Investors – Time for extreme caution!

Many investment advisors like to explain to their customers that they knew what was going to happen before the stock market crashed but, most of them are exaggerating – he said politely – and have no way to back up their claims.

• In our 16th December 1999 article entitled “Protecting Your Profits” we stated that ‘Risk management is extremely important, especially when many markets appear to be moving from one extreme to another. In the US the NASDAQ is up 70%+ YTD. We doubt this will continue and we should be prepared for what may come next.’
• In our 23rd December 1999 article we stated that ‘…our short-term indicators have reversed and would suggest being very cautious in putting new money in the market right now. The first quarter of 2000 could be very interesting indeed.’
• On 27th February 2000 we warned of the Internet excesses coming to a head and featured a story on a technology company called ‘Cacheflow’. This company lost astonishing amount of money and the only ‘cash-flowing’ was in the IPO when $500,000,000 (Yes! $500 million) flowed into the pockets of Michael Malcom, the man who started the company. It certainly had not been flowing into their investors pockets as the stock crashed from $161 down to practically nothing.
• In the 12th March 2000 article entitled “Do You Have a Casino Mentality” we used stronger words; ‘Have you also been sucked into believing that stocks can only go higher? Are you taking unnecessary risks with your investments? Are you managing the risk in your portfolio?’
• Then on the 19th March 2000 in “Time to Adjust Your Expectations” we said that ‘In any market, with any investment, risk management is crucially important. We would rather lose opportunity than lose money. We can always make up opportunity but it’s hard to make up money.’
• In our 16th April article entitled ‘Did the Analysts on Wall Street Warn You?” We suggested that Wall Street analysts and their firms were not really in the business of making you money; they’re in the business of making themselves money.

At year end 2000, out of the 8,000 stock recommendations made by analysts covering the 500 companies in the S&P 500 index, only 29 were ‘Sells’. That’s less than one half of one per cent which shows you how smart they were, right?

I’m not going to tell you that my investment recommendations have been right all of the time – nobody is, but the vast majority of my clients have been delighted that I’ve been right a lot more than than wrong!

Over the years, my investment clients have been thankful for my high-probability, low risk wealth management strategies including Federico Carrillo-Zurcher who was the Costa Rican Minister of Finance at the time and the former Chief Executive Officer of the Costa Rica Stock Exchange, (Bolsa Nacional de Valores (BNV)) who wrote in the introduction to my investment book:

“Scott Oliver is one of these few visionaries. Over the last four years, he has shown me that Costa Rica might become a regional financial center after all, thanks only to the efforts of professionals like him.”

Federico and I were both wrong about Costa Rica becoming a financial centre but Federico has been happy with my work as a professional investment advisor saying: “Not only have Scott’s investment recommendations performed better than the comparable indices, his attention to detail is impeccable.

His personal service and level of client communication has also been excellent, as he has always been reachable at any time day and night. And in general I have been very pleased with our relationship and hope to maintain Scott, both as a financial advisor and as a friend, for years to come.”

A few of our VIP Members have also been fortunate including Steve and Eve from Charlotte, NC. USA who wrote to me on the 16th August 2007 at 7:40 AM saying: “Scott. Eve and I want to express our gratitude for your bold statements about the US equity markets. We took your advice and sold US equities at the 13,800 Dow level. We are so glad you saved us over $100,000 in losses so far. Enough to make a sizeable down payment on a piece of paradise in Costa Rica. Thanks!”

Today the 24th August 2010 the Dow closed at 10,040.50 still 3,760 points lower than where Steve and Eve sold out and the markets look uglier than ever, never in my lifetime have I seen so many horrendously negative economic indicators.

• There is no recovery today!
• There will be no recovery tomorrow or in the next five years.
• In fact, if you are at the tail end of the “Baby Boomers” wave like me at age 50, I don’t believe we’ll see a meaningful recovery in our lifetimes…

In November 2009 I wrote that: “We’ll see massive civil unrest, the declaration of martial law and hundreds of thousands of detentions as millions of cold and hungry people take to the streets.” In an article entitled: You Can’t Handle The Truth!

I’m not telling you what to do – I no longer give investment advice except to a handful of clients – but please speak with your investment advisor to make sure you are in the most defensive position you can be in with regards to your investments.

What I said last year is worth repeating: “If you’re not already thinking in survival mode, get there fast and, wherever you are, we all need to make sure we have a well stocked and secure refuge preferably away from the maddening crowd where we can at least try to ride out the long, very dangerous storm that lies ahead.”

My refuge or my plan ‘B’ is Costa Rica and I’m more thrilled every day to call this land of stunning scenery, sunshine and smiles my home.

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Written by Scott Oliver, author of 1. Costa Rica Real Estate Scams & How To Avoid Them, 2. How To Buy Costa Rica Real Estate Without Losing Your Camisa, 3. Costa Rica’s Guide To Making Money Offshore and the Director of Costa Rica Living & Retirement – Secrets To Happiness, a new DVD which reveals all with 14 in depth interviews…

Andrew Makarik

to@welovecostarica.com

Andrew Makarik is the main editor of WeLoveCostaRica, a fan of this sunny country. He is also a loving husband and a has a lovely daughter. By being a devoted family man and the biggest Costa Rica fan, he wants to make more people feel at home there. WeLoveCostaRica unites people and helps them find new home or a new travel destination. This website is a friendly community where everyone can find not only information, but also new friends and travel pals. Andrew is also passionate about IT and programming, so he himself maintains a friendly atmosphere in this cozy environment of WeLoveCostaRica.com.