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comment by kleinbl00
kleinbl00  ·  4791 days ago  ·  link  ·    ·  parent  ·  post: D is for deflation
It's never a good idea to short a commodity controlled by a central power with absolute authority. Any attempts to make money in China are going to be beholden to China's ability to manipulate the value of the yuan with impunity; it's my opinion that consumer goods are going to be less influenced than durable goods, but then, I have exactly zero training in trading.

The problem is any shift in Chinese attitudes will be passing through the filter of the Chinese state, so any attempts to think of it in a fully Western way is going to be peril-fraught.





d_e_solomon  ·  4791 days ago  ·  link  ·  
I could avoid some of the currency exposure by shorting an ADR or ETF, but even that would leave me exposed to the underlying currency. The problem from my perspective is the ability and willingness for the central government to intervene in the real estate market to sop up excess supply and/or inject capital into the banks to paper over the issue.
kleinbl00  ·  4791 days ago  ·  link  ·  
I'm not going to call your strategy unwise. I'm not even going to question it. I don't know enough to question anyone on anything and won't pretend to. What I will say is that my risk point in investments is directly related to their vulnerability to external influence.

The best money I've ever made, and the most comfort I've ever had, was "betting against the USA." In December 2004 I took my retirement fund out of bonds and threw it all at emerging markets funds, FOREX funds and every other aggregate measure I could find that basically said "foreign economies are going to grow faster than the US economy." It was partly luck (my knowledge of the world is imperfect) and partly skill (my knowledge of geopolitic is greater than my knowledge of individual companies' performance) and it paid off about 70% over three years. In September 2007 I took my retirement funds out of emerging markets and forex because I no longer felt that anyone could predict the general direction of the market; the research I had been doing predicted the collapse of the housing bubble but not much else. I responded by putting my money in a ratcheting index fund, so when the S&P dropped a month later I didn't lose a dime.

It's still there. It's safe to say that I'm much more interested in "not losing money" than I am in "making money" which I recognize as an excessively-conservative policy for a 37-year-old. However, I just don't trust any system in which public opinion trumps data.

thenewgreen  ·  4791 days ago  ·  link  ·  
Nicely played. We have done well investing in some Canadian emerging markets. When we were married we received some money from friends and family. We didn't touch any of it except to invest it in these markets. 7 years later we were able to put over 20% down on our first home. The lions share of the money we used came from this funds performance. "oh canada, my home...."
d_e_solomon  ·  4791 days ago  ·  link  ·  
It's tough to invest and beat the market unless one can spend a significant portion of their day doing research - and I don't have that type of time. I'm generally invested in index funds and shift the balance between them depending on the prevailing winds as best as I can determine. Your shift away from US bonds probably saved quite a bit. I tend to only shift the distribution a bit - I don't have much faith in my investing choices to try a larger move.

I do enjoy making small investments like my aforementioned short on gold -but even that was only 1k which is really just a way to put my money where my mouth is. I suspect I'll make a similar bet on china, but we'll see.

Most of my non-401k assets are still sitting in interest bearing accounts, but I've been nervous to actually invest them - it's hard to gauge which way the market is right now.

kleinbl00  ·  4791 days ago  ·  link  ·  
Me? I'm looking at farmland. My ancestors survived the fall of the czar by getting out of jewelry just in time to open a greengrocer's. Now all I gotta do is find that "permaculture for dummies" book...
mk  ·  4791 days ago  ·  link  ·  
That permaculture comment led me to this: http://en.wikipedia.org/wiki/Chicken_tractor

Now I want to build a chicken tractor that has very slow solar powered wheels. It would be fantastic if you could program it to drive, back and forth, back and forth, over a large stretch of lawn. Maybe moving a couple of feet per day.

kleinbl00  ·  4791 days ago  ·  link  ·  
Chicken tractors are out of favor. Most permies will tell you to go with the paddock system: http://www.richsoil.com/raising-chickens.jsp
d_e_solomon  ·  4791 days ago  ·  link  ·  
I just read way more than I wanted to about raising chickens....
mk  ·  4791 days ago  ·  link  ·  
Total agreement.