Dow Peaking? The Quick Guide to Diversifying Your Stock Profits
The comments above & below is an edited and abridged synopsis of an article by Jeff Clark
The S&P has nearly quadrupled since its 2009 low. It currently ranks as the 2nd-longest bull market in the last 140 years.
Just as important as recognizing the frothiness of the current market is the fact that the stock market has always fluctuated between bull and bear markets. No bull market lasts forever.
Capturing profits is only prudent given how long this market has been chugging higher. It’s also a way to build wealth, since investors now have some money to build a position in other investments.
Buying different stocks than you now own would expose you to the same frothy market. The current real estate market won’t allow buying low. And loading up on bonds doesn’t really help since they pay next to nothing despite the bump in rates.
The straightforward way to true diversification is through buying physical gold bullion. Gold moves opposite to the US stock market more often than with it. They are considered negatively correlated assets.
This is practical information for investors: If you want an asset that will rise when stocks and most other assets fall, gold is likely to do that more often than not.
The golden rule when buying gold coins is this: Buy the most common or popular items, so that you have high liquidity when the time comes to sell. If you want gold bars, they have lower premiums.
Now is the time to diversify into gold. All markets cycle, and a down cycle for stocks and an upcycle for precious metals is on the doorstep. Take some of your profits and buy some undervalued gold.