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The stock market plunge you’ve seen so far is little more than a dress rehearsal.
The main event — the Black October we’ve been warning you about incessantly day after day — has not yet begun.
So if you’re kicking yourself for not following our recommendations to get your money to safety — if you think you’ve missed the last lifeboat in a sinking ship — listen carefully:
There is still time to find safety and do the right thing for yourself and your loved ones.
With its deadcat bounce this morning, the market is giving you a last chance to act. It’s not too late.
Nor is it too late to convert this dramatic turn of events into an equally dramatic wealth-growing opportunity.
No, you can’t turn back the clock. But at a time like this, the last thing you need is to be kicking yourself for not reacting sooner. That’s water under the bridge. It’s what you do NOW that matters.
So this morning, rather than my regular 4:30 a.m., I woke up at 2:30 a.m. — to review yesterday’s events, compile all the relevant recommendations from our recent reports, put them together for you in a practical guide, and give that guide to you here, in this e-mail.
First and foremost, an urgent reminder: Today is your last day to join our Safe Money Report before our prices double starting at midnight tonight.
Safe Money Report is designed precisely for times like these. And in addition to giving you specific buy-and-sell recommendations for protection, it helps investors turn ordinary stock market declines into potentially large profit opportunities. And when stocks crash like they did yesterday, the opportunity can be magnified even more.
Many of our readers realize that. So with all that’s happening, demand for the service has exploded. That’s why I have no choice but to double our prices, effective TONIGHT: It’s the only fair way I know to limit the number of subscribers and prevent too many people from piling into the contrary investments we recommend.
To join today while you still can get in at half price, click here. Or for more information, check our Website.
Second, let’s talk priorities. Whether you join us for those dramatic profit opportunities or not, for the great bulk of your money, a top priority must be to find safety and preserve what you have. So if we can accomplish just that much together right now — and nothing more — let’s consider it a victory.
The lesson of recent days is very obvious:
Most Institutions and Investments
That Wall Street Said Were “Safe”
Are Not Really Safe After All.
Wall Street brokers and rating agencies said triple-A mortgage-backed securities were “safe.”
They said common stock in government-backed Fannie Mae and Freddie Mac were “safe”; and their preferred shares, “even safer.”
They said big brokers like Bear Stearns and Lehman Brothers were “rock solid”; and Merrill Lynch even more so.
Never before has the word “safe” been more misused; and never before have investors been more abused!
Safety doesn’t mean you have to make a big yield. For your core holdings at a time like this getting a return OF your money is far more important than getting a return ON your money.
So, to qualify as a safe place for your money, all that we ask is that it …
* PRESERVE what you already have,
* PROTECT you from the grave dangers in the economy, plus one more critical thing …
* Give you ACCESS. When you want your money, you’ve got it. No delays. No penalties. No mealy-mouth excuses. And by all means, no lock-ups or freezes!
Number One on My Short List:
U.S. Treasury Bills
But please do not confuse Treasury bills with Treasury bonds.
Treasury bills are short term (under one year). Treasury bonds are long term, as much as 30 years.
The primary difference: The longer the maturity, the longer you have to wait for your money. If you don’t want to wait, you can sell your notes or bonds on the secondary market. But if inflation or other factors have driven down their market value, you will take a loss.
Three-month Treasury bills, though, don’t have that problem. The most you’ll have to wait is the three months. Market fluctuations are infinitesimal and simply not an issue.
How do you buy Treasury bills? Very simple: You can open an account directly with the U.S. Treasury Department, with your Social Security number. Just go to their Web page dedicated to Treasury bills for individuals. And just to make sure you’re on the right page, here’s what it looks like:
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I like Treasury Direct because there’s no intermediary between you and your money. As the name implies, it’s direct.
But there’s one aspect I don’t like about it: If you want your money back BEFORE maturity, you have to transfer your Treasury bills to a broker, a process that’s cumbersome and takes way too much time.
The Most LIQUID Way To Buy T-Bills
For immediate liquidity — the ability to have your cash any day you want — I prefer a money market fund that specializes in short-term Treasury securities or equivalent. You can have them wire the funds to your local checking account. Or you can even write checks against them, through their custodian bank.
And no matter what happens to a bank, even in a national banking crisis, your funds are segregated from the custodian bank’s deposits. Custodial services are not affected. And the Treasury Department guarantees ALL Treasury securities, without limitation, no matter who holds them in custody.
Which Treasury-only money market fund should you use? That’s up to you. There are quite a few good ones to choose from, including Capital Preservation Fund, the Weiss Treasury Only Money Market Fund or any of those that we have cited here regularly.
Just don’t expect a lot of yield. Safety and liquidity are in tremendous demand right now, and for good obvious reason. Low yield is the price you pay, and it’s worth every penny.
Another Viable Alternative:
A Nicely Hedged Portfolio
Thanks to inverse ETFs and alternative investments, a money manager that understands bear markets can help you have your cake and eat it too.
- You can keep some money in the market, taking advantage of special situations and unusual profit opportunities in sectors that are least vulnerable to a decline. Plus, at the same time …
- You protect yourself from a broad market decline with alternate investments and inverse ETFs in the sectors that are likely to sink the most.
It’s a more complex strategy. But if done properly, it can work very nicely.
So if you work with a money manager, ask him about what special investments he uses to reduce and hedge your risk … or better yet, ask him if he has a program designed to actually profit from stock market declines. If your manager has neither, seriously consider moving your assets to one who does.
How Far Will the Market Fall?
No one knows for sure. But in our July 2008 issue of Safe Money Report, we ventured an educated guess. In case you missed it, here’s a picture of our front page with the headline …
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Our forecast right now: The same. So to repeat, it’s NOT too late to get out.
Here’s what we wrote then and what still applies today.
“Despite some notable exceptions, U.S. stocks are headed down, and anyone who still believes otherwise must be living on another planet. We have irrefutable proof of a credit crunch. We have overwhelming evidence of a severe recession. And we have a solid confirmation in the stock market itself, as the major indexes bust through their lowest lows of 2007.”
“What about stocks I’m stuck with?” you ask. The fact is, you’re not really stuck. Below is what I wrote exactly three months ago. The same applies today …
Sell, Hedge … or
Be Prepared to Lose!
(Money and Markets, June 30)
The stock market is falling swiftly, and you don’t have the luxury of time. So I’ll get straight to the point:
If you haven’t done so already in response to our many earlier warnings, you’d better sell or hedge your vulnerable investments now. If you don’t, be prepared to suffer far deeper losses in the bear market of 2008 and beyond.
But beware: Most brokers will try to talk you out of it. They have a hidden agenda. They want to keep you as a customer; and they know that, once customers sell their stocks, they often close their brokerage accounts.
With this in mind, many brokers have been trained with up to seven sales pitches designed to keep you in the market come hell or high water.
Broker Pitch #1: “Buy more.” Their argument goes something like this: “Your stock is now selling at bargain prices. So if you didn’t already own 100 shares, you’d probably be thinking about buying — not selling. Instead, why not double down and take advantage of dollar-cost averaging?”
The more likely result in a bear market: Every time your stock falls by another $1 per share, instead of losing just $100, you’ll be losing $200.
Broker Pitch #2: “Hold for a recovery!” They argue that the “market will inevitably recover,” that the “recovery is always bigger and better than any near-term decline,” and that you should therefore “always invest for the long term.”
The reality: Bear markets can last for years. It could take still longer for the averages to recover to current levels. During all those years, your money is dead in the water. And don’t forget: If the company goes out of business, your stock will be worthless and will never recover.
Broker Pitch #3: “You can’t afford to take a loss.” If you insist on selling, brokers often come back with this approach: “Your losses are just on paper right now. So if you sell, all you’ll be doing is locking them in. You can’t afford to do that.”
What they don’t tell you is that there’s no fundamental difference between a paper loss and a realized loss. Nor do they reveal that the Securities & Exchange Commission (SEC) requires brokers themselves to value the securities they hold in their own portfolio at the current market price — to recognize the losses as real whether they’ve sold the securities or not.
Broker Pitch #4: “You can’t afford to take a profit and pay the taxes.” If you’ve got a profit in a stock, they say: “All you’ll be doing is writing a fat check to Uncle Sam. You can’t afford to do that.”
The reality: Although it’s not shown on your brokerage statement, the true value of your portfolio is NET of taxes. So whether you or your heirs pay those taxes now or in the future is mostly a difference of timing. And if our next president approves legislation to raise capital gains taxes next year, it could actually cost you more. Besides, which would you prefer — paying some taxes on profits or paying no taxes on losses?
Broker Pitch #5: The “don’t-be-a-fool” argument. “Stocks look very cheap now and we’re very close to rock bottom,” goes the script. “We may even be right at the bottom. If you sell now, three months from now, you’ll be kicking yourself. Don’t be a fool.”
The truth: Brokers don’t have the faintest idea where the bottom is. Nor does anyone at their firm. And they know darn well that stocks do not hit bottom just because they look cheap. Worse, for their own accounts, brokers and their affiliates have been — and are likely to continue — liquidating shares, often targeting precisely the same shares they pitch to their customers.
Broker Pitch #6: “The market is turning.” If the market enjoys an intermediate bounce, which it certainly will at some point soon, this pitch is invoked. “Look at this big rally!” they say. “Your shares are finally starting to come back. After waiting all this time, are you sure you want to run away now — just when things are starting to turn around in your favor?”
The truth: In a bear market, intermediate rallies actually give you the best opportunity to sell.
Broker Pitch #7: The last ace-in-the hole in the broker’s arsenal of pitches is the patriotic approach. “Do you realize,” they’ll say, “what could happen if everyone does what you’re talking about doing? That’s when the market would really nosedive. But if you and millions of other investors would just have a bit more faith in our economy — in our country — then the market will recover and everyone will come out ahead.”
The truth: Locking up precious capital in sinking enterprises is not exactly good for our country. Better to safeguard the funds and reinvest them in better opportunities at a better time.
Need more information and specifics?
No problem. Here are our recent
articles with the most pertinent info:
- Last Chance for the Truth, 9-28-08. “You cannot wait to see how long Wall Street’s celebration will last or how soon Washington’s plan will fail. You must take protective action now.”
- No Bailout May Be Big Enough to Bring a Quick End to This Bear Market, 9-22-08. “Bust follows boom in financial markets like night follows day.”
- Warning: Nasty Surprises Coming Next Week, 9-21-08. Brace yourself for “a few nasty surprises, shocks and wake-up calls coming as early as next week: The fear factor. The selling stampede …”
- Washington declares war on debt crisis! Urgent Q & A, 9-19-08. “Is this the signal to jump back into stocks? No. For stocks that are vulnerable to a credit crisis and an economic decline, this is a signal to SELL. And for those who are looking for a hedge or profit opportunity for the next big decline, this is an ideal opportunity to get started.”
- Dow plunges 504! Here’s what’s next, 9-15-08. “You’ll soon hear the Wall Street pundits arguing that this is the “climactic capitulation” that will end the decline. Don’t fall for it! In reality, the Dow is still not far from its all-time peaks, with a lot further to fall. Our forecast is unchanged: 7,200 on the Dow.”
- Unthinkable Truth; Undeniable Reality, 7-28-08. “They’d have you believe they can outlaw the cycle of boom and bust … repeal the law of supply and demand … even freeze the march of time. In the real world, of course, no government in history has ever been able to do anything of the kind, and they know it. Why? Because, behind the façade of their feel-good happy talk and beneath the thin veneer of their Pollyanna optimism, nearly every single one of our leaders — including Bernanke and Paulson, Democrats and Republicans — is really a gloom-and-doom pessimist in disguise.”
- The Great American Nightmare, 7-21-08. “This is the first stage of the dangerous bear market we’ve been warning you about.”
- How to Prepare for the NEXT Panic, 7-07-08. “‘When another collapse is about to begin,’ Dad warned, ‘they’re not going to ring any bells. Few investors will see it coming, fewer still will take protective action, and almost everyone will get caught in the melee. Don’t let that happen to our subscribers!’ But today, the bells are finally ringing and doing so loudly.”
Don’t wait any longer. Get to safety now.
Good luck and God bless!
Martin
About Money and Markets
For more information and archived issues, visit http://legacy.weissinc.com
Money and Markets (MaM) is published by Weiss Research, Inc. and written by Martin D. Weiss along with Tony Sagami, Nilus Mattive, Sean Brodrick, Larry Edelson, Michael Larson and Jack Crooks. To avoid conflicts of interest, Weiss Research and its staff do not hold positions in companies recommended in MaM, nor do we accept any compensation for such recommendations. The comments, graphs, forecasts, and indices published in MaM are based upon data whose accuracy is deemed reliable but not guaranteed. Performance returns cited are derived from our best estimates but must be considered hypothetical in as much as we do not track the actual prices investors pay or receive. Regular contributors and staff include Kristen Adams, Andrea Baumwald, John Burke, Amber Dakar, Dinesh Kalera, Christina Kern, Red Morgan, Maryellen Murphy, Jennifer Newman-Amos, Adam Shafer, Julie Trudeau and Leslie Underwood.
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