Maybe it’s the old adage “I’m looking more for a return OF my principle than a return ON my principle” that brings value to the concept of wealth preservation.
So I bring to you these 10 principles for wealth preservation that were shared with me by my Swiss Money Manager friends.
1. Get rid of the noise – Don‘t trust any of the daily market gibberish. The majority is generally wrong, so be prepared to think outside of the box and act off the beaten path.
2. Watch what is happening on the geo-political and international monetary front – Easy money regimes always come to an end. But they don´t end without a fight. In view of the globalized nature of today´s economies and business, beware of concerted international action and surprises. Unexpected surprises lie ahead.
3. Learn from history and understand big picture fundamentals – History does not repeat, but it rhymes. Long-term trends and fundamental economic realities will ultimately reign and should therefore define your strategic decisions.
4. But, there will be times when fundamentals don‘t matter – Beware of short- to medium-term scenarios that will contradict your fundamental conclusions. You may, for instance, be absolutely right about your expectations of hyper-inflation. However, the path to that scenario may take longer than you expect and could be preceded by very different developments.
5. There is no such thing as ´too big to fail´ – No bank, no government, no nation is too big to fail. To the contrary, this very flawed assumption has been one of the key drivers for the crisis we face today. Don´t trust in the protection of big organizations, be they private or public.
6. Protect your freedom and wealth – As more regulations, some certainly of a protectionist nature, are created and directed toward your tax money, you must put asset protection and risk management first. This is the time for planning and multi-jurisdictional diversification of assets.
7. Investment rules of the 90´s no longer apply – Investment principles that worked in the last 20 years are best forgotten. Re-think and question every decision you make under this aspect.
8. Every crisis bears opportunity – Yes, there are investment opportunities ahead. There‘s a bull market somewhere. We look forward to substantial gains in 2009, particularly once the de-leveraging process ends.
9. Look reality in the eye – Perpetual optimism is dangerous, even though pessimism is unpopular. Be realistic. Those prudent individuals see danger and take precaution!
10. And certainly don‘t procrastinate! – Things have been happening rapidly in financial markets. You can expect more of this ahead, and not only in financial markets. Substantial regulatory, fiscal and geo-political changes can be expected around the corner and in early 2010.
If you want regular, good advice on how to watch what is happening, ignore the noise and act off the beaten path, I can think of no better way than to check out the Casey Report.
