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Where to put your money when your main concerns are protection against inflation and market crashes?

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The best advice is to invest in food, fuel, tools, and weapons, plus supporting infrastructure. Then when the world as we know it ends, you have a better chance of surviving. End of the world movies were popular in the 50’s and 60’s, and provide many useful suggestions, though, grain of salt. The main concern, I think, would be avoiding detection. I advise against gold, because gold is useful only when there is civilization and commerce.

If you are talking about something less severe than TEOTWAKI, then it depends on exactly what form of insanity you have in mind: what exactly do you want to protect against? I want to protect against the burden of hearing crazy leftist rants, so I avoid their club meetings. I also want to protect against economic collapse caused by exponential expansion of the tax-and-regulate state, but at this point I don’t see any reasonable new action that I can undertake, so I will just continue to teach the proper methods of human existence and hope that it has a positive effect on my life.

So as a starter, I’d work on being more specific about your concern. As a practical matter, I would not buy property for rental income, not here, because the risks of government takings (direct and regulatory) are locally way too high. Things may be different in your town.

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On 1/30/2021 at 9:42 AM, DavidOdden said:

The best advice is to invest in food, fuel, tools, and weapons, plus supporting infrastructure. Then when the world as we know it ends, you have a better chance of surviving. End of the world movies were popular in the 50’s and 60’s, and provide many useful suggestions, though, grain of salt. The main concern, I think, would be avoiding detection. I advise against gold, because gold is useful only when there is civilization and commerce.

If you are talking about something less severe than , then it depends on exactly what form of insanity you have in mind: what exactly do you want to protect against? I want to protect against the burden of hearing crazy leftist rants, so I avoid their club meetings. I also want to protect against economic collapse caused by exponential expansion of the tax-and-regulate state, but at this point I don’t see any reasonable new action that I can undertake, so I will just continue to teach the proper methods of human existence and hope that it has a positive effect on my life.

So as a starter, I’d work on being more specific about your concern. As a practical matter, I would not buy property for rental income, not here, because the risks of government takings (direct and regulatory) are locally way too high. Things may be different in your town.

I’m not thinking TEOTWAKI. The question of economic collapse is always a question of degree. I don’t know what the future looks like, but I’m not optimistic. As stated in the thread title, my two great concerns are a large market correction and inflation. Since the government/Fed prints money to prop up the markets, are these opposite probabilities? And does this long term trajectory eventually end with both happening when the market rejects this mechanism?

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My main suggestion for the problem of market correction is long-term thinking, that is, don’t panic-sell every time the Dow drops by a thousand, even though it might take 5 years to recover. If you understand economics and politics really well (I sure don’t, and you don’t claim to) you may decide that “This is the big one, we will never recover” and you can make the TEOTWAKI move. Until it is clear that there is no future (your reasonable future), assume that things will return to normal and craziness will not prevail.

I don’t know what the actual causal relationship is between inflation and market correction, but my eyeball estimate is that inflation is slow, market rise is slow, market collapse (correction) is more catastrophic and is followed by deflation. To me, the central question is, can I correctly detect irrational exuberance in the market and anticipate a collapse, thereby switching to gold. Alternatively, can I predict investments that are most resilient? E.g. investing in Kodak because people will always be taking pictures. I know that I’m missing an opportunity to invest in GameStop, but I can live with that. (Ooo, I’m watcing the GameStop share price crash in real time. Quick, sell!).

What I did back they was have a conversation with a broker at an investment company where we have a small account, and I suppose I just got lucky ‘cuz he was right, but I communicated the point that I’m not looking for quick cash, I want a solution that will work for maybe 50 years. I was not looking for protection against craziness. I don’t deny that it exists, but that was and is not my motivating consideration.

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  • 2 months later...
Posted (edited)

This is my official investment strategy, based on my view of the world. It has a macroeconomic theme. The US government is the biggest debtor nation in the history of the world and has horrible fundamentals, and is deficit spending and printing money like crazy to pander to the masses creating horrible distortions, bubbles that will lead to crashes, and inflation. The world still thinks the USD is a sound currency, but it isn't, and more people are realizing this. All governments are printing money, but the USD has more to lose because it's more overvalued. Neither I nor any of the people I listen to can tell how long this will continue, but it's likely to lead to serious problems worse than the ones we've already had. There is still value being created in the world, but I don't know how to find it, so pay mangement fees to professionals who might be able to. 

Cash, USD savings (55.5% of net worth)

Investments (45.5% of net worth):

  • Mutual fund managed by rational people, broadly diversified in a manner compatible with my view of the world. Includes a strong "hard asset" component, is but not decisively unconventional and USD-bearish. Includes conventional stuff like real estate, financial services, BRK.A, etc. (8.7% of investment account).
  • Decisively USD-bearish funds by Peter Schiff (38.9% of investment account). Blend of four funds, will do great if the USD weakens relative to other currencies, and won't if it doesn't. These have done horribly in the 10 years since inception, but I think he'll be vindicated one day. 
  • Natural Resource funds: blend of funds of companies engaged in the exploitation of raw materials, which offer the opportunity to profit from inflation, and, according to many free-market thinkers, are in new secular bull market in themselves. Speculative, but I favor it. (8.7% of investment account)
  • Physical precious metals, including exchange-traded trusts, allocated metals, and physical metals in my possession (50.1% of investment account).

Precious metals mining funds are found in all three of the equity categories above and only arbitrarily differentiated from the physical metals and trusts category. That seems to be my leitmotif.

Edited by happiness
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