ACTION PLAN – Repeated from the 12-1-2011 Special Alert for Emphasis

Posted on by


The future holds many possible scenarios; but, in my opinion, we need to discuss two. It is very difficult to predict the actions of European central bankers and politicians. Thus, I believe we should consider each of these scenarios as equally likely:

SCENARIO ONE: No further action by the central banks nor the European Central Bank (the “ECB”). This would be a big disappointment. In a matter of days or weeks, the stock markets would re-start their downward spiral. Pressure would build again on the banking system; thus, creating a situation similar to the Lehman Brothers bankruptcy in September, 2008. Our stock market could drop substantially under this scenario.

SCENARIO TWO: The efforts initiated by worldwide central banks on November 30th and Friday’s announcement of a closer fiscal union are just the first two moves in a series whose end result is to build a lasting solution to the festering problem in Europe. Germany MUST play a big part in this scenario by placing its impressive cash reserves on the line. If Germany makes a clear commitment soon to do this, the U.S. stock market will be poised to enjoy its traditional Santa Claus rally which could propel stocks to a much higher level.

So, how do you invest in this time of high uncertainty? I recommend the following, depending upon which category fits your unique circumstance:



  1. Aggressive investors, moderately aggressive investors, and investors who do not intend to touch their investments for 10 years or longer – invest (now) one-half of the money you had “parked” on the side-lines. Invest the other one-half gradually over the next 7 months as you continue to gather more information, and carefully watch to see if Scenario Two unfolds.

  2. Investors who need to withdraw from the investment portfolio – continue to “park” any amounts you expect to withdraw within the next 5 years in a short/intermediate term bond fund.

  3. Conservative, moderately conservative, preservation minded investors and investors who with start withdrawing from their portfolio in 5 to 10 years– gradually invest the money you had parked on the side-lines over the next 7 months as you continue to gather more information, and carefully watch to see if Scenario Two unfolds.

This entry was posted in $1$s. Bookmark the permalink.