Search the forum archives for my lengthly posts about the stock market, and the recommendations made in the newsletters to which I subscribe. I got out of the stock market because it is overvalued, and the next recession will reduce earnings which will cause another sell-off. I sold my Vanguard index funds and various stocks, right before the first 2% downturn. The timing was luck. I wanted to be out of the stock market well before the recession. We are 95% cash. The only stocks I own are BRK.B, and COP and a canadian lead mining company (maybe a bad decision). I would like to buy gold, and am waiting for a price drop.
If you are bullish on stocks, explain your reason.
Treasury bills are the safest way to hold cash, and CDs are good too. They pay over 5%.
This is the time to preserve assets, not to hope for big returns. Keep some money, maybe 10% to invest in stocks, gold, or whatever you deem a good play.
In a downward moving stock market, what is the chance that your stock will move opposite of the entire market and go up?
Some people here are bullish on commodities, but in our discussion yesterday at the meetup, several members told me that commodity prices are high only due to high US consumption. In our next recession, we will buy less from China, China’s demand for commodities will fall, and commodity prices will revert to the mean.
A real good book about the dollar weakness and commodities and money supply is Richard Duncan’s The Dollar Crisis. The most important thing I learned in that book, I have not read anywhere else: he has Federal Reserve and IMF data, about a hundred tables of graphs of this stuff, and he shows that commodity prices and stock markets around the world fell sharply due to the 2000-2001 weak US capital-spending led recession. He says the next recession will be a consumer spending led recession, and that makes it much stronger, since it is 70% of GDP. Commodity prices will fall off the cliff then, he says. Gold excepted. Duncan was an IMF consultant, so he presents original insight. I read the book twice, and it is heavily underlined.
Now, how do we make more than 5%, with low risk of losing our principal? That is the question, and I’ve asked this many times on this forum. Let’s see what answer pop up today.
