Has a fund manager, or an investment banker ever advised one to get out of their investment fund? Of course not!... That would cause a work on their stocks and they don't want that, now do they?
Do you ever hear political leaders or finance ministers let you know that we come in for a depression real soon? Like that's ever going to occur! No way! Not until it has recently happened Investment Banks for sale, they talk... It'd alarm people and bring the economy to an abrupt halt. The downturn will be much faster than when they feed you candy coated talk... So you receive the sweetened version... It can help them save face and protects the economy from an immediate drop. (supposedly)
You will find two common ways for investors to get rid of profit the markets.
#1 Market timing - that's reacting to daily, weekly or even monthly to news items in the economic world - a lot of people take action wrong a lot of the time. (That's short sighted investing- you ought to concentrate on the 2 to 5 year range)
#2 Staying invested during a significant prolonged systemic failure in the markets.When markets drop 50% like they did in 2001 and 2002 it will take about 5 years for funds to obtain back up to a break even point. Zero returns for 5 years in anything but smart investing! Markets dropped over 50% in 2008 But we knew that would happen back 2007. We're now in 2010 and if markets grow by 30% over another 2 yrs it will have been 5 years again for the markets to reach a zero return.
Escape equity investments when a systemic failure is coming. We knew for quite some time this downturn was coming. It had to happen. You can't do really reckless lending and wildly drive up house prices by making ridiculously bad loans all across a nation as large as USA and not need it fall apart. CNN has been keeping us informed of this crisis for quite some time just before 2008. Anyone who owns a TV should be surprised by major declines in markets.
In 2007 I protected my clients by advising them to move 60% to 80% of the investments from mutual funds into bonds or daily interest accounts. That has been because we knew the mortgage crisis and US real-estate market fiasco would implode sooner or later. We knew that would cause serious economic repercussions during 2008 and 2009. I predicted a 40% to 60% drop. The Toronto Stock Exchange (TSX) was between 14,500 and 15,500 when I was moving my client's money to safe ground.
My prediction in Sept. 2008 when the TSX was about 12,000 was that it's about ½ way down. Again I predicted it'd drop to about 8,000 during 2008 and 2009 before it levels out and begins a growth period and I see no reason to alter my view now. (Actually it may go even lower). In hindsight it dropped to 7,600 before it started initially to turnaround and now in March 2010 is back up to 12,000
My clients are happy now because these were earning interest, but more to the point they could buy back into the markets in increments during 2009 and that earned them far more money. What the opportunity which was!
A number of my other articles cover what's needed to be better equipped to identify major downturns in front of time. But understanding that fund managers and politicians would not be doing their jobs, and wouldn't be doing us any favors when they did come our in advance and tell us saw a significant problem looming. That would really create a swift collapse sooner and quicker. There will be no chance for us to arrange for it in front of time.
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