As stock market enters a massive bear cycle, Dow plummets, what can you do to save your retirement funds?
Nancy Sensua
Nov. 11, 2007

The biggest challenge for the next thirty years is preservation of capital. If you would have asked any real estate broker last year about the future of the real estate market, the answer was simple. The real estate never goes down. When the market consensus is something like that, long term nasty bear markets hit where the valuation plummet over time. That happens to all investments and assets. That is exactly what has happened to the stock market. The stock market actually topped in March 2000. After a nasty fall till end of 2001 and some base building, the countertrend corrective bull move happened over the last five years.

That phase is over, a nasty third wave will wipe out 70% of the valuation of the stock market between now and 2012. The question is what can you do to save your retirement while the market plummets, banks go bankrupt, real estate markets are flooded with foreclosures an d the economy goes into deep depression?

Non-participation in the stock market can be dangerous too. What happens all that bad never really materializes?

The approach that you must take is wait and see. As the market goes down, do not jump in. Look for the confirmation from the bond market. If you ever see bonds and stocks are rallying together, it is the end of the recession.

Lower your participation in the stock market. The budget deficit will explode as the recession brings in less tax revenues. The bond market can go into a panic mode if oil hits $250 a barrel between now and 2012.

Put money into money market. If you own some stocks write call options and buy protective puts. This is not the time for buy and hold. Those who tell you to that have not seen a real recession. That never really happened since 1982.

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Nancy Sensua
Lower your participation in the stock market. The budget deficit will explode as the recession brings in less tax revenues. The bond market can go into a panic mode if oil hits $250 a barrel between now and 2012.
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