“To drift is to be in hell, to be in heaven is to rule.” –Jorge

bernard shaw

Train the Director of National Security,

Tom Ridge has said that it is not a question of “if”

we will have another terrorist attack, but when.

Like the 9/11 attack, the financial effects of

another terrorist attack will be felt by almost

everyone who lives in the United States. If you

have been carried away by a false sense of complacency

because we haven’t been attacked yet, think for a moment

moment about what he could lose if a major attack

It happened in the not too distant future.

After September 11, 2001, major economic changes

It happened, and that was a relatively minor event.

If a nuclear or dirty bomb exploded in New York

City, the economic “fall” would be much, much

greater than. Fortunately, there are simple and effective methods.

ways to “terror proof” your savings if you know

to do.

After the events of September 11, I felt a

I need to rethink how I allocated my own

investments. As a Certified Financial Planner and

investment educator, I also had many students who

they were concerned about protecting their wallet. Yo

I searched for books that might be of help, but

i couldn’t find one that was useful and reasonably

priced. Therefore, I decided to write my own. With

with the help of my co-author Jonathan Robinson,

wrote “Terror proof your mind and your money: Believe

Physical, Financial and Mental Security in

dangerous times.”

In the book, we discuss many

practical ways to easily get the “terror” out of

terrorism by alleviating one’s anxiety, ensuring

the home and the protection of financial assets.

Although I can’t discuss all the suggestions

outlined in our book in a short article like this one, I can

provide you with many helpful guidelines for protecting

their assets in the event of another tragedy. When

the moment of another attack occurs, if your

investments are in the right places, you

weather the coming storm well. However, if your

assets are poorly positioned, you could face the

financial (as well as emotional) development prospects

devastation.

house of cards

if you look honestly

in our current economic climate, you can see there

there are many vulnerabilities. In the case of a large

terrorist attack on the US, our economy could

fall like a “house of cards”. Consider the

following:

1. The stock market, especially the technological one

Stocks like Google, Yahoo, and EBay are trading at

valuations higher than technology stock prices during

the dot.com bubble in the late 1990s. Many

commenters are even calling early 2005

market an “eco bubble”.

2. The 10-year benchmark

The Treasury bond is yielding less than 5% in a world

who has promised higher interest rates for

Federal Reserve Chairman Alan Greenspan. (Higher

interest rates will make the value of your long

term bonds to automatically decrease in value).

3. The

housing market is certainly too expensive in both

coasts, and is probably unsustainable in the

middle of the country too. Home sales started

to slow down in light of higher mortgage rates,

outrageous prices, too much speculation and buyer

exhaustion. If the current owners cannot borrow

more money of your increasingly valuable

residence, will they continue to spend at the mall? He

has been largely borrowed money from housing

that has helped consumers buy in the last three years… and

without it, the US could easily fall into a

recession, causing even more problems.

4. The

value of the dollar–as seen by the rest of the

world as a part of the shares in the USA Inc.–has been

falling for almost three years. Do you think he

the world will continue to put in $500-600 billion

dollars of your savings in our economy

every year? If foreigners decide not to send their

money to us, our interest rates will increase even

faster than the promised “gradualism” promised by

Mr Greenspan. Most Americans don’t really care

on the value of the dollar in world markets,

but I assure you that if the dollar becomes something

of “American Peso”, we will all quickly learn how to

a weak dollar can hurt. For example, we have to

buy oil in dollars, and if the dollars are not worth

anything, how can we afford to fill the tank with

our nice new SUV?

5. And finally, the rate of

inflation (classically defined as too much

increase in the amount of money in circulation)

is increasing. And if that kind of inflation

(monetary) is increasing, then price inflation will not

be far behind A repeat of price inflation

be essentially a repetition of the completely problematic

1970

Yes, there is certainly good news.

on the investment front, but overvalued markets

are inherently risky in any type of era, and

act very badly in a state of panic, terrified

financial markets. An act of terrorism would be

exaggerate the problems in all these markets.

ASSET ALLOCATION

I have been teaching investment workshops since 1979. In 1999 and early

2000 I couldn’t make my adult students care about ridiculous actions

prices. All of my so-called intelligent adult students thought, “This time is different.”

Well, live and learn. Warren Buffett, the best investor of our age has said:

“Investing knowledge is cumulative.”

mr buffett

apparently he has found out that the US stock market.

not a good bet right now. He has recently made publicly

He stated that he will not buy anything in the US.

stock market, but focuses on buying

foreign currencies.

By studying what happened to

financial markets after the attack of 9/11,

learned that investors who had diversified money

in various asset allocations it did quite well. So

if history is a lesson, you’ll probably get it right

in the event of a future attack if you invest

“relatively” equal percentages of your investment

money in stock categories, short term

bonds, cash, commercial real estate and

raw materials (including gold and silver). Ounce

you have moved your money to these different assets

classes, the next thing to focus on is getting started

selecting specific or individual mutual funds

stocks that you think will perform well in

types of turbulent markets. For example, in a

increasingly dangerous world, some “safety”

stocks would probably be good investments (if other

value considerations are present.) Such a classic

defense actions as have been done by Boeing and Lockheed

well since 9/11. Of course, I’m not your financier.

adviser and this is not the forum to promote

no company in particular, so I am not recommending

anything without knowing more about you. Quite,

my goal here is to get you to look at the assignment

of assets: the large areas in which your assets are invested

in.

In addition to detailing how certain industries

did after 9/11, I devote significant attention to

our book to encourage investors to include

precious metals in their portfolios. gold and

silver have protected investors for centuries of

bad financial management, bad governments,

inflation and, of course, war. is not a

coincidence that the Golden Rule is frequently

misquoted as “Those with the golden rule”. Is

It is also worth remembering that all “fiat” currencies

(paper declared as money by some authority

without being exchangeable for something else)

they have eventually become “collectibles”. Confederate

money, French allowances, Iraqi dinars, etc. have

everything turns into confetti. Compare that history with

the fact that each gold or silver coin

ever made still has value. you should think about

placing a percentage of your money in gold and

money if you want to make your portfolio

terror proof.

Your preparation does not have to be

perfect. As George Patton said, “A good plan today

is better than a perfect plan tomorrow.” No one is

He is born knowing how to invest. smart investors

develop their experience by reading about what

others did with their money, and reaching a

appropriate plan based on all the information you

can pick up Remember, traditional Wall Street

TV brokers and financial analysts rarely (if ever)

bring up the subject of your horror test

savings. Therefore, apart from the book that

co-author of this topic, you are more or less in

own when considering the likely implications

of a terrorist attack on your financial health. Do

your decisions carefully.

For most people, the

worst scars from a future terrorist attack

be physical. They will be emotional and financial.

If you are caught off guard, your future

financial plans (and those of your loved ones)

could be delayed for a significant period of time or destroyed

total. That would be adding a tragedy in

on top of another It’s time to pay attention to your

where is your money and take appropriate action

action… before it’s too late.