Posted on 10-9-2002

Sell, Sell Now! ... And Keep Smiling
By Thom Calandra, CBS.MarketWatch.com, Thursday, 5 September 5, 2002

In the coming bad months and years, a period that will annihilate nearly
all paper assets and shrink the oceans of debt and credit sloshing around
the world, investors and workers will be asking what they can do to
sidestep a meltdown of their personal portfolios. "It a question everyone
should be asking themselves right now, and it's not too late," Elliott Wave
International forecaster Robert R. Prechter Jr. told me Thursday. "What's
going to happen when the stock market finally bottoms? You'll be able to go
in there and buy stocks that used to trade at $85 a share for maybe half a
dollar or a quarter of a dollar."

The coming meltdown, in the eyes of Prechter and others alarmed by the
global credit expansion of the 20th century, will include homes, bank
deposits, insurance policies, even paychecks. Here are some starter-tips,
gleaned from many fine sources, including the Weiss Safe Money Report,
Prechter's new book, "Conquer the Crash," and "Crisis Investing" author
Doug Casey's International Speculator.

Do investigate the integrity of all money markets, bank deposits and other
cash instruments at your disposal. Not all money market accounts or funds
are created equal. Those that are based on risky short-term paper, from
corporations or even government agencies, probably won't allow you peace of
mind in the event of a fiscal meltdown. Several sources, including the
Weiss Safe Money Report, Bankrate.com and Grant's Interest Rate Observer,
examine safety and liquidity issues surrounding commercial banks and the
fund companies that manage money markets.

Do investigate cash equivalents that exist outside of your home country, in
the event of political risk. Switzerland's bank reserves, unlike those in
the United States, are backed by a 25 percent savings rate that is required
of citizens by law.

Do sell all stocks that are losing you money. Do sell all stocks that are
making you money.

Don't consider buying any stocks, or bonds, or anything considered a paper
asset, unless you are prepared to take a 25 percent loss. Or unless you are
prepared to hold for 15 years or longer (just ask the folks who still own
Ford Motor.

Don't be lulled into a sense of false security by the interim rallies
staged by Wall Street. The rallies are perfectly normal in that they allow
sellers to exit with just a bit more cash than they had a month ago, but
not nearly enough to make up for losses in this, a third consecutive year
of falling equities.

Do buy gold and silver -- coins, bars and even some bullion proxies, such
as Central Fund of Canada, if personal storage of the metal is a challenge.
If currencies self-destruct from the drag of decades of credit issuance by
national and corporate treasuries, bullion almost certainly will become a
commodity with monetary status.

Do eliminate as much debt as you can -- credit cards, automobile loans,
margin interest, mortgages, second mortgages. The credit overhang in the
United States, more than $30 trillion owed by U.S. companies, individuals
and the government, is three times gross domestic product, the highest
ever. Besides saving you or your home from personal bankruptcy, default or
repossession, your elimination of debt will be a service to this country's
economy.

Keep your day job, sell the gas-guzzling SUV and if you really see the red
writing on the wall, start short-selling some of the major equity indexes,
especially the price-weighted Dow Jones Industrial Average's
exchange-traded Diamond Trust and its major components, like high-priced 3M.

"Why should you be taking a risk with your college money, your retirement
money and all the money you worked so hard to save?" Prechter says in the
CBS MarketWatch interview. "First thing is, you need to get out of those
very risky areas. The stock market is the No. 1 (risk) in a deflationary
environment. No. 2 is the real estate market. And the third one is in bonds
that have been issued by risky enterprises."