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Despite the Fed’s $85 billion bailout of AIG …
Despite the boldest move ever by the SEC to squash short-selling …
And despite massive new cash infusions by central banks all over the world …
All of which were announced just TODAY …
We still have panic conditions in the financial markets. Here are just the most visible symptoms:
The investment banking industry — or whatever’s left of it — is in turmoil, with breaking news on MORE giant banks: Wachovia and Morgan Stanley could be merging … Washington Mutual is up for sale … and Lloyds of London is taking over a troubled lender in the UK.
Gold bullion has skyrocketed by $89 per ounce, the greatest one-day percentage rise since 1985 and the single largest dollar rise of all times — another indication of panic spreading throughout the financial markets.
The Dow has plunged 449 points, reversing all of yesterday’s gains three times over — a clear sign the government’s rescue efforts are failing.
Reserve Primary Fund — a type of money fund that we have told investors not to buy — broke the buck: It suffered losses in its Lehman Brothers holdings that forced its net asset value below the $1 level, an indication of a broader market meltdown ahead.
The TED spread, the difference between the yield on three-month Treasury bills and three-month LIBOR, has literally exploded to 302 basis points (3.02 percentage points). That’s even HIGHER than what we saw at the time of the 1987 stock market crash, still another big red flag.
We saw this coming long ago and we stood on the rooftops to warn you …
Earlier this year, we emailed you our report “How to Protect Your Stock Portfolio From the Spreading Credit Crunch,” posted it prominently on our Web page, and then emailed it to you again.
Last month, we held a special one-hour Webcast to warn you about the coming bank and broker failures. We named the most likely candidates. And we showed you simple pathways to safety.
And just this week, we held another one-hour webcast, “Panic to Pandemic,” to warn you about the consequences of the very failures you’re beginning to see unfold before your eyes right now … with specific ideas on how to convert this into a major profit opportunity.
Have You Taken Action?
We sure hope so.
Indeed, if you’ve acted promptly on our warnings, you are far ahead of nearly all investors in the world today. You have a big stash of cash. And you could be enjoying some of the largest, fastest gains in recent history.
But if you have not yet taken firm action, don’t kick yourself. We recognize that the future scenario we painted months ago — of massive financial failures — was hard for most people to believe. But that’s water under the bridge. Now, all that matters is this:
It’s NOT Too Late to Take Prudent, Bold
Steps to Protect Yourself and Your Family!
Specifically …
With the exception of special situations we and our affiliates have recommended, get the heck out of the stock market! It doesn’t matter if you have a profit that would entail capital gains taxes … or a loss that you don’t want to recognize. Just use any temporary rallies as your opportunity to get out!
Place the proceeds of your sales in the safest, most liquid haven in the world today — short-term Treasury bills or a Treasury-only money fund like Capital Preservation Fund, Weiss Treasury-Only Money Market Fund, or any of the several we have been recommending all along.
Yes, their yields are very low. But that’s because so many investors are finally waking up to the dangers and are rushing to them for the very same safety we have been recommending all along. And remember: Unlike the ordinary money market fund that broke the buck today, the assets of a Treasury-only money fund are not negatively affected by this crisis in any way whatsoever.
No matter how thorough you’ve been in following our recommendations to sell off vulnerable assets, it’s only natural that you might still have some that you’re either unable or unwilling to part with. That could include …
- a retirement fund beyond your direct control,
- stocks or options in your employer’s company that you’re not permitted to sell,
- money market funds that invest in commercial paper and bank CDs,
- uninsured deposits at banks that are failing,
- cash-value life insurance policies or annuities,
- some real estate properties, or
- a small business that you own.
But look around you and listen. This week’s events — the demise of AIG and the busting of the buck by the Reserve Primary Fund — are telling you that, in these panicky conditions, your other assets can also suffer real damage in this kind of a panic environment.
To protect yourself against inevitable losses, use any temporary bounce in the stock market as your entry point to start hedging.
Next, the same vehicles you use for hedging can also be used to convert this dramatic market disaster into an equally dramatic profit opportunity. Provided you use them in moderation and with most of your money kept safe, they can be the tail that wags the dog of your entire portfolio, multiplying your overall return.
Which Hedging Vehicles?
How? When? Where?
We gave you the answers in our 1-hour webcast this week, “Plague to Pandemic,” and the video recording is available for immediate download right now. Just turn up your computer speakers and click here.
With pandemonium now unfolding in the markets, with our webcast devoted to how you can profit from this precise scenario, and with so much money to be made, we think it would be a crying shame if you missed it.
Best wishes,
Martin D. Weiss, Ph.D. and Mike Larson
Editors of Safe Money Report
About Money and Markets
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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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