Today was a huge day on Wall Street, unfortunately not in a good way, and it’s only going to get more interesting. Which of course is not a good thing if you have your money tied up in the markets, or even in a bank.
Last week there was a sell off that took the Dow Jones down more then 10% from it’s highs. This was the first correction in four years. Fully one third of all of the S&P500 is in decline by more then 20%. As Friday approached the intensity of the selling increased right up to the closing bell on Friday leading many to worry all weekend. Based on what happened today for good reason.
The government is releasing a statement that is essentially stating that this volatility is the result of Chinese volatility earlier in the year. Don’t believe it. This most recent correction is the result of domestic monetary policies by both this administration but mostly by this inflationary Federal Reserve. The run up of Quantitative Easing since the crisis in 2008 has resulted in over inflated bubble prices in both the stock market and perhaps in real estate. Sound familiar? It should, this pattern keeps getting repeated over and over again. The massive money creation by the Fed has to go somewhere, and it would appear that a great deal of that money has wound up in the stock markets. Which is quite common.
This kind of government stimulus policy creates a very unsteady and fragile economy that becomes dependent upon the easy money flows to keep the cogs turning. Even a slight rate increase can upset the apple cart and then the house of cards can come tumbling down. Today’s losses come without even a Fed increase in rates, but merely the idea that the Fed will be raising rates soon.
The Fed has had interest rates so low for so long, where will they go now, when even the rumor of rate hikes causes markets to fall? The truth is they have no where to go anymore, we are nearing the end of what the Fed can do. Their only solution to every other crisis has been to print more money driving interest rates to nearly zero. If they try to go to negative interest rates that would literally mean that the banks will charge their customers to put their money in the bank. Things are literally getting that insane.
So what do you do? Well if the Fed is going to inflate the currency to the point that there are negative interest rates your going to want to hold onto something that is real and also something that doesn’t merely diversify your risk but transfers your risk altogether.
The something real part is pretty easy. Get yourself some gold and/or silver. Coins, bars, whatever just get at least 10% of your wealth into something that is real and out of the paper money. Do it today.
Then when you feel you have enough of that, put some of your dollars into vehicles that don’t merely diversify your risks, but transfer the risks to another party altogether. Companies that specialize in taking on risks for other people are called insurance companies, and they are very good at it. So get some of your wealth out of the markets and banks and put at least a solid third with a solid insurance company. They take the risks you get the guarantees. No more sleepless nights.