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Strategies & Market Trends : The coming US dollar crisis
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To: Skeeter Bug who wrote (20960)6/26/2009 1:12:15 AM
From: prosperous3 Recommendations  Read Replies (1) of 71455
 
Would say 10-20%(no more) in gold, 0-10% equities, and rest MM, short term govt treasuries or cash.
If say we have inflation and dollar value drops by half, with 20% gold, 80% cash expect gold to double, cash to become half in value and you would lose at the most 20% of total portfolio (not too bad considering there was 50% devaluation), similarly if you have say larger inflation say 3x, you would lose 14%. Need to make sure these are within your risk tolerance, if on the other hand there is severe deflation, you will still come out OK (since cash would work well). The problem currently making one way bet to not lose at all or make gains on inflation or deflation expectation is that you would need to take very high risk and will likely realize it if the bet goes in the other direction. Most folks should be able to see that stock market investing with huge interventions are playgrounds for speculating hedge funds and trading very iratically considering the news we are getting and most investors would do well to stay away other than an occasional hit and run. Until these leveraged/speculating hedge funds, who have been supported by govt interventions are evaporated the equity market will stay a dangerous place.

My simple minded heuristic is when the DJ on our FM radio station stops telling us where stocks are every half hour with high degree of emotion I would consider to start investing in the stock market :-) until then I will let him enjoy the roller-coasters
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