflation gets out of control… it reaches a point where it turns into a self-fulfilling prophecy.
“Higher prices… lead to higher wages… which lead to higher costs… which lead to even higher prices, wages and costs.
“And on and on it goes.
“Once you get into an ever-increasing inflationary cycle… it’s very hard to stop.”
Where does the “recession” part of his prediction fit into this?
In short, Rahemtulla likened the situation the U.S. is facing now to the 1970s when inflation was raging due to government spending and President Nixon taking the U.S. off the gold standard in 1971.
He then talked about how, to get inflation under control, Fed Chairman Paul Volcker raised interest rates to over 22% in 1979.
As crazy as that was, it worked. But as the presentation points out, if the Fed did this today, it could lead to untold pain for everyday folks, given the extreme debt levels.
Here’s how Rahemtulla put it:
“If this situation gets out of control, we could have to relive the worst parts of the 1970s all over again.
“And it could take somebody like Paul Volcker with the courage to raise interest rates to unimaginable levels to stop the bleeding.
“And doing that will hurt.
“It will hurt bad.
“Continuing to raise interest rates could blow up the federal debt even further.
“It could collapse the housing market.
“It could crush hundreds of businesses that need credit to survive.
“It could get uglier than anyone wants to admit.
“That’s why you must protect yourself and your finances now… because ‘they’ certainly aren’t going to do it for you.
“And you must be swift because…
“America’s Reckoning has already begun.
“If we stay on the current path…
“And believe me… I hope we don’t…
“We could find ourselves in the middle of the worst recession the nation has seen in half a century.”
Why does the increased debt level matter?
In short, interest payments. It’s one thing to have a large debt burden with low interest rates, but it’s another when those interest payments start outstripping tax receipts.
And this is one of the main points Rahemtulla made:
“Right now, we pay very little in interest on the federal debt… a little over 1% at $399 billion in 2022.
“But what if that figure rose to just 5%?
“We’d then be paying over $1.5 trillion just in interest on the debt… or about 75% of the $2 trillion Americans pay each year in income taxes.
“If interest rates jumped to 10%?
“We’d be paying $3 trillion a year… meaning that every single dollar you and every other American pay in income tax would go purely to interest.
“All the income taxes taken out of millions of Americans’ paychecks…
“Not one dollar of it would go to actually running the government.
“If interest rates were to rise to 20% like they did at the end of the 1970s…
“It would be a total and complete meltdown.”
It’s anyone’s guess as to if what Rahemtulla talked about plays out, and if so, when. Trying to predict the future with any level of certainty is a fool’s game, in my humble opinion.
But it’s also good to educate yourself on what is taking place in order to make better decisions. And it’s hard to argue with some of the points Rahemtulla made in the presentation, especially since he’s not the only one talking about this scenario.
For instance, one person I’ve learned a lot from lately is James Lavish, who runs a (free) newsletter called the Informationist.
And he talks about a similar concept called the debt spiral.
The above article is well worth a read if you have the time, but here’s a snippet from the article about the debt spiral, which sums the concept up nicely:
“Think of it like this: You run up the balance on a credit card. The monthly payments are more than you have after paying for mandatory things like mortgage, car loans, and food. So, you take out another credit card to pay for some of these things. But your credit score is worse and the interest rate on this new card is higher. So, now the monthly payments are even higher. And you have borrowed more. To make those payments, you have to open another credit card…and so on…you are trapped.
“It’s no different for a country perpetually operating in a deficit.
“more debt → higher interest rates → higher deficits → more debt”– James Lavish (https://jameslavish.substack.com/p/-whats-a-debt-spiral-and-is-the-us)
Anyway, getting back to the presentation…
As for why we haven’t entered a recession yet, Karim Rahemtulla said he believes it has to do with how Americans are borrowing money, which has led to the highest credit card debt in history and total household debt reaching more than $16 trillion.
“So why hasn’t the economy completely collapsed yet?
“Well, it’s because, for the moment, Americans are dealing with the higher costs by doing the same thing they always do: borrow money.
“Credit card debt just hit $930 billion – the highest it has ever been in history.
“And total household debt just surpassed $16 TRILLION…”
“So what happens next?
“I think it’s possible we will spiral into a deep recession.”
There was more to what Rahemtulla said than this, but that’s my summary of his prediction. And as for his three recommendations, the only way to learn about those would be to join his Trade of the Day Plus service and read the three reports he’s put together.
But I did some sleuthing to see what I could find…
What Are Karim Rahemtulla’s 3 Picks?
The clues Rahemtulla shared about his three picks were quite vague, such that I was only able to uncover one of them. But I’ll summarize the clues he shared (and what I learned) about each and show you what I think the second company is.
“The $3 Gold Play: The Recession Asset That Could Triple Gold’s Returns in America’s Reckoning”
Based on the clues Rahemtulla shared about his gold pick, it’s a stock trading for around $3 a share that pays dividends at somewhere in the ballpark of 6.5% or more.
Here are the clues that led me to this conclusion:
“For just $3, you can get in and potentially supercharge your performance on the precious metal.”
“One of the biggest problems with gold is that there’s no yield… no income opportunity.
“But with this gold investment… you get paid a dividend!
“It’s big too…
“Over 50 times the income you’d make in a savings account…”
The reason I think that the dividend is around 6.5% or more is that the average interest rate of a U.S. savings account currently stands at 0.13%, and 50x that is 6.5%.
Aside from that clue, he referred to it as a “$3 gold stock” at one point in the presentation (keyword being “stock”) and talked about some of its price runups compared to gold during various periods over the past several decades.
I’m stumped on what this one could be, but if you have any ideas, feel free to chime in in the comments section below.
“Energy Partner Checks: Triple Your Income as a New Energy Pipeline Partner”
Here’s a summary of the clues Rahemtulla shared about his second pick:
“The second hard asset to look at is energy.”
“Instead of just being a regular stockholder in a company…
“You can become a PARTNER in a company that owns pipelines that deliver oil across the country.
“And as a partner, you are guaranteed your share of the company’s profits.
“The more oil gets delivered… the more you get paid.”
“You can own a piece of over 120,000 miles of energy infrastructure nationwide…
“That accounts for about 30% of our country’s total oil and natural gas.
“This company is responsible for the transportation, storage and end delivery of natural gas, crude oil, natural gas liquids and refined products.
“And every barrel that comes through means money in your pocket.
“They have one of America’s largest energy portfolios…
“Their operations span across 41 states and Canada…”
Based on those clues, I think Rahemtulla’s pick is Energy Transfer LP (ticker: ET), a Texas-based midstream energy company that transports natural gas and oil through its network of pipelines throughout North America.
What led me to this company was Rahemtulla’s clue about it having “120,000 miles of energy infrastructure nationwide” and operating in 41 states.
Those are pretty specific clues, and a quick Google search led me to the energytransfer.com website, which states that Energy Transfer LP has “approximately 120,000 miles of pipelines and associated energy infrastructure across 41 states.”
Furthermore, the company site states that about 30% of the U.S.’ natural gas and oil has moved through their pipelines, which matches another one of Rahemtulla’s clues.
So, Energy Transfer appears to be his second pick.
As for the part about “partnering” with this company, I’m not sure what that’s about. But it appears to relate to what he said about how investors can earn a “share of the company’s profits” by way of cash distributions (aka dividends). And as of writing (September 2022), Energy Transfer pays a dividend of over 8% annually.
“Double-Income Stream Shares: Turn Rising Interest Rates Into TWO Ways to Make Extra Money”
Rahemtulla’s third and final pick is one he was also pretty vague about, but he did share some clues that helped narrow it down a bit:
“The final investment I want to share with you for America’s Reckoning is a special way to collect income even while interest rates rise.
“I’m not talking about CDs or bonds or any type of regular stocks you might hear about…
“And this has nothing to do with exchanging foreign currencies or trading futures.
“This investment pays three to four times as much income as the average stock. It’s an unusual type of investment used by Wall Street insiders – especially during a crisis.”
“Forbes pointed out that this special investment combines the “best of bonds and equity in one security.”
“And The Wall Street Journal called it the ‘secret weapon for yield.'”
“Best of all…
“It’s yet another way to collect income while also giving you the chance at massive capital gains.
“And that’s why I call it ‘Double-Income Stream Shares’…”
The Forbes article and Wall Street Journal article Rahemtulla quoted above were talking about preferred stock, which is a type of equity that gives preferred stockholders a higher claim to dividends or asset distribution compared to common stockholders.
So, based on the above clues, Rahemtulla is pitching preferred stock in a company that pays dividends, which helps, but it doesn’t narrow his pick down much.
There was one last clue, though.
On the order page for the service he’s pitching, Rahemtulla dropped one final hint, which suggests that the company is in the finance industry:
“I’ll show you two ways to use these special “Double-Income Stream Shares” to build your portfolio – even in the worst of America’s Reckoning. You’ll learn how to tap into the rising interest rates and make extra income payments from 42% of ALL loans issued over the entire globe.”Source: https://secure.monumenttradersalliance.com/journey/RECKONTO99TPULT2YRDSWARWARLTGVI/1
I looked into that clue (and the other clues) but wasn’t able to uncover this one. So as with his gold pick, if you have any ideas, let me know in the comments section.
Recommended: Go here to see my #1 rated stock advisory of 2023
Karim Rahemtulla’s latest presentation is all about “America’s Reckoning,” which is essentially a prediction he has made about America’s debt, inflation, and a potential future recession. He also teased three stocks during the pitch.
Given the vagueness of the clues, I’m not sure what two of them are, but his oil and gas pipeline pick appears to be Energy Transfer LP.
Whether or not Rahemtulla’s prediction plays out, and which stocks are good investments if it does, is anyone’s guess. But at least now you know what one of his picks is likely to be.
Also worth noting is that earlier this year, I wrote about another teaser Rahemtulla released that centered around what he calls the “last great value stock.” And I break down exactly what I think that company is (and why) in this post.
So if you want to find out about his other picks, check that post out.
Anyways, that’s it from me.
Thanks for reading!
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The $3 gold stock is B2Gold..Symbol BTG /U.S. and BTO /TMX Toronto