<< <i>This "crisis" has show, that the US dollar and US treasuries are safe havens. Just as they have been and wil continue to be, until the US govt is overthrown. Anybody know when that will be?
16 months ago
Edited: Actually, the same people are still in charge. We just don't know exactly who they are. >>
Borders, smorders....who needs 'em. "We're All Socialists Now."
<< <i>Pensions and retirement plans are the last remaining glob of money for the Washington/Wall St. theives to go after. Do not be surprised if Washington comes up with some type of legislation to "protect" American workers' retirement plans by requiring them to be invested in "safe" US Treasury bonds. Unless your employer is matching your retirement contributions they best thing you can do is take full control of your retirement account by getting it out of the hands of others and into an account that you and only you can manage. In many cases this requires you to transfer the funds to an IRA that you control. >>
Quoted for truth.
My employer does match .50 on the dollar up to 6%. This will be the first year I do not contribute. I moved everything into "safe" bond type investments and would pull it all out and suffer the penalties if I could. It would all go into gold and silver.
There is no doubt the government would take control of all private retirement funds, today, if they thought they could get away with it and remain in power.
All future investments for the foreseeable future will be precious metals. Then when the timing is right, it will be real estate.
Assuming no debt...50% Muni-bonds (tax exempt), 25% Gold and Silver, 24% Mutual Funds or companies with a high dividend, 1% at the Casino/horse track. That's my current play.
<< <i>Pensions and retirement plans are the last remaining glob of money for the Washington/Wall St. theives to go after. Do not be surprised if Washington comes up with some type of legislation to "protect" American workers' retirement plans by requiring them to be invested in "safe" US Treasury bonds. Unless your employer is matching your retirement contributions they best thing you can do is take full control of your retirement account by getting it out of the hands of others and into an account that you and only you can manage. In many cases this requires you to transfer the funds to an IRA that you control. >>
Quoted for truth.
My employer does match .50 on the dollar up to 6%. This will be the first year I do not contribute. I moved everything into "safe" bond type investments and would pull it all out and suffer the penalties if I could. It would all go into gold and silver.
There is no doubt the government would take control of all private retirement funds, today, if they thought they could get away with it and remain in power.
All future investments for the foreseeable future will be precious metals. Then when the timing is right, it will be real estate. >>
With your employer matching .50 on the dollar, I think you're crazy not to take them up on it, where can you get a rate of return like that? nowhere!!!!
With your employer matching .50 on the dollar, I think you're crazy not to take them up on it, where can you get a rate of return like that? nowhere!!!! >>
I agree. Instantly a 50% gain. I'd definitely be in up to the match. If you're paranoid about stocks then put it in stable funds and take the rest of your money and put it in metals.
There is a great book called "The Black Swan,"the author, fellow named Taleb, says that as things in the world become more complex, it becomes harder to predict with any kind of reliability, what things will do in the future. He says that markets, like financial markets, are beyond comprehension, and that we make up silly little formulas or models to explain what is happening. It is a great book and anyone wondering about where their money might be going would enjoy it.
Taleb, says that as things in the world become more complex, it becomes harder to predict with any kind of reliability
It's not as much about predictability, he also says that the systems become more fragile and that a system failure becomes much more likely as complexity increases.
(And that is why I'm thinking silver, now that you mention it).
Q: Are You Printing Money? Bernanke: Not Literally
<< <i>Taleb, says that as things in the world become more complex, it becomes harder to predict with any kind of reliability
It's not as much about predictability, he also says that the systems become more fragile and that a system failure becomes much more likely as complexity increases.
(And that is why I'm thinking silver, now that you mention it). >>
He also says not to make many smalls bets in the markets as it gets you nowhere. Play for the Black Swan event. That's how he made his mark........MJ
Walker Proof Digital Album Fellas, leave the tight pants to the ladies. If I can count the coins in your pockets you better use them to call a tailor. Stay thirsty my friends......
<< <i>Taleb, says that as things in the world become more complex, it becomes harder to predict with any kind of reliability
It's not as much about predictability, he also says that the systems become more fragile and that a system failure becomes much more likely as complexity increases.
(And that is why I'm thinking silver, now that you mention it). >>
He also says not to make many smalls bets in the markets as it gets you nowhere. Play for the Black Swan event. That's how he made his mark........MJ >>
That might be fine for an author or commentator looking to make his mark, or for a young person with a high income potential. It is really stupid, if a person is along in years and isn't likely to earn all that much more income.
Black swans are rare. We just had one in 2008. We might not see another one for another 20 years, and it might not be the one a person bets on. In the 2008 many managed portfolios of those looking for that kind of event suffered terrible losses. So even though they were right that a black swan appeared, and they were right on nature of news events, they placed their bets such that they not only lost money, but lost huge amounts of money, -30%, -50% some -70%. How humiliating would that be? To bet on a rare black swan, have it come up and still lose one's shirt?
Betting on the black swan is betting on a long shot. If it is the long shot favored by popular commentators, odds are that ain't the one winning. This might lead to the conclusion that throwing darts at random long shots is more likely to produce a big winner than betting on black swans that popular commentators are talking about.
As I have always said during my time on the forums: for the average person, diversifying into age appropriate assets, accepting an average return with average risk, while also having some insurance against black swan events is almost always the best way to go for the average person. If a person wants to gamble on long shots, best avoid listening to the popular commentators--their longs shots are less likely to come in.
So what's the safe haven now? as the thread asks .....
Get OUT of DEBT. Period. The only debt I have now is a small mortgage. No car payments, no credit cards, etc. For the first time in my life I am nearly debt free minus the small mortgage I have that is high equity even with the worst possible sale price I might get TODAY. That combined with a 401k that I lucked out with over two years ago and pulled 90% of funds into guaranteed combined with purchasing PM's at a very modest level have me positioned much better than most.
GET OUT OF ALL DEBT and then play with a keen mind
I'd rather jab sharp pencils in my eyes then own these poorly run companies whether they go up in price or not. There are better fleabag beaten down companies then these two IMHO. I get physically sick thinking about AIG.
To each is own
MJ
Walker Proof Digital Album Fellas, leave the tight pants to the ladies. If I can count the coins in your pockets you better use them to call a tailor. Stay thirsty my friends......
Black swans are rare. We just had one in 2008. We might not see another one for another 20 years, and it might not be the one a person bets on.
Let's review. 1987 Meltdown, LongTerm Capital Management, Enron, AIG, Fannie & Freddie, BoA, Citi, WaMu, IndyBank, Libor, 1.44 Quad in Derivatives, Baby Boom retirement, unfunded federal liabilities, no buyers for Treasuries - all a tip of the iceberg. What does it take to get your attention?
In the 2008 many managed portfolios of those looking for that kind of event suffered terrible losses. So even though they were right that a black swan appeared, and they were right on nature of news events, they placed their bets such that they not only lost money, but lost huge amounts of money, -30%, -50% some -70%. How humiliating would that be? To bet on a rare black swan, have it come up and still lose one's shirt?
I'm lost on that one. Can you give some examples?
Betting on the black swan is betting on a long shot. If it is the long shot favored by popular commentators, odds are that ain't the one winning. This might lead to the conclusion that throwing darts at random long shots is more likely to produce a big winner than betting on black swans that popular commentators are talking about.
I guess I'd need you to be more specific. Which (What)? black swan(s) are you talking about? Which one is favored by popular commentators that isn't likely? I tend to think that a sovereign debt default by quantitative easing is in the cards, and is not too far away. My bets are focused on that eventuality and if I am wrong, then I'll live with the consequences for better or worse. My perception is that we are having a "rolling sovereign debt default" on a continuous basis, and have been for at least the past 5 years. My judgement is that it will only get worse in the foreseeable future.
As I have always said during my time on the forums: for the average person, diversifying into age appropriate assets, accepting an average return with average risk, while also having some insurance against black swan events is almost always the best way to go for the average person.
And I am here to tell you that risk assessment is in the eye of the beholder. If I were peddling stocks & bonds, I'd be telling you that risks are figured the way that I learned in business school 25 years ago, but that is not true now. Flash trading and derivatives have altered the whole financial structure (and the associated risks) and if you don't believe that, then we will have to agree to disagree.
Get OUT of DEBT. Period. The only debt I have now is a small mortgage. No car payments, no credit cards, etc. For the first time in my life I am nearly debt free minus the small mortgage I have that is high equity even with the worst possible sale price I might get TODAY. That combined with a 401k that I lucked out with over two years ago and pulled 90% of funds into guaranteed combined with purchasing PM's at a very modest level have me positioned much better than most.
I agree with reducing debt to manageable levels, but I have not finished paying off my mortgage simply because I intend to pay it off with devalued dollars, and I will continue to take the tax deduction. Liquidating my mortgage debt all at once doesn't make financial sense to me, although I could do it.
Q: Are You Printing Money? Bernanke: Not Literally
Slowly siphoning off your 401K and mutual funds. Owning individual stocks may offset this.
I have been out of the stock market now for 2 weeks. I am considering not contributing anymore to my 401K either even with a .50 match up to 6% of my salary, not because of the aforementioned link.
In the 2008 many managed portfolios of those looking for that kind of event suffered terrible losses. So even though they were right that a black swan appeared, and they were right on nature of news events, they placed their bets such that they not only lost money, but lost huge amounts of money, -30%, -50% some -70%. How humiliating would that be? To bet on a rare black swan, have it come up and still lose one's shirt?
I'm lost on that one. Can you give some examples? >>
Google this search: harry schultz peter brimelow best worst
Look up the article for Newsletter of the year 2008. >> from that Brimelow article which the forum filter won't let me link:
The reason I pick Schultz: the extraordinary prescience he showed in predicting what he called a "financial tsunami" well over a year ago. Well? He was right, wasn't he?
... But over the past 12 months through November, Schultz is down a heart-stopping 76.05% by Hulbert Financial Digest count, vs. negative 36.68% for the dividend-reinvested Dow Jones Wilshire 5000. >>
Schultz got the 2008 story line of a financial tsunami almost entirely correct, but his subscribers still lost their shirts. Another half-dozen newsletters were in a similar boat, they got the 2008 story right, but their audited portfolios lost big time. The same will likely happen with the next Black Swan. The popular commentators might get the story right, but many will likely have their money in the wrong places. Everything is easy in hindsight, not so easy going forward.
As for the news, again as I've written many times before, I've been involved in the financial markets for over 20 years. Chicken Little has always been around, always screaming that the sky is going to fall immediately. Go back 20 years, and a person can find similar dire predictions. For students of history, go back 40 years, or 100 years, and the Chicken was alive back then too. Most of the time, barring major historic events (again: major war, revolution, plague or famine), the economy muddles through. Some of the stuff you cited are relatively small events. Any fundamentals that a small timer is reading about, is for the most part, already priced into all the markets. The stock market will have a 10% down day once every few years on average--that isn't a Black Swan, that is an average event. Same with other markets, though the frequency might be higher or lower on average.
I'm not here to convince anyone and I have nothing to sell. I never argue with other people's personal financial choices. I do have the benefit of some time in the markets, and I hope some of the readers can benefit from that wisdom. Personally, I listened way too much to Chicken Little in my younger days, and suffered from it. I can see that some may be making the same mistake. Obviously, no one knows the future, and the Chicken will be right some day. However, two years after a Black Swan event, isn't the best time to be betting on another one. The risk premiums for placing the bets are higher, the payoffs smaller.
Red Tiger, I'm not so sure that 2008 was a Black Swan Event as much as it was a premonition of the "real thing", yet to come. I think that what you referred to as "small events" were exactly that - small tremors that foreshadow a bigger event, or more accurately - a whole constellation of events that have the impact of a big event. While I wouldn't say that I'm betting on a Black Swan to occur, I would say that I think that the odds of a Black Swan occuring are increasing. Fair enough?
The article didn't really give the details about why Harry Schultz's "Model Portfolio" lost 76% during the 12 months from early 2008 to early 2009, but it did say that the model is always 100% invested. Well, if you have to stay 100% invested and the market takes a dive, where are you going to run, anyhow? Most professionally-managed pension funds lost at least 40% during that same time, I assume without the impediment of having to remain 100% invested. And I would imagine that most of his subscribers didn't blindly stay 100% invested in any portfolio as it was getting waxed. Either way, the article didn't really say what assets were hit the hardest within his model portfolio, so the article was of limited value in that regard.
Harry makes a good point in that any investments in US stocks are basically the same as holding US Dollars. That's kinda my observation and my motivation for being out of stocks entirely right now. I also worry about the other possible eventualities that are mentioned in the article concerning 401Ks. I don't see holding even an overweighted position in precious metals as a bet on a Black Swan Event, and I hope not to experience a real one. It's not that I'm against stocks, because I invested in them regularly from 1985 through 2007 with very little reservations. It's just that I'd worry alot more if I had to stay in paper assets instead of precious metals right now, that's all. Responding to the OP - if there is a safe haven right now, I'd say that it really is in the pms.
Q: Are You Printing Money? Bernanke: Not Literally
<< <i>I contend no one alive today has witnessed a Black Swan. Just ask the people in Hiroshima and Nagasaki in 1945. >>
That could be true depending on how a person defines the event. I would define a Black Swan event as something that might happen every 25 years or so. Much rarer than that that and it is more like a light emitting, teleporting Swan, not just a Black one. Much more common than that and it is something most folks are prepared for because they likely have seen several of them already during their adult lifetimes. An example of the light emitting, teleporting Swan would be a massive meteor strike that might come every 500 million years and causes the extinction of half of all species on the planet.
If someone is saying no one alive has seen a Black Swan, that means they are defining it as events that come less often than every 100 years. That can be a valid definition, but during the past 100 years a lot of bad stuff has gone down. Revolutions, major wars, famines, plagues, tend to be the historic catalysts that lead to major economic upheavals, and there have been plenty of them during the past 100 years. In many countries, the economic slate was wiped clean, with all paper assets (stocks, bonds, deeds to real estate, currency) worth close to zero. In many countries, they ended up with 20% or more of their adult population dead in a few years. If those kind of events don't qualify, it is scary to think of what might.
As for having to be 100% invested being an excuse for Schultz suffering a 76% loss in his monitored portfolio in one year, it is a weak explanation, because conservative bullion investments such as CEF (Central Fund of Canada), or money market funds, T-bills, or similar low risk foreign government debt instruments are all acceptable in monitored portfolios. Hedging is also acceptable. It is an example of someone betting on the rare Black Swan, having the Swan turn up, and still losing one's shirt. The details of what was bought or sold are not all important, because my main point is that Schultz got the economic story mostly right, the timing mostly right, but still didn't choose investments that would benefit from the "financial tsunami." That's the way it often goes with popular pundits. Like I said, there were half-dozen other high profile, big name, stock newsletters that also got the story mostly right, and the timing mostly right, but ended up losing more than the average dart thrower who got the story wrong, and the timing wrong.
As for having to be 100% invested being an excuse for Schultz suffering a 76% loss in his monitored portfolio in one year, it is a weak explanation, because conservative bullion investments such as CEF (Central Fund of Canada), or money market funds, T-bills, or similar low risk foreign government debt instruments are all acceptable in monitored portfolios. Hedging is also acceptable.
I'm not debating that one of Schultz's portfolios was better than it really was. That wasn't my point. jmski
Q: Are You Printing Money? Bernanke: Not Literally
RT's basic premise about calling it right and still getting it wrong does have merit. Peter Schiff was 100% spot on about the cause of the financial crisis including the timing. However, he still got hammered during the crisis with most everyone else and was on the wrong side of most trades as the dollar strengtened and most Australia bets and mining stocks went south fast.......MJ
Walker Proof Digital Album Fellas, leave the tight pants to the ladies. If I can count the coins in your pockets you better use them to call a tailor. Stay thirsty my friends......
<< <i>RT's basic premise about calling it right and still getting it wrong does have merit. Peter Schiff was 100% spot on about the cause of the financial crisis including the timing. However, he still got hammered during the crisis with most everyone else and was on the wrong side of most trades as the dollar strengtened and most Australia bets and mining stocks went south fast.......MJ >>
Then one needs to ask the question, "why?" He obviously missed something. And since he probably cannot answer why he performed so badly, other than using hindsight, he is most likely destined to "get hammered" again. I know why he performed so badly, and it is the same reason why most fail miserably in their investments. And from the interviews I have seen with Mr. Schiff the last few weeks, he still doesnt see himself. Thats too bad, as I think hes a fairly bright guy.
RT, yes I would say a Black Swan occurs about once a lifetime. But they can be more than a brief, one-off, event. The most important Black Swan, IMO, of the last century was the Treaty of Versailles, as it set into motion WWII, the Holocost and development of nuclear power.
Comments
<< <i>This "crisis" has show, that the US dollar and US treasuries are safe havens. Just as they have been and wil continue to be, until the US govt is overthrown. Anybody know when that will be?
16 months ago
Edited: Actually, the same people are still in charge. We just don't know exactly who they are. >>
Borders, smorders....who needs 'em. "We're All Socialists Now."
is that now you can lose money in each asset class ,rather the whole
enchilada in just one investment. Ahhh, the power of dispersion.
Camelot
<< <i>more gold >>
If you bought gold in Argentine pesos in January 2002, you saw gold go from 500 pesos to 1200 pesos, very quickly.
I knew it would happen.
<< <i>I dunno why, but I'm thinking silver right now. >>
That isn't a good investment strategy.
<< <i>Pensions and retirement plans are the last remaining glob of money for the Washington/Wall St. theives to go after. Do not be surprised if Washington comes up with some type of legislation to "protect" American workers' retirement plans by requiring them to be invested in "safe" US Treasury bonds. Unless your employer is matching your retirement contributions they best thing you can do is take full control of your retirement account by getting it out of the hands of others and into an account that you and only you can manage. In many cases this requires you to transfer the funds to an IRA that you control. >>
Quoted for truth.
My employer does match .50 on the dollar up to 6%. This will be the first year I do not contribute. I moved everything into "safe" bond type investments and would pull it all out and suffer the penalties if I could. It would all go into gold and silver.
There is no doubt the government would take control of all private retirement funds, today, if they thought they could get away with it and remain in power.
All future investments for the foreseeable future will be precious metals. Then when the timing is right, it will be real estate.
<< <i>Whitefish Bay? >>
Im sorry I missed this earlier. What a FANTASTIC answer to the OP!!!!
Well done Cladking.
Knowledge is the enemy of fear
<< <i>
<< <i>Pensions and retirement plans are the last remaining glob of money for the Washington/Wall St. theives to go after. Do not be surprised if Washington comes up with some type of legislation to "protect" American workers' retirement plans by requiring them to be invested in "safe" US Treasury bonds. Unless your employer is matching your retirement contributions they best thing you can do is take full control of your retirement account by getting it out of the hands of others and into an account that you and only you can manage. In many cases this requires you to transfer the funds to an IRA that you control. >>
Quoted for truth.
My employer does match .50 on the dollar up to 6%. This will be the first year I do not contribute. I moved everything into "safe" bond type investments and would pull it all out and suffer the penalties if I could. It would all go into gold and silver.
There is no doubt the government would take control of all private retirement funds, today, if they thought they could get away with it and remain in power.
All future investments for the foreseeable future will be precious metals. Then when the timing is right, it will be real estate. >>
With your employer matching .50 on the dollar, I think you're crazy not to take them up on it, where can you get a rate of return like that? nowhere!!!!
<< <i>
With your employer matching .50 on the dollar, I think you're crazy not to take them up on it, where can you get a rate of return like that? nowhere!!!! >>
I agree. Instantly a 50% gain. I'd definitely be in up to the match. If you're paranoid about stocks then put it in stable funds and take the rest of your money and put it in metals.
Positive BST Transactions (buyers and sellers): wondercoin, blu62vette, BAJJERFAN, privatecoin, blu62vette, AlanLastufka, privatecoin
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It's not as much about predictability, he also says that the systems become more fragile and that a system failure becomes much more likely as complexity increases.
(And that is why I'm thinking silver, now that you mention it).
I knew it would happen.
The government is incapable of ever managing the economy. That is why communism collapsed. It is now socialism’s turn - Martin Armstrong
<< <i>Taleb, says that as things in the world become more complex, it becomes harder to predict with any kind of reliability
It's not as much about predictability, he also says that the systems become more fragile and that a system failure becomes much more likely as complexity increases.
(And that is why I'm thinking silver, now that you mention it).
He also says not to make many smalls bets in the markets as it gets you nowhere. Play for the Black Swan event. That's how he made his mark........MJ
Fellas, leave the tight pants to the ladies. If I can count the coins in your pockets you better use them to call a tailor. Stay thirsty my friends......
<< <i>
<< <i>Taleb, says that as things in the world become more complex, it becomes harder to predict with any kind of reliability
It's not as much about predictability, he also says that the systems become more fragile and that a system failure becomes much more likely as complexity increases.
(And that is why I'm thinking silver, now that you mention it).
He also says not to make many smalls bets in the markets as it gets you nowhere. Play for the Black Swan event. That's how he made his mark........MJ >>
That might be fine for an author or commentator looking to make his mark, or for a young person with a high income potential. It is really stupid, if a person is along in years and isn't likely to earn all that much more income.
Black swans are rare. We just had one in 2008. We might not see another one for another 20 years, and it might not be the one a person bets on. In the 2008 many managed portfolios of those looking for that kind of event suffered terrible losses. So even though they were right that a black swan appeared, and they were right on nature of news events, they placed their bets such that they not only lost money, but lost huge amounts of money, -30%, -50% some -70%. How humiliating would that be? To bet on a rare black swan, have it come up and still lose one's shirt?
Betting on the black swan is betting on a long shot. If it is the long shot favored by popular commentators, odds are that ain't the one winning. This might lead to the conclusion that throwing darts at random long shots is more likely to produce a big winner than betting on black swans that popular commentators are talking about.
As I have always said during my time on the forums: for the average person, diversifying into age appropriate assets, accepting an average return with average risk, while also having some insurance against black swan events is almost always the best way to go for the average person. If a person wants to gamble on long shots, best avoid listening to the popular commentators--their longs shots are less likely to come in.
Get OUT of DEBT. Period. The only debt I have now is a small mortgage. No car payments, no credit cards, etc. For the first time in my life I am nearly debt free minus the small mortgage I have that is high equity even with the worst possible sale price I might get TODAY. That combined with a 401k that I lucked out with over two years ago and pulled 90% of funds into guaranteed combined with purchasing PM's at a very modest level have me positioned much better than most.
GET OUT OF ALL DEBT and then play with a keen mind
ISO 1978 Topps Baseball in NM-MT High Grade Raw 3, 100, 103, 302, 347, 376, 416, 466, 481, 487, 509, 534, 540, 554, 579, 580, 622, 642, 673, 724__________________________________________________________________________________________________________________________________ISO 1978 O-Pee-Chee in NM-MT High Grade Raw12, 21, 29, 38, 49, 65, 69, 73, 74, 81, 95, 100, 104, 110, 115, 122, 132, 133, 135, 140, 142, 151, 153, 155, 160, 161, 167, 168, 172, 179, 181, 196, 200, 204, 210, 224, 231, 240
<< <i>C, AIG >>
I'd rather jab sharp pencils in my eyes then own these poorly run companies whether they go up in price or not. There are better fleabag beaten down companies then these two IMHO. I get physically sick thinking about AIG.
To each is own
MJ
Fellas, leave the tight pants to the ladies. If I can count the coins in your pockets you better use them to call a tailor. Stay thirsty my friends......
Let's review. 1987 Meltdown, LongTerm Capital Management, Enron, AIG, Fannie & Freddie, BoA, Citi, WaMu, IndyBank, Libor, 1.44 Quad in Derivatives, Baby Boom retirement, unfunded federal liabilities, no buyers for Treasuries - all a tip of the iceberg. What does it take to get your attention?
In the 2008 many managed portfolios of those looking for that kind of event suffered terrible losses. So even though they were right that a black swan appeared, and they were right on nature of news events, they placed their bets such that they not only lost money, but lost huge amounts of money, -30%, -50% some -70%. How humiliating would that be? To bet on a rare black swan, have it come up and still lose one's shirt?
I'm lost on that one. Can you give some examples?
Betting on the black swan is betting on a long shot. If it is the long shot favored by popular commentators, odds are that ain't the one winning. This might lead to the conclusion that throwing darts at random long shots is more likely to produce a big winner than betting on black swans that popular commentators are talking about.
I guess I'd need you to be more specific. Which (What)? black swan(s) are you talking about? Which one is favored by popular commentators that isn't likely? I tend to think that a sovereign debt default by quantitative easing is in the cards, and is not too far away. My bets are focused on that eventuality and if I am wrong, then I'll live with the consequences for better or worse. My perception is that we are having a "rolling sovereign debt default" on a continuous basis, and have been for at least the past 5 years. My judgement is that it will only get worse in the foreseeable future.
As I have always said during my time on the forums: for the average person, diversifying into age appropriate assets, accepting an average return with average risk, while also having some insurance against black swan events is almost always the best way to go for the average person.
And I am here to tell you that risk assessment is in the eye of the beholder. If I were peddling stocks & bonds, I'd be telling you that risks are figured the way that I learned in business school 25 years ago, but that is not true now. Flash trading and derivatives have altered the whole financial structure (and the associated risks) and if you don't believe that, then we will have to agree to disagree.
Get OUT of DEBT. Period. The only debt I have now is a small mortgage. No car payments, no credit cards, etc. For the first time in my life I am nearly debt free minus the small mortgage I have that is high equity even with the worst possible sale price I might get TODAY. That combined with a 401k that I lucked out with over two years ago and pulled 90% of funds into guaranteed combined with purchasing PM's at a very modest level have me positioned much better than most.
I agree with reducing debt to manageable levels, but I have not finished paying off my mortgage simply because I intend to pay it off with devalued dollars, and I will continue to take the tax deduction. Liquidating my mortgage debt all at once doesn't make financial sense to me, although I could do it.
I knew it would happen.
Slowly siphoning off your 401K and mutual funds. Owning individual stocks may offset this.
I have been out of the stock market now for 2 weeks. I am considering not contributing anymore to my 401K either even with a .50 match up to 6% of my salary, not because of the aforementioned link.
Box of 20
<< <i>Here's a sleeper: MGH >>
Interesting. Have one of the firms I talk to taking a peek at this one. Debating getting back into the game and picking up 500 myself.
<< <i>
In the 2008 many managed portfolios of those looking for that kind of event suffered terrible losses. So even though they were right that a black swan appeared, and they were right on nature of news events, they placed their bets such that they not only lost money, but lost huge amounts of money, -30%, -50% some -70%. How humiliating would that be? To bet on a rare black swan, have it come up and still lose one's shirt?
I'm lost on that one. Can you give some examples?
>>
Google this search:
harry schultz peter brimelow best worst
Look up the article for Newsletter of the year 2008.
>> from that Brimelow article which the forum filter won't let me link:
The reason I pick Schultz: the extraordinary prescience he showed in predicting what he called a "financial tsunami" well over a year ago. Well? He was right, wasn't he?
... But over the past 12 months through November, Schultz is down a heart-stopping 76.05% by Hulbert Financial Digest count, vs. negative 36.68% for the dividend-reinvested Dow Jones Wilshire 5000.
>>
Schultz got the 2008 story line of a financial tsunami almost entirely correct, but his subscribers still lost their shirts. Another half-dozen newsletters were in a similar boat, they got the 2008 story right, but their audited portfolios lost big time. The same will likely happen with the next Black Swan. The popular commentators might get the story right, but many will likely have their money in the wrong places. Everything is easy in hindsight, not so easy going forward.
As for the news, again as I've written many times before, I've been involved in the financial markets for over 20 years. Chicken Little has always been around, always screaming that the sky is going to fall immediately. Go back 20 years, and a person can find similar dire predictions. For students of history, go back 40 years, or 100 years, and the Chicken was alive back then too. Most of the time, barring major historic events (again: major war, revolution, plague or famine), the economy muddles through. Some of the stuff you cited are relatively small events. Any fundamentals that a small timer is reading about, is for the most part, already priced into all the markets. The stock market will have a 10% down day once every few years on average--that isn't a Black Swan, that is an average event. Same with other markets, though the frequency might be higher or lower on average.
I'm not here to convince anyone and I have nothing to sell. I never argue with other people's personal financial choices. I do have the benefit of some time in the markets, and I hope some of the readers can benefit from that wisdom. Personally, I listened way too much to Chicken Little in my younger days, and suffered from it. I can see that some may be making the same mistake. Obviously, no one knows the future, and the Chicken will be right some day. However, two years after a Black Swan event, isn't the best time to be betting on another one. The risk premiums for placing the bets are higher, the payoffs smaller.
The article didn't really give the details about why Harry Schultz's "Model Portfolio" lost 76% during the 12 months from early 2008 to early 2009, but it did say that the model is always 100% invested. Well, if you have to stay 100% invested and the market takes a dive, where are you going to run, anyhow? Most professionally-managed pension funds lost at least 40% during that same time, I assume without the impediment of having to remain 100% invested. And I would imagine that most of his subscribers didn't blindly stay 100% invested in any portfolio as it was getting waxed. Either way, the article didn't really say what assets were hit the hardest within his model portfolio, so the article was of limited value in that regard.
Harry makes a good point in that any investments in US stocks are basically the same as holding US Dollars. That's kinda my observation and my motivation for being out of stocks entirely right now. I also worry about the other possible eventualities that are mentioned in the article concerning 401Ks. I don't see holding even an overweighted position in precious metals as a bet on a Black Swan Event, and I hope not to experience a real one. It's not that I'm against stocks, because I invested in them regularly from 1985 through 2007 with very little reservations. It's just that I'd worry alot more if I had to stay in paper assets instead of precious metals right now, that's all. Responding to the OP - if there is a safe haven right now, I'd say that it really is in the pms.
I knew it would happen.
Knowledge is the enemy of fear
now, what is safe? That is an entirely different question.
Well, if you've got good land at a cheap price a long time ago.... that might be good if you can live on it and off it.
<< <i>I contend no one alive today has witnessed a Black Swan. Just ask the people in Hiroshima and Nagasaki in 1945. >>
That could be true depending on how a person defines the event. I would define a Black Swan event as something that might happen every 25 years or so. Much rarer than that that and it is more like a light emitting, teleporting Swan, not just a Black one. Much more common than that and it is something most folks are prepared for because they likely have seen several of them already during their adult lifetimes. An example of the light emitting, teleporting Swan would be a massive meteor strike that might come every 500 million years and causes the extinction of half of all species on the planet.
If someone is saying no one alive has seen a Black Swan, that means they are defining it as events that come less often than every 100 years. That can be a valid definition, but during the past 100 years a lot of bad stuff has gone down. Revolutions, major wars, famines, plagues, tend to be the historic catalysts that lead to major economic upheavals, and there have been plenty of them during the past 100 years. In many countries, the economic slate was wiped clean, with all paper assets (stocks, bonds, deeds to real estate, currency) worth close to zero. In many countries, they ended up with 20% or more of their adult population dead in a few years. If those kind of events don't qualify, it is scary to think of what might.
As for having to be 100% invested being an excuse for Schultz suffering a 76% loss in his monitored portfolio in one year, it is a weak explanation, because conservative bullion investments such as CEF (Central Fund of Canada), or money market funds, T-bills, or similar low risk foreign government debt instruments are all acceptable in monitored portfolios. Hedging is also acceptable. It is an example of someone betting on the rare Black Swan, having the Swan turn up, and still losing one's shirt. The details of what was bought or sold are not all important, because my main point is that Schultz got the economic story mostly right, the timing mostly right, but still didn't choose investments that would benefit from the "financial tsunami." That's the way it often goes with popular pundits. Like I said, there were half-dozen other high profile, big name, stock newsletters that also got the story mostly right, and the timing mostly right, but ended up losing more than the average dart thrower who got the story wrong, and the timing wrong.
I'm not debating that one of Schultz's portfolios was better than it really was. That wasn't my point. jmski
I knew it would happen.
Fellas, leave the tight pants to the ladies. If I can count the coins in your pockets you better use them to call a tailor. Stay thirsty my friends......
<< <i>RT's basic premise about calling it right and still getting it wrong does have merit. Peter Schiff was 100% spot on about the cause of the financial crisis including the timing. However, he still got hammered during the crisis with most everyone else and was on the wrong side of most trades as the dollar strengtened and most Australia bets and mining stocks went south fast.......MJ >>
Then one needs to ask the question, "why?" He obviously missed something. And since he probably cannot answer why he performed so badly, other than using hindsight, he is most likely destined to "get hammered" again. I know why he performed so badly, and it is the same reason why most fail miserably in their investments. And from the interviews I have seen with Mr. Schiff the last few weeks, he still doesnt see himself. Thats too bad, as I think hes a fairly bright guy.
RT, yes I would say a Black Swan occurs about once a lifetime. But they can be more than a brief, one-off, event. The most important Black Swan, IMO, of the last century was the Treaty of Versailles, as it set into motion WWII, the Holocost and development of nuclear power.
Knowledge is the enemy of fear
FBI was at my local feed store taking inventory on fertilizer sales this afternoon.
This oil leak in the gulf may effect USA worse than anything we have seen.