March 22, 2023

Financials Matter

"It's Not Just About Finance"

The Biggest Risk to Your Portfolio is…

“Is the stock market going to blow-up soon?”

“Should I sell everything and hold cash?”

“I own a lot of bonds and am concerned about a bond market bubble.  What do you think?”

These are just a few questions I get all the time from people who are freaked out mostly by the news media.  And it’s perfectly understandable.  They’re worried about losing their money.

The media does what their Wall Street overlords tell them to do.  And they focus on keeping you worried, distracted, and confused.

They talk about risks but they avoid telling you about the greatest risk to your investments.

It’s not some threat of inflation, deflation, war, or even political confusion.

The greatest risk to your investments is “Counter-Party Risk” AKA Default Risk.

It’s the failure of the other party to meet its obligations.

Unless you own something and have possession of it, there is a counter-party.

If you own a bond, the risk is the issuer of that bond will make good on their promise to pay you back.  But all you really have is a piece of paper.

It’s the same with a stock.

Common sense tells you that if someone can’t pay you back, they simply won’t.

So why do most investors believe that our government (Currently broke to the tune of $20 Trillion+) will make good on their promises?

The best way to avoid counter-party risk is to have possession of whatever it is you’re investing in.

It’s easier to do than you think.

We explain all the details in an article titled If You Don’t Hold it, You Don’t Own It.

And you can get it (HERE).