Emergency Retirement Recovery: The Battle for Investment Survival ~ The Risk Averse Alert

Thursday, November 27, 2008

Emergency Retirement Recovery: The Battle for Investment Survival

Let's talk high-stakes turkey...

Why are those who get hysterical about the growing array of government bailouts — the list of petitioners with cup in hand lengthens with each passing day — failing to ask the most fundamental question of all:

Are we bankrupt?

This really is the crux of the matter. We simply do not generate enough economic wealth to honor all financial claims. At the root of the problem is not a long line of money grubbers who want something for nothing. This is rather a symptom than a cause.

Instead, the problem lies in belief finance reigns supreme. Yet in truth finance should rightly be only a means to an end. It should be servant, not master.

Indeed, is this not why we invest? And when adequate returns fail to materialize what are we left to conclude? The endeavor is vanquished! The idea proved bankrupt. So, we deal with it and move on.

This applies as much on a social level as it does in one's own individual experience...

So, let's consider the case of the "balanced and diversified" retirement portfolio preached by many a glorified salesperson pretending to be financial advisors...

Does anyone stop to ask who benefits with a strategy forcing you to save much more for retirement than you really need? If only this were the worst of it! What is the lame rejoinder to this hallowed retirement investment approach after it has proven you vulnerable to swallowing huge losses? It's "no one can predict what the market will do."

Puhlease! You know as well as I do this simply is not true.

Which fact should lead the reader whose "balanced and diversified" retirement portfolio just took a giant hit to conclude the reality of our present state of bankruptcy quite evidently leaves little place to hide, beyond the safety of short-term debt securities (even here, though, potential problems have necessitated government guarantees on money market funds ... which, itself, demonstrates the depth of systemic insolvency).

The "balanced and diversified" investment strategy has been vanquished. So, heed Ben Franklin's wisdom, then, because the definition of insanity is doing the same wrong thing over again and expecting different results.

Now, about the so-called "Retirement Emergency" some are claiming. You want to make its impact insignificant? You want to recover 401(k) losses quickly?

Close your eyes. Imagine it's 1932. Great fortunes in the stock market have been lost. Yet those wise enough to see the writing on the wall are now in great position to make some serious bank ... and with little risk at all.

Truth is the real Retirement Emergency lies in waiting. Chances are a hyper-inflationary blowout is being hastened with each new trillion being added in a vain attempt to sustain a completely unsustainable financial arrangement.

So, how might you best protect the purchasing power of your retirement savings?

My advice is become an expert investor in just one blessed thing. Take it from the author of "The Battle for Investment Survival," Gerald Loeb, who in 1935 had a thing or two to say about the fallacy of diversification.

Because difficult times ahead stand to prove this lesson again...

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© The Risk Averse Alert — Advocating a patient, disciplined approach to stock market investing. Overriding objective is limiting financial risk. Minimizing investment capital loss is a priority.

Analysis centers on the stock market's path of least resistance. Long-term, this drives a simple strategy for safely investing a 401(k) for maximum profit. Intermediate-term, investing with stock index tracking-ETFs (both their long and short varieties) is advanced. Short-term, stock index options occasionally offer extraordinary profit opportunities when the stock market is moving along its projected path.

Nothing is set in stone. Nor is the stock market's path of least resistance always known. More often than not, there are no stock index option positions recommended.

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