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Cash is King: Preserving Your Wealth in Turbulent Times.
In today's market—where economic volatility is as much a part of the landscape as Wall Street—cash has become the wisest and safest investment. For years, stocks have ruled the roost. But with many investments losing their luster, it's cash that is king these days.
Many savvy investors like Warren Buffett are now moving into cash. But not all "cash investments" are safe. We'll show you how to find the highest yielding, safest cash investments in our special briefing below.
In this latest briefing you'll discover:
- Why Warren Buffet now has more than $40 billion of Berkshire Hathaway parked in cash and cash equivalents today.
- The top 5 reasons why cash will be king in the coming year.
- The 3 safest places to stash your cash-all guaranteed by the U.S. Government and out performing stocks by 500% this year.
- The one "safe investment" you must avoid now. It's not as safe as most investors think!
- A little-known, highly rated cash investment yielding 100% more than money markets and CDs.
- A new bull market will begin when the Fed stops raising rates, right? Not so fast. Learn why investors playing this waiting game could lose big time.
PLUS, an urgent warning to all investors who are still buying up Nasdaq stocks with no earnings, and no prospects. AND, why Bernanke's blunder could be the biggest opportunity of the last decade for savvy investors. Go here now.
Dear Newsmax Reader,
At a recent Money Show I attended in Las Vegas, thousands of investors were asked which they thought was a better bet right now; stocks that pay few or no dividends, or earning 5% a year in a no-risk money market fund.
Their answers were surprising, if not alarming, to investment bankers in New York who depend on the stock market's success. By a wide margin, the group of investors said that the best investment right now is a Treasury bill, a money-market fund, or a bank CD.
The new reality is that, in today's environment—where economic volatility is as much a part of the landscape as Wall Street—cash has become the wisest and safest investment in town.
So where is the smart money going these days? Consider Warren Buffett, who has $40 billion of Berkshire Hathaway parked in cash and cash equivalents these days. Here's his recent baseball analogy for sitting on cash; "It's better not to invest-or swing-at bad pitches in today's market. You may not hit a home run, but you won't strike out either. And you'll still get to first base."
It's worth noting that Buffett does not bluntly say, "I am sitting on cash because I believe the market is overvalued and will slide. In the future I will buy stocks cheap."
Sometimes it's more helpful to avoid listening to what Buffett says and focus instead on what he does. As one of the greatest investors in history, Buffett knows that his every utterance can shift the market. He does not want to cause a stock market panic—or be blamed for causing a slide in stock values that may hurt his considerable equity portfolio.
But if you read between the lines and watch what Buffett does with his money, his investment success is fairly easy to see. This year, Buffett-watchers are seeing the Oracle of Omaha move into cash.
In fact, at his annual meeting in Omaha this year, Buffett basically insinuated that he would have moved out of any of his equity positions but he simply cannot. He owns such large chunks of companies like Coca-Cola, he would kill these stocks—and his own values—if he started liquidating.
Millions of savvy investors are moving into cash like Buffett.
Discover the 3 safest places to stash your cash—-all guaranteed by the U.S. Government and outperforming stocks by 500% this year. Go here now.
5 Reasons Why Cash Will Be King in the Next Year.
Clearly, with the economy in peril and the stock market struggling to provide value, more and more investors are turning to cash instruments to stay ahead of inflation and provide stable income in a chaotic investing environment.
For years, stocks have ruled the roost. But with traditionally preferred investment vehicles losing their luster, it's cash that is king these days. Here's why:
Reason #1: A Global Recession is Likely
You may not hear about it from the Wall Street bulls, but the United States is the world's biggest debtor nation, printing money with abandon to sustain the illusion of prosperity. And we've been doing this for years. In 2007, the U.S. government owed over $8.8 trillion—and that number is climbing every day.
For decades, Americans have been told by the government, by Wall Street, and by the mass media that the economy is just fine, even as the cancer grows beneath the surface.
Today the U.S. is teetering on the edge of recession. Interest rates have been hiked 17 times. The U.S. economy is both consumer-driven and debt-driven. With consumer debt already excessively high, more rate increases will only dampen consumer spending. Add to the mix that interest rate hikes are destroying the housing boom that had fueled the overall economy during the past four years.
The key component of the global recession puzzle is real estate—specifically the downward trend of U.S. housing prices in 2007. Globally, The "Economist" magazine calls it the greatest bubble in world history, and as it slowly expands, it's not just real estate speculators and homeowners who will suffer, but the entire U.S. economy, it's banking and financial system, and most assuredly, the equity markets.
Those who hold cash positions in their portfolios will be among the few left without significant losses.
A new bull market will begin when the Fed stops raising rates, right? Not so fast. Learn why investors playing this waiting game could lose big time. Go here now.
Reason #2: Higher Interest Rates Weaken Equities
In an effort to push an economic collapse off into the future, the Fed lowered interest rates in the early nineties to practically near-zero levels triggering a feeding frenzy of lending, as people rushed out to continue living beyond their means. With loan interest below 5%, those burned in the stock market went out and invested in real estate.
This has led to historic high consumer debt. Today, the typical debt carried by the average middle-class family in America is between $10,000 and $13,000 in credit card debt and a minimum 10 times that amount in home mortgages.
As a result, the Fed has put on the brakes and raised rates 17 times in the past three years. With this tightening of the money supply—something the Fed is seeking to accomplish today—there will simply be less money to pour into U.S. equities. Stock prices will fall, thus driving more money into cash instruments.
Investors are already rushing into cash investments, as many abandon their mutual fund investments. According to numbers from the Crane Data LLC, $600 billion has flowed into money market funds over the past two years.
Reason #3: Cash Returns Are Outperforming Stocks
With the Fed raising short-term interest rates some 17 times in the past three years, investors are more attentive to cash yields (some as high as 5%).
Compare that to the leading stock market indices today.
Despite the Dow breaking through the 13,000 level and hitting a new record high, the index is up just 4% this year. In comparison, cash yields are hovering around 5%. Where should you have placed your wealth during the past six months? Cash investments, like bank CDs and money market deposits, should go higher if the Fed boosts its benchmark funds rate (now at 5.25%).
The average taxable money fund yield in a recent survey by Crane Data was 4.65%. Compare that to the returns below in the various stock indices—and don't forget to factor in the higher risk associated with stock investments in 2007. Also consider that cash returns are higher than the 2.8% rise in the consumer price index over the past 12 months.
Discover the one "safe investment" you must avoid now. It's not as safe as most investors think! Go here now.
Reason #4: Dividend Yields Are Low
Dividend yields have also been trending downward. In 2006, average dividend payouts hovered around 4%. Today, those average payouts have dropped to about 1%.
This contrast is framed nicely in the July 14 issue of "The New York Sun." The paper quotes James Melcher, president of Balestra Capital, a $200 million New York hedge fund. He says that, "stocks are by no means cheap, based on historical standards."
Melcher points out that in 1982, a year of great buying opportunities, the big Dow stocks were selling at six to eight times earnings; dividend yields were around 5%; and profit margins had been destroyed. Today, on the other hand, P/E ratios are in the mid-to-upper teens, the dividend yield on the S&P 500 is 1.87%; and profit margins are very high.
"The name of the game in the stock market is to buy low and sell high, not the other way around," Melcher concludes.
Reason #5: Rising Inflation is Making Cash a Better Bet Than Stocks
There is little doubt that rising inflation has caused the Fed to be bolder about continuing to raise interest rates and extend rate hikes.
And the more Ben Bernanke and company raise interest rates, the higher the potential for a negative economy and lousy earnings. And, as we've already pointed out, the stock market has reacted negatively to rising inflation and higher interest rates.
How does that impact stock prices? Simple. When interest rates rise, financial stocks, for example, will suffer because rising rates are bad news for lending institutions. Higher rates also impact key industries like manufacturing, as economic growth is choked off in higher rate environments.
Or consider construction-industry stocks. With higher rates, fewer people buy homes or build them. That hurts construction companies that may be forced to lay off workers, further sending the economy into a downward spiral.
With the Federal Reserve reacting to higher interest rates some 17 times during the past three years, investors are more favorably inclined toward cash yields of up to 5%.
The lesson? As long as inflation looms, the Fed will raise rates. And when the Fed continues to raise interest rates, cash really is king.
Discover where Warren Buffet has more than $40 billion of Berkshire Hathaway parked in cash and cash equivalents today. Go here now.
7 Best Places to Stash Your Cash
Cash is a most attractive investment option to many investors right now. But experts say that if you don't know what you're doing, investing in cash can be tricky. Knowing where and how to look makes it more effective to use cash as a safe harbor for at least 25% of your investment assets.
Here is one of our favorite places to stash cash.
Money Market Funds
Many people prefer to invest in money market funds and accounts because of their flexibility and accessibility. You can get to funds in a money market as easily as you can grab cash from your checking account.
American banks, competing more fiercely than in the past, also offer high yields for both savings and money-market accounts. It's good, experts say, to research investments for good deals, remembering that money markets:
- With higher balances will pay more
- Might require minimum deposit amounts, giving those that don't an added advantage
- That keep investor fees low tend to have the highest yields
These funds usually don't pay as much as a CD, but sometimes they outperform them—especially in a period of rising rates.
In our latest Financial Intelligence Report you'll discover six more places to stash your cash in the coming year. Most are guaranteed by the U.S. Government and many are outperforming stocks by 500% this year. Go here now.
We Help You Make Sense of the Avalanche of Information
One of the reasons Financial Intelligence Report (FIR) has been so successful at finding the truth and revealing it: We don't have vested interests.
All of the major financial TV shows and publications are dependent on advertising from both major corporations and financial firms, which benefit from a bull market. These businesses will no doubt penalize media outlets that offer bearish perspectives.
FIR strives to offer a "distance" in its contrarian financial analysis. We think our contrarian outlook is wise as long as it is based on facts—not a religion of negativity. Some call FIR a "doom and gloom" publication. We absolutely disagree, and we must point out that we have been bullish on many investment sectors.
Today we feel that there are some worrisome signs indicating future economic woes for the U.S. And we didn't come to that conclusion quickly. For instance, our longtime readers know it took us some time to become bearish on real estate. In 2004 we recommended several REITs that investors could benefit from.
At that time, several "doom and gloom" newsletters were predicting a radical real estate-inspired depression. But we didn't buy into that scenario.
In 2005, we quickly identified that the real estate bubble was indeed set to pop, and we advised investors to sell their REITs for a tidy profit. Those included Catellus Development (+66%), Tanger Factory Outlets (+50%) and Parkway Properties (+33%).
To find out our latest recommendations and get up to 5 FREE special reports,
Go here now.
Actionable Investment Insight You Can Count on Every Month
Our latest report on the best places to stash your cash is just a sample of the important financial information you receive every month in the Financial Intelligence Report.
Unlike most other financial newsletters, with Financial Intelligence Report, there is no hype. There are no absurd claims.
Its just thoroughly researched, accurate information, reasonable projections and excellent investment advice from some of the best financial minds in the country.
And rather than narrowly focus on just a few investments the way most financial newsletters do, FIR covers it all: stocks, bonds, munis, options, commodities -- even precious metals.
In fact, Financial Intelligence Report is more like a white-paper report that major trust companies send to their billionaire clients.
Join the FIR Club Tap Into Your Own Financial Brain Trust
There's an old proverb that says, "In many counselors, there you will find wisdom."
At Financial Intelligence Report, we take that one step further. We believe in reaching out to some of the smartest, well connected and often contrarian minds on the planet.
Former Secretary of State Alexander M. Haig, also a noted business leader who was a founding director of AOL, says bluntly, "Financial Intelligence Report is a must read for every global investor."
You'd be surprised to learn just how many financial gurus and billionaires agree with Gen. Haig and subscribe to Financial Intelligence Report.
They turn to us because of our unique brain trust.
Financial Intelligence Report is edited each month by a team of analysts and experts led by its publisher, Christopher Ruddy.
Ruddy, a graduate of the London School of Economics, serves on the board of the prestigious Financial Publisher's Association, and has been a noted commentator and author.
Ruddy and the FIR team, in turn, speak with some of the great financial minds to give our readers the other side of the story beyond the media spin.
Our FIR team and contributors includes:
- David Frazier, an investment securities industry expert who brings to the table more than 20-years experience in the financial markets. He's worked for several top firms, including Dun & Bradstreet and Investor's Business Daily.
- Jarret Wollstein, a much in-demand speaker and author on financial and privacy issues. Jarret's books have sold millions of copies.
- Axel Merk, president of Merk Investments, an independent investment adviser focused on growth, value, gold, and cash strategies.
- Etienne "Hans" Parisis, a Belgian-born bank economist who has advised global billionaires and governments on the financial markets and international investments. Hans is based in Panama City, Panama.
This is just a part of our team. Our approach is not to rely on insular opinions about the markets, but to seek out the best and brightest, globally.
That's why each month Financial Intelligence Report is filled with unique insights from global investors such as commodities expert Jim Rogers . . . billionaire Warren Buffett . . . legendary investor Sir John Templeton . . . UCLA economist Edward Leamer . . . and Wharton School expert Jeremy Siegel.
In this latest issue of FIR you'll also discover:
- Gold. Is it still the ultimate hedge? Is it too late to get in on the action?
- Bernanke's Conundrum: Where are interest rates heading? Get the inside story.
- Buffett is betting against the dollar, but should you follow his lead?
- How the Fed is setting the stage for a market collapse
- The real truth on the governments inflation statistics
- The best cash investments and more.
Make sure you don't miss an issue -- go here now.
Most investment newsletters providing this type of incisive coverage typically cost $200 to $800 a year. Some cost well over $1,000.
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