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When Investing Becomes Dangerous What Are Your Best Choices?

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When Investing Becomes Dangerous What Are Your Best Choices?

The long-term bull market is not only weakening; it is becoming a treacherous market according to Mad Money’s Jim Cramer. So, when investing becomes dangerous what are your best choices? Here is some of what Cramer says.

Between the mixed messages on U.S.-China trade and concerns about an economic slowdown, day-to-day stock-picking is becoming very challenging for the average investor, CNBC’s Jim Cramer acknowledged on Tuesday.

“We’ve got to call a spade a spade. This market isn’t just volatile, it’s treacherous,” he said after yet another turbulent trading session on Wall Street. “I don’t want the treachery, which is not going to go away, to get to you. Use it to your advantage.”

The best way for investors to take advantage of the swings is to ignore them altogether, said Cramer, host of “Mad Money.” Instead, he suggested focusing on long-term themes “that hold up through this madness” because they aren’t tied to China or the welfare of the broader economy.

Intrinsic Stock Value
This is the long term investing, value stock approach that uses intrinsic stock value as a guide. As we mentioned in the intrinsic value article, a key to making this approach work is knowing what a company does, how its business plan will make money, and how that business plan will remain viable into the future. In this regard, here are the approaches that Cramer recommends.

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When Investing Becomes Dangerous What Are Your Best Choices?

  1. 1. When Investing Becomes Dangerous What Are Your Best Choices? By www.ProfitableInvestingTips.com
  2. 2. http://profitableinvestingtips.com/bond-investing/when-investing-becomes-dangerous-what-are-your-best-choices The long-term bull market is not only weakening; it is becoming a treacherous market according to Mad Money’s Jim Cramer.
  3. 3. http://profitableinvestingtips.com/bond-investing/when-investing-becomes-dangerous-what-are-your-best-choices So, when investing becomes dangerous what are your best choices? Here is some of what Cramer says.
  4. 4. http://profitableinvestingtips.com/bond-investing/when-investing-becomes-dangerous-what-are-your-best-choices Between the mixed messages on U.S.- China trade and concerns about an economic slowdown, day-to-day stock- picking is becoming very challenging for the average investor, CNBC’s Jim Cramer acknowledged on Tuesday.
  5. 5. http://profitableinvestingtips.com/bond-investing/when-investing-becomes-dangerous-what-are-your-best-choices “We’ve got to call a spade a spade.
  6. 6. http://profitableinvestingtips.com/bond-investing/when-investing-becomes-dangerous-what-are-your-best-choices This market isn’t just volatile, it’s treacherous,” he said after yet another turbulent trading session on Wall Street.
  7. 7. http://profitableinvestingtips.com/bond-investing/when-investing-becomes-dangerous-what-are-your-best-choices “I don’t want the treachery, which is not going to go away, to get to you. Use it to your advantage.”
  8. 8. http://profitableinvestingtips.com/bond-investing/when-investing-becomes-dangerous-what-are-your-best-choices The best way for investors to take advantage of the swings is to ignore them altogether, said Cramer, host of “Mad Money.”
  9. 9. http://profitableinvestingtips.com/bond-investing/when-investing-becomes-dangerous-what-are-your-best-choices Instead, he suggested focusing on long-term themes “that hold up through this madness” because they aren’t tied to China or the welfare of the broader economy.
  10. 10. http://profitableinvestingtips.com/bond-investing/when-investing-becomes-dangerous-what-are-your-best-choices Intrinsic Stock Value
  11. 11. http://profitableinvestingtips.com/bond-investing/when-investing-becomes-dangerous-what-are-your-best-choices This is the long term investing, value stock approach that uses intrinsic stock value as a guide.
  12. 12. http://profitableinvestingtips.com/bond-investing/when-investing-becomes-dangerous-what-are-your-best-choices As we mentioned in the intrinsic value article, a key to making this approach work is knowing what a company does, how its business plan will make money, and how that business plan will remain viable into the future.
  13. 13. http://profitableinvestingtips.com/bond-investing/when-investing-becomes-dangerous-what-are-your-best-choices In this regard, here are the approaches that Cramer recommends.
  14. 14. http://profitableinvestingtips.com/bond-investing/when-investing-becomes-dangerous-what-are-your-best-choices Cramer suggests a general approach of picking individual stocks that are not tied to trade with China, are not tied to the welfare of general economy, and have both high dividend yields and strong financial positions.
  15. 15. http://profitableinvestingtips.com/bond-investing/when-investing-becomes-dangerous-what-are-your-best-choices His specific suggestions are cloud- based companies as this sector is growing, health care and pharmaceuticals because people will always need their products and services, and companies in cyber security which seems to be an ever- increasing need.
  16. 16. http://profitableinvestingtips.com/bond-investing/when-investing-becomes-dangerous-what-are-your-best-choices To his list we might add biotech companies to the degree that you can reliably pick the winners in this arena.
  17. 17. http://profitableinvestingtips.com/bond-investing/when-investing-becomes-dangerous-what-are-your-best-choices And, of course, any company that stands out with more than one of the criteria will be worth a look.
  18. 18. http://profitableinvestingtips.com/bond-investing/when-investing-becomes-dangerous-what-are-your-best-choices Berkshire Hathaway, an Example of Intrinsic Value Investing
  19. 19. http://profitableinvestingtips.com/bond-investing/when-investing-becomes-dangerous-what-are-your-best-choices Investments That Will Not Lose Money
  20. 20. http://profitableinvestingtips.com/bond-investing/when-investing-becomes-dangerous-what-are-your-best-choices What are your other best choices when investing becomes dangerous?
  21. 21. http://profitableinvestingtips.com/bond-investing/when-investing-becomes-dangerous-what-are-your-best-choices Recently we wrote about how to invest without losing any money.
  22. 22. http://profitableinvestingtips.com/bond-investing/when-investing-becomes-dangerous-what-are-your-best-choices We looked at ways to preserve cash in return for foregoing growth opportunities. The four suggestions were these.
  23. 23. http://profitableinvestingtips.com/bond-investing/when-investing-becomes-dangerous-what-are-your-best-choices • Put money in the bank where it is protected by Federal Deposit Insurance • Buy US Treasuries, Bonds, Notes, and Bills
  24. 24. http://profitableinvestingtips.com/bond-investing/when-investing-becomes-dangerous-what-are-your-best-choices • Purchase Investment Grade Bonds, AAA or AA • Select investments with long term value using intrinsic value as a guide.
  25. 25. http://profitableinvestingtips.com/bond-investing/when-investing-becomes-dangerous-what-are-your-best-choices Essentially putting all of your assets into cash (bank deposits and government bonds) is a time-honored approach when markets look chancy.
  26. 26. http://profitableinvestingtips.com/bond-investing/when-investing-becomes-dangerous-what-are-your-best-choices Famously, Warren Buffett held a strong cash position going into the dot com crash because he said the market made no sense and thus he was not going to invest until it did!
  27. 27. http://profitableinvestingtips.com/bond-investing/when-investing-becomes-dangerous-what-are-your-best-choices AAA Bond Rating
  28. 28. http://profitableinvestingtips.com/bond-investing/when-investing-becomes-dangerous-what-are-your-best-choices In Regard to China-Related Investments
  29. 29. http://profitableinvestingtips.com/bond-investing/when-investing-becomes-dangerous-what-are-your-best-choices China has been the growth story for the last couple of decades.
  30. 30. http://profitableinvestingtips.com/bond-investing/when-investing-becomes-dangerous-what-are-your-best-choices There are investments in China that have done well and investments in companies that do business with China which have also done well.
  31. 31. http://profitableinvestingtips.com/bond-investing/when-investing-becomes-dangerous-what-are-your-best-choices However, all grow stories eventually correct and level off.
  32. 32. http://profitableinvestingtips.com/bond-investing/when-investing-becomes-dangerous-what-are-your-best-choices In today’s China the phenomenal growth story is changing for more reasons that simply getting old or because of the risk of a protected trade war.
  33. 33. http://profitableinvestingtips.com/bond-investing/when-investing-becomes-dangerous-what-are-your-best-choices Bloomberg has an interesting and useful article about how damage to the Chinese economy from the trade war is already done.
  34. 34. http://profitableinvestingtips.com/bond-investing/when-investing-becomes-dangerous-what-are-your-best-choices The damage to China’s economy from the trade war with the U.S. can’t be immediately made good even in the case of a resolution with President Donald Trump, Citigroup economists say.
  35. 35. http://profitableinvestingtips.com/bond-investing/when-investing-becomes-dangerous-what-are-your-best-choices That’s because the tariff war is underlining China’s rising cost of labor at a time when the job market is under pressure, Citi economists led by Liu Li- Gang said in their 2019 economic outlook report.
  36. 36. http://profitableinvestingtips.com/bond-investing/when-investing-becomes-dangerous-what-are-your-best-choices The trade war with the U.S. could cut China’s export growth by almost half next year, putting around 4.4 million jobs at risk, the economists wrote.
  37. 37. http://profitableinvestingtips.com/bond-investing/when-investing-becomes-dangerous-what-are-your-best-choices “It is a reality that China is losing some of its cost competitiveness, especially in labor-intensive and low-value-added sectors,” according to the report.
  38. 38. http://profitableinvestingtips.com/bond-investing/when-investing-becomes-dangerous-what-are-your-best-choices “Although shifting the supply chains is not feasible in real time, manufacturers may seriously weigh the option of leaving China if punitive tariffs last longer than expected.”
  39. 39. http://profitableinvestingtips.com/bond-investing/when-investing-becomes-dangerous-what-are-your-best-choices China has become important to the global economy both as a supplier of inexpensive finished products and as a consumer of commodities.
  40. 40. http://profitableinvestingtips.com/bond-investing/when-investing-becomes-dangerous-what-are-your-best-choices A more-expensive China makes products more expensive around the world and will tend to drive supply chains out of China.
  41. 41. http://profitableinvestingtips.com/bond-investing/when-investing-becomes-dangerous-what-are-your-best-choices A substantial reduction in raw material use by China will hurt commodity- dependent economies around the world as we noted in our “resource curse” article some time back.
  42. 42. http://profitableinvestingtips.com/bond-investing/when-investing-becomes-dangerous-what-are-your-best-choices The bottom line for investors is that China is not the best choice right now for investing by foreigners and especially not by investors who are simply following the herd because the China-investing herd is about to “head south” in a big way.
  43. 43. http://profitableinvestingtips.com/bond-investing/when-investing-becomes-dangerous-what-are-your-best-choices Likewise, companies that have profited by selling to China, like Boeing, will be hurt in a prolonged trade war.
  44. 44. http://profitableinvestingtips.com/bond-investing/when-investing-becomes-dangerous-what-are-your-best-choices When Investing Becomes Dangerous What Are Your Best Choices?
  45. 45. http://profitableinvestingtips.com/bond-investing/when-investing-becomes-dangerous-what-are-your-best-choices All of this is great in theory but how do put these thoughts into practice?
  46. 46. http://profitableinvestingtips.com/bond-investing/when-investing-becomes-dangerous-what-are-your-best-choices Cramer makes several specific suggestions.
  47. 47. http://profitableinvestingtips.com/bond-investing/when-investing-becomes-dangerous-what-are-your-best-choices Cloud-based businesses he suggests are Salesforce.com, Splunk, VMware and Workday.
  48. 48. http://profitableinvestingtips.com/bond-investing/when-investing-becomes-dangerous-what-are-your-best-choices These stocks will be volatile like the rest in today’s trading but have strong potential for long term growth as computing requires more memory and processing power which will be found in networked computers (the cloud).
  49. 49. http://profitableinvestingtips.com/bond-investing/when-investing-becomes-dangerous-what-are-your-best-choices His suggestions for health care and pharmaceuticals are United Health Care, Merck, Centene, and Johnson & Johnson.
  50. 50. http://profitableinvestingtips.com/bond-investing/when-investing-becomes-dangerous-what-are-your-best-choices For cybersecurity he suggests Palo Alto Networks.
  51. 51. http://profitableinvestingtips.com/bond-investing/when-investing-becomes-dangerous-what-are-your-best-choices In the “strong balance sheet” and “high dividend” niche he suggests AT&T.
  52. 52. http://profitableinvestingtips.com/bond-investing/when-investing-becomes-dangerous-what-are-your-best-choices If you are going to choose any of these don’t just take Cramer’s advice or ours.
  53. 53. http://profitableinvestingtips.com/bond-investing/when-investing-becomes-dangerous-what-are-your-best-choices Apply the intrinsic value approach to each possible investment along with ways to invest without losing money.
  54. 54. http://profitableinvestingtips.com/bond-investing/when-investing-becomes-dangerous-what-are-your-best-choices An interesting choice, also mentioned by Cramer, is Microsoft.
  55. 55. http://profitableinvestingtips.com/bond-investing/when-investing-becomes-dangerous-what-are-your-best-choices This company has a strong balance sheet, a huge cloud presence, and is one of the two US companies along with Johnson & Johnson that has bonds with an AAA rating!

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