[su_quote cite=”Bill Cosby” class=”wwd-post”]”In order to succeed, your desire for success should be greater than your fear of failure.”[/su_quote]
Dear FutureMoneyTrends.com Member,
Before we get into ways to protect yourself from the next crash, I want to invite you to two events that I will be speaking at next month. If you decided to attend either one, please reply to this message and let us know so we can coordinate a meet up for FMT members.
The first event will be in Palm Springs, California, on February 7th and 8th. I will personally be speaking on February 7th, along with Rick Rule of Sprott Asset Management, Mike Maloney of GoldSilver.com, and David Morgan of Silver-Investor.com. The event itself is free to attend since it has an exhibit area that is usually filled with mining companies, precious metal dealers, and other hard asset businesses. To view the details of this event go to CambridgeHouse.com
The second event will be in Las Vegas, Nevada, on February 21st and 22nd. The main event is on Saturday the 22nd where myself and 14 other speakers will be discussing liberty. There is a small fee to attend, but believe me, this is going to be money well spent. Some of the brightest minds are attending and speaking, including David Morgan and Jeff Berwick. To view the details for this event, click here.
At both events, I would be honored to meet with you to discuss finance, life, and liberty. I plan to make a large order of cigars and arrive a day early in case anyone wants to meet at the pool for lunch or drinks. I hope to meet many of you at one or both of these events.
Preparing for the Next Market Crash
Even though we only advocate holding high quality businesses for the long term, we still have to be prudent about protecting our gains. Now when it comes to owning the Forever Stocks in our Smart Money portfolio or the ones we have mentioned in our weekly wealth digest, like Becton Dickinson (BDX) and Apple (AAPL), I have no concern over these businesses going under.
So that we are all on the same page, I plan to hold several of my Forever stocks, no matter what type of volatility we see. I look at some of my positions as the safest investments in the world and I prefer to hold a world dominating company rather than a Janet Yellen buck or gold which has no compounding return.
Right now I would suggest everyone enter in a 15% trailing stop loss broadly on your portfolio. Perhaps a 25% trailing stop loss on your more volatile positions like smaller oil stocks and a 10-15% trailing stop loss on your most conservative positions like the ones mentioned above.
Is a crash likely?
It’s tough to say since the stock market is the only sign of a recovery, the economy is in a depression, so I really do feel that the FED will do everything it can, including buying shares on the open market in order to keep the stock market from crashing dramatically. A 10% correction for the Dow, from its high, would put the Dow Jones which is currently at over 16,400 (16,576 high) at 14,918.
Drivers for the rally to continue:
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- The public did not participate in the rally of the last 5 years
- FED is extremely supportive of it
- Interest rates are low
The 3 drivers supporting it are all significant, however there are probably a thousand reasons it should crash. Now a crash doesn’t mean the end of the world, but it would put the entire recovery story in jeopardy, the whole wealth effect which is now finally starting to push the public into buying stocks, would immediately put them back on the sidelines.
I am NOT a financial adviser and I don’t expect everyone to even agree with me, even our staff is divided between what’s next. Half say Dow 10,000 and the other says Dow 20,000, so let me just share with you what I am doing.
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- I am protecting my gains by putting trailing stop losses on most of my investments that are in publicly listed companies.
- Keeping my speculations down to a minimum.
- Holding both gold and cash as an insurance policy.
This is not the stock market of the 1980’s or 1990’s. Each person reading this needs to be extreme when it comes to where you hold your wealth. Don’t blindly speculate, be very specific about where you plan to hold your wealth.
Personally I like gold for insurance, houses for cash flow, and large cap ultra safe and proven businesses for compounding my wealth. When it comes to speculating, my favorite position is physical silver, after that it is small micro-cap plays, ones that are ran by the all star team of their sectors who are supported by the smartest investors in the world. Short of that, I don’t buy it, it is just not the time to gamble.
We are living in unprecedented times, where the world’s reserve currency is tied to nothing, it is simply just a bank note that is loaned in existence. The government behind it is bankrupt and the entire financial system is being held together with a policy that is best described as a ponzi scheme.
Be safe, be smart, and have a prosperous week.