Beware: All Signs Portend An Imminent Market Correction

Being primarily a preferred investor, I feel that my portfolio will not be as adversely affected as the common shareholder in the event of a market correction; however, 2008 taught me that we all face portfolio danger during a deep correction. Unfortunately, because I own no crystal ball nor am gifted with any foresight into the future, I cannot be certain about when this will occur or how severe the correction will be. Therefore, to protect my interests I gradually, over the past three years, have transitioned my portfolio from one heavily margin-based to one heavy with cash. In short, I've de-risked my portfolio in the safest way possible by increasing my cash position by reducing my at-risk investment portfolio.

Yet, thanks to Trump and the Republican party's engineered tax cut signed into law on 12/22/17, my preferred portfolio has never looked better. However, I see evidence of troubling signs on the horizon. First, I'd like to discuss why the market has been performing at record levels. When Trump took office, he, fortunately, inherited a vibrant economy that had a consistent bull run since early 2009. Prior to that and Obama's election to the presidency, we were mired in a deep recession verging on another great depression. To avoid this catastrophe, the government was forced to lend 100's of billions of dollars to the severely undercapitalized banks and other such institutions to jump-start our economy. Unfortunately, during this time trillions of dollars were added to the national debt. However, toward the end of Obama's presidency, the years budget deficit had been pared from approximately $1.2 trillion to several hundred billion dollars per year.

When Trump took office, and the economy fully recovered with the market doing quite well, what he should have done was to start paying down the national debt as he had promised while campaigning. What he did do was the opposite. He and his Republican allies in Congress pushed through the tax bill on 12/22/17, which cut the taxes on corporate America and the super-wealthy dramatically while throwing scraps to the rest of us. The result:

Furthermore, the ISM report showed a manufacturing slowdown in December, which portends doom and gloom for our economy going forward.

Currently, the markets are measured at all-time highs, unfortunately, much of it is fueled, not only, by the burgeoning of our national debt as a result of the passage of the December tax package gift for corporate America, but also a result our primarily, 70% consumer-driven economy buoyed by a new record level of personal debt which now tops $14 trillion; greater than the debt we accrued prior to the last great recession that began in 2008 that bottomed out in early March 2009. However, by that time trillions of dollars of the world's worth had been lost. My fear is that as history is apt to do, it repeats itself. Only this time the outcome might be far worse and its effects more prolonged than the previous debacle.

Making matters worse, should Trump be reelected, he will be at the helm attempting to right the foundering ship that is our economy. An economy made worse by many of his intemperate and foolhardy decisions. Moreso, he will have the backing of a sycophantic Republican party parroting his words and tweets and praising them as if Moses were returning from the mountain relating the word of God.

And the fools who follow this man, and many of them are investors who are dazzled by the performance of their portfolios regardless of the damage done to the country we are all invested in. And as most investors often do, they will wait too long to exit their investments, and as in 2008 end up losing all their recent gains plus much more besides.

At this moment in time, I've chosen safety over profit, profit, BTW, that in no way will affect my comfortable lifestyle. Yes, I'm still invested, but far less than I was prior to the inauguration of the present administration. I fear our chickens will soon come home to roost, and I intend to be out of town when that occurs. When it will happen I cannot say because that information is far above my pay grade. However, be assured that it will happen, and as far as I'm concerned, an ounce of prevention is worth a pound of pain and cure.