8/14/2019 Wealth Building and Wealth Preservation

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Wea lth B ui ld ing a nd Wea lth Pres er vati on

Wea lth buil din g is one issue…a nd is har d to accomp lish .Wea lth preserv ation in to days econ omy is pr obably mu ch har der t o a ccomplish .

To create new wealth or wealth creation, one needs to have the combination of skill,timing, risk taking, blessings and a great deal of work. Once this new wealth has beencreated, the security,preservation and growth become a goal. Sadly the reality today is thatmany fortunes have been wiped out by investors who have not thought a plan. They did notrealize the risks they were taking. They did not realize how important liquidity is. They took on too much leverage. They believed what the news told them. They believed that the pricesof real estate never go down and that real estate is a safe asset. The fact is there is nothingsafe but rather how much risk does one need to take on in order to achieve their desired rateof return. Investors need to think in these terms. This is reality. I know too many people whogot wiped out by “Safe’ investments such as auction rate securities or asset backed lendingschemes.The investment world has changed so much that now investors need to fight for their

investment survival (This might be a stronger word than wealth preservation.) Throughoutthe world central banks are flooding the market with liquidity in order to prop up a bankingsystem which is critically ill. We are passed the issue of if some of the worlds largest banksare too big to fall. Any bank can fail. Actually virtually two banks a week are falling in the USalone. Investors need to understand that are risks which we have not seen for decades oreven a hundred years. There are hopes that the FDIC will continue to bail out banks andguarantee the deposits of funds. Really how long can this continue? ( I assume just run theprinting presses if the FED needs more money). Then there is counter party risk and evencustodial risk. So far it has not happen when banks fail but there exist the chancethat investors might not get access to their assets when they want or need them (what everthey might be..such as equities, bonds or even precious metals).Times like these which are unique require other strategies for wealth preservation. In myopinion one of the best way for both wealth building and wealth preservation is trendfollowing a basket of commodities. In times of crisis such as we are experiencing there aredramatic trends. With these dramatic trends there is the case to be made that there exists atime for wealth building through commodity trading. Personally I look at commoditytrading as a hedge or as a means of wealth preservation. Last year was an interestingexample that there was inflation…stock market crash…and then deflation and that manytrend following commodity trading advisors had a very good year in the midst of a crisis.What else I like about commodity trading is that we trade real assets. Not a piece of paperhoping for a percentage of the profits of a company ( stock). Put this into context, over thelast ten years, the Dow Jones index has declined 80% against gold. Howmany investors purchased index funds and have not seen profits for years. Howmany investors can continue to be long term buy and hold ( pray) when over a 10 yearstretch they did not make any money. In all realitythere will be stretches as well in trend

following of commodities that one does not make any money. However when one looks at awide basket of commodities…and they can go long or go short…there is a the distinctpossibility for a trend to emerge. One needs to be available for the oppurtunities and over theyears there have been. It should be a paramount issue considering todays economy anavenue to use for wealth preservation is trend following of commodities. What if gold shootsto $2,000? What if gold falls back down to $200. Trend following commodity trading advisorswill follow the move and stand the chance to make money. The same can be stated for theUS dollar. What would happen if the US dollar crashes? How do you protect your US dollars?Depending on the time frame and methodology most trend followers would benefit if the USdollar would crash. Do you remember how many Billions George Soros made when the BritishPound crashed? He was not alone. Trend followingcommodity trading advisors also made abundle.

8/14/2019 Wealth Building and Wealth Preservation

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There are other choices other than real estate, stocks and bonds. The reality is these marketscan be in a long drawn out period that can last for years. Trend following is non biased… longor short…it does not matter. Some of the other advantages are, investors money is kept insegregated accounts at the brokerage houses. Even if they brokerage fails the monies are notco mingled. Added to this if one has a managed account, the commodity trading advisor onlycan give orders for buys and sells. He does not have access to the funds.

Everything has risks… ( even doing nothing has risks) however if you are looking for wealthpreservation…or possibly wealth security..with a reasonable expectation of riskand rewardyou owe to yourself to learn more about commodity trading and commodity trading advisorsthat are trend followers.

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 Andrew Abrahamwww.AJpartnersinc.com