Investing when you don't expect tomorrow to look like yesterday

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CookieDough
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Investing when you don't expect tomorrow to look like yesterday

Post by CookieDough »

I'm trying hard to word this to abide by the forum's rules; if I misstep, please let me know and I'll adjust accordingly.

Is there any investing advice for when you are concerned about the future stability of the country you live in? I am not getting into any political specifics, just looking specifically for views about investing in such conditions, i.e., potentially increasing international stocks or bonds, holding more cash, buying gold, etc.

Any links to relevant articles would be appreciated -- again, though, with a focus on investment choices, not on politics.
mortfree
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Re: Investing when you don't expect tomorrow to look like yesterday

Post by mortfree »

Roth and 401k are maxed and invested as usual.

Taxable investments in VTI and Wellington are paused. Holding cash instead as life is too expensive (groceries)

Bracing for accounts to drop
Closer to 50 than 40
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Re: Investing when you don't expect tomorrow to look like yesterday

Post by runner3081 »

Anyone who expects tomorrow to look like yesterday, regardless of what is going, is well, fooling themselves. Make decisions based on your comfort level and go from there.

If it hits the fan, whatever we THINK might be valuable, could be worthless.
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Re: Investing when you don't expect tomorrow to look like yesterday

Post by steadyosmosis »

I looked at the value of the SP500 index for the day/year I was born, to discover how I should invest.

Also, somebody said: "When all is said and done, there is often more said than done."
Last edited by steadyosmosis on Sun Feb 02, 2025 8:44 pm, edited 1 time in total.
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Re: Investing when you don't expect tomorrow to look like yesterday

Post by nisiprius »

Every time I've thought this through, I keep coming up with the same non-answers.

1) There is nothing cheap or reliable you can do to immunize yourself against a national-scale financial/political/economic crisis. You can't just make a couple of mouse clicks and buy a few thousand dollars of something. If your economic world collapses, having bought $10,000 worth of something that doubles may give you a little psychological lift, but an extra $10,000 is not enough to save you. Conversely, putting half of your money into some non-traditional asset is seriously dangerous.

2) The only rational action I see is to leave. And when I think that through, if you want it to be more than desperation survival, arriving with nothing but the clothes on your back--it won't be cheap or easy or anything you can do quickly. It means picking a country well in advance, studying the immigration laws, learning the language, setting up accounts, funding them in advance before currency controls are imposed, preparing for a job search, etc. And you could easily pick the wrong country, because other countries can experience rapid change, too.

3) Predictions are amazingly bad. Everyone else's, and mine too, if I am honest. If you actually keep records, you'll be astonished at how often you are seriously wrong. If you get a chance, read he Fortune Sellers: The Big Business of Buying and Selling Predictions by William A. Sherden. It's stunning. Weather predictions are, by far, the most accurate predictions of any kind. So even if you don't think tomorrow will look like yesterday, you still don't know which way it will go and actually acting on that in your investments is a bad idea.
Last edited by nisiprius on Sun Feb 02, 2025 8:37 pm, edited 2 times in total.
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Watty
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Re: Investing when you don't expect tomorrow to look like yesterday

Post by Watty »

Diversification is about the best you can do in unsettled times. Even if things go to hell in a handbasket some asset classes will benefit.

One of the problems is that even if you could predict the future it can play out in unexpected ways. Another is that in theory at least all the uncertainty should already be priced into the assets you might want to buy.

You mentioned gold and there are lots of threads on that which you can look up and I am skeptical because of the problems with so called "paper gold" like ETFs and there are also lots of challenges with trying to own large amounts of physical gold. Owning a few thousand dollars of precious metals might feel good but in reality it would be rare that it would actually be a solution to a problem.

Counterfeit precious metal coins are also a huge problem so if you do get some precious metals you need to be very careful.
Last edited by Watty on Sun Feb 02, 2025 8:37 pm, edited 1 time in total.
Mike Scott
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Re: Investing when you don't expect tomorrow to look like yesterday

Post by Mike Scott »

Look at discussions on variations on the "Permanent Portfolio". It's not my choice but some do.
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Re: Investing when you don't expect tomorrow to look like yesterday

Post by Everlast311 »

CookieDough wrote: Sun Feb 02, 2025 8:02 pm I'm trying hard to word this to abide by the forum's rules; if I misstep, please let me know and I'll adjust accordingly.

Is there any investing advice for when you are concerned about the future stability of the country you live in? I am not getting into any political specifics, just looking specifically for views about investing in such conditions, i.e., potentially increasing international stocks or bonds, holding more cash, buying gold, etc.

Any links to relevant articles would be appreciated -- again, though, with a focus on investment choices, not on politics.
Volatility is why equity investors get paid to stay in their seat. Making drastic changes based on feelings or possible future events is usually inadvisable. Charlie Munger had a saying about not interrupting compounding. That said, one should be properly diversified at all times, so if your allocation to bonds or international stocks is lacking, it's not a bad idea to consider adding some within the context of a reasonable asset allocation. But don't do it out of fear (I would skip the gold). Perhaps turn off the TV and go for a walk.
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Re: Investing when you don't expect tomorrow to look like yesterday

Post by Carguy85 »

CookieDough wrote: Sun Feb 02, 2025 8:02 pm increasing international stocks or bonds, holding more cash, buying gold.
Yep…all likely bad ideas…. You shouldn’t let political ideology cause you to lose money.
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Re: Investing when you don't expect tomorrow to look like yesterday

Post by cosmos »

Carguy85 wrote: Sun Feb 02, 2025 8:43 pm
CookieDough wrote: Sun Feb 02, 2025 8:02 pm increasing international stocks or bonds, holding more cash, buying gold.
Yep…all likely bad ideas…. You shouldn’t let political ideology cause you to lose money.
RIght now you definately want a 100% US portfolio. :sharebeer
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Re: Investing when you don't expect tomorrow to look like yesterday

Post by Epsilon Delta »

nisiprius wrote: Sun Feb 02, 2025 8:32 pm 3) Predictions are amazingly bad. Everyone else's, and mine too, if I am honest. If you actually keep records, you'll be astonished at how often you are seriously wrong. If you get a chance, read he Fortune Sellers: The Big Business of Buying and Selling Predictions by William A. Sherden. It's stunning. Weather predictions are, by far, the most accurate predictions of any kind. So even if you don't think tomorrow will look like yesterday, you still don't know which way it will go and actually acting on that in your investments is a bad idea.
I predict any ephemeris beats any weather forecast.

It takes a whole bunch of predictions to walk out your front door or drive down the street. People just take accurate predictions for granted.
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Re: Investing when you don't expect tomorrow to look like yesterday

Post by Variant »

CookieDough wrote: Sun Feb 02, 2025 8:02 pm I'm trying hard to word this to abide by the forum's rules; if I misstep, please let me know and I'll adjust accordingly.

Is there any investing advice for when you are concerned about the future stability of the country you live in? I am not getting into any political specifics, just looking specifically for views about investing in such conditions, i.e., potentially increasing international stocks or bonds, holding more cash, buying gold, etc.

Any links to relevant articles would be appreciated -- again, though, with a focus on investment choices, not on politics.
Look back at the last time you felt this way and realize everything turned out okay.
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Re: Investing when you don't expect tomorrow to look like yesterday

Post by Hot Sauce »

cosmos wrote: Sun Feb 02, 2025 8:56 pm
Carguy85 wrote: Sun Feb 02, 2025 8:43 pm

Yep…all likely bad ideas…. You shouldn’t let political ideology cause you to lose money.
RIght now you definately want a 100% US portfolio. :sharebeer
Why is that?

US stock futures are down over 2% in light of recent events.
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Re: Investing when you don't expect tomorrow to look like yesterday

Post by Hot Sauce »

My advice is Short term bonds.
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Re: Investing when you don't expect tomorrow to look like yesterday

Post by Parkinglotracer »

What has worked for me the last 64 years is to always be a little uncomfortable in my job, get more education than I had to have, to live beneath my means and save 10-15% of what I made in case I needed it. I never had more than 75% of my savings in equities and never had my wealth concentrated in one or two stocks and never made big bets. I paid off my house when I could. I am 50/50 now in retirement. I do a short term bond ladder because I want my bonds for stability in my portfolio and don’t want them to be affected negatively by rising rates.

I think a diversified education, skill set, and portfolio will maximize the chances one will be successful in whatever tomor will bring. Capitalism is a great system that can adapt quickly to a changing tomor. I do my best to stay positive even in uncertain times.


I’d stick with my current asset allocation. This time may have you realize your chosen asset allocation was a bit aggressive to allow you to sleep at night. I’d stay the course.
Last edited by Parkinglotracer on Mon Feb 03, 2025 4:19 am, edited 1 time in total.
Hot Sauce
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Re: Investing when you don't expect tomorrow to look like yesterday

Post by Hot Sauce »

Variant wrote: Sun Feb 02, 2025 9:01 pm
CookieDough wrote: Sun Feb 02, 2025 8:02 pm Is there any investing advice for when you are concerned about the future stability of the country you live in?
Look back at the last time you felt this way and realize everything turned out okay.
What if one has never felt this way before?
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Re: Investing when you don't expect tomorrow to look like yesterday

Post by Beensabu »

If you do not have so much that you can afford to park a bunch of it in various different countries (along with real estate), then don't worry about it, because there's nothing you can do.
"The only thing that makes life possible is permanent, intolerable uncertainty; not knowing what comes next." ~Ursula LeGuin
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Re: Investing when you don't expect tomorrow to look like yesterday

Post by Random Walker »

Markets price risk and are efficient. Anything you’re concerned about is already incorporated into prices. Diversify as broadly as you can across unique and independent risks

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Re: Investing when you don't expect tomorrow to look like yesterday

Post by FoundingFather »

Global diversification makes sense to me (hence why I am globally weighted in regards to my stock/equities), and inflation protected bonds, as it seems inflation is more often the problem rather than deflation.

I am 80/20, with the 80% being a cap weighted global stock etf (VT), and the 20% being TIPS.

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Re: Investing when you don't expect tomorrow to look like yesterday

Post by Hot Sauce »

Random Walker wrote: Sun Feb 02, 2025 9:16 pm Markets price risk and are efficient. Anything you’re concerned about is already incorporated into prices. Diversify as broadly as you can across unique and independent risks

Dave
Efficient? How does that explain stock futures suddenly being down 2% on “old news”?
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Re: Investing when you don't expect tomorrow to look like yesterday

Post by arcticpineapplecorp. »

CookieDough wrote: Sun Feb 02, 2025 8:02 pm I'm trying hard to word this to abide by the forum's rules; if I misstep, please let me know and I'll adjust accordingly.

Is there any investing advice for when you are concerned about the future stability of the country you live in? I am not getting into any political specifics, just looking specifically for views about investing in such conditions, i.e., potentially increasing international stocks or bonds, holding more cash, buying gold, etc.

Any links to relevant articles would be appreciated -- again, though, with a focus on investment choices, not on politics.
does the following help at all:

Image

Image

Source

Image

Image

best to just ignore the noise.
Last edited by arcticpineapplecorp. on Sun Feb 02, 2025 9:27 pm, edited 2 times in total.
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Re: Investing when you don't expect tomorrow to look like yesterday

Post by LFKB »

Hot Sauce wrote: Sun Feb 02, 2025 9:01 pm
cosmos wrote: Sun Feb 02, 2025 8:56 pm

RIght now you definately want a 100% US portfolio. :sharebeer
Why is that?

US stock futures are down over 2% in light of recent events.
Who cares? 2% drops happen all the time. [Political comment removed by moderator oldcomputerguy]

You think the stock market won’t be up over the next four years?
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Re: Investing when you don't expect tomorrow to look like yesterday

Post by Hot Sauce »

arcticpineapplecorp. wrote: Sun Feb 02, 2025 9:25 pm
CookieDough wrote: Sun Feb 02, 2025 8:02 pm I'm trying hard to word this to abide by the forum's rules; if I misstep, please let me know and I'll adjust accordingly.

Is there any investing advice for when you are concerned about the future stability of the country you live in? I am not getting into any political specifics, just looking specifically for views about investing in such conditions, i.e., potentially increasing international stocks or bonds, holding more cash, buying gold, etc.

Any links to relevant articles would be appreciated -- again, though, with a focus on investment choices, not on politics.
does the following help at all:

Image

Image

Source

Image

Image

best to just ignore the noise.
In defense of the OP’s original question, none of the events in this table really get at the heart of worrying about the stability of one’s own country.
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Re: Investing when you don't expect tomorrow to look like yesterday

Post by snowday2022 »

arcticpineapplecorp. wrote: Sun Feb 02, 2025 9:25 pm
CookieDough wrote: Sun Feb 02, 2025 8:02 pm I'm trying hard to word this to abide by the forum's rules; if I misstep, please let me know and I'll adjust accordingly.

Is there any investing advice for when you are concerned about the future stability of the country you live in? I am not getting into any political specifics, just looking specifically for views about investing in such conditions, i.e., potentially increasing international stocks or bonds, holding more cash, buying gold, etc.

Any links to relevant articles would be appreciated -- again, though, with a focus on investment choices, not on politics.
does the following help at all:

Image

Image

Source

Image

Image

best to just ignore the noise.
Fascinating post. 9/11, 31 days to recover. JFK assassination, 1 day to recover.
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Re: Investing when you don't expect tomorrow to look like yesterday

Post by snowday2022 »

Hot Sauce wrote: Sun Feb 02, 2025 9:29 pm
arcticpineapplecorp. wrote: Sun Feb 02, 2025 9:25 pm
does the following help at all:

Image

Image

Source

Image

Image

best to just ignore the noise.
In defense of the OP’s original question, none of the events in this table really get at the heart of worrying about the stability of one’s own country.
Lots of the events listed were deeply unnerving and threatened political stability.
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Re: Investing when you don't expect tomorrow to look like yesterday

Post by RetiredAL »

arcticpineapplecorp. wrote: Sun Feb 02, 2025 9:25 pm
best to just ignore the noise.
+1

Thank you for all the "perspective charts/graphs" you've posted over the years.
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Re: Investing when you don't expect tomorrow to look like yesterday

Post by tibbitts »

CookieDough wrote: Sun Feb 02, 2025 8:02 pm I'm trying hard to word this to abide by the forum's rules; if I misstep, please let me know and I'll adjust accordingly.

Is there any investing advice for when you are concerned about the future stability of the country you live in? I am not getting into any political specifics, just looking specifically for views about investing in such conditions, i.e., potentially increasing international stocks or bonds, holding more cash, buying gold, etc.

Any links to relevant articles would be appreciated -- again, though, with a focus on investment choices, not on politics.
How many other times in history have you - or would you have, if you'd been aware - felt tomorrow might not look like yesterday? How many times in history have you felt the US actually has changed - vs. just "might likely change - in fundamental ways?
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Re: Investing when you don't expect tomorrow to look like yesterday

Post by arcticpineapplecorp. »

Hot Sauce wrote: Sun Feb 02, 2025 9:29 pm In defense of the OP’s original question, none of the events in this table really get at the heart of worrying about the stability of one’s own country.
sure it does. you don't think people thought it was the end of the world during the cuban missile crisis, 9-11, global financial crisis and so on?

people on bogleheads admitted they thought "this time is different" during the covid pandemic and sold all their stocks (which was a colossal mistake). The four most dangerous words in investing are "This Time Is Different".

OP, if you are concerned with the four horsemen of the financial disaster (coined by William Bernstein) I suggest you read Deep Risk by William Bernstein.

He talks about the things to worry about most and what assets to hold to deal with these:
1. Severe, prolonged hyperinflation
2. Severe, prolonged deflation
3. Confiscation
4. Devastation (geopolitical disaster)

what works? (quotes are from the book):

for inflation: commodities and TIPS and delayed credits for SS (24% higher benefit than at FRA if delay til 70) and value stocks and international diversification (and inflation adjusted annuity, if you can find one anymore. Perhaps an inflation adjusted pension?)

for deflation: treasury bills and bonds, international stock diversification and paradoxically gold which "as the DMS database shows, appreciates more in real value with deflationary spirals than with severe inflation."

for confiscation: "The costs of insuring against confiscation are high, not so much in monetary terms, bu rather in terms of convenience: do you really want to be dealing with bullion in Zurich or New Zealand? how badly do you want to become the absentee landlord of a flat in Italy?"

for devastation: "The last horseman's consequences and costs are those of (military) devastation; the odds are extremely low, the consequences dire, if not fatal, and the methods and costs of insuring against it the same as for the confiscation scenario: foreign stored gold or overseas real estate. These two measures are effective only against devastation on the local, not global, level, and even locally the efficacy of the protection is uncertain; as financial analyst and gadfly Marc Faber put it, "When Timur sacked Aleppo and Damascus in 1400, it didn't help to have your savings in gold. You lost your life and your gold."
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Re: Investing when you don't expect tomorrow to look like yesterday

Post by Hot Sauce »

arcticpineapplecorp. wrote: Sun Feb 02, 2025 9:52 pm
Hot Sauce wrote: Sun Feb 02, 2025 9:29 pm In defense of the OP’s original question, none of the events in this table really get at the heart of worrying about the stability of one’s own country.
sure it does. you don't think people thought it was the end of the world during the cuban missile crisis, 9-11, global financial crisis and so on?
Throw some data for the civil war period in there and maybe I’ll change my mind.
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Re: Investing when you don't expect tomorrow to look like yesterday

Post by Billy C »

Those are some great charts. The one word that comes to mind when looking at them is “resilience.”

Don’t let short-term noise disrupt your long-term investment strategy. Trust in your IPS, stay the course, and remain disciplined.
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Re: Investing when you don't expect tomorrow to look like yesterday

Post by Elric »

nisiprius wrote: Sun Feb 02, 2025 8:32 pm Every time I've thought this through, I keep coming up with the same non-answers.

1) There is nothing cheap or reliable you can do to immunize yourself against a national-scale financial/political/economic crisis. You can't just make a couple of mouse clicks and buy a few thousand dollars of something. If your economic world collapses, having bought $10,000 worth of something that doubles may give you a little psychological lift, but an extra $10,000 is not enough to save you. Conversely, putting half of your money into some non-traditional asset is seriously dangerous.

2) The only rational action I see is to leave. And when I think that through, if you want it to be more than desperation survival, arriving with nothing but the clothes on your back--it won't be cheap or easy or anything you can do quickly. It means picking a country well in advance, studying the immigration laws, learning the language, setting up accounts, funding them in advance before currency controls are imposed, preparing for a job search, etc. And you could easily pick the wrong country, because other countries can experience rapid change, too.

3) Predictions are amazingly bad. Everyone else's, and mine too, if I am honest. If you actually keep records, you'll be astonished at how often you are seriously wrong. If you get a chance, read he Fortune Sellers: The Big Business of Buying and Selling Predictions by William A. Sherden. It's stunning. Weather predictions are, by far, the most accurate predictions of any kind. So even if you don't think tomorrow will look like yesterday, you still don't know which way it will go and actually acting on that in your investments is a bad idea.
Very good summary. Nobody can predict the future, but my crustal ball says the probability of a major drop has gone up significantly and an even worse black swan event is now closer to reality than ever.before in my lifetime.

We thought of leaving U.S. and likely have options, but while we're retired. Our son isn't and we aren't yet willing to be around the world.feom him.

It's a minor step,.but we're likely to move all but $200 OUT of TSP as risk reduction . Minor, and doesn't change asset allocation overall.
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Re: Investing when you don't expect tomorrow to look like yesterday

Post by arcticpineapplecorp. »

Hot Sauce wrote: Sun Feb 02, 2025 10:00 pm
arcticpineapplecorp. wrote: Sun Feb 02, 2025 9:52 pm
sure it does. you don't think people thought it was the end of the world during the cuban missile crisis, 9-11, global financial crisis and so on?
Throw some data for the civil war period in there and maybe I’ll change my mind.
1802 onward (can't see the specific civil war period (4 years) but the market seems to have gone up regardless:

Image

Perhaps if you were living in the South, you were dealing with hyperinflation of confederate money, mostly due to counterfeiting. And unfortunately, there weren't I-Bonds, or TIPS back then. But as the Siegel chart shows above, stocks would have increased in value over time. Four years is a long time when you're going through it, but short on a lifetime span.

Arguably the Great Depression was worse. But even then 3 month t bills would have come out ahead of stocks until 1943: https://pages.stern.nyu.edu/~adamodar/N ... retSP.html
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Re: Investing when you don't expect tomorrow to look like yesterday

Post by Random Poster »

arcticpineapplecorp. wrote: Sun Feb 02, 2025 9:52 pm
Hot Sauce wrote: Sun Feb 02, 2025 9:29 pm In defense of the OP’s original question, none of the events in this table really get at the heart of worrying about the stability of one’s own country.
sure it does. you don't think people thought it was the end of the world during the cuban missile crisis, 9-11, global financial crisis and so on?
You got any charts showing what happened in Germany from, say, 1920 to date? Or, more specifically, from 1920 to 1950?

Or any other country where, for many, living through certain time periods really was “the end of the world” for them?

I have my doubts that “staying the course” worked all that well for them.
Most experiences are better imagined.
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Re: Investing when you don't expect tomorrow to look like yesterday

Post by Random Poster »

CookieDough wrote: Sun Feb 02, 2025 8:02 pm I'm trying hard to word this to abide by the forum's rules; if I misstep, please let me know and I'll adjust accordingly.

Is there any investing advice for when you are concerned about the future stability of the country you live in? I am not getting into any political specifics, just looking specifically for views about investing in such conditions, i.e., potentially increasing international stocks or bonds, holding more cash, buying gold, etc.

Any links to relevant articles would be appreciated -- again, though, with a focus on investment choices, not on politics.
My gut says to go all cash, or alternatively, stop all future investing and redirect such amounts to cash.

And I’d move a lot of that cash to somewhere outside of my current country of residence, which is a lot easier said than done.

I personally don’t think international stocks would offer much protection, primarily because I think there is far too much interconnection in the world economy.
Most experiences are better imagined.
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Re: Investing when you don't expect tomorrow to look like yesterday

Post by jericso »

Seems to me that the 10 year yield is a good barometer for how much one should worry. Looks like smooth sailing to me.
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Re: Investing when you don't expect tomorrow to look like yesterday

Post by patrick »

Random Poster wrote: Sun Feb 02, 2025 10:29 pm
arcticpineapplecorp. wrote: Sun Feb 02, 2025 9:52 pm
sure it does. you don't think people thought it was the end of the world during the cuban missile crisis, 9-11, global financial crisis and so on?
You got any charts showing what happened in Germany from, say, 1920 to date? Or, more specifically, from 1920 to 1950?

Or any other country where, for many, living through certain time periods really was “the end of the world” for them?

I have my doubts that “staying the course” worked all that well for them.
https://www.credit-suisse.com/media/ass ... k-2014.pdf has charts back to 1900 for many few countries, including Germany. You'll see that German stocks did have large losses, but German stocks recovered eventually. Meanwhile German cash and bonds did far worse. I'm not sure how feasible it would have been for German investors to avoid problems with foreign assets, but in any scenario close to "the end of the world" I would consider non-financial problems more pressing than financial ones.
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Re: Investing when you don't expect tomorrow to look like yesterday

Post by Lynx310650 »

Depends on the country you are in. If ex-USA, it would be prudent to invest in dollar-denominated assets and actually have some dollars as that is the global reserve currency. Ideally in a foreign bank account you can access from outside your country. Also some physical gold and maybe some of the c-word for get out of dodge situations.

Ironically I think this hypo is much more difficult if it's the USA you are talking about. TINA. The last time the global hegemon was declining (the British Empire), you had a clear 2nd place wealthy democracy firmly on the rise you could look to invest in or even immigrate to (the USA). No such nation exists today. I mean maybe India? But they certainly aren't there yet. So not sure where else you could really invest, what currency would be "safe". If the US-led rules based global economy falters, would even gold be a safe asset?

So if this is the USA you are talking about, I'd just keep investing like tomorrow will indeed be like yesterday because the alternative is literally uninvestable.
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CookieDough
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Re: Investing when you don't expect tomorrow to look like yesterday

Post by CookieDough »

OP here -- wow, some great thoughts & ideas & charts. Many thanks to everyone. Much food for thought.
Beensabu wrote: Sun Feb 02, 2025 9:16 pm If you do not have so much that you can afford to park a bunch of it in various different countries (along with real estate), then don't worry about it, because there's nothing you can do.
I think this is my favorite response. There's something to be said for accepting a lack of control.
patrick
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Re: Investing when you don't expect tomorrow to look like yesterday

Post by patrick »

Hot Sauce wrote: Sun Feb 02, 2025 9:20 pm
Random Walker wrote: Sun Feb 02, 2025 9:16 pm Markets price risk and are efficient. Anything you’re concerned about is already incorporated into prices. Diversify as broadly as you can across unique and independent risks

Dave
Efficient? How does that explain stock futures suddenly being down 2% on “old news”?
An efficient market means (roughly) that it would match the expected value based on probabilities derived from all known information.

Suppose we know that there is a 60% chance that X will happen, and the fair market price is $98 if X happens and $103 if it doesn't. The market should be around $100 as long as we don't know, but then drop to $98 if we find out for sure that X will happen. If we then find out that X is happening, then and only then should the price should drop to $98. Even though it was "old news" that it X would probably happen, until we knew for sure the market shouldn't have priced as if it was certain.

Of course the real world is more complex -- there are more than 2 possibilities to factor in!
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MoneyIsTime
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Re: Investing when you don't expect tomorrow to look like yesterday

Post by MoneyIsTime »

How to roll.
It’s tough to say say when we’re uncertain and panicked.
Really hard to make an accurate judgment call.
This will likely play out as a series of policy blunders, lasting a few years but not forever.

My gut instinct is to think:
• The US economy is pretty resilient right now. We have a good foundation and had a good run. Many have their feet under themselves. Will a hit be good? NO! But every economy takes hits. We must prepare but not panic.
• Looking at the US actual economic might, in a worldwide view, is not trivial. We have some momentum, which does help.

I’d say:
• Bolster your gains by diverting SOME to safer grounds like bonds/TIPS/cash.
• But if you’re under 75 (unassuming life to 90), I’d go with at least 60% in SP500/or large stock index of your choice. Over 75 then 50/50 maybe.

The world’s money has to go somewhere, hopefully we’ve (US econ) still got a decent chance at it.
Last edited by MoneyIsTime on Sun Feb 02, 2025 11:15 pm, edited 1 time in total.
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Re: Investing when you don't expect tomorrow to look like yesterday

Post by jginseattle »

I suggest reading The Uncertainty Solution: How to Invest with Confidence in the Face of the Unknown (2023), by John M. Jennings.
Last edited by jginseattle on Mon Feb 03, 2025 2:41 am, edited 3 times in total.
LoveTheBogle
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Re: Investing when you don't expect tomorrow to look like yesterday

Post by LoveTheBogle »

I think the level of concern or lack thereof is highly correlated to what news networks you watch.

Tune out the noise. Live your life. Stop watching the news. Don’t make any rash decisions based upon hunches.
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Re: Investing when you don't expect tomorrow to look like yesterday

Post by KEotSK66 »

you should always invest for your objective

if you're investing for retirement your assets, how much you to intend to draw regularly, and an estimate of inflation should be your concerns

tomorrow will take on its own character but you still have to invest toward your objective(s), control what you can and don't be worried about what's going on in the universe
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Re: Investing when you don't expect tomorrow to look like yesterday

Post by jdibber »

"My rule -- and it's good only about 99% of the time, so I have to be careful here -- when these crises come along, the best rule you can possible follow is not "Don't stand there, do something," but "Don't do something, stand there!" -- Bogle.
"I order the food, you cook the food. Then the customer gets the food. We do that for 40 years, and then we die." -Squidward S3E2
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Re: Investing when you don't expect tomorrow to look like yesterday

Post by rogue_economist »

arcticpineapplecorp. wrote: Sun Feb 02, 2025 9:25 pm
CookieDough wrote: Sun Feb 02, 2025 8:02 pm I'm trying hard to word this to abide by the forum's rules; if I misstep, please let me know and I'll adjust accordingly.

Is there any investing advice for when you are concerned about the future stability of the country you live in? I am not getting into any political specifics, just looking specifically for views about investing in such conditions, i.e., potentially increasing international stocks or bonds, holding more cash, buying gold, etc.

Any links to relevant articles would be appreciated -- again, though, with a focus on investment choices, not on politics.
does the following help at all:

Image

Image

Source

Image

Image

best to just ignore the noise.
Not really, because those only show the US market, definitely a form of cherry picking data.

Show the Russian or Chinese stock markets in the 20th century...

For that matter, those charts conveniently leave out 1929 and I'm not entirely sure they are even in real $.

To OP,

There is great value in staying the course, and especially not allowing chicken little syndrome to make you do dumb things. I would never say to go and trade on the basis of any of the usual mundane day to day news or doom and gloom.

That said, if you are nervous about the future, its worth examining your resiliency to whatever may come and how to improve that.

Much of this is investing, but in a broader sense. Some random thoughts to start with.

International stocks and bonds? Perhaps, especially if they outperform the US. But if you are holding them via a fund that is run by a US firm and sold in US dollars, don't expect this to be insurance against anything more than poor domestic returns.

Cash? Hard to argue with the value of cash for some financial resiliency. Think in terms of how long you can pay expenses on the cash you have, do you need more? Is your cash distributed across multiple types of institutions, to reduce the risk of it being unavailable at one? Do you still have a relationship with at least one financial institution that has a physical branch (preferably many) that you can go to to get physical cash should circumstances merit? Do you have enough cash on hand to get through a short term crisis where other payment may not be available?

Gold is excellent money, but its not an investment. Most of the time it will just under-perform the stock market, but there are times in history where Gold bought people out of horrible jams. If you have a significant net worth, such insurance might be worth having.

And one last one...land. Land is the only thing that lasts...Do you have your own home with at least some land under it? That can also provide a form of resilience that is worth having, both by diversifying into real estate and by providing a certain mix of utility and reliance to trying times.
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Re: Investing when you don't expect tomorrow to look like yesterday

Post by secondopinion »

LoveTheBogle wrote: Sun Feb 02, 2025 11:15 pm Tune out the noise. Live your life. Stop watching the news. Don’t make any rash decisions based upon hunches.
This is true whether one is a passive investor or even a speculator. The news is meant to be sell well; it is certainly not meant to be truly helpful, as they want an endless reliance of their readers. I rather make money instead.
Passive investing: not about making big bucks but making profits. Active investing: not about beating the market but meeting goals. Speculation: not about timing the market but taking profitable risks.
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Re: Investing when you don't expect tomorrow to look like yesterday

Post by jdibber »

rogue_economist wrote: Mon Feb 03, 2025 12:11 am Gold is excellent money, but its not an investment. Most of the time it will just under-perform the stock market, but there are times in history where Gold bought people out of horrible jams. If you have a significant net worth, such insurance might be worth having.
Gold by itself is not necessarily a sound investment, but in a properly constructed portfolio, it can be beneficial

From earlyretirementnow.com

"But gold shines (pardon the pun) when all the other asset classes are hurting. And that’s a huge benefit! Not so much in the pre-1920s era but at least during the last 100 years and during some of the well-known bear markets and recessions.

I particularly like the fact that gold seems to work well both during inflationary recessions (1970s) but also during the bad demand shocks that conjured up fears of a deflationary scenario (2008/9)....and the 2020 recession... gold would have worked quite well as a diversifier again!
"I order the food, you cook the food. Then the customer gets the food. We do that for 40 years, and then we die." -Squidward S3E2
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Re: Investing when you don't expect tomorrow to look like yesterday

Post by rogue_economist »

jdibber wrote: Mon Feb 03, 2025 12:29 am
rogue_economist wrote: Mon Feb 03, 2025 12:11 am Gold is excellent money, but its not an investment. Most of the time it will just under-perform the stock market, but there are times in history where Gold bought people out of horrible jams. If you have a significant net worth, such insurance might be worth having.
Gold by itself is not necessarily a sound investment, but in a properly constructed portfolio, it can be beneficial

From earlyretirementnow.com

"But gold shines (pardon the pun) when all the other asset classes are hurting. And that’s a huge benefit! Not so much in the pre-1920s era but at least during the last 100 years and during some of the well-known bear markets and recessions.

I particularly like the fact that gold seems to work well both during inflationary recessions (1970s) but also during the bad demand shocks that conjured up fears of a deflationary scenario (2008/9)....and the 2020 recession... gold would have worked quite well as a diversifier again!
Gold produces no income, therefore I say its not an investment. It is an asset, and may work in a portfolio to reduce losses.
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Re: Investing when you don't expect tomorrow to look like yesterday

Post by patrick »

The world today has changed quite a bit from the world 30 years ago, but that doesn't mean you should have abandoned stocks 30 years ago. I expect the world 30 years from now will have changed quite a bit from the world today, but that doesn't mean I can predict what the changes will be.

Predictions of imminent financial catastrophe are far more common than actual financial catastrophe. The chances of any catastrophe that is easily predictable based on widely available information and can be mitigated with publicly traded assets should be reflected in the prices of those assets. Of course this doesn't mean that financial catastrophe is impossible.

In a repeat of the Great Depression, a standard 3-fund portfolio is OK with a reasonable withdrawal rate, but versions with higher bond allocations would feel more comfortable. In an inflationary version of the Great Depression, it would still work if you use inflation protected bonds.

More extreme scenarios involving the financial system breaking down and/or inflation protected bonds not being paid honestly are much harder to protect against. Foreign financial assets held in a local brokerage or fund wouldn't help if the local financial system breaks down or the government seizes them. You could also lose land and gold if the government seizes them or there is a general breakdown of law and order. Even foreign assets held abroad could fail if a crisis leaves you unable to leave your country, or the crisis hits the other country as well.

Perhaps you could maintain assets in 20 different countries and keep a private plane ready to leave on a moment's notice, and take you to whichever one seems most likely to weather the crisis. That would be rather costly to set up and could still fail if the whole world falls. There is however one way to protect against losing money even if the whole world ends: spend the money now instead of saving it. This one doesn't even require a lot of money to implement, though it will leave you in a bad situation if the world doesn't end.
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Re: Investing when you don't expect tomorrow to look like yesterday

Post by Lawrence of Suburbia »

I'm completely deer-in-the-headlights about recent U.S. events. Terrified at times; so, yet again, trying to wean myself away from the news and doomscrolling YouTube, etc.

But I don't think changing anything in my investment portfolio would make me feel any better, really. One thing I am certain of is, this nation is chock full of kind, decent people who will be stalwart when the going gets really difficult.

Read The Wisdom Of Insecurity by Alan Watts; I keep a copy on my nightstand.

Winston Churchill once said (apocryphally?) "The Americans always do the right thing -- after they've tried everything else."
Last edited by Lawrence of Suburbia on Mon Feb 03, 2025 1:35 am, edited 4 times in total.
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