Craig Brockie
Dear editor:
I am writing you with a single objective: to help as many residents of Fort Frances as possible avoid financial ruin.
It pained me to see so many good, honest people lose so much of their hard-earned savings in 2008. I sincerely hope that readers of this letter will avoid repeating the important life lesson that 2008 presented.
At this time, the stock market is looking far closer to a top than a bottom—in fact, dangerously so. It is clear to me that immediately liquidating all mutual funds (which hold stocks or non-federal bonds) is the most prudent course of action to avoid losing another 50 percent or more of one’s savings.
If you have an RRSP, chances are you got whacked in 2008. As the saying goes, “Fool me once, shame on you. Fool me twice, shame on me.”
In September, 2007, I filmed a five-minute video predicting the upcoming stock market crash, what to expect, and how to protect yourself (the video is still online at Youtube.com). The following month, the video was released and announced to my e-mail newsletter list, warning of the upcoming stock market crash.
That same month, the markets topped and began the worst slide since the Great Depression.
By the time the markets had found their (temporary) bottom, investors had been devastated—most losing more than 40 percent and some losing as much as 75 percent of their wealth.
Since March, 2009, many stocks have doubled—and some have tripled—from their lows. If you had been following the lead of one of my favourite market forecasters, you could have invested in these funds for your own benefit.
Even the benchmark S&P 500 index has rallied 72 percent from its March, 2009 lows.
Of course, most people thought it was too scary or dangerous to invest in early 2009 when, in reality, it was the best investment opportunity since the Great Depression. Now, several months later, many believe the worst is behind us and the stock market is safer place to be invested.
Nothing could be further from the truth.
If you would like to avoid the losses you experienced in 2008, be sure to learn from your experience rather than repeating it. Call your stock broker or investment adviser and assertively insist that they sell all your positions and move 100 percent into cash.
Don’t take no for an answer. You are the boss. It’s your money.
It’s also important to understand that there are no tax consequences for taking this action so long as you leave the cash within your RRSP.
You’ve been lied to for the past 10 years that to “buy and hold” was a wise thing to do. In reality, over the past 10 years, the S&P 500 index is down 23 percent and the Nasdaq is down 54 percent—and this is without even factoring in inflation.
Also be sure to avoid believing the myth that precious metals or mining stocks somehow are magically going to avoid dropping along with the rest of the stock market. This myth was proven to be false in 2008, and will be proven to be false again by the time we reach the next bottom in the stock markets.
The good news is you now have a choice of whether or not you will be ruined by the next downward leg of the market.
The other good news is that there are proven ways to profit from a declining market. To learn how to profit, sign up for my free newsletter at CraigBrockie.com or any of the paid services mentioned in my Youtube video.
While contemplating and preparing for another financial calamity may not be an uplifting experience for you, consider this your opportunity to turn lemons in lemonade. Act rationally, not emotionally.
Sincerely,
Craig:Brockie
West Vancouver, B.C.
(formerly of
Fort Frances, Ont.)
