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Tuesday, January 3, 2012

2012 Outlook: How To Invest

2012 Outlook Part 1: Introduction
2012 Outlook Part 2: How We Got Here
2012 Outlook Part 3: Sovereign Debt Review
2012 Outlook Part 4: Global Butterfly Effect
2012 Outlook Part 5: Japan's Debt Crisis
2012 Outlook Part 6: United States Stock Market
2012 Outlook Part 7: United States Bond Market
2012 Outlook Part 8: Gold And Silver
2012 Outlook Part 9: How To Invest
2012 Outlook Bonus: Real Estate

I am not a financial advisor.  I would recommend speaking with one before making any investment decisions.

So after spending considerable time talking about where not to invest, where would I have money positioned to start 2012?

1. Ultra Safe Cash Held In US Dollars
2. Precious Metals

Ultra safe cash means money that is held in T-Bills rolling 6 months or less. Not at a bank, and not in Treasury bonds (1 year or longer).  American Century has a fund called the Capital Preservation Fund that holds only ultra short term bills.

Precious metals means physical precious metals or strong mining companies. I personally use a company called Goldmoney.  You can open an account in just a few minutes by following this link:

GoldMoney. The best way to buy gold & silver

Basically you are on the sidelines waiting.  I believe all other investments as of today (January 3, 2012) are either too expensive or do not have enough positive or negative sentiment to apply action.  This could change by this afternoon depending on what happens in the markets.  Or it could change tomorrow, next week, or next month based on how the market conditions change, but if I were holding $1 million dollars today heading into retirement that is how I would be positioned and I would sit back and let the market dictate my next move.

For example….

If the stock market begins to move considerably higher to begin the year, I would put on a “short” position in stocks meaning that I would profit if prices fell (and lose money if prices rose).

If the European crisis escalates, bringing down the value of the euro, and simultaneously bringing down the value of commodities or certain currencies (Canadian dollar, Australian dollar, Brazilian real, Asian currencies, New Zealand dollar), I would take some of the liquid cash and purchase commodity related stocks held in those currencies.

If the stock market crashed significantly, I would begin to invest in safe stocks with a high dividend, such as consumer staples (companies that sell items people have to buy such as toothpaste), utilities, and health care.

If the price of agriculture, oil, natural gas, gold, silver or related stocks fell significantly I would purchase these assets with the available liquid cash.

I will continue to monitor events on a daily basis and try to alert you when I feel assets have reached the point signaling a strong buying opportunity (future growth opportunity coupled with poor current sentiment).

Until then, I would take some time and do your own research on what is taking place in the world. I will update my recommended reading list with the “must reads” as they come out. I will continue to provide the most important news articles and interviews on the left column of this page every day.

Investors that come out of this period with capital available to invest are going to be able to invest early in the greatest bull market in history, but until we get there the turbulence is going to pick up significantly and the average lifestyle in terms of wealth is going to fall.

The 40 year debt fueled binge has come to an end, and now the bill is due.

For an additional discussion on how to purchase precious metals and precious metal mining stocks please see Purchasing Precious Metals: NAV Considerations.

For information on the American Century Capital Preservation Fund click here.

To open an account with Goldmoney in only a few minutes click the following link:

GoldMoney. The best way to buy gold & silver