Here’s a surreal thought – the last time I posted an article-just a few weeks ago, General Motors was not owned by the government and the day to day operations of GM were not managed from the White House. What a difference a few weeks can make!
Hello again, fellow investors! Well, as I write this follow up article, the stock market took another tumble the last two days of almost 300 points. I know, I know-just a measly 290 point drop. Remember the good old days of just a couple years ago that that kind of drop was unheard of? Nowadays, we consider it “normal stimulus package adjustment.” After many days in the past six months when the Dow fell 200 to 700 points in a single day-this recent drop in mere petty cash!
Many of you that read my last article may be shouting at me, “Hey, Mr. Doomsday, the market has recovered hundreds of points since your last article.” Yes, the stock market has rallied a bit in the last couple of months, but I can almost guarantee you that this is a “dead cat bounce.” For those of you that may be unfamiliar with that term, it is an old, crude analogy when the stock market plummets and then a short-term rebound follows. If you can imagine a lifeless cat being tossed out the window of a multi-story building, when it hits the sidewalk, it’s going to bounce back a certain amount. My apologies to PETA and pet lovers (I have multiple Chihuahuas) for this graphic description, but investors have used the saying for decades.
And by the way, how is your 401K doing? You probably will receive your statement for the second quarter in July. Are you going to be afraid to open it? I have an idea that it’s not going to look any better than your last statement. Here’s a comment that will cause every financial advisor in the U.S. to call me a gambler. I cashed in my 401K and invested in antiques and collectibles.
These financial “experts” tell us that investing in collectibles or tangibles is risky. The investing gurus tell us that keeping our investment dollars (what’s left, that is) in our 401K is the safe thing to do right now. That’s funny – if it’s the safe thing to do – how come I lost over half of my retirement money? Did you ever consider that these investing gurus would be out of a job and drawing their unemployment if everyone stopped taking their advice and placed their investment dollars elsewhere? If I am an apple farmer, it’s in my best interest to advise everyone that they need to keep eating apples!
So where are we in this thing called “the stimulus rescue package bill-thingy-whatever?” The government continues to print money and throw it at every state and county in the United States for “stimulus.” No matter where you live in the U.S., your town or city or county is guaranteed to have some funds come in due to this trillion dollar plus debt producing machine. There is definitely no recession when it comes to government spending!
But where is this all heading? I am sure that by the time this article is published, the stock market will have recovered some of this past week’s downturn. But then what? Is it going to continue to drop 100 points, recover by 200 points and then drop 300 points? Who wants to play that “antacid” game? Is the day coming in the next week, month, or 6 months that the market drops over 700 points in one day like it did last fall?
I just can’t live well and sleep at night playing the “Wall Street roulette wheel,” and the “just wait and be patient with your 401K” game. Almost every economist across our country agrees that the consequences of the trillion dollar bailout are rampant, runaway inflation. When this occurs, how do you think your investments will be affected?
Investing during a recession by investing in collectibles or tangibles is a safe way to hedge against the inflationary disaster that I feel is coming soon. For example, if you had $10,000 to invest right now-where are you going to invest it? If you buy $10,000 in blue chip stocks (General Motors used to be considered a blue chip stock), where will you be in one month, three months, or six months?
Do you realize that you could possibly lose it all-every single penny? Now, imagine investing that $10,000 in collectibles-American Eagle gold coins, for example. Do you know where you will be in 1, 3, or 6 months? I can almost guarantee you will have made a return on your investment rather than take a loss by investing in collectibles. I will guarantee that you can’t lose your entire investment-gold coins, for example, are not going to decrease in value-especially during inflationary times.
In my humble opinion, the government stimulus program is going to fail miserably and even backfire. Banks are still failing (the media doesn’t seem to be reporting this fact), the housing market has not recovered, foreclosures continue to rise, unemployment is in double digits in almost every state, and people just aren’t spending their money-which would be a true stimulus to the U.S. economy.
So, my investor friends, consider an investing during recession plan which I believe should include investing in collectibles and tangibles. Protect your investment dollars and hedge your hard earned dollars as we prepare to enter the coming economic inflation storm.