The Risk of Being A Conservative Investor (part 1 of 2)

The Risk of Being A Conservative Investor (Part 1/2)

The Market is telling us something very important. Are you listening?

Investors who choose not to listen will pay the ultimate price. No, not with their life, even worse. They are becoming indentured servants to their ‘day-job’.

A major crack has been exposed from the manipulation of the Fed & Congress. This is very serious stuff. This is the type of stuff that brings people into the streets. And it all is happening right now.

Take a look at this price chart of US State Debt. It’s falling off a cliff.

This picture clearly shows that people are abandoning state debt by the billions because they are very concerned with what is happening.

This price chart for “MUB” (National Municipal Bond Fund – the largest exchange traded fund in the US)  is dropping rapidly because the majority of what is inside this dying monster is state debt.

So what secrets is this chart telling us?

The States are in bad shape. One of two things is baked into the cake for sure:

1)      There will be a state that defaults on its debt, or

2)      The US Government is going to have to bail out a
handful of states (they may be doing it already).

Prudent investors and investors who thought they were being conservative are losing their futures.

What you are looking at was the second safest investment in the world, US Municipal Bonds (US government bonds debt being the first – please no laughter).

Something seriously wrong is going on and it appears that no one is paying attention or even noticing.

What this price chart of Municipal Debt is saying is that there are going to be some state defaults. Europe has Greece, Ireland, Portugal, Spain, Italy and Belgium. And the US has California, Nevada, Illinois, New York and New Jersey.

What worries me most is that risky behavior is being promoted by the Fed, the Treasury, the Congress and the Executive Office. They all want Investors to buy stocks so people can feel marginally richer. But we don’t as a country [feel richer] because only the top 10% of the country owns stocks.

And while the government wants you to buy risky stocks they are penalizing any safe, prudent behaviors like saving money, buying bonds and paying down your house.  Why else would the government have lowered interest rates to zero or close to zero on your savings, CDs and bonds…not to mention the trillions in dollars that they have printed?

They (the US government) clearly want Americans to spend, trade and speculate their futures. And to what end? So the banks can be whole again?

So what is the end-game?
Where does this all lead?
How does this end?
Who gets hurt the worst…or the least.

These are questions I answer every month in my Insiders Club gatherings. And for those of you that have not been to one I will answer this question tomorrow in my follow up to this posting.

And if you know investors who choose to “weather the storm” forward this to them so they’ve at least been warned.

Speak with you in a couple days with part 2.

Together, we are growing and protecting your wealth,

PS – There are four algorithms that my clients have been using to avoid Wall Street’s toxic actions for the past decade.  From signaling investors to buy gold and silver in 2004 to signaling 401(k)s to go to cash before the market plummeted in 2008, combine them or keep them separate and you have a straightforward system that clearly signals when and where to buy. Proven Investment Algorithms.

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