The best wealth management advice is blunt, honest and timely. And that is what you can expect from The Midas Legacy. The Midas experts care about making the world a better place with the “cold hard truth.”
A good way to measure the value of your wealth adviser is to gauge if he “predicts the next market collapse ahead-of-time.” Of course, you will want to take your money out of the market, before it falls. Midas Financial Expert Sean Bower has been warning his clients for years.
Mr. Bower has noted the diminishing corporate returns due to very low interest rates. He has also warned his customers to keep 2008 uppermost in their memories. Market collapses can happen again, especially after 7 years of a bull market.
“Dangers of ZIRP”
In the 1980s, the Japanese economy was booming, then suddenly it became stagnant. This might have been after Sony started buying up a number of large American corporations. Thereafter, the nation adopted a very low interest rate policy.
The benefits of low interest rates is that it makes capital cheap. After 2008, the Federal Reserve lowered interest rates until they instituted ZIRP. ZIRP means Zero Interest Rate Policy.
In Capitalism, interest rates are the “price of money,” thus ZIRP means that money is free. Well, in the real world is “money free?” Of course not.
ZIRP is basically an endless government bailout. Even the Bank of America is warning Yahoo Finance in 2016, that markets might be resembling the “Tech Bubble” of the 1990s. What were the characteristics of the 1990s “Tech Bubble?”
Investors were swimming in capital after the 1980s. There were many new firms, whose valuations were hard to calculate. This was the time of the “dot.com” euphoria. Wealthy investors poured money into stocks, sending the prices higher and higher.
All bubbles must “burst” because the valuations are unsustainable. While some investors continue to pay higher prices for firms with little or no earnings, Mr. Bower is advising his clients to save up their cash.
With cash, you have flexibility. If there is a bear market, then you can buy good stocks, at an affordable price. Mr. Bower also suggests that you consider shorting bubble stocks. Only the future will show the world if the market is in a bubble, but be careful.
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