By Al Thomas
You may remember several years ago how cooperative North Korea became before they exploded their atomic bomb. They called in all the interested nations for a huge conference that lasted for weeks. They seemed to be making concessions and were talking peace.
Then the bomb went off. End of conference.
Lately Iran has been talking peace. Making nice sounds about how they want to cooperate about their uranium enrichment program. It is for nuclear power. And why does a country with the second largest oil reserves in the world need nuclear power?
Letís have a conference and talk about our peaceful intentions.
My guess is they are close to exploding a bomb. What this conference does is stop Israel from making a first strike. I hope they donít fall into the phony peace trap like the rest of the world.
Until the bomb goes off???
It has been my analysis that the stock market has been going up on foam. There is no industrial output to justify these high stock prices.
Stock margins are at new highs. The public is complacent. They are being suckered in. All they see is higher prices and they are missing out.
Each time the market makes a new high it pulls in more fence sitters with their money.
What should an investor do with his money?
CASH IS KING. The market is too dangerous for me. I would rather be out wishing I was in then in wishing I was out.
For those who have positions in stocks, ETFs and mutual funds there is one way to protect their money.
I am recommending long term out of the money PUTs for current positions or market indexes or long term out of the money CALLs on bear funds.
It is insurance equal to about 1% of amount invested. If you have $50,000 in stocks and mutual funds you might want spend (I did not say invest) about $500. Mutual fund managers will not help you.
IF the market crashes the options will make money; if it doesnít you will lose the money just as with the premiums do when your house doesnít burn down. If you donít know how to do this talk to a discount broker and open an account. They are not allowed to give advice, but will explain how this works.
It is my opinion that even if Iran doesnít set off an atomic bomb the market is going to start down drastically in the next year. As I always say, I may be wrong. This is cheap insurance and will allow you to sleep nights.
Copyright 2013 Williamsburg Investment Co. All rights reserved. Al's new ebook (32 pages) is available on Amazon.com for 99 cents. It explains the Golden Cross and the Death Cross. These are well known methods of determining long term trends in the market. If you only learn one method of technical analysis this would have kept you out of the 2000 and 2008 crashes and will keep you out of the next one that is coming soon. The title is Never Lose Money In The Stock Market Again.