My friend is a director at major investment bank, at a branch in San Francisco’s financial center. This is a guy who makes $500,000 a year, has a masters in economics, and is up to his neck every day in global financial markets.

His spin on this? He writes me several weeks ago…

“Hey, I’m now at a insiders’ conference on global financial markets. Mood is very dark. Insiders are running Worst Case Scenarios, and sharing disasters now unfolding at their global financial firms. These people don’t get scared and they are very scared. as for financial markets i tell you: be afraid, BE VERY AFRAID. buy gold and hide it under your bed!”

After that message I looked over E*TRADE’s financial statements, which is where I kept all our retirement accounts. I saw that E*TRADE is insolvent, in terms of bad loans on their books versus capital. I moved my accounts out of E*TRADE. That’s just one financial firm.

My message to participants of this forum is this: you are crazy or stupid if you haven’t….

1) Sold your long positions in stocks, sold your stock mutual funds (assuming they are not SHORT position mutual funds)…and braced your portfolio for a VERY bearish market and a nasty recession.

2) Checked the financial stability of any institution where you keep substantial funds.

3) Bought a lot of GOLD.

4) At least reduced your holdings of any dollar assets.

5) Carefully considered your risk for your current employer having layoffs if your employer faces nasty recession. Switch employers if your company is recession-sensitive.