Wednesday, March 18, 2009

Investment Advice

Advice for Young Investors

No Easy Answers

But the current environment naturally leaves a beginner confused about how to invest. The tough housing market means real estate looks cheap, but it's also an unreliable investment. After the financial market's problems of the past year, the same can be said for stocks, bonds, and other investments. Are they a bargain or a dangerous trap? At the same time, the financial crisis and widespread layoffs seem to argue for playing it safe. But how much cash can really fit into your piggybank or under your mattress?


Trillions of dollars can be placed under your mattress. Here's a list of the things you will need.

1. A shovel.
2. A wheelbarrow.
3. A TARP.
4. An armored car.
5. Access to a @#$%load of $100,000 bills (see link below).

The first four items are relatively easy to obtain. The last one will require you to have connections within the Treasury or the Federal Reserve, and/or have access to a backyard during one of the many paper money helicopter drops. Barring that, you can also hope that the government will print that denomination at some point in the future, say if inflation picks up.

Under cover of darkness, use the wheelbarrow to move the money to the armored car and then park the car in your garage. Shut the door and your mouth. Loose lips sink ships. Congratulate yourself. The hard part is done.

Dig a hole under your mattress with the shovel. You will need to dig a very big hole. This may take more than one day. Don't get discouraged. Just keep digging. Dispose of the dirt slowly through a pant leg as you take walks around your neighborhood. You don't want anyone to think you've been digging. Once you are done, use the wheelbarrow to safely transfer the money from the armored car to the hole. Once that step is completed, cover it with the TARP.

You are now safe from the financial storm. As long as all that faith-based paper currency retains its value over the long-term, you've got nothing to worry about. Well, almost nothing to worry about. Don't leave the room. Brace the door and prepare for looters. Other cash hoarders may not be as careful as you. Once looters realize that someone has trillions of dollars stored under their mattress, they might rightly supsect that everyone does.

Department of the Treasury - FAQs: Currency

What was the largest currency denomination ever produced?

The largest denomination of currency ever printed by the Bureau of Engraving and Printing (BEP) was the $100,000 Series 1934 Gold Certificate featuring the portrait of President Wilson. These notes were printed from December 18, 1934 through January 9, 1935 and were issued by the Treasurer of the United States to Federal Reserve Banks only against an equal amount of gold bullion held by the Treasury Department. The notes were used only for official transactions between Federal Reserve Banks and were not circulated among the general public.


Backed by gold bullion? Those were the days.

8 comments:

Anonymous said...

Stag,

No Easy Answers

How about NO answers. None, nada, zip, zilch. There are no long term winners in a casino.

Remember when deworsification was a hot strategy? And how about buy and fold? Day trading? Asset (mis)allocation? De-emerging Markets? Sub-merging markets? (Get)real estate?

Commodities? - yeah, they're great as long as your purchasing power is being stolen and your prior work is being de-valued.

Currencies? - sure, it's probably easier to pick the least worst than it is to invest in over-leveraged and over-valued assets stocks and bonds.

Here's my advice. Go long matresses and stack them up in a pyramid.

Who knows, Maybe more and more people will start hoarding the most precious commodity of all - TIME!

Stagflationary Mark said...

mab,

How about NO answers. None, nada, zip, zilch. There are no long term winners in a casino.

Wow. That's almost exactly what I told my tax preparer today. We were both talking about the giant hole we were digging for ourselves.

She started off with a (reverse) rant over the AIG bonuses. She said it was like loaning someone a hundred dollars and then getting all concerned that about one particular penny of it.

I said that if we are so outraged over the bonuses, why stop there? The company was going under anyway. Let's take back all those base salaries too while we are at it.

The angry mob is carrying pitchforks these days. As repulsive as I find taxpayer money paying bonuses to AIG workers, I find it even more repulsive that the government is so eager to confiscate money from others overtly. That's a dangerous very precedent for savers such as myself.

What ever happened to the crazy idea of using inflation to do it covertly? Nevermind. We'll be getting plenty of that too in the years to come. I am more convinced than ever.

So what's the solution as an individual investor? As you say, "None, nada, zip, zilch."

As Greenspan once said, there really is no safe store of value in a welfare state.

Anonymous said...

Speaking of wheelbarrows and cash, have you seen this one: http://www.pagetutor.com/trillion/index.html

IMO, it really captures how people have a tendency to smoosh orders of magnitude together when dealing with large numbers. They act as if million to billion to trillion is one order of magnitude each, like going from hundred to thousand, when in fact it is 3 orders of magnitude, going from 1 to one thousand.

Also in my opinion, I think the bonus brouhaha is a smokescreen for the billions that were handed over to Goldman Sachs for the CDS. The media is acting their usual useful idiots.

Anonymous said...

...the illustration captures it because I doubt very many people would have freehanded a drawing correctly.

Anonymous said...

AllanF,

You won't want to miss this. Goldman is going to clear up some "misperceptions" regarding its relationship with AIG. Of course the facts will be distorted to protect the truth.

http://www.marketwatch.com/news/story/goldman-detail-aig-trading-relationship/story.aspx?guid=%7B83E134BA%2DA983%2D451F%2DB6A7%2DFF4D005EEECF%7D&dist=msr_5

Propaganda on top of propaganda.

Stagflationary Mark said...

AllanF,

In theory, a trillion dollars could also pay for two trillion man-hours of cheap Chinese factory labor. I doubt many can picture that either. Too bad. Once the global rebalancing eventually occurs, China might expect us to actually do the work instead of them.

Stagflationary Mark said...

mab,

I'd like to read your link right now, but I'm using a Playstation 3 and there's no copy and paste feature.

I suspect that it would take me at least two trillion hours to enter that URL correctly, lol.

I'll therefore simply assume that I would want to vomit if I did read it. That's what I feel like doing most of the time when reading financial news links these days. Sigh.

Stagflationary Mark said...

AllanF,

The diagram showing what a billion dollars from your link is interesting. That is also the amount of space that my trillion dollar example would require (since I was using $100,000 bills instead of $100 bills). Looks to me like I might need to increase the number of armored cars and shovels by one order of magnitude just to be on the safe side.

In my defense, I did say it might take more than a day to dig the hole though, lol.