Asset Protection & Investing; What’s Your Defensive Position?

I’m not a financial advisor but I work with some of the best ones in the United States because they often have clients that understand the finite and fragile nature of wealth and that we must take proactive steps to protect it. 

One of the top financial advisors I regularly turn to for solutions and answers on insurance and investment issues is my friend Jeff Christenson of Christenson Wealth Management in Phoenix Arizona. Jeff has been an exceptionally important part of the planning of many of my clients, and many more who are not, and works with a very demanding group of people that like all those we work with are substantially more concerned with loss than growth.  Jeff is one of the people that for years insisted that even his HNW clients save for a rainy day, protect their assets and use strategies that limit losses – the last ten years have made his clients loyal believers… many of them survived the losses of their income and businesses by using these assets.

Below is a recent commentary on the markets that Jeff shared with me. His position is honest, open and frankly brave given the very strong opinions many people have on these issues. I hope your investment strategy and advisors have taken these issues into account. I’ve shared Jeff’s message in its entirety. If you’d like to know more about him or receive his updates directly, see his firm’s contact information below. – Ike Devji 

Jeff Christenson, President Christenson Wealth Management

Dear Friends and Clients, 

I have moved, or will be moving, most portfolios to a defensive position. 

We seem to be skating on thin ice, with our economy, our government, and our national deficit. 

This can be viewed as a “contrarian indicator” (for markets) but I think it is actually just ….. bad. 

It is my opinion that the Fed and the President don’t know what to do about the economy, jobs, entitlements, and the staggering debt that could DOUBLE in less than 10 years. 

We were downgraded as a COUNTRY for our own borrowing purposes.  This has never happened.  The short term results can be neutral to unthinkable… 

There are many people and businesses that are just barely hanging on, month to month. 

Gary Shilling believes home values will FALL another 10-20% to simply regress to the MEAN.  Many homeowners are living in their homes without paying their lender.  I have 4 good friends who just went bankrupt.  Who will pay for that?  How many more? 

Gold…..be careful, too many people interested in it right now.  It may also double again, but it is indeed speculative    

The middle class has shrunk, and there are now fewer people with more money, than ever before.  These people are currently sitting tight on that cash. 

Inaction is the wrong thing as a country and as an investor. 

There are things you should be proactive about, asset protection and conservative financial strategies are certainly 2 of them.  

I feel we are EXACTLY where the FED and the President were hoping we would NOT be 3 years after the financial meltdown.  

I recently came across an interesting article* that simply illustrates our government’s fiscal problems by comparing the 2011 Federal Budget to a typical middle-income household’s budget.  Here are the results: 

U.S. Tax revenue:     $2,170,000,000,000 

Fed budget:                 $3,820,000,000,000 

New debt:                    $1,650,000,000,000 

National debt:             $14,271,000,000,000 

Recent budget cut:    $38,500,000,000 

Let’s remove 8 zeros and pretend it’s a household budget: 

Annual family income:                                      $21,700 

Money the family spent:                                 $38,200 

New debt on the credit card:                         $16,500 

Outstanding balance on the credit card:    $142,710 

Total budget cuts:                                               $385  

The harsh reality is that our current level of productivity (or lack thereof) requires revenue (tax) increases, AND spending (entitlement) cuts BOTH.  Politicians get voted OUT for doing these things.  Our household financial woes in this example, have become a popularity contest – not what’s prudent. 

I urge you to Google and do your own research on our national debt.  If we do NOT do this, and FAST, our lenders may soon just stop.  There is no contingency for that.  We are addicted, and Washington has given everyone what they want – when they want it – and the “Physics of Money” simply won’t allow it to continue.  Something has to (and will) give.  It is like giving your kids everything they want and wondering why they grew up to be spoiled and lazy. 

TO BE CLEAR!  I am in favor of raising taxes ONLY if there is a cut in spending.  We have to PAY AS WE GO.  Ask an economist that is NOT a politician or lobbyist.  

When you factor in the demographic shift (Social Security, Medicare, Medicaid etc) and our current low productivity, it is sobering to think of where this money will magically come from in the future….   It is like watching two trains heading toward each other on the same track. 

9-11 should have taught us to be prepared and conservative, but Washington kept taxes low and spent out of control.  

The DOW is currently at about 11,000.   The market is in denial, apparently because these companies are “profitable and cash rich”.  

Consumer confidence is low and the mood of the working and (middle) class is pessimistic.  President Obama (and W too) wrote a bigger check than he could cash, I think.  He (they) made promises to the masses that can’t be kept. 

We are in a period of deleveraging, and asset values can (and I believe) will go lower.  The Pontiac Silverdome was recently purchased for $583,000.   

We MUST prepare. 

There are opportunities RIGHT NOW, and there will be many more for the prepared. 

I reserve the right to be wrong, and maybe the stock market (Dow) might shoot straight up and make me look too conservative and over-concerned. 

But I doubt it.  

Call me for specific strategies. 

Jeff Christenson 

P.S. Please see the attached commentary I emailed out on September 17, 2008.  Interesting to note that at the time, the Dow was at 11388, followed by a market low of 6507 on March 9, 2009**. 

P.P.S.  Times of adversity can yield amazing things.  

I challenge the people reading this letter to one or more of the following: 

  • If you can, hire someone.  If you can’t, MENTOR someone.  You are reading this because you are a successful person, and were handpicked by me to receive it.  SHARE your genius.
  • Ask your neighbor if you can help them with anything.
  • Invent / improve / innovate something.
  • Find something of value that you have that would be of much greater value to someone else, and give it to them.  Help someone less fortunate.
  • Stop complaining about the government and start DOING something about it.  (purpleletter.org)
  • Treasure things money cannot buy.
  • Stay positive, some great things are coming your way! 

*Source:  Federal Budget: http://www.usgovernmentspending.com/ and Federal Revenue: http://www.usgovernmentrevenue.com/#usgs302a  

**Source: http://finance.yahoo.com/echarts?s=%5Edji+interactive#symbol=^dji;range=5y;compare=;indicator=volume;charttype=area;crosshair=on;ohlcvalues=0;logscale=off;source=; 

The views are those of Jeff Christenson and should not be construed as investment advice.  All information is believed to be from reliable sources; however, we make no representation as to its completeness or accuracy.  Investor cannot directly invest in indices.  Past Performance does not guarantee future results.  

Securities offered through Multi-Financial Securities Corporation, Member FINRA/SIPC 

Christenson Wealth Management and Multi-Financial Securities Corporation are separate companies. 

Please consult with a qualified tax advisor prior to implementing any tax related strategy. 

For more information on Jeff, Christenson Wealth Management or to receive future economic commentary please visit www.HabitsOfWealth.Com or call (602) 808-5580.

Leave a Reply

Your email address will not be published. Required fields are marked *