Don’t:
• Generally speaking, don’t own stocks.
• Don’t own any but the most pristine bonds.
• Generally speaking, don’t invest in real estate.
• Generally speaking, don’t buy commodities.
…
• Generally speaking, don’t own stocks.
• Don’t own any but the most pristine bonds.
• Generally speaking, don’t invest in real estate.
• Generally speaking, don’t buy commodities.
…
Do:
• Fight the inertia that will keep you from taking action to prepare for the downturn. Start taking steps now.
• Involve your significant others in your decisions. Put your home or business partners in tune with your thinking before it’s too late.
• Talk to heavily invested parents or in-laws who may be planning to pass on their investments to you. See if you can get them to become safe and liquid.
• Think globally, not just domestically.
• Open accounts at two or three of the safest banks in the world.
• Invest in short-term money market instruments issued by the soundest governments.
• Own some physical gold, silver and platinum.
• Have some cash on hand.
...
• Plan how to take advantage of the next major uptrend. For example, go back to school during the decline and come out with extra skills just as the economy begins to recover. Apprentice in a job for low pay and learn enough to start your own business at the bottom so you can ride the next big up wave of prosperity. Investigate troubled businesses to buy at the bottom at deep discounts.
• Smile! because you will not be jumping out of the window; you’ll be preparing for the incredible opportunities listed in the next chapter.
MyView
The above is Robert Prechter's take. The major difference between the deflationist (Prechter/Mike Shedlock) and inflationist (Peter Schiff/Marc Faber) is the deflationist said that the wave of deleveraging in most sectors will over power the printing of money by the central bank, on the same score, the inflationist is thinking the opposite, the wave of printing money, from private debt to public debt, will overpower to any deleveraging by the private sector.
Prechter's showed that the by giving the example of Japan, where public debt debt increase significantly to replace the private debt, but the property price still drop about 87% from its peak in 1989! Although Japan GDP was positive but weak. Similarly Japan stock market is currently traded significantly below its peak in 1989. Japan's model had shown that no matter how much the government can create debt, it does not stop the deflation (and Japan's case is isolated, no impact to the world economy)
Peter Schiff argument is also valid that US government is printing so much money, unprecedented, that it will eventually cause the dollar to drop significantly, hence, may cause hyper inflation and destroy its economy.
I believe that
• Smile! because you will not be jumping out of the window; you’ll be preparing for the incredible opportunities listed in the next chapter.
MyView
The above is Robert Prechter's take. The major difference between the deflationist (Prechter/Mike Shedlock) and inflationist (Peter Schiff/Marc Faber) is the deflationist said that the wave of deleveraging in most sectors will over power the printing of money by the central bank, on the same score, the inflationist is thinking the opposite, the wave of printing money, from private debt to public debt, will overpower to any deleveraging by the private sector.
Prechter's showed that the by giving the example of Japan, where public debt debt increase significantly to replace the private debt, but the property price still drop about 87% from its peak in 1989! Although Japan GDP was positive but weak. Similarly Japan stock market is currently traded significantly below its peak in 1989. Japan's model had shown that no matter how much the government can create debt, it does not stop the deflation (and Japan's case is isolated, no impact to the world economy)
Peter Schiff argument is also valid that US government is printing so much money, unprecedented, that it will eventually cause the dollar to drop significantly, hence, may cause hyper inflation and destroy its economy.
I believe that
- Japan still manage positive GDP after its crash in 1989 is due to its strong exports (world is growing), strong private savings and strong trade surplus.
- On the other hand, US is following Japan's model, public sector is printing money, US will run out of bullet because it cannot export its way out of the problem, and on top of that, US is over geared and also over consumed.
- On top of the above, the world, US, Europe and China had initiated a world wide printing of money (for China is ok because it has the sufficient surplus, strong savings, trade surplus and trying to maintain its currency at competitive level), so these world printing of money had flush the world with fiat money, and the other side of the equation is DEBT. If the money not used productively, i.e. buying toxic assets, going into unproductive sectors, doing bailouts, stimulating economy resulting resources not allocated productively, will significantly WEAKENING THE ECONOMY.
- So the actions by most countries will weaken their own economy, as a result causing weak earnings, unproductive allocation of resources, incapability of repaying the DEBT.
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