How to Protect Yourself from Bear Markets Like 2000 and 2008
Posted By | November 23, 2016
The years 2000 and 2008 weren’t very happy times for investors. Both years saw bear markets in stocks that put large dents in investment portfolios. You can’t go back and undo the damage you may have suffered back then, but you can certainly learn from the experience as you navigate the current market environment. We, here at Augusta Precious Metals, can show you how a gold IRA can help you going forward.
The 2000 bear market was due to the dotcom bust. As you recall, in the heady years just before the new millennium, investors and speculators caught Internet fever. Some high-tech companies were, in fact, solid companies, but there were many more that promoted vaporware -- marketing concepts that used buzzwords to impress investors, while offering nothing of tangible value. Valuations were pushed through the roof, and knowledgeable insiders took advantage by selling their shares to the dazzled, hungry public. It ended very badly, with many bankruptcies.
2008 was even worse. The real estate boom collapsed as the world learned about millions of subprime mortgages made to borrowers who could not afford the payments. The house of cards collapsed as foreclosures erupted, banks faced insolvency and the markets cratered. The subsequent Great Recession was the most significant financial challenge since 1929’s Great Depression. Of course, the damage spread to the stock market and many folks saw their nest eggs disappear. Many have yet to fully recover from the destruction.
What did we learn? The most important lesson involved what we call a “black swan event,” which is shorthand for the occurrence of bad events more frequently than we would expect statistically. Without going into the math, the upshot is that it is wise, in the long run, to temper your enthusiasm for overly aggressive investing.
Augusta believes the most important step you can take to protect yourself from market corrections is to diversify your assets as widely as possible – owning just stocks and bonds is not good enough. That’s where gold comes in. An Augusta™ Gold IRA from Augusta Precious Metals allows you to diversify your asset allocations with tangible assets, so you’re not holding all your eggs in one basket. Not only that, gold prices have a mind of their own, and usually move independently of stock prices, which can help balance your investments. Investing in an Augusta™ Gold IRA also provides a tax deduction. Investing some of your portfolio in an Augusta™ Gold IRA could reduce your exposure to the stock market and may help you ride out a bear market.
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