Expert warns of a severe market collapse — offers 3 options to shelter investments

Hoarding cash: A temporary safety net

Rogers, who co-founded the Quantum Fund, has navigated through turbulent markets before, notably during the economic turmoil of the 1970s and again during the dot com bubble and burst. As a result, the esteemed investor has learned a thing or two about weathering a market storm.

Based on his experience, Rogers suggests holding a significant amount of cash in preparation for the next collapse.

“I am not spending my cash yet. I would like to have more cash because, when the next market collapse comes, it’s going to be the worst in my lifetime,” Rogers said.

He continues with a few other solid suggestions: “If I were buying today — and I’m not — I would probably buy silver or agriculture.”

In Canada, investors may want to consider a similar approach. Keeping cash in a high-interest savings account or short-term Canadian government bonds, such as T-bills, can offer some security while preserving liquidity for future opportunities.

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Keeping cash in a high-interest savings account

Keeping cash in a high-interest savings account can be a smart hedge during a stock market correction as it keeps your earnings safe from market volatility.

Keep in mind that, during a stock market correction, many investments lose value rapidly, and liquidity becomes crucial. By keeping your investment cash in a high-interest savings account, your cash balance is secure and unaffected by market swings. This ensures you have readily accessible funds to cover expenses or invest when better opportunities arise.

Read More: Pick the best high-interest savings account

Holding cash during a market correction puts you in a strong position to exploit investment opportunities. When stock prices fall during a correction, many high-quality assets can become undervalued. Cash on hand allows you to buy stocks, bonds or ETFs at lower prices, capitalizing on the potential for future growth once the market recovers.

While cash may not deliver the high returns of other investments in the long run, holding cash in a high-interest savings account during a stock market correction provides liquidity, safety and the opportunity to buy assets at discounted prices, making it a valuable hedge against market volatility.

Precious metals as a hedge against uncertainty

Precious metals like gold and silver are often seen as hedges against inflation and economic uncertainty, primarily because they cannot be printed by central banks like traditional currency. In 2024, gold has drawn significant attention from investors, reaching new record highs as concerns over inflation rise.

Read More: How to invest in gold

Silver, while also rallying this year, remains well below its historical peak. Rogers noted this discrepancy as a reason for his interest in the metal. “Silver is down 40% or 50% from its all-time high... Gold has been making all-time highs,” he explained. “Silver is down — it’s hard to find things that are down.”

Read More: How to invest in silver

For Canadian investors, exposure to precious metals could be achieved through gold mining stocks like Barrick Gold (NYSE:GOLD) or Franco-Nevada (NYSE:FNV), which have performed well amid rising commodity prices.