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:
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:
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:
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:
Tuna-
ReplyDeleteNice work on laying on that basic timeline. I have attended several conferences over the last three years taking in great analysis by Rosenberg, Schilling, Faber etc. There is one coming up in La Jolla Ca in May that is great.
Anyway, I think your conclusions are spot on. However, there are many, many more "traders" out there who are looking at the same scenario...waiting for the next shoe to drop, then print money etc is a crowded trade...there is SO much liquidity in the system ready to pounce that it is creating the illusion that the FED is the invisible hand. They are to some extent but they are more like a hammer - they have openly told us they are providing massive liquidity...its out there and every time the market dips there are millions of little individual decisions that play out that support the market because there is so much liquidity.
I think there is one more category beyond #3 deflationist...I belong to this group: "liquidity stagflationists" - yes, I made that up...but basically, as you walk through your timeline each is a massive "liquidity" event for the US markets:
1. Euro breakdown = money into the US from Europe
2. Japan breakdown = money in the US (although Japan Inc will do everything in its power to push this out into the future)
3. Stock market crash or Bond Crash - massive liquidity from one to other and back and forth...
4. FED, BOC, BOJ, ECB easing (they will, they will, they will, they will) adding liquidity
5. Oil prices dropping (not mentioned) adds massive liquidity etc. - (and by the way Oil IS the currency of the world today...period...so goes oil, so goes the economies...)
So, Liquidity Stagflation is HELL...everyone waiting for the next shoe to drop or the CPI to go haywire...no, we will FOR YEARS live in financial purgatory as the equilibrium between deflation (debt destruction) and inflation (money creation) battle it out...we Americans can't stand ties...its worse than losing because we want and need an End Game...
I wish it could happen too but its time to take the conversation to the next level...the harsh reality is that we have ten years of liquidity stagflation...sort of like the 1970's on steroids...
The best investment maybe to just tune out and go away for ten years - bring back the neighborhood block party!
Best, Shark
I agree, and it is frustrating sitting back waiting for the next shoe to drop when you are earning 0% interest on your cash and precious metals. The idea of tuning out the markets and not paying attention may be an investor's best recommendation.
ReplyDeleteThe ones that start investing just because they feel they have to do "something" may end up getting hurt the most.