Transcription of last Friday’s Market Situation Report

  

This email is a full transcription of Friday's "Market Situation Report". We all synthesis information differently…and for some text is best.

I hope you enjoy Friday's transcription. If you would prefer the video format, you can find it here

 

The Market Situation Report

Imagine a group of people who solve their problems with crime. 

They don't solve their problems with education, with family, by moving to a different city, by talking it out, by working with social organizations, by getting a job, or by taking a very hard look at their behaviors.

This group of people feels that crime is the solution to their problem.   

They are not necessarily good people or bad people. Tall people or short people. White people or black people. They are just people that believe crime is the solution to their problem.

Experts clearly agree the number one reason a person ends up in the prison system is this type of thinking.

Do you get it? People who commit crimes are people that think crime is the best solution.  And these people are called criminals.

I use to think criminals were bad people but they are not necessarily good or bad. The determining factor for being a criminal is how one goes about solving their problem.

So, what does this have to do with investing and money?

A lot actually.

Turn your attention to how many people attempt to solve their money problems.

Most people believe the solution to their retirement problem is buying more stocks.
Most people believe the solution to their portfolio problem is "diversification".
Most people believe the solution to their investment returns is a more complicated approach.

And just like the person who turns to crime to solve their problem the people above are creating the same mistake. Meaning, the solution to their problem IS the problem.

So, if you know someone that thinks the solution to their problem is any of the above then have them listen up.

Their solution is dangerous to their wealth.

The solution you choose to solve your problem is the number one reason that determines which direction your financial future is heading.

So, if your financial future has not been getting filled with more security and freedom then that means the solutions you are using are doing the opposite.

And no, the direction of your wealth has nothing to do with who is running this country or the Central Bank.

Your SOLUTION determines your future.

So, what is my "solution"?

Fair question.

My solution is to use proven strategies, that combined, get the big picture right, the trend right and the market right, regardless.

That means they worked in 2008 when the stock market fell 39%. And they worked in 2010 when the stock market increased 13%.

Let me share one of my "solutions" with you. I call it the "OT Strategy". "OT" stands for obvious trend.

Basically, the OT Strategy locates stocks that are trending up over a longer period but have recently "pulled back" while still staying in that upward trend.  

Here is an example:  Merck (MRK) topped out at $48.  Currently it's at about $43.  So there was a $5 drop which is about a 12% correction.

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What you might love about this is, that the 12% loss is not your loss.  So, even if you use a 25% stop loss, now you can put on a 13% stop loss on this stock because someone else has taken the other 12% hit for you.

Here is the point: the solution is NOT Merck. You are not buying Merck because of Merck.  You are buying it because the strategy you use (your solution) is looking for stocks that are going up and have had a pull back.

It is not about the stock. It is about the solution.

Here is another company called Formento (FMX) they are a beverage company in Latin America.  

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FMX almost hit $100 then pulled back to $87, a 14% correction.  But the overall direction of this price chart is up, but with pull backs.

Again, your solution (or strategy) determines your security and your future and your freedom and not the stock.

Here is another example, Costco.

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Costco hit $104 then fell to $93, for a 12% pull back. 

Costco is not going to solve your problems. Costco is not the solution. The asset class you invest in is not going to solve your problem.

Your SOLUTION will solve, or not solve your problem.

Your SOLUTION determines your future. Just like people who choose crime to solve their problems. Change your solution and change your future.

And here's the thing…everyone has a SOLUTION that they are using today. 

What's yours?

And did you back test it over the past 100 years?

How did it do during the 2000 to 2002 50% stock market crash? How did it perform in 2008?

A real world example.

I spoke with a woman yesterday who said her strategy was buying large cap stocks that have great dividends.

I said ok, have you back tested it? Did it work during inflationary times or stagflationary times or deflationary times? How about its performance in 2008?

She did not know.

She realized that her strategy should probably be called "my gut feeling strategy".

So, what would you call your SOLUTION?
 

Monthly Strategy Gathering

Our last gathering of the year will be on Tuesday, December 11th.  You will get my updated view on stocks, bonds, currencies, commodities, precious metals and real estate.  We will have our lovable Speed Investing and I will take all of your questions and answers live.   

AND we will talk about the how the increase in taxes will affect you and the economy in 2013. Yes, taxes are 100% going up next year. By how much? I don't know. But taxes are going up.

Be prepared.

 

Together, we are growing and protecting your wealth,

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RC Peck, CFP 

Fearless Wealth | Investment Independence
Helping Individuals Reach Financial Independence Sooner, Faster, Safer.

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