Defense

I mentioned I would look into some defensive moves. I will do so below.  After my last PE heart attack, several people have tried to calm me down. 


I suppose one could be more sanguine, but only if you are sure your home is earthquake proof. That would mean, if you wish to stay in stocks, only look at low PE ratios, especially if there are dividends. When the washout comes, you will want to be in real companies.


For example, AT&T  (NYSE: T) will be around in the future.  It has a PE ratio of 12 and a dividend of 6%.  That's not bad.


I don't know how fast the dollar will depreciate, the inflation rate right now is near 0, so who knows if a rising AT&T is actually a positive investment.  You may be going sideways regarding purchasing power, but have to pay taxes, which will increase quickly, on the paper profit. 

An aside to show why we are doomed:  the inflation rate is near zero so there will be no cost of living increases for social security recipients this year.  There is a law about this. Anyway, socialists think in terms of yearly increases in salary and benefits, being used to think in terms of being wage slaves, so the administration is asking Congress for a $250 check to be sent to social security recipients.  There is no logic to this, of course, it is just sticking it to the man, I guess. This freebie:  $12,000,000,000, just chump change, these days. Why? Because people ought to get a raise, its normal.  Eve of Destruction

If you are suffering from inertia and can't see exchanging a cotton paper for a metal, one thing you can do to protect stock investments is to buy QID.  I bought these as a speculation, but they would even make more sense if you already have stocks.


QID is an EFT, sort of a make-believe investment, that changes in value as the its target product changes. There are EFTs on just about anything that moves. The QID is designed to react inversely, at twice the speed, as the QQQ. Got that?  

QQQ 

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Definition

The Nasdaq 100 Index Tracking Stock. The QQQ is anExchange Traded Fund which allows investors to essentiallyinvest in all of the stocks that make up the Nasdaq 100 in asingle security.

OK, if the NASDAQ goes up (QQQ), the QID goes down twice as fast. The opposite is true, which I what I am betting on and you should to, if you are keeping your stocks, as is there is a high downside risk in the market right now, recall the average  PE ratio is 150 and we have returned to 10,000 on the Dow, not in PE ratios.  


If things take off, which I cannot imagine, you lost a little on the QID, but not much while your stocks are happy. 


If things do crash, then you cash in your QID when you think things are done; then you could buy QQQ for upside moves.   


If you are invested in the U.S. game board, then this is a protection, as well as a way to make short and mid-term gains as things gyrate. 




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Of note, conspiracy theorists, who seem to be right all the time now, say stay out of gold EFTs as there is concern there actually isn't enough gold being held to cover the EFTs.  That is,  gold EFTs are a ponzi scheme. Since gold is leased and the big banks, various countries, and the FED are involved, I would bet on that side of the table. There is a drive to keep the price of gold down and risk is being taken to do so, if that risk fails - OMG.