Time to be Cautious

As we move into third quarter earning territory, I believe it is time to take some profits off the table before we could see an even bigger collapse than we did last year at this time. Why do I think it is time to be cautious? Lets start with the recent run that all world markets have had since its March lows. Most markets are now up over 50% with some stocks up over 100%. This rally whether the government wants to admit it or not is completely being fueled artificially by government money being pumped into the system. All world markets are definitely set for a breather.

I believe that we are definitely in a bear market rally and until we see change in the employment picture in the states where currently there are 15 million people unemployed, we will continue in a bear market. With recent layoffs, the american consumer is petrified and has moved into a self-preservation mode. They have seen their houses loose value, their retirement savings eroded and for those smart enough, their currency drop in buying power. If the enthusiasm in the market takes a change for the worse, watch out! Everyone will be ready this time and will have their finger on the sell button...hoping to prevent what happened in the last crash from reoccuring.

From an investing perspective, this scenario can be quite scary. All of those gains that I have just mentioned could be wiped out for those that are not prepared. The normal safe place to be is in precious metals which will probably continue to show great returns. If the market crashes, people will once again be forced to sell their winners to pay for their losers. This means that commodities stocks will probably be hit just like other indexes. Investing in real gold, silver, etc. is going to preserve your wealth the best and will be the safest alternative in a market collapse. Cash, treasury bills and bonds are probably your second safest bet.

Over the next couple of weeks, I will be posting videos and more commentory on this topic. My hunch could be wrong and as per usual the government always has a way to control the market if it believes that things might go awfully wrong. The important thing to remember is that things don't always go up. Gravity will eventually pull things including stocks back to earth. I know that I have set my stop losses and have already actively started taking profits on stocks that have moved substantially.