The Fiscal Cliff - Portfolio Strategies

[EngineerMike]

[ moderator edit ]

Flaggship suggested gold, which I think will do well. Might also become a target, as it did in the FDR days when owning US gold coins became illegal. Folks trading in gold were branded "speculators" and vilified. Consider also becoming a landlord. Real property is limited, and usually does well in inflationary times. Flaggship also suggested debt-free; nobody can kick you out of an investment if you own it outright. You may not have as high a return using 100%equity-0%debt, but you'll be able to earn a yield w/complete safety.
Its gunna get rough.

[whem2fish]

I'm sitting tight troeprice has done well I will still have the same number of shares I won't retire till 2025

[jzick]

Flaggship suggested gold, which I think will do well. Might also become a target, as it did in the FDR days when owning US gold coins became illegal. Folks trading in gold were branded "speculators" and vilified. Consider also becoming a landlord. Real property is limited, and usually does well in inflationary times.

We used both precious metals and real property strategies for years (since early 70s). Our strategy for metals was to buy and hold actual metal, as opposed to trading in futures or stocks. Storage and insurance fees are expensive, but now that we are in a selling mode, it turned out to be a lucky strategy. The problem with metals today is that they are very expensive to buy. If I were actively building equity, I am not certain metals would be a good choice.

Real property (rentals) also worked well for us, although the "hassle factor" dealing with tenants sometimes made it seem not worthwhile. If someone is active enough (you have to physically do a lot of the refurbish/repair work yourself), current property prices might make this a good long term strategy.

As for short term strategy to deal with the "cliff" and other messes, we are accumulating cash and spending as much as we can. We sure do not want to leave any behind so heirs have to satisfy an estate tax.

[wincrasher]

Having a sell-off just to avoid a few points in extra taxes next year may be a bit short-sighted. You'll just have to put your money to work somewhere else, and guess what, there will be taxes on those gains too.

It may be wise, however, to start making adjustments to your portfolio to reduce your exposure to companies heavily dependent on government spending. The big defense contractors are likely to see cuts in expensive weapons programs and their stocks will probably take hits, if they haven't already.

[Erich]

As an outsider from north of the border looking in, I have a couple points that no ones mentioned. Taking money out of the bank(cash) and stuffing it in the mattress doesn't provide you any security. If the government decides to devalue, you can begin wallpapering the (pick a room). My grandparents went through it in Europe in the early 1900's. One day it's worth a dollar, the next morning, .50 cents. Secondly, if you're going into precious metals, don't bother with paper, get real hard gold(if it's allowed there), otherwise get it out of the country. Again paper isn't going to hold up if you don't have it in your hand. Pay down your personal debt, they don't take away what you won. It's unfortunate, although I really, really doubt that most governments debts will ever be paid down, it's a virtual impossibility, you've gone way too far. Why over the last couple years are there so many places that buy your grandmothers gold teeth, old broken jewlery, etc. I give you cash, sure but no where near its actual value. There's a particular group that knows something, unfortunately we're not allowed to identify by race. Lastly, get real with your lifestyle and get serious when it comes to needs and wants. I want a lot of things too, but they are not needed to keep me going.

[nplenzick]

A good friend of mine who isn't nearly as optimistic as I am has taking a large amount of his funds out of his stock portfolio and bought a building that's rented by a Dollar Store. Apparently Dollar Stores do not own their buildings and they look for investors to purchase them. Dollar maintains the building and supposedly he has insurance in case they go bankrupt. He pays the mortgage and collects the rent. I've heard Sheetz gas has the same sort of deal.
I on the other hand have faith in our country and I've made quit a good amount of money the last time the stock market went down in 08. I look at it as buying stocks on sale.

[George Lewis]

I note many good suggestions on saving or keeping our assets. One problem is gold. If you have an ounce of gold, how do you spend it? It is worth $1,700 and you want 20 gallons of gasoline and two loaves of bread. All you have is this gold...how do you spend it and get change...I have to be missing something here...help put me on the right track.

[palehorse89]

First time in 25 years I moved my money to a safe place, market is up, and the fiscal cliff is going to drive it down along with other world problems so.... out of the market with my 401k today and into a safe fund, I can buy back in when it bottoms out but Iam tired of taking a
woopin as I have 5 to 8 time sence 1987. Everyone always says ride it out, but I am tired of the extreme loss and the slow ride back up. Something is going to happen soon and I am not talking about the market hitting 14,000......

[jzick]

One problem is gold. If you have an ounce of gold, how do you spend it?

Obviously, as long as currency has value there is little use for precious metals as day to day money. Should there be a total collapse of the monetary system, however, precious metal, or even things like toilet paper or ammunition may be the only source of value to buy other things. Many armageddon predictors say keeping a supply of silver dimes and small denomination gold coins is prudent. You can also buy Canadian Maple Leaf coins that are easy to break into smaller pieces.

[CampDaven]

Originally Posted by palehorse89

First time in 25 years I moved my money to a safe place, market is up, and the fiscal cliff is going to drive it down along with other world problems so.... out of the market with my 401k today and into a safe fund, I can buy back in when it bottoms out but Iam tired of taking a
woopin as I have 5 to 8 time sence 1987. Everyone always says ride it out, but I am tired of the extreme loss and the slow ride back up. Something is going to happen soon and I am not talking about the market hitting 14,000......

:Thumb:
I took the hit in 87, but never again.
The sidelines are fun! You get to sleep well, watch others bash, clash, and gnash, and then jump in the game when the water is calm and the UP has begun.

[palehorse89]

Originally Posted by CampDaven

:Thumb:
I took the hit in 87, but never again.
The sidelines are fun! You get to sleep well, watch others bash, clash, and gnash, and then jump in the game when the water is calm and the UP has begun.

It was hard to do today asI had a 12.81% YTD return on my money now I am going to luck to get 1.5% on it........ but I 'll have it. I'll just sit back and watch for a bit

[Gary - K7GLD]

Originally Posted by jzick

Obviously, as long as currency has value there is little use for precious metals as day to day money. Should there be a total collapse of the monetary system, however, precious metal, or even things like toilet paper or ammunition may be the only source of value to buy other things. Many armageddon predictors say keeping a supply of silver dimes and small denomination gold coins is prudent. You can also buy Canadian Maple Leaf coins that are easy to break into smaller pieces.

I've often wondered at the "buy gold" strategy - IF there was a financial collapse, a infrastructure collapse would be right behind it - no one to operate the power generators drive the trucks - or enforce the laws - no paychecks, no workers, simple as that! It's happened before where nations and societies have collapsed...

SO, grocery stores are closed or shelves go bare - the register computers are down for lack of power, and no way to register purchases - so what do you DO with your gold, even if it wasn't locked up out of your reach in some overseas vault?

Do we think various places of business will set up scales to weigh gold - or hire appraisers to establish value - even IF there were goods to be bought?

[racefn]

I am By no means a professional nor do I think I am, Most " professionals" will tell you stay in market don't try and time it, Just exactly what are they doing?, on a minute by minute basis, I say don't kid yourself the last time I rode it out per say, it cost me a bundle, I now have it all back and then some and I'm keeping it,at least most I hope. I moved 80% to safe, 10% bonds and 10% large cap, dont know if this is right or wrong but I feel better anyway, of course I would have slept in a Holiday Inn last night, but I don't have to......

[palehorse89]

Originally Posted by racefn

I am By no means a professional nor do I think I am, Most " professionals" will tell you stay in market don't try and time it, Just exactly what are they doing?, on a minute by minute basis, I say don't kid yourself the last time I rode it out per say, it cost me a bundle, I now have it all back and then some and I'm keeping it,at least most I hope. I moved 80% to safe, 10% bonds and 10% large cap, dont know if this is right or wrong but I feel better anyway, of course I would have slept in a Holiday Inn last night, but I don't have to......

You don't have it all back and you never will. You and me are back to our all time high but the $200,000 plus that I lost over the down times in 25 years I will never recover, it might of just been on paper, so people say you really did not loose anything,when the market hit 6600 in I think 2008 I put 25% of my wages into it up untill about a year ago where it just has been floating, The news everyday does not sound good for the market and they have been warning for a year now as other counties go bankrupt