“I think this is going to be a stock market peak of a lifetime followed by a crash very similar to the early 1930s. This happens once in a lifetime,” Dent Research Founder Harry Dent recently told CNBC’s “Futures Now.”
MK note: “Impossible,” you say? Think again.
In the period 1929 through 1932 the DJIA went from 380.33 at its height (Sept, 1929) to 42.84 at its low (July, 1932). That calculates to a nearly 90% loss of value in stocks based on the average. Never say “never.”
The chart below, courtesy of our friends at Macrotrends.net, illustrates both the depth of the loss and the length of time stocks remained mired in negative territory. It took 25 years for the DJIA to return to the 1929 high (in late 1954).
With respect to gold ownership as a means to wealth preservation, the investor need consider first not just what one might gain from it, but what one might lose by remaining “all-in” the stock market (or bond market for that matter). Second, one should consider that the need for gold rarely surfaces, until. . . .well, until it’s needed. Attempting to become diversified after the fact is not nearly as effective as taking the proper steps before. The period 2007-2011 is a good example of that tenet. Last, note that the DJIA was in a rocket ship trajectory in 1929 – euphoria was running unchecked – then without warning the hammer fell.
Diversify. . .and let the financial winds carry us where they may.