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1. As a rule I do not respond to Blog comments, but in this case, because I like your blog and the people that write reply’s etc. I am compelled to hopefully, shed a little light on the subject. First off, I think it is irresponsible on your part to throw out such a doom and gloom prediction of the markets. I do not disagree that there eventually will be a correction, such as the one you stated, eventually being the key word.

   With the recent tax cuts, re-repatriation of Corporate dollars, increase in spendable income and with luck, more competitive health care, the outlook for continued strong markets looks very good. Yes, there will be corrections and I would agree that we could see as much as 20% this year. What goes up, must come down at some point in time. And yes, there is a lot of irrational exuberance in our markets.

   That said, as much as the Financial guru’s talk about foreign markets and how good they are, the truth is they are not that good and getting worse. When you have countries/Banks that are actually charging their investors to deposit money with them, contrary to popular belief, that is not a good sign. Many of the wealthy in Europe and around the globe will, if they are not already, be seeking a safe-haven for their assets and America and our markets are the safest haven in the world. This influx will force our markets (Dow) to go up. How high? Somewhere between 30,000 to 40,000

   That said, what does a retired person with Soc. Security and a portfolio from anywhere of $100,000 to a $1M put their money. Property taxes still need to be paid, food expenses, for most of us some form of electricity expense, income tax, books, etc. Expenses, whether retired or not, continue and we have to have some type of income, be it from work or investments.

   Having spent 20+ years in the financial services industry, 15 of those as Certified Financial Planner (now retired) I have seen a lot and at one time was the supervisor of Representatives with clients with a total asset base of 100 million. I say this not to pat myself on the back, rather to have people understand that I am not new to the world of finances.

   So, what does one do with a portfolio? First and foremost a person must realize that they never lose money if they take a profit. Meaning if you have ridden this market up, and especially if it is a tax sheltered account and if you are worrying at night, one idea is to sell out the stock funds. Go to a cash position for a “cool down” period and if we get the 20% or more do a 25%-35% purchase. Yes you are buying on the dip, usually a good idea. When the markets stabilize make another 25%-35% purchase. Obviously, if they don’t stabilize, stay in cash until they do. Side note, if you have gains, especially significant gains and it is NOT a tax sheltered account, be sure and research how much your gains are so that you are prepared to pay tax on them. With the new tax laws, you might be surprised.

   Another idea, if you take your profits and are sitting on the sidelines, select a fixed amount to put back in the market each month, this is called dollar cost averaging. Make sure to put in the amount each month regardless of the markets ups and downs. This proven method of investment buys more shares when the market is down and less shares when the market moves up. Over time, I have never seen where the average cost per share was not lower than the ending market value.

   If you require income, in my opinion, use income producing investments. Many advisors tout what is called the 4% strategy, that is where stock funds are used to generate income by removing 4% of the value each distribution period. For example, you have a portfolio of $200,000 in a stock fund. 4% of $200,000 is $8,000, divided by 12(months) equals $667.00 per month income/distribution. The thought behind this is the market will out-perform 4% and you will get income and growth. I was not in my working days, nor am I in my retirement days, a fan of using a growth vehicle to produce income. Albeit, we have to have some growth to offset inflation.

   On that same $200,000 portfolio if you put $150,000 in a bond fund and leave $50,000 in a stock fund. You basically accomplish the same thing as far as income and growth potential, with a lot less risk.

   For those that are not retired, I have two suggestions. First, use professional management, meaning Mutual Funds or actively managed ETF’s. There are many very good “no fee” funds available. Second, diversify your portfolio, there are many sectors in our market, Technology, Medical, Large Cap Stock, Growth, Bonds etc. Spread the wealth as best you can. And yes, I would have 10% of my wealth in silver eagle rounds, in my possession. I love gold but it is expensive and I think silver has a lot more potential.

   Finally, don’t panic if the markets correct, especially if you have 10 or more years before you retire.

   Oh, one last thought on Bond funds. These types of funds usually pay monthly dividends which means income, if interest rates go up the “Value” of the Bond Fund will come down, HOWEVER, as a rule, it does NOT effect the monthly income that you get. And interest rates are going to go up, they have to, they have been artificially suppressed for over eight years. Buy the fund for the income and don’t worry about the value.

   And my disclaimer, I am not affiliated with any investment firm, fact is I am unemployed! (Retired) I am just throwing out some ideas for the good people of this blog to think about and research.

   Trust in the Lord, ultimately the fate of us all are in HIS hands.

   1. Also in the industry. Thanks for a sane voice. The doom and gloom really makes a massive opportunity cost for those that buy into it.

   2. Kelly, you say “Trust in the Lord”, but God makes it plain in Revelation 6 – before the Rapture – that the earth must go through very difficult times, including great war, famine and death (1/4 of earth’s population will die in these days).
      Thank you for your words and opinions. Everyone’s entitled to theirs, but it’s wise to conform our opinions to God’s Word.

      1. Mr. Gray, Thank you for your response, I am sorry but I totally miss your point. My comment about Trust in the Lord, the fate of us all are in HIS hands, I stand by. Jesus is my Lord and he owns this world and my final words meant, we can try as we should, but Jesus owns the world and all of our stuff and we need to have the faith that he will take care of us. If you think this wrong, oh well.

         Scripture tells us to continue on in our lives and work, not to go to “hold mode” and wait on the Lord’s return. Thus we go forward and plan accordingly.

         I fully understand revelation six, before the Rapture and I absolutely understand the turmoil that all of the world will go through. And as I said, your point is???

         As to your comment about conforming opinions to God’s word, I do not understand where you are coming from… Have you ever read in scripture where it says “Judge not for ye be judged”? Do not judge me sir, for you know not where my heart is.

2. Kelly and Dirk: Thank you! There is only so much an ordinary working person can do. Good, well-considered insight from professionals without a vested interest in my decision. Having multiple streams of income (pension, 401(K), IRAs, SS, precious metals and skills) is my plan to keep up.

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