On 2010-12-25, Karl Townsend wrote:

THAT'S where we are headed, my friends.
That's the great abyss.
Our valuable Greenbacks turning into Monopoly money!

So the real question is - what will the "hard currency" of the future be?

Yen? Yuan? Pesos??? Or toilet paper and Tampons????

Considering that ob Tampons are now out of production and going for nearly
$40 a box... well....

Like I said before, Karl, I have no clue.
(nor do I believe anyone else does either!)



Interesting story.

i

Yep, Iggy is right, a prudent move for my investments at this time
would be from 60/40 bond/stock to maybe 20/80 bond/stock.

But, that's just for while things stay normal. Our economy is a house
of cards. I don't know when, but sooner than later seems likely, a
couple of cards holding the whole pile up are going to be kicked out.
Then my protfolio don't mean jack s#$%.

Besides having money in mutual funds and other stocks, I have a
relatively large part of assets in Berkshire Hathaway. I have long
been a big admirer of Warren Buffett specifically. He thinks that the
United States has a great way of "unlocking human potential" and that
our economic future is very bright. His company plunked down 35
billion dollars to buy a railroad, a year ago.

I think that the United States is by far the best country to immigrate
to, because of its respect of human life, tolerance, and rule of law.

I am also optimistic about our future, but not necessarily about the
dollar exchange rate.

When I buy stocks, I do not tink as much about what will happen to
their prices tomorrow, as I think about the stream of earnings that I
will earn pro-rata.

I have no crystal ball, myself, and always been extra wary of
inflation, but the bond market does not take that possibility too
seriously.

Nevertheless, I own some put options on TLT (long term treasury ETF),
that would rise in price if interest rates soar and bonds take a
plunge. On balance, I would not become much richer if that happened,
just less poorer.

To me, there is not much difference between questions "how to make
money" and "how not to lose money", to me it is the same. If I can
find something cheap, I buy it, otherwise I do not. As I said, prior
to 2008, I had most of my money and my retirement money in money market.

The risk, to me, is all about how much I pay. If I buy two 30 lb rolls
of Techallow 622 Inconel MIG wire for $40 each, there is not much
risk. If I buy a Bridgeport CNC mill in unknown condition for $500,
there is also not much risk. Similarly, if I buy stocks at 10-14 P/E,
the risk is also not huge and the money making potential is good.

I have never chased the latest market fashions and that has a nice
effect of keeping the risk down somewhat. Everything perceived to be
safe, or popular, has its price bid up to the extent that the risk is
just too much.

I know full well that in many financial circles, risk is understood as
volatility, I studies this in business school and I disagree with that
approach wholeheartedly. The risk in paying too much for something
that is not worth it.

i