Doc Eifrig: Start planning now for the collapse
From Dr. David Eifrig, MD, MBA, Retirement Millionaire:
Wall Street analysts just can’t get it right.
They project high earnings growth at the top of the market and declining earnings right at the bottom.
To find the peak in the market, we have to watch for when earnings estimates get too high. We haven’t gotten there yet. With earnings season nearly over, 78% of companies have beaten analysts’ estimates. That’s the highest number since at least 2008.
What happens next is clear. Analysts will ratchet up their estimates, projecting higher and higher earnings growth… until the economy turns, and they are wildly incorrect.
That’s what we’re watching for.
We’re watching for it out in the real world, too. Today, planes and hotels are full. Construction equipment is everywhere. Job boards are full of postings.
Everything looks good… But it’s bordering on too good. That leaves us stuck.
It’s not time to sell all your stocks and go to cash… But it’s not time to load up on risk, either.
We know that doesn’t lend itself to bold action in your trading account. But we do have a plan…
In Retirement Millionaire, we have conservative holdings. We don’t need to worry about debt defaults with any of our holdings. But if the default rate ticks up and credit markets seize, stocks will plummet, even high-quality ones.
We’re going to pare our holdings to only our highest-conviction ideas. That means today we’re going to book a handful of substantial gains we’ve earned over a long time.
Second, the best investment you could have made in the last 10 years was to buy levered-but-healthy companies in the middle of the 2008 credit crisis.
So we’ll be building a watch list for bottom fishing. And we want you to start planning now, so you’ll have the courage to buy stocks during any sort of collapse.
. . .
Crux note: Last week, Doc closed five triple-digit trades in his most recent issue of Retirement Millionaire. He recommends moving around 15%-20% of your portfolio into cash toady – and shared a simple and safe way to earn some extra yield on your cash.
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