Tags: Marotta | survivalist | currency | crisis

Money Manager Marotta: How to Get Ready for Next Financial Crisis

By    |   Monday, 03 March 2014 01:34 PM

Investors have reason to fear another possible financial crisis, and there are several steps they can take to prepare, says David John Marotta, president of Marotta Wealth Management.

"The growing debt and deficit spending taxes those holding dollars. The devaluation in the U.S. dollar risks the dollar's status as the reserve currency of the world," he writes in USA Today.

"The coming financial crash always looms. End of the markets, end of civilization, end of the world. How do you prepare?"

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Marotta both agrees and disagrees with the advice of survivalists to exit paper investments.

"Limiting your investment in paper currency makes sense, especially currencies actively devalued, such as U.S. dollars, euros and yen," he asserts.

But getting out of paper investments completely "makes no sense," Marotta argues. "Yes, you own property via a paper deed and a car via a paper title." The same is true with your mutual funds/exchange-traded funds and stocks, he adds.

"Even a global financial crash can't change your ownership in shares of publicly traded companies (though it can drive down the value of shares)," Marotta explains.

Marotta likes the idea of shrinking your debt. "If civilization continues, avoiding, paying down or somehow dealing with your debt remains essential to building real wealth," he writes.

Many survivalists encourage you to invest in gold. However, Marotta explains that if the money supply collapses, so too will the purchasing power of gold.

"Worse, if the global economy survives you're stuck with investment properties of gold bullion. Gold has a low expected return of just inflation and one of the highest volatilities as measured by standard deviation. That means that the optimum asset allocation to gold is always zero."

There is some talk that the Ukraine crisis could turn into a crisis for financial markets, but many experts take a less dire view.

"Global markets typically sell off on news of an escalated geopolitical crisis like we're seeing in Ukraine. How deep it goes depends on the effectiveness of diplomacy," Frederic Dickson, chief investment strategist at D.A. Davidson, tells Bloomberg.

"We're in a camp that this is not a black swan event that will mark the end of the five year bull market for stocks in the U.S. and globally, but a modest correction event."

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Investors have reason to fear another possible financial crisis, and there are several steps they can take to prepare, says David John Marotta, president of Marotta Wealth Management.
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2014-34-03
Monday, 03 March 2014 01:34 PM
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