Wednesday (Aug. 22) will mark the longest bull market on record. As we approach nearly a decade of bull market growth, some investors are beginning to wonder if a stock market crash in 2018 is in the making.
While there are some signs of a market crash present, such as volatility surging 27% last week, we can't predict a stock market crash.
The bull market could very well continue to rage on.
However, with stock prices soaring to record-high valuations and geopolitical tensions rising, investors have every reason to have a plan on how to protect their assets against a bear market.
The famed cyclically adjusted price/earnings ratio is at its second-highest level ever, even higher than before the 1929 stock market crash. Plus, the trade war with China and the potential for more interest rate hikes threatens sustained economic growth.
YOU KNOW IT IN YOUR GUT: Look at how things are going. Financial turmoil is coming just around the corner, maybe just a few months away. Click here...
But you don't have to be a victim if the stock market falls. Our three-part stock market crash protection plan can not only help you protect your investment during a downturn, but also earn a profit...
Stock Market Crash Protection Plan, Part No. 3: Protect Your Investments with Gold
Our first strategy to protect your investment dollars is to buy gold, which is an effective hedge against the stock market's uncertainty.
There is a proven correlation between market downturns and rising gold prices. From the time the market first began losing value during the 2008 financial crisis, the Dow dropped 49%, while gold prices went up 5% over the same period.
Keith recommends putting up to 5% of your assets in gold, and you can accomplish this simply with the SPDR Gold Trust ETF (NYSE Arca: GLD).
GLD trades like a stock, it is liquid, and the fees are low. Plus, it accurately tracks the price movement of gold.
That makes it much easier - and cheaper - to own than physical gold, which requires shipping, seller fees, and expensive security.
Gold is currently selling for $1,244 an ounce, whereas GLD currently trades at $117.61 per share, which means you can buy it in smaller chunks, too.
While gold is one way to hedge against a downturn, our second method is also effective...
Stock Market Crash Protection Plan, Part No. 2: Safely Short the Overall Market
One of the most effective ways to profit off of a market tumble is to bet against the market, or short the major indexes.
And this doesn't have to be nearly as risky as shorting individual stocks.
In most cases, shorting stocks can expose investors to nearly unlimited losses, which is risky. However, we have a strategy that limits this risk and allows you to create safer profits.
You see, a normal short position will require that traders sell borrowed shares and re-purchase them at a later date. Provided the share price drops, the trader will make a profit on their "bet" when they buy back the stock at a lower price.
But this type of play can backfire if the share price goes up instead of down.
There is no limit to how far up a stock's price can soar, so a short position represents unlimited risk without hedging with options contracts.
There's an easier way...
One way to profit from the market falling is to own an inverse fund.
An example is the Rydex Inverse S&P 500 Strategy Fund (MUTF: RYURX). This is a mutual fund that moves inversely to the S&P 500.
If the S&P 500 drops, then RYURX will go up.
The risk with this fund is that it is going to drop if the market continues to thrive, so it's only a good idea to allocate as much as you are willing to bet against a falling market.
We've provided two effective hedge strategies for stock market crashes, but there are still some stocks you can own that could outperform the market, even in a downturn.
Both of these stocks rallied during the 2000 dot-com bubble crash, and they are in must-have industries that simply aren't going to go out of style.
In fact, analysts are predicting one of them could grow 30% over the coming year alone...
Stock Market Crash Protection Plan, Part No. 1: Our Best Stocks to Buy Right Now
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We're recommending two stocks that have a track record of performing well even as the broader market declines. Both of these stocks brought positive returns during the tech crash in 2000, even as the overall markets fell more than 10%.
While there's no guarantee these stocks will be immune to the next correction or pullback, they are some of the best companies in the most in-demand industries.
Money Morning Chief Investment Strategist Keith Fitz-Gerald thinks investors should hold on to stocks in the "Unstoppable Trends." The trick to making huge profits is to find "must have" companies that fall into these six Unstoppable Trends: medicine; technology; demographics; scarcity and allocation; energy; and war, terrorism, and ugliness (also known as "defense"). The Unstoppable Trends are backed by trillions of dollars that Washington cannot derail, the Fed cannot meddle with, and Wall Street cannot hijack.
By owning well-run companies in these Unstoppable Trends, you'll own resilient stocks that will charge out of any market downturn, leaving behind anyone who sold off stocks for other assets. And if the market doesn't correct, these stocks are still going up.
That's why we're bringing you two of our favorite stocks from the Unstoppable Trends.
Raytheon Co. (NYSE: RTN) is our play for the trend of war, terrorism, and ugliness.
Raytheon is a leader in the defense industry, with billions in contracts with the U.S. government and other countries across the world. That means if the market falls, Raytheon is going to continue to excel over the long term.
Raytheon has billion-dollar contracts with the U.S. government, but it also has a diverse customer base. International customers make up just under half of its business. That means even if a few countries cut defense spending during an economic downturn, RTN still has plenty of other customers to help it weather the storm.
But RTN's real allure as an Unstoppable Trend pick is the fact that war is a reality of the world. For instance, as tensions rise abroad, the United States is more likely to need more weapons and equipment. When the United States launched a missile strike on a Syrian airbase on April 7, Raytheon's stock jumped more than 2%, since its missiles were used.
RTN currently trades at $200.45 a share and pays a 1.73% dividend yield. Wall Street analysts give it a price target as high as $259 a share, which is a potential gain of 30%.
Becton Dickinson and Co. (NYSE: BDX) is an example of a play in the Unstoppable Trend of demographics.
BDX is a healthcare company specializing in one-time use medical products utilized in hospitals and long-term care facilities. That means as populations age, more people will need this type of medical care, and BDX will be in even higher demand. People will need healthcare whether the market falls or not.
But BDX is also an exceptionally well-managed company. It has a 10.54% profit margin and maintains a 1.58% dividend yield, even after a $12.2 billion takeover of CareFusion Corp. two years ago. That means the company's capital management is sustainable and will easily survive a market downturn. And that's good news for its shareholders during a stock market crash.
BDX trades at $252.81 a share and pays a 1.19% dividend yield. Analysts give it a high price target of $290 a share, a 15% potential gain.
There Aren't Any "Safe Spaces" to Protect You from the Next Financial Disaster
America is headed for an economic disaster bigger than anything since the Great Depression.
If you lost out when the markets crashed in 2008, then you are going to want to see this special presentation.
Because if you don't act soon, the effects on your financial future could be more severe than anything you have ever experienced.
Don't wait - You can see all the details right here.