We're near the bottom !

[orion]

I cant' take it anymore. I look at MarketWatch to see how the markets, oil, and gold are doing in one spot. Today they have a picture from teh great crash of 29 and this;

Bittles: Most negative news backdrop in 80 years

Bruce Bittles, chief investment strategist at R.W. Baird, tells Andrew O'Day the sentiment on Wall Street is about as bad as it can get right now, which suggests a market bottom is near.

http://www.marketwatch.com/tvradio/player.asp?guid={CC1D27AA-ECBA-4435-BC95-FAF398E51649}

Oh boy, how can you talk like this when the market is only down some 20%, TYPICAL bear markets go 20 to 30% down, and this guy says if we hit July lows we can build a substantial rally? If we have the worse news in 80 years why isn't the market down 50%? I need to put my money in an apple stand and disconnect from the media ....

[Tulpen]

Remember that when things are really, really, really bad they always can get worse!

[Lukester]

Tulpen - sounds like you are a savvy and agile trader. We are likely nearing the bottom. Just because EJ's $780 was broken does not mean the decline is a bottomless pit. We are approaching the fibonacci retracement number (61.8 ) of the entire bull market. The decline will be done then. You'll be able to "stick a fork in it", as they say. If you think fibonacci numbers are specious in bull markets look up the track record of David Bensimon. His record is among the best out there. Ask Bart whether he's "for real" or not. Meanwhile, more power to you as you trade these moves. My view of the merit of trading is that position limits greatly reduce what appear to be fabulous overall returns. At least I must presume as a smart trader you use position limits.

[Jim Nickerson]

Tulpen - sounds like you are a savvy and agile trader. We are likely nearing the bottom. Just because EJ's $780 was broken does not mean the decline is a bottomless pit. We are approaching the fibonacci retracement number (61.8 ) of the entire bull market. The decline will be done then. You'll be able to "stick a fork in it", as they say. If you think fibonacci numbers are specious in bull markets look up the track record of David Bensimon. His record is among the best out there. Ask Bart whether he's "for real" or not. Meanwhile, more power to you as you trade these moves. My view of the merit of trading is that position limits greatly reduce what appear to be fabulous overall returns. At least I must presume as a smart trader you use position limits.

Luke, despite so many things about you that I truly do not like, I do find you tolerable some of the time, and I actually look forward to somethings about which you opine--if they are not so goddamned long that I figure reading your metaphors use up too much of my remaining time on earth.

Bensimon can predict anything he wishes using whatever methods he relys upon, but any projection he makes has to come to fruition, and until it does his projection is not anything that I think anyone should put aside all other considerations for self-preservation and jump on his bandwagon.

I personally think you are pushing his projections too far, and I would caution anyone to take no one's advice as to what is going to happen next. There has been enough of that shit here already.

Put up where you are invested and let people draw their own conclusions about what you think, and I am not implying that I personally give a hoot about how you are personally invested.

[Andreuccio]

Luke, despite so many things about you that I truly do not like, I do find you tolerable some of the time, and I actually look forward to somethings about which you opine--if they are not so goddamned long that I figure reading your metaphors use up too much of my remaining time on earth.



Hilarious. Great paragraph, Jim. :D

[The Outback Oracle]

Remember that when things are really, really, really bad they always can get worse!

On CNBC this thing has had more bottoms than a bloody piggery!

[Lukester]

Andreuccio -

Regarding the notion of "brevity",

Here, take this post for example:

http://www.itulip.com/forums/showthread.php?p=47014#post47014

Can you condense all the points made in this post regarding the merit of the various arguments involved in the recent hedge fund PM selling debacle into a single paragraph? Of course, you won't need to explore the idea from scratch as I did there, you will have the benefit of simply paraphrasing what I laid out as a sequence of plausible or implausible events. Even so, it's not easy to shoehorn into a single paragraph. Of course you can conclude the entire topic is of no interest and leave it at that.

Fact is, when you try to explore the convoluted threads of events such as what happened in August, it's quite difficult to do that in an attractively condensed looking sound bite. I notice when Jim tries to deconstruct a complex idea he quickly devolves into rambling. Maybe he can summarize the topic discussed in that thread into the sort of highly condensed paragraph I've asked you to do as well?

Go ahead. Why don't you both give it a shot and see how short you can make it?

If someone can show me how to post the tangled interconnection of interests and plausibilities described there into a super condensed single paragraph I'd be fascinated to see how it's done. I have difficulty condensing more convoluted events or descriptions down into short posts. I genuinely admire those who can do that really simply and clearly. I don't do that nearly as briefly as I should, and I stand corrected for that. But at least I tackle those tangled subjects rather than simply leaving it to someone else to tackle while I restrict myself to merely sniping at them afterwards.

How the heck to you describe the above chain of events and the merit of the various arguments into a single paragraph?

[metalman]

Andreuccio -

Regarding the notion of "brevity",

Here, take this post for example:

http://www.itulip.com/forums/showthread.php?p=47014#post47014

Can you condense all the points made in this post regarding the merit of the various arguments involved in the recent hedge fund PM selling debacle into a single paragraph? Of course, you won't need to explore the idea from scratch as I did there, you will have the benefit of simply paraphrasing what I laid out as a sequence of plausible or implausible events. Even so, it's not easy to shoehorn into a single paragraph. Of course you can conclude the entire topic is of no interest and leave it at that.

Fact is, when you try to explore the convoluted threads of events such as what happened in August, it's quite difficult to do that in an attractively condensed looking sound bite. I notice when Jim tries to deconstruct a complex idea he quickly devolves into rambling. Maybe he can summarize the topic discussed in that thread into the sort of highly condensed paragraph I've asked you to do as well?

Go ahead. Why don't you both give it a shot and see how short you can make it?

If someone can show me how to post the tangled interconnection of interests and plausibilities described there into a super condensed single paragraph I'd be fascinated to see how it's done. I have difficulty condensing more convoluted events or descriptions down into short posts. I genuinely admire those who can do that really simply and clearly. I don't do that nearly as briefly as I should, and I stand corrected for that. But at least I tackle those tangled subjects rather than simply leaving it to someone else to tackle while I restrict myself to merely sniping at them afterwards.

How the heck to you describe the above chain of events and the merit of the various arguments into a single paragraph?

i like it that luke 'shows his work'. demonstrates that he's not just lifting ideas off someone else's site to present as his own, and always names his sources when presenting an idea that's not his... good man!

unsolicited advice (for ej, too)... the structure can be improved...

good writing is like a sandwich...

I. quick intro that summarizes what you're going to talk about...

II. meat

III. summary of what you've concluded.

if it's a long article then...

I. quick intro that summarizes what you're going to talk about...

II. meat topic 1...
meat topic 2...
meat topic 3...
meat topic n...

III. summary of what you've concluded.

[Lukester]

Yeah well I'm waiting for Andreuccio and Jim to provide a one paragraph summary of that post. Have at it, you masters of brevity! :)

[Andreuccio]

Andreuccio -

Regarding the notion of "brevity",

Here, take this post for example:

http://www.itulip.com/forums/showthread.php?p=47014#post47014

Can you condense all the points made in this post regarding the merit of the various arguments involved in the recent hedge fund PM selling debacle into a single paragraph? Of course, you won't need to explore the idea from scratch as I did there, you will have the benefit of simply paraphrasing what I laid out as a sequence of plausible or implausible events. Even so, it's not easy to shoehorn into a single paragraph. Of course you can conclude the entire topic is of no interest and leave it at that.

Fact is, when you try to explore the convoluted threads of events such as what happened in August, it's quite difficult to do that in an attractively condensed looking sound bite. I notice when Jim tries to deconstruct a complex idea he quickly devolves into rambling. Maybe he can summarize the topic discussed in that thread into the sort of highly condensed paragraph I've asked you to do as well?

Go ahead. Why don't you both give it a shot and see how short you can make it?

If someone can show me how to post the tangled interconnection of interests and plausibilities described there into a super condensed single paragraph I'd be fascinated to see how it's done. I have difficulty condensing more convoluted events or descriptions down into short posts. I genuinely admire those who can do that really simply and clearly. I don't do that nearly as briefly as I should, and I stand corrected for that. But at least I tackle those tangled subjects rather than simply leaving it to someone else to tackle while I restrict myself to merely sniping at them afterwards.

How the heck to you describe the above chain of events and the merit of the various arguments into a single paragraph?

You see, Luke, this post is nearly twice as long as Jim's post, but it's not even half as funny.

[Andreuccio]

Yeah well I'm waiting for Andreuccio and Jim to provide a one paragraph summary of that post. Have at it, you masters of brevity! :)

Now that's a good post! Short, sweet, get's the point across without the reader risking phlebitis due to prolonged inactivity. Well done! :)

[Jim Nickerson]

Hilarious. Great paragraph, Jim. :D

If anything in that post was important, it was not that paragraph. That was just my jabbing at Luke, which generally I like to do when he gives me an opening.

[Jim Nickerson]

Andreuccio -

Regarding the notion of "brevity",

Here, take this post for example:

http://www.itulip.com/forums/showthread.php?p=47014#post47014

Can you condense all the points made in this post regarding the merit of the various arguments involved in the recent hedge fund PM selling debacle into a single paragraph? Of course, you won't need to explore the idea from scratch as I did there, you will have the benefit of simply paraphrasing what I laid out as a sequence of plausible or implausible events. Even so, it's not easy to shoehorn into a single paragraph. Of course you can conclude the entire topic is of no interest and leave it at that.

Fact is, when you try to explore the convoluted threads of events such as what happened in August, it's quite difficult to do that in an attractively condensed looking sound bite. I notice when Jim tries to deconstruct a complex idea he quickly devolves into rambling. Maybe he can summarize the topic discussed in that thread into the sort of highly condensed paragraph I've asked you to do as well?

Go ahead. Why don't you both give it a shot and see how short you can make it?

If someone can show me how to post the tangled interconnection of interests and plausibilities described there into a super condensed single paragraph I'd be fascinated to see how it's done. I have difficulty condensing more convoluted events or descriptions down into short posts. I genuinely admire those who can do that really simply and clearly. I don't do that nearly as briefly as I should, and I stand corrected for that. But at least I tackle those tangled subjects rather than simply leaving it to someone else to tackle while I restrict myself to merely sniping at them afterwards.

How the heck to you describe the above chain of events and the merit of the various arguments into a single paragraph?

Luke, one thought I have had about your contributions is: if you took a creative writing course in college, I imagine you must have made an AAA+++, and subsequently been offered a position to teach a course in creative writing. It occurs to me that all us readers would benefit if you had taken a course in scientific writing (for lack of some perhaps more suitable term) wherein one makes references to important points that may have been put forth by other pundits with a link in this instance of internet communication. It is also important and useful to us readers of your posts if you would go to the trouble to use that little "quote" icon on the reply to thread page to denote information that is not your writings. So many of your posts are confusing because you have your own style of posting, and I (probably the only one) have trouble discerning what is your opinion vs. what is someone elses.

You are undoubtedly an intelligent dude, and I don't mind knowing your opinions based on however you have arrived at them, but I don't wish to read everything you have read to finally ferret out what your opinion is.

To your credit, you have tended, I hope not by chance, to shorten some of your posts. Take from this what you can, it is meant to be constructive.

Edit: not that I don't feel challenged to review and rewrite what you offered above. I just do not have the time to fool with it. Do the best you can, and perhaps give a bit of consideration to other's use of their times.

[Lukester]

Natter natter natter. Why don't you answer the question - straight up? You are "fatigued" by the length of my posts? That must mean you know how to get those points across more briefly. So show me where I'm going astray here rather than offering the cute comments. Take the linked article and condense it to cover all the main points into something a quarter of it's size. And if you say you "don't have the time" as Jim has excused himself, then would it be too much to ask that you desist from snarking about the length of other people's posts when they try to put forward a complicated topic?

http://www.itulip.com/forums/showthr...7014#post47014 (http://www.itulip.com/forums/showthread.php?p=47014#post47014)

What's the topic? Deconstruct for us please, what happened between two large money center banks, the hedge funds, the Fed, the OTC markets and the COMEX this past August. Go ahead, don't just natter and dance around it. Do it, or hold your peace. Same goes for Jim. Notice he's talking about "getting jabs in". Who's being frivolous around here. Me, or you guys, eh? I want one, or the other, or better yet the both of you, to take this topic and condense it down into your "ideal" informative, brief and succinct summary, while not omitting all the salient points.

Now that's a good post! Short, sweet, get's the point across without the reader risking phlebitis due to prolonged inactivity. Well done! :)

[krakknisse]

Luke, despite so many things about you that I truly do not like, I do find you tolerable some of the time, and I actually look forward to somethings about which you opine--if they are not so goddamned long that I figure reading your metaphors use up too much of my remaining time on earth.

Jim: you pounce on Lukester just about every time he writes, then hijack the thread into stuff that is not very interesting about writing, colleges, paragraphs. So, just as a tit for tat, I'm going to hijack every "pick on Luke" thread that you hijack, and I'm going to pick on you instead. I find the "bottom" topic interesting, and frankly couldn't see your contribution to that debate through the thicket of grumpy rumblings.

[Jim Nickerson]

Natter natter natter. Why don't you answer the question - straight up? You are "fatigued" by the length of my posts? That must mean you know how to get those points across more briefly. So show me where I'm going astray here rather than offering the cute comments. Take the linked article and condense it to cover all the main points into something a quarter of it's size. And if you say you "don't have the time" as Jim has excused himself, then would it be too much to ask that you desist from snarking about the length of other people's posts when they try to put forward a complicated topic?

http://www.itulip.com/forums/showthr...7014#post47014 (http://www.itulip.com/forums/showthread.php?p=47014#post47014)

What's the topic? Deconstruct for us please, what happened between two large money center banks, the hedge funds, the Fed, the OTC markets and the COMEX this past August. Go ahead, don't just natter and dance around it. Do it, or hold your peace. Same goes for Jim. Notice he's talking about "getting jabs in". Who's being frivolous around here. Me, or you guys, eh? I want one, or the other, or better yet the both of you, to take this topic and condense it down into your "ideal" informative, brief and succinct summary, while not omitting all the salient points.

Okay, Luke,

From your post linked above. Were I inclined to read all that your apparently read in constructing it. I would have written: This is what Nadler thinks:************.

This is what Mish thinks:******** and I don't think you referenced whatever was the basis for your interpretation of what either of them had written.

This is what Szabo thinks:*************

This is what I, the Lukester, think.

There is no way I can bring myself to read all you actually wrote, because when it was written nor now do I think it is of much importance to my my trying to invest.

[Jim Nickerson]

Jim: you pounce on Lukester just about every time he writes, then hijack the thread into stuff that is not very interesting about writing, colleges, paragraphs. So, just as a tit for tat, I'm going to hijack every "pick on Luke" thread that you hijack, and I'm going to pick on you instead. I find the "bottom" topic interesting, and frankly couldn't see your contribution to that debate through the thicket of grumpy rumblings.

Have at it, troll.

[Lukester]

I'm pretty sure we are near the bottom Krakke. $720 for gold, or if it breaks that, $675 is the hard floor. It will bounce hard off one of those two. Silver will be bouncing around down in there like a yo-yo on a very loose string. Somewhere between $8.50 and $9.80. Anything under $10.00 is a great buy for the five year term. I'm not saying where I've collected this opinion but I sure paid enough for it. When markets are collapsing and you have a lot invested, temporarily buying expensive intel is cheap insurance. This is what three sources were all in agreement on. In particular the $675.00 number for gold came up repeatedly as the hard floor in all of their calls.

Oh, and thanks for your kind words "Uncle Krakke". Do you Norwegian gnarly giants really carry clubs and dress in bear skins? :D

I find the "bottom" topic interesting.

[Lukester]

Brilliant summation Jim. Masterful.

Okay, Luke,

From your post linked above. Were I inclined to read all that your apparently read in constructing it. I would have written: This is what Nadler thinks:************.

This is what Mish thinks:******** and I don't think you referenced whatever was the basis for your interpretation of what either of them had written.

This is what Szabo thinks:*************

This is what I, the Lukester, think.

There is no way I can bring myself to read all you actually wrote, because when it was written nor now do I think it is of much importance to my my trying to invest.

[Jim Nickerson]

Brilliant summation Jim. Masterful.

Thank you, Luke.

To opine on the notion "We're near the bottom!"

It's possible that there is some sort of bottom for equities in the next six weeks. Though today was a 300+ point turnaround in the Dow, if the Advance/Decline numbers I see are correct, it was not a strong day. The ADV/DEC numbers were negative for NYSE and Nasdaq. And the TRINS were more indicative of distribution than those that may be seen at bottoms--and I do not claim expertise in the TRIN, but I do follow it but do not trade off it. There are two recent 90% down days in volume and points, which I believe suggests more downside. Sentiment figures for AAII and II are not that negative.

Oil and gold or PM's may be in for a bounce here, and it is certainly possible that the lows are in, but if so that remains to be proven by the trends reversing. As I write oil is up .34 and gold up 9.90. If some sort of bottom came into place today, I expect both oil and PM's and commodities to trade sideways for a while rather than quickly returning to their recent peaks, but I nor anyone, I don't think, knows for certain.

I think there is still a tremendous amount of turmoil in all these markets and I don't recall as much volatility, but I have a short memory.

I am short the major equity indices with inverse funds, and long SRS and SKF--allocation 29.7%. My biggest losses right now are in GTU and CEF which a couple of weeks ago was ~6% of my portfolio and now is down to 3.30%, and in some refiners and UNG--currently 3.9% allocation. Cash 42%, Hedged equity HSGFX 19.4%.

[Lukester]

Sorry Jim. You missed the sarcasm I'm afraid. Would it be too much to ask that you focus your attentions on someone else other than me any time you feel like chewing on a bone?

Luke, despite so many things about you that I truly do not like ....
If anything in that post was important, it was not that paragraph. That was just my jabbing at Luke, which generally I like to do when he gives me an opening.

[raja]

Yeah well I'm waiting for Andreuccio and Jim to provide a one paragraph summary of that post. Have at it, you masters of brevity! :)
When I see a long post by anyone, I scan it or read the first paragraph to determine if it's something of interest to me. I often skip long posts regardless of the author, simply because I've only got a certain amount of time that I want to spend planted in front of the computer.

The result is that I often don't read some of Lukester's longer posts. But that doesn't irritate me, and I don't fault Lukester . . . it's just a matter of my choice of how I spend my time.

One thing I would like is for those making long posts to put a short paragraph at the top stating the main ideas being discussed, and the conclusion if any. This is done in scientific writing with the abstract.

[Andreuccio]

Natter natter natter. Why don't you answer the question - straight up? You are "fatigued" by the length of my posts? That must mean you know how to get those points across more briefly. So show me where I'm going astray here rather than offering the cute comments. Take the linked article and condense it to cover all the main points into something a quarter of it's size. And if you say you "don't have the time" as Jim has excused himself, then would it be too much to ask that you desist from snarking about the length of other people's posts when they try to put forward a complicated topic?

http://www.itulip.com/forums/showthr...7014#post47014 (http://www.itulip.com/forums/showthread.php?p=47014#post47014)

What's the topic? Deconstruct for us please, what happened between two large money center banks, the hedge funds, the Fed, the OTC markets and the COMEX this past August. Go ahead, don't just natter and dance around it. Do it, or hold your peace. Same goes for Jim. Notice he's talking about "getting jabs in". Who's being frivolous around here. Me, or you guys, eh? I want one, or the other, or better yet the both of you, to take this topic and condense it down into your "ideal" informative, brief and succinct summary, while not omitting all the salient points.

Just so we're clear, Luke, what I liked about Jim's paragraph wasn't the swipe at you. If it were just that I wouldn't have bothered to comment. You take plenty of crap from posters, myself included, regarding the length of your posts, and you do seem to have made an effort to shorten many of them. I considered not making the comment about Jim's post originally because I didn't want to pile on you, though I've done a bit of that since then in this thread in response to some of your comments.

What I liked about Jim's post was the fact that Jim included self-parody and self-deprecating humor to make his point. That's what I thought was really funny. That it was about you was incidental. I apologize for not being clear, particularly when I was aware to begin with that there was a likelihood for confusion, and then for not clarifying when I had the chance, but instead taking a shot at you myself.

As to your challenge, I have to confess to not being interested in writing a summary of whatever it is you want me to summarize. Maybe later today I'll be in the mood and might take a shot at it. We'll see.

[orion]

When I started this thread I wanted to comment on "qualified expert investors" calling a bottom to equities. I thought that;

1) MarketWatch's dramatization that we are in a 1929 bad news type situation was funny because althougth I think the crap has hit the fan, the market and unemployment numbers, etc. seem to be in the range of a normal recession not a 1929 state;

2) to be calling for a substantial rebound is even more hilarious because I think the 1929 type news is in the pipe and the market is headed down, although there may be bear rallies.

As for where my money is I am mostly in cash with <5% PM, 10% in Prudent Bear and Hussman type funds. And obviosuly I do not claim to be an expert ...

[c1ue]

Orion,

Whether we're at the bottom or not depends on your time frame and investment goals.

My admittedly very long view combined with my extremely short trading style is that we're still in economic time: i.e. that we'll be in the 4th inning of the grand economic baseball game once a top 10 depository bank fails.

Even with the Fannie/Freddie 'conservatorship' - you'll note that there will not be a lot of either action within the 'conservatorship' nor positive/negative impact on the rest of the financials (Lehman, WaMu, Wachovia).

The long term dollar depreciation theme is still very apparent to me - but the short term behavior is not going to necessarily reflect it (and isn't right now).

But this thesis is personal - everyone here at iTulip has some variation from mine.

But as everyone has their own time frames and investment goals, that is perfectly understandable.

We could theoretically all be right given a single set of events.

Your position is very conservative in one sense, but in another it is not: you are avoiding market risk but you are also standing still for the dollar depreciation/inflation punch.

Were your goal to retire and/or buy real property in the next 3 years or less, your position is very understandable.

If you're looking at retirement much further down the road, however, then I'd ask you to examine your saving plan + annual investment growth over inflation to see if your present allocation is going to allow you to meet your retirement goals.

There are many more wrinkles - retirement after all is only one financial goal, but I think you get the drift.

[raja]

Orion: I am mostly in cash with <5% PM, 10% in Prudent Bear and Hussman type funds. Were your goal to retire and/or buy real property in the next 3 years or less, your position is very understandable.

For someone who is close to retirement or retired, I think a better choice would be to have roughly equal portions of savings in cash, such as Treasuries, inflation hedges, such as PM, and real estate to provide a cash flow that will hopefully keep pace with inflation (this also assumes buying in a good area when prices near the bottom).

Being "mostly in cash" means that wealth will be mostly be eaten up by inflation or hyperinflation . . . . unless there is deflation, of course :D

[Jay]

For someone who is close to retirement or retired, I think a better choice would be to have roughly equal portions of savings in cash, such as Treasuries, inflation hedges, such as PM, and real estate to provide a cash flow that will hopefully keep pace with inflation (this also assumes buying in a good area when prices near the bottom).

Being "mostly in cash" means that wealth will be mostly be eaten up by inflation or hyperinflation . . . . unless there is deflation, of course :D
I hear you raja. My time frame is long but I still think your strategy is solid. I have the PM's and cash (and energy/oil), but am really deliberating over the real estate. We rent now, but the right multifamily or two might be a nice hedge for many situations. I don't know if I can handle the extra time investment though. In my area some multifamilies are selling below replacement cost of the buildings (Providence, RI).

[orion]

I am about 10 years from semi retiring. I have considered paying off my mortgage now but when it hits the fan I think of my greatgrandfather who owned things but when you're in a depression you can't sell them if you need cash. I can pay off the mortgage and still have good cash but I am hesitant. I realize the inflation eating away my cash but i am trying to figure out how you position yourself to pass thru ka and poom. I also think about energy stocks as a longer term add to portfolio.

[c1ue]

For someone who is close to retirement or retired, I think a better choice would be to have roughly equal portions of savings in cash, such as Treasuries, inflation hedges, such as PM, and real estate to provide a cash flow that will hopefully keep pace with inflation (this also assumes buying in a good area when prices near the bottom).

Being "mostly in cash" means that wealth will be mostly be eaten up by inflation or hyperinflation . . . . unless there is deflation, of course :D

Raja,

You've got your views, and I've got mine.

When times get bad, cash is king.

Losing 10% a year due to inflation sucks, but being able to buy income producing assets for cheap is great.

The lessons of Argentina are: Government securities are crap. Bank accounts are crap. Money under the bed is good. Real estate was good - but not good if you needed the purchasing power of rent to survive. PMs were good, but only in certain forms.

But the ones who actually profited in the Argentina hyperinflation were those with the cash to buy real property (real estate or businesses) between the advent of the hyperinflation and its end. Because no one had any savings from income or cash in that period.

[raja]

Raja,

When times get bad, cash is king.
This is only conditionally true . . . wouldn't you agree. For example, cash is not king in Zimbabwe.

Losing 10% a year due to inflation sucks, but being able to buy income producing assets for cheap is great.Agreed.
If I've got my money in Treasuries, and I decide to buy assets, I just cash them in and buy. Treasuries are better than under the bed because you get interest . . . and they are safe from residential theft.


But the ones who actually profited in the Argentina hyperinflation were those with the cash to buy real property (real estate or businesses) between the advent of the hyperinflation and its end. Because no one had any savings from income or cash in that period.Yes, buying real property prior to hyperinflation is good . . . much better than holding cash ;)

IMHO, whether Treasuries are good depends on the extent of the collapse. If it's bad but not too bad, it's good to be in Treasuries, because the rate will climb (as it did in 1980), and you can lock in long-term Treasuries when you think they are near the top. MUCH better than cash.

If the collapse is really bad, i.e., hyperinflation, then better to be entirely in PM and real property.

I don't ever see a default on Treasuries, since they'll just crank up the printing presses to pay them off . . . .

[c1ue]

This is only conditionally true . . . wouldn't you agree. For example, cash is not king in Zimbabwe.


Yes, but the even for me - the US isn't going to become Zimbabwe.

And if it does, buying Treasuries isn't going to be much use either

Yes, buying real property prior to hyperinflation is good . . . much better than holding cash ;)

IMHO, whether Treasuries are good depends on the extent of the collapse. If it's bad but not too bad, it's good to be in Treasuries, because the rate will climb (as it did in 1980), and you can lock in long-term Treasuries when you think they are near the top. MUCH better than cash.

Raja,

Look more closely at the tales from Argentina's experience.

Even those who owned real property but were dependent on rental income from said property suffered mightily. First shock from renters not having the income to pay for rent due to food price increases. Second shock from not being able to access their cash when banks were frozen.

Thus having liquid cash outside of a bank had its 6 months in the sun in Argentina.

As for Treasuries as investments themselves - I completely agree that default is much less of a risk. But Treasuries don't keep up with inflation, furthermore all Treasuries are in dollars.

In a severe inflationary case - you're going to get hurt several ways:

1) Interest rates on new Treasuries are eventually going to go up. This makes not-matured older Treasuries worth much less
2) Dollar itself will lose purchasing power.
3) Treasuries can be called.

Even the PM + real estate example - real estate might be a better investment if total US residential real estate were not so much high a number than GDP. With real GDP being at least flat and very possibly contracting, plus credit (lack of) availability thrown in, it is very realistic to assume there will be secular inflation adjusted price drops in real estate for a generation.

This doesn't bode well either for real estate holdings - unless your cost basis is ridiculously low already. In which case it ain't an investment, its an economic rent construct :eek:

[raja]

As for Treasuries as investments themselves - I completely agree that default is much less of a risk. But Treasuries don't keep up with inflation, furthermore all Treasuries are in dollars.

There's no question that Treasuries are losers . . . but what other choice is there for those of us who aren't skilled businessmen, aside form PMs? For us, a small loss is better than a catastrophic loss . . . .

In a severe inflationary case - you're going to get hurt several ways:

1) Interest rates on new Treasuries are eventually going to go up. This makes not-matured older Treasuries worth much less
2) Dollar itself will lose purchasing power.
3) Treasuries can be called.

I should have mentioned that I recommend only short-term treasury bills . . . until such time that the rates rise and it's time to lock in long-term notes with high rates.

When a note or bill is called, is that actually a loss? Or is it just a shortened maturity?

Even the PM + real estate example - real estate might be a better investment if total US residential real estate were not so much high a number than GDP. With real GDP being at least flat and very possibly contracting, plus credit (lack of) availability thrown in, it is very realistic to assume there will be secular inflation adjusted price drops in real estate for a generation.

This doesn't bode well either for real estate holdings - unless your cost basis is ridiculously low already. In which case it ain't an investment, its an economic rent construct :eek:RE price drops for a generation :eek:

Can you give me a pointer on how to know or calculate when RE prices have reached a point that they are again "reasonable" in relationship to GDP?

[Andreuccio]

Can you give me a pointer on how to know or calculate when RE prices have reached a point that they are again "reasonable" in relationship to GDP?

I don't know about relationship to GDP, but Charles McKay had a good chart showing RE prices in relationship to gold.

[c1ue]

Can you give me a pointer on how to know or calculate when RE prices have reached a point that they are again "reasonable" in relationship to GDP?

EJ and iTulip have a graph showing the USRREV in relation to GDP.

I don't know precisely where it is, but a review of the EJ/Fred new threads should turn it up pretty quickly.

The iTulip prediction based on the graph is for USRREV to approach GDP (instead of the present 1.5x/1.6x) in the next 5 years.

Of course, the graph appears to be a 'constant dollars' type data set - so actual prices are difficult to discern.

But it isn't too hard to game out the variables here:

100% inflation in the next 5 years means GDP will be $27T; a 'reversion to mean' would mean USRREV actually go up 35% ($20T to $27T) but in reality purchasing power equivalent is down a full 33%.

40% inflation in the next 5 years would be $18.6T GDP, in turn this implies a USRREV drop of another 8% or so.

Of course, there is always the possibility of over-correction. After all, prior to the roughly 1980, USRREV was well BELOW GDP.

Full USRREV mean reversion to say, 1970 levels, would mean 0.66 times GDP which would mean a 10% DROP in the 100% inflation scenario in absolute terms, and a 40% DROP in the 40% inflation scenario.

Again, not to say this will occur, but it is useful to understand just how things could get worse w/ regards to a real estate investment.