My understanding is that HFTs - which are highly profitable - likely use some AI-techniques.
From my understanding of HFT, what they’re effectively doing is automated front runnings.
They scan market activity and look for spreads between orders and availability. Then they place very short term orders any time they see, for instance, “I’ll sell 1000 X at $49” and “I’ll buy 500 X at $49.05”, effectively buying up all the outstanding $49 orders and flipping them for a $.05 profit.
You don’t need an advanced AI for this. You just need to be able to see orders and make trades faster than anyone else in the market.
Because getting out ahead of trade volume is so lucrative, you’ll see huge investments in rack space near the physical stock exchanges and high speed lines between cities with big brokerages.
But AI trading is (theoretically) about spotting and predicting long term trends in the market, not front running active trades.
Idk if I’d say they “fuck everyone” given how much of the market is already heavily concentrated in a handful of hedge funds and investment banks. Most people don’t have real exposure to the stock market. And of those who do, most don’t indulge in active trading - they have savings in a 401k that maps to an index fund or other basket of blue chips, updating on daily or quarterly cycle.
The folks the HFT really fuck over are the day traders and investment bankers who are, themselves, trying to rapidly reposition ahead of market data. Warren Buffet’s Berkshire team loses more to HFTers in a day than any lay citizen would lose in a lifetime.
Institutional Investors (such as Pension Funds) and Retail are the ones getting properly fleeced in present day markets.
Retail might have started to get wise on it (frankly I don’t know for sure if that’s the case, as Retail tend to be either naive amateurs or deluded fools, so I’m just trusting what you said on this), but when it comes to Pension Funds people only figure out they’ve been fucked decades later when they try and cash their pensions and it’s a lot more difficult to tease away how it happened when all the money is pretty much in an investment black-box than it is from watching a handful of stocks and ETFs one has invested directly in.
Well sure, if you were a multi billion dollar hedge fund with an experienced staff and insider connections to market makers, with a powerful algorithmic trading apparatus, you’d be kicking the shit out of random dipshits on the internet. No use denying it!
You don’t need an advanced AI for this. You just need to be able to see orders and make trades faster than anyone else in the market.
Which they do by literally having their server machines physically in the same building as the Exchanges.
The system is rigged and has been rigged like this (not counting all the other ways it’s rigged, such as the tons of insider trading) for over 2 decades.
PS: The book “Flash Boys” is a great read about HFT.
The system is rigged and has been rigged like this
It’s rigged against day traders. But you can still get by just fine as a value or growth style investor who is seeking long term ROI. You’re just a sucker if you think you can outplay the machines minute-by-minute.
PS: The book “Flash Boys” is a great reading about HFT.
Michael Lewis was the GOAT back then. Shame he parlayed his fame into FTX infamy.
Hft aren’t just taking from day traders. They profit from all transactions. Your 401k is bled a fraction of a percent every day by hfts that take a cut before the Index fund or Mutual fund makes its daily rebalance.
They rebalance continuously. If they waited until the end of the month it would be billions that would be impossible to rebalance without distorting the trades they’re trying to execute.
Even if they waited it wouldn’t matter .001% of $1 billion a month is the same as .001% of $333m daily.
$33M/day is an enormous churn, even for a big pension fund. Again, I’d like to see where you’re finding these numbers. The NYSE trades $18.9B/day across a pool of $52T in asset value. By proportion, you’re talking about a fund with a $90B market cap showing that kind of activity.
Personally I went into Gold for long term ROI (though that’s pretty much a bet on in the long term there being crisis with the currencies themselves) since even ETFs and other spread investment stock strategies are still affected by Market manias and their aftermaths which can be triggered by HFTs (which at times create positive-feedback loops that turn into market runs).
That said, I was in the Industries that got hit hardest in the latest 2 major crashes (Tech in 2000, Finance in 2008) - to the point of being with Lehman Brothers in 2008 when they went bankrupt - as well as in Britain when they voted to Brexit (which tanked the pound, something which, by the way, this strategy protected me against), plus being in the Finance Industry is a bit like working in a sausage-making factory (once you see how sausages are made, you never want to eat one again) so I have a good excuse for having a “trust nothing” ultra-conservative savings protection strategy 🤪
Yeah, Gold doesn’t go up, rather it’s currencies that go down in value so you need more tokens of a currency to buy the same amount of Gold.
It’s mainly a protection against large economic upheaval, which is why I called it a “savings protection strategy”. Gold bought at the 1980 peak (the worst possible point since the end of the Gold Standard) is right now worth 8x more nominally in USD, though only about 2x if you discount inflation (as 1$ from 1980 is $3.93 in today’s money).
I suspect that what you thing is “long term” is not the same as what I think as “long term”.
More broadly, Gold’s long term ROI depends on which currency you’re comparing it with - it tends to be amazing in currencies like the Rupee because India’s policies are shit and the currency devaluates a lot, less so in currencies like the US Dollar or the Deutsche Mark/Euro. This is why it tends to be a traditional strategy in poorer countries which traditionally had more unstable economies, like India and China.
I myself bough gold near the local maximum in 2012 only to see its value stagnate for almost a decade (see graphic), so I just sat on it and now it’s worth almost 4.5x as much in nominal terms in the currency I bought it with (British Pounds) because, IMHO, the structural problems of the Economy and Financial system that led to the 2008 Crash were never actually solved by Central Banks and Governments in the West, plus there are a whole lot of related Social and Societal problems making the societies themselves less stable (which is why, Britain had Brexit and the US has Trump).
Gold is a punt on the instability of the current Economic and Financial structures in the West and on the ineptitude and even corruption of its politicians, as well as the expected upheavals from the transition from the Era Of America to the Era Of China, and it’s one I’m doing with an horizon of decades.
It can easilly be beaten by active trading strategies, but so far for me has worked fine as just a way to park my savings, kinda like in the old days - from the 40s to to maybe the 80s - buying stocks from large well established companies (say, GE) and getting a stead income from it in the form of dividends was a good way to park savings.
That said, I was in the Industries that got hit hardest in the latest 2 major crashes (Tech in 2000, Finance in 2008) - to the point of being with Lehman Brothers in 2008 when they went bankrupt - as well as in Britain when they voted to Brexit (which tanked the pound, something which, by the way, this strategy protected me against), plus being in the Finance Industry is a bit like working in a sausage-making factory (once you see how sausages are made, you never want to eat one again) so I have a good excuse for having a “trust nothing” ultra-conservative savings protection strategy 🤪
I’ll say that I was working O&G in 2020 when the spot price of a barrel went negative. My own firm dropped in price from mid double digits to single digits, and I bought every share I could get my hands on, knowing they could liquidate tomorrow for multiple of their market cap.
If you’re that much of an insider, I can’t imagine why you’d bother being conservative. Seems like you’ve got a ton of valuable info to trade against.
I left the industry almost a decade ago and was never a business guy: I just made software for the business (specifically Frontoffice development).
I literally put my savings in Gold and pretty much didn’t touch it for over a decade.
Amongst other things that position saved me from the hit on the British Pound after the Leave vote (and decay since) as the savings that went into it were originally in Pounds.
I wouldn’t call it an “investment strategy”, more of a “safe long-term parking strategy”.
Since the question was about how to protect oneself of the upheavals in the US, its system and its Economy, I pitched my “safe parking” strategy as a possible answer that’s very passive (certainly the way I did it).
I literally put my savings in Gold and pretty much didn’t touch it for over a decade.
Putting money in an appreciating savings account is a great way to earn passive income. But gold did not outperform the S&P 500 until this last year, and even then only barely. For a whole host of reasons, commodities are a highly speculative and historically underperforming asset class.
I wouldn’t call it an “investment strategy”, more of a “safe long-term parking strategy”.
I mean, long term savings is long term savings. Unless you’re keeping it in straight cash (historically one of the worst moves you can make) you’re still making some kind of investment decision.
Since the question was about how to protect oneself of the upheavals in the US
The answer there tends to be utilities and treasuries. Gold, as a commodity safe haven, is still heavily predicated on the easy credit afforded by its buyers. Utilities, by contrast, tend to have inelastic demand and so continue to enjoy high cash flow (and high dividends) as the rest of the industry contracts. And treasuries pay a fixed rate, guaranteeing future returns for the life of the note.
Gold is still speculative relative to the demand for trade on the market. So you can see sudden spikes in price in the time period around a crash. But there’s no incentive to hold it long term, as there’s no revenue generation behind owning a yellow rock. You’ll see high volatility, not a high rate of return, long term.
Keep in my that my whole point is that Gold is good at facing the biggest Social and Economic upheaval of all (the once in a century kind of event), not that people should be going into it during the good times with no clouds in the sky and with a time horizont of a few years.
Putting money in an appreciating savings account is a great way to earn passive income.
I guess you haven’t seen the interest rates on those since 2008. That advice is almost 2 decades out of date. Also they’re tightly couple to USD.
But gold did not outperform the S&P 500 until this last year, and even then only barely.
Absolutelly, stocks (as an asset, rather than any specific individual stocks) perform better outside major economic upheavals. Since we seem well on track for one, this isn’t exactly a good time for going into Stocks IMHO so I didn’t advise a nice index tracker investment or similar - when an entire economy goes down the drain, those go too.
As for that statistic you quoted, keep in mind that the S&P 500’s historical performance doesn’t include stocks which were taken out of the index, so it’s not a real image of the market but rather distorted on the upside since all the “bad” stock get removed from the index, something which matters in a long term comparison, so over the long term it’s less clear which asset performs best.
Theoretically a properly diversified stock portfolio should outperform Gold over the long term, but there is some amount of management needed (anybody who had GE in their portfolio going into the 90s would’ve wanted to offload some of it in the 00s) and stocks are often a lot more tightly couple to the currency and Economy of the country they’re listed in (unless we’re talking about companies which make all their money abroad and just happen to be listed in a major exchange in a different country).
Gold just works it’s “magic” - literally of requiring nothing and doing nothing and still somehow holding value - even if burried in one’s backyard.
Commodities are a highly speculative and historically underperforming asset class
Well, that’s the thing, Gold doesn’t tend to perform as commodity because it has very little in the way of industrial uses.
It’s mainly an historical form of currency, which is why its volatility tends to be in between currencies and major stock market indexes.
If you look at Silver - which is much more sought for its industrial uses - it’s a totally different story.
[Since the question was about how to protect oneself of the upheavals in the US]
The answer there tends to be utilities and treasuries.
Those things are tightly coupled to the value of the a country’s currency and economy. If the objective is to protect oneself from upheavals in those, those two investments aren’t at all effective.
I’ll give you an example of my own: my savings were originally in British Pounds. I moved most of them to Gold in the aftermath of the 2008 Crash. Years later, there was the Leave Referendum in Britain and the British Pound tanked almost 20% in value when the results came out. The impact on my savings: Gold went up in British Pounds as much as the British Pound tanked - Gold didn’t became any more appealing in Britain, it just held its value as all things Britain and British became less valuable for the rest of the World. Similarly I did not feel any of the subsequent slow devaluation of the GBP.
Had I invested in Gilts (British Treasuries) or British Utilities, I would’ve been fully hit by the loss of value of the British Pound versus other currencies.
Mind you, some of my savings back then were in Euros and they had almost the same behaviour versus the British Pound, though the Euro was also dragged a little down by the Leave Referedum result versus Gold and the Dollar.
The point being that to protect one’s US Dollar savings right now one should probably exit the Dollar and assets denominated in Dollars, for different currencies, and Gold just happens to be currency-like (a traditional currency even and still held by Central banks as reserves) whilst not really tightly coupled to the politics or Economics of any one country.
Just switching savings to a different currency or assets denominated in other currencies (say, ETFs on major stock indices in markets outside one’s home market) would probably do most of the same, though if a big country like the US really goes down the shithole, other economies will also be dragged down at least a bit, and of course any currency or assets denominated in that currency you hold are at the mercy of governmental mismanagement in that country.
Gold, meanwhile, just sits there and does nothing being controller by nobody.
It’s the ultimate passive isolationist investment, IMHO, and as I said way back in my first post, having been hit directly by the last to biggest economic crashes plus Brexit, I’m biased towards passive isolationist long term holding of value.
Gold is good at facing the biggest Social and Economic upheaval of all
It’s not. It’s still a commodity (and not a particularly useful one). Again, if you pick any given market crash and you invest in a telecom or energy giant at the outset, you’re going to outperform gold as a commodity over the intervening years. Gold only pays out when you can time the market and sell during a surge in demand. Outside of those boom cycles, the commodity trades flat or declining.
It is, at best, a short cycle hedge against sudden drops in price. And at that point, your play is to sell the gold and buy into an undervalued equity.
Because they know that someone is going to be more clever than them, faster than them, at some point, if they keep trying to do inside moves.
And also because they know that at some point, because of everyone trying to be cleverer and faster than everyone else… one day this is all going to blow up, and all the various kinds of leverage will unwind, and work backwards.
They didn’t say they went 100% into gold, just thst they have a solid chunk in it, as a safety margin / defensive play.
Gold, on the other hand… much, much simpler, in the long term.
Generally less ROI than during a Bull run in the market, but it does always go up, in the long run… beats inflation!
If you see massive volatility in gold, that means some fairly big entities are … rearranging their bets, so to speak.
On that note, here’s the DJIA / Gold:
Trump’s been great for Gold prices, Gold’s gone up more than the stock market has, in his term so far.
… Have you been following the Fed Repo rates in the last couple of weeks?
The Fed is losing control of the bond market, repo rates have been blowing outside of the Fed’s target channels… massive, massive liquidity crunch currently ongoing in the US banking system, because they’re all realizing they’re exposed to … double pledged collateral, or maybe the whole collateralized debt asset security things that people have been making out of!- yep, its not subprime home loans this time, its subprime auto loans!
Defaults and delinquencies are powering up highed and higher for… basically every kind of debt class, Commerical Real Estate market is blowing up…
China has been massively buying gold.
BRICS just rolled out a new intl payment system, based on the Yuan.
Turns out the largest foreign buyer of US debt is actually… the Cayman Islands, ie, US financial firms that are leveraged 100 to 1 on the basis trade.
Fed held a secret meeting on Friday, with a whole bunch of banks, to discuss those cockroaches Jaimie Dimon mentioned a couple weeks back.
… Because the $200T Shadow Banking system is currently completely imploding.
Oh, and Bitcoin is entering full nose dive territory.
Like I said, every one keeps trying to out clever each other, one day, it all breaks, 1929 style.
Took the market 25 years to recover from that one.
But AI trading is (theoretically) about spotting and predicting long term trends in the market, not front running active trades.
Yeah, AI has been useful finding leads for me. So far, it had been correct with some long term market predictions. I asked AI of the resilience of the renewable energy sector, and it had been correct since my renewable stocks have grown in face of tech stocks sell off and broader market uncertainty. But I suppose it’s a no-brainer considering that the renewable energy sector is still utilities, and utilities are go-to defensive investments in the face of market downturn.
From my understanding of HFT, what they’re effectively doing is automated front runnings.
They scan market activity and look for spreads between orders and availability. Then they place very short term orders any time they see, for instance, “I’ll sell 1000 X at $49” and “I’ll buy 500 X at $49.05”, effectively buying up all the outstanding $49 orders and flipping them for a $.05 profit.
You don’t need an advanced AI for this. You just need to be able to see orders and make trades faster than anyone else in the market.
Because getting out ahead of trade volume is so lucrative, you’ll see huge investments in rack space near the physical stock exchanges and high speed lines between cities with big brokerages.
But AI trading is (theoretically) about spotting and predicting long term trends in the market, not front running active trades.
That’s how big hedge funds fuck everyone. They have that access.
Idk if I’d say they “fuck everyone” given how much of the market is already heavily concentrated in a handful of hedge funds and investment banks. Most people don’t have real exposure to the stock market. And of those who do, most don’t indulge in active trading - they have savings in a 401k that maps to an index fund or other basket of blue chips, updating on daily or quarterly cycle.
The folks the HFT really fuck over are the day traders and investment bankers who are, themselves, trying to rapidly reposition ahead of market data. Warren Buffet’s Berkshire team loses more to HFTers in a day than any lay citizen would lose in a lifetime.
Institutional Investors (such as Pension Funds) and Retail are the ones getting properly fleeced in present day markets.
Retail might have started to get wise on it (frankly I don’t know for sure if that’s the case, as Retail tend to be either naive amateurs or deluded fools, so I’m just trusting what you said on this), but when it comes to Pension Funds people only figure out they’ve been fucked decades later when they try and cash their pensions and it’s a lot more difficult to tease away how it happened when all the money is pretty much in an investment black-box than it is from watching a handful of stocks and ETFs one has invested directly in.
Are you saying that if you had that access, then you could beat all the big hedge funds? Because… no… you couldn’t.
Uhh… what? What are you taking about?
Well sure, if you were a multi billion dollar hedge fund with an experienced staff and insider connections to market makers, with a powerful algorithmic trading apparatus, you’d be kicking the shit out of random dipshits on the internet. No use denying it!
Which they do by literally having their server machines physically in the same building as the Exchanges.
The system is rigged and has been rigged like this (not counting all the other ways it’s rigged, such as the tons of insider trading) for over 2 decades.
PS: The book “Flash Boys” is a great read about HFT.
It’s rigged against day traders. But you can still get by just fine as a value or growth style investor who is seeking long term ROI. You’re just a sucker if you think you can outplay the machines minute-by-minute.
Michael Lewis was the GOAT back then. Shame he parlayed his fame into FTX infamy.
Hft aren’t just taking from day traders. They profit from all transactions. Your 401k is bled a fraction of a percent every day by hfts that take a cut before the Index fund or Mutual fund makes its daily rebalance.
Every month, maybe. These big portfolio funds aren’t rebalancing at that frequency or scale. They’re relatively static and conservatively positioned.
They rebalance continuously. If they waited until the end of the month it would be billions that would be impossible to rebalance without distorting the trades they’re trying to execute.
Even if they waited it wouldn’t matter .001% of $1 billion a month is the same as .001% of $333m daily.
On the margins. You’re not seeing the whole portfolio turn over day by day.
Which 401k is flipping $333M of balance sheet every day?
Also, how many days do you think are in a month?
Sorry I dropped a decimal. 33.3*30
Your 401k isn’t $33 million a day. It’s the funds behind it that are trading daily.
.001% of $33M from the Vanguard Index means you lose .001% of the $50k in your 401k which holds Vanguard.
$33M/day is an enormous churn, even for a big pension fund. Again, I’d like to see where you’re finding these numbers. The NYSE trades $18.9B/day across a pool of $52T in asset value. By proportion, you’re talking about a fund with a $90B market cap showing that kind of activity.
Personally I went into Gold for long term ROI (though that’s pretty much a bet on in the long term there being crisis with the currencies themselves) since even ETFs and other spread investment stock strategies are still affected by Market manias and their aftermaths which can be triggered by HFTs (which at times create positive-feedback loops that turn into market runs).
That said, I was in the Industries that got hit hardest in the latest 2 major crashes (Tech in 2000, Finance in 2008) - to the point of being with Lehman Brothers in 2008 when they went bankrupt - as well as in Britain when they voted to Brexit (which tanked the pound, something which, by the way, this strategy protected me against), plus being in the Finance Industry is a bit like working in a sausage-making factory (once you see how sausages are made, you never want to eat one again) so I have a good excuse for having a “trust nothing” ultra-conservative savings protection strategy 🤪
Gold has never been good long term roi. It’s an inflation hedge. (I bought gold in the 1980’s).
Yeah, Gold doesn’t go up, rather it’s currencies that go down in value so you need more tokens of a currency to buy the same amount of Gold.
It’s mainly a protection against large economic upheaval, which is why I called it a “savings protection strategy”. Gold bought at the 1980 peak (the worst possible point since the end of the Gold Standard) is right now worth 8x more nominally in USD, though only about 2x if you discount inflation (as 1$ from 1980 is $3.93 in today’s money).
I suspect that what you thing is “long term” is not the same as what I think as “long term”.
More broadly, Gold’s long term ROI depends on which currency you’re comparing it with - it tends to be amazing in currencies like the Rupee because India’s policies are shit and the currency devaluates a lot, less so in currencies like the US Dollar or the Deutsche Mark/Euro. This is why it tends to be a traditional strategy in poorer countries which traditionally had more unstable economies, like India and China.
I myself bough gold near the local maximum in 2012 only to see its value stagnate for almost a decade (see graphic), so I just sat on it and now it’s worth almost 4.5x as much in nominal terms in the currency I bought it with (British Pounds) because, IMHO, the structural problems of the Economy and Financial system that led to the 2008 Crash were never actually solved by Central Banks and Governments in the West, plus there are a whole lot of related Social and Societal problems making the societies themselves less stable (which is why, Britain had Brexit and the US has Trump).
Gold is a punt on the instability of the current Economic and Financial structures in the West and on the ineptitude and even corruption of its politicians, as well as the expected upheavals from the transition from the Era Of America to the Era Of China, and it’s one I’m doing with an horizon of decades.
It can easilly be beaten by active trading strategies, but so far for me has worked fine as just a way to park my savings, kinda like in the old days - from the 40s to to maybe the 80s - buying stocks from large well established companies (say, GE) and getting a stead income from it in the form of dividends was a good way to park savings.
:-/
That’s certainly a strategy.
I’ll say that I was working O&G in 2020 when the spot price of a barrel went negative. My own firm dropped in price from mid double digits to single digits, and I bought every share I could get my hands on, knowing they could liquidate tomorrow for multiple of their market cap.
If you’re that much of an insider, I can’t imagine why you’d bother being conservative. Seems like you’ve got a ton of valuable info to trade against.
I left the industry almost a decade ago and was never a business guy: I just made software for the business (specifically Frontoffice development).
I literally put my savings in Gold and pretty much didn’t touch it for over a decade.
Amongst other things that position saved me from the hit on the British Pound after the Leave vote (and decay since) as the savings that went into it were originally in Pounds.
I wouldn’t call it an “investment strategy”, more of a “safe long-term parking strategy”.
Since the question was about how to protect oneself of the upheavals in the US, its system and its Economy, I pitched my “safe parking” strategy as a possible answer that’s very passive (certainly the way I did it).
Putting money in an appreciating savings account is a great way to earn passive income. But gold did not outperform the S&P 500 until this last year, and even then only barely. For a whole host of reasons, commodities are a highly speculative and historically underperforming asset class.
I mean, long term savings is long term savings. Unless you’re keeping it in straight cash (historically one of the worst moves you can make) you’re still making some kind of investment decision.
The answer there tends to be utilities and treasuries. Gold, as a commodity safe haven, is still heavily predicated on the easy credit afforded by its buyers. Utilities, by contrast, tend to have inelastic demand and so continue to enjoy high cash flow (and high dividends) as the rest of the industry contracts. And treasuries pay a fixed rate, guaranteeing future returns for the life of the note.
Gold is still speculative relative to the demand for trade on the market. So you can see sudden spikes in price in the time period around a crash. But there’s no incentive to hold it long term, as there’s no revenue generation behind owning a yellow rock. You’ll see high volatility, not a high rate of return, long term.
Keep in my that my whole point is that Gold is good at facing the biggest Social and Economic upheaval of all (the once in a century kind of event), not that people should be going into it during the good times with no clouds in the sky and with a time horizont of a few years.
I guess you haven’t seen the interest rates on those since 2008. That advice is almost 2 decades out of date. Also they’re tightly couple to USD.
Absolutelly, stocks (as an asset, rather than any specific individual stocks) perform better outside major economic upheavals. Since we seem well on track for one, this isn’t exactly a good time for going into Stocks IMHO so I didn’t advise a nice index tracker investment or similar - when an entire economy goes down the drain, those go too.
As for that statistic you quoted, keep in mind that the S&P 500’s historical performance doesn’t include stocks which were taken out of the index, so it’s not a real image of the market but rather distorted on the upside since all the “bad” stock get removed from the index, something which matters in a long term comparison, so over the long term it’s less clear which asset performs best.
Theoretically a properly diversified stock portfolio should outperform Gold over the long term, but there is some amount of management needed (anybody who had GE in their portfolio going into the 90s would’ve wanted to offload some of it in the 00s) and stocks are often a lot more tightly couple to the currency and Economy of the country they’re listed in (unless we’re talking about companies which make all their money abroad and just happen to be listed in a major exchange in a different country).
Gold just works it’s “magic” - literally of requiring nothing and doing nothing and still somehow holding value - even if burried in one’s backyard.
Well, that’s the thing, Gold doesn’t tend to perform as commodity because it has very little in the way of industrial uses.
It’s mainly an historical form of currency, which is why its volatility tends to be in between currencies and major stock market indexes.
If you look at Silver - which is much more sought for its industrial uses - it’s a totally different story.
Those things are tightly coupled to the value of the a country’s currency and economy. If the objective is to protect oneself from upheavals in those, those two investments aren’t at all effective.
I’ll give you an example of my own: my savings were originally in British Pounds. I moved most of them to Gold in the aftermath of the 2008 Crash. Years later, there was the Leave Referendum in Britain and the British Pound tanked almost 20% in value when the results came out. The impact on my savings: Gold went up in British Pounds as much as the British Pound tanked - Gold didn’t became any more appealing in Britain, it just held its value as all things Britain and British became less valuable for the rest of the World. Similarly I did not feel any of the subsequent slow devaluation of the GBP.
Had I invested in Gilts (British Treasuries) or British Utilities, I would’ve been fully hit by the loss of value of the British Pound versus other currencies.
Mind you, some of my savings back then were in Euros and they had almost the same behaviour versus the British Pound, though the Euro was also dragged a little down by the Leave Referedum result versus Gold and the Dollar.
The point being that to protect one’s US Dollar savings right now one should probably exit the Dollar and assets denominated in Dollars, for different currencies, and Gold just happens to be currency-like (a traditional currency even and still held by Central banks as reserves) whilst not really tightly coupled to the politics or Economics of any one country.
Just switching savings to a different currency or assets denominated in other currencies (say, ETFs on major stock indices in markets outside one’s home market) would probably do most of the same, though if a big country like the US really goes down the shithole, other economies will also be dragged down at least a bit, and of course any currency or assets denominated in that currency you hold are at the mercy of governmental mismanagement in that country.
Gold, meanwhile, just sits there and does nothing being controller by nobody.
It’s the ultimate passive isolationist investment, IMHO, and as I said way back in my first post, having been hit directly by the last to biggest economic crashes plus Brexit, I’m biased towards passive isolationist long term holding of value.
It’s not. It’s still a commodity (and not a particularly useful one). Again, if you pick any given market crash and you invest in a telecom or energy giant at the outset, you’re going to outperform gold as a commodity over the intervening years. Gold only pays out when you can time the market and sell during a surge in demand. Outside of those boom cycles, the commodity trades flat or declining.
It is, at best, a short cycle hedge against sudden drops in price. And at that point, your play is to sell the gold and buy into an undervalued equity.
:-|
Because they know that someone is going to be more clever than them, faster than them, at some point, if they keep trying to do inside moves.
And also because they know that at some point, because of everyone trying to be cleverer and faster than everyone else… one day this is all going to blow up, and all the various kinds of leverage will unwind, and work backwards.
They didn’t say they went 100% into gold, just thst they have a solid chunk in it, as a safety margin / defensive play.
Gold, on the other hand… much, much simpler, in the long term.
Generally less ROI than during a Bull run in the market, but it does always go up, in the long run… beats inflation!
If you see massive volatility in gold, that means some fairly big entities are … rearranging their bets, so to speak.
On that note, here’s the DJIA / Gold:
Trump’s been great for Gold prices, Gold’s gone up more than the stock market has, in his term so far.
:-/
That’s a lot of hedging
Yep, dollar’s dying.
… Have you been following the Fed Repo rates in the last couple of weeks?
The Fed is losing control of the bond market, repo rates have been blowing outside of the Fed’s target channels… massive, massive liquidity crunch currently ongoing in the US banking system, because they’re all realizing they’re exposed to … double pledged collateral, or maybe the whole collateralized debt asset security things that people have been making out of!- yep, its not subprime home loans this time, its subprime auto loans!
Defaults and delinquencies are powering up highed and higher for… basically every kind of debt class, Commerical Real Estate market is blowing up…
China has been massively buying gold.
BRICS just rolled out a new intl payment system, based on the Yuan.
Turns out the largest foreign buyer of US debt is actually… the Cayman Islands, ie, US financial firms that are leveraged 100 to 1 on the basis trade.
Fed held a secret meeting on Friday, with a whole bunch of banks, to discuss those cockroaches Jaimie Dimon mentioned a couple weeks back.
… Because the $200T Shadow Banking system is currently completely imploding.
Oh, and Bitcoin is entering full nose dive territory.
Like I said, every one keeps trying to out clever each other, one day, it all breaks, 1929 style.
Took the market 25 years to recover from that one.
My God, these are some takes
Yeah, AI has been useful finding leads for me. So far, it had been correct with some long term market predictions. I asked AI of the resilience of the renewable energy sector, and it had been correct since my renewable stocks have grown in face of tech stocks sell off and broader market uncertainty. But I suppose it’s a no-brainer considering that the renewable energy sector is still utilities, and utilities are go-to defensive investments in the face of market downturn.