Trust Yourself

I was recently asked how it was that I knew to sell my property portfolio in the UK at the beginning of 2006, why I sold all my stocks in favor of gold and silver, and why I am convinced now that the recent actions by the Federal Reserve and the Treasury Department are likely to fail and will affect not only Americans but people all over the globe.

How did I get it right, when so many others missed it entirely? Well, I do keep an eagle eye on world markets, property prices, stock movements, currency exchange rates and commodities and I use a lot of “left-brain” analysis to draw some of my conclusions. However, this is not the only method that I employ. In addition, I utilise my “right-brain” intuitive abilities to see whether the actions of the authorities actually “feel right.” With all my financial decisions, I look at the issues from a completely rational point of view and then I draw on my instinctive and more emotional impulses to create a full picture of the situation.

If something “feels wrong” no matter how wonderful the deal may look – and I have been offered many “fabulous deals” – I would not get involved if my antennae were telling me that something was not quite right.

Here were a few of the early warning signs that made me feel uncomfortable and begin to question the decisions of the powers that be:
- I couldn’t make sense of how nations could consume beyond their means indefinitely.
- It didn’t make sense to me how a system that is based on a continual expansion of credit would make an easy transition to a no-growth or contracting environment.
- As a mortgage broker and financial consultant at the time, I could not see how people who were making less than $30k per year or who were even unemployed were given loans by the banks to purchase $500k houses with no money down and have any hope of every paying them back. Banks were becoming more and more irresponsible with their lending and there had to be consequences to these actions in the medium to long term.
- It did not seem possible that money could continue to expand faster than the economy in the long term

We are now moving into a period where many leaders and the media are hyping up the possibility that the economic crisis will soon be behind us and I would like to show you how you can programme yourself to listen very carefully to your own inner voice, even if you cannot articulate what is wrong – it’s very important to start to learn to trust your own instincts when a story just doesn’t add up. This will be happening more and more and it is up to you to start thinking and feeling for yourself. For too long now, we have been programmed to listen and trust our governments, our health service, our banks, our treasurers and the media instead of our own inner voices.

There were many investors involved with Bernard Madoff who recently said that they had suspicions and concerns over the years about the steadiness of Madoff’s returns. Yet, despite those worries, they kept their money with him. If they had trusted themselves and decided to move their money to an institution where they did not have these gut-level concerns, they would probably be in much better shape right now.
Here are a few major issues that do not add up at the moment that I am focusing on:
- how is it possible for a nation that is insolvent to borrow money from a financial system that is also insolvent to bail out insolvent financial institutions?
Does this make any sense to you at all? Until I can gain an appreciation for how we can borrow our way out of this mess, I will maintain a very protective stance on my finances and assets. I am very doubtful about the overall solvency of all our financial institutions and therefore I strongly resist any advice to go ahead and buy stocks because they are “very cheap” right now and they “always go up in the long run.” If you are hearing this kind of advice from your professional advisors or friends and family, ask them how it will be possible for nations that are already insolvent to continue borrowing money from a financial system that is also insolvent to bail out insolvent financial institutions?

- how are we going to return to a renewed period of economic growth based upon more consumption when baby boomers ( the wealthiest people in the economy) have seen their two primary forms of wealth – stocks and property – fail in the same decade?
Growth requires consumers to spend more money on more things, but older people generally down-scale their lives, cut back on their spending, pay down their debts and add to their savings.

I hear many commentators already calling for a bottom and searching for signs that a recovery in consumer spending is happening. The danger here is failing to appreciate the extent to which our recent excesses were simply over the top and are very unlikely to be repeated any time soon. The banks have far from declared all the liabilities on their balance sheets so there will likely be another huge wave of defaults that will require even more bailout funds.

In the US right now, the Fed is now "monetising debt" – i.e. printing money, and runs the very real risk of a massive devaluation of the US dollar. Of course, I would strongly suspect that this is actually the goal of the Fed, although they will not come right out and say that. Competitive currency devaluations have been a feature of every global financial crisis and are the preferred way of relieving the strains built up by the past periods of excess.

What should you do about this? Trust yourself, and take actions accordingly. Take responsibility for your actions by educating yourself well about issues that you do not fully understand, and do not trust or assume that the authorities know better than you do. Listen to your instincts, act on what you know to be true, and steer clear of the things that don't make sense to you. Most of all listen to that “inner voice” for it is usually spot on.

If you would like a personalised consultation of your situation with the current risks and opportunities facing you, please check out my website for further information: www.financemoneybusiness.com or email bg@financemoneybusiness.com
Good luck.