Can you really prepare for a market crash?
This is the question posed by a recent article at the website of The Globe and Mail newspaper. And the answer delivered by the piece? If you approach investing from the perspective of thoughtful asset allocation, and eschew sexy strategies like market timing, you can, indeed, “prepare for a market crash.”
It’s good advice. In fact, not only can you prepare for a collapse, but you can even prosper from the event if you weight your portfolio toward assets that have demonstrated the capacity to thrive in volatile economic conditions, such as precious metals.
Market Timing is a “Low Percentage Strategy” for Just About Everyone
Equities investors typically decide to make the best of worsening market conditions in one of two ways: either riding out the downturns – making no portfolio adjustments on the basis of the drastically-worsened market conditions – or trying to time the market. Market timers use any of a variety of resources – news, technical analysis, fundamental analysis, etc. – singularly or in combination to predict what markets will do, and then proactively move between equities and cash in anticipation of those changes.
The Globe and Mail article quotes Adrian Mastracci, senior portfolio manager at Lycos Asset Management, as saying that market timing is a “low percentage strategy,” and he’s right. A big problem with market timing is that it’s very difficult for investors to divorce their emotions from the process of investing. Even if the information they’re evaluating seems solid, investors will often contravene the data and instead move based on their hunches.
The other problem with market timing has to do with something else to which Mastracci alludes in the article: “Market mayhem is a normal occurrence, in all directions. Investors will often have little time, if any, to react.” These days, because of the speed with which news reaches financial markets, it is more difficult than ever to manage a portfolio on a predictive basis. Nowadays, unexpected negative news can sink equities markets in a matter of minutes, thwarting the best intentions of investors who seek to save themselves – or even profit – by anticipating what those same markets will do next.
An Allocation to Physical Gold & Silver Can Keep an IRA or 401(k) High-Functioning
But why settle for either riding out the drops or trying to predict the precise movements of the market? Surely there’s a better way to guide your portfolio through volatile markets, right?
It concerns allocating your money to select alternative assets – such as physical gold and silver – in such a way that even if you keep a portion of your portfolio committed to equities, you are positioned to not only greatly limit your overall portfolio losses, but even continue to make gains during the upheaval.
Silver vs. DJIA During the Height of the Great Recession, 10/2007 through 02/2008. One of many historical instances when precious metals thrived while equities struggled during a period of great economic uncertainty.
Chart Courtesy of StockCharts.com
To learn more about how the strategic acquisition of physical gold and silver for your IRA or 401(k) may be the best strategy of all to negotiate a market downturn, call Augusta Precious Metals at 855-976-5436. Our dedicated gold and silver professionals look forward to answering all of your questions so that you may better decide if an allocation to physical precious metals is right for you. We look forward to protecting your assets.
Can you really prepare for a market crash? Yes, but you have to be willing to think outside the realm of equities, and even traditional assets altogether. Instead, look to those alternative assets – such as physical gold and silver – that offer retirement investors a genuine option for defending the value of their portfolios.