Whare do you put the money you took out of stocks?greenspun.com : LUSENET : TimeBomb 2000 (Y2000) : One Thread
I just sold all my stocks(retirement), paid my tax's, paid the house off, bought my y2k preps, and have 400,000.00 left over. I need some ideas on how to best preserve these funds. Tell me why I shouldn't put it all in short term treasuries. Tell me how you would diversify the funds, and why? How about some good ideas! I hear people on this forum recommending gold. why? Isn't gold just as big of a risk as any paper instrument, just a differant kind of risk? Diversification sounds good, but how do you do it so that when you come out on the other side(no matter what happens) you have 400,000.00 or more? I think there needs to be some discussion on this. How would you solve this puzzle?
-- Concerned (firstname.lastname@example.org), August 18, 1999
I'm investing in rural acreage...
-- Y2KGardener (email@example.com), August 18, 1999.
I would guess you will be get many responses from gold bugs. Unfortunately, much of what I have seen posted here about gold has a rather low signal to noise ratio.
As for answering your basic question, the qualifier "no matter what happens" looks like a real stopper. We shall see.
-- Jerry B (firstname.lastname@example.org), August 18, 1999.
http://www.gold-eagle.com/editorials_99/madhok081999.html here is the signal to go with the noise on gold.
-- rambo (email@example.com), August 18, 1999.
The answer to your question lies in your thoughts and beliefs as to what the likely outcome of y2k failure on society will be. If you believe that there will be massive failure and infrastructure collapse, then gold, held in the form of small numismatics, will be a great investment. If you believe that there will be plenty of failures ,distributed throughout the system but forsee that the system holds up undre the strain then T-bills makes a great investment as you are able to buy common stock in companies that prove to be capable of guiding thei company through difficult times and still survive. you will also be able to buy these same companies at significant discounts to todays egregious prices. Lastly, if you believe that there is little to no disruption to economic activity due to y2k than T-bills again makes a great investment as why would anyone with any sense pay 35 times earnings on stocks! Even easy Al Greenspan believes stocks, according to his valuation models, are 40% overvalued. T-bills are a great place to ride out the storm if you belive the system will stand the y2k strain, gold is a good investment if you believe the system will fail massivly. The idea of purchasing good farm land in the country also sounds appealing if you believe the system will fail completly. With todays prices on farms you will be able to buy at prices not seen in a generation. It really is pretty simple as to where to put your money, It just requires that you make a call on where we are going. Diversification is just a way of saying "I think I might be wrong."
-- PJ (firstname.lastname@example.org), August 18, 1999.
-- Just Joking (email@example.com), August 18, 1999.
Stocks to socks
-- CygnusXI (firstname.lastname@example.org), August 18, 1999.
Try the Treasury Direct program so the T-bills are registered in your own name and account directly. Go to the Bureau of Public Debt online. Even with Treasuries, you can diversify in terms of time line. I have a bunch of 10-year inflation adjusted Treasuries. I think there' another auction of these in October. If you want to go through a brokerage house, and not have them directly in your account, you can still buy some 10=years from the prior auction-- probably.
-- Mara Wayne (MaraWAyne@aol.com), August 18, 1999.
We made the decision that safety is the major factor...just getting to the other side and not being worried about making money. Therefore, we put a small amount in a safe that could be found readily by any thief. We put a larger amount in a gun safe that is pretty well hidden. Then we buried more than 50% of it. All of it is protected against fire, wind and water damage. They may find both safes, but they won't find the buried stuff and that would get us through.
-- Hannah (Hannah@ColonialAmerica.com), August 18, 1999.
My guess is that we are about to enter a period of instability and stagflation at the least, with the possibility that it all goes to hell a few months after rollover. This says gold to me which I have purchased with about 20% of my portfolio. I am gradually withdrawing less than 10% of my assets in cash in small bills (to act as my extended family's bank). I am buying lots of stuff, including a solar energy system for my home and associated appliances. I have decided to leave 10% of my money in a savings account in the hope(?) that the FDIC will still be backed by federal taxpayers (hint: that's less than $100,000).
The rest will go to more preps for people who aren't prepared in my extended family or neighbors that have kids.
-- nothere nothere (email@example.com), August 18, 1999.
$400,000 left over after paying off your home and everything else? Most lurkers here wished they had your problem! Taking personal possession of gold is better than a piece of paper saying you have some money somewhere!!! If you want to increase your $400,000, put at least $50,000 into Put Options and when the market crashes you'll be a millionaire many times over!
-- smitty (firstname.lastname@example.org), August 18, 1999.
i think at this point the PRESERVATION OF CAPITAL is the most important thing. I would invest all my $400,000.00 into 13 weeks, 26 weeks and 52 weeks wait till 9/14 for the 52 weeks so that you can get a better rate of interest as Greenspan will probably raise another .25 points on August 24th. There is an excellent web site by a prominent economist Yardeni.com go to this y2k book. He believes that the market will fall at leat 40% next year and you will be ready with your cash to get some bargains. Assuming you want them.
-- Rena the CPA (email@example.com), August 18, 1999.
Lots of good thought going into this one.
My thoughts are that, over the short term (next year) it really doesn't matter what I do with my money, if things are good, it only matters if their is a financial disaster. So I've positioned myself to ride out a disaster.
The situation is very complex and their are manipulators and regulators and central banks and financial houses of various kinds playing in it. As a result, You can't tell which strategy will win. They could create inflation and keep equity prices up (just worth less Big Macs), they could force down the pricce of gold (been doing that), they could pick the pocket of people who guess right. IT IS IMPORTANT TO BE DIVERSIFIED. If they push one thing down to try to control the situation, something else will pop up.
Gold is manipulated as hell, on the other hand it is down at record lows. There are real funny things going on right now with currencies and gold. You can play this thing in physical gold or gold mining stocks. The stocks are leveraged, and physical is real hard pretty things you can hold in your hand which is not dependent on the promise of someone to pay. I've got a little of both.
Treasuries, I don't like. The long bonds go down in value when interest rates rise (look at 'em recently). The government is the only entity that can change a contract unilaterally. Bill C. can turn your short term bonds into long bonds with the stroke of a pen.
I like money market. Real short term, and will catch the interest rate rise. I some default, rates will go up to compensate.
Rydex Ursa and Prudent Bear fund short the market.
If there are shortages of oil and food and metals, commodity prices will go up. Oppenheimer Real Asset is a commodity based fund.
Might want to play the oil service industry somehow. I havn't tried yet.
If you get a big gain out of one, you ought to rebalance. Increases will probably rotate through these sectors, IMHO. Rebalancing gains would get you a chance to catch all the gains.
By March 00 all the cards will be on the table. Then you can look at getting back in the market. The successful businesses will get the unsuccessful businesses marketshare (and some will get monoplies).
-- ng (firstname.lastname@example.org), August 18, 1999.
The safest option of my 401K plan is the money market fund. I am using the rest to pay bills, etc.
-- Mad Monk (email@example.com), August 18, 1999.
Harry Browne once put forth the idea of a "permanent portfolio" that I like.
25% Cash (insured Money market account)
25% Gold (hold it in your hand)
25% stocks (blue chips)
His idea was that whatever hits, some of this portfolio will take a hit, but the other areas will naturally offset the losses. Once a year, adjust the ratios back to 25-25-25-25 and forget it.
He also noted that most people like to tinker with some of their money. He suggested that this is fine. Take some amount that you can afford to lose and invest in Real estate, bet on the ponies, day trade, collect fine art - whatever trips your trigger. his theory that was that dabbling with your little projects would help you keep your sticky fingers out of the permanent portfolio...
Just another idea....
-- Berry Picker (BerryPicking@yahoo.com), August 19, 1999.