So what is the SMART MONEY doing right now??greenspun.com : LUSENET : TimeBomb 2000 (Y2000) : One Thread
OK, so lets assume for a moment that some of the wealthiest and smartest people in the world do get it. After all, they got to where they are by having some sort of foresight. So lets assume that they are scared senseless about Y2K (like you and I), and they are pondering their financial options.
Our hero in this story is a very successful and reputable 55-year-old player on Wall Street. Over the years he has built a personal fortune of some $50 million dollars. He remembers well the 1973-74 recession, and hes heard first hand accounts about the 1930s Great Depression. Y2K has sneaked up on him now, and he is terrified of loosing all his digital dollars fortune.
Our hero already knows that the stock market bubble is about to burst any day now. He has liquidated all his equities weeks ago. His $50 million fortune is now sitting in cash in his bank account (or perhaps in short-term Treasuries). Over lunch the other day, his old friend Alan Greenspan confided in him that he himself is not sure if the banks are going to function on Jan 4th, or even on Jan 31st. So what does our smart hero do with all his money to prepare for Y2K? Well, he withdrew a million dollars in cash from the bank. He took out 50,000 $20 bills and some change. Then he bought some $9 million worth of 1 oz Eagles -- UPS delivered a truck load with some 35,000 coins, about 25% of all 1oz Eagles minted that month. An interesting problem develops on how/where to store so many cubic feet of gold, but thats another story :-). Hes got enough food, water, ammo and supplies for a year.
So Mr. Hero now has $40 million left in his bank account. He is a true GI now and sees the same investment challenges we all do. Withdrawing more cash is not really feasible, and theres no way he can store more gold. So what will Mr. Hero do with 80% of his fortune?
The question is, what is the SMART MONEY doing right now??
-- Smart Money (Pondering@Options.com), September 07, 1999
I would think that Mr. Money Bags would look at the area where he lives and invest in good ag land. Again, I think that we get hung up on the problem of conserving 1999 dollars at that value, but what we should be doing is to try to conserve buying power. Actually with that amount of money he could do a great deal to help those around him who will not be as well prepared. Buy those goods now that many of us are buying and put them in a cheap building with the thought of either bartering or exchanging for labor later. After all goods do represent money and are essentially what we all will eventually use money for anyway. I think the answer you were looking for was what to invest in, and I think that goods, buildings and land is probably the way to go, as who knows about stocks, bonds and treasuries. The other thing to invest in is knowledge. There are or were some microfich (sp?) readers that you could buy for about $1000 that had tremendous amounts of how to information available. It things really break down, knowing or having the information on how to do something will be very valuable.
-- Gene on Cape Cod (email@example.com), September 07, 1999.
--$9 million worth of 1 oz Eagles--
Shades of Vegas casino Ted Binnon. This guy had millons of dollars worth of silver buried in a vacant lot in small town near Vegas. Know what happened? Ted's bimbo mistress and his right-hand man got together, and snuffed old Ted for his hoard of silver:)
--An interesting problem develops [yeah, like how not to get murdered] on how/where to store so many cubic feet of gold [I'll that one for Y2K Pro]--
-- rich (firstname.lastname@example.org), September 07, 1999.
Good story Andy, er, Smart Money. Now I know just what to do with my millions...
-- Y2K Pro (email@example.com), September 07, 1999.
pre-Y2K: Buy a few producing oil and gas wells. Gold mines.
Post-Y2K: Buy up real estate on discounted prices.
-- Bill P (firstname.lastname@example.org), September 07, 1999.
Nah, a guy with 50 million isn't gonna suddenly act like an ostrich and hide his head in a hole the first big disaster that comes along. Many of them are successful due to being good crisis managers. He/she will build up his business to be impenetrable to y2k glitches (maybe up to a 7)so that he/she will gain the post y2k loyalty of employees and customers and then spend the rest to make the proximal community that he lives in able to survive a 9 (probably in partnership with other well to do neighbors)
55 year old rich guys agressively think more of legacy and progeny survival rather than the short term ability of keeping currency which may or may not be devalued (yes even gold!)
BTW, his/her neighborhood will be the first to get utilities restored.
-- Sandwich (email@example.com), September 07, 1999.
The smart money haven't bought gold in the last 20 years!
-- Sandwich (firstname.lastname@example.org), September 07, 1999.
I might be inclined to add a "bolt-hole" in one or more countries with conservative politics and access to a major commodity (oil) that might be worth enough to keep the national currency afloat (or to reestablish it). Norway/Sweden, Scotland and Chile come to mind. Maybe New Zealand (geothermal energy). Then again, there is alway Alaska and Canada. (Areas to avoid: anywhere where you can potentially die from athlete's foot when you go to the local hospital. :) ) I would also "invest" in a number of barter items. A Gold rolex,rings, i.d. bracelet, money clip and the like. Add a packet with GIA certified stones-colored diamonds preferred. Maybe a few certified coins. In the "Crash of '79" by Paul Erdman, the hero sold all of his stock; bought 10,000 oz. of gold and put the rest into investment property in the San Fernando valley (a large cattle ranch if I remember right). I remember being struck by the line:"escrow to close within 48 hours". In one of his other books, the hero buys a winery. The key with a land purchase would be to have an infastructure-a small town, or towns nearby and good neighbors.
Now there's a question... Does everyone have a valid pasport? Checked into getting one lately? Well, o.k., two questions.
-- Greg Lawrence (email@example.com), September 07, 1999.
Gawd! If you have THAT MUCH money, the "smart" thing to do is leave a good chunk of it IN THE SYSTEM! I mean, I hate to sound like Y2K Pro, but things could turn out to be a bump in the road, in which case you could really clean up if you didn't completely cash out. Especially if the price of gold plummets yet further, which it darn well could!
Of course, if you only have a FEW million, cashing out is the only way to go....
-- King of Spain (firstname.lastname@example.org), September 07, 1999.
How about giving 50% of leftover $ away? Open preparedness store in town you live in and sell food, etc. for 1/2 price. Do credit check on customers and if they have lost-o-money, reject their purchase.
I realized the greed of the masses, but I also see the greed of individuals with too much money on their hands.
If it's gonna go to waste, then help the poor (under $25k income)
-- dw (y2k@Outhere.com), September 07, 1999.
I don't have a lot of smart money......however I had a very smart one dollar coin (bill to you Yanks.....) which at precisely 8:45 this morning invested in a Mars bar. My thinking was that if we go Infomagic then I could sell this Mars bar for a profit next year......
Unfortunately, at precisely 9:14 I participated in an asset reduction program....alright, I ate the damn thing.......well i was hungry...
I suppose I'd better stick to rice and beans next time I get a smart dollar.
-- Craig (email@example.com), September 07, 1999.
I got into this issue in 1997 looking for a profit angle. Now capital preservation (and bean preservation) is the issue. I have not thought of a single investment for which I can't invent a scenario that makes it a loser. The most basic question being asked is, "What do you do with money that you are not willing to beam up to the mother ship? My answer is based on the notion that a total bank collapse becomes pretty much a 10 and you might as well use your dollars to start your wood stove and wipe... (well, never mind). Short of a 10, you do like any sound investor does...diversify! Ideally, spread money in standard accounts over several banks. More might be spread over several brokerage houses. (Let us not forget that the last money to be removed will be the 401K money, providing an element of stability to these places (maybe). I intend to have a range of real liquidity that includes traveler's checks (possibly from several sources). When the dust settles, I deposit them in any institution that appears stable. If these vehicles fail, we are toast anyway. I'm shorting the market incrementally via the Prudent Bear Fund (a) up to the crash, or (b) through the rollover. I decided to carry it through the rollover even though the liquidation of the shares could get dicey in the event of 7+.
In my opinion, you should not consider the following:
(1) Make a bet that REQUIRES a disaster -- sound advice from KoS.
(2) Don't buy land now -- you could get slaughtered in a fire sale later.
(3) A friend said he would fall back on his stamp collection -- bad idea.
-- Dave (firstname.lastname@example.org), September 07, 1999.
Re passports. I had mine renewed a couple of weeks ago. Got it back within 10 days with no problem. Chubby hubby and I figure if we have to jump ship we should have our passports up to the maximum epire date.
-- Taz (Tassie@aol.com), September 07, 1999.