Guidant Financial Group Blog

Monday, Jim Cramer, CNBC’s host of “Mad Money” shocked investors by stating he saw the potential for the market to pull back another 20%. In an interview with Ann Curry, Cramer expressed concern about being overly invested in the stock market. “Whatever money you may need for the next five years, please take it out of the stock market right now, this week. I do not believe that you should risk those assets in the stock market right now.” He also warned that Europe is right behinds us.

Last Friday, the government’s $700 billion bailout plan passed which increased the insured rate on bank deposits from $100,000 to $250,000. Cramer was quoted as saying “Your money is safe” but he also warned that stock market investors may not be so lucky.

To be fair, he also suggested that if you have the assets and stomach to ride out the ups and downs for the next 5-years, you may not want to pull out.

All this came from a guy who is best known for helping people to invest in stocks. There is no doubt it’s a scary time. Is Jim Cramer right? The truth be told – Jim knows as little as anyone else what the future holds.

Over the past few weeks Guidant has been flooded with calls from clients and prospective clients asking what we think about this crisis, trying to move money quickly and asking for help. I will refrain from giving any advice but I will share some thoughts that may resonate with you.

For over five years we have talked about the benefits one can enjoy through a self-directed IRA – most importantly, true diversification. Markets are cyclical – they all are. It’s how you perform and react under pressure that defines the level of success you will realize. Right now the stock market is in crisis. The real estate market has its challenges. There is concern about the dollar. Fears of inflation. Rumors of more wars. No doubt – it’s a scary time.

Is it possible that there is unique opportunity as well?

Right now credit is tight. Small businesses, homeowners and investors need access to cash. Credit runs this economy. Could self-directed IRA holders originate loans from their retirement plans to these people for income and profit? Absolutely. Are their people in distressed situations that need to avoid a foreclosure or possible bankruptcy? Yes. Are tax defaults creating opportunity for tax deed or tax lien investments? No doubt. Are there foreign and domestic real estate opportunities that are not affected by the US economic conditions? And will rents go higher when it’s more difficult to apply for a loan? They always do.

I’m not advocating that you need to rush in and buy. I’m always concerned that people make healthy investments. If you believe there is opportunity in the stock market – great. If you feel that real estate has unique opportunities and you prefer secured assets over paper – perfect. It really is up to you. The reality is that unlike an account with a traditional financial services company, a self-directed IRA will provide you the choice as to when, where and how that is invested.

My heart goes out to those that feel panicked today. It is challenging time but I believe in this Country and resiliency. I believe in YOU.