Time To Take Out “Crash Insurance”

  • Buffett bracing for once-every-decade market chaos…
  • … and here’s how you can follow his lead
  • Tiny companies in line for contracts from Trump’s ISIS plan
  • How we’re protecting the downside with penny pot stocks
  • The truth about Trump’s debt tweet
  • Now The 5 is “un-American”(!)

After 53 years, Warren Buffett’s just phoning it in now.

For a long time, Buffett’s annual letter to Berkshire Hathaway shareholders was a fount of investing wisdom. But this year’s model, released Saturday morning, looks like a cut-and-paste job from some of his most predictable and pedestrian speeches.

On the one hand, U.S. stocks are “virtually certain to be worth far more in the years ahead” and “babies born in America today are the luckiest crop in history.”

On the other hand, “Every decade or so, dark clouds will fill the economic skies, and they will briefly rain gold. When downpours of that sort occur, it’s imperative that we rush outdoors carrying washtubs, not teaspoons. And that we will do.”


As we noted last week, this month marks the 10th anniversary of the first tremors in the mortgage market that presaged the financial earthquake of 2008.

Which makes today as good a time as any to revisit Buffett’s “crash insurance” strategy.

“How would you like to go into the insurance business,” said a clever writer at Forbes a few years back, “collecting premiums for insuring people against catastrophes?

“The product in question is crash insurance, which pays out if stocks take a dive. Your potential buyers are worried bulls — people who want to be in the market but don’t want all the risk that goes with it.”

Buffett has sold billions of dollars in “crash insurance” via Berkshire Hathaway over the years.

True, Buffett is privy to all sorts of special deals. So the kind of crash insurance we’re talking about isn’t exactly the same as what he deals in. But it’s close enough you could still pocket a handsome income.

“You don’t need a license for this underwriting work,” says that Forbes piece, “just some loose cash and a steady nerve.” The writer went out on a limb, citing an example of how you could sell crash insurance, not knowing at the time how it would turn out.

It turned out very nicely: Depending on how much money you set aside in your account, you could have grabbed a payout just shy of $18,000.

But that’s just a magazine’s hypotheticals. The real-world results can be even better. Our own satisfied readers have used this strategy and similar ones…

  • From a reader in Minnesota: “This simple transaction has become my primary source of income. I expect to make $60,000–80,000 this year. I made $25,000 last year while learning the ropes”
  • Says a reader in Virginia: “I realized $128,000 using this secret transaction”
  • And a reader in Connecticut: “[I’ve seen] $4,500 in INSTANT INCOME per month…”

The best part about this strategy is the market doesn’t have to crash for you to collect these payouts. It works in up, down and sideways markets. With our help, you’ll be clued in to a valuable “income code.” Act on it and you’ll collect hundreds instantly.

The next code will be released tomorrow morning. For that reason, we’re taking down this presentation about the strategy tonight at midnight. Don’t miss out.

The major U.S. stock indexes are treading water in advance of the president’s big speech to Congress tomorrow night.

At last check, the Dow had inched up two points, to 20,823, while the S&P 500 had shed seven hundredths of a point at 2,367. Excitement.

The market’s gone nowhere since Thursday — when we said Wall Street was collectively waking up to the realization that Trump’s ambitious economic agenda might not be enacted in the first 100 days… or 200 days… or maybe ever.

This morning, we can’t get away from such headlines: “Markets Risk Rude Awakening if Trump Address Underwhelms” (Financial Times). “Trump’s ‘Big Fat Bubble’ Trouble in the Stock Market” (Politico).

While stocks in general have stalled since Thursday, gold has rallied nearly $30 over that time: As we write, the bid is up to $1,262.

No big earnings numbers today, no big surprises in the economic data. And in case you’re curious… PwC, the Big Four accounting firm that somehow mixed up the envelopes for Best Picture at the Oscars last night, is not a publicly traded company. But if it were, the price action today would surely be amusing…

The one certainty about Trump’s emerging budget blueprint is a 9% increase in military spending.

Or as he put it this morning, “an historic increase in defense spending.” But you knew that already if you’ve been reading regularly. The numbers are still fuzzy, but they’ll become clearer over the next three weeks.

Meanwhile, today’s the day Defense Secretary James Mattis is due to deliver the president a strategy to defeat ISIS. It was on Jan. 28 that Trump ordered a 30-day review.

Media speculation right now is centered on whether ground troops will be sent into Syria. Flying beneath the media radar is what that plan will mean for a subniche of defense contractors. Jim Rickards and his team already have an early read on who’s best poised to profit: Jim just recorded a video update you can watch right here.

“Cue the speculation train,” says our Ray Blanco about a federal crackdown on states that have legalized recreational marijuana.

As we mentioned on Friday, White House spokesman Sean Spicer said he anticipates “greater enforcement”… although he was quick to add the final call lies with the Justice Department.

“It’s just too early,” Ray says today, “to know whether Spicer’s comments are all talk or the start of a major enforcement change at the already-spread-thin Department of Justice.

“Public opinion has clearly shifted in favor of decriminalizing recreational marijuana in the last few years, and it’s entirely possible that as this plays out, President Trump doesn’t see it as an argument worth risking favorability ratings over.”

Indeed: A new Quinnipiac University poll finds 71% of Americans would object to the feds bigfooting state-level decisions to ease up on pot. Even 55% of Republicans prefer the states’-rights position in this case.

“Count on lots of guessing,” Ray says, “about the future of recreational pot for the next four-plus years.”

But we’re not going to speculate,” Ray adds.

This is a key point if you’ve been on the fence about our new premium service, Penny Pot Profits. “We act only on clear trading signals in the price action,” Ray says — “the politics are a whole level removed from how we make money.

“It’s also worth noting that all of our open trades are in the medical pot space, which actually got an extra shot of legitimacy from Sean Spicer’s comments.”

Spicer drew a clear distinction between recreational weed and medical cannabis. “The president,” said Spicer, “understands the pain and suffering that many people go through who are facing especially terminal diseases and the comfort that some of these drugs, including medical marijuana, can bring to them.”

We’ll give Ray the final word: “The bottom line is that there are profitable trends to play in the pot stock space right now.” And here’s how you can unlock the “secret logic” behind their extreme moves.

The award for Prescient Tweet of the Month goes to Boston magazine writer David Bernstein.

In three tweets on Saturday morning, Bernstein wrote: “On FOX & Friends, Herman Cain just said that the media isn’t telling you that Trump reduced the debt $12b in his 1st month… and compared that w/Obama increasing debt $200b in his 1st month. Turns out that’s from a post circulating on wacky-right sites… but if Trump tweets that stat this morning, you know where he got it.”

Thirty-two minutes later…

Of course, we don’t take anyone’s word for it. So we went to the Treasury’s website this morning. Actually, the numbers updated through last Thursday are even better — the national debt has shrunk $33.4 billion since he took office.

But come on! The numbers fluctuate from day to day and month to month based on what the government spends and what the government takes in. A five-week snapshot tells you nothing.

At least Trump’s tweet was factual — which is more than you can say for Gateway Pundit, which started this nonsense by claiming, “Trump cut the U.S. debt burden.”

Anyway, check back with us in another year for more meaningful figures. And in the meantime, you might want to exercise the same degree of skepticism with the “InfoTrump” media camp as you do with the mainstream.

[Before you write us an angry email and/or cancel your subscription: Long before Trump came along, we were calling out the bogusity of budget figures under administrations of both major parties. For instance, the allegedly balanced budgets in Bill Clinton’s second term? It was all accounting trickery: The national debt kept rising every year…]

“Don’t send me any more of this BS,” a reader writes after last Thursday’s episode, when David Stockman gently suggested the Trump tax cut might not sail through Congress as easily as Reagan’s first tax cut did when David worked in the White House.

“I found your anti-Trump message to be totally disgusting and un-American.

“If you can’t stay out of areas that you’re not qualified for, then shut up. Any more of this BS and you can cancel my subscription.”

The 5: So you’re one of those people, described in a Politico article last week, who got a shock when their tax preparer told them Obamacare hasn’t been repealed yet.

We knew they were out there somewhere…

“Wow! So you’re closed-minded and your open-minded reader canceled,” writes a reader after someone carped in Friday’s episode.

“I, for one, love The 5 and look forward to its arrival. I know what I’m getting: a quick snapshot of the world with some great financial tidbits along with some advertising. Keep it coming!

“P.S. I don’t know how these people come up with the idea that you are for or against Trump (like the lamestream media), but I for one think you fairly note the machinations, both good and bad, of any politician of any stripe, be it Trump or Obama or any other.”

The 5: Much as we try to chuckle… in our darker moments, we do worry about people who are so wrapped up in their revulsion with the establishment — something we totally sympathize with — that their own identity becomes wrapped up with that of the Leader, who is Not To Be Questioned.

Of course the establishment media question him every which way. But they’ve forfeited their authority to do so because they looked the other way with all of Obama’s and Bush’s depredations this century — most especially by retailing the neocons’ mushroom-cloud lies during the run-up to the Iraq War.

“I can see it coming,” a reader writes after our papers-please reflections on Friday — “a requirement for every citizen to have an internal passport or ID of some sort, as a means of controlling illegal immigration.

“Look for Mr. Trump to tweet such a proposal soon. Border police will conduct frequent sweeps and arrest anyone without such papers or a valid foreign passport on suspicion of being an ‘illegal.’ You already need such a state-issued ID to fly, I believe. The Nazification of America proceeds apace.”

The 5: Probably not until some sort of attack — in which the feds will have missed all the warning signs, natch. But rather than point that out, the self-styled #Resistance will be cowed into silence.

Best regards,

Dave Gonigam
The 5 Min. Forecast

P.S. Last chance: We’re set to issue a new and valuable “income code” to a select group of readers tomorrow. Here’s your final chance to learn how they work before this presentation vanishes from the web tonight at midnight.

Dave Gonigam

Dave Gonigam

Dave Gonigam has been managing editor of The 5 Min. Forecast since September 2010. Before joining the research and writing team at Agora Financial in 2007, he worked for 20 years as an Emmy award-winning television news producer.

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