Executive Summary

• The outlook from our endorsed financial advisor, New Harbor Financial
• 6 strategies for positioning your portfolio for the next market downturn
• Deciding which strategies are most appropriate for you

If you have not yet read Part 1: The Coronavirus Is The Black Swan Markets Have Feared, available free to all readers, please click here to read it first.

As we take close note of the current disconnect in the markets, we supplement our own analysis with that of other experts we respect. Are they seeing similar signs of imminent risk?

New Harbor Financial is an independent financial advisory firm that manages investor capital using a philosophy that takes many of the key trends within The Crash Course into account. We asked them for an update on their current market outlook, and here’s their response:

In our opinion, the US stock market is in the blowoff phase of a bubble that has been going on for many years.  The most recent blowoff started in October 2019 when the Federal Reserve announced their “Not-QE” policy of entering into repurchase agreements with eligible banks.  Since last October, the balance sheet of the Federal Reserve has increased by $400 billion, fueling a speculative rally in stock markets that has been historic, and one-directional.

By continuing to stimulate in a reckless fashion, the Federal Reserve, along with other global central banks, have stolen growth from the future and are likely making our current situation even worse.

Stocks are near their highest levels of valuation in history. From these levels, we would expect the return on investments in the S&P 500 and other US markets to be very low, perhaps even negative, over the next decade.

While we can’t predict the timing or the exact path of events, New Harbor maintains a very defensive portfolio with a significant exposure to cash equivalents, and very little net exposure to the stock market.  We are optimistic that we will be able to deploy cash and take advantage of more reasonable prices in the future.

We would urge investors to not fall prey to the notion that “the Fed has our back”.