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baxtr

The problem is Tina!

There Is No Alternative

- Gold? Dead asset

- Cash? Good luck with inflation

- Bitcoin? My ass…

So what else can you do as a rational investor than to invest most of your cash into an S&P500 or World fund?

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Instead of cash, I hold treasuries. The rest is spread out among low holding cost index funds (watch out for fees... they will kill your profits) and use dividend re-investment. Split things between tax advantaged and non tax advantaged depending on your short and long term goals (ask a certified financial advisor with fiduciary duty for strategies that work for you. It's worth the small fee)

Every time the market takes a crap, I buy. I rarely sell. Keep enough cash or near cash assets in a no penalty account(s) to cover unexpected costs so aren't forced to sell.

A luxurious set up for sure (which took about a decade to get set up) but it's repeatable and fairly stable.

Now, if you have real wealth (like $10s of millions of liquid assets) then look to setting up a MFO or SFO and focus on tax efficiency, etc. That's a whole different set of strategies.

Interesting.

So US Treasury securities instead of cash right?

And then every time there is a dip, sell the treasuries and buy ETFs?

Sure. Dollar cost averaging across a broad spectrum works well for a (very) conservative investor. I try never to have more than 10% of my liquid assets in speculative deals (straight up gambling stuff... individual stock picks, day trading, options, etc). The rest I try to keep as long term investing and/or cash or near cash.

Give it to entrepeneurs/researchers doing intrinsicly cool things like cancer research, without knowing how you will get any of it back right at the start. The problem is NOT lack of productive investments, its that Uber rich people think its not fair if they ever lose.

Military manufacturers are a reasonably safe haven these days as Europe is desperately trying to re-arm itself following the Russian invasion of Ukraine, the Middle East is in flames once again and there's a ton of uncertainty and small scale hostilities around China/India/Pakistan.

Urban residential real estate is also a safe haven assuming you still are allowed to invest there. Demand is not going to shrink any time soon (as most Western governments are running rural areas to the ground for them being too expensive to bring on modern standards and expectations in infrastructure), and supply is so scarce that even large developments and re-zoning will hardly make a dent in demand.

Invest in a fund which underweights bubble stocks by tracking a suitable alternative index:

https://www.bogleheads.org/wiki/Alternative_indices

Dividend weighted indexes are the classic option, and fundamental weighted index are a newer one.

Maybe unfashionable equities? Utility stocks, Japan/S Korea, BRKB etc?

Golds been rallying really aggressively recently

So, too late now, you're saying. I read overvalued, soon to crash…

Perhaps we should be buying up Yuan…

Chinese equities have actually been great performers recently (off of a base of ultra-pessimism), but that's mostly the onshore market, not the ADR paper you can buy in the west.

Buying the yuan on the other hand is directly taking a stance against CCP state controlled currency policy. A less advisable and knowable bet.

Then invest in Chinese airlines, banks...

Yes I know, same with Bitcoin.

I mean it’s a dead asset class since it doesn’t fund any economic activity. It’s just a store of wealth

Yeah, frankly I think there is no truly safe place for investments at this point.

We might as well just enjoy the ride knowing at least when it hits the bottom, we'll all of us be in the same tough spot.

Well isn't that the whole point? At a fundamental level, investment profits are a payment for the risk you take. No risk equals no profit. There are "safe" investments currently. You can get paid 4% a year roughly to hold treasuries right now. Considered a "risk free" investment (Which sure, maybe the merits can be argued).

But at the end of the day the only way to profit from an investment is taking some risk. It all comes down to pricing that risk.

> Gold? Dead asset

What? Gold is at a record high, and with inflation it will only go higher.

https://www.macrotrends.net/1333/historical-gold-prices-100-...

Dead in the sense that it is not useful for society.

How is it not useful for society if it’s worth $3300 an ounce? It’s a metal prized physical properties and it’s also used in industry.

My favorite LLM tells me that roughly 85% of the world’s gold is simply “lying around” in the sense of being held as jewelry, bars, coins, or reserves. In contrast, only about 15% of the gold is actively utilized in production or technological applications.

So I'd say it's the same as having cash under your pillow.

If it’s the same thing as cash under your pillow, and it’s useless, then give me all the cash under your pillow.

Yes, exactly. That’s the idea!

I give my cash to you, and, as exchange, I will own a (usually small) share of your company.

Then you’ll hopefully be successful and my shares will raise.

Good for you. Good for me. Good for society since you created jobs.

> https://www.macrotrends.net/1333/historical-gold-prices-100-...

In nominal terms perhaps, but in inflation adjust terms it's roughly what it hit in 1980:

* https://www.investopedia.com/gold-price-history-highs-and-lo...

https://graphics.thomsonreuters.com/11/07/CMD_GLDNFLT0711_VF...

And there have been long (10y) stretches where it's remained flat: it takes a lot of patience to HODL through something like that. Even if equities (e.g., holding an index fund) are flat at least you get some yield.

With a pure commodity play like gold (or BTC) your only way of returns in price appreciation.

And what was happening in the 80s?

Inflation.

And what’s happening now?

> And what was happening in the 80s? Inflation.

Gold was high in 1980 specifically and dropped after 1980 even when inflation was still high.

Gold also had a peak in 2012: was there inflation then?

> And what’s happening now?

Nothing. Inflation peaked in February 2023 and has been dropping ever since:

* https://fred.stlouisfed.org/series/CORESTICKM159SFRBATL

Gold didn't start going up until September 2023 and has been rising. Gold and inflation are currently inversely related.

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