Black Monday

[BlackPeter]

I am curious...not intended as a dig at anyone that's gone to a huge holding in cash. What are you going to do if it really looks like the global economy has hit the skids and banks are coming under extreme pressure ? How are you planning to handle the RBNZ's open bank resolution ? I think its well worth having a good discussion about that. Open an Aussie Govt guaranteed bank account ? Who's to say they won't pass legislation under urgency so the guarantee only applies to Australian residents ? Cash under the mattress, gold or silver coins...what are you going to do ? Disc, I already have a small allocation to physical silver bullion and it's been a horrible "investment"

Very good question. Not one of the early chickens (currently roughly 75% in stocks, not counting the family home). I don't think that historically there is any asset class always unaffected by crashes, but there always have been some which fared better than others. Diversification is here in my view the key.

Personally - I can't imagine a scenario that would move me totally out of shares, I always intend to hold at least some blue chips producing stuff everybody needs. Graham recommends to keep at least 25% in shares.

Some shares are quite uncorrelated to the performance of NZ companies: to name only two: OGC (a Canadian gold miner), TEM (a British investment fond). I normally hold some as "hedge"

Some of my cash is (and more would likely go) into "safe" bonds - I don't expect utilities including companies like IFT to roll up their toe nails any time soon ... and than there are obviously the government backed bonds. So far I don't expect NZ to sink as low as Greece, i.e. should be fine. Admittedly - bond yields are currently not that exciting - i.e. there is a risk to be a bit late to go into them (but than ... I trust that low bond yields might keep stock prices up).

Bank accounts - I have a rule to put not more than 10% of my portfolio into one share ... and this rule applies as well to (long term) holdings on bank accounts.

I do have some overseas nest eggs (capital life insurances, super scheme) ... and some more likely to go there if the situation looks here more scary than on the other side of the big pond.

Some property is certainly a good idea (and for starters - a mortgage free family home).

Being reasonable self sufficient helps as well ... if bad comes to worse we could minimise grocery bills and live of the land.

Not sure about (physical) gold. The gold coins my grand parents used to give me when I was a child have been one of the worst investments I made so far in my life. Prefer to hold gold miners and expect them to flourish if everything else goes down the drain.

[Onion]

Digging a hole in the back yard and burying cash ...

Where do you live Roger?

[jonu]

Where do you live Roger?

In the Onion patch

[Big Blind]

So is that why safes are still popular and not solely due to cash jobs???

Perhaps an investment in a safe-making company would be a "safe" bet. Taxi!!!

[trader_jackson]

My brief thoughts:
- Many US companies appear to be betting Earnings Per Share estimates, with no seriously adverse outlook comments
- Oil seems to be bottoming out at around $30 barrel, with many other commodities appearing to be bottoming out in price as well ("global tax cut")
- Australian employment, consumer confidence and CPI seem to be alot stronger than analysts estimates
- Europe is stable, with Greece recently receiving an upgrade from S&P
- China remains a mystery (for me), but the rest of the world seems to be doing well enough to "pick up China's slack"
- Volatility will continue, as people worries will continue to exceed that of the actual fundamentals, helped by the fact China has been the "hero people have turned to" for the past 7 years or so and is now slowing down (to a more sustainable growth rate)

[mshierlaw]

The advise to date summarised:

- Do not put silver bullion under the mattress, it's "horrible".
- Always watch what your neighbour is doing in the back garden.
- If you bury gold in the back garden it may be a future GOLD mine.
- In a deflationary environment, cold hard cash is best stored in the freezer.
- Stocks are out of season this summer, may recover after demand for casserole firms up.
- Do not hold too many stocks right now, you may run out of freezer space waiting for a casserole recovery.

DISC .... I like casserole but not this summer & my neighbour is nosey.

[Baa_Baa]

Don't talk about physical bullion holdings in a pseudo anonymous internet forum. Don't even imply you have a holding. Delete your messages immediately if you have. Not joking.

[bull....]

the equity selling could be oil sovereign funds selling to raise cash? Saudi even selling there assets now

Aberdeen asset management confirms what I was thinking about a lot of the selling

http://www.cnbc.com/2016/01/27/top-a...-outflows.html

[Leftfield]

Good post Bull. Ouch, $13 Billion withdrawn from overseas markets. It helps explain NZX's relative insulation from the gyrations (so far.)

[Beagle]

Very good question. Not one of the early chickens (currently roughly 75% in stocks, not counting the family home). I don't think that historically there is any asset class always unaffected by crashes, but there always have been some which fared better than others. Diversification is here in my view the key.

Personally - I can't imagine a scenario that would move me totally out of shares, I always intend to hold at least some blue chips producing stuff everybody needs. Graham recommends to keep at least 25% in shares.

Some shares are quite uncorrelated to the performance of NZ companies: to name only two: OGC (a Canadian gold miner), TEM (a British investment fond). I normally hold some as "hedge"

Some of my cash is (and more would likely go) into "safe" bonds - I don't expect utilities including companies like IFT to roll up their toe nails any time soon ... and than there are obviously the government backed bonds. So far I don't expect NZ to sink as low as Greece, i.e. should be fine. Admittedly - bond yields are currently not that exciting - i.e. there is a risk to be a bit late to go into them (but than ... I trust that low bond yields might keep stock prices up).

Bank accounts - I have a rule to put not more than 10% of my portfolio into one share ... and this rule applies as well to (long term) holdings on bank accounts.

I do have some overseas nest eggs (capital life insurances, super scheme) ... and some more likely to go there if the situation looks here more scary than on the other side of the big pond.

Some property is certainly a good idea (and for starters - a mortgage free family home).

Being reasonable self sufficient helps as well ... if bad comes to worse we could minimise grocery bills and live of the land.

Not sure about (physical) gold. The gold coins my grand parents used to give me when I was a child have been one of the worst investments I made so far in my life. Prefer to hold gold miners and expect them to flourish if everything else goes down the drain.

Excellent post BP.
The whole sustainable living thing is a nice goal to work towards. One day there will be a complete breakdown in the monetary system and those with no debt and some land to grow things on will be far better positioned than most.
Debt free is something I'm big on now too.

Government issued Kiwi bonds are Govt guaranteed and NOT subject to the OBR. Returns are low but I think its a good thing we had this discussion because I'd forgotten about the Kiwi bonds and risk adjusted returns are better than term deposits with a bank IMO and its probably a better idea than giving your neighbour a chance at mining your riches