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Scott,
I respect your credentials as a professional in matters of wealth management. That is why I am concerned when you opine on the current market conditions. There are other professionals who disagree with a sell-all tactic right now.
If I were leaving the market for a good long while for whatever reason or if I found a better way to increase my wealth, now might be a good time to get out of equity stocks. But , neither is the case for me nor is it for most investors. The corallary to the question “when do I pull all my money out of the market?” is “When do I put it back in again?” You better have the correct answer to both before acting on the first because eventually, you will need to put your money back to work for you and if you miss the high point of a market and then miss the low point of a market correction, odds are you will lose money.
Market timing is risky business and even the professionals have a hard time making money at it. The calculation is that you must be correct 74% of the time when you buy AND when sell. The bigest mistake most investors make, according to what I read, is that they sell low in a panick and buy back in when things are better. Patience is a virtue and time is on the side of any small investor.
I have been through two small market dips this year. Each time, I left the money where it was with only minor adjustments and each time, the money flowed back into the portfolio in short order ( two to three months). However, I am noticing the same macro indicators you mentioned iin your article and I am also seeing some other anecdotal evidence that a major correction is coming. What I do not know is the most important factor in all this: Are we headed for a secular bear market? If so, how long do you think it will last? and finally, where is a good place to put money right now? Do you have the answers to these?
I never said “sell all.”
I did say:
“If you have not already done so, I would strongly encourage you to consult with you investment advisor and make sure that your financial affairs are as defensive as possible because it’s going to get a lot worse before it gets better and, we want to make sure that your Costa Rica dream is not shattered by some plonker who doesn’t know “how.””
Scott Oliver – Founder
WeLoveCostaRica.comSorry, I did not mean to say that you advised such a thing. I was referring to the two readers you quoted in your article who stated they “sold U.S. equities” while the Dow was at a 13K plus and thanked you for your bold statements about the U.S. equity market. That gives the impression they were motivated to sell all their U.S. equities based on your previous article “The Perfect Storm”. Financial situations are subjective and unique and their actions may have been the perfect personal solution to the perfect storm. Time will tell for them. For others, staying invested in the U.S. equity market may be the thing to do to guarantee their Costa Rica dreams are intact. Time will tell and I believe, given enough time, equity stocks are a sure bet.
The wonderful thing about expert advice is that without knowing the specific circumstances it is impossible to make a suitable recommendation to someone and, as you can see from this example even though I did NOT recommend selling all their equities that what they did. Thankfully FOR THEM that proved to be a very sensible move FOR THEM.
Just for the record and in very general terms, my clients remain invested but ‘if’ they have followed my recommendations, which does NOT always happen, they have been moving out of US$ investments since my arrival over eight years ago.
I have never claimed to be an advisor who will beat the market and make you a ton of money – there’s too much risk involved in that and I’ll leave that to the rookies who think they know it all…
But I have always spoken of ‘high probability low risk investing’ which was explained in-depth in my first book ‘Costa Rica’s Guide to Making Money Offshore in Bull & Bear Markets’ which you can read about at https://www.welovecostarica.com/members/500.cfm and which has allowed my investment clients to enjoy attractive returns, with an internationally diversified, multi-currency managed hedge fund portfolio where the risk is low and where their capital is very well preserved.
Please note that I do NOT work as an investment advisor to US citizens.
Scott Oliver – Founder
WeLoveCostaRica.comMost companies in today’s world market have a healthy amount of exposure to foreign economies and are not limited to U.S. market effects only. Conversely, in this world market, most larger foreign companies have some limited exposure to the U.S. economy. FedEx, for example, is a U.S. company. Buy stock in FedEx and your protfolio has domestic AND foreign investment in one stock. Buy Embraer Air stock, a Brazilian aircraft manufacturer and you are immediately exposed to the U.S. market.
In other words, aren’t we all pretty much in the same boat no matter where our money is put?
Sprite, if you don’t think economics are really changing in the US, take a look at this link.
http://www.msnbc.msn.com/id/21718926/The economic powerhouse that was once the US economy is beginning to falter. We have allowed other nations to do better at what we once did greatly. We have all but lost the ability to manufacture, We have not built an oil refinery in the last 30 years, and the dollar is dropping faster than we can hope for it to help what little exporting we have left.
For a nation that runs on oil we have not kept up with the pace of our own gluttonous needs. We import just about everything, outsource our service sector, then have the gall to say everything is peachy keen.
The handwriting is on the wall. We are entering into that Perfect Storm with our eyes closed.
The dynamics that run the financial/economic world are shifting to other places around the globe. As much as I don’t like it, it’s time to remove our heads from out of our collective posteriors and take a look around.
Even though investment in companies are becoming more of an international affair, we in the US are lagging behind. We are not graduating the engineers and infrastructure builders of our nation. We are failing to improve our educational system, while other countries are delivering students able to take on the challenges of the 21st century. Taken as a whole, this storm encompasses more than just simply the financial entities we have. It is symbolic of the breakdown in every facet of our society.
There are still opportunities around the world to successfully invest in. Having said that, the US may find itself in the unenviable position of being one of the least attractive. How long do you think other foreign manufacturers, like Honda, Toyota, Hyundai and a multitude of others will want to build factories in the US if we slide into an economy that is constantly struggling, and going into recession or worse? The reason they build here is because they can sell here. Once the economy slows, so will investments.
I am probably the least educated on economics and finances of the group, but I can still see a mess forming just as clearly as most.
If you want to invest offshore, I would assume as an American, you do it at your own peril.
Money invested in companies listed in the various US stock exchanges is no more at risk to a faltering american economy than money invested through any other nation’s exchange. If I were looking at a future as a worker in the US, I WOULD be concerned about the coming fall of the US. Fortunately, I will be retiring soon. I only have to worry about social security remaining solvent and the world economy not faltering too badly for too long since I will be in the market till the end.
And these ups and downs are cyclical. But I agree that this time, the down turn may turn out to be the beginning of the end for my country’s leading position in the world economy. The focus and power will shift east and spread out more. That may turn out to be a good thing. Maybe not. The U.S. needs a major change of social focus anyway. Money and power is corruptive.Sprite, I agree most companies, with the exception of many US companies, are at about the same risk. The Perfect Storm was for the US economy primarily. The one disturbing thing is that sub-prime mortgages were bundled and sold to international hedge funds. I believe Britain has a lot of exposure in that area.
I’m not as fortunate as you, and still have many more years before retiring. The market is cyclical and historically has always come back. This time it may or may not happen. The Great Depression was caused by 90% leveraging, and that has changed. Still, you have to be careful of your investments.
I am quite concerned by the lack of leadership in this country. The changes we are about to face, come at a time when I don’t think there is substantial guidance for us to weather that storm.
You are right about money and power being corruptive. Let’s hope the change of social focus arrives before it is too late for the next generation. Someone said to me, ” America’s greatest days are behind us, it is now the time of China and the third world.” This is an unsettling thought to someone who has lived in what was once considered the greatest nation on earth.
Good luck in your retirement and in your investments.
Thanks for your well wishes. However, I wish I were closer to what your age may be. I could have started this journey to Costa Rica sooner.
Barring a catastrophic, world destroying event, the markets should chug along as always. The ups and downs should not concern you since you have time and time is the key to getting ahead as long as you remain invested. Unfortunately, I am at a time in life where any burp in the market will effect the quality of my retirement so my fingers are crossed.
I don’t feel any sorrow over the USA losing its leadership stance in the world. I have never been afflicted with patriotism and while it is great to celebrate our cultural differences, nationalism is usually carried too far. People suffer from this human tendency. This is another reason I like Costa Rica….no friggn army. These Ticos still wave their national flag and feel a stong sense of national identity without talking about guns and bombs at the same time.
Sprite, we can’t turn back the clock. Enjoy what you have. Sometimes I find myself wishing I was already at retirement age. But wishing my life away is not a good thing. I’ll just have to wait till retirement comes along. I’ve developed patience over the years, and it serves me well.
I wish that catastrophic event never happens, and hope there is plenty left for all of us to retire happily. We’ll both keep our fingers crossed, even in the face of grim realities.
I can understand your feeling the way you do about the US. I personally don’t want to see it flush itself down the drain. My patriotism is linked to what this country used to be and what the principles were of its founding. That patriotism I will always carry, and it is my duty to criticize this country when I believe it has not lived up to those principles. Some of the most patriotic friends of mine are now starting to feel the way many of us are these days. We see the things that are wrong and can be silent no longer. Fortunately we still have the right to do so. If the day ever comes where we lose it, I’m outta here in a New York minute, retired or not.
Pura Vida
Sprite takes words out of my mouth. Yes the problem of nationalism in America, the red State beating down the blue states for lack of patriotism ect. As an American I have always been embarrassed by our countries military strong arm tatics. I too have no feeling of “Proud to be an Amhareikan” bullsh*t. I want to get out right now. I want to be in CR tonight. I don’t care if I never go back. Well maybe to see my Mom. But that is the only reason. So where is this perfect storm article anyway?
Those who wave the patriotic flag talk about their love of country like a four year old talks about loving their mother. All this patriotic symbolism, etc. is just another hint at fascism. I’m with you mittizzi; I wish I were back in CR NOW instead of having to wait until after Xmas.
The media and politicians have so divided this country to their benefit, that GOOD people of whatever political stripe feel the need to get out of here. It’s a damn shame.
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