Lepard's Financial Advice

[OKRonPaul]

Most of my money is in a 401k now, in very conservative investments (I haven't lost very much at all). I just changed jobs, and the money is in my old 401k.

I'd like to put this into something more solid (like gold/silver), but if I withdrawl I lose quite a bit in taxes. I actually have very little cash on hand at the moment (especially not 6 months worth). Unsure what to do.

Since the 401k is with your previous employer you have the option to move it into a similar IRA type account with a different investment firm and get tons more choice as to investment options with no penalty. I had a couple old, smaller 401k's hanging around that I did this with recently. I wish I had this option with my big 401k but I still work there so it's stuck.

 

[billjarrett]

With the way the economy is, is it a good idea still to keep money in 401k/IRA? E.g., what if I make a IRA with Vanguard, and Vanguard goes under? Or, since I have so little in cash, would it be worth it to cash it out?

 

[werdd]

Lep, ive already done most of the things you outlined, except the whole 250k in the bank thing .

 

[hopeforamerica]

Most of my money is in a 401k now, in very conservative investments (I haven't lost very much at all). I just changed jobs, and the money is in my old 401k.

I'd like to put this into something more solid (like gold/silver), but if I withdrawl I lose quite a bit in taxes. I actually have very little cash on hand at the moment (especially not 6 months worth). Unsure what to do.

Rollover your 401K into an account with Peter Schiff's company!!!! That's what I did, and instead of loosing $$, I'm making a bit.

http://www.europac.net/

 

[llepard]

Do you think commodities and basic materials have a lot further to fall?

Tough call. Probably yes, then they sky rocket in hyperinflation.

Deflation is taking place as a result of the unwinding of leverage. Prechter of Elliott Wave thinks it will be worse than the 30's because it is at one degree of trend higher. I agree with this view. If this is true prices for everything will continue to fall for some time.

You have two competing forces. Demand destruction lowering prices. Dollar decreasing in value raising dollar prices.

It is very hard to know how the two will interact.

 

[llepard]

Larry, thanks for your advice. Could you clarify what you mean when you say "5. I would not pay off any debt if I could be sure to service it. I will repay it with worthless future dollars." Specifically, what do you mean when you say "could be sure to service it"? Thanks for all you do.

In the future. Real assets have value. Paper dollars do not. A new currency will emerge.

If you own a home with a mortgage I would not pay the mortgage off if you have the income or savings to make the payments. You do not want to lose the home at the market bottom. The home has value to you as shelter. If the dollar becomes worthless then in the future you will take something of value (like gold) exchange it for dollars (you will get a lot of them for very little) and use the dollars received to extinguish your debt.

The critical thing though is "being able to service it". If the debt is called (some mortgages are callable) could you pay it off. Can you be sure of making the payments? Even if you lose your job?

As Peter Schiff says, if he had a mortgage he would stop paying now and put the proceeds into gold. Let them foreclose. They will never take your house because it will take time to process the foreclosure and the whole country will be bankrupt. I personally would not advise this. But Schiff does.

The point is, debt is good, if you do not lose the underlying asset.

In the new environment possession will be nine tenths of the law.

 

[MRoCkEd]

It's illegal to give advice? wtf kind of a place is this? lol
Thanks for your general guidelines though, LL.

 

[rockandrollsouls]

I have been getting a lot of PM's asking for advice.

Rather than respond to each one individually here are my thoughts.

By law I am not allowed to give advice since I am not a government registered RIA. Having said that, and using the First Amendment as my defense, I will offer my opinions based on 30 years of investment experience. It may not apply to your situation. You must make your own decisions.

1. I would not own any stocks or mutual funds long. NONE. Not even emerging market funds (which IMHO will be good at the bottom). They will all be sold in the coming panic.

2. I would not own any bonds other than foreign bonds, and even those may come to be a problem. Paper is going to become worthless. I would sell municipals, bond funds, money markets, all of that stuff. Ask people in the First Reserve fund -- they cannot get their money back.

3. I would keep a very large cash balance in a safe place. Enough to pay for 6 months of living costs.

4. I would not put over $250k in a bank, and even that I advise against. Banks could be shut down. ATM's may not work. Credit cards may not work.

5. I would not pay off any debt if I could be sure to service it. I will repay it with worthless future dollars.

6. I would stock up on food and essentials. I have 6 months of food in my house.

7. I would buy and store precious metals in a safe place.

I would be prepared to clean out my bank accounts, brokerage accounts, all money accounts. I would know how to wire and transfer money quickly. In fact, I would try to get everything to cash now, or to accounts which are overseas. If you have an account overseas that is more than $10k you must report it or you are committing a felony.

8. If you are an investment professional or have investment experience you might want to use stock short sales, put options, and futures. If you do not know what you are doing don't touch this. There is a lot of volatility.

9. One idea i have right now, that I hold in my 401k is SRS. It is 2x the inverse of the REIT index. Trading at 97.91. Should go much higher. Also, I own puts on Wells Fargo. FHUVU. Oct. 37.5 traded Friday at 4.00 Very risky.

I would avoid cities. I would be prepared for a lot of changes.

There is a very hard storm coming. The key will be to hang onto what you have. In a bear market he who loses the least is the winner.

Be very wary of all financial institutions. They can fail. Do not put too many eggs in one basket. I have a dozen brokerage accounts. One day we could wake up and it will be GAME OVER. The dollar is devalued. Ten old dollars are worth one new dollar. All accounts are frozen. You have what you have.

I believe that in this scenario Gold is the best defense.

I second this....llepard really hit the nail on the head.

 

[gb13]

Thanks Lepard.

One question: How do you feel about silver, as opposed to gold, for someone with limited capital for PMs. The main reason I've been buying silver lately is because the premiums for smaller quantities of gold is enormous. I've been getting good deals on silver lately.

Thanks for the great advice.

I don't know if you missed this question, Llepard. Maybe you've answered it previously. Either way, if you could offer and opinion, or point me towards some info you find appropriate, I would be very appreciative.

Thanks again.

 

[CurtisLow]

Curtis, I'm curious, is your home worth 200k? A year ago houses in my area were still selling for 200k, and they were 50-70k before the bubble. Now the only ones selling for over 100k are from people still getting zero down mortgages (amusing that they are still available so easily)...

Yeah, I had a Realtor do a market analysis. I have my place priced below that price (my choice) My home is 2000sf of professional office and 2000sf of home. Any doctors out there looking for a rural office?

 

[thomaspaine23]

I tend to see a sharp deflation, perhaps followed by a period of slow deflation/stagnation. Then a period of hyperinflation.

IMO we are seeing the beginning of the sharp deflation. The dollar will strengthen as financial firms raise capital by dumping stocks commodities etc and place it into short term Treasuries.

If the credit markets stay frozen, more and more companies will be forced to liquidate investments to stay afloat.

I believe it will be an uneven deflation though. Necessities will not drop nearly as much as luxuries, I.E. homes and cars deflate, bread and milk don't.

I think we will also see a bigger disconnect between the physical gold/silver market and the paper market. Again this will be connected to financials dumping
paper investments to raise cash.

IMO the Fed will try to reflate the dollar AFTER the deflation has hit main street and a number of smaller banks are gobbled up by the big ones.

The big question in my mind is will we get through the deflation peacefully?
After 8 years of Bush, the war and the financial crisis, confidence in government has been eroded. What will main street's reaction be when the bailout saves Wall Street but does nothing for the average Joe?

What happens when the Fed comes clean and asks for another Trillion?
Then all bets are off....

 

[WCR]

I don't know if you can help me but here's my question. I have about $1100 in credit card debt right now, and I have about $2000 on hand. Now should I pay off every credit card atm, and just keep with $900 and not use the credit cards? Or should I just make an above average minimum payment until a crash and pay off the debt on maybe 10 to 25 cents on the dollar? Or can it go another way, with a credit fall, and the interest rate rises and I don't have enough?

Any help?

 

[Falseflagop]

Larry great advice, just got back home.


As to gold I bet you mean PHYISCAL as opposed to paper, see the disconnect in the two markets this is because imho CENTRAL BANK trying ot steal the gold cheap! ETF imho are a fraud

 

[Arklatex]

WCR, pay off the credit card debt. That is 'bad debt'

 

[Anti Federalist]

Boom - and there you have it.

Well done Larry!

 

[Anti Federalist]

Agree. Food more important than gold. But, gold is money in every country in the world. Some of them will have food. Gold will be good to exchange for food.

Money is nothing more than a claim on productive capacity. Having the capacity would be the first goal. But capacity is not easily moved. Gold is.

I think gold could be worth 2-100x its present value in terms of real purchasing power if the entire world decides that paper money is crap. There is not enough gold in the world compared to productive capacity and the government has illegally suppressed its price.

Exactly.

I've been countering this argument quite a bit lately. Very true: you can't eat gold, but if you have any substantial worth, you can't plant it in the ground either.

Physical possession of PMs is not an "investment" in the way most understand it, it is simply a hedge to protect worth and have it remain relatively liquid and not subject to devaluation and hyperinflation.

 

[Mahkato]

Dang. It is SO FREAKING HARD to bite the bullet and cash out my retirement accounts (taking a heavy hit on the penalties and taxes) but I am worried that I need to do this now or lose it all.

STUPID FREAKING FEDERAL RESERVE SCREWING UP MY LIFE! Argh.

Pirates, the lot of them.

 

[Anti Federalist]

Dang. It is SO FREAKING HARD to bite the bullet and cash out my retirement accounts (taking a heavy hit on the penalties and taxes) but I am worried that I need to do this now or lose it all.

STUPID FREAKING FEDERAL RESERVE SCREWING UP MY LIFE! Argh.

Pirates, the lot of them.

There's no easy answers that's for sure.

While not perfect, consider moving it into a "cash preservation" option within your IRA or 401k. At least it's insured, until the FDIC's wheels come off anyway. Most 401k plans won't allow you to cash out an account.

 

[Arklatex]

Dang. It is SO FREAKING HARD to bite the bullet and cash out my retirement accounts (taking a heavy hit on the penalties and taxes) but I am worried that I need to do this now or lose it all.

What kind of retirement account are we talking? Maybe you can diversify it, you can buy physical Gold through an IRA.

Don't put all your eggs in one basket, we might be wrong and the economy sky rockets from here on out. Doubtful but it's possible.

Invest in happiness, food, guns, your family, your garden, your house and BJ Lawson for congress please: http://www.lawsonforcongress.com/splash/?s0701

 

[The Good Doctor]

I think he means "keeping up with payments".

Larry, thanks for your advice. Could you clarify what you mean when you say "5. I would not pay off any debt if I could be sure to service it. I will repay it with worthless future dollars." Specifically, what do you mean when you say "could be sure to service it"? Thanks for all you do.