Since the financial crisis, global markets have benefited from interest rates close to zero, central banks printing money and buying financial assets such as bonds, mortgages, and even stocks in the case of Japan and Switzerland.

Authorities around the globe have tried a massive and risky experiment: print money, buy financial assets, increase debt, and see what happens. On top of the financial engineering of central banks pumping up financial assets around the world, companies have been using the low-interest-rate environment to borrow and buy their own stock. All this experimental financial engineering on top of record debt is going to end badly.

Listen to GHOGH with Jamarlin Martin | Episode 41: The Bull Market And Why They Hate Ocasio-Cortez And Gabbard
Jamarlin Martin discusses the nasty stock market decline and why there’s trouble ahead for the global economy.

The Dow and S&P 500 are on track for their biggest December loss since the Great Depression, CNN reported.
Each was down about 7.8 percent through Monday. The Depression-era losses were much bigger — the S&P 500 plummetted 14.5 percent and the Dow dropped 17 percent. Still, this is the biggest drop for each key market barometer since 1931, according to data from LPL Research.

It feels like a bear market because FAANG’s are in a BEAR market. If the market lived by FAANG’s on the way up, it will die by same on the way down. Game is over. https://t.co/rzuFEfxmf9

— Jamarlin Martin (@JamarlinMartin) December 6, 2018

If you are an existing investor in the stock market, it’s not time to panic. I believe the 10-year bull market that took off over 300 percent from the lows of the financial crisis has peaked and the S&P will fall at least 50 percent from the peak.  This doesn’t mean get out of the market entirely and go to 100 percent cash — although cash has outperformed stocks in 2018 YTD.

Here are some sensible options to reduce risks now that markets have gone up more than 300 percent and the smart money has already been made in this long cycle.

• • Reduce some of your stock exposure portfolio and go into at least 20-percent treasuries and at least 10-percent gold (GLD). These holdings in your portfolio could potentially rise while markets continue to fall.  When interest rates drop back to zero during the next crisis and they start printing more money again — and this doesn’t work — gold is going to enter its own bubble. Gold is the investment to hedge against promiscuous money printing and debt. I believe Ponzi-scheme economics is going to fail.

• • Reduce or get out of the crowded FAANG stocks such as Facebook, Apple, Amazon, Netflix and Google. Everyone and their mama rode these high-flying stocks on the way up and they’re leading the charge down. These stocks are so popular and crowded, holding them makes them even riskier than they ordinarily would be based on their growth and earnings.

• • Go 100-percent to cash and wait to buy lower, look for further confirmation that the bull market is over and be patient to go back in at much lower prices — 30-to-50-percent lower from here.

• Hedge your portfolio by buying out of the money SPY puts or the short SPY exchange-traded fund (SH). This ETF allows you to profit if the market continues to fall. When you buy the short SPY ETF, it will go up when the S&P falls.

The stock bubble obituary.

Co's were using financial engineering & buying back their own shares to push prices higher.

Big Tech had become concentrated with only a few co's dominating stock indexes & their industries.

Many investors were all in the same FAANG stocks ..then

— Jamarlin Martin (@JamarlinMartin) May 13, 2018

I believe the bull market is officially over but even if it’s not, we are in the ninth inning. It doesn’t make sense to be taking a lot of new risks after the market has increased by 300-percent-plus over 10 years. The U.S. has loaded up on a massive amount of debt, printed a lot of money, and traded her long-term future for short-term gains. America is headed for a big fall.

For new investors who missed the historic bull run in stocks, it’s time to consider buying some gold.

Gold tends to do well in times of crisis. Gold will be a great long-term investment over the next five-to-10 years. I have lived through two big bubbles and busts — 2000 and 2008. The next bust is at our doorstep. It’s not time to panic but to adjust, de-risk, and potentially profit from the coming financial crisis that is at America’s doorstep.

Your investment vehicle doesn’t have to stop. Just adjust your speed (risk profile) with so many concerns about the macro environment.

Ray Dalio said (in Davos) we’re at end of bubble cycle, ALSO says it’s stupid to hold cash right now. His words suggest he may be washed up, the use of “stupid” suggest even he’s drinking pitchers of kool-aid. Why pick up nickels in front of bullet train here at the TOP?

— Jamarlin Martin (@JamarlinMartin) February 6, 2018

Disclaimer: This is not investment advice. This is the opinion of the author. You should consult with a professional financial advisor. Nothing here should be relied on to make investments or trades.