For Dick Morris FEAR is Good Business

Dick Morris may be a good political strategist, but he would make a horrible investor coach. Though my guess is that based on all the commissions he’s making on gold and life insurance sales, he does not care.

Please, don’t let these self-interested fear mongers get into your head! Check out these headlines. . .

From Dick Morris: “Economist Warns – 90% Stock Market Collapse”

From Newsmax.com: “Dow Plunges as Obama Signs Debt Deal”

Dick Morris again: “Term Life Insurance Coverage – Under $13 Per Month”

The first article above goes on to say. . .

Please find a special message from our paid sponsor, Newsmax.com. Sponsorships like this help to allow us to continue to send you Dick’s commentary free of charge. We appreciate your support.

Hmmm . . . paid sponsor.

The article is replete with words like could and language like if this, then this, then possibly this. It recounts that this economist prophetically predicted the last decline of 50% back in 2008. The article does not provide any specific quotes or videos or sources from that time – it simply states that this guy “said it would happen.”

Do you think if he was on the record predicting a 50% decline in the stock market in 2006 that they would show us that record? You bet! That would be great evidence. Truth is many will say after the fact that they knew it all along and that they in fact predicted it. Few will actually have the evidence to back it up.

Now this guy is saying a 90% stock market decline?

I say bring it on!!

Why? Let me explain . . .

In October of 2007 the DOW was at 14093, and everyone was happy. By March of 2009 the DOW had hit bottom in the 6000’s. Few were happy. Many were panicked. But my clients remained disciplined. We rebalanced.

By January this year, as the DOW struggled to reach 12000, still 15% off its previous 2007 peak, my clients had all of their money back. How? you ask. How does one get back to 100% when the “market” is only 85% of what it was at its peak?

The answer is simple math and a proven investment strategy. . .

1. We own over 12000 companies in 44 countries in 17 distinct asset classes that are engineered based on their dissimilar price movements or low correlation. In other words, you owned emerging markets and microcap stocks before they doubled in value rather than having to chase after the return.

2. We bought more shares on the dips through our rebalancing efforts all the way down the hill. In other words, while others were panicking, we were buying their lower priced shares. Slowing and quietly making strides in your portfolio but adding to the number of shares you own.

So, when the rebound came, you went up the hill with more and better shares than the “market” (the DOW).

Let’s take a quiz. Would you be better off with $1,000,000 at a DOW of . . .

a. 14,093
b. 12,000
c. 10,200

The right answer is c. If the DOW goes down again, we’ll do what we did last time. If we do what we did last time and make our money back at 85% of the most recent high, then you will have your money back at a DOW of 10,200. This sure beats trying to time the market, and it definitely beats living in fear of it.

 

So will we see a 90% decline in the “stock market”? I don’t think so, but who knows? Frankly though, for your benefit, I kind of hope so. Am I crazy? NO. I just understand what we can and can’t know.

We cannot know if that will happen. If it does happen, we can’t know how long it will take. We can’t know which sectors will be hit the hardest, nor can we know which ones will lead the rebound.

But we can and do know what we are doing and exactly what we will do IF it does happen. More importantly—and you need to know this and believe it—we can know that the market will come back. The market will always come back.

If ANY decline happens in ANY asset class, we will buy it on the dip. We will position you for more gains by owning more of the lower priced assets.

We know that our fixed income portfolios go up when stocks go down. So we are sure that you can make gains in a portion of your portfolio that can be used to purchase the declining portion at a lower price.

So the next time you hear a fear monger selling his wares remember two things:

1. He’s selling you something, or trying to, and you should never buy something from someone who needs to make you afraid in order to make the sale.

2. If what they are saying does happen, you are still fine because markets work and capitalism is stronger than these temporary unpredictable issues.

Come on, Dick Morris. You’re a smart guy – stop peddling fear. It’s just so predictable and degrading!

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3 Responses to For Dick Morris FEAR is Good Business

  1. Cori Downey says:

    Good to have reminders of this Evan. Thanks for reducing the fear that we all tend to feel with so much unpredictability!

  2. Mac says:

    Good to see that you are still working hard for people, Evan. I took a bath on housing as I bought my last three fixers right into the sharp housing decline. Still picking up the pieces but am physically unscathed.

    Your best advise today is that someon’s misfortune can really be our opportunity. Maybe better put: Someone is always making money, no matter what the markets are doing. (I hate others misfortune)
    Best,Mac MacEachran

  3. Thanks Mac and Cori, I appreciate your comments. The sad reality is that some do lose. The truth is that none have to. Will my clients buy while others are panic selling – Yes. To the contrary, if others did not panic sell, would that be okay with me? Yes. I’d rather see stock prices fluctuate a little less and reflect the change in values of companys only. Yet, since many are less education and less well coached, they will sell in fear and lose their wealth and peace of mind in the process. On my watch, my clients will not participate.