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Thread: Today's investment conundrum

  1. #1

    Today's investment conundrum

    The central banks and politicians (over)reaction to the coronavirus scare have left a real dilemma for investing and preserving wealth. The current situation could easily produce either a major deflation or a runaway inflation. Holding cash in the first situation is great but could be disastrous in the second. Virtually every asset class has the same situation, they could move dramatically depending on whether we have inflation or deflation and how massive whatever comes will be.

    We have been into rental real estate, but the economic situation could crash property values. I saw a survey a day or two ago saying that half of American homeowners were considering selling their houses due to economic hard times from the coronavirus lockdown. The real estate market could easily turn very sour.

    We are upping our precious metal holdings but in a deflationary cycle that could go down like everything else, so we will only go so far with that.

    In terms of holding cash, the question is which currency. We want to be diversified from the dollar especially if the election goes sour. The euro has its own problems, and is as risky as the dollar. At one time, the Swiss franc would have been the obvious answer, but in recent years, the Swiss central bank has deliberately depressed their currency so they would not get so far ahead of the euro, since the EU is the major trading partner and that would put a real hurting on their exports. Scandanavian kronor are a possiblity as is the Australian dollar.

    The huge question is what lies ahead, inflation or deflation, and at what level?

  2. #2
    BitCoin or gold is your best bet
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  3. #3
    Quote Originally Posted by Carolinian View Post

    The huge question is what lies ahead, inflation or deflation, and at what level?
    Global stagnation is what was reported in October 2019 before the covid 19 outbreak. The outbreak and the social unrest has exacerbated the stagnation, imo. Inflation and deflation are in check because of the Fed's stimulus. For how long things stay in check kind of depends on agenda driven billionaires and politicians that are no longer anywhere near center on any issue. I think Elon Musk may be right telling every one to take the "Red Pill".

  4. #4
    One thing I have been looking into is rental property in eastern European countries that still have a national currency and do not use the euro. You can buy a lot more house for the dollar, and the rental return is actually better if you buy the right properties. Once travel is more normal, I am going to check it out on the ground. The Czech Republic, Poland, Hungary, and Romania are the places I am looking. You can set rent in a different currency, and use a stable one, perhaps the Swiss franc, since if the euro goes over the cliff, I do not think the Swiss are going to follow them down.

  5. #5
    I believe the best investments are still to be diversified into some of everything. I have done it this way ever since I was about 20 years old and am now 69. I have made the slow climb and held on to everything through out all the economy ups and downs. In property I sold and bought up 3 times while paying off my mortgages and have been in our last and final home with it paid off for the past 12 years.
    Both stocks and bonds have done well for us and in retirement we have no worries and our kids at some point will have a lot easier life. We are also able to help them each year which is needed for them because of living in California.
    We have never had to worry in good times or bad.
    Bart
    I live to vacation and vacation to live.

  6. #6
    I like rental properties that are close to where we live. Interesting is that when the interest rates go down 1% the value of the properties go up 10%. My opinion of gold and silver is once you have it you never sell it. It's nice to have and even though it is an asset, it really is more of a collectible that gets passed to heirs, imo. Some day the prices for silver and gold could spike and these products could be vary profitable but I'm not holding my breath, lol.

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