I want to guide members to be very careful in the markets. The last few days are a result of optimism over the stimulus package that has been communicated by the White House and Fed as:
“We will throw everything at the economy to restart it” .
It is very possible we could return to
another secular bull market that lasts for many more years and we could
see new highs. However, what happens if we throw all this stimulus into
the market and in the Fall we have another breakout of the coronavirus
and have to shut down parts of the economy again or shut down the
economy entirely? That means the stimulus was a waste of taxpayer money
and the country will have a debt that we will never be able to pay our
way out of. We go 100% into a Depression as the Fed has no more tools.
If they flood with more stimulus then we are starting to look like
Venezuela and Zimbabwe.
This will become a whole new level of fiat currency.
My guidance to you is – it is ok to play/invest in the market but do it with a much smaller part of your portfolio. The markets are not reacting in a manner that indicates the asset bubble has blown up; however, that may be the case. Make sure to own, as an insurance for your portfolio, at least 5% in gold and silver and if possible own physical gold and silver. If not simply buy the ETFs of SLV and GLD. As I said on the webinar last night I am getting reports investors are finding it very difficult to buy physical gold and silver. If they can find physical gold and silver they are paying a premium over the spot price in the market.
If you really want to be conservative and be prepared for risk then own 50% of your portfolio in cash. US dollars despite the nonstop printing by the Feds is still the best currency to remain invested in.
The battle in the market is the Bulls versus the Bears. Over the last 2 days the Bulls are winning. The Bulls believe unlimited funds flooded to buy all asset backed securities and municipal bonds, bailout out small and large businesses and throwing all levels of financial assistance to the American worker – will keep the party going.
I am siding a little bit more towards a Bearish outlook that the coronavirus is not going away any time soon and once earning reports hit, unemployment skyrockets to the millions and other countries are not buying American goods because they are in lockdown we will see another major sell off in the market. I certainly could be wrong but don’t get too confident in the last 2 days of market euphoria. Take some of your money off the table especially if you have made profit in the last 2 trading days.