I’m speaking from ignorance here, because I know very little about economics, and nothing about the business of investment and finance.
You know how sometimes, if a person believes a stock’s value is about to go down, they can “short” it? (My understanding of the process is that a person buys a contract to be able to sell some shares in the future at the price they’re going for right now, meaning that if the stock’s value goes down, they make money.)
Suppose you believe that the United States is about to tank, and you want to make some money off it. I know there’s no such thing as buying shares of stock in a country, but is there some other way to “short” America? How would a person go about something like this?
Currency speculation?
Precious metals/gems?
Investing in businesses that do well when everything is falling apart around them?
Investing in foreign businesses that don’t depend on the massive U.S. economy for their success?
Straight up looting and shit?
I’m not asking for myself, and it’s a moot point anyway because I don’t have the resources to capitalize on my country’s destruction even if I wanted to.
Relatively safe, but with limited scope for profit. Also, be sure to invest in the actual material stuff, and keep it safe. Don’t invest in a gold “warehousing” deal.
Sounds like a very wise plan. Again, try to keep it local. If Wall Street crashes, your investments are worth the paper they’re printed on. But if you have a deal with Dick’s Hardware right down the street, you know where to find Dick when you want him.
Some love there, although if the U.S. takes a big dive, the whole world dives too.
Guns are always a good “last ditch” investment. Stockpile a bunch of rifles and ammo in a really secure location, and invite your friends to come stay with you when civilization goes “Mad Max.”
If you honestly believe that the world’s largest economy is going to tank, then you have to accept that it’s going to drag the rest down as well.
Some people will argue that gold or diamonds is the way to go, but gold won’t save you from the zombie apocalypse.
I favor my father’s plan, which was to keep transferring balances from one credit card to another. Then, when he finally ran out of credit cards, he was going to say, “I can’t pay. What are you going to do to me?”
Whatever you invest in, the worst place to put it is in a safe deposit box at a bank. There will be men with carbines standing outside to make sure you do not get inside the building.
Also, do not put it outside the U<SA, because you will not be allowed to leave the country to go and get it.
That’s actually the OP’s best, most readily doable plan of action if he thinks the end is near enough to start betting on. Pile on the debt like there’s no tomorrow, literally.
Keep in mind, I’m not talking about “safe places to put your funds when times are tough.” I’m talking about cynically capitalizing on the downfall of the republic. Imagine you’re somebody who believes that the U.S. is about to undergo a Mayan Empire style collapse very soon. How would you put yourself in a situation where, the worse things get in America, the better things get for you?
So if things get really bad in America, what’s one of the things that will happen? Massive inflation. So taking out tons and tons and tons of risky debt like Kunilou’s dad is a really good strategy in that situation. Debts denominated in 2017 dollars will only have to be paid back in worthless 2022 dollars. Inflation helps debtors and screws lenders.
Of course the opposite could happen and you get nasty deflation, which happened in the depression. And then people who borrowed cheap dollars have to pay the debt back in expensive dollars.
The problem with this is what’s your time horizon for TEOWAWKI? Is it happening next year, or next decade? A socioeconomic collapse that takes down the United States is going to have severe knock-on effects on the rest of the world, even if they haven’t done whatever it is that will destroy America.
The other big trouble with this sort of bet is that if things really go to hell your “investments” won’t be worth anything, because we’ll have a lovely combination of authoritarianism and anarchy. That is, local strongmen issue orders and those orders are backed up by men with guns, that’s the authoritarian part. And the anarchic part is that there’s no outside authority to enforce the rule of law.
So just because you have legal ownership of some assets might not mean anything. OK, you’re the legal owner of some business or property. When the local boss rips up your deed what are you supposed to do about it? Or to take the example of gold, if you’re the paper owner of gold in some vault in some bank, what happens when the boss marches into the bank and tells them to hand over the gold? Heck, maybe he leaves the bank with a piece of paper saying he’ll pay them back someday. So when you want your assets, they hand you a piece of papers saying they’ll pay you back when the boss pays them back. And that and $150 will get you a cup of coffee.
Bottom line, if the country goes to hell it’s going to take everyone down with it. Sure there will be winners and losers, but the winners are going to be those aforementioned bosses and their goons.
Specialty betting houses, right? Find a book who will take some bets - dissolution of Supreme Court, stock market collapse, whatever you think is a prerequisite for “the fall of America” - lay a deadline on it, and collect your winnings!
Invest heavily in for profit prisons, (which recently saw a stock value increase of 100%!)
Destroy education, access to birth control, gut all social services and safety nets, deny abortion access, increase militarization of police, cut back legal aid, etc, etc.
I think that’s pretty much the recipe for making criminals!
(Did you know for profit prisons have contractural penalties for the state, in the millions of dollars, if they aren’t kept at capacity?)
Currency speculation for short-term risk (days-weeks)
Stock Market for medium-term risk (months)
Property and other private ownership for long term (decades)
I think thats going to be very dependent on the way the US goes down. In general, invest in foreign stocks from companies not exposed, and well set to fill the vacuum.
Personally, I believe that if the US is going down, the most likly route of descent is one with ever-incresing company profits and the middle classes being squeezed further and further, leading to a slow descent into a kind of Latin American style economic feudalism.
So, what would you look for to predict which one would be the case? Probably no way to know for sure, I know.
Ideally, it would be fast, but not too fast. Fast enough to take everybody by surprise except the small number of people who are clever enough to exploit it for their own personal gain…
…but not quite fast enough for all this to happen. Obviously in a Mad Max situation, the winner is the biggest, toughest person, not the one with the most material assets. In my scenario, there would still be ownership, still be property, still be something to threaten people with losing.
I think someone beat us to this idea.
What kinds of investments would you consider to not be “exposed”?
If you’re investing in a Chinese company that manufactures stuff for export, that company is going to crater when the American economy craters.
You need to invest in foreign companies that do business locally. The problem of course is that while those companies might not have any direct business with America, the country as a whole does. And so an American downturn is going to hurt the entire world economy, even if the the rest of the world is not directly affected by the American zombie apocalypse.
Yes, that S&P 500 ETF is the largest, but there are many that are completely dissimilar. You could, for instance, invest in an ETF that invests in Indian Rupees, or one that invests in the Nigerian stock market or one that invests in companies that service the wind energy industry.
And why would an ETF be a better way to short America than, say, an index or actively managed fund?
Sorry, I guess I should have specified an ETF related to*** American exchanges***. If you wanted to short America. And not Nigeria.
Because they are more directly related to the overall healthy of the markets, and take the widest possible basket of investment vehicles related to the theme of the fund.
So, one problem with shorting the American stock market is that there’s interdepencies. If America really does go down - and it is possible, remember what has happened with Japan? - the Chinese stock market won’t do any better. Maybe the European one?
Another issue is that even if America is going down the tubes, it takes time to crash this baby. Hypothetically, if you think Trump and the Republicans are going to systematically pass laws that essentially let the wealthy loot America (like not repairing roads, giving the wealthy a tax break. Not paying the deficit, giving the wealthy a tax break. No welfare of any sort - you guessed the reason why), the problem is the real consequences take decades to come to fruition.
Eventually those unrepaired roads and bridges will be in such poor condition that they are collapsing and thus impeding commerce. But they can just repair them then, when they actually collapse. A few people will be killed but they were surplus… Eventually, the lack of investment in education will mean that companies cannot find skilled labor. (oh, but they can just import it via H1Bs…). Eventually, the national debt will be so high that other countries refuse to lend the USA any more money, and they have to raise taxes. Or they can just cut medicare and social security.
