"A history in which every particular incident may be true may on the whole be false"
Thomas Babington Macaulay
It seems as if the most popular topic in the media over the last few weeks has been the upcoming "Armageddon" and "complete collapse" of the United States as we know it... Pretty much every "talking head" expert out there considers it to be his/her personal responsibility, to recommend moving a large part of investor's savings into cash because of the upcoming collapse of the stock market. Heh? Aren't we a little late? Being the skeptic I really am- I now want to ask all of these "move everything to cash" "doom and gloom"ers out there a simple question-
If the simultaneous "upcoming collapse" of several financial firms of the size of Citigroup, Morgan Stanley or Goldman Sachs as envisioned in the "Armageddon scenario" actually occurred tomorrow, what would your super "safe" cash be really good for? Toilet paper? Napkins? Or may be a "great memorabilia" for the next "age"? Do you really think that gold is going to really replace dollar as the world's reserve currency or that we are going back to the "barter economy" of the Middle Age? Heh? A little less reading of Tolkien's "Lord of the rings" and a little more of "Creative Destruction" by Schumpeter could certainly help...
How about the "virtually guaranteed" by many experts outcome of China, Japan, Russia and Co supposedly asking for their money back, and selling of the US debt which would once again lead to the complete collapse of the US Empire and the "dollar" world? Hmm, let's see... Global markets collapsed by 30%+ over the last few months and US dollar rallied... Budget deficit ballooned to all time high and dollar once again rallied... Do the experts by any chance see a trend here?
Oil has rallied to $145 a barrel back in June, but Russia's "Petro State" stock market has actually collapsed by 60% and the "mighty rouble" (the great hope of Iran, Venezuela and Co) has lost its shine faster than McCain could say "KGB"? Chinese trade surplus and currency reserves have reached another "all time high" last months but somehow we are still not using Renmimbi to pay for goods at Walmart?
How about the "media's push" two years ago into forcing us to believe that London is misplacing New York as a "financial capital" of the world because of the Sarbanes Oxley? Who could possibly claim now we had too much regulation of the financial industry? Or how about "media driven" mirage of Dubai becoming "the always growing oasis" in the desert sands of Persian Gulf?
Or may be about the "age of China" leading to the complete depletion of oil, copper, natural gas and nickel to build more and more "Bird Nest" stadiums... Weren't we supposed to "run out of food" right about now? Wasn't potash supposed to become more expensive than gold? How about the "peak oil" stories? Where are all the "oil is going to $200" screamers today?
Archive Comments (2)
I've not seriously considered moving to cash, but I have considered moving from the beaten down shares of one company to the beaten down shares of another. Obviously, in this move I'd hope to upgrade to a stock the would out-perform my current holding. However, what I haven't seen discussed are the tax implications of this move. With values to be found in many places, Isn't it better to take some official loses for tax purposes while moving the proceeds immediately into the next investment idea? Any thoughts?
Posted by Dudbud October 19, 2008 3:29 AM
Dudbud,
My personal strategy is to ignore the tax impact as much as possible... I believe that over the long haul making any investment decisions purely because of the tax impact will lead to losses.. Think financial sector investors in 2007-08...
As far as juggling dollars from one investment to the other goes- I do it all the time!
Posted by VY October 19, 2008 3:17 PM