Early last June here’s how I led off a special three-part Intelligence Report series to subscribers: “In recent issues my goal has been to work especially hard at providing you intelligence that will keep you safe and dividend-centric during what I consider the inevitable coming meltdown.”
Meltdown? Absolutely baked in to the cake as I write to you, and becoming more of a deep medium term concern for me as time passes.
The Fed’s robbing Peter (you and Dick Young) to benefit Paul (international bankers and Wall Street charlatans) program continues to create a clogged financial toilet. Junk stocks and strato-priced non-dividend-payers are screaming, while the type of stocks investors want for a safe and comfortable retirement languish out of favor-an occurrence to be expected in the late bubble stage of any bull market, especially today’s.
Automated trading systems (featuring no human input), day traders, momentum mavens, and craps enthusiasts of all stripes are engaged in a full-blown, tail- chasing, ring around the rosy circus. It’s financial musical chairs. When the music cranks off-hopefully not because of an EMP-related demolition of part of America’s electrical grid-the gang above will be switched instantaneously into reverse hyper-drive as bids disappear and stock prices crater.
Protect, Preserve, Patience, Perspective
One month later in Intelligence Report I continued, “Sends a chill down your spine, does it not? Who wouldn’t rather just forget all about such agony? Well the even worse news is that more of the same is on the way.”
I then advised, “Remember my rule of four P’s—Protect, Preserve, Patience, and Perspective. If you religiously stick to these words, you will rarely, if ever, get into a financial bind.”
The Prudent Man Rule of 1830
In my most recent issue of Intelligence Report, I reminded investors of The Prudent Man Rule stemming from the 1830 Massachusetts court formulation Harvard College v. Amory. The Prudent Man Rule directs trustees “to observe how men of prudence, discretion and intelligence manage their affairs, not in regard to speculation, but in regard to the permanent disposition of their funds, considering the probable income, as well as safety of the capital invested.”
Maximizers = Maximum Comfort and Security
Since I started our family investment management firm in 1989, I have opened under the assumption that The Prudent Man Rule to this day carries as much weight as it did in 1830. Common sense and prudence just don’t go out of style-ever.
I kicked off my special three part series by introducing a three-sector investment portfolio aimed at allowing investors to ride out the financial market turmoil I envision ahead with maximum comfort and security. I labeled the portfolio the Maximizers.
Well, over the last three-day financial markets rout, my Maximizers operated as I expected, with only a decline of 0.9%, while the S&P 500 and the NASDAQ each declined by nearly 10%.
The negative backdrop that has created the environment for the recent three-day mini-crash has not improved. In coming issues of Intelligence Report, I will analyze the winners and losers from the horrific 2014/2015 oil price crash as well as on the geopolitical and investment front. I also will expand my ongoing analysis of the environment for gold and why I have been a substantial buyer in my own account in recent weeks.
All in all in the next few years, there will be as many opportunities ahead as there are sinkholes. The job, of course, is to constantly stay on the safe side of the road.