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Author Topic: Some free investment advice for the RAS community  (Read 28481 times)
Jason
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« on: August 16, 2008, 01:37:47 PM »

After a long hiatus I'm paying RAS another visit, this time with free financial advice.  As I said earlier I'm never completely gone.  Heh.

For anyone who has investments in the stock market, get them out.  All of them.  Do this RIGHT NOW.  Be long NO STOCKS.  Can I make this any clearer?  IF YOU OWN STOCKS SELL THEM!  Keep your money in cash, bonds (US Treasuries and foreign bonds), and a good foreign currency fund (I use the Merk Hard Currency Fund).  Oh, and you should own some gold coins too, not for investment purposes but for insurance against utter disaster and MASS inflation.  American Eagle bullion coins are the best place to start.

The money to be made in the stock market is going to be on the SHORT side.  For the uninitiated this means betting against the market, so if it goes down, you make money, if it goes up, you lose money.  There are exchange traded funds which short various market indices, like the Dow Jones, S&P 500, etc.  Put some money in one, or more than one, of those.

Sectors that will get HAMMERED:  financial and real estate.  There are ETFs which short these sectors as well.

Commodities are going to keep going down as we continue further into a recession.  This includes oil.  Unless there is war with Iran.  In that case oil goes to the moon.

Hope this helps anyone who may be reading the RAS forum.
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ason

"We're going to make airplanes out of beef."
- Alex Lifeson
Benj
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« Reply #1 on: September 02, 2008, 06:50:18 PM »

Sounds like you recently took an investment class.  Pretty decent sounding advice.

I have a question though: If you buy gold coins as an investment, who do you sell them to in the future to get your investment back?
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Jason
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« Reply #2 on: September 05, 2008, 08:21:14 PM »

Sounds like you recently took an investment class.  Pretty decent sounding advice.

I have a question though: If you buy gold coins as an investment, who do you sell them to in the future to get your investment back?

If you're buying gold coins for an investment you can go with an offshore account, or a place like Kitco.com that stores the gold for you.  Goldmoney.com is another web site which facilitates speculation, but serves mostly as a transaction house.  In other words, you can make precious metal backed transactions with other people on the site with accounts. 

I wouldn't recommend buying gold as an investment right now, just physical coins which you take personal ownership of and store yourself as insurance, like I said, against utter disaster and mass inflation (collapse of the dollar).  Unless the US goes to war with Iran that is.

An investment class?  Nope, never took one.  I've always had an interest in the stock market, but haven't always had the money to do anything with it.  Now I'm playing the short end until this recession finishes up. 

My recommendations still stand.  Sell ALL stock holdings.  This is going to be a BAD recession.
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ason

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Benj
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« Reply #3 on: September 08, 2008, 07:24:18 PM »

I know what you mean, but assuming you buy physical gold coins and the economy collapses, who are you going to sell them to to get your money back?  Or would you simply trade them with other post-apocalyptic survivors for goods and services on an ad-hoc basis?
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Jason
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« Reply #4 on: September 09, 2008, 06:12:56 PM »

I know what you mean, but assuming you buy physical gold coins and the economy collapses, who are you going to sell them to to get your money back?  Or would you simply trade them with other post-apocalyptic survivors for goods and services on an ad-hoc basis?

There are two reasons to own gold coins.  One is what you alluded to, a complete breakdown of the economic system where you have to barter for things.  Obviously you're not going to sell them to get your money back in this case, you're going to use them for survival.  Hence why I called gold coins insurance as opposed to an investment.  This is very very unlikely to happen, but hey you never know. 

The second is massive inflation of the dollar.  In this case you're mostly speculating on the price of gold going up a lot, but also that people might begin to turn away from the dollar and start using gold as money.  Here you can sell the coins to dealers or to a place like Kitco.com who will buy them.  Another way to hedge against this is using a site like Goldmoney.com to buy precious metals.  If you have an account there holding precious metals, and we're hit with a major run-up in inflation, then your account value will grow in dollar terms.
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ason

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Benj
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« Reply #5 on: September 09, 2008, 09:34:51 PM »

Cool.  So can you explain to me how gold is safe against inflation?  You're saying if I buy $10 worth of gold coins, the value of the gold coins won't change, even if the corresponding dollar amount does?
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Jason
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« Reply #6 on: September 14, 2008, 08:37:15 AM »

Cool.  So can you explain to me how gold is safe against inflation?  You're saying if I buy $10 worth of gold coins, the value of the gold coins won't change, even if the corresponding dollar amount does?

Let me clarify a bit here, I am saying gold is a good investment when you think MASS inflation will happen.  The normal low to moderate level of inflation won't drive the price of gold up.  You can find price charts which will bear this out.  Gold is good when people think there will be a LOT of inflation in the future.  Gold is like a safety net that people buy when BIG stuff happens, like a war or if the government starts printing off so many dollars that there is a lot of inflation, so people begin to lose confidence in the dollar.  So, if you think something big will happen, gold is a good commodity to speculate in.

Having said that, you really have to know your stuff to trade gold like this.  It's better to just buy gold for the other purpose it serves: insurance against disaster.  In this case don't think of it as an investment, it's insurance, and like regular insurance you hope you never have to use it (and truthfully it is very unlikely you ever will in your lifetime).  So, a good thing to do is pick up a small (1/10oz) gold American Eagle coin every now and again and put it someplace safe.  After a while you'll have a nice stockpile.  If nothing else it is a small amount of peace of mind.  Buy firearms and lots of ammo for added peace of mind!

In the meantime, consider the free advice for protecting your money in the downturn we're going through I've posted.  Sell equities and switch to cash, bonds (foreign and US Treasury), foreign currencies, and if you're willing to take on more risk short the market and individual stocks (the most risky).  Get defensive, to minimize your losses.  The only way to make money is going to be betting against the market for the next year to 2 years.  The ship is going down!
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ason

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Benj
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« Reply #7 on: September 22, 2008, 07:53:16 PM »

So Jason, what do you think about the recent bad news in the financial world -- all the banks going under and all that.  Did you see it coming?
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Jason
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« Reply #8 on: September 26, 2008, 03:58:14 PM »

I was posting months ago on an NC State message board about all of this.  If you want proof I can probably search for those old posts, but it would likely take some time to find them.  Back then I was saying most of these financial firms were insolvent, and specifically fingered Lehman Brothers, Fannie Mae, and Freddie Mac, and probably some others.  Merrill Lynch was going to go bankrupt, but the government helped broker a deal with Bank of America to save their asses.  A lot more banks are going to go under.

I'll stick my neck out a bit and make a specific prediction:  Wachovia will go bankrupt or be bought out for next to nothing (stock price drops to low single digits).  They're finished. 

Have you been following the bailout news?  It's a payout to the large firms, who are going to end up buying the small to mid size firms as they go bankrupt for pennies on the dollar.  The whole thing is a scam to help make money during this downturn.  In the meantime, the debt will shoot up and the dollar will continue going down down down because it will take a lot of inflation to pay for all of this.

Stay completely out of this market.  Cash is king!  When the bailout is announced there will likely be a pop, and maybe even a bear market rally for a while, but don't let it fool you.  A bailout will solve nothing, the best it will do is postpone and compound the issue.  2009 is going to be rough.
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ason

"We're going to make airplanes out of beef."
- Alex Lifeson
Jason
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« Reply #9 on: September 27, 2008, 11:04:33 AM »

Wow, from what I've been reading, they're going to go all out with the bailout to "save" these firms.  Wachovia might even be able to stay independent if the government takes up all or most of their bad debt.  Christ.  That'll kill my prediction. 

If the government goes full bore into inflation and bailout mode, then the stock downturn may be, MAY be over, athough the economy may still be sluggish into 2009.  But this will not solve the long term issues.  We'll be right back where we are now eventually.  We WILL pay for this with a depreciated dollar.  Of that there is no doubt.
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ason

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- Alex Lifeson
Jason
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« Reply #10 on: September 29, 2008, 07:20:41 AM »

Score one for me!  Wachovia is going to be bought by Citigroup and the shares are trading in the $1-2 range. 
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ason

"We're going to make airplanes out of beef."
- Alex Lifeson
Benj
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« Reply #11 on: September 29, 2008, 09:17:09 AM »

That sucks.  I'm a Wachovia customer and I hate Citigroup.  Oh well; what can ya do.
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Jason
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« Reply #12 on: September 29, 2008, 06:47:22 PM »

That sucks.  I'm a Wachovia customer and I hate Citigroup.  Oh well; what can ya do.

You could switch banks!  Can you get into a Credit Union?  Since my dad worked for IBM I've had a Coastal Federal Credit Union account for as long as I can remember.  My other bank account is a checking account with Schwab Bank, which is linked to my brokerage account.  Schwab is an excellent, stable firm, and they have no balance sheet problems.

Just the banking operations were bought out, the asset management and insurance and maybe some other stuff will still be around as Wachovia.

Amazing, the market dropped 777 points today!  No bailout!  I think it ultimately gets done, but man that sure surprised me that it did not pass!
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ason

"We're going to make airplanes out of beef."
- Alex Lifeson
Jason
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« Reply #13 on: October 02, 2008, 06:44:14 PM »

Gold is a buy now.  Buy gold coins and open a Goldmoney.com account.  This is what I'll be doing ASAP.

Continue to stay out of the market.  Sell all equities and hold cash and bonds.
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ason

"We're going to make airplanes out of beef."
- Alex Lifeson
Benj
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« Reply #14 on: October 03, 2008, 11:05:16 AM »

Well, I don't know if I'll be buying any gold.  But I'm glad to hear that Wachovia changed its mind; it will now be bought by Wells-Fargo, and it looks like Wachovia will more-or-less stay in-tact.
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