Go Ahead and Nag

Well maybe not everyone, but anyone you really care about.

Specifically, nag them about getting themselves prepared for economic hard times coming in these next few years.

Get them out of stocks (and even bonds) in their retirement accounts. They've already seen huge gains. The time has come to lock in those gains. It's should all be about preservation of capital right now.

What is Preservation of Capital?

It means, worry less about the gains you could have gotten that you missed by pulling out before the top. Focus on the losses you won't experience by staying in past the tipping point. Make keeping what you've got your top financial priority, not growing it as fast as you can.

Face the impulse of greed that is a part of every person, and answer it with a rational look at how economic cycles move. What goes up, always comes down. Maybe not to previous lows, but definitely from current highs.

Preservation Plays

The best preservation plays in my estimation are:

1. Precious metals - Both gold and silver are depressed right now, so if you're going to buy low and sell high, now would be the time to buy them
2. Cash/Money Market Funds - If you've got money in retirement accounts, you can't take that money out, nor should you. It is tax free and probably also matched by your employer. But you don't have to leave it in risky stocks and bonds. Money Market Funds don't promise hardly any growth. I think the rate is maybe 1% now, if that. The idea with them is completely just to keep the money you've got at the time you switch into them. The stock market probably will keep going up for days or even weeks after you make the switch, and you'll have to accept that you miss those gains. And then it will crash, and you'll be so glad you missed those losses. Holding some cash you can spend anytime you want is also a good idea, at least a few thousand dollars.
3. Real Estate Improvement - This one can be a little risky, depending on where you buy and what the local market conditions are. I would not buy in the San Francisco Bay Area right now, for example. But there are some parts of the country that are still down from 2008's crash. Buying property and then improving it and either selling it or renting it out can be a good option in some markets even now. I've recently bought bare land at $25k below assessment and plan to build on it, then either live in it off-grid (eliminating my rent and utility bills) or rent it out, creating much better cashflow than that money would have done sitting in a bank account earning .05% interest. That's particularly the case when inflation hits in a couple years.
   
   

And we can expect both deflation and inflation.

First there will deflation, as bubbles start popping and stock, bonds and real estate in some areas correct to fair value. Then people will start losing their jobs, will stop eating out, and will also be unable to access credit. This will lead to recession.

In response to this recession, the Fed will print more money. This is going to be happening with all the Feds all around the world. This will lead to inflation, which will decimate the purchasing power of the money you have. And you can bet your wages will not rise to keep pace with that inflation, so your income will also effectively be decreased.

So that's why you want to hold some dollars, so that you can buy during the initial period of deflation. Not buy stocks, of course! But buy other things that will last that are now cheaper.

But you want to mostly hold hedges like precious metals, income property, and crypto that can go up even while everything else is going down.

Crypto: Part Preservation Hedge, Part Growth Investment

This is more subjective. I personally think that Bitcoin and even Stellar XLM are very stable at their current prices (Oct. 2018). They may still bounce around by 10% in either direction, but they seem to have both found their bottom. They are not dependent on what's happening in stocks, meaning they don't go up or down with them. So they can also be a good hedge against a falling stock market.

They also have some upside potential that makes them half like a growth investment. Some people say BTC will eventually be worth $1 Million. I'm not that optimistic. But I think it is realistic to think that 5 years from now 1 BTC might be worth $100,000. Though at that time, inflation will have decimated the purchasing power of $100,000, to where it may be more like having $50,000 in today's dollars. But still not bad for what is currently a $6,500 investment!

Keep Telling Them

If there is someone you love who doesn't know this stuff, or who kind of knows, but isn't taking it seriously, then harass them. Call them every weekend. Write them emails. Message them on social media. Tag them in related posts.

Don't be afraid to irritate someone trying to help them. Don't worry about being a nuisance. If they love you as much as you love them, they will eventually forgive you. Especially when the shit hits the fan and they're glad you finally got them to listen and act.

It is worth having those you love pissed off at you for the chance to spare them a lot of heartache and woe that may be on the way.

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