US Stock Market Trending Down
Canadian Stk Mkt Trending Down
US Bond Yields Yield’s Trending Down
Jeff’s Weekly Stock Market Commentary: The Calm Before the Storm?
The entire Northeast corridor is bracing for snow of ‘potentially historic proportions.’ It is expected that some places could receive up to 30 inches of snow and hurricane force winds of 70 miles per hour. If that occurs, there could be significant power outages and travel disruptions. Already airlines have cancelled over 2000 flights and announced over 2000 delays.
People in the storm’s path are being told to stock up on food and water and to prepare to be without power for several days. Those who have been through storms like this in the past are sure to take the warnings seriously. And then there will be those that don’t respect the reports and will do little to prepare. They may remember that there have been similar warnings in previous ‘historic’ storms where the patterns shifted at the last minute and the effects of the storm were minimal. Or they may remember when a big storm did occur, but everything was back to normal in just a few days.
Many approach investing the same way. Many who lost significant portions of their wealth in 2000 and 2008 will say that there wasn’t any way to know that a crash was coming. But there was. The signs were there. We could see the weather patterns developing and there were some stock market meteorologists that tried to warn investors. Granted, they didn’t always make it to the financial media because their predictions didn’t follow the script the media wanted. So the media would drown out the warnings by following it up with several so-called experts who could be relied upon to reassure investors that everything was all right and that the markets should continue to go up the next few years. Of course, those experts were wrong and the retirement accounts of many of our nation’s seniors were devastated. A lot of them still haven’t recovered.
If you listen to those same pundits and the financial news channels they are on, you will hear them saying the same thing now that they did back in 2000 and 2008. The brokerage firm economists continue to predict 3% annual growth forever with no variation in sight. Virtually all are saying that the market will be higher in 2015.
Those of us raising the alarm are definitely in the minority. And it is always difficult to stand against conventional wisdom. To me, it is about risk and reward. Those who fail to prepare for a potentially historic snow storm with 30 inches of snow and hurricane force winds may very well be risking their lives.
If those of us who are predicting the probability of an equally historic financial storm ahead are correct, then it is only prudent to begin preparations now. Massive super computers are now able predict weather patterns down to the block and city level with amazing accuracy. That same degree of accuracy may not yet be available in the financial markets so the warnings cannot be as precise. But it is clear, that conditions are building for another financial storm of historic proportions. Those who fail to prepare for the financial storm may not lose their physical lives, but they may face a significantly reduced quality of life.
The good news is that there are ways to insulate your portfolio from the potential storm and, not only preserve what you’ve worked so hard to achieve, but to see it prudently grow at the same time.
Striving to achieve that for my clients is what gets me up every morning.
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