Investment Strategies for 2019 and the Next Crash

Investment Strategies for 2019 and the Next Crash

Investment Strategies for 2019 and the Next Crash

I was recently asked for advice about investment strategies for the coming times. It is a reasonable request since we as Christians need to plan for the future responsibly. It makes sense to look at all the options whether they be stocks, bonds, commodities or other assets. If there is going to be another big crash, and I think there is, we must take measures to navigate amid the storm.

To some, plotting such strategies might seem the work of doomsayers. People are easily misled into believing that all is well in our economy. We now enjoy full employment, a roaring stock market, low inflation and less regulation. A climate of prosperity exudes a message of consumer confidence and optimism.

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This good economic news should be celebrated, having in mind that the prudent person uses good times to prepare for the bad ones.  We must also realize that things are not always as they seem. Strategic planning for the next big crash consists first in looking objectively at the present situation and acting accordingly.

Looking Objectively at the Economy

I am not a financial advisor and am not in the business of financial planning or investment counseling. However, this is how I see the general economic situation. The subprime mortgage crisis that rocked America one decade ago should have taught us some lessons about what to avoid in the future. However, we have learned little from the 2008 crash.

The situation is fragile. The present economic boom is built on the actions of central bankers that flooded economies with cheap money to extricate us from the Great Recession. With quantitative easing and other tools, trillions of dollars have fed the boom times and fueled spending. Such extraordinary life support cannot be maintained forever. Yet its termination could trigger a crisis, which some experts say could be “worse than the Great Depression.”

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Another big problem is debt of all types. Household debt, which has surpassed pre-2008 levels, stands at a record $13.2 trillion. Student loans, credit card debt and auto loans are all over $1 trillion each. Non-personal debt—federal, corporate and a host of other liabilities— also weigh down the economy. Worldwide non-personal debt is estimated to be around $167 trillion.

A final concern is increased federal deficits in a time of prosperity when normally such spending diminishes. The government now owes $21.5 trillion compared to $12.8 trillion in 2010. Servicing the debt next year is estimated to cost $390 billion very close to the $400 billion spent on Medicaid.

In addition, future political, trade or military conflicts can impact the economy. America could face significant inflationary pressures or an even more dangerous deflationary spiral. Thus, it makes sense to have an investment strategy to hedge against such threats.

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Strategies for Uncertain Times

However, I am at a loss as to what to advise regarding traditional assets and holdings. The scope of the crisis we face dwarfs those that came before. It is hard to think of safe investments that will not in some way be shaken by the forces that might be unleashed.

This does not eliminate the need for an investment strategy. However, it calls for an unapplauded approach to assets and investments. It requires skills of another order than those usually expected from financial advisors. Fortunately, these assets and skills are accessible to even the poorest investors.

A Diverse Portfolio of Order

Thus, I can offer some advice in this unpraised field. Indeed, I can propose a very diverse portfolio that will reduce risks and liabilities. My suggestion will give investors the elements to act with prudence and wisdom in the midst of the storm.

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I believe the greatest need in times of crisis is not assets but order. “Order is the first need of the soul,” says Russell Kirk. That is to say, there needs to be a sufficiently stable and logical arrangement of things that will allow the person to make plans and project into the future. Order allows us to orient ourselves according to a defined moral compass. When a life is in disorder, all the assets of the world are to no avail.

My unprofessional investment advice calls for establishing and strengthening order above all else.

Internal Order Needed

Thus, I would start by strengthening the personal order of the investor. The worst disorders are internal ones. A competent person can usually fend off an external threat. However, when a person‘s spiritual life is in disorder, everything can fall apart when under pressure.

My first counsel for investors is to strive for order in their personal lives.  That means ridding themselves of sinful habits and destructive vices that offend God and waste time and money. The most serious of these are addictions like alcohol, drugs, or pornography. That also means investing time in the cultivation of good habits, the appreciation of beauty and culture, and social skills. These are assets that will be in great demand in the coming troubles.

Such an investment orders the mind and allows individuals to act with calm prudence during crises. It frees people from the chains of the unbridled passions that have ruined so many fortunes. Order helps avoid the lack of reflection, stressful lifestyles, impulsive behavior, and panic that lead to mistakes in judgment.

Rejecting Extreme Individualism

Modern economy and life are very focused on the individual who is hailed as supreme. It puts individuals in the center of their own little universes . . . and investment worlds. Because of this extremely misguided individualism, even the lives of the most ordered persons can fall apart when facing financial disasters.

That is why we must have recourse to those closest to us for support. In times of financial crisis, ordered family relationships are balm for the soul. Order in family life is an enormous asset that multiplies our capacities to face the future. The trials and suffering involved in family life build character. The joys and consolations found in the family provide incentive and meaning to economic endeavors.

Strengthening the family order is an essential part of my investment advice.  Good investors will invest time and effort in the family. They will look for occasions to reinforce bonds and mutual support. They will share the pains of hardship. They will do everything possible to avoid separation and divorce when the life’s troubles assail them. There can be no worse investment disaster than the breakup of a family especially in times of financial turmoil.

The Need for Networks

Even a strong family is not enough in time of crisis. We are social beings and need associations of various kinds to assist us in our shortcomings and those of our families. Networks of friends, neighbors, parishioners, trade, professional and business associates are valuable assets that bring talents and skills together for mutual benefit. These networks are the core of thriving communities where people look after each other. Like a castle’s outer walls and fortifications, they form part of a broader order that helps protect the individual and family.

Communities of differing degrees are important hedges for the troubles ahead. Smart investors will invest time, effort and money in developing these networks and communities that provide mutual counsel and aid.

Looking Toward the Church

Of course, the greatest relationship must be with God and His Church. Individuals, families and communities need to turn confidently to a higher power, especially in times of crisis. A benevolent God Who desires our good and salvation aids us in our needs through His loving Providence. He is also an omnipotent God who can do all things for those who have recourse to Him.

A wise investor needs to develop a spiritual life.  From the Catholic perspective from which I speak, this means cultivating a life of prayer and frequenting the sacraments. It also means accepting the misfortunes and trials that God puts in our path, confiding that a greater good will come of them. This especially includes a tender and filial devotion to the Blessed Mother, since none who fly to her protection are left unaided, as Saint Bernard teaches. Indeed, perhaps the best investment advice I can give is faithful obedience to Our Lady of Fatima’s maternal request that we pray her rosary daily.

Investments cannot be implemented coldly and mechanically as found so often in today’s markets. Their ROI resists mathematical calculation and expression.

Organic Investment Strategies

There is one final consideration for my investment suggestions. They cannot be implemented coldly and mechanically as found so often in today’s markets. They cannot be tabulated on a spreadsheet. Their ROI resists mathematical calculation and expression.

Human relationships are very different from mechanical processes. Human life is full of pondered choices, unending creativity and varied rhythms. From the exuberance of life comes spontaneity, passion, poetry and nuance. An organic society based on these relationships brings forth systems of art, culture and social bonds that benefit the common good and defy rigid systematization.

Thus, any economic system must be governed by prudence and justice. However, it must also be tempered and secured by charity. As Saint Antoninus of Florence, an early economist saint, says, charity “binds men together in a brotherhood that is a true and perfect oneness . . . [and] makes it possible for men to be self-sacrificing in favor of the common good.”

A wise investor is also a charitable one that adapts economic realities to social necessities and Christian duties.

Some might express disappointment that my investment advice that does not offer concrete buying and selling options. However, I am confident that all those who follow this higher spiritual perspective will be better equipped to discern correctly and make wise and prudent judgment calls on stocks, bonds, currencies, commodities and securities. This portfolio of order will give them all they need to face the future responsibly in the coming hard times.