Welcome to the Wealth Daily Weekend Edition — our insights from the week in investing and links to our most-read Wealth Daily and sister publication articles.
Having spent a great deal of my younger days in places where big waves break, I have seen my fair share of hurricanes. Old Earl is just one of many.
But I can tell you from experience that there is nothing quite like the feeling you get when the eye of the storm passes over.
It is truly surreal.
The winds die down, the sun comes out, and for a moment (at least), it’s all over. And if you didn’t know what was on the other side of that eye, you’d think that you were home free…
If only it were true. That, to me, is what the markets feel like these days.
It is as if the first part of the storm has passed over, and it seems safe enough to go outside.
Love them or hate them, you can’t say the printing presses have been run to no effect.
The problem is that the other half is still on its way, and is beginning to beat down on us. And while the Fed has clearly shown that he won’t let the storm kill us, a double dip here seems likely.
The only question then is whether or not the second half of the storm will be as devastating to the markets as the first.
A recession or its equivalent — near zero growth — is a given. We know that.
Now it’s just a matter of what it will look like, and whether or not the markets have actually properly priced it in. After all, that is what efficient markets do — at least, that’s what the bulls tell us…
But as we also know, markets can and do make mistakes — especially in the short term. That’s why I’ve been pounding the table that 10K must hold.
So here we sit, in the eye of the proverbial storm with the winds starting to picking up again and the unknown clearly on its way. That’s the unsettling part about this market and what makes it so tough to gage.
So how do you protect yourself as an investor?
Well, you do exactly what you would do if you were facing down that hurricane: prepare for the worst, but hope for the best.
That means being defensive in nature, concentrating your investments in the safety of steady dividend paying stocks. That is what’s been working for The Wealth Advisory.
Our dividend portfolio is up big over the last two years banking 209% in gains without so much as a single loser.
It also means using mental stops on all of your open positions, so that you are prepared for any news that turns out to be worse than what the market is expecting or forecasting.
Remember, it’s not your life that you are saving by doing this, but your principal. So defend it in much the same manner. It is your ticket to the game. Never, ever forget that.
And here’s why.
It’s as simple as that hurricane story. You see, just like Earl, every single storm I ever saw ended eventually, no matter how bad they may have seemed when the house felt like it would fly off its foundation.
And when this storm does eventually pass, it will be no where but up for the markets. — that much I am sure of. So here we sit, waiting and watching…. watching and waiting.
Kind of like it how it was when my oldest son was born 13 years ago. We knew he was coming; we just didn’t know when or what he would look like.
And in retrospect, I’m happy to report that he managed to turn out ok — even though I was scared out of my wits at the time. (Lucky for him, he takes after his mother.)
Either way, it goes without saying that what we’ve been treated to so far has been nearly enough fear to panic the markets. That has given me a whole new appreciation of that famous Depression-era quote by Roosevelt himself.
You may remember it.
In his first inaugural address, Roosevelt thundered, “The only thing we have to fear is fear itself.”
And while I’ve heard that phrase more than 100 times in my life, the events of the last two years have given the spirit of the moment a whole new clarity — as if I was hearing it for the first time.
As for the rest of FDR’s speech, it’s well worth the read. Because let’s face it: There really is nothing new under the sun. Ours is a well-worn path.
I’d ask you to also consider the following passage from a day long gone by. I discovered it in a speech by my favorite central banker, Richard W. Fisher:
Every now and then the world is visited by one of these delusive seasons, when ‘the credit system’ … expands to full luxuriance: everybody trusts everybody; a bad debt is a thing unheard of; the broad way to certain and sudden wealth lies plain and open; and men are tempted to dash forward boldly from the facility of borrowing.
Now is the time for speculative and dreaming or designing men. They relate their dreams and projects to the ignorant and credulous, dazzle them with golden visions, and set them maddening after shadows. The example of one stimulates another; speculation rises on speculation; bubble rises on bubble; every one helps … to swell the windy superstructure….
It renders the [financier] a magician, and the Exchange a region of enchantment…. No ‘operation’ is thought worthy of attention that does not double or treble the investment. No business is worth following that does not promise an immediate fortune…. The subterranean garden of Aladdin is nothing to the realms of wealth that break upon [the] imagination.
“Could this delusion always last, …life …would indeed be a golden dream; but it is as short as it is brilliant.”
Now those last words weren’t written by Fisher or Roosevelt — but by Washington Irving. He was talking about the “Mississippi Bubble” fiasco of 1719. And even though it was penned almost 300 years ago, it reads like it could have been written at the height of the bubble a few years back. Chalk it up to the human condition.
So here’s what I’d like you to take away from it all this holiday weekend, as you dip your hand in the cooler for cold one…
We’ve been in these jams before and this too shall pass. It just takes time.
By the way, here’s another passage from Fisher’s speech that I couldn’t agree with more. He called it “Old Doc Nadler’s Remedy,” and it was delivered after the Crash of 1929:
You’re right if you bet that the United States economy will continue to expand;
You’re wrong if you bet that it is going to stand still or collapse;
You’re wrong if you bet that any one element in our society is going to ruin or wreck the country;
You’re right if you bet that men in business, labor, and government are sane, reasonably well informed and decent people who can be counted on to find common ground among all their conflicting interests and work out a compromise solution to the big issues that confront them.
And that I guess is what all of us are really waiting for: reasonable men to put together a solution.
I just wish that they would hurry up and get here.
As for places to invest some of your hard-earned labor, here are a few of best investment ideas from the pages of this week’s top-read articles in Wealth Daily and from our sister publication, Energy & Capital.
Have a great weekend and Happy Labor Day.
Your bargain-hunting analyst,
Editor, Wealth Daily
What Lilly’s Failed Drug Means for Investors: Prognosis Good for this Drug Company’s Stock
Publisher Brian Hicks shares with readers a recent update on Alzheimer’s drug trials and reiterates why Anavex stands out as one of the only bright spots in the race to find a cure.
The Double Dip Arrives: Like an Unwelcome House Guest
Analyst Adam Sharp writes about the double dip’s arrival, just as baby boomers began to drain entitlement programs like Social Security and Medicare.
Huge Oil and Gas Discovery: How to Profit from the Latest Find
Editor Ian Cooper unveils the latest oil and gas discovery in the Middle East, and offers ways to profit from it now.
Better than Big Oil: Infrastructure Investing at Its Best
Editor Keith Kohl shows readers a different approach to oil investing.
Organic Food Profit Trends: 3 Stocks that Can Help You Profit from Organic Food Trends
Editor Jeff Siegel reveals three organic and natural food stocks that are making investors boatloads of money during the recession.
Our Game Plan for Financial Stocks: Profiting from the White House Housing Plan
Editor Ian Cooper offers two game plans for playing financial stocks on new housing initiatives, and details the long-term realities.
DNA Vaccines: The Winner Behind the Only Flu Shot You’ll Ever Need
Editor Steve Christ examines the H1N1 swine flu panic and explains how scientists are working to prevent a greater tragedy. According to Steve, this is a market that’s “just heating up”…
673 Years Worth of Energy: Why You’ll Never Have to Worry About $300 Oil Again
Editor Ian Cooper examines an energy find with more oil that 11 Saudi Arabias.
Must-See TV: This One is Money in the Bank
Editor Nick Hodge uncovers the truth behind a nuclear power story that has been buried by the mainstream media.