We’ve written some in these parts about the many, many predictions of a US dollar collapse and an associated economic and societal collapse — recent newsletter pitches that spin this “doom” story have come fast and furious from Porter Stansberry and several others, and they are a pretty popular stock in trade in the world of investment newsletter marketing … though Porter did raise the bar considerably with his huge (and probably extremely successful) marketing investment in the “End of America” video promotions that he started to run several years ago.
That doesn’t mean that the predictions of doom are wrong… just that we’re well reminded that they are marketing. They are selling the fear of what might happen, and the fear of being unprepared or missing out. These pundits may well actually believe that the worst will happen, or that the trend for the US economy is bad enough that something very bad is very likely to happen, and they might even be right… but the wording and the emotional drama of the ads are simple advertising. And it works. I get worried when I read these ads or listen to the presentations.
I don’t sell all my stocks and put my IRA into gold and buy a citizenship in St. Kitts and Nevis or an estate in Nicaragua or Argentina because I fear the US will descend into chaos… but I do worry.
And there are very reasonable, mainstream things that people do every day to protect their savings against confiscatory governments or future inflation or currency devaluation… and, of course, reasonable things that every family can do to protect themselves from disasters both natural and man-made.
And really, if you subscribe to most of these newsletters I expect that’s going to be the advice that you will actually receive… be prepared, but don’t sink all your money into gold or guns or cans of beans in the basement and don’t stop thinking about ways to grow your net worth in the stock market. The disaster prognosis sells books and tries to kick-start some “outside the box” thinking, and there’s probably nothing wrong with that unless you get overwhelmed by the fear-based marketing, but meanwhile the newsletters these folks write and sell continue to recommend various types of real, mainstream investments that you can trade on the stock market.
So sure, as far as I’m concerned I think folks should feel free to buy an air horn to protect yourself from burglars, or buy a little farmland in the country if that’s feasible for you and you think you’ll need to plant beans to survive, keep an emergency kit and some supplies like most folks started doing after 9/11… and heck, if you suffer from the greatest fear of the wealthy, that your savings will be confiscated and you’ll be in the same boat as everyone else, feel free to buy that yacht to get you out of the country, and that home in Panama, and that overseas bank account (make sure to report it to the IRS). But most people can’t afford those things, or would be pretty minimally protected by having $10,000 of their savings in a bank in Canada or Panama.
It is very easy to go beyond reasonable preparation and bring yourself to the edge of panic — particularly if you’re also angry at the stock market, or at big business or the banks, or at the government or our elected leaders. Panicked people don’t make smart or well-timed choices very often, but they do buy newsletters and freeze-dried beef stroganoff and, apparently, collectible silver coins if the ads I’m seeing are any indication. I think there’s plenty of reason to worry that people might be shocked by some future economic downturn, whatever the cause, but I also think people who spent hours and huge amounts of psychic energy worrying about how to get some money out of the US would have been better off figuring out how to save more money and focusing on diversification. Better, I think, to deal with the crisis we know we have, a population of people who, on average, expect 30 or 40 “golden years” of retirement but haven’t saved nearly enough to live that retirement. Panic a little less, diversify, and save a lot more.
I love diversification. I like diversifying so that my stock portfolio isn’t dependent solely on the US economy and includes a large weighting in companies who operate elsewhere or globally and own “real” hard assets or valuable and irreplaceable businesses (though to some degree that diversification has been a drag on my portfolio in recent years), I like diversifying so that my savings is not solely in US dollar bank accounts (largely with physical precious metals and with foreign currencies, though I don’t currently hold any foreign currency CDs as I often have in the past)… but I don’t fool myself into thinking that I will know when the stock market is going to have its next crash, or when the dollar will reverse course and l