$this->bbcode_second_pass_quote('BigTex', '')$this->bbcode_second_pass_quote('americandream', '')$this->bbcode_second_pass_quote('BigTex', 'H')ere's a thought:
Smart money is getting out of PMs because they look overbought and it's profit taking. Smart money knows that bigger equity downers are coming, which will further depress PM prices short-term because investors will be selling everything. When PM prices are sucked down with the broad decline, the smart money will come back in and buy at the depressed prices before the PMs start back up while the rest of the equity market languishes. The small investor will miss out on the PM trough because they're too scared of the fact that everything seems to be tanking at once.
I can barely make out the outlines of this pattern, but this is what it looks like to me.
This pattern should repeat when the long term bond market explodes, probably later this year.
The good news is that when the long bond market corrects, there should be the opportunity to buy 30 year bonds paying 8-10%, which should be very good investments going forward.
PeakOil is You
It sure did get quiet in here all of a sudden
Re: It sure did get quiet in here all of a sudden
by Heineken » Wed 19 Mar 2008, 22:07:50
Oh, I agree that there will be buying on short and mid term dips. But until the banks are cleared of all the bad debt that relates to sub-prime financing, I reckon the smart guys will be rotating their funds through the revolving door. That's the stance I've taken. Find somewhere as safe as possible to hold funds and then dart in and out of risk when appropriate...and the current risk averse volatility seems to bear me out.
I'm not sure just how good Treasury ratings will be if the Fed continues to take the shit stuff in as collateral. But then again, if there's an 8% correction, why not run with risk which should be ok by then? What do you reckon?
I can probably make a better argument right now than at any time in recent history for why there is NO real safe haven. Stocks, bonds, cash and PMs all have serious downside risk.
Think about it. Stocks are scary, the bond market is potentially even scarier. PMs look overbought, and cash loses a little of its value seemingly every day, and there don't appear to be any changes in the fundamentals that would strengthen the dollar on the horizon.
The only truly safe portfolio I could think of right now (and this is based upon thoughts from many of you) would be cash holdings in a basket of currencies, a basket of PM holdings, and perhaps a few defensive stocks like utilities with a reliable dividend that ought to backstop them in a hard selloff.
Of course, the safest investment of all, as usual, is to pay down debt. That gets you a guaranteed risk free return on investment.
Also, if you have any annuity type payment you make every month like health club dues, premium cable channels, stuff like that, think about the principal that would be necessary to generate that stream of income. If you cut off the annuity payment you are making, you are effectively generating for yourself extra tax-free income. This approach sort of creates what you might call "phantom wealth", in that you are creating a stream of income by foregoing consumption rather than placing capital at risk.
Note that there is a clever bit of risk shifting in the strategy described above as well. You would need $10,000 to generate enough income to pay the $50 a month health club dues, and there would still be risk in that approach. If you cancel the health club membership, however, you are basically equating the benefit of the health club membership to the return you would get on a $10,000 investment, EXCEPT there is no risk in canceling the health club membership (other than the risks associated with not being physically fit, but you can get that elsewhere for free).
Thus, you are generating the same income, but by doing so through foregone consumption you are generating the income RISK-FREE, as opposed to having to do it by investing your $10,000, which will always involve SOME level of risk.
This is just a fancy way of describing the benefits of living frugally, but I think that there is a lot of wisdom in it.
Land. Healthy productive land is an absolute safe haven, Tex.
I'm even more bullish on land than I am on PMs, although I dearly love both.
"Actually, humans died out long ago."
---Abused, abandoned hunting dog
"Things have entered a stage where the only change that is possible is for things to get worse."
---I & my bro.
---Abused, abandoned hunting dog
"Things have entered a stage where the only change that is possible is for things to get worse."
---I & my bro.
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Heineken - Expert
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Re: It sure did get quiet in here all of a sudden
by smallpoxgirl » Wed 19 Mar 2008, 22:26:32
$this->bbcode_second_pass_quote('Heineken', 'I')'m even more bullish on land than I am on PMs, although I dearly love both.
I think you're about the only one giving any loving to the PMs today. Gold's down to $917.
"We were standing on the edges
Of a thousand burning bridges
Sifting through the ashes every day
What we thought would never end
Now is nothing more than a memory
The way things were before
I lost my way" - OCMS
Of a thousand burning bridges
Sifting through the ashes every day
What we thought would never end
Now is nothing more than a memory
The way things were before
I lost my way" - OCMS
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smallpoxgirl - Expert
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- Joined: Mon 08 Nov 2004, 04:00:00
