Savings/investment

Am very nervous about this - obviously should have done it at market's nadir.

Let me guess - are you working with Merrill Lynch?

Yeah. We are. I am very uncomfortable with the idea of munis, but here we are. What are other good options for investment? Long-term, with a good mix of non-U.S. stuff, reasonably liquid and not likely to go -40% in 2 months?

My partner keeps harping "we can't time the market", blablabla. I dunno.

I'm starting to think very simple these days. With the market reflated and the global economy the way it is, I would not be putting significant money in the stock market now. Gold has had a run so far, but if the dollar depreciates there are many that argue it could go further. I'm looking into either GLD or PHYS (which actually has physical gold stored). This should be a no brainer, the question is what %.

Another simple idea is put the money in CYB - chinese currency. It will appreciate at some point. It might be gradual, but I think little downside risk.

Or you could bet the farm on Apple. Jobs could die and you take a 40% hit, or iAd could be the next Google.

Heh, we bet a litle bit of the farm on apple (bought at 166, sold at 90!) Already have some gld (bought in at 900).

Based on the chart for the price of gold, it sure looks like a bubble to me. That's not to say that a chart that goes the opposite direction is necessarily a bargain.

Yeah, I can relate on AAPL. When it was at 90, I was thinking BIDU was a better deal at near 100, but didn't pull the trigger. Just closed at 688.

-“The only thing you live to regret are the risks you didn't take”

The currency risk in the stock portfolio appears high. I don't see prices low enough to compensate for the risk. As far as munis the credit risk is very much a concern. I would want to know how the credits were selected.

the gold trade has NOT been and IS NOT a dollar hedge trade...we should all know this by now. It is an anti-fiat currency trade at a time when fiscal governance across the globe is shady at best. The dollar has risen substantially the past 5-6 months against other major currencies, and clearly gold has not inversely traded with that move. I think many people are in gold, without knowing the real reason why its rising.

Needless to say, you did better on BIDU. Congrats. I shorted the market (!) in March '09.

UD: Dollar has not risen against FXC.

I was referring more to the Euro/pound...currencies are weak and strong relative only to one another and there are so many things going on that affect what makes one currency weak or strong against another.

If I told many how the US dollar would do against the euro and pound over the past 5-6 months, do you think they would say gold would still be 3-4% below its recent highs? lets be real here.

-“The only thing you live to regret are the risks you didn't take”

Many lost their lives because of the risks they took.

It's all about whether the risk is worth the reward based on the information available at the time of the decision.

Well, I know nothing - or enough to hurt myself.

nyc10023 - I wish! I didn't pull the trigger at its lows. And I hate myself when thoughts to buy it now cross my mind.

Sunday - Many also lived a life of quiet desperation for the risks they didn't take.

UD - Fair points. Where is your best guess gold is headed?

On currency - since the Yuan is still tied to the dollar. I think the only question is not whether it goes up, but by how much and when. Better than a 1% interest rate in the bank...

freewilly - honestly, dont know. only have longer term calls..I too sold my GLD around 104 or so and my DGP and didnt get back in, argh! charts show how strong it is. My gut says if there is a bubble anywhere yet to go nutz, its in gold. I think it will get silly, stupid, nuts, traders will add momentum to it, everyone will doubt it, mis interpret it to mean inflation, etc..and surprise everyone. Just where that level is, who knows. Ive seen oil go up 45% in a few months time after it busted over 100 in 2008. What if gold does the same and runs to 2000? yes, i think it can get that nuts and silly.

"If I told many how the US dollar would do against the euro and pound over the past 5-6 months, do you think they would say gold would still be 3-4% below its recent highs? lets be real here."

But lets say the dollar depreciates over the next 5-6 months, gold would surely rise right?

I remind myself of the following before I pull the trigger on any investment:
- pride is my enemy
- greed is my enemy
- patience can be a friend and an enemy
- there is no such thing as easy money

and to better understand the risk, I ask myself the question:
- what don't I know about this investment?

freewilly - yes..that is the thing. On a side note, I think the US dollar will be the last major currency to fall. But in the interim, it may get stronger relative to other weaker major currencies, and gold will still be in play, explaining that the trade is something other than a dollar hedge. Gold tends to do well in times of fiscal uncertainty and lack of fiscal discipline. Well look around the globe. people need to get out of this 'gold is a dollar hedge only' mindset, to understand what really is powering the precious metal; which happens to be an alternative currency to paper dollars. gold is finite, cant print gold. that is my view.

did you read my discussion back 15 months ago on urbandigs?

http://www.urbandigs.com/2009/02/how_in_is_gold_huh.html

especially the comments..got a lot of crap for that one..especially the comment Feb 22nd, 2009 at 4:21pm --> "Anon - I would go as far as to say it this way. The gold rise is NOT a US dollar hedge here. Gold is finite, and paper is unlimited. In a world of printing presses, they cant print more gold. When I argued for the rise of gold a year ago, the main reason was not a fear of dollar collapse. What will the US dollar collapse relative to? Plus, do we see wage inflation going rampant in the near future? I see reverse for a while ahead, yet gold will rise. Something else is at play here. Can gold rise at the same time your dollars gain purchasing power? Yes."

interesting when you go back in time & place to when it was written

Sunday - you have it down. My routine is to down the whisky and slap myself a few times.

from Feb 2009: "Look at how gold has performed in other currencies, if you question this statement. One big fear I have right now, which happens to fit as a texas hedge with my gold trade, is a sharp selloff in some bond market, in some country, somewhere, at some point down the road. Its a very possible event that could spark a global equity selloff that ultimately earns a color to depict the day it happens on! This is part of the gold trade. "

Hmmmmm, Hello Greece govt bonds!

granted equities are up 70%+ since...I admit, totally didnt see that reflation coming in equities or hy bonds,..still amazes me

freewilly, I didn't say I always listen to myself. :) I just found that as I listen to myself more, I'm doing better. However, I still got a long way to go. Greed and balancing patience is what I'm having the most trouble with controlling...

Gold is interesting, but really if you are taking out the insurance receipt that Gold actually represents it should not be in an ETF(which if I'm not mistaken has counter-party risk). Warehouse receipts or gold coins would be better, Equity stake in a Gold producer is even superior. You might be more leveraged with an ETF, but if the position is synthetic, it might be as valuable as a Swap underwritten by a Lehman or an AIG.

Urban, I definitely see inflation coming, but just like the guys who saw the housing collapse in 2004 & 2005, knowing something will occur and predicting the timing are two different things. The warning signs of higher inflation just keep mounting. I can't see the common sense in ignoring those signs.

P.P.I. commodities, Chinese inflation and the apparent reversal of housing costs can only mean one thing...

very true riversider...as for etf counterparty risk, yep, its there but I think GLD actually holds physical gold. There are many out there who swear by the physical stuff only, as the absolute worst case is a system wide failure, in which paper derivatives may be worthless...still, I think the closest we came to armageddon like that was after lehman, around early 2009, and its clear that risk is off the table right now.

i hate gold -- as you know, UD. you said in october that it would fly to 1500 if it broke 1100 -- and it didnt.

i dont like fear plays.

Manhattanfox: what would you put your $ in, now? If you had been cash previously.

Why pay these guys 3% in fees, and taxes on trading gains. Pay commissions on the munis, as you won't touch them.... and you'll save tons buying ETFs/indexes.

> The warning signs of higher inflation just keep mounting

Except for the most clear signs of lower prices.

somewhereelse. I guess you would jump at the chance to buy treasuries....

and ETF indices are a PONZI scheme. the buyers refuse to accept they are taking counter-party risk and ignore the implied credit spread. No wonder this has been such a good business.

that doesn't apply to basic etfs... only swap-based ones

and riversider, wrong again. no treasuries for me.

just checking :)