What I’m About to Tell Hundreds of Investors in New Orleans ...
Orlando. Las Vegas. San Francisco. Dallas. I’ve been crisscrossing the country this year to meet with as many investors in person as I can. And later this week, I’m hitting the road again.
Specifically, I’ll be participating in multiple investor panels and delivering a presentation at the New Orleans Investment Conference that runs from Nov. 1 through 4. There’s still time (though not much) to get registered here: https://bit.ly/2Qr32vO. Or you can call 800.648.8411 and mention you’re doing so on my invitation.
Why am I racking up so many miles on the ground and hours in the air? Simple. We have never faced a market environment quite like this one. It presents both incredible risks AND enormous profit opportunities.
That’s because after nine-plus years of virtually uninterrupted bull market activity, we began transitioning into an increasingly volatile environment in February. This is very clearly NOT the same market we had before, and you can NOT invest as if it is. Your approach, your technique and your investments HAVE to change.
If they don’t, your portfolio will suffer the consequences.
Indeed, while I can’t share the content of my entire presentation here, I will give you my big-picture summation — the three bullet points from my very first slide:
The extremely favorable (and arguably “artificial”) market environment that lasted from March 2009 through January 2018 is changing.
Monetary/fiscal policies are increasingly diverging, the split between winners and losers is growing, and cracks in the market façade are widening.
Herd-like investor behavior, record-high levels of risk-taking, extreme overvaluation in multiple asset classes, and more suggest we’ve reached an important inflection point.
What does this mean in practical terms? As an investor, you need to focus more on capital PRESERVATION now. That means you should ...
1) Cut your overall stock allocation. I don’t know your personal financial situation, of course, so can’t give you a percentage figure. But I will say that my Safe Money Report model portfolio is roughly half in cash and other defensive ETFs. It’s also hedged via another specialized investment (You can get all the details here.)
2) Re-allocate your remaining funds. Shift OUT of over-loved, overhyped, over-owned tech and other high-risk stocks. Shift IN to undervalued, underappreciated, yet much lower-risk, higher-rated stocks in sectors like utilities and consumer staples.
3) Alter your tactical approach. In a rising-tide market, you’ll tend to get bailed out of bad investments by the general uptrend. But we don’t have one anymore. So, you need to focus less on buying dips aggressively and more on selling rallies.
Use bounces to get out of bad investments at higher prices. Or better yet, take advantage of them to add things like inverse ETFs and put options on the cheap!
That’s what I’d tell you over beignets and black coffee if we were meeting in New Orleans this weekend. But even if your travel plans don’t permit that, I hope you take my advice to heart.
Until next time,