Unprecedented Event

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pkcrafter
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Unprecedented Event

Post by pkcrafter » Tue Apr 24, 2018 8:45 pm

Do you believe the U.S. stock market could experience an unprecedented event?

For instance, Wm Berstein's Deep Risks.

The four main causes of deep risk according to Bernstein are hyperinflation, prolonged deflation, devastation (wars or geopolitical disasters) or government confiscation of assets.

http://awealthofcommonsense.com/2014/04 ... tein-risk/

Is there anyone who is 100% stocks that believes in these risks?

Paul
When times are good, investors tend to forget about risk and focus on opportunity. When times are bad, investors tend to forget about opportunity and focus on risk.

snarlyjack
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Re: Unprecedented Event

Post by snarlyjack » Tue Apr 24, 2018 8:57 pm

Paul,

I' am not quite 100% stocks.
90% stocks, 10% cd.

Imho, If that happened, say war with N/K I would view it as
very short term in nature & a total buying opportunity.

No to (hyperinflation, prolonged deflation, gov't confiscation).

I' am pretty bullish & have been since I've been here...(long time).

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Watty
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Re: Unprecedented Event

Post by Watty » Tue Apr 24, 2018 9:08 pm

pkcrafter wrote:
Tue Apr 24, 2018 8:45 pm
Do you believe the U.S. stock market could experience an unprecedented event?
There are very few events like the ones you mentioned that are unprecedented. They have all happened many times in other countries.

Some of them have even happened in the US to one degree or another when you consider things like the civil war, slavery, the great depression, wage freezes and the high inflation of the late 1970's.

stan1
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Re: Unprecedented Event

Post by stan1 » Tue Apr 24, 2018 9:10 pm

Low probability, definitely not zero in the US or even global especially for someone who might live 50 or more years. Not sure what to do about it other than diversify and not get greedy (lower risk exposure when it is not needed or compensated).

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randomizer
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Re: Unprecedented Event

Post by randomizer » Tue Apr 24, 2018 9:12 pm

pkcrafter wrote:
Tue Apr 24, 2018 8:45 pm
Do you believe the U.S. stock market could experience an unprecedented event?
Yeah.
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Doom&Gloom
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Re: Unprecedented Event

Post by Doom&Gloom » Tue Apr 24, 2018 9:18 pm

randomizer wrote:
Tue Apr 24, 2018 9:12 pm
pkcrafter wrote:
Tue Apr 24, 2018 8:45 pm
Do you believe the U.S. stock market could experience an unprecedented event?
Yeah.
Sure. What could possibly be absolutely preventing it?

golfCaddy
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Re: Unprecedented Event

Post by golfCaddy » Tue Apr 24, 2018 9:20 pm

Deflation wouldn't be unprecedented even for the US, as the Great Depression demonstrates. You can't discuss the other three without running afoul of the forum's rules on politics. Suffice to say, I recommend reading Bernstein.

runner540
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Re: Unprecedented Event

Post by runner540 » Tue Apr 24, 2018 9:28 pm

Sure, those things could happen here. I know people who've experienced them in other countries: it's ugly and game changing, and often your financial assets are the least of your worries (food, safety, freedom take precedence). That's why I like diversification: geographical, type of account (Roth/tax-deferred/taxable), location of account, etc. If by the time I retire the income tax has been largely replaced by a VAT tax, the value of a Roth has just diminished tremendously!

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Re: Unprecedented Event

Post by samtex » Tue Apr 24, 2018 9:37 pm

Event like: https://en.m.wikipedia.org/wiki/Nuclear ... etic_pulse

The US EMP Commission published a rather depressing paper on the affect of a EMP event. I find the scary part is that there wouldn't be a need for mass use of nuclear weapons. And very little physical damage, other than our toasted electronics. A solar EMP could do the same. Like in the 1800's when it melted our telegraph system, including the telegraph keys, lines and underwater cables. Back then, the telegraph was our high tech. And if it was melted by the event, just imagine our high tech equipment today. We really wouldn't be worried about our retirement accounts.

Somethings are so destructive most people find it difficult to comprehend.

Samtex

runner3081
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Re: Unprecedented Event

Post by runner3081 » Tue Apr 24, 2018 10:57 pm

Of course it could happen and it could bring a once-in-a-lifetime buying opportunity as well.

IlliniDave
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Re: Unprecedented Event

Post by IlliniDave » Wed Apr 25, 2018 3:19 am

pkcrafter wrote:
Tue Apr 24, 2018 8:45 pm
...
The four main causes of deep risk according to Bernstein are hyperinflation, prolonged deflation, devastation (wars or geopolitical disasters) or government confiscation of assets.

Is there anyone who is 100% stocks that believes in these risks?

Paul
I'm not 100% stocks, only about 70%. I "believe in" such risks insofar as I acknowledge they exist. But I don't think any of them are likely to devastate worldwide equity investors and leave other investors/asset holders unscathed anytime in a time horizon that is relevant to me.

Dr. Bernstein was one of the first authors I read when I started educating myself about investing. He tends to have a pretty pessimistic outlook, so whenever I catch myself feeling too good about things I reread a little of his stuff. I think his business caters to people an order of magnitude wealthier than me, or more, and the game for people with tens or hundreds of millions in financial assets is maybe different than it is for someone like me.
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Valuethinker
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Re: Unprecedented Event

Post by Valuethinker » Wed Apr 25, 2018 3:21 am

samtex wrote:
Tue Apr 24, 2018 9:37 pm
Event like: https://en.m.wikipedia.org/wiki/Nuclear ... etic_pulse

The US EMP Commission published a rather depressing paper on the affect of a EMP event. I find the scary part is that there wouldn't be a need for mass use of nuclear weapons. And very little physical damage, other than our toasted electronics. A solar EMP could do the same. Like in the 1800's when it melted our telegraph system, including the telegraph keys, lines and underwater cables. Back then, the telegraph was our high tech. And if it was melted by the event, just imagine our high tech equipment today. We really wouldn't be worried about our retirement accounts.

Somethings are so destructive most people find it difficult to comprehend.

Samtex
And the punchline is that solar flare would take out the US and Russian early warning radar and communication systems.

THAT could precipitate World War 3. Any nation that fears surprise attack (think Pakistan, North Korea, Israel etc.) or at a time of high international tension one of the superpowers might decide to strike first "use it or lose it".

This was precisely the scenario we were in in the Cuban Missile Crisis. It wasn't until a conference organized by Robert S Macnamara (SECDEF during the crisis) in 1992 (?) in Moscow that it was discovered just how close it was.

The Joint Chiefs recommended a conventional strike to take out the Russian missiles before they were armed with nuclear warheads. But US intelligence was faulty. The missiles were *already* armed. And the commanders on the ground were under orders to "use it or lose it"- -to fire the missiles if they came under attack.

The result would have been destruction by atomic detonation of parts of the US invasion fleet and US military bases and cities within range-- places in Florida, Alabama, Atlanta etc, Norfolk VA perhaps etc. The US would of course have launched mass retaliation against USSR.

The Russian generals and politicians at the Conference were gobsmacked that the Americans had not realized the situation.

The 2 sides were operating under false assumptions about the other side's position and knowledge.

That's how the world ends.

Valuethinker
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Re: Unprecedented Event

Post by Valuethinker » Wed Apr 25, 2018 3:22 am

pkcrafter wrote:
Tue Apr 24, 2018 8:45 pm
Do you believe the U.S. stock market could experience an unprecedented event?

For instance, Wm Berstein's Deep Risks.

The four main causes of deep risk according to Bernstein are hyperinflation, prolonged deflation, devastation (wars or geopolitical disasters) or government confiscation of assets.

http://awealthofcommonsense.com/2014/04 ... tein-risk/

Is there anyone who is 100% stocks that believes in these risks?

Paul
I certainly believe in the possibility of (all) of these risks.

However I am not 100% equities.

What's more likely is some awful bear market, with a 30-50% drop in equities. Happens periodically. The high returns of equities are paid for by high volatility.

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Re: Unprecedented Event

Post by UpperNwGuy » Wed Apr 25, 2018 4:09 am

OP, what action are you recommending we take?

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Sheepdog
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Re: Unprecedented Event

Post by Sheepdog » Wed Apr 25, 2018 4:49 am

Time to close?
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AtlasShrugged?
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Re: Unprecedented Event

Post by AtlasShrugged? » Wed Apr 25, 2018 6:23 am

Answers below.

hyperinflation: Nope
prolonged deflation: Nope
devastation (wars or geopolitical disasters): Yes (BTW, it could be a natural event)
government confiscation of assets: Yes

From an investment perspective, I guess you could partly mitigate by holding an international index fund, or having assets physically outside the country. That would invoke FATCA, though. Not sure how much protection that diversificaton would have. My view is that if the US 'goes down', the world is coming along for the ride.

Edit: I suppose one could obtain precious metals and jewels (loose diamonds, etc). Reading some of the posts about Spain, that might also make sense.
Last edited by AtlasShrugged? on Sat Apr 28, 2018 7:42 am, edited 1 time in total.
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david1082b
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Re: Unprecedented Event

Post by david1082b » Wed Apr 25, 2018 7:02 am

pkcrafter wrote:
Tue Apr 24, 2018 8:45 pm
Do you believe the U.S. stock market could experience an unprecedented event?

For instance, Wm Berstein's Deep Risks.

The four main causes of deep risk according to Bernstein are hyperinflation, prolonged deflation, devastation (wars or geopolitical disasters) or government confiscation of assets.

http://awealthofcommonsense.com/2014/04 ... tein-risk/

Is there anyone who is 100% stocks that believes in these risks?

Paul
The next few sentences of the AWOCS post say:
These deep risks are all completely out of your control. Bernstein surgically dissects each deep risk in the book and shows that even though the there is a small probability of these events occurring, stocks are still your best bet to protect and grow your wealth should they transpire.
So even if someone does believe in these risks, Bernstein says stocks are the way to go in the long run.

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Re: Unprecedented Event

Post by Call_Me_Op » Wed Apr 25, 2018 7:04 am

pkcrafter wrote:
Tue Apr 24, 2018 8:45 pm
Do you believe the U.S. stock market could experience an unprecedented event?
Of course. And you portfolio should be positioned in such a way that you don't care.
Best regards, -Op | | "In the middle of difficulty lies opportunity." Einstein

Hillview
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Re: Unprecedented Event

Post by Hillview » Wed Apr 25, 2018 7:14 am

A possible issue is a major cyber breach or a power outage that lasts a long time (months) across a large region like the east coast.

JoeRetire
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Re: Unprecedented Event

Post by JoeRetire » Wed Apr 25, 2018 7:19 am

pkcrafter wrote:
Tue Apr 24, 2018 8:45 pm
Do you believe the U.S. stock market could experience an unprecedented event?
Yes.

A zombie apocalypse could happen too. But they all seem unlikely.

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Watty
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Re: Unprecedented Event

Post by Watty » Wed Apr 25, 2018 7:23 am

pkcrafter wrote:
Tue Apr 24, 2018 8:45 pm
Is there anyone who is 100% stocks that believes in these risks?
Another thought.

In many of these scenarios bonds would also not do very well either, or even worse than stocks in some situations.

Bonds have different risks than stocks but they should not really considered as being "safe".

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Re: Unprecedented Event

Post by z3r0c00l » Wed Apr 25, 2018 7:41 am

samtex wrote:
Tue Apr 24, 2018 9:37 pm
Event like: https://en.m.wikipedia.org/wiki/Nuclear ... etic_pulse

The US EMP Commission published a rather depressing paper on the affect of a EMP event. I find the scary part is that there wouldn't be a need for mass use of nuclear weapons. And very little physical damage, other than our toasted electronics. A solar EMP could do the same. Like in the 1800's when it melted our telegraph system, including the telegraph keys, lines and underwater cables. Back then, the telegraph was our high tech. And if it was melted by the event, just imagine our high tech equipment today. We really wouldn't be worried about our retirement accounts.

Somethings are so destructive most people find it difficult to comprehend.

Samtex
A major solar flare is probably the most likely of the severe, existential threats to civilization. I shudder to think of what happens when the power is out for a few months across the country considering how poorly we respond to storm damage in small regions.

BlackStrat
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Re: Unprecedented Event

Post by BlackStrat » Wed Apr 25, 2018 8:12 am

samtex wrote:
Tue Apr 24, 2018 9:37 pm
Event like: https://en.m.wikipedia.org/wiki/Nuclear ... etic_pulse

The US EMP Commission published a rather depressing paper ......
Yep - an EMP would be a complete mess alright. If you enjoy reading novels, I thought this book captured the aftermath of an EMP attack fairly well:

https://www.amazon.com/Second-After-Joh ... 0765327252

While we're discussing doomsday events, this could be an unprecedented occurrence along the mid-Atlantic coast which could affect our portfolios:

http://www.dailymail.co.uk/news/article ... namis.html

Broken Man 1999
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Re: Unprecedented Event

Post by Broken Man 1999 » Wed Apr 25, 2018 8:24 am

runner3081 wrote:
Tue Apr 24, 2018 10:57 pm
Of course it could happen and it could bring a once-in-a-lifetime buying opportunity as well.
How would you buy if things were so hosed?

I would agree that IF you could buy, it could be a great opportunity, but if the swizzle-stick really hits the fan, not sure one would be able.'

Hopefully I will never see such an event. :shock:

Broken Man 1999
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dbr
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Re: Unprecedented Event

Post by dbr » Wed Apr 25, 2018 8:43 am

What does it mean to "believe in" a risk? But, yes, I think it is fundamental that one does not rely 100% on a single resource for all of anything that is important. And the narrower, meaning less diversified, the resource the less one would rely on it.

Note, however, that in times of unprecedented stress resources can be correlated. Financial, political, economic disasters and extremes don't affect only stocks in isolation. Exactly how actionable recognizing "deep risk" is becomes a question for significant debate.

On the other hand, "100% stocks" may be too narrow in the presence of various fallbacks that exist including future employment, aka personal capital, owning personal property such as one's home, having future access to public assistance starting with Social Security, having resources in family and friends, etc., etc.

I think you have to conjure up some pretty extreme combinations of personal situation and realization of deep risks to then back down to a pronouncement that "100% stocks" should never happen.

That said, I would never attempt to retire on no other resource than 100% stocks and no Plan B myself. Plan B might include that losing 95% of my wealth would still leave me with plenty.

But I am a little unsure what the question really is.

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Re: Unprecedented Event

Post by Yukon » Wed Apr 25, 2018 8:44 am

IlliniDave wrote:
Wed Apr 25, 2018 3:19 am
Dr. Bernstein was one of the first authors I read when I started educating myself about investing. He tends to have a pretty pessimistic outlook, so whenever I catch myself feeling too good about things I reread a little of his stuff. I think his business caters to people an order of magnitude wealthier than me, or more, and the game for people with tens or hundreds of millions in financial assets is maybe different than it is for someone like me.
Interesting. I've never considered Dr. Bernstein's outlook pessimistic. I love his take on risk and that he acknowledges history for those who turn the blind eye and believe "this time is different".
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JoMoney
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Re: Unprecedented Event

Post by JoMoney » Wed Apr 25, 2018 8:54 am

Yes.

Do you believe bonds are somehow exempt from these 'deep risks', or that they offer the potential to provide real returns sufficient to reach goals?
"To achieve satisfactory investment results is easier than most people realize; to achieve superior results is harder than it looks." - Benjamin Graham

dbr
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Re: Unprecedented Event

Post by dbr » Wed Apr 25, 2018 8:57 am

Yukon wrote:
Wed Apr 25, 2018 8:44 am
IlliniDave wrote:
Wed Apr 25, 2018 3:19 am
Dr. Bernstein was one of the first authors I read when I started educating myself about investing. He tends to have a pretty pessimistic outlook, so whenever I catch myself feeling too good about things I reread a little of his stuff. I think his business caters to people an order of magnitude wealthier than me, or more, and the game for people with tens or hundreds of millions in financial assets is maybe different than it is for someone like me.
Interesting. I've never considered Dr. Bernstein's outlook pessimistic. I love his take on risk and that he acknowledges history for those who turn the blind eye and believe "this time is different".
He seems to oscillate between practical and common sense investment advice and trying to be a doomsday prophet. I don't really know how to take that. His language is sometimes hyperbolic to an extent that credibility evaporates. I don't really know how to take some of that either.

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Re: Unprecedented Event

Post by pkcrafter » Wed Apr 25, 2018 9:14 am

UpperNwGuy wrote:
Wed Apr 25, 2018 4:09 am
OP, what action are you recommending we take?
Well, I don't have any recommendations, especially after reading several of the replies. I originally wondered if there was anything that 100%ers feared, but I'm now convinced these deep risks are not something having only 60% in stock would help.

So, the percent in equity an investor has is entirely dependent on that person's own personal situation. Investors do get hurt by market falls, but it's mostly because of poor planing. Those that have a need to take risk are also the ones who don't have much ability. If you don't have a need to take higher risk, then you actually have more ability.

In the end, I don't like to forget the stock market is actually risky in ways we may not be prepared for. There are black swans that don't qualify as deep risk, but they can be very destructive, especially for those anywhere within 10 years of needing the money. There are things that can happen that are beyond our control, and It doesn't matter if it's permanent damage or just temporary damage it it ends up spoiling our anticipated style of living on accumulated assets. The market would not be near as risky if we knew what might happen and for how long it would interfere with our plans, but we don't, and it's that unknown dark area that has prevented me from ever being 100% stocks.

Paul
When times are good, investors tend to forget about risk and focus on opportunity. When times are bad, investors tend to forget about opportunity and focus on risk.

dbr
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Re: Unprecedented Event

Post by dbr » Wed Apr 25, 2018 9:21 am

pkcrafter wrote:
Wed Apr 25, 2018 9:14 am
UpperNwGuy wrote:
Wed Apr 25, 2018 4:09 am
OP, what action are you recommending we take?
Well, I don't have any recommendations, especially after reading several of the replies. I originally wondered if there was anything that 100%ers feared, but I'm now convinced these deep risks are not something having only 60% in stock would help.

So, the percent in equity an investor has is entirely dependent on that person's own personal situation. Investors do get hurt by market falls, but it's mostly because of poor planing. Those that have a need to take risk are also the ones who don't have much ability. If you don't have a need to take higher risk, then you actually have more ability.

In the end, I don't like to forget the stock market is actually risky in ways we may not be prepared for. There are black swans that don't qualify as deep risk, but they can be very destructive, especially for those anywhere within 10 years of needing the money. There are things that can happen that are beyond our control, and It doesn't matter if it's permanent damage or just temporary damage it it ends up spoiling our anticipated style of living on accumulated assets. The market would not be near as risky if we knew what might happen and for how long it would interfere with our plans, but we don't, and it's that unknown dark area that has prevented me from ever being 100% stocks.

Paul
I would say on the whole that people's financial plans are more commonly and more severely upset by non-financial risk than by financial risk. This includes ill health, disability from moderate to severe degrees, divorce and other family upsets, consequences of natural disasters, in some countries political upsets beyond mere financial issues, etc. Against the general range of "deep" risk I think concerns over "100% stocks" are relatively trivial.

If one wants to focus on investment risks applicable to stocks one area would be single stock risk. People in retirement disaster due to holding only the stock of their employer are real and not that uncommon. See recent news.

Another area of investment risk more likely than 100% stock market crash is fraud and exploitation by financial "services" including predatory investment advice, schemes, etc.

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randomizer
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Re: Unprecedented Event

Post by randomizer » Wed Apr 25, 2018 11:22 am

samtex wrote:
Tue Apr 24, 2018 9:37 pm
Event like: https://en.m.wikipedia.org/wiki/Nuclear ... etic_pulse
Given that 99%+ of my money is just digits in a computer, this is worrying. As is the possibility (likelihood) of major cyberterrorism and cybercriminality in the future.
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2015
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Re: Unprecedented Event

Post by 2015 » Wed Apr 25, 2018 11:24 am

dbr wrote:
Wed Apr 25, 2018 9:21 am
pkcrafter wrote:
Wed Apr 25, 2018 9:14 am
UpperNwGuy wrote:
Wed Apr 25, 2018 4:09 am
OP, what action are you recommending we take?
I would say on the whole that people's financial plans are more commonly and more severely upset by non-financial risk than by financial risk. This includes ill health, disability from moderate to severe degrees, divorce and other family upsets, consequences of natural disasters, in some countries political upsets beyond mere financial issues, etc. Against the general range of "deep" risk I think concerns over "100% stocks" are relatively trivial.

...
This.
The biggest "deep risk" and largest unprecedented event in our lives will be that we each of us is going to die. No one on their death bed wishes they'd spent more of their life worrying about unlikely risks.

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JoMoney
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Re: Unprecedented Event

Post by JoMoney » Wed Apr 25, 2018 11:29 am

randomizer wrote:
Wed Apr 25, 2018 11:22 am
samtex wrote:
Tue Apr 24, 2018 9:37 pm
Event like: https://en.m.wikipedia.org/wiki/Nuclear ... etic_pulse
Given that 99%+ of my money is just digits in a computer, this is worrying. As is the possibility (likelihood) of major cyberterrorism and cybercriminality in the future.
Note that a EMP devastating our electronic world is not limited to just a malicious threat

The solar storm of 2012 that almost sent us back to a post-apocalyptic Stone Age
"To achieve satisfactory investment results is easier than most people realize; to achieve superior results is harder than it looks." - Benjamin Graham

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randomizer
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Re: Unprecedented Event

Post by randomizer » Wed Apr 25, 2018 11:36 am

JoMoney wrote:
Wed Apr 25, 2018 11:29 am
randomizer wrote:
Wed Apr 25, 2018 11:22 am
samtex wrote:
Tue Apr 24, 2018 9:37 pm
Event like: https://en.m.wikipedia.org/wiki/Nuclear ... etic_pulse
Given that 99%+ of my money is just digits in a computer, this is worrying. As is the possibility (likelihood) of major cyberterrorism and cybercriminality in the future.
Note that a EMP devastating our electronic world is not limited to just a malicious threat

The solar storm of 2012 that almost sent us back to a post-apocalyptic Stone Age
Hm. I guess I should diversify by adding several years of canned food to my portfolio.
87.5:12.5, EM tilt — HODL the course!

3feetpete
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Re: Unprecedented Event

Post by 3feetpete » Wed Apr 25, 2018 1:06 pm

Anything is possible. In general it does no good to worry about things you can't do anything about. I think the most likely unprecedented event would be a temporary disruption of our supply chain for food and other necessities precipitated by either a natural event, or war or a cyber event. If that happens it won't matter a bit what's in your portfolio. Food will be the only thing of value. Against the slight chance of that I have a 3 month supply of food. I'm not a survivalist but I consider the money I spent on freeze dried food to be a prudent insurance policy. The freeze dried food pouches last 25 years so for a couple hundred dollars per person I get a 25 year insurance policy. Chances are I'll never need it.

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Re: Unprecedented Event

Post by willthrill81 » Thu Apr 26, 2018 1:19 am

JoMoney wrote:
Wed Apr 25, 2018 8:54 am
Yes.

Do you believe bonds are somehow exempt from these 'deep risks', or that they offer the potential to provide real returns sufficient to reach goals?
:thumbsup BINGO!

Bonds are not immune from these risks. People really need to purge from their minds the notion that bonds don't carry very real risks. Forget the 'unprecedented' idea, just look at what happened to bonds in the 1940s and 1970s.
“It's a dangerous business, Frodo, going out your door. You step onto the road, and if you don't keep your feet, there's no knowing where you might be swept off to.” J.R.R. Tolkien,The Lord of the Rings

bberris
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Re: Unprecedented Event

Post by bberris » Thu Apr 26, 2018 9:37 am

JoeRetire wrote:
Wed Apr 25, 2018 7:19 am
pkcrafter wrote:
Tue Apr 24, 2018 8:45 pm
Do you believe the U.S. stock market could experience an unprecedented event?
Yes.

A zombie apocalypse could happen too. But they all seem unlikely.
I'm not concerned. The government has a plan to deal with zombies. Seriously.

MinhN
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Re: Unprecedented Event

Post by MinhN » Thu Apr 26, 2018 9:46 am

Well the 2008 crisis was an unprecedented event so I'll promise you the next one will be even more spectacular. I'm not sure if the feds will be able to QE their way out of the next one. I'm 90% equities by the way.

JoeRetire
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Re: Unprecedented Event

Post by JoeRetire » Thu Apr 26, 2018 11:09 am

bberris wrote:
Thu Apr 26, 2018 9:37 am
JoeRetire wrote:
Wed Apr 25, 2018 7:19 am
A zombie apocalypse could happen too. But they all seem unlikely.
I'm not concerned. The government has a plan to deal with zombies. Seriously.
Trusting the government to be able to handle a zombie apocalypse effectively should concern you. Seriously.

Everyone has a plan until they get punched in the mouth by a zombie.
- Zombie Tyson

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JoMoney
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Re: Unprecedented Event

Post by JoMoney » Thu Apr 26, 2018 11:13 am

JoeRetire wrote:
Thu Apr 26, 2018 11:09 am
bberris wrote:
Thu Apr 26, 2018 9:37 am
JoeRetire wrote:
Wed Apr 25, 2018 7:19 am
A zombie apocalypse could happen too. But they all seem unlikely.
I'm not concerned. The government has a plan to deal with zombies. Seriously.
Trusting the government to be able to handle a zombie apocalypse effectively should concern you. Seriously.

Everyone has a plan until they get punched in the mouth by a zombie.
- Zombie Tyson
I've seen how government works, Zombies get really good pensions.
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carofe
Posts: 337
Joined: Thu Mar 20, 2014 7:21 pm

Re: Unprecedented Event

Post by carofe » Thu Apr 26, 2018 12:28 pm

Humans go free enterprise and investing because we have a reasonable expectation that your enterprise will succeeds, that is, optimism founded on the good understanding of what you are getting into and probability of winning. If you are starting an enterprise (or investing and letting somebody else do it for you), being pessimistic about it is the wrong mindset.

Through history, in general, people just starts business and invest regardless, and if it fails or if there is war, after the event is over (even during), people start over again rebuilding, living, starting business and investing again. Now the flip side: the older you get the harder it gets and the more you need to rely on others to start over.

I wasn't born in a developed country, not even in a democratic system. I've seen some of it.
US Total Stock Market + Intermediate Term Bond. That's it.

likegarden
Posts: 2661
Joined: Mon Feb 26, 2007 5:33 pm

Re: Unprecedented Event

Post by likegarden » Thu Apr 26, 2018 1:19 pm

We are very lucky living in the US. We do not have a dictatorship which usually loses in wars, like in Nazi Germany. In Germany after 1945 all savings accounts were reduced to 10%, and the country and economy destroyed. This will never happen here.

carofe
Posts: 337
Joined: Thu Mar 20, 2014 7:21 pm

Re: Unprecedented Event

Post by carofe » Thu Apr 26, 2018 2:18 pm

In worst case scenario, of economic disasters, or totalitarian/authoritarian gov't taking over, or war; if you are lucky enough to not being killed in the process, what you usually get to keep is the house you live in.
Even, in communist regimes, they take away all your investments, businesses, and rental properties to give it to others but usually they let you keep your house (as long as you comply with them).
In the case of a non-communist dictatorship (like Franco in Spain), or economic disaster in general, whether you have to pay rent or mortgage for shelter can make the difference between you can eat once or twice a day.

Therefore, IMHO the best strategy to survive a major event like that is this: stay out of debt, buy a house and pay it off, and don't think about major events when investing, unless they are imminent.
US Total Stock Market + Intermediate Term Bond. That's it.

lazyday
Posts: 3297
Joined: Wed Mar 14, 2007 10:27 pm

Re: Unprecedented Event

Post by lazyday » Thu Apr 26, 2018 3:44 pm

carofe wrote:
Thu Apr 26, 2018 2:18 pm
In worst case scenario, of economic disasters, or totalitarian/authoritarian gov't taking over, or war; if you are lucky enough to not being killed in the process, what you usually get to keep is the house you live in.
Even, in communist regimes, they take away all your investments, businesses, and rental properties to give it to others but usually they let you keep your house (as long as you comply with them).
In the case of a non-communist dictatorship (like Franco in Spain), or economic disaster in general, whether you have to pay rent or mortgage for shelter can make the difference between you can eat once or twice a day.

Therefore, IMHO the best strategy to survive a major event like that is this: stay out of debt, buy a house and pay it off, and don't think about major events when investing, unless they are imminent.
Good post, I'm glad the mods didn't lock the thread.

I can't vouch for the history above, but it rings true to me.

We probably wouldn't own a house for this reason alone, but insurance against deep risk might be a factor when deciding. Home ownership also might help in cases of bankruptcy, such as from a lawsuit or medical expenses.

Valuethinker
Posts: 35652
Joined: Fri May 11, 2007 11:07 am

Re: Unprecedented Event

Post by Valuethinker » Thu Apr 26, 2018 3:56 pm

likegarden wrote:
Thu Apr 26, 2018 1:19 pm
We are very lucky living in the US. We do not have a dictatorship which usually loses in wars, like in Nazi Germany. In Germany after 1945 all savings accounts were reduced to 10%, and the country and economy destroyed. This will never happen here.
You are living in a dream land if you think "it can't happen here". No country is immune to dictatorship.

In fact, Sinclair Lewis wrote a novel with that very name.

"Clark Gifford's Body" is also an intriguing novel on a similar theme.

carofe
Posts: 337
Joined: Thu Mar 20, 2014 7:21 pm

Re: Unprecedented Event

Post by carofe » Thu Apr 26, 2018 4:54 pm

lazyday wrote:
Thu Apr 26, 2018 3:44 pm
carofe wrote:
Thu Apr 26, 2018 2:18 pm
In worst case scenario, of economic disasters, or totalitarian/authoritarian gov't taking over, or war; if you are lucky enough to not being killed in the process, what you usually get to keep is the house you live in.
Even, in communist regimes, they take away all your investments, businesses, and rental properties to give it to others but usually they let you keep your house (as long as you comply with them).
In the case of a non-communist dictatorship (like Franco in Spain), or economic disaster in general, whether you have to pay rent or mortgage for shelter can make the difference between you can eat once or twice a day.

Therefore, IMHO the best strategy to survive a major event like that is this: stay out of debt, buy a house and pay it off, and don't think about major events when investing, unless they are imminent.
Good post, I'm glad the mods didn't lock the thread.

I can't vouch for the history above, but it rings true to me.

We probably wouldn't own a house for this reason alone, but insurance against deep risk might be a factor when deciding. Home ownership also might help in cases of bankruptcy, such as from a lawsuit or medical expenses.

Right after the communist revolution in Cuba, Fidel Castro eventually took away all rental properties, letting you keep your own house. I had a relative that passed away not too long ago that spent all his savings buying rental properties during his career as a way of preparing for retirement. He got to own 4 properties including his primary residency. When Fidel took over, he was forced to sell to the gov't all his rentals at a ridiculous low price; ended up migrating to USA.

During 2008-2009 and even after that, in Spain things got really tough. People that had mortgages lost their houses in mass; those that rented had a hard time finding affordable rent and make it to the end of the month, or just were evicted and lived on the streets; but those that had houses paid off (they paid it off or they inherited it) were fine. The money they got from the gov't from the unemployment insurance covered their expenses. I was there when it happened. I was able to see in real life the increase chance of surviving to something like that when you have a paid off placed to live.
US Total Stock Market + Intermediate Term Bond. That's it.

wrongfunds
Posts: 1728
Joined: Tue Dec 21, 2010 3:55 pm

Re: Unprecedented Event

Post by wrongfunds » Thu Apr 26, 2018 6:13 pm

Since moderators have not yet clamped down on this topic, let me add another wrinkle.

What if China/India/Somebodyelse becomes superpower and takes over USA? Have you thought how that will affect your retirement? That certainly would be "Unprecedented Event"!

I suspect now that I have contributed, this topic is going to get locked. That never fails!

hilink73
Posts: 280
Joined: Tue Sep 20, 2016 3:29 pm

Re: Unprecedented Event

Post by hilink73 » Fri Apr 27, 2018 12:42 am

wrongfunds wrote:
Thu Apr 26, 2018 6:13 pm
Since moderators have not yet clamped down on this topic, let me add another wrinkle.

What if China/India/Somebodyelse becomes superpower and takes over USA? Have you thought how that will affect your retirement? That certainly would be "Unprecedented Event"!

I suspect now that I have contributed, this topic is going to get locked. That never fails!
Another reason to diversify globally maybe.

There's only so much you can do to prepare against such large scale events.
There's even less (or mostly nothing) one can do to prevent them.
But, for some (especially political or economic) events it does hurt to be informed well for taking appropriate action: e. g. leaving the country (before many are trying to flee the country!).

hilink73
Posts: 280
Joined: Tue Sep 20, 2016 3:29 pm

Re: Unprecedented Event

Post by hilink73 » Fri Apr 27, 2018 12:49 am

Valuethinker wrote:
Thu Apr 26, 2018 3:56 pm
likegarden wrote:
Thu Apr 26, 2018 1:19 pm
We are very lucky living in the US. We do not have a dictatorship which usually loses in wars, like in Nazi Germany. In Germany after 1945 all savings accounts were reduced to 10%, and the country and economy destroyed. This will never happen here.
You are living in a dream land if you think "it can't happen here". No country is immune to dictatorship.

In fact, Sinclair Lewis wrote a novel with that very name.

"Clark Gifford's Body" is also an intriguing novel on a similar theme.
And not to forget "The Wave".
https://en.wikipedia.org/wiki/The_Wave_%28novel%29

wrongfunds
Posts: 1728
Joined: Tue Dec 21, 2010 3:55 pm

Re: Unprecedented Event

Post by wrongfunds » Fri Apr 27, 2018 6:31 am

Funnily, in last tens years there were at least couple of "Unprecedented Events" or as I call it UN-PRESIDENTED events :-) Nobody could have even imagined them 30 years ago.

So, the attitude of "This will never happen in USA" needs to be given little bit dose of reality.

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