Last week, I got a insightful response from one of our readers about a article on the dramatic drop in corporate profits:
“I appreciate you sorting out the real issue: We’re still heading south, and the government is trying to pad the numbers by including “bloat,” things that no one wants to buy and corporations are now stuck with. And that stocks are overpriced and a buying opportunity is approaching.”
He went one to talk about the importance of cash. I realized that while I had talked about being carful of the current market, I didn’t talk about exactly what to do to profit from the coming market crash.
So here’s exactly how to position yourself to avoid the next 2008 style crash and potentially profit from it without taking on excessive risk.
Before we jump into the good news, I want to start off with the bad news.
If don’t already have investments, I’m sorry you’ve missed the current market money train. I don’t want you to think there is nothing you can do though.
I just want insure no one gets suckered by the new market highs. Now is the time to hold and prepare. Not jump in.
The last couple of weeks we’ve been talking about the disconnect between the stock market and reality.
First we have the disconnect between corporate profits and the stock market:
Corporate profits are falling like they did before the 2008 crash.
Then we have the disconnect between the stock market and the real economy
Here’s the chart:
The stock market has continued to climb higher as the real economy crumbles.
Both of these charts are giving us a clear message. The current money train is over; the market bubble it getting ready to burst.
To be ready to ride the next market money train, you need cash ready to go. It’s not something that you can build up once the crash happens. There are thousands of investors who have already realized what is happening.
They have a pile of cash ready to invest. They already know the companies they are going to invest in when the crash happens. They know they have to be patient and swift.
They have to be patient, sitting in cash until the market bubble bursts.
They know they much be swift right after the bubble bursts and hits rock bottom.
They know they have to be ready to pull the trigger and invest in the great companies that have been discounted as a result of the crash. They have proven investment systems that have identified companies that will be great investments when the time comes.
There is no time to analyze, and “save up some money to invest.” You have to have your cash ready to go like they do. You have to have a list of investments to purchase before the crash.
This will allow you to maximize the next stock market money train. The current money train has been going on since the end of 2009. The savvy investors have been enjoying 15% to 20% returns as a result.
However they know that this train ride is almost over and is about to turn into a train wreck. This is why they (myself included) are gearing up for the next crash by stockpiling cash and preparing a list companies to invest in when the bubble bursts.
How much cash?
As much as you can get your hands on. Every dollar that is currently going, or is going to to investing in the stock market should be stockpiled.
Sure, many financial advisors would rip out there hair at the thought of this. Who cares.
If you do what the masses do, you’ll get the results the masses do. If you do what the savvy investors do, you get the results the savvy investors do.
It’s that simple.
There is not need for complex allocation models or fancy economic models. The charts show us the current market money train is over and it’s time to gear up for the next one.
So a quick recap:
1) Cash is King: Start hoarding
2) Be Patient: Wait for the bubble to burst
3) Be Prepared: Start compiling a list of stocks to buy when the bubble does burst
4) Be Swift; when the market crashes use a proven investment system (like the Titan Stock System) to swoop in and get great investment bargains.