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Keep your fingers crossed. A panic recession is a great time to get rich. You can pick up assets for a dime on the dollar. Well, four bits on the dollar. I doubled my net worth between 2009 and 2011. I grew up knowing a man who exited the Great Depression as a multi-millionaire. In 2010 I was advising my friends to buy a half price house at 3% fixed, pointing out that their friends would think they were a financial genius.
Cash is king in a recession, but with all the free money the Fed is throwing around, a decent credit rating might do. The time to leverage is when everyone is freaking out.
Keep your fingers crossed. A panic recession is a great time to get rich. You can pick up assets for a dime on the dollar. Well, four bits on the dollar. I doubled my net worth between 2009 and 2011. I grew up knowing a man who exited the Great Depression as a multi-millionaire. In 2010 I was advising my friends to buy a half price house at 3% fixed, pointing out that their friends would think they were a financial genius.
Cash is king in a recession, but with all the free money the Fed is throwing around, a decent credit rating might do. The time to leverage is when everyone is freaking out.
there are far better choices then cash in a depression or recession with falling rates ..
holding long term treasuries will buy way more depressed assets in a depression scenario then cash will . compared to the soaring of long term treasuries cash is trash as they say.
whomever came up with the saying cash is king really had a poor understanding of how other assets work in the various economic outcomes possible .
whoever said cash is trash had it right because there are usually far better choices in each part of the cycle then cash .
there are far better choices then cash in a depression or recession with falling rates ..
holding long term treasuries will buy way more depressed assets in a depression scenario then cash will . compared to the soaring of long term treasuries cash is trash as they say.
whomever came up with the saying cash is king really had a poor understanding of how other assets work in the various economic outcomes possible .
whoever said cash is trash had it right because there are usually far better choices in each part of the cycle then cash .
Agree. The best thing about cash is that it is immediately liquid, but you pay a price for that liquidity vs. other instruments.
Get ready for another $1 trillion in this year's federal budget deficit, raising the national debt to $27 trillion. Congress is getting ready to pass another $1 trillion in Covid "simulus".
There is now $4 of debt in the US for every $1 of GDP
Don't worry about it. We'll inflate it away, as we've done with every National Debt since WWII.
Of course, that's bad news for anybody who was conscientious enough to save their money. Especially if they put it in an account that doesn't keep up with inflation. Soon it will be worth maybe 1/10 or less of the value they originally put in.
If someone stuffed a mattress with his precious $20,000 in 1940 (an amount that could actually buy half a dozen medium-sized new houses at the time), today he'd be lucky if he can buy a new car with it. ONE new car. And a cheap one at that.
But the government cordially thanks him for paying off most of the debts they ran up.
Sucker.
We will always attempt to inflate away debt, a nice tax on the savers. But one of these days, we won't be able to. The attempt to inflate will result in hyperinflation and financial collapse. The Federal government is always able to keep all those plates spinning up in the air WAY longer than I think they should all come crashing down.
It's magic, I tell ya'!
I won't even begin to guess when that will come. The debt is not at insane levels quite yet, but we are racing to it. The national debt was $5 trillion in 2000.
So from $5 trillion in 2000 to $26 trillion in 2020. I don't know how many $10 trillion decades of debt we can absorb and not experience financial collapse. this projects to $56 trillion in 2050 or roughly 250% of GDP.
And we don't even know the impact of Covid 19 on federal tax coffers. In October when businesses have to pay their federal taxes, how many are going to just declare bankruptcy instead. Uncle Sugar could see a huge decline in collections from projections. Add that to the current $26 trillion national debt upon everthing else.
there are far better choices then cash in a depression or recession with falling rates ..
holding long term treasuries will buy way more depressed assets in a depression scenario then cash will . compared to the soaring of long term treasuries cash is trash as they say.
whomever came up with the saying cash is king really had a poor understanding of how other assets work in the various economic outcomes possible .
whoever said cash is trash had it right because there are usually far better choices in each part of the cycle then cash .
Interesting thoughts.
I would be more focused on interest rates than GDP, and where they were headed to decide on cash vs debt paper. These days I worry more about slightly rising rates, not falling GDP as I specifically hold cash.
there are far better choices then cash in a depression or recession with falling rates ..
holding long term treasuries will buy way more depressed assets in a depression scenario then cash will . compared to the soaring of long term treasuries cash is trash as they say.
whomever came up with the saying cash is king really had a poor understanding of how other assets work in the various economic outcomes possible .
whoever said cash is trash had it right because there are usually far better choices in each part of the cycle then cash .
Cash is trash as one famous investor so equivalently stated earlier this year. TLT is the answer to a recession and depression. Avoid cash at all costs.
Cash is trash as one famous investor so equivalently stated earlier this year. TLT is the answer to a recession and depression. Avoid cash at all costs.
Cash can be very good to hold when things go to hell in a hand basket. Then one can for instance invest in a real good buy low opportunity. Like stocks or homes 2009.
Cash can be very good to hold when things go to hell in a hand basket. Then one can for instance invest in a real good buy low opportunity. Like stocks or homes 2009.
nooooo , in a recession LONG TERM TREASURIES ARE WHERE YOU WANT TO BE ... they soar 20-30% .. then you use that money to take advantage of opportunity and buy a whole lot more of that opportunity .
sitting in cash at zero while the price of admission to say a TLT is the same costs .
only one can give you way more money to reinvest at the lows .
so yes cash is usually trash in comparison.
this is something those that bail in to cash don't even realize ... they are trying to time things with that proverbial vision of being that last man standing with a fist full of dollars that they don't even realize what they are giving up with short sighted thinking that rarely plays out the way they picture it
money markets are already being propped up by the fund families or they would be below zero ...
t-bill etf's BIL are negative ... others like shv are around zero
on the other hand if you merely hung out in tlt the last month instead you would be up 2.55% .
the last week was up 1.09% , ytd up 24% and 1 year up 30% .
so that would buy way more assets when they get discounted if you think opportunity is coming . .
let this sink in ... how much extra would you need to gain going to cash and then executing a good timing to buy back in to equal that 24% ytd return you did not get just by staying invested and doing nothing , simply letting the long term treasuries just do their thing .
the answer is more was likely given up by the move to cash then likely gained going through the whole gyration .
Last edited by mathjak107; 07-16-2020 at 04:17 AM..
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