What are good investments in a panic situation?

In My Humble Opinion
1

There is another thread in this forum (IMHO) titled “Selling Silver Dollars”.

Most of that thread concerns techniques for selling silver dollars but it also contains some info about the future prices of precious metals.

In light of some rather startling news today, I decided to start another thread asking people for their opinions of good investments or just good choices to make with your money in panic situations. There is a headline in a British news site called “The Telegraph” that reads as follows:

“Investors ‘go bananas’ for gold bars as global stock markets tumble”.

I will paste a link to this story below. The gist of this story is that people are panicking about the stock markets tumbling and there has been an extreme price spike in both gold and silver.

To the best of my knowledge, The Telegraph is a fairly reputable news site.

During the past ten days the price of silver has risen from approx $14 per ounce to $16 per ounce and that represents a 14 percent increase. That is truly an exceptional price rise in a very short period of time and an interesting question is whether this is just an anomaly of if it signals the beginning of an extreme price increase in precious metals.

In any case, I’m not suggesting that people should line up to buy gold and silver and even if I was, it would generally be a mistake for anyone to base their financial moves on someone else’s opinion.

But it would be interesting to ask people here just what kind of changes (if any) they might consider making with their money.

Would you consider:

  1. Taking some of your money out of the stock markets and buying some precious metals?

  2. Taking some of your money and converting it from one currency into another?

  3. Buying (or “stocking up” on) some consumer goods that you think might be in short supply in the near to medium term future?

I know that I could put these questions into a poll. But I don’t want to do that because I’d like to encourage people to post any of their ideas and I wouldn’t want to restrict anyone to just a few of my ideas.

But I will post one of my ideas here. There is a perception by some writers who believe in a serious future economic crash. They recommend a few consumer items in particular that people should hoard or at the very least should stock up a fairly large supply.

I happen to think this is a reasonable idea. There is no need to fill up your garage full of these things. But it may be reasonable to go and purchase at least a few months supply. Of course, this is just my opinion and to be fair, I am kind of strange when it comes to future “survivalist” type notions.

I realize that most people probably think this is all a bunch of hogwash and so I will put these items into a spoiler box so as to avoid upsetting people unnecessarily.

Here are some items that are often recommended people “stock up” on during panic situations.

  1. bottled water (like one gallon bottles)
  2. coffee
  3. hand soap (maybe also some other kinds of common household soap)
  4. cigarettes or plain tobacco (even if you don’t smoke, these things may be in short supply and so you may be able to “help out” your friends and neighbors.

I’d like to know if anyone here is planning to make some serious changes in the way they handle their money if the current trends appear to continue.

2

Psychedelic mushrooms or cannabis, if that is legal where you live, since that will actively help relieve the sense of panic. Giving in to the panic and fear seems counter productive, better invest in something that alleviates it. :wink:

3

I just saw the following headline: “BOOM: Coffee hits $15 a cup in Bay Area…”

http://www.fox5ny.com/news/88961165-story

I would think that would def be kind of scary for coffee lovers.

4

What kind of panic do you envision? Something along the lines of Bernie Sanders gets elected? Something like the financial crisis of 2008? Or more serious?

Because we survived the 2008 crisis and if you invested in the stock market you made out quite well. (I know because my mother made quite a bit then, although she only invested a few thousand.)

In a more serious situation (Human sacrifice! Dogs and cats living together! Mass hysteria!), the usual advice is to stockpile bullets and canned food. Not sure how having plenty of hand soap would help.

5

A gun and plenty of ammo.

6

Booze, when things got really bad as Yugoslavia exploded people were using small bottles like currency. Aside from getting drunk it’s useful to sterilize things and doesn’t rot (unlike tobacco, tobacco especially in cigarette form can go bad fast). And alcoholics will buy it before any else.

7

Specifically pre-1898 guns chambered for ammo calibers readily available. And while the above was probably a joke, I’m not kidding very much at all. Since anything 1898 and earlier isn’t considered a firearm, and since the serious nuts get into regular panics on a fairly predictable basis, the price on things like a G-88 Commission Rifle in 8mm Mauser or a run of the mill shooter .45LC handgun have done damn well over the last 20 years.

8

Charlie, Charlie. You’re overwrought.

Nothing very exciting is happening. If you’re nervous about stocks, sell your stocks and stick the proceeds in a nationally recognized bricks & mortar bank.

Buying a non-performing asset like metals is silly. Always.

9

The way to make money in the stock market is to Buy Low, and Sell High.

What you are suggesting, i.e., selling LOW, is not a winning proposition.

10

This, only drink it and chill out.

11

Investment Advice?

Chocolate will be half price at your local pharmacy next Monday & it Never goes bad.

12

I’d stay way from Gold (and probably Silver) right now. I don’t follow gold, but from what I understand, when the market crashes, as it has over the past month and half, people move their money to Gold. The price of Gold, I think, has spiked over the last year or two based on A)The recent trend in the market and B)The amount of stores that want to buy your gold. They wouldn’t want to buy your gold if the price was high, they’d want to sell it to you.

Very quickly looking online, the price of GLD (etf) has gone from 105 to 120 in in the last month in a half. That’s a 14% increase. As soon as the market rebounds, that’s going to plummet.

As far as ‘good investments’ my quick and dirty advice is to look at stocks (or mutual funds/ETFs holding stocks) that have tanked since January of this year, but are good companies. For example. Boeing and Disney aren’t going out of business any time soon, but have fallen apart in the last 30+ days. Those, in my very humble opinion, have become very cheap. I’d look for that kind of stuff.

I wouldn’t mess wit the vix or foreign money, that’s for the pros and/or day traders.

As far as consumables (bottled water et al) as a way to make money, unless you truly for see some kind of shortage in the near future, I’m not sure why you think you could make money there. No one wants to buy bottled water from you when they can get it from the store.

TLDR, the stock market has tanked this year, when it comes to buy low/sell high, RIGHT NOW is the time to buy low. Sell high should show up, I’ll bet with in the next 12 months. But I’ve told my friends that have ‘always thought’ about dabbling in the stock market, that this is the time to jump in, even if it’s going to suck for the first few months.

And to be clear, I am practicing what I preach. my brokerage account is close to being in the red and I’ve poured in about 20% more because I think this is a good time to do it. It’s tough to put that money in and watch it disappear a day later, but I know the market will move back up and I’ll get it back, and then some.

13

Exactly.

I love it when the stock market tanks. Because it means stocks are priced at a discount. It allows me to buy more stock for the same amount of money.

14

Ah, the magic of dollar cost averaging. I invest the same amount every pay period. When my investments are high, that money buys fewer shares. When my investments are down, that money buys more shares. Simply put, the downward corrections don’t hurt as much while the benefit of upswings are multiplied. “Buy low, sell high” sounds good, but market timing is tough. I (and Warren Buffett) prefer the “Buy more when low, buy less when high” long term approach. Dollar cost averaging does that automatically.

15

I’m investing in my distillery. If the world collapses I’ll have booze and boiled water and if it doesn’t collapse I’ll own a larger distillery.

16

The very definition of “Heads you win; tails you win bigger!!” :smiley:

17

So, by your logic, buying insurance must always be a terrible idea. Not only is it a non-performing asset, but in the aggregate insurance actually has a* negative* performance.

The OP may wish to consider researching commodity futures, which can effectively diversify both stock and bond investments as well as hedge against inflation risk:

http://fic.wharton.upenn.edu/fic/papers/06/0607.pdf

18

But you don’t buy insurance as an investment, so that doesn’t make sense. In fact, I’ve only ever seen insurance listed as a liability, because you work on the assumption that you owe the insurance company money, not an asset that [del]may[/del]will someday give you more than you gave them.

IOW, you can’t compare insurance to an investment. It’s not one.

19

Yes, that was my point exactly. The same holds true for precious metals and other hard assets.

20

How are precious metals not an investment vehicle? Unless I’m misunderstanding what you’re writing, either you or everyone else that does investing is wrong.