Wall Street Journal subscribers were in for an unpleasant surprise on Monday. The paper exposed a record investor exodus from stock ETFs in January.
This is the first net outflow for stock market ETFs in almost a year. Why?
The Journal is calling it “a symptom of heightened wariness after December’s rout.”
Translation: retirement investors just don’t want (and can’t afford) to get burned another time.
“The overall view on the market is still quite bearish,” says Daniel Suzuki, a portfolio manager at Bernstein Advisors.
No surprise there… Fidelity Investments reported that IRA account balances dropped in the last quarter of 2018 over 10%. The average 401(k) balance dipped below $100,000.
The reason, says Fidelity: “Market volatility was mostly the reason for the drop… due to the market shakeup.”
Shakeup or not, that’s a lot of pain. Especially for people that are close to retirement and can’t afford to see their balances drop.
MarketWatch was following the same trend this week: “Near-retirees do have reason to be concerned, considering they’ll need that money within the next few years. Without the proper asset allocation or a strategy in place, soon-to-be retirees could risk losing thousands of dollars of their nest egg, which could force them to keep working and delay their retirement date.”
No wonder soon-to-be retirees are looking for ways to diversify to safe havens.
While earnings have been relatively good and the Federal Reserve has backed off its aggressive interest rate hikes for now, it may not be enough to stave off the bear market to come.
Here’s the top three reasons analysts are concerned about stocks right now:
China’s slowing economy is still a big problem for the entire world
The U.S. profit cycle is decelerating
There won’t be a tax windfall this spring, as there was in 2018
The flight to safer parts of the market has begun, it seems.
“Investors are rebalancing risk within portfolios, looking for something to mitigate the risk of U.S. equities,” said Matthew Bartolini, head of Americas Research for State Street Global Advisors.
Patrick Ceresna, chief derivative market strategist for BigPicture Trading, said gold has established a price bottom over the last few years and is ready for a rally in 2019.
George Milling-Stanley at State Street Global Advisors says gold prices could push $1,400/oz in 2019. “The gold investment market is becoming much healthier over the last three or four months.”
Looking ahead, State Street says stocks aren’t looking too bullish: “December 2018 was the worst December since 1931, and the technical indicators are still somewhat bearish,” says Bartolini.
Have you considered your own diversification plan, before the next bear market hits?
HOW MUCH SILVER IN THAT SUPER BOWL TROPHY?
If you were watching the Super Bowl on Sunday, did you wonder… is that trophy really made out of pure silver?
The answer is… no. The official Vince Lombardi trophy is actually made of sterling silver, which is only 92.5 percent pure.
The kind of IRA-eligible silver coins and bars used in retirement accounts are 99.99% pure.
Still, the trophy is quite valuable.
It stands about 22 inches high and has a silver football on top that is exactly NFL regulation size. It weighs in at about 7 pounds, but not all of that is silver weight!
Making the trophy actually requires about $1,500 in silver to do the job.
Not to mention at least $50,000 in production costs and four months of precision crafting by official maker Tiffany & Co. to get it right.
Of course, its value is priceless in the hearts and minds of players football fans everywhere.
Silver content or not, this is still one of the most precious trophies handed out in America.
CRYPTO CURIOUS? READ THIS FIRST
The cryptocurrency market was just rocked with a revelation that a key crypto exchange — Canadian crypto exchange QuadrigaCX – has completely lost all access to the valuable coin it held for investors.
$190 million worth of Bitcoin and other cryptocurrencies, gone without a trace. A shocking and sad failure to safeguard customers’ digital currency.
The story is almost too odd to be true: the vault had only one password, known only to the exchange’s founder. He died in December and took that secret with him… to the grave.
Troubling news for anyone considering buying cryptocurrency as a retirement strategy!
This is why so many retirement investors put a portion of their portfolios in safe haven assets like gold and silver coins and bars. These are assets that have had value for thousands of years, not just a handful of years.
Physical gold and silver can’t be minted out of nothing! These assets can’t disappear without a trace from your safe or bank depository.
TIME TO LAY DOWN FOUNDATIONS
Retirement investing is about laying down solid foundations, not casting the dice.
Being diversified just makes sense, so you can ride out the inevitable bumps in the road. Market volatility is no joke when your future is on the line.
The good news is, you still have time to prepare today.
I highly suggest you consider gold and silver for your IRA. A gold bullion backed IRA is of considerable comfort in these times of uncertainty.