Investing with an eye toward safety SHOULD never go out of style. It’s something I don’t just preach. I also practice.
But in the more than two decades I’ve been in this business, I have (unfortunately) seen a pattern repeat itself a few times … At exactly the wrong time, some people will throw caution to the wind.
They’ll decide that holding cash in reserve is a waste of time and money, and go “all in.” They’ll focus solely on the high yields companies are paying out, without evaluating whether those juicy yields are actually sustainable.
They’ll buy stocks that are nothing more than ticker symbols to them simply because some fund manager on TV pushed them. And they’ll act as if return ON capital is the only thing that matters, rather than worry about return OF capital.
After nine long years of bull market, 667 global interest rate cuts, more than $20 trillion of global QE, and an unprecedented stretch of relative calm in stocks, I believe it’s happening again. And like in the past, it’s exceedingly dangerous for your wealth. It reminds me of what I saw real estate “investors” doing in the mid-2000s, and dot-com stock “investors” doing at the end of the last century.
So this month in my flagship newsletter, we decided to make a change. We decided to underscore our commitment to a different, more prudent approach by re-christening it the Weiss Ratings’ Safe Money Report.
If you’ve been following my work and the work of our company founder Martin D. Weiss for some time, then you know the long and storied history of that name. And if you’ve been reading my columns over the past few months, you know why this move makes sense at this time.
I believe the carefree, low-volatility, QE-and-rate-cut-supported, near-record rally that began in 2009 and ran through early 2018 is morphing into something entirely different. We’re transitioning into a new, and likely more treacherous environment. It’s one where old investing techniques won’t work like they used to — and where a new “Safe Money” approach is required.
Many won’t recognize this important shift. Others may acknowledge it, but refuse to adapt. That will prove to be a huge mistake. So, I plan to do all I can, especially in my newly renamed newsletter, to make sure you are on the right side of market history.
Be sure you take steps to reduce risk in your portfolio. That means dumping SELL-rated stocks that our Weiss Ratings system has identified as higher-risk, lowering your market exposure overall, and keep a healthy dollup of cash in reserve. After all, safety never truly goes out of style.
Until next time,