Were you able to hear the urgent message I recorded for you this week?
If so, I hope you’ve already begun to take action. If not, here’s the transcript …
Edited Transcript of
Martin D. Weiss’
Urgent Action Alert
This is Martin Weiss for our entire Weiss Research team, with an update on the mortgage meltdown and what you should be doing about it.
For everyone who’s been willing to listen — and even for many who weren’t listening — we’ve been beating the drums about this housing and mortgage crisis, with no punches pulled.
We told you it was coming. We told you to prepare. And now it’s here: The great housing and mortgage bubble of the past three years is melting down.
Until now, the fall-out was contained to just a few sectors — home builders, real estate speculators, subprime lenders.
But as we’ve alerted readers, now the crisis is threatening to spread — to all real estate sectors, to all mortgage sectors and, possibly to the broader U.S. economy.
Wall Street has vastly underestimated the depth and scope of this crisis.
They didn’t see it before the latest news on surging delinquencies, foreclosures and failures.
And from what I can tell, they still don’t get it now even after the news of surging delinquencies, foreclosures and failures. That’s why I believe you should brace yourself for more declines to come:
You should be ready for more declines in the stocks that are directly vulnerable to the mortgage meltdown like builders and mortgage lenders.
You should be ready for more declines in the stocks that are indirectly vulnerable — like home repair, home appliances, home furnishings … or banks that have a big stake in the real estate and mortgage sector.
Plus, you should even allow for the possibility of some more weakness in the stocks or sectors that we have recommended. When investors start selling, they typically throw out the baby with the bath water. And there’s no evidence I can see right now that they’re going to behave any differently this time.
Meanwhile, in China and East Asia … in Brazil and Latin America … in Russia and Eastern Europe … we see no sign of housing or real estate decline. We see no sign of an economic slowdown. And we see no change whatsoever in the powerful forces that have been driving those markets higher.
Ditto for key sectors here in the U.S. that we have picked out as the strongest.
So what do you do? I have four recommendations for you:
FIRST, build cash. And then tuck that cash away in the highest quality, most liquid investments you can find, such as a Treasury-only money market fund.
SECOND, if you haven’t done so already, get rid of the assets that are directly in the line of fire. That includes speculative real estate — whether residential or commercial. That includes stocks in companies tied to the real estate bubble. It includes real estate investment trusts — the REITS. It even includes mortgage-backed securities.
Don’t kick yourself if you ignored our warnings last year or last month. Nor does it matter if you have a gain or a loss in those positions. Just get rid of them.
THIRD, diversify overseas. Our team has given you a broad range of choices and opportunities. Go for the ones that you feel are the most appropriate for you.
FOURTH, hedge. This is especially important if you have investments that we have not been recommending — that you’ve kept in your portfolio over the years … or that you’ve added recently based on someone else’s say-so.
Plus, you may also want to consider it for protection overall. Remember: Just because I or my team like an investment for fundamental reasons doesn’t necessarily make them immune to market declines for technical reasons.
You can hedge to protect yourself. The question you’re probably asking is …
HOW Do You Hedge?
Well, in the old days, you’d have to go short, you’d have to use futures or you’d have to use some sort of strategy that exposes yourself to other kinds of risks.
Yes, you could use put options. And those are a good alternative.
But here’s another vehicle which I think you’ll like: Inverse Exchange Traded Funds — inverse ETFs that are designed to go up when the market goes down.
And fortunately, right now, there’s a whole series of these new ETFs available.
For example, there’s an ETF designed to protect you against declines in the Dow Jones Industrials. Its name is the Short Dow30 ProShares, symbol DOG.
There’s also an ETF designed to protect you against declines in the Nasdaq 100 — the Short QQQ ProShares, symbol PSQ.
If you have some of these inverse ETFs in your portfolio, and the scenario ahead unfolds the way I think it will, you could actually have two kinds of profit opportunities.
Your first kind of profit opportunity is to continue to make money on the sectors and countries that benefit from the growth forces that are still so powerful today.
The second kind of profit opportunity is to make money from the weakness in U.S. markets caused by the mortgage meltdown we’re seeing right now.
I think that gives you a good balance. It gives you diversification away from the mortgage meltdown. And it gives you protection against the mortgage meltdown.
That’s why, this week, I issued an educational supplement to my Safe Money Report which gives readers very specific instructions on how to hedge prudently.
There’s no charge for this report. But it’s something I hope that you can take advantage of — a token of my appreciation for your loyalty as a reader.
I think it’s very timely. I think every investor, whether conservative or aggressive, should have this information. And I think you should look at it as well. So use this link to download it:
http://www.martinweiss.com/images/pdf/smr/educationalreport.pdf
Thank you for taking the time to listen. And thank you for your continuing interest.
Have a wonderful week!
Martin
About MONEY AND MARKETS
For more information and archived issues, visit http://www.moneyandmarkets.com
MONEY AND MARKETS (MaM) is published by Weiss Research, Inc. and written by Martin D. Weiss along with Sean Brodrick, Larry Edelson, Michael Larson, Nilus Mattive, and Tony Sagami. To avoid conflicts of interest, Weiss Research and its staff do not hold positions in companies recommended in MaM. Nor do we accept any compensation for such recommendations. The comments, graphs, forecasts, and indices published in MaM are based upon data whose accuracy is deemed reliable but not guaranteed. Performance returns cited are derived from our best estimates but must be considered hypothetical inasmuch as we do not track the actual prices investors pay or receive. Regular contributors and staff include John Burke, Amber Dakar, Kristen Adams, Jennifer Moran, Red Morgan, and Julie Trudeau.
Attention editors and publishers! Money and Markets issues can be republished. Republished issues MUST include attribution of the author(s) and the following short paragraph:
This investment news is brought to you by Money and Markets. Money and Markets is a free daily investment newsletter from Martin D. Weiss and Weiss Research analysts offering the latest investing news and financial insights for the stock market, including tips and advice on investing in gold, energy and oil. Dr. Weiss is a leader in the fields of investing, interest rates, financial safety and economic forecasting. To view archives or subscribe, visit http://www.MoneyandMarkets.com
From time to time, Money and Markets may have information from select third-party advertisers known as “external sponsorships.” We cannot guarantee the accuracy of these ads. In addition, these ads do not necessarily express the viewpoints of Money and Markets or its editors. For more information, see our terms and conditions.
© 2007 by Weiss Research, Inc. All rights reserved.
15430 Endeavour Drive, Jupiter, FL 33478
