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.
Well, as I explained for me it has been pretty good at just passivelly avoiding the consequences of nation-sized bullshit like Brexit without me doing anything at all.
At the risk of repeating myself, my whole point is that it’s good as a passive investment, not that it can’t easilly be beaten by active trade strategies by somebody with good market knowledge (who is entering and exiting positions and can spot those “undervalued equities”)
Hence my expectation that for the ignorant investor or those who can’t be arsed to follow the markets, it’s probably a suitable passive zero-knowledge-needed way to bypass the consequences of whatever shit the US seems to be diving into as well as on a grander scale the transition from America as the top power to China as the top power, all things with a scope of at least one or two decades.
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.
:-/
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.
:-|
Well, as I explained for me it has been pretty good at just passivelly avoiding the consequences of nation-sized bullshit like Brexit without me doing anything at all.
At the risk of repeating myself, my whole point is that it’s good as a passive investment, not that it can’t easilly be beaten by active trade strategies by somebody with good market knowledge (who is entering and exiting positions and can spot those “undervalued equities”)
Hence my expectation that for the ignorant investor or those who can’t be arsed to follow the markets, it’s probably a suitable passive zero-knowledge-needed way to bypass the consequences of whatever shit the US seems to be diving into as well as on a grander scale the transition from America as the top power to China as the top power, all things with a scope of at least one or two decades.
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
… I’m an econometrician by education.
My ‘takes’ have a pretty good track record, but, basically no one ever listens to me, so these days I just laugh…
Oh sure. The USD has done terribly over the last five years. That’s why it’s trading at parity with the Euro and at a high water mark against the Yen.