Crash Proof 2.0

I've made a big change in how I invest over the last couple of weeks.

Among the books I read are a lot of investment books. Over the years, I have followed the advice of a few of the better books, at least in my opinion. I've had mixed results with them. I did pretty well in 2006 and 2007 before the bottom fell out of the market. Then I lost it all back and consider myself lucky that I didn't lose more.

I've also subscribed to a number of newsletters over the years. Some I've followed to the point of investing money in the things that they recommend. Same deal, when the market is going up, their recommendations go up, but when things turn around, I lose money.

After I retired, I kept doing the same things, until the bottom fell out and I sold everything and stayed in cash. When I felt it was time to get back in, I decided to go with Investor's Business Daily. I had read this newspaper off and on for a long time and had read all 3 releases of 'How to Make Money in Stocks'. I subscribed to their software and started watching the market. I made some money until the bottom fell out again. One of the things that they are good at is getting out when things go bad. So overall, I actually made a little money.

I would have probably stuck with IBD since one of their main rules is to protect your money in bad markets. Now that I was retired, I had the time to do the work they require.

However, over this time, and especially after Obama was elected, I've had a bad feeling about the future of the market over the next several years. Market pundits are saying now that the worst is over and things are starting to bottom out. I don't believe it. Even Obama is positioning himself for a double dip recession. I've believed this for a while and believe that it's going to be worse the second time than it was the first. The government isn't doing anything right to get the economy going again.

My problem was that I didn't know what to do to protect myself. I've either been treading water or actually losing money for a couple of years now, and if I keep going like this, I'll eventually wind up broke.

Then I read Crash Proof 2.0 by Peter D. Schiff. This is a republished and updated version of Crash Proof, written a couple of years ago. In it, the original book is presented as it was first published, followed by an updated section. This was done chapter by chapter. Many of Mr. Schiff's predictions from the original version had already come true and he gave convincing arguments why others were still coming. He wasn't telling me anything that I didn't already believe. However, he also gave a solution to the problem of what to do about it. Boiled down to a few words, it's this: invest overseas.

However, his recommendations went further. First, he explained that if you invest in foreign stock markets in most brokerage accounts, you would go through market makers who can take a big cut of your money. Secondly, most of the stocks in foreign companies were not listed in the U.S. at all, so your choice was limited. His solution was to use his brokerage, which invests directly in a multitude of foreign countries. The book says more, but this was the gist of it.

Whether my feelings are right or wrong, they are my feelings, so I took the plunge. My wife was a little nervous about moving everything at once, so I moved my IRA's and my daughters Roth IRA over to his brokerage. I expect to talk to him today to finalize my investments. He will have me invested in eight different countries, in addition to a few funds. One of the funds is their China fund.

I don't know if I'm doing the right thing. I believe I am, and I can't just sit and collect 1% per year interest while inflation is eating the value of my cash. I believe that for the next 3 years, at least, I'll be better off with my money out of the country. If I do well in the first 6 months, my wife will agree that the rest of my money can move over too.

I didn't give the brokerage's name because I didn't want anyone to make a move based on what I did. I'm hardly the one to follow. But if anyone else feels like I do, read the book and make up your own mind.

And if you pray, say a prayer for me too.

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When you cannot make up your mind which of two evenly balanced courses of action you should take - choose the bolder. - William J. Slim, British General