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How to Minimize Your Investment Losses in the Next Recession

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How to Minimize Your Investment Losses in the Next Recession

The current volatility in the US stock market is reminiscent of the days preceding both the dot com crash and the 2008 market crash that ushered in the Great Recession. It may well be time to consider how to minimize your investment losses in the next recession. The 2008 crash destroyed about $7 trillion in equity value. A crash today might destroy as much as $20 trillion in equity value according to Investopedia.

The recent stock market retreat, which has sent the S&P 500 Index (SPX) down by 5.9% from its intraday high on Oct. 3, has intensified the debate between the bulls and the bears. Outspoken economist, hedge fund manager and market analyst John Hussman is renewing his prediction of a severe market crash that would send major U.S. stock market indices plummeting by 60% or more. He has been warning that stock valuations have been extreme for years, and long overdue for a return to historical norms. Putting this in dollar terms, Hussman recently said that the crash will wipe out $20 trillion of stock market value, Business Insider reports.

Timing a market correction is always difficult. Bears have been predicting this bull market’s demise for years! But all good things do come to an end and that includes rising stock market prices.

Steps to Take to Minimizes Losses when the Market Tanks

Investopedia offers advice from JPMorgan on how to avoid losses in the next recession.

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How to Minimize Your Investment Losses in the Next Recession

  1. 1. HOW TO MINIMIZE YOUR INVESTMENT LOSSES IN THE NEXT RECESSION By www.ProfitableInvestingTips.com
  2. 2. http://profitableinvestingtips.com/bond-investing/how-to-minimize-your-investment-losses-in-the-next-recession The current volatility in the US stock market is reminiscent of the days preceding both the dot com crash and the 2008 market crash that ushered in the Great Recession.
  3. 3. http://profitableinvestingtips.com/bond-investing/how-to-minimize-your-investment-losses-in-the-next-recession It may well be time to consider how to minimize your investment losses in the next recession.
  4. 4. http://profitableinvestingtips.com/bond-investing/how-to-minimize-your-investment-losses-in-the-next-recession The 2008 crash destroyed about $7 trillion in equity value.
  5. 5. http://profitableinvestingtips.com/bond-investing/how-to-minimize-your-investment-losses-in-the-next-recession A crash today might destroy as much as $20 trillion in equity value according to Investopedia.
  6. 6. http://profitableinvestingtips.com/bond-investing/how-to-minimize-your-investment-losses-in-the-next-recession The recent stock market retreat, which has sent the S&P 500 Index (SPX) down by 5.9% from its intraday high on Oct. 3, has intensified the debate between the bulls and the bears.
  7. 7. http://profitableinvestingtips.com/bond-investing/how-to-minimize-your-investment-losses-in-the-next-recession Outspoken economist, hedge fund manager and market analyst John Hussman is renewing his prediction of a severe market crash that would send major U.S. stock market indices plummeting by 60% or more.
  8. 8. http://profitableinvestingtips.com/bond-investing/how-to-minimize-your-investment-losses-in-the-next-recession He has been warning that stock valuations have been extreme for years, and long overdue for a return to historical norms.
  9. 9. http://profitableinvestingtips.com/bond-investing/how-to-minimize-your-investment-losses-in-the-next-recession Putting this in dollar terms, Hussman recently said that the crash will wipe out $20 trillion of stock market value, Business Insider reports.
  10. 10. http://profitableinvestingtips.com/bond-investing/how-to-minimize-your-investment-losses-in-the-next-recession Timing a market correction is always difficult.
  11. 11. http://profitableinvestingtips.com/bond-investing/how-to-minimize-your-investment-losses-in-the-next-recession Bears have been predicting this bull market’s demise for years!
  12. 12. http://profitableinvestingtips.com/bond-investing/how-to-minimize-your-investment-losses-in-the-next-recession But all good things do come to an end and that includes rising stock market prices.
  13. 13. http://profitableinvestingtips.com/bond-investing/how-to-minimize-your-investment-losses-in-the-next-recession Steps to Take to Minimizes Losses when the Market Tanks
  14. 14. http://profitableinvestingtips.com/bond-investing/how-to-minimize-your-investment-losses-in-the-next-recession Investopedia offers advice from JPMorgan on how to avoid losses in the next recession.
  15. 15. http://profitableinvestingtips.com/bond-investing/how-to-minimize-your-investment-losses-in-the-next-recession They suggest that bonds will start outperforming stocks as much as a year before the market actually crashes.
  16. 16. http://profitableinvestingtips.com/bond-investing/how-to-minimize-your-investment-losses-in-the-next-recession Rotating some of your profits out of stocks into bonds is their recommendation.
  17. 17. http://profitableinvestingtips.com/bond-investing/how-to-minimize-your-investment-losses-in-the-next-recession Cyclical stocks will take more of a hit than defensive stocks when the market heads south.
  18. 18. http://profitableinvestingtips.com/bond-investing/how-to-minimize-your-investment-losses-in-the-next-recession Their suggestion is to start moving money out of some of your recent cyclical stock winners into long term growth stocks.
  19. 19. http://profitableinvestingtips.com/bond-investing/how-to-minimize-your-investment-losses-in-the-next-recession Growth stock prices are based on their earnings.
  20. 20. http://profitableinvestingtips.com/bond-investing/how-to-minimize-your-investment-losses-in-the-next-recession When earnings drop off the stocks without a margin of safety will fall more rapidly than the general market.
  21. 21. http://profitableinvestingtips.com/bond-investing/how-to-minimize-your-investment-losses-in-the-next-recession These folks suggest moving out of growth stocks and starting to buy value stocks.
  22. 22. http://profitableinvestingtips.com/bond-investing/how-to-minimize-your-investment-losses-in-the-next-recession And, things will get worse in developing markets, especially those economies afflicted by the “resource curse.”
  23. 23. http://profitableinvestingtips.com/bond-investing/how-to-minimize-your-investment-losses-in-the-next-recession Is This the Time to Buy Gold?
  24. 24. http://profitableinvestingtips.com/bond-investing/how-to-minimize-your-investment-losses-in-the-next-recession Investing in gold can be profitable if you pick and choose carefully when to buy and when to sell. We wrote about this in 2010.
  25. 25. http://profitableinvestingtips.com/bond-investing/how-to-minimize-your-investment-losses-in-the-next-recession There are a number of attractive options for investing in gold and there are pitfalls.
  26. 26. http://profitableinvestingtips.com/bond-investing/how-to-minimize-your-investment-losses-in-the-next-recession Gold stock investing includes mining companies and derivatives.
  27. 27. http://profitableinvestingtips.com/bond-investing/how-to-minimize-your-investment-losses-in-the-next-recession Many gold bugs will say that how to invest in the stock market during hard economic times is to invest in gold.
  28. 28. http://profitableinvestingtips.com/bond-investing/how-to-minimize-your-investment-losses-in-the-next-recession However, the true gold bug will advise that you buy and hoard gold bullion or rare gold coins.
  29. 29. http://profitableinvestingtips.com/bond-investing/how-to-minimize-your-investment-losses-in-the-next-recession When we wrote this, gold was trading at about $1,400 an ounce.
  30. 30. http://profitableinvestingtips.com/bond-investing/how-to-minimize-your-investment-losses-in-the-next-recession It rose for a couple of years to trade briefly in the $1,900 range before falling.
  31. 31. http://profitableinvestingtips.com/bond-investing/how-to-minimize-your-investment-losses-in-the-next-recession Today gold trades at about $1,200 an ounce.
  32. 32. http://profitableinvestingtips.com/bond-investing/how-to-minimize-your-investment-losses-in-the-next-recession The best time to buy gold was in the early 1970s during a period of historic inflation brought on by new social spending and the war in Vietnam.
  33. 33. http://profitableinvestingtips.com/bond-investing/how-to-minimize-your-investment-losses-in-the-next-recession The next best time was in 2000 when interest rates plummeted and war raged in the Middle East.
  34. 34. http://profitableinvestingtips.com/bond-investing/how-to-minimize-your-investment-losses-in-the-next-recession In each case, the price of gold steadily rose until economic conditions improved and it became contra productive to hold an asset that has quit appreciating and did not pay dividends or interest.
  35. 35. http://profitableinvestingtips.com/bond-investing/how-to-minimize-your-investment-losses-in-the-next-recession Now, however, might be a good time to balance your investment portfolio with a gold ETF or mining stock with the understanding that you will hold the investment for a few years and then rotate back to equities, bonds, or even cash.

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