How Mary Caught Her
Financial Advisor In a Lie
EVG Research Team here, and if you have an IRA then this conversation may worry you…
A middle-aged man in his uninspired white shirt and black tie flipped to the next page in his paper packet and asked, “So when it comes to risk, you'd like to play it safe and aim for slow, steady growth, correct?”
Mary turned to her husband, unsure of her answer.
She knew the golden retirement years she'd been working for all her life were just years away. And she knew rolling her 401(k) into an IRA meant she had to make this important decision.
But all Mary wanted was to keep her money safe. And in this turbulent economy of large ups and downs, who knows what's safe and what isn't?
Still, after a comforting touch on the hand from her husband, she answered, “Yes. At this point I'd be happy just to keep the wealth that I've grown.”
“Great,” said the broker. “Then sign here where I've marked that you prefer a conservative approach…”
“OK,” said Mary as she reached for the pen.
“…And that means that bonds would likely be the best fit for you.”
Mary Froze at the Word “Bonds…”
…Her husband started to speak, but tripped over his first words. They looked at each other.
“We've heard that the bond market is the next bubble to crash, just like the housing bubble crashed. Are you sure it's the safest choice?”
The IRA broker finished a slow, long exhale. He looked into Mary's eyes, not searching for an answer so much as deciding which version of the truth to tell.
“Well, I'm required to tell you the bond market is your safest bet because it has been traditionally. But if you ask me, yes, the bond market is the largest bubble we've seen yet.”
Mary's jaw dropped. She couldn't believe what had just taken place…
Her Financial Advisor Just Recommended
She Invest in a Bubble He Knew Was About to Burst…
The story above was dramatized with fake names and fake black ties, but a similar version did happen to me.
And the sad thing is, it probably happens thousands of times a day. A person looking for safety is told to invest in bonds, i.e. government debt, even though that same broker or financial advisor may believe that bonds are in a bubble about to burst.
At The Elevation Group, we're not here to take the place of your financial advisor and can't give investment advice. So whether or not we believe the bond market is in a bubble is besides the point.
The point is, there are brokers who DO believe the bond market is in a bubble and yet still recommend bonds to conservative investors.
Peter Schiff refers to this as “Defensive Investing.”
And it's similar to “Defensive Medicine” where doctors run multiple unnecessary tests to make sure they can't be sued later on for missing anything important.
Similarly, “Defensive Investing” is done to avoid a lawsuit or being fired. It's when brokers give you traditional financial advice, rather than what their own logic and reasoning suggests, because it's safer for them to do so.
No one is going to be sued or fired for suggesting bonds are safe, because they have been for decades.
But unfortunately for those not paying attention, the times are a-changin'.
The Booming and Busting Bond Market
Again, we're not in a position to give financial advice. But there are many reasons to believe that the bond market is indeed in a bubble.
Michael Pento, of Pento Portfolio Strategies, says of bonds, “All three elements of a bubble exist: surging prices that are historic in nature, a massive increase in supply, and levels of ownership that are unprecedented.”
But without even getting into the fundamentals, let's just simplify it with a question:
At a time when cities, states and countries around the world are struggling with massive debt, why would anyone want to invest in more government debt?
Peter Schiff sees it the same way we do:
“The bond market is the mother of all bubbles right now and I think when it bursts the losses will dwarf the combined losses of the stock market bubble and the real estate bubble. The problem is that there is no way for the government to pay things back. This decade will be the worst decade for bonds in US history”
Peter Schiff, Euro Pacific Capital
and author of “Crash Proof”
“So, Where Do I Find the Truth?”
It's awful when a financial advisor or broker feels they can't tell you how they really feel about an investment.
The irony is, at The Elevation Group, we're able to call it as we see it, simply because we don't give personal investment advice.
We track down how rich financial experts are investing their own money and persuade them to explain their strategies for our Members in detail on video.
Here's an example…
Most people believe they can only invest $2,000 to $5,000 in an IRA each year. But we met an expert who showed us how to invest much, much more than that into a group of IRAs absolutely tax free… up to $110,000, in fact… and then even use some of that money to pay for health care costs and your kids' college education, all tax free.
And that's just one example of many that shows you can't get this type of information from your local strip mall investment broker.
To find out more about our little known investment strategies and become an EVG member, watch this free presentation now:
Your Partner in Prosperity,
The EVG Research Team