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Profit from 2018's Painful Lessons

Commentaries & Views

My friend and mentor Doug Casey is fond of saying that it's better to risk 10% of your assets speculating on 100% gains than to risk 100% of your assets hoping for a "safe" 10% return.

It's a good argument for allocating a portion of one's portfolio to higher-risk/higher-reward speculations—like the junior mining stocks we all know and love.

Fair enough, but it also implies that 90% of one's assets remain in mainstream investments. If you're like most metals investors I know, you are probably more than 10% exposed to gold and other mining stocks. Still, most of us have quite a bit riding on more conventional investments. And given the beating those took last quarter, I've been thinking a lot about other assets and they risks they may pose, even for gold bugs.

The talking heads in the mainstream financial media are no help. They are full of advice, mostly about how cheap mainstream stocks are now and why everyone should buy. Color me skeptical. But even if equities in general do bounce back and have another gangbuster year in 2019—perhaps with a little help from the Fed—that doesn't mean that all the ideas that worked in 2017 and 2018 will work in 2019.

Some of these leftover ideas sounded good when you first heard about them, but their potential has been realized and there's not as much upside left. Others never saw their potential realized—and they never will.

2018 was a year that saw many once exciting investment ideas expire… some in glory, and many in the dumpster.

This means that some of the assets you may be holding are past their prime and will not deliver for you in the future.

Which ones?

The details are in a free report I've just published. But to give you a quick overview, there are seven areas I think all investors should be very wary of:

  • Tomahawk Tweets: Investing based on tweets from the White House.
  • The Great 2018 Marijuana Mania: Weed is becoming a legitimate business—but that doesn't mean pot stocks will be winners this year.
  • The Short Volatility Crisis: There was a way to profit on Wall Street's record bull keeping volatility down. That trade is done.
  • The Continuing Yield Hunt: Seeking yield in a low-yield environment has pushed many investors into becoming speculators without realizing it. That's very dangerous.
  • The Crypto Crypt: I'm not anti-blockchain. But as with the dot-com bubble, while the technology is real, most of the offerings will be duds.
  • (Lazy) Passive Investing: It's dangerous to put all your eggs in an ETF basket and think that doing so mitigates risk through diversification.
  • Leveraged ETFs: This puts the ETF risk on steroids.

My special report explains each of these expired investment ideas: what it was, why it worked, why may not work going forward, and what to do if you're exposed. Even folks who don't agree with me on some of these investments could benefit from rethinking the risks attached to the others.

I strongly encourage all investors to read my free report inform themselves about these potentially toxic assets.

That goes double if you're as optimistic about precious metals in 2019 as I am. Like me, you may be wondering what to sell in other areas to reallocate to gold and silver.

Disclaimer: The views expressed in this article are those of the author and may not reflect those of Kitco Metals Inc. The author has made every effort to ensure accuracy of information provided; however, neither Kitco Metals Inc. nor the author can guarantee such accuracy. This article is strictly for informational purposes only. It is not a solicitation to make any exchange in commodities, securities or other financial instruments. Kitco Metals Inc. and the author of this article do not accept culpability for losses and/ or damages arising from the use of this publication.