Record stock price rises can hurt. Unreasonable expectations may be at fault. Economic analyses can be dead wrong. Interest rate reductions are like pain-killer drugs. They do more harm than good. Temporary relief hides structural defects. Only pharmacists gain. What should you do with stocks?
Sell.
Start with large capital stocks from the financial sector. Focus on the ones with global operations. They are the ones with a friend in the Fed. Their executives use words like ‘derivatives’ to put hands into your pockets. Wait for a price that returns your capital. Unload even if you cannot cover the latest interest rate.
Now put the cash to work. Start with things that you simply have to consume over the next year. Meat, grain, and vegetable shortening, or whatever media you use to cook, should have top investment slots. You cannot store any real quantities of gasoline, but you can fill your freezer. Bookmark this page, and set an alert to come back in summer. You will wish you had bought a whole cold chain.
You cannot liquidate all your stocks for food. The stock market is still replete with great picks. However, most of them will hop around some more before settling down to any kind of cruising altitude. Invest in them by all means, but buckle up for a long flight. Parachuting mid-flight will hurt.
The point of this post is to focus on the doable. Why bother with the Fed, fire sales, and stimulus? No one listens. Just roll up the shirt sleeves and get down to a new stock market day. Recession and inflation are on the horizon. The weather person could be off by a day. That does not mean clear and sunny weather. Batten down your financial planning. Rejoice in reality of your own making.
We are with you, and better than FEMA. Join our forum or write for us. There is safety in numbers. We can all gain by thinking through what we can do to ride through the continuing stock market theater until the Bernanke show is over.
