Last week I boarded a small prop plane and escaped to Toronto under the cover of night. It was my first trip to Canada and I can say with certainty it will not be my last…
In between high-octane Canadian lagers, maple syrup slathered flapjacks, and my first authentic plate of poutine, I gave a speech at the Toronto Money Show about how to safely invest in the coming stock market crash.
I was joined at the Money Show by my colleagues Nick Hodge and Christian DeHaemer, and we were able to rub elbows with financial luminaries like Peter Schiff, Capitalist Times‘ Roger Conrad and Idiot Millionaire Derek Foster. They all gave stirring presentations on a myriad of topics from trading volatility, to navigating high-frequency trading, to using social media to identify under-the-radar stocks.
Finally, it was my turn to take the podium, and here’s what I told the crowded room of investors…
Let me start by saying that this will be the most boring presentation on stock market crash you’ve ever seen. But it will also be the safest and most profitable…
I’ll spare you the talk about bread lines, suicides, and gold going to the moon.
I’m going to avoid talk of hyperinflation, wiped out retirement accounts, and the collapse of the dollar.
What I am going to tell you is how to safely and responsibly double your portfolio value.
From my experience in the newsletter industry, and my feedback from mom and pop investors, one thing I haven’t seen covered is one of the simplest: buying boring, dividend-paying blue chips on the cheap. Especially ones that you can plug into an IRM(72) account.
While the talk of a market crash can get your blood pumping, your eyes twitching, and send you into a hair-ripping despair, that is exactly what you need to avoid to make yourself a successful post-crash investor.
You need to stay calm and start buying.
In the heat of earth-shattering doom-and-gloom, you have to fight against what everything in your body is telling you…
Now, I’m not here to predict the next crash. I’m not here to time the market just right. I have no crystal ball or I probably wouldn’t be here talking to you — I’d be on my own tropical island riding around on a 4-wheeler and having local natives in coconut bathing suits feed me margaritas and cool me with palm fronds.
But I will predict this: the current skyrocketing market will run out of fuel in the next year or two, and it will set up a historical opportunity to scoop up solid value stocks to hold for the rest of your life — and make a pretty penny in the meantime.
Judging by the market performance over the last week, I’d say we’re well on our way:
I don’t need to harp on this. If you’ve been an investor for more than a few years, you know these signs all too well. Probably a little too well if you lived through the 1987 crash, the dot-com crash, and the 2008 subprime crash. If it walks like a duck, and it talks like a duck… odds are its not a rooster. There will be consequences to this Fed-fueled market frenzy. And I’m not waiting around for those consequences…
Now, I’m really not a gloom-and-doom permabear. I consider myself a reluctant optimist — and at times like this, I like to expand my horizons and think long term. That’s why I’ve ditched a few of my biggest winners to free up some capital for the upcoming “Wall Street fire sale.”
And if you peg your investments to the specific sector that gets creamed, that’s when you can make some serious long-term gains. In 2008, financial stocks were about as popular as Congress is now…
Here’s how one shrewd investor turned two radioactive stocks into billions…
Right after the 2008 market crash, when most investors were running for the hills and selling off their portfolios at huge losses, hedge fund titan David Tepper kept his head and went on a massive spending spree on decimated bank stocks — namely Bank of America (NYSE: BAC) and Citigroup (NYSE: C).
He was literally the only big player buying these stocks.
How do those stocks look now, and then?
Citigroup hit low of $10.30 in 2009. It now trades at $50.98. That’s a 394% gain.
Bank of America bottomed out at $3.14 on March 9th, 2009. Today it trades at $16.48. That’s good for a 450% gain today.
Tepper made an astounding $7 billion for his hedge fund, $4 billion of which went right into his personal bank account.
Now, it takes an iron will and a strong stomach to make a move like David Tepper. To be honest, I do not have that kind of risk tolerance. I actually like to be able to sleep at night without risk of my entire investment going up in smoke.
That’s why I’m more comfortable banking triple-digit gains with far less risk…
There are plenty of safe blue-chip stocks that are bulletproof over the long term that have returned Tepper-like gains without the extreme volatility. The key is to get in on rock solid companies that you can find at an absolute bargain right after a crash.
It happens every time a bubble bursts. Let’s just look at some of the safest returns from the last crash in 2008:
- Boeing (NYSE: BA) is up 299%
- General Electric (NYSE: GE) is up 239%
- Johnson and Johnson (NYSE: JNJ) is up 96%
- McDonald’s (NYSE: MCD) is up 80%
Those are penny stock type gains: without the volatility or risk.
You don’t make returns like that by buying at the top. Crisis investing is one true mark of a seasoned, successful investor. So don’t panic, simply make yourself a checklist of stocks you’d love to own, and buy them after the crash. It really is that simple.
And if you want to compound your gains over a few years, I sincerely hope you look into a IRM(72) account to hold your post-crash stocks. One thing Boeing, General Electric, Johnson and Johnson, and McDonald’s all have in common is that they offer IRM(72) programs.
This plan allows everyday folks to collect “dividend multipliers” on a select group of stocks like the ones I mentioned. You can start with as little as one share. All you do is set it, forget it, and watch it multiply as if on autopilot.
We may be coming up on a generational opportunity here. Don’t let it go to waste.
