Three Rules to Prepare for the Next Meltdown

A handful of bear market "rules" can help you survive – and, indeed, thrive – in the next crisis... [Stansberry Research Logo] Delivering World-Class Financial Research Since 1999 [DailyWealth] Editor's note: Will the year ahead bring an imminent recession... or an inflationary boom? According to our founder, Porter Stansberry, three simple rules can help you succeed in either outcome. In today's piece – adapted from The Big Secret on Wall Street, published by his firm [Porter & Co.]( on September 19 – Porter explains how to prepare your portfolio now... before the next crisis comes. --------------------------------------------------------------- Three Rules to Prepare for the Next Meltdown By Porter Stansberry --------------------------------------------------------------- Government deficits are soaring like never before... As of mid-September, this year's budget deficit represented nearly 6% of U.S. gross domestic product ("GDP") – a level that's unprecedented in U.S. history, outside of wartime or a severe economic downturn. In other words, the U.S. government is spending as if we're already in a crisis... before any crisis has even begun. Meanwhile, the Federal Reserve is now aggressively cutting interest rates for the first time since the COVID-19 lockdowns... despite official inflation measures remaining well above the central bank's official 2% target. I'm no longer sure whether we'll imminently experience a recession and stock market meltdown... or an inflationary boom and stock market melt-up, followed by a severe downturn. As such, I believe investors should do their best to be prepared for either outcome. That means continuing to own high-quality stocks and other assets that will benefit from a potential melt-up, while also beginning to prepare for the inevitable meltdown. And today, I'm going to help you do just that... by sharing a handful of bear market "rules" that will help you survive – and, indeed, thrive – in the next crisis... --------------------------------------------------------------- Recommended Links: [Porter's Permanent Portfolio Invitation Expires Tonight]( Because of the danger he sees ahead for the U.S. economy, Porter Stansberry is doing something he has NEVER done before (and may never do again) – he's offering access to some of the most advanced work of his career, his Permanent Portfolio, for thousands of dollars off the retail price. This is the perfect answer to what's coming to this country and our markets over the months and years ahead. Until midnight tonight, [click here to see Porter's exclusive invitation](. --------------------------------------------------------------- [What Are These Billionaire Investors Afraid Of?]( Billionaires Warren Buffett, Stanley Druckenmiller, George Soros, and David Tepper have all sold off massive U.S. stock positions, including shares of Nvidia, Apple, and Bank of America. Billionaire Ray Dalio, who runs one of the world's most successful hedge funds, says, "Things are going to get worse for our economy." What are these billionaires so worried about? [Click here to see why experts and insiders may be preparing for the biggest financial crisis of the past 200 years](. --------------------------------------------------------------- Bear Market Rule No. 1: You Must Hold Cash Taking advantage of bear market bargains requires more than just the knowledge to buy when most investors are selling – to "be greedy when others are fearful," as legendary investor Warren Buffett has famously said... You must also have the cash available to do so. This should be fairly obvious. Unfortunately, most investors tend to remain fully invested until a crisis is already underway... and only begin to raise meaningful amounts of cash after stocks have entered a bear market. By then, it's too late. This behavior is doubly harmful. It locks in big losses on the stocks you sell... And it leaves you with relatively little cash available to take advantage of bear market opportunities. The key to avoiding this fate is to have cash available before trouble begins... when – like today – warning signs are mounting but most investors remain blissfully unaware. Despite my belief that an inflationary stock market melt-up is possible, I continue to suggest that most investors hold as much as 25% of their portfolios in cash today. Bear Market Rule No. 2: 'Hedge' Your Cash With Hard Assets I also recommend holding a small percentage of your cash in hard assets that do well during periods of inflation. The reason is simple... As I mentioned above, the Fed and Treasury are already "goosing" the economy today. And the government's response to every severe recession or bear market since the 1990s has been to flood the financial system with even more monetary and fiscal stimulus that causes the value of the U.S. dollar to decline. During the 2008 financial crisis, my favorite inflation hedge was gold bullion – plain, regular gold coins. Gold was – and still is – the only asset that has maintained its value for thousands of years. So I still believe every investor should own some gold today. But now I also suggest holding bitcoin as well. This cryptocurrency shares several of the same monetary qualities with the precious metal – including scarcity, durability, and fungibility – earning it the nickname of "digital gold." In fact, by some measures, bitcoin is arguably an even better store of value than gold. That said, bitcoin has only existed for around 15 years... It simply can't compare with gold's centuries-long track record of reliably storing value through crises. For that reason, it makes sense to own a little of both. Bear Market Rule No. 3: Be Prepared to Follow the Greats Raising cash before a crisis is only part of the equation. You must also have the emotional discipline to put that cash to work. I explained why this is so important in the April 2008 issue of Stansberry's Investment Advisory... While most of your financial advisors will undoubtedly tell you to trim your exposure to stocks and "batten down the hatches" financially – you will get the opposite advice from me. Do you think Warren Buffett, Sam Zell, Marty Whitman, Bill Gross, Jim Rogers, Jeremy Grantham, Steve Leuthold, Mark Mobius, or any other extraordinarily successful long-term investor trims his portfolio during bear markets? Absolutely not. That's when they put their cash reserves to work. Great investments are made during bear markets. Great investors earn their reputations during bear markets. The fortune you hope to gain from the markets will be made by what you do during bear markets. It's easy to buy and hold during good times. It is much, much more difficult to put money to work in critical situations when you have to go against the crowd and your own fears. While most investors understand this strategy in their heads, few have the fortitude to act while others are panicking. Once again, the key is preparation. It's also a great idea to create a "shopping list" of high-quality stocks you'd like to own. Ideally, you'll have been following a business for years and will know it inside and out... So you'll have the confidence to buy when others don't. And – as you'll discover if you become a lifelong connoisseur of great businesses – the trick to achieving outstanding long-term results lies in only buying at reasonable prices. Regards, Porter Stansberry --------------------------------------------------------------- Editor's note: According to Porter, what comes next for the U.S. economy could be much worse than battles over taxes or tariffs... or even a market crash. That's why he's stepping forward to show folks exactly how to prepare, starting immediately, using what has been called the "Holy Grail" of the investment world. And he's even sharing four stocks with the potential to protect and grow your money in the years ahead... [Get the details here](. Further Reading After Donald Trump's election victory, a wave of enthusiasm swept through the markets. But while everyday investors are jumping in headfirst, the "smart money" is waving a warning flag. And it may only be a matter of time before greed shifts to fear... [Read more here](. "Everything people thought they knew about Big Tech stocks, the jobs market, and the overall economy has been upended since the first half of this year," Dr. David Eifrig writes. In times of uncertainty, it's wise to revisit the first principles of investing. And three key principles can help you prepare for more volatility... [Learn more here](. --------------------------------------------------------------- [Tell us what you think of this content]( [We value our subscribers' feedback. To help us improve your experience, we'd like to ask you a couple brief questions.]( [Click here to rate this e-mail]( You have received this e-mail as part of your subscription to DailyWealth. 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