Editor’s Note: In today’s essay space, we bring you comments from fellow Markets and Money readers on how they will survive and prosper 2009. Inflation, deflation, depression, recession, there is a plan for all seasons!
I shall buy Gold, Silver and some resource stocks NCM, WPL, BHP. That’s about it. The balance will stay in Cash this year 2009.
My plan is not to try to predict anything, or believe predictions (Inflation? China going gangbusters again? New commodity boom?). I will just use what I have learned about technical analysis to:
- Find the newly trending stocks/markets. I will use Diggers and Drillers to help identify commodity stocks with a bit of fundamental flavour.
- Stay in them until my signal says sell
- If the All Ords gives a sell signal with my favourite squiggly line I will look for new shorts
So I will trade like a robot – the only way to survive financially and emotionally!
You asked, “It’s an important question-probably the most important you can ask these days. So we’re going to collect and write up our thoughts over the weekend. Stay tuned! And if you want to send us your plan, don’t be shy.”
Here’s my plan:
- Continue to pray
- Continue to live below my means
- Continue to purchase precious metals
- Continue to build a “storm kit” We get pretty significant storms in Texas at times, so the kit is useful for the aftermath of nature’s storms and man-made economic storms. My kit includes foodstuffs, a water purifier, gun/ammo (hey, this is Texas!), diesel fuel (for my diesel car, which I think that diesel will store a lot better than gasoline), mutually supportive friends and a plan to pull it all together. I’m checking into generators, but don’t have one yet.
Thanks for the DR website. I really enjoy the contrarian analyses and the personality / humour the authors put in their contributions.
JL in Texas
To your question what should we do?
- Take notice of the Markets and Money analysis (with co-benefit of getting sorely needed laughs from the writers’ predilection’ for understatement of the obvious).
- Watch the original Mad Max movie and take some notes on survival techniques for ‘a future world that is coming to suburbs near you’
- Bemoan the fact that I am not living in a remote fully sustainable community of caring organic farmers with some ex SAS troopers and all the requisite equipment and supplies to sustain a long drawn-out cataclysm
- Invest in arms manufacture, security technology companies and the pharmas manufacturing headache and analgesic medicines
- Learn to speak Chinese
With the money supply going crazy surely mega inflation is inevitable in certain asset classes like energy (as China recovers) GOLD insurance and food. Probably as a more or less global phenomenon. Maybe everything except wages. I don’t think housing will suffer a serious price decline as the domestic economy is not badly affected long term as far as I can see.
I wouldn’t mind going into debt to buy local energy stocks. That’s about my plan. Wait for oil to double in price and then re-evaluate. The Aussie dollar has been pretty weak and over a year or two I don’t think it’s likely to recover substantially in that time frame. Oil should. Possibly. SWFs and hedge funds have to pile into something.
Maybe with the profits I will buy gold coins (or mining companies) and guns, and bars for my windows. And for my vege garden. Not sure when gold’s gonna do that 5th leg of the Elliott wave some of us are expecting. I prefer shorter time frames with all this volatility. What a ride. Whee!
I have been reading the DR for about two years and look forward to reading it. I really enjoy your, Bill and the rest of the crew’s reckonings, keep up the great work.
I always read your column with interest as a balance to the optimists who seem to infest the newspapers.
My strategic rearrangement of investments began in late 2006 when this GFC was first mooted in the UK press and overseas investments were repatriated and spread around the Australian banks as a risk management strategy. I was still buying shares but cautiously & only in 1% of cash resources at a time.
I then sold of some of my shares late 2007 but took my eye off the share market despite advice from others to liquidate my position. Since then I have been looking for shares in which to park my cash but only recently found a few prospects that might be worthwhile.
I was in North Germany in my UK based motor home late October 08 and needing a spare part. I noticed from the highway a large motor home sales yard bursting with new motor homes and visited.
Whilst there I was fortunate to have an interesting conversation with the owner when I commented that he had a full yard well past the end of the summer sales period & at a time when financial predictions were already quite negative.
His response was insightful. He advised that there was a collective German memory of the Weimar republic of the 1920’s/1930’s and the aftermath of WW2.
His customers saw a motor home as something of real value on which to spend their saved Euros “before they became worthless” and which was a portable house which they could move to somewhere in the Mediterranean sun if life became really desperate!!!!
His sales were excellent.
There is clearly going to be hyper inflation in the cost of living in Australia which means that the real purchasing power of my cash at bank is diminishing rapidly.
As well, interest on cash at bank is derisory and is taxed at one’s marginal rate so the question is what to do with it “before it becomes worthless”.
In Australia every federal, state & local authority/city council is making a grab for income straight out of my pocket where they know I have no option except to pay up such as council rates, fees for government services, vehicle registration etc.
As well our collective or national wealth is being squandered on “feel good” and poorly conceived projects which will no doubt be executed with equal inefficiency. The National Broadband Network is such a plan that is not “Nation Building”. It’s “Nation Wealth Destroying”.
It’s worth recollecting the “Think Big” projects of the 1970’s and 1980’s in NZ which has left a legacy of national impoverishment that has lasted to today.
I agree with your sentiments that house prices are over-valued. This when taken with the unfavourable circumstances that landlords find themselves in when dealing with feral tenants due to an iniquitous “Residential Tenancy Act” makes rental properties an undesirable way of safeguarding wealth.
We have much to learn from the reformed Communists /Socialists who govern China and who have clearly understood their current strategic/financial advantages plus long term needs and are withdrawing their US$1.7 trillion of USA treasuries and converting it into a vice lock on all the mineral resources required for the long term prosperity of their economy when these resources are priced at desperation levels.
Clever chaps who are way smarter than those in UK & USA!!!
I am still at a quandary as what to do with my cash as fortunately I have few $ assets in Superannuation, no debts and I am a hands on person who can fix most broken things and maintain the prime items like cars and homes that I own so I am able to minimise my outgoings.
I don’t see many safe investments and I can see the real value of cash being rapidly diminished by inflation.