What goes up in crash, de/inflation, and depression?

TimeCorrosion · Nov 25, 2009

I am trying to hedge in case of war, market crash, inflation, deflation, and depression. What do you think will preserve value or even increase in value in those scenarios?

Defense sector tends to go up in war times (like WWIII); commodities go up during inflation; but pretty much everything goes down in crash, deflation, and depression.

Any simple way to hedge against all these disasters?

MTE · Nov 25, 2009

Buy OTM calls and puts. Calls will hedge aganst inflation and puts will hedge against crash/depression.

As for the World War III...if that should happen then I don't think your investments will be very high on the list of priorities.

Martinghoul · Nov 25, 2009

Guns and cans of baked beanz... Maybe gold, but unlikely to help a lot, really.

makloda · Nov 25, 2009

Quote from TimeCorrosion:Any simple way to hedge against all these disasters?

Own and run a secluded farm, outside of wherever the war happens. Be fully self sufficient (livestock, crops etc.). Plenty of guns and ammo. Keep some physical gold in stashes across the globe, e.g. Canada, Switzerland and Australia.

MTE · Nov 25, 2009

Quote from makloda:

Own and run a secluded farm, outside of wherever the war happens. Be fully self sufficient (livestock, crops etc.). Plenty of guns and ammo. Keep some physical gold in stashes across the globe, e.g. Canada, Switzerland and Australia.

Sounds like a plan!

Bigpipn · Nov 25, 2009

Quote from Martinghoul:

Guns and cans of baked beanz... Maybe gold, but unlikely to help a lot, really.

I hope everyone heeds your advice because I'm stocking up on dolla...err.. toilet paper.

In all seriousness, you're right, gold isn't likely to help you and the CBs know this. It's just like real estate, the Nasdaq, and tulips. It's no different. Why would anyone rather own shares of Yahoo who, at the time, paid no dividend, over entire countries (market cap) paying double digit dividend yields? It's the same reason they want gold over things....

If sh*t hits the fan would I rather have my water purifier or your gold-plated tungsten?

spindr0 · Nov 25, 2009

Quote from TimeCorrosion:

Defense sector tends to go up in war times (like WWIII); commodities go up during inflation; but pretty much everything goes down in crash, deflation, and depression.

Any simple way to hedge against all these disasters?

Lots of Prozac!

spindr0 · Nov 25, 2009

Quote from MTE:

As for the World War III...if that should happen then I don't think your investments will be very high on the list of priorities.

I would have thought that warm glowiing feeling would have been enough

dmo · Nov 25, 2009

Quote from TimeCorrosion:

I am trying to hedge in case of war, market crash, inflation, deflation, and depression. What do you think will preserve value or even increase in value in those scenarios?

Defense sector tends to go up in war times (like WWIII); commodities go up during inflation; but pretty much everything goes down in crash, deflation, and depression.

Any simple way to hedge against all these disasters?

As you say, pretty much everything goes down in a deflationary depression. You might want to look at some of the January 2012 puts, which would do quite nicely if your scenario came to pass any time in the reasonably near future.

Emini Maestro · Nov 25, 2009

The obvious answer would be to look at history to find what instruments were present during times of past similar distress, that performed well in a hedging function. Gold and silver, for starters. What kind of industries? Anything vice-related. Booze, porn, smokes, pawn shops and pizza. Why pizza? It's not good for you, but it's cheap.