A Trading Plan That Could Save Your Portfolio

This week I would like to share with you the strategy that I am deploying to my own investment portfolio. As the U.S. stock market nears completion of a major topping pattern I expect a multiyear decline in the price of equities.

During the past month my focus has been on big picture analysis. Because what I believe is about to unfold will have a dramatic life-changing affect on your financial situation and it is crucial that you realize what is very likely going to happen.

The worst case scenario is that you give back come gains generated during this  year bull market, and best case is that you not only avoid the bear market but profit substantially from it.

Let’s talk about the masses for a moment. Unfortunately most traders and investors are extremely bullish on stocks right now and for good reason. Over the past six years you virtually had to just throw a dart at the board and over time you would have generated substantial gains. But because of this luck/success most investors have become overly bullish and continue to buy stocks at an alarming rate even though evaluations are high and warning signs of the stock market top is near.

Simply put there is a time in the market when you should be accumulating shares. And there is also a time when you should sell your equity positions and exit the equity market.

According to my analysis and experience I feel investors should exit positions in equities and focus on a large cash position and/or moving thier money into bonds and other asset classes.

Looking forward 8 to 24 months to protect your portfolio and continue to grow its value will be in Canadian bonds (not US Bonds), precious metals, and in the commodity market as a whole.

Let me explain my thought process behind these ideas briefly:

Canadian Bonds: unlike the US Canadian rates continued to decline. As rates fall we tend to see the price of bonds rise. And when fear hits the overall stock market in both Canada and the USA money will naturally flow out of equities and into bonds as a safe haven. This double flow of money will send the price of bonds dramatically higher.