Rickards: Elections Reveal One Thing
Posted November 09, 2022
“If you think the turmoil is over,” Jim Rickards said this morning, “I have very bad news for you…
“The turmoil is just beginning.”
Jim’s beat is helping his readers survive and thrive in any environment.
Today, Jim’s going to take us back to first principles.
While, to many, it’s become an over beaten horse: Diversification is still key.
Sounds obvious, eh?
“But,” says Jim, “most people don't understand what diversification is.”
In the featured article below, Jim will reveal what diversification really means… and what he thinks an ideal portfolio looks like to weather any storms.
Before we go there… we have one important (and final) announcement from Jim…
Poof… Gone Tonight at Midnight
Jim’s “Emergency Election Briefing” — posted on this page — will be taken offline tonight at midnight.
So consider this the last call…
Starting today, Jim believes you have the opportunity to 15X your money in the next 90 days.
And to make sure you have everything you need…
He posted a video on a special webpage to show you how to get started. (You won’t find this video anywhere else online. Not Youtube. Not Facebook. Not Twitter. Nowhere.)
But the clock is ticking…
And read on.
Diversification is Still Key
If you think the turmoil is over, I have very bad news for you..
The turmoil is just beginning.
I always say diversification is the key and people roll their eyes, go, "Oh yeah, well of course diversification, everybody says that."
But most people don't understand what diversification is.
I've had people tell me, "Hey Jim, I'm completely diversified. I've got 50 different stocks in 10 different sectors, semiconductors, consumer, nondurables, minerals in mining, et cetera, transportation, et cetera.”
And I look at them and I say, "You're not diversified. You may have 50 stocks, but you have one asset class, it's called stocks. And when they go down, they go down together. Not every single stock, there are always some outliers, but they'll all go up together, or they'll all go down together.”
You'd have winners and losers every day and the trend might be up, but you could hit or miss on any given stock.
That's in normal times. We're not in normal times, we're not even close to normal times. And so when there's stress in the system, whether it’s economic stress, financial stress in terms of liquidity, or political stress, the correlation goes way up and they all move together. And if you're all in equities, you could lose significantly on your entire portfolio.
So how do you prevent that? I'm not saying don't have any stocks, I'm saying have a slice.
And in the slice, I would look at the big energy companies, Exxon Mobil, Chevron, BP, Marathon, Shell, and others. Where they've been beaten down, because Biden says, "I'm putting the fossil fuel industry out of business."
If you know anything about physics, energy, chemistry, you know that oil and gas is not going to go away. We're going to be relying on them 50 years from now. Gasoline is like a miracle component by weight, other than uranium and plutonium. It's got the most energy by weight of anything you can think of, run rings around a battery. They're not going to wait. So if the sector has been beaten down, if it's going to win in the long run, that could be a good opportunity right now.
But also have some 10-year treasury notes. Because interest rates are going to come down as the recession unfolds. And if you think 10-year treasury notes are a little too volatile for your taste, that's okay, have a look at two-year notes, you'll get a lot of the same performance, a little less volatility, but that's okay, it's still a winner.
I've always recommended 10% gold. And people say, "Oh, Jim you say sell everything and buy gold." I've never said that. I don't believe that. That's a dumb move. But a 10% slice will serve you well.
Big slug of cash, I mean maybe 30% cash.
And people say, "Oh, there's no return on cash, I don't think my bank only pays me quarter 1% or whatever."
That overlooks a couple of things. Number one, first of all, it's a positive return. You're not losing money. If you're all in NASDAQ, you've lost 35% since November in cash, you've lost nothing.
So the outperforming stocks and in a deflationary environment, which I wouldn't rule out, cash could be your best performing asset, because the nominal value doesn't change, but the real value goes up by the measure of deflation.
It's just, you subtract a negative, that's a plus, a little bit of…
But more importantly, if everything crashes the way I expect, the person with cash can go shopping in the wreckage. That's when you get your bargains.
By the way, guess who has 130 billion in cash? It's Warren Buffet and Berkshire Hathaway.
They see what I see and we just see the same thing.
So Berkshire Hathaway is cash at an all-time high, a big slug of cash.
I love real estate, not commercial… residential or agricultural income-producing real estate.
And I mentioned gold, so that's what a real diversified portfolio looks like.
Slice of stocks, slice of real estate, slice of natural resources, slice of cash, a slice of gold. If you have a couple of private equity opportunities, be selective, but go for it. That's the portfolio that will hold up well in all states of the world.