Crash of '29

[Kung Wu]

I haven't studied the stock market crash of 1929 like some of you business majors did. Are the ingredients there for a repeat? According to one article from the History channel this were some of the key ingredients:

Among the other causes of the stock market crash of 1929 were low wages, the proliferation of debt, a struggling agricultural sector and an excess of large bank loans that could not be liquidated.

Did the easy money from the 2010's cause average joes to over-speculate and have too much confidence in the market, like they did in the 1920's?

The government raised interest rates from 5 to 6 percent right before it crashed in '29. The current interest rate at the central bank is 5.3% or so?

I don't think we have the agricultural strain we had in '29, but we certainly have some left over commercial loan strain from the pandemic.

What's the hedge? Gold? Are gold ETFs a sufficient hedge or do they go the way the market would in a crash scenario? Does it have to be cold hard metal in your hands to a true hedge?

What percent of cash should you sit on if you anticipate a crash and want to be able to buy in at that time?

[pinstripers]

I barely remember it. I was just a child.

[WstateU]

Ross and I were hoopin’ at the ‘U’, chasin’ flappers, shockin’ wheat, with no worries…

[shoxlax]

I haven't studied the stock market crash of 1929 like some of you business majors did. Are the ingredients there for a repeat? According to one article from the History channel this were some of the key ingredients:



Did the easy money from the 2010's cause average joes to over-speculate and have too much confidence in the market, like they did in the 1920's?

The government raised interest rates from 5 to 6 percent right before it crashed in '29. The current interest rate at the central bank is 5.3% or so?

I don't think we have the agricultural strain we had in '29, but we certainly have some left over commercial loan strain from the pandemic.

What's the hedge? Gold? Are gold ETFs a sufficient hedge or do they go the way the market would in a crash scenario? Does it have to be cold hard metal in your hands to a true hedge?

What percent of cash should you sit on if you anticipate a crash and want to be able to buy in at that time?

Rare Earth Elements are your play.

[Kung Wu]

Rare Earth Elements are your play.

So you are saying to invest in 7'0" guys that can play the center position?

[shoxlax]

So you are saying to invest in 7'0" guys that can play the center position?

Only if they are filled with neodymium

[Kung Wu]

Only if they are filled with neodymium

Okay joking aside, how do you invest in rare earth metals such that they are stock market crash proof?

[WuDrWu]

I'm old school. At least one Krugerrand or similar every year. If you keep a SDB fine, otherwise get a wall/floor safe. Get strapped.

[WstateU]

My portfolio is managed by a major wealth management company. Sure, the market's a roller coaster at times, but over the long-haul it has been very good to me and my family (Stocks, Bonds and cash). Oh yeah, I was concerned when we lost about 50% of our portfolio in 2008-2009, but four years later it had rebounded very nicely and continues to soar. My suggestion is to "stay the course" and let a professional manage your wealth; it takes a lot of the emotion out of investing. "Dollar-Cost Averaging" (monthly 401K or other monthly contributions) is a great investment vehicle. The "Rule of 72" is magic. I sleep well knowing my 'nest egg' is well diversified and well protected for market downturns. Regardless of the stupidity in the US and world, I don't see another "Crash of '29". National banks are highly scrutinized by the OCC and state banks are similarly regulated by each state. Not that I completely trust banking regulators, however anyone in the banking industry knows they watch banks very closely. I believe banks are the most highly regulated industry.

Dollar-Cost Averaging

Dollar-cost averaging is the strategy of investing in stocks or funds at regular intervals to spread out purchases. If you make regular contributions to an investment or retirement account, such as an individual retirement account (IRA) or 401 (k), you may already be dollar-cost averaging.

Rule of 72

Do you know the Rule of 72? It's an easy way to calculate just how long it's going to take for your money to double. Just take the number 72 and divide it by the interest rate you hope to earn. That number gives you the approximate number of years it will take for your investment to double.

[Kung Wu]

My portfolio is managed by a major wealth management company. Sure, the market's a roller coaster at times, but over the long-haul it has been very good to me and my family (Stocks, Bonds and cash). Oh yeah, I was concerned when we lost about 50% of our portfolio in 2008-2009, but four years later it had rebounded very nicely and continues to soar. My suggestion is to "stay the course" and let a professional manage your wealth; it takes a lot of the emotion out of investing. "Dollar-Cost Averaging" (monthly 401K or other monthly contributions) is a great investment vehicle. The "Rule of 72" is magic. I sleep well knowing my 'nest egg' is well diversified and well protected for market downturns. Regardless of the stupidity in the US and world, I don't see another "Crash of '29". National banks are highly scrutinized by the OCC and state banks are similarly regulated by each state. Not that I completely trust banking regulators, however anyone in the banking industry knows they watch banks very closely. I believe banks are the most highly regulated industry.

You have described my behavior almost to a tee, except for cash. I haven't stood on very much cash. Do you have a fixed amount of cash you stand on or is it a percent of your portfolio?

[WstateU]

You have described my behavior almost to a tee, except for cash. I haven't stood on very much cash. Do you have a fixed amount of cash you stand on or is it a percent of your portfolio?

Not a lot of cash; I haven't looked recently, but probably close to this allocation...

Cash & Cash Alternatives - 3%
Fixed Income - 6%
US Equity - 85%
Non-US Equity - 6%

[Kung Wu]

Not a lot of cash; I haven't looked recently, but probably close to this allocation...

Cash & Cash Alternatives - 3%
Fixed Income - 6%
US Equity - 85%
Non-US Equity - 6%

Okay, we are closer than I thought we would be.

[WuDrWu]

Not a lot of cash; I haven't looked recently, but probably close to this allocation...

Cash & Cash Alternatives - 3%
Fixed Income - 6%
US Equity - 85%
Non-US Equity - 6%

That is a high % in equities if you're 70+ imho. With today's interest rates, locking in 5+% for several years should be a part of any retired person's portfolio, again imho.

There was a bank in California that recently offered a 9.5% 5 month CD.....unfortunately, you had to live within about 5 counties of southern California to qualify.

[ShockTalk]

That is a high % in equities if you're 70+ imho. With today's interest rates, locking in 5+% for several years should be a part of any retired person's portfolio, again imho.

THIS. Caveat may be if you're not "income dependent" on any of those equities now and don't expect to be later.

[WstateU]

THIS. Caveat may be if you're not "income dependent" on any of those equities now and don't expect to be later.