I learned this from a dear friend and very wealthy man: The biggest gains are made in times of turmoil, IF you have prepared before the storm hits! That risk AND opportunity is staring us right in the face. After several years of relative peace, prosperity and market exuberance, you now need to switch gears and think about adjusting your approach to wealth preservation and investing, in preparation of less prosperous and peaceful times ahead.
This may sound harsh, negative, too doom-and-gloomy. Yet, it is what it is. If you have spent any time at all thinking about the current state of affairs on your own – with the TV turned off – you know that serious challenges exist. The question is: What will you do with that knowledge?
Thinking, speaking AND acting independently – it takes courage!
Most investors will remain on auto-pilot, instead of using this time window to prepare and set themselves up for some of the greatest profit opportunities that lie ahead. I am reminded of a comment made by one of my clients during one of our Briefings in Austin, Texas. We had a great group of wealthy American families and investors at the event and the discussion revolved around the best strategies to protect wealth in the upcoming “storm”. One angle we discussed was the safe ownership of physically allocated gold.
My client told me this: “You know Frank, everyone sees that things are going in the wrong direction. And yet, when I mentioned to my financial advisor that I am storing physical precious metals in a vault in Switzerland, he looked at me as if I was crazy. He doesn’t have any advice other than to keep doing what we’ve been doing. It seems most people would agree that there is trouble ahead, but no one is willing to leave the beaten path!”
Unfortunately, he is right. We’re faced today with a host of challenges and uncertainties in politics, the global economy and financial markets. Too much debt, too much regulation, too much government everywhere. This has led to what I would call an international “social mood swing”. This mood swing is clearly apparent and widely discussed in the real world, although largely dismissed by mainstream media and most politicians as the “stupidity of those irredeemable masses”.
The level of conceit displayed by the establishment in the current political climate is only further fueling the change dynamics and that should also alert you to the possibility of a very relevant change of trend. Social mood swings are at the core of major economic trend changes. They are much more relevant than all the ephemeral distractions and daily events covered so ferociously by media pundits.
In other words, you as an investor should not fall into the trap of marching to the beat of the mainstream drummers. You need to step back, think, and consider your options. That is what prudent risk and wealth management is all about.
Will you follow the advice of a lemming?
Unfortunately, the vast majority of advisors are lemmings. They follow the mainstream gibberish and then act as if they were giving you personalized and unique advice. Unfortunately, independent thought and action is a rarity, more and more so these days.
Therefore, your financial advisor’s ideas and guidance will tend to be “mass fodder” and miss out on the best opportunities and strategies available under the very special circumstances we live in today. Savvy investors and wealthy families all over the world recognize this, and they are in a very active mode of adjusting their planning to effectively address the big picture challenges ahead.
Let me use gold as an example to make my point. I’m not trying to convince you to buy gold here, although I would be happy to do that some other time.
As you’re considering buying physically allocated gold, not the paper type - aka the GLD version of gold that is bought by the masses and backed by nothing more than Wall Street bankers’ promises and the size of a large bank’s shaky balance sheet - you might think about talking to your financial advisor. That’s only natural. However, I can already hear what he will say: “Oh no, don’t do that. Gold is a useless piece of rock. Oh, and it does not pay any interest…”
Why does your financial advisor shun gold?
Why? Because financial advisors only deal with paper assets like stocks, bonds and mutual funds. It’s what they know, what they’ve studied, it’s what they’re familiar with, it’s what they have been selling for years, and it’s what all their colleagues are recommending. Therefore, it’s in their comfort zone, but not in your best interest. It’s as if you walked into a Toyota dealership and asked them to advise you on buying a Mercedes. It’s just not what they do.
When you buy gold, silver or other hard assets that may offer an appropriate diversification out of the lop-sided financial world of paper money, you’ll be moving money away from your financial advisor’s management, eating into the fees and commissions they make when you invest in their stocks and bonds. Most financial advisors are store-fronts for large banks and financial institutions. And even independent advisors, who charge a fee instead of earning a sales commission and who will typically tend to be more objective, will generally only handle paper investments that are bought and sold at the click of a button through their familiar trading system.
In the end, it is YOUR responsibility to decide and act
These are not ordinary times. Therefore, you need to think “outside of the box” if you want to find solutions, a Plan B so to speak, that will continue to protect your wealth in the period ahead. You may need to consider adjustments not only to your investment allocation angle, but perhaps also to the structural setup you currently have.
When big empires tumble, it is not just financial markets that go sour. There are a host of other challenges that emerge during such a phase, ranging from all kinds, shapes and forms of financial repression to an increase in taxes, more litigation, social unrest and even war.
Even your most trusted financial advisor – someone who may be an expert when you’re looking to invest in stocks and bonds — will be almost completely useless when it comes to giving realistic, qualified advice on buying gold, or setting up a trust and asset protection scheme, and combining that with a compliant and globally diversified investment strategy.
Extraordinary times call for extraordinary measures. Don’t expect your average advisor to have such measures on hand!