Fear seems to be driving most of the populous thinking. Not a day goes by, in my home state, and battleground state of Florida, that the current news is putting stress on the complete system. Some of the nervousness is fear of change and some is fear of our general security. The news just reported guns sales have soared, and there is sentiment that we may lose some freedoms. You could argue that people may be more concerned about the rule of law. A recent Law and Order episode dealt with a stockbroker being beaten to death, an all too chilling reminder of our current economic mess. It seems everywhere we are feeling the stress.
I know that there is not a cure-all to the problem but some of our problems could be avoided with proper asset protection planning and diversification of structures. Last week we read a newsletter about an attorney who was considering suing money managers when the stock market collapses. To read that newsletter, click here.
Think of these two scenarios:
Imagine you are a planner and you have set up a client with what appears to be a great plan, they are set for retirement and then something happens where the market tanks and they lose most or all of their investments.
Now, imagine you have a client with a diversified plan. Some is in the market, some in life insurance; some is in Fixed Indexed Annuities. Now, the market tanks, sure your client may lose some or all of what they had in the market but the other structures you put in place offer downside protection so they didn’t gain, but, they didn’t lose either.
A recent article from John Dietz , co-founder of the Asset Protection Society, is a good essay on the current pulse of our world in peril. I believe his first hand insight into these global economic times is well worth the read.
Dear Valued Reader,
Things have not looked this gloomy for quite some time. Comparisons about previous recessions and depressions still fill the 12-second sound bites and negative news is everywhere. Of course, if you continue to watch the news you may be wondering if you are going to have running water next week.
Well, what does it all mean? Very simply, the pendulum has now swung too far in the negative direction. Yes there are problems and yes we need to get a better grip on easy money policies, price inflation, and a host of other financial woes, but the fear is much worse than the reality. For at least 6 years financial writers and financial analysts have been talking about the derivate time bombs about to go off. Well they did, and the financial writers were vindicated.
| Now we are here, and the good news is, we are fixing the problem. It will not be perfect, but markets will be more efficient in the longrun. |
Taking Inventory
Stocks have not been this cheap for quite awhile. It is almost unimaginable that we have seen some of the greatest growth in the markets, and now we are seeing the lowest thresholds in the cycle, all this in our lifetime. Inefficiencies in the markets have created opportunity where there was none just 3 months ago. It may not be pretty, but there is opportunity knocking. Stocks are cheap and probably more hated than any other investment class at this very moment. Add on tons of fear, low price to earnings ratios and loads of distain; I like those odds.
Consider that most of us will need to put our money to work at sometime. The choices are the mattress, the bank, gold bullion, real estate, bonds, a new business or the stock market. I am certainly not suggesting that you run willy-nilly back into the fire that may have just burned you. I am, however, saying that the glass that looks half empty is still half full. For the people with the right attitude, there are going to be a myriad of business opportunities going forward.
As an example, there have been massive losers, Lehman, but there have also been massive winners. Take note of all the emerging new companies, JP Morgan, Wells Fargo, Bank of America and many more. How would you like to get a dollar’s worth of assets for 2cents? Some of these companies really did just that. And we are nowhere near an end of the market that created inefficiency and opportunity.
What about Safety
Today safety has a whole new meaning. Having safe investments has proven to be just as frightful as taking risk. The paradigm shift that is occurring is not a market or an industry; it is you and I, the humans. I know we would all like to go back and take the blue pill and remain in the matrix, but that bus, along with Elvis, has left the building. I suppose, with much consternation, a little revolution now and again is good for the soul.
Seeing is believing
In the last 30 days, I have been literally around the world, from Europe to Asia to the U.S. and I can say with firsthand knowledge that life, as we know it, is not ending. The traffic, the shopping malls, and the businesses I have visited are all busy and bustling. Yes, I know what the charts on savings rates tell us and what they warn of the future, but I am more optimistic about the markets at these levels than I have been for a long time.
The fact is that the inefficiencies of the markets have created the biggest gaps for opportunity in our lifetime. The opportunities are not just stock related; they are in all walks of business. No doubt there will be winners and losers moving forward. The current disconnections represent opportunity of all kinds.
Housing and Real Estate
The credit markets, though slow, are just starting to revitalize. It is interesting that in some markets, real estate developers with cash on hand are renting condos instead of selling. Hmm, wonder why? Real estate will take longer to right itself, but there is still opportunity.
The downside, something that should not be left out, is that real people have been hurt in very significant ways. There is not a day that goes by that I do not get a phone call from someone that has really had their guts ripped out, which is extremely disheartening. Having said that, in each case, the person or company could have ended up differently if they would have added the tools of Asset Protection to their business and personal life.
The wakeup call for all of us is that business planning, estate planning and Asset Protection need to be part and parcel of your life.
In all but one of the cases I worked on in the past 60 days, I could have helped the person before their trouble was overwhelming.
We get more safety by proactively creating a favorable environment. My sound advice: Stop watching the news and ground yourself with education and research about the new opportunities and doors that are open to you, your families and your businesses.
It is truly time to view the world, notice the word “world” in a whole new light, the light of opportunity.
Until next time,
John