“What Should I Do with My Money?”
December 13th, 2006WARNING: This is not a recommendation to buy sell or hold any financial instrument.
Many people are emailing, wondering: What should I do with my money?
While I think questions at this stage should be about water, shelter and food, a lot of Cryptogon readers still have investments on the brain; as if there’s some logical (and knowable) way to navigate what will probably be the grandest collapse in the history of civilization.
Many people, even now, are simply not thinking weird enough.
If, after reading:
and
Waiting for Clarity on the Brink of Oblivion
…you still feel inclined to try your luck on the ponzi-scheme, faith-based scam known as “investing,” I’ve found an article that you should read closely. Summing it up in one line: The advice being doled out to millionaires by the room-full—buy low management cost ETFs and funds that track stock indexes.
Even though I don’t play with stocks anymore, this is a damn good article, with sound advice—for those who insist on playing with ponzi schemes. It would have been better if it told people to learn how to hedge their stock index bets with out of the money put options. But that might not have maintained the right appearances. People might ask disturbing questions like, “If there’s that much risk involved, why am I playing this game in the first place?” The response of the index pushers would be, “Trust the market, over time…” Sure. How many decades do you have to recover your losses?
What’s the alternative?
Becky and I picked ticks off our goats this afternoon, and watered the garden…
Via: San Francisco Magazine:
For 35 years, Bay Area finance revolutionaries have been pushing a personal investing strategy that brokers despise and hope you ignore.
Excellent. Yes, at this stage of our plan, we are still heavily in the market – but not “playing” the market. A portion of our income is pension contribution, and it would be silly to forego revenue given by the company. Also, we have some funds from previous employment. It would be silly, on a tax-basis, to just take it out into dollars, right now. No point in coughing up 30% for taxes needlessly, only to find ourselves holding a wad of dollars.
Instead, we’ve moved it to mutual funds diversified away from American systemic risk (this is me being subtle) of which there are plenty. Soon, we’d like to find a way to move that into even safer alternatives, or convert it to What We Really NEED… but want to be methodical and smart. Meanwhile, physical possession of metals — we like the more easily spent pieces of actual silver, in non-U.S. denominations — is attractive, when we can afford it. But the homestead and the greater plan come first.
When people ask what they should do with their money, why not answer them: “Send them to me. I’ll give them a good home.” 😉
As for betting on gold and silver versus betting on water, food and shelter, I would say that those betting on the latter does so in the hope that thugs (government or otherwise) won’t simply seize them by force, while those betting on the former (and here I mean owning the physical stuff without any records of ownership) hope that people will continue to believe in the value of precious metals after all fiat paper scams have ended as they must. Both bets are, I think, reasonable, and they both carries with them a certain amount of risk that have to be taken into consideration.
Would you accept my gold coin as payment for a night’s shelter and some of your food and water?
Buy Silver, it is about to double, again. The is more gold above ground than silver, and silver is consumed in industry, gold is not.
actually a question, not a comment…
i’ve been thinking about discontinuing the use of my bank account and dealing only with cash. can you think of any reason that might be a bad idea? i can’t, but i could be missing something.
just curious.
Playing with fire.
The fun thing about a credit bubble is that it is like playing with fire.
I remember during the dot-com bubble thinking ‘this is a bubble, how can it not miss it and not get killed by it?’. Since you never know how far the insanity is going to go up, and know when it will pop, the easy way to play with fire was to always have sell stop orders on all your positions 10% below the current price. So if AOL was at 100, sell stop at $90.
That way they could go as high as the greater fool wanted, but then the music stopped, every position automatically got flushed to cash.
The other fun way to play with volatility I learned in college with a fun stock market simulation called Millionaire. To get rich every time in that silly game, you just picked 10 positions and bought leap puts and calls on both sides and waited for some epic event to send one side through the roof.
So for gold,
GDXFK CALL MKT VEC GOLD MIN$37 EXP 06/16/07,
GDXRK PUT MKT VEC GOLD MIN$37 EXP 06/16/07
If things stay stable, both positions devalue over time to nothing, but if it moves up or down (no one knows which) one position expires worthless, but the other goes way up.
Other than that, I live debt-free 100%, use renewable resources like firewood and biofuel.
I have studied the great depression and german hyperinflation and noticed that despite many terrible consequences, people kept on living their lives, companies kept making products despite the financial hurricane around them.
But I must admit, I have no idea what to do with cash from sale of our bay area mcMansion.
Stocks are nothing more than gambling. Analysis of the stocks are easily equated to card counters.
In my eyes, people who invest heavily in stocks are just as damaged as those who risk everything in a Vegas casino, although the results in Vegas happen a lot quicker.
I’ve been trying to invest in things that I trust in. I bought a good axe last week. Over the weekend, I chopped up an old fallen tree for firewood.
I’m also slightly invested in guns. My oldest purchase I bought for $350 about 8 years ago, and it’s now worth $450. Depending on the manufacturer and collector value, the prices will swing dramatically. A Sig arms gun a friend had been considering for a while jumped by several hundred dollars when they discontinued that model, even in used condition.
So, as Kuromaku Kenkyu asked above, yes, you have to worry about the thugs, and you should plan in advance. In a chaos situation, any ideas of utopia are out the window.
I have some other things in the works for myself, but they’re slow coming. If/when the time comes that they’re needed, we’ll see what state of completeness they’re in. As I’ve found, stuff like this is never complete. There’s always a way to make things better. If civilization collapsed today, I have a 40′ long vehicle with enough fuel in it to travel 1900 miles, enough supplies to be self sufficent when I reach another location, and enough protection to keep those who want what I have at a distance.
Of course, a single person will have it very rough. You have to have the community to thrive. A single person alone can survive, but a good group will thrive and be safe.
>>>Analysis of the stocks are easily equated to card counters.
Actually, unlike market analysis, card counting works. That’s why casinos will ask you to leave if they identify you as a counter. It’s not illegal, but casinos can ask you to leave for any reason.
A buddy of mine (PhD), and I briefly thought we were going to go with card counting on black jack, but decided against it because of the hassles involved.
They just won’t allow it, even though it works and is legal.
Why not simply keep doubling a bet on red on the roulette table until red comes up? That system would work, eventually (know that getting 30 blacks/greens in a row is not uncommon), but there’s a little problem with the table limit.
HA