Investing for Collapse

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The Old Man
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Re: Investing for Collapse

Post by The Old Man »

You may wish to consider a book by William J. Bernstein called "Deep Risk".
https://www.amazon.com/Deep-Risk-Histor ... 0988780313

Personally, I believe geographically dispersed investments will perform the best in an uncertain environment.

In a collapse scenario you should consider more than just investment performance. You will generally need cash - may not be a lot but you will need it - and it may prove to be difficult to liquidate your investments at any price in a true collapse/crisis. Have some cash available or other assets easily convertible to cash.

Finally, you need to consider that your tangible assets can be taken from you. You should invest in assets that cannot be taken from you, i.e. education and skills. Tangible assets should be geographically dispersed and your ownership/management of said assets should also be geographically dispersed. A second passport can also be useful as the ability to survive may be contingent on your ability to move.

Jason

Re: Investing for Collapse

Post by Jason »

Ironically, the first US immigration crisis in America was when Mexico invited US Southern citizens into Texas after they declared independence from Spain. It was soon overrun by Southerners who just continued their way of life. Mexico tried to fight back by limiting immigration and demanding that everyone already located convert to Roman Catholicism. It failed leading to Texas declaring independence and eventually the US Mexican war over annexation.

TopHatFox
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Re: Investing for Collapse

Post by TopHatFox »

jacob wrote:
Sat Feb 22, 2020 11:36 am
Not sure what use they'd have for geologists or physicists, but being a doctor or a dentist would certainly come in handy and be valued... See e.g. https://www.theguardian.com/us-news/201 ... nt-poverty or
https://www.theguardian.com/news/2016/n ... lth-divide (Source check: Guardian).
Physicist I don't really know, but rich and middle-class people will probably still want their lithium batteries, natural gas in their stoves, or gasoline in their cars. They probably want granite-counter tops too. (Assuming it's a slow decline that's more pronounced in some areas than others)

Doctors and dentists are definitely superior to both though, but you're also in school for forever and probably in debt

AnalyticalEngine
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Re: Investing for Collapse

Post by AnalyticalEngine »

Red state vs. Blue state is also a thought terminating narrative. You want to focus much more specifically on policy than that. This is why it's better to focus on specific details and scenarios. Otherwise narrative bias will hide the blind spots.

shadow
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Re: Investing for Collapse

Post by shadow »

@AnalyticalEngine, Jason
I appreciate your responses. I understand where you are coming from as older people observing the younger generation, but I do not believe I have fallen for the "Collapse narrative." I'm not on the Greta bandwagon or have any kind of idea that "we" can cause global political change on a scale and at a speed that is talked about in those areas. I think Jacob's comment in this thread about the unequal distribution of collapse explains my OP; I want to prepare for the possibility that I fall into one of those pockets of crisis (not claiming that I knew everything/anything that Jacob wrote before I read it but rather that I want to look at collapse as a series of events instead of an apocalypse type occurrence).

@George
Thanks for the suggestions. When I said immigration crisis I was referring to something like horsewoman's description.

@Jacob
Thanks for the readings. Luckily I got over the panic stage before I had any assets to throw away.

@TOM
Thanks for the book recommendation.


So far I think I have a few points to take away from the thread:
1) While I don't believe that there will be a doomsday my OP was folly as it shows I am still looking for a solution to the general doomsday. The only things that helps someone across any kind of crisis are skills.

2) Invest in skills.

3) Maintain cash/liquidity.

4) Invest in mobility.

5) In the same vein, disperse assets geographically.
Last edited by shadow on Wed Mar 25, 2020 5:27 pm, edited 1 time in total.

The Old Man
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Re: Investing for Collapse

Post by The Old Man »

https://www.youtube.com/channel/UCT6Y5J ... MivpKgVXew

A useful podcast series called "Fall of Civilizations Podcast". Its an historical overview of civilizations that rose and then fell, circumstances behind their fall, and what it was like to be a person alive at the time.

jacob
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Re: Investing for Collapse

Post by jacob »

The collapse of the USSR is interesting. Read these descriptions of the aftermath ...
https://www.amazon.com/Armed-Patience-D ... 557791090/
https://www.amazon.com/Nothing-True-Eve ... 610396006/
... and then tell me what the "best investments" were in that case.

ertyu
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Re: Investing for Collapse

Post by ertyu »

The collapse of the USSR didn't result in displaced populations like a war or a climatic event would, so real estate and land were the best ways to preserve wealth (this would not be true if you're forced into refugee status or if your apartment building gets bombed). Subsistence farming helped, sex work helped, informal networks helped. Connections helped if you were into trying to syphon state property into your own pockets and start your own business. Being able to immigrate or having relatives who immigrated and sent you money helped. In general, most common people suffered mostly due to hyperinflation, so: real assets + subsistence/repair skills which could directly produce material goods or services.

Looking at some of the likely ways societal collapse might play out in the future, in my opinion climate change and war are likely to be much bigger factors. So I am not sure the example of the USSR is a good template for what is likely waiting.

The Old Man
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Re: Investing for Collapse

Post by The Old Man »

ertyu wrote:
Sun Feb 23, 2020 10:54 am
Looking at some of the likely ways societal collapse might play out in the future, in my opinion climate change and war are likely to be much bigger factors. So I am not sure the example of the USSR is a good template for what is likely waiting.
A notable feature of the post-USSR environment was the rise of the Russian Mafia. Before the collapse you never heard of them. This feature is important to note. Collapse yields disorder and that disorder will be filled somehow. The rise of powerful mafias (militias, etc.) is likely in a collapse scenario.

Lucky C
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Re: Investing for Collapse

Post by Lucky C »

Invest in a rational way that profits from the irrationality of others, with expected returns not highly correlated to GDP, earnings growth, the most popular index funds, etc.

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Ego
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Re: Investing for Collapse

Post by Ego »

A new example of how collapse happens taking place now.

https://www.aljazeera.com/ajimpact/dist ... 42678.html
But as Lebanon has spiralled into its worst economic crisis in decades, banks have imposed informal capital controls that force people to withdraw their savings in Lebanese pounds at the official exchange rate that effectively values their savings at 40 percent less than what its worth on the parallel market.

ertyu
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Re: Investing for Collapse

Post by ertyu »

oh that is EVIL. I wonder if it can be done for brokerage accounts, too

George the original one
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Re: Investing for Collapse

Post by George the original one »

That's not much different than other individual countries crises. Remember Argentina retirees getting ripped off and Greek government grabbing bank accounts?

Any place a third party holds your assets is a likely target for societal theft.

chenda
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Re: Investing for Collapse

Post by chenda »

Social capital will be very important I would think.

Riggerjack
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Re: Investing for Collapse

Post by Riggerjack »

oh that is EVIL. I wonder if it can be done for brokerage accounts, too
It's pretty much par for the course when a country gets politically unstable. Capital controls are how governments in trouble stop assets from crossing the borders. South Africa in the 80's. Really, any serious unrest is greeted this way. The last example I remember was Cyprus.

Nomad
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Re: Investing for Collapse

Post by Nomad »

You can buy ETF's that short the NASDAQ etc.

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Stahlmann
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Re: Investing for Collapse

Post by Stahlmann »

invest in low cost countries before they escape middle income trap (if it isn't set by global reptilian masonic conspiracy :lol:)
https://www.youtube.com/watch?v=FlxfIdsDynE

shemp
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Re: Investing for Collapse

Post by shemp »

I see two possible collapse scenarios:

1) Sudden catastrophic collapse due to epic scale natural disaster or big war involving country of current passport/residency. Expect all financial wealth to be lost in this scenario. Cash, bank accounts, bonds, unindexed pensions will be wiped out by hyperinflation. Ordinary stockholders will be victimized by insiders (scam buyouts where ordinary shareholders get nothing, etc). Gold held by certificate will be stolen. Real estate will be repriced based on ability to generate cash flow, and that means repriced down by 90% in real terms in many cases. Farm and timberland will be valuable to the extent you can prevent crops, livestock, timber from being stolen, meaning you need weapons and willingness to use them and possibly suffer violence yourself.

2) Inability of society to fulfill excess promises to pensioners and bondholders. This is an extremely likely scenario for most countries. Easy solution is inflation. Not hyperinflation, but more in the 5-15% range, combined with distorting inflation figures by undercounting items mostly consumed by elderly and other useless eaters (eg healthcare) while overcounting items consumed by productive adults (eg transportation costs). Over a period of ten years, this will wipe out much of the burden of excess explicit/implicit promises. EVERYONE EVERYWHERE SHOULD PREPARE FOR 5-15% RANGE INFLATION AT SOME POINT IN FUTURE.

----

For someone like me, who is retired and with lots of financial wealth, one hedge against first scenario is second passport or at least second residency in country far removed geo-politically from country of primary passport/residency, plus substantial chunk of financial wealth at bank in second country. Need to make sure second country and its banks are not corrupt, otherwise financial wealth transferred to them may disappear.

Another possibility is private vault (such as dassafe.com in Austria) to hold gold bars/coins. Because private vault facility rather than bank safe deposit box, no reporting to USA government. Also, ownership of gold itself not currently required to be reported to USA government, though that might change in the future. Transfers of large sums of money overseas to buy gold would be reported to the USA government, or can accumulate gradually by carrying $10K currency on person on flights to Europe, plus another $20K per trip in cash withdrawals at ATMs, which could be justified as travel expenses.

Whether financial wealth at bank or gold in vault, amount needs to be sufficient for rebuilding life after catastrophe. So not a small sum and not suitable for lean FIRE, given that cost of obtaining second passport/residency plus wealth in second country or vault will produce little or not return, after accounting for all expenses involved.

To protect against scenario two, avoid long nominal bonds and things that resemble long nominal bonds, such as annuities without inflation adjustment. Because inflation figures may be distorted, even inflation-adjusted bonds/pensions/annuities may lose substantial value in scenario two. Personally owned businesses and real estate should hold up better than publically owned stocks, but even stocks will survive to some extent.

7Wannabe5
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Re: Investing for Collapse

Post by 7Wannabe5 »

The old lady who provides meat rabbits and eggs to the reigning local militia/gang does not necessarily need her own weapons. Gold they will snatch, but meat rabbits they will need somebody to tend to.

shemp
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Re: Investing for Collapse

Post by shemp »

As others in the thread previously noted, personal skills and health are the best forms of wealth, because you can then sell your labor after the catastrophe envisioned in scenario one. And personal skills and health are also immune to inflation of scenario two. That's what selling small quantities of meat and eggs amounts to: indirectly selling labor.

If you have a big farm, you can't expect to keep that farm wealth intact under scenario one. Farmers in former Rhodesia (now Zimbabwe) and other colonial nations lost everything, farmers in South Africa may lose most of their wealth, ditto for farmers in Argentina, etc. In most cases, farmers whose land was stolen can find employment managing the farm for the new owners. Or perhaps manage another farm elsewhere to reduce feeling of humiliation. Skilled labor is resilient wealth.

In other words, investing in farms, ranches or timberland is not necessarily better than publicly owned stocks, in planning for scenario one. Jacob and others have previously made a similar point, regarding dubious plans to liquidate IRAs and sink the proceeds into permaculture communities because someone read something somewhere on the internet about "peak oil" (remember that?).

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