Almost every finance guru I know of has one person he uses as the "perfect indicator"...
Contrarian thinkers like me – folks who find opportunity in challenging conventional wisdom and investing against the crowd – often seek out somebody who always seems to be running with the herd. That person is most valuable when uncertainty starts swirling.
And you can find plenty of uncertainty anywhere you look these days... Bank failures – combined with the ever-present worry of the U.S. debt ceiling – have lots of people worried about where markets and the economy in general are headed.
Fear is one of the biggest hindrances to being a profitable investor.
It's common investor behavior to freeze in the face of fear. A tiny part of your brain called the amygdala kicks in whenever there's a perceived threat.
The amygdala makes us want to avoid risk.
Money, in today's society, represents a sense of security. We need money in order to obtain what we need to survive... food, shelter, and medicine. Any threat of losing money can trigger the amygdala to kick into full force.
But that fear is dangerous to your investments. The "safest" thing for your amygdala is to follow the crowd... to stay out of the market until you hear that everyone is buying in – normally at the top.
As Jeff Havenstein explained on Wednesday, investors are too bearish. And that's a good sign to get into the market.
Last week, Joel Litman issued a warning that something will happen on June 23 that could be costly for plenty of investors. But for folks who are ready, it will give you the chance to make and save money.
According to Joel, "Over $10 trillion will be impacted before the dust settles. We normally see the full effects play out over six to 12 months."
If you want to know what steps to take to be on the winning side, click here for all the details.
Now, let's get into some of the things you've had on your minds this week. As always, keep sending your comments, questions, and topic suggestions to [email protected]. We read every e-mail.
Q: Hi Doc. What are your recommendations on how to manage a scleroderma diagnosis, specifically a hardening of lung tissue? Thank you! – K.D.
A: Thanks for your question, K.D. Scleroderma is a long-term diagnosis. It literally means hard ("sclero") skin ("derma"). It happens when your body makes too much collagen. The excess collagen in your skin and tissues causes them to tighten, harden, and become inflamed.
And managing this condition involves different treatments, depending on how it's affecting you and your life.
The people at greatest risk of developing scleroderma are women in their 30s, 40s, or 50s.
Scleroderma patients can show a wide variety of symptoms and complications. Based on those, doctors may prescribe medication to:
- Suppress the immune system to reduce skin thickening and lung damage
- Dilate blood vessels for folks with Raynaud's phenomenon (numbing of the feet and hands due to decreased blood flow)
- Ease digestive symptoms for folks with heartburn
- Relieve pain using nonsteroidal, anti-inflammatory medications or corticosteroids
In treatment-resistant cases of scleroderma, doctors may consider stem-cell transplantation or even lung and kidney transplants.
But that's a rare extreme... The best things for you to do include exercising daily, protecting yourself from getting sick, and managing any pain you're experiencing with things like yoga, meditation, and the occasional over-the-counter, low-dose pain reliever. Start with one 250-milligram Excedrin every 10 days or so. The effects last so long, you shouldn't need to take one daily.
If your doctor has prescribed you medication, take it... and familiarize yourself with any possible side effects. Be sure to update your doctor if you start experiencing any changes that might indicate that your condition is worsening.
Q: What exactly is considered cash for asset allocation? Do pensions or Social Security count as cash? – E.M.
A: Here's an easy way to think about what asset category your investment is: If the investment is liquid (meaning you can get your money quickly) and won't lose value over the next few days, consider it as cash... whether it's in your mattress, your savings account, or your checking account. A pension is not cash.
Anything with a stream of regular income paid to you contractually should be considered a fixed-income asset (akin to a bond). A pension and Social Security payments are like owning a bond that pays regular income (monthly, in these cases). The only difference is that neither pays back a lump sum of principal like a bond does.
What We're Reading...
- Did you miss it? It's time to be a contrarian.
- Something different: Montana is the first state to ban TikTok.
Here's to our health, wealth, and a great retirement,
Dr. David Eifrig and the Health & Wealth Bulletin Research Team
May 19, 2023