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Wondering what the smaller investor should do?
In the previous depressions, really monied people bought undervalued large companies and property.
However, apart from trying to pick undervalued stock .... where else can the smaller investor look?
Keep on DCAing into your appropriate asset allocation.
Ride the escalator down into the basement on the basis that it must be a better deal to buy the lower it gets? Does that really make any sense to anybody?
Just asking.
I do not do "investments" in other folks businesses -- but I would think that shorting those that are likely to keep going down would make better sense?
Not quite yet,but within the next 6-12 months,I believe 10 and 30 year treasury yields will begin to rise.Usually,long yields begin to rise due to an improving economy.That might not be the case this time.If continuing deficits undermine confidence in the dollar,investors will look to park their money elsewhere than the alleged safety of U.S. government debt.The play would then be ETF's shorting treasuries,they are PST (2 times levered short 7-10 year bonds), TBF (short 20+ year bonds) and TBT(2 times levered short 20+ year bonds).Good luck in investing,and remember,ALWAYS put a trailing stop loss on any investment you make to limit downside damage.JMHO
I think tuberose had a good start on a really interesting concept. I was sort of laying back hoping it would go somewhere.
I guess the model was that this is a Depression. Not so much whether Happy Days Are Here Again is just around the corner -- but rather an application of how to do good in "Down" times.
So if one accepts that this is a Depression -- which is where this started -- I guess that would indicate a Long Term (across years) Deflationary Depression? Where, in general, housing, wages, interest, etc., are down, and/or continue to drift down?
Is that a fair description of the model?
I have seen some folks do well in this. Those are the folks that accept the situation, take a grasp of it and plan accordingly.
A Deflationary Depression means in practice whatever is produced may likely be worth less quickly, and that the targeted customer may have less and less money to buy it into the future, as they themselves are laid-off, and if re-hired, it will likely be at a lower wage.
So if you are running a McDonalds -- try a 50 cent menu rather than a dollar menu. If you are into housing -- go for very cheap (or affordable, as they say) products. I guess in general -- drop from a High Gross Revenue / High Cash Flow model, and into a Low Cost, Lower Price -- but Profitable Model.
Ride the escalator down into the basement on the basis that it must be a better deal to buy the lower it gets? Does that really make any sense to anybody?
Yes. I've been consistently DCAing for a long time now and it's always amazing how quickly your stash shoots back up when market returns.
I've spoken with many people who's net worth reached an all-time high immediately after the huge drop of 08-09 since they kept with it, even though the DOW hasn't gotten anywhere near the 14k level again from prior to the carnage. If you need the money you could be in trouble, but if you're looking long term the dips are what pays off.
Agree re treasury bonds... though this is a safe option, rather than a growth option.
Cash seems to be king ....those successful in the great depression bought well.
Investing a larger amount in specific stocks may be the way to go for me ...riskier but better return.
Undervalued property good too but perhaps too long a period of costly maintainance and problem tenants somewhere like Las Vegas before things improve.
Am thinking of Philip T's comment regarding offering cheaper services and products. Surely healthcare presents some opportunities?
With so many people u/e and likely to be rehired later at lower wages ....cheaper healthcare must be a good option.
Maybe nurse practitioner clinics would work? Cash only medical services? Having a medical professional read your Xrays and process your blood tests in another country?
Am going to get my thinking cap on re healthcare
Agree re treasury bonds... though this is a safe option, rather than a growth option.
Cash seems to be king ....those successful in the great depression bought well.
Investing a larger amount in specific stocks may be the way to go for me ...riskier but better return.
Undervalued property good too but perhaps too long a period of costly maintainance and problem tenants somewhere like Las Vegas before things improve.
Am thinking of Philip T's comment regarding offering cheaper services and products. Surely healthcare presents some opportunities?
With so many people u/e and likely to be rehired later at lower wages ....cheaper healthcare must be a good option.
Maybe nurse practitioner clinics would work? Cash only medical services? Having a medical professional read your Xrays and process your blood tests in another country?
Am going to get my thinking cap on re healthcare
I'm not sure you grasp my treasury comments.You would be SHORTING treasury futures,not buying them.Yields on long term government debt has gone from 17% down to less than 4% in the last 20 years.Thus shorting them would have been a disaster.Now,as long term yields reach historic lows,there just isn't much lower to go.The ETF's I wrote about could DOUBLE in price in a few months if a treasury auction goes bad a yields move from 3.9% to say 5.25%.Bonds ain't sexy,but they can give you solid returns,if you bet the right direction.
If anyone throws the old "we are the next Japan",and we are going to have deflation,don't buy bonds,soon they will yield zero.1)The Fed will DEVALUE the dollar in one way or another before they let that happen,which would cure the deflating housing market,foriegners would come out of the woodwork to buy cheap property in the U.S.,right now,at 3.4 times median income,U.S. housing STILL is overpriced.Historic average is 2.7 times,and always overshoots on the way up and down.2)Americans ain't like the Japanese,who live frugally,and save like mizers,moneys velocity is how economies recover,spending,not saving,and brother,do we spend,even if we don't have it! 3)If you believe in the economic recovery which isn't happening yet,IMHO,bond yields go up as the indices start to recover.Good Luck
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