The Time Machine: What’s the best way to protect ourselves against the next market crash?If you had a time machine, and could go back to 2007, which stocks and other investments would you hold, buy, or sell? How about 1999, or even 1929? Do the best investments just prior to all market crashes have anything much in common?
How likely would your picks be to maintain, increase, or recover their value during and after the next crash?
Are you not worried, because you know you are invested in great companies, so can securely ride out a crash until the market resurges – which it always does? Do you see a drop like that as a good thing, because you can buy great stocks at bargain prices?
Or are you concerned enough to want to keep at least 10% of your investments in ”safe havens” – if so, what do you think the best ones are?
Do you think, like Travis does, that the next crash will be very different from the last one?
Do you think it is more likely to be caused by a cyclical panic sell-off, by bad government policies, by corrupt banking practices, by disruptions or shifts in the world monetary system, or some combination of these?
All thoughts, opinions, personal stories, and quotes from useful sources are welcome. Let’s share information, and learn from each other. Let’s figure out the best way to prepare, so we can have peace of mind and not be so fixated on financial and economic news that we don’t fully enjoy life.
This is a discussion topic or guest posting submitted by a Stock Gumshoe reader. The content has not been edited or reviewed by Stock Gumshoe, and any opinions expressed are those of the author alone.
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111 Comments on "
The Time Machine: What’s the best way to protect ourselves against the next market crash?"
“No stock market has out-performed the American over the long run. One estimate of long-term real stock market returns showed an average return for the US market of 4.73% per year between the 1920’s and the 1990’s.” – p. 126
“Nothing illustrates more clearly how hard human beings find it to learn from history than the repetitive history of stock market bubbles.” – p. 123
From “The Ascent of Money” by Niall Ferguson, 2008 paperback edition.
Just now becoming a new irregular, I have not read Travis’ comments concerning “…that the next crash will be very different from the last one.” Has he written how it will be different … longer, deeper, more swift … ?
Tim Wood, of cyclesman.com, would disagree with the basic statement. His research says that all have the same basic ‘DNA markers’ as a prelude to the crash.
Rick
Maybe Travis did use the word “crisis” but you used the word “crash” in the 4th paragraph of your article”:
“Do you think, like Travis does, that the next crash will be very different from the last one?”
That’s what rick pionkowski was quoting.
Just for the record.
Yes, sorry Rusty I was really correcting myself not you! And should have thought to say that.
I mean “correcting myself not Rick”. As an endless fountain of errors lately, I think I’ll get some sleep and come back tomorrow, I had a post on the real history of gold confiscation planned for today but it can wait a day. That’s a subject that the extremists on both sides have distorted a lot so I want to lay out what really happened with actual reliable references that anyone can check.
I like the idea of a list of high quality gold / silver stocks to trade around. Like many others, I’m holding quite a few losers in precious metals equities, keeping them for the possible moonshot. In addition to your best assets list, Arch1, I would add a reliable rifle and ammunition.
jack I am well equipped tho I have no intent of doing a Custers last stand ,,,,,,firing off a 12 gauge shotgun at night [ala Joe Biden] does earn the notice and respect of the neighbors.
Farmers and ranchers all have guns for “predator control” and practice the three S system,,,shoot shovel and shutup,,,,,,and we all respect each other. Few coyotes and feral dogs here-abouts.
Patricia, would you care to give more details on your strategy in #3? I got into mining stocks around 2007 and am sitting on a substantial loss. I’m mostly still holding because the underlying concerns that got me into them in the first place are unchanged, but it would be nice to do something more intelligent with the funds in the meantime. Fortunately I am a bit ahead on physical gold/silver, no plan to sell those.
SGDM: For heavens sake….between September 2014 and now you would have lost 20+%. I thought you were trying to guard against a mere 10% loss ! Looks like youre creating your own crash.
Absolutely Alan dividends and DRIPS in Aristocrats IMHO Best2ALL!-Benjamin
From zacks, relevant to this thread if it works:
Consequences of the Stock Market Failing
http://finance.zacks.com/consequences-stock-market-failing-5834.html
Best2ALL!-Benjamin
Patricia thank you for the link,,I had not previously known of Janet Tavakoli , but I tot.ally agree with her, It is painfully obvious to me that the fraudulent housing bubble and resultant failure could not have happened without venial complicity of the Govt, including both political parties. In my opinion a certain Barney Frank acted as the best Senator money can buy and his legacy is ongoing and being built upon by others. I think of the scene in DR. Frankenstein’s Monster when the peasants arm themselves with pitchforks and torches and go hunting.
Ah! Then the answer is simple. 2008, Have enough cash to last you 2 yrs ….forget whatever stock you own….drink G&T’s, and youll be back into a hazy profit by 2010. You see, if you have more than enough cash in the bank, neither fear nor greed is a problem.
I guess you trust cash and banks more than I do Alan! I’m a bit of a history buff. Governments have always ended up spending so much on wars, poorly designed social programs, and corrupt siphoning of public money, that the currencies they issue end up failing. The world doesn’t end each time it happens, but there sure is a lot of pain until the defaults play out.
And the US gov confiscated all the gold less than 100yrs ago. It had no legal cash value…..while cash (however depreciated) bought carrots. Now we get back to investing in essentials. Thats NEVER been illegal. In any event, I thought we’d agreed a 10% crash….not a total breakdown of the whole social/banking system.
Thanks Benjamin – I’d read that MarketWatch article yesterday but your post puts it into much better perspective. The “historic standards” you refer to are exactly what a euphoric market tends to ignore, as I understand it.
But Alan, you are pricing everything in U.S. $, over a term of about 8 years… if you think benevolent geniuses are running our government and the Fed, and any day now will start instituting sane policies so that the structural economic changes we need have a chance to come about – then I can understand your long-term faith in the dollar. You get the last word if you want it because now I’m late, got to go!
Its not the $, its the fiat system. We simply cannot go back to swapping beans for carrots. Never mind…if you gotta go, you gotta go. Far be it from me to delay a lady with a full bladder.
Exactly Frank! I think of gold and silver as compact commodities. If there were some form of pork bellies that never spoiled, and could be magically miniaturized so they didn’t take up much room until needed, that would be just as good for me as a store of value. (Though I don’t suppose miniature pork bellies would make very attractive jewelry, so I guess PMs have an advantage there.)
I wonder if I’m the only one in my neighborhood who is happy whenever I see my primary stock watch list completely in the red. I sure doubt it. What a great week to buy the ones on my short list.
I have to get back to work, very busy this week. I’m so pleased with the posts from others that turned up here, from several of my favorite (and smartest) subscribers: thank you! You guys are serious investors, I’m small-time and a rookie, so your comments are super helpful. I’ll check back in Saturday.
Made the mistake of checking my email before Saturday and seeing Alan’s last post so here I am for a couple of minutes.. I also wanted to clarify something in post in #10: I meant “several of my favorite (and smartest) GUMSHOE subscribers.” I certainly don’t consider posters here my “subscribers”, in fact didn’t expect this discussion to last all that long, but I’ve already gotten plenty out of it so would fade away happy even if it never got another response.
Patricia this sure seems to be an attempt of the use of reverse psychology as I understand it [;-]-) Shalom, Benjamin
I truly appreciate your jena se qua Patricia. One of the avenues I walk is utilizing the TVIX as insurance at ALL times. Best2ALL!-Benjamin
Correction Ben: I’ve read your post #7 several times (not #10). Really excellent.
Sogiam: Now this is where Im a dim newbie. WTF is TVIX all about. I read yahoo profile and still didnt understand it. Thanks in advance for your explanation.
Additional VIX video: https://www.youtube.com/watch?v=oETupU86PDY
Credit Suisse AG (TVIX) Stock Chart Technical Analysis for 02-06-15
https://www.youtube.com/watch?v=kjvyYE5klbQ
Daily 2X VIX ST ETN Velocityshares (TVIX) Stock Chart Technical Analysis for 02-18-15
https://www.youtube.com/watch?v=BjJxi98PIgU Best-Benjamin
Alan: A video on the VIX follows: https://www.youtube.com/watch?v=uTpdGyn7xm0
BTW I wasnt having a pop at you at all, I was just trying (and failing) to be amusing with the play on your words….’Ive got to go’….full bladder.
Actually, I totally applaud what you are doing. I just wish I had a sufficient surplus dosh to be able to park some assets on the other side of the ‘need for income’ street. I’m sure that, one way or other, you will have the last laugh.
Mwah!
Dont be too spooked. Investment feeds on greed and fear and the journalists feed on both.’ This stock will rocket 500%….subscribe for $100 and Ill tell you its name’…..or…….’the sky is falling. Subscribe for $100 and Ill tell you how to protect yourself and profit.’ following all the wars and crashes, my parents had a golden rule…….If you cant afford to by it cash….you cant afford it.