Market crash??I’ve been getting e-mails saying that a market crash is imminent, that stocks, bonds and cash will be affected, and that if I subscribe I can ’ride it out and possibly even make a profit’. I just want to know if I should listen or not — my inheritance is riding on it. All I want to do is invest some and bank rhe rest, but if I’m going to be poor, no matter what I had, I won’t be able to.
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The way to handle emails claiming that stocks, bonds, and cash will crash all at once is to “unsubscribe.” I suggest that you start reading some books on financial history, and find out how people have best preserved their wealth through economic disasters of all sorts. The answers will become clear to you. One of the best suggestions (which I’m hearing more frequently from various sources – try watching Bloomberg for a couple days in a row lately) is to keep a substantial chunk of your assets in cash right now so that whatever happens you have the flexibility to respond, to jump in sweep up bargains in stocks or real estate or whatever best appeals to you as a long term investment, depending on what crashes when. The problems with cash/currencies, though very real, will probably take a much longer time to play out.
Thanks for your comments / thoughts on this. I too have seen much of the “imminent crash” columns, articles and advertising on this subject. (To the original poster, also keep in mind, that many of these also come in the form of “Advertorials”, which are designed to get YOUR $ in exchange for *their* information on how to side-step it!) Patricia, just wondering if you have any favorite books that you would recommend? Thanks!
“This Time Is Different – Eight Centuries of Financial Folly”
by Carmen M. Reinhart & Kenneth S. Rogoff
“Manias, Panics, and Crashes – A History of Financial Crisis”
by Charles P. Kindleberger & Robert Z. Aliber
I also suggest “The Ascent of Money” by Niall Ferguson because it’s a great overview, and understanding how limited people’s financing options were before banking, bonds, and stocks were created is important. Those financial innovations sped up mankind’s economic progress to a degree we can’t really appreciate in modern times – we take credit for granted. Just because it can be so overdone and corrupted doesn’t make credit a bad thing.
And don’t forget “Dave Barry’s Money Secrets” by Dave Barry. He does a fine job lampooning those corruptors, and helps us not be so deadly serious about all this.
It’s only money!
Hi JJ,
I have found myself in agreement with Patricia on many issues and agree with her answer here also. I do subscribe to a few newsletters, but for the most part they are a waste of money and you will wind up following the ones that you agree with. Stock Gumshoe is better.
Don’t be in anything that makes you nervous and keep plenty of cash. My suggestion is to nibble a little bit with things you find that you believe in. Do small positions that won’t make you lose your equilibrium if they go against you.
My opinion is that the investment landscape is really, really treacherous right now.
Hi JJ,
I have found myself in agreement with Patricia on many issues and agree with her answer here also. I do subscribe to a few newsletters, but for the most part they are a waste of money and you will just wind up following the ones that you agree with.
Don’t be in anything that makes you nervous and keep plenty of cash. My suggestion is to nibble a little bit with things you find that you believe in. Do small positions that won’t make you lose your equilibrium if they go against you. Surf around Stock Gumshoe, you’ll get ideas that won’t be accompanied by strenuous efforts to sell you another subscription.
My opinion is that the investment landscape is really, really treacherous right now.
For your reading enjoyment I suggest The Big Rest, by Martin Middlekoop and
The Downfall of Money, by Frederick Taylor.
PS…the majority of my assets are outside of the stock and bond market. So my losses
may sting but they are not going to be ruinous.
Everything cannot crash at the same time because commodities have already crashed and the stock, bond, dollar, and real estate markets are still levitated.
Those markets may all crash fairly simultaneously, but no one knows for sure and they certainly do not know when.
Those remaining asset bubbles are highly dependent on interest rates, hence the desperate and unnatural adamancy of the governments to keep rates low and “stimulate”. These policies must eventually erode the value of the dollar, but as Patricia pointed out, we will have a little more time to see the dollar crashing than we will the stock or bond markets.
Wait a second…the stock market is sort of having a train wreck as we speak.
That would leave bonds, USD, and real estate as the holdouts.
There are two other prominent bubbles. One is the high cost of educational services; and the other is the high societal costs of health and medical care. These will be the very last to go; and I am a biotech bull thanks to the guidance of Dr Kss.
The way I see this past week or so HN: unlike you or me, huge numbers of people were surprised disturbed to learn that the world’s economy (with an emphasis on China) is pretty sluggish. Apparently they didn’t notice or believe this until it was confirmed via Planet Janet. So now, rather than investors reacting favorably to continued ZIRP, most are very uncertain, at least for now, about where to put their $. They should heed what a host said on Bloomberg’s “What’d You Miss?” the other day: where commodities go, stock markets follow. It really is that simple, making crystal balls unnecessary.
I think you’re right (as usual) about today’s prominent bubbles. The education field is wide open to major disruption by rapidly evolving innovations like online courses and degrees, and to cheaper competition in general. I also expect huge pressure from voters in the future to forgive most student debt – whatever happens, the student loan bubble will burst and I don’t have much idea as to the ramifications of that (who, besides government, has the most exposure – but I’d stay far away from any institution that does).
But with our aging (and sickening earlier) population medical care will continue to generate great profits for investors who know what they’re doing. I mentioned helping someone through a 5 day hospital stay recently: the bill was over 90k (and 0 time was spent in ICU). You already know I disagree with so much of what conventional medicine does – even in this case the person ended up in the hospital BECAUSE of following a doctor’s instructions exactly. Then after being taken off a drug taken for decades, there was dramatic improvement (huge). The person is now left taking only one drug, a blood thinner – but to be fair, based on their medical history, would probably not survive without it.
I decided to stay completely away from biotech because separating out the companies which I think do great harm, from those which do not, proved too onerous and time-consuming for me. For example I don’t want to profit from our diabetes epidemic: I want the epidemic ended because people learn to eat right! Rarely do we see a doctor honest or brave enough to publicly admit that Type II is a self-created disease which can be completely reversed in early stages simply by eliminating all processed carbohydrates and replacing them with (mainly green) vegetables. That worked for me years ago when I was “pre-diabetic”, and worked recently for a relative who’d been taking insulin for years (he’s been off insulin for months and considered “pre-diabetic.”)
As for how to make money in this environment, I’ve been most interested lately in global capital flows, and trying to identify the next most likely bubbles to get in at the beginning. Precious metals is a possibility for all the reasons we’ve talked about in the past, but I still like uranium too. The tiny companies that have survived since before the 00’s uranium bull run, and were doing great when the next run was going good before Fukashima – and are still here with little or no debt – those I find especially interesting. Contracting is going now for 2018, and some experts are estimating another 3 to 5 years before uranium shoots up again. It could even take longer, but I like the long term odds very, very much. That’s where I’m throwing my “Reno/Vegas” money these days – on a couple of these nano-caps (just the mention of the term “nano-caps” would probably make Travis cringe!).
HN, on the future of the dollar – have you read Rickard’s last two columns on dailyreckoning.com – the Sept 21 column I especially liked.