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during the good times, then once the market crashes, it's time to come out of hiding! Your portfolio will survive the market turmoil like no one else's, and you can scoop up all of the cheap stocks that less vigilant people had to sell. You can buy that high quality company for a fraction of what it cost before, and your investments have never been safer.

Of course the market may go lower, but there is little to fear, and everything to celebrate if this is the case: If you are buying shares in a high quality company with great recession proof products, then a falling price just means a better bargain. As Warren Buffet likes to say: When the price of groceries falls, you don't get upset. You don't go down to the grocery store and say, "Hey these groceries were more expensive last week. I want to buy them at last week's price." Rather, you get excited, because you get the same product for cheaper.

CONCLUSION

Notice that nowhere in the above article did we discuss diversification. Diversification is a good thing, and it is worthwhile to practice it on some level. But broad diversification will not keep your portfolio safe in a crash.

Rather, the best way to stay safe from a crash is to be vigilant. Keep an eye out for those "perma-bulls", who say the market will never go down. When they start coming out of the woodwork, you need to start stock-piling cash. Keep an eye out for the chart pattern shown here, and as it forms, stay on your toes. Keep cash, and buy government bonds (or government bond funds), and when the market tanks (as it always does), start buying stocks like crazy.

When the market recovers even as little as 10%, you could be dancing in the street in no time, while those who bought at the top could be licking their wounds for years to come.

Learn more about this author, Brian Palmer.
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