World Markets plummeted again last night and futures are looking weak to start the day. It’s looking like this week will be more of the same. We get the feeling that the puke day is right around the corner. The day the market drops 20-30% and just gets it all out.
As far how low we go? There is an old trader saying, what halves once will half again. In other words 75% and if you think about it, that’s how much the NASDAQ fell after the tech bubble popped. That would put the Dow at 3500, the S&P 500 375 and the NASDAQ around 650. None of it sounds too farfetched anymore.
Here is what we wrote for subscribers in June of 2008 on way to protect yourself.
“RBS issues global stock and credit crash alert”
“Morgan Stanley warns of ‘catastrophic event’ as ECB fights Federal Reserve”
“Everything seemingly is spinning out of control”
These are some of the alarming headlines that many of our readers and The Correct Call have read recently. Crashes, Catastrophes, Spinning Out of Control… are these Chicken Little warnings? or are dark clouds gathering and about to unleash a withering financial storm?
The truth is we don’t pretend to know one way or the other. It is vital to remain objective and take what the market gives you. The Correct Call takes a top-down approach and sees what the market is saying and invests accordingly. We are not afraid of negativity or overwhelmed by optimism. As a result, we believe there are always great opportunities out there no matter the environment.
That being said, many of our readers have asked us “what can I do to protect my portfolio in this market?” So we did our research looking for investments that have little, no, or negative correlation with US stocks; meaning, investments that don’t necessarily move in tandem with stocks. They have their own free will, so to speak.
We have identified 7 things you can do to protect your portfolio RIGHT NOW!
- CASH is KING:
Don’t be afraid to move some money to the sidelines. Selling losers makes a lot of sense. It can take years for many of these companies to recover. We are still waiting for many of the tech darlings of the late 90’s and early 2000’s “to get back to what we paid for them.” How long before Qualcomm gets back to $88, let alone $1000.
Some of the things you should be looking at to determine which of your stocks are cash candidates include:
Earnings Misses
Bad News
Management Shake-Ups
Deteriorating Fundamentals Relative to its Peers
Desperate for an Infusion of Cash
Once you have decided which stocks make sense to sell, you might consider matching your loses with some of your gains. Don’t be greedy, eventually today’s winners will give way and be replaced by the next hot thing.
When the markets - be it Real Estate or Stocks - hit rock bottom, you will need cash on hand to take advantage of these bargains.
