Namaste Powayseller.

Yeah, those were all good ideas he posted, but they are all super high risk.

I think shorting would be more prudent in the Fall when more numbers are in. The whole idea of them still sounds really scary to me though.

PS, i see your point. And yes, capital preservation combined with a good return is the best way to go.

I think that Daniel was saying that if you were 100% sure of your predictions, you’d risk all because there’s zero downside. If you were clairvoyant, you could easily make the Forbes list in a short time.

Don’t worry if people don’t take your point of view. If they think that houses are always a good buy, let them buy. They are not sure either so that’s why they are here.

Tell us more about your previous house. What is a Vatsu house? I love architecture and good designs so I’d love to know more.

Peter Schiff goes on Kudlow and Company today at 5:30EST (2:30 PST) on CNBC

My website tracking Temecula and South Riverside County

90% cash? I’m surprised you even take the risk to walk outside of your house poway seller (just kidding). Really, if you are putting 90% of your money in cash, you are surely not going to build on your wealth. That is the safe play (asset preservation) if you are unsure about the market direction but it will not grow that way. As Daniel says, if you are so sure about the crash, then investing on the downward side (i.e. puts, shorts, etc) is not really risky.

But regardless of what we think about your hyper-conservative investment strategies, you at least did the smartest and most important thing already and that was to sell your house.

It’s risky if you do it at the wrong time. Despite a decline, there are going to be small peaks and valleys along the way.

PS – I feel like I am in the same boat. After sinking 250K in the house (hard asset)I live in, that I don’t think will depreciate much, paying full cash and no mortgage, I am still sitting on $300K CD earning 5.12%p/yr that is just “burning a hole in my pants” not knowing what to do with it with the huge recession/stagflation staring me in the face. I feel paralyzed into inaction. I keep reading economic blogs and this blog to discern whatever the best minds have in mind to guide me along and get me some strong validation to some specific action — but to no avail. I am still with no answers for myself. I feel that my money in CD’s is like a wasting asset with the misreported inflation rate. Sorry for my ramblings. And to be brutally honest, I hate those critics (esp. Dr. Pangloss) who get so condescending and resort to personal attacks,like I am doing now, of course…but here goes: I want to share that I have entertained these wealth preservation ideas personally, all of them kooky:

Perhaps withdraw some good amount and plow it in fishpond lands in the Philippines (that was where I came from). I already started a small amount in this direction ($20K) and bought me 1.5 hectares worth of fishponds. After all, if America goes into the pits and start behaving like a third-world country like the Philippines (I don’t wish it because I am an American Citizen and try to embrace the flag like the NeoCons do),no?, then it is not bad to retire 6 months each year in the Philippines –Art Bell of Coast-to-Coast–was setting an example here. Pick your third world country perhaps and invest in feeding the world that suffers in Depression, no?

Now, what would I do with the rest of my money? Shoud I invest in uranium (maybe Cameco?) because I find investing in gold and silver just plain silly. What do gold jewelries do to add to humankind? Miniscule to me. OTOH, Uranium demand might continue its upward trajectory in the future because people will need more nuclear plants — Peak Oil is the reason, no? China is definitely building more nuclear plants to power up all new empty buildings they own and needs more uranium if oil slows to a trickle….

Now, what if uranium is not ok? Should I take my money out of US CD’s and take it accross border of Canada and buy Canadian CD’s to be sheltered from vagaries of depreciating US dollar? Would Canadian banks let me, a US citizen, do that? I don’t know… Has anyone tried? How about liquidity in such should I want to withdraw it fast? These are personal questions I ask myself only–no need for others to go get answers for me.

Should I continue keeping $50K in stocks? I haven’t sold my stocks in Pfizer, Verizon, AEP, Wyeth, and CMS yet. Although I have lost money in them because I bought them in 2002 and have not seen profits at all… I still own them. (Duh!) Should I sell them all now at a loss after holding them so many years? My stocks in Honda, Mittal steel, Consol coal, BEAV aerospace – all bought in 2002, have been good to me, however. Should I continue keeping them? Again, these are personal questions I ask myself –not asking others to go get answers for me.

Wealth preservation is a hard thing for me indeed. I don’t mean to gloat…just to share and bounce my ideas to others in case the right person comes along to give me more kooky ideas to entertain.

Powayseller, pardon my musings, I admire you a lot. With your so-called “bluntness” and “blanket-ness”, those only add to your appeal to me as reader. Thank you for the so-many substantive posts you have done in the past. I don’t have the same long patience and forebearance you inherently possess. I tire and give up easily in debates. I don’t like to engage Dr. Pangloss and the likes of him, hence, I only like to read sensible posts from many others and especially yours. I didn’t intend to post much. I am by nature a wallflower or a fly in the wall given to delusions of having the same skills as Nancy’s soothsayer in the other white house. I long for reading more of your posts and wish for your continued success at increasing financial security. And I wish Good Luck to all, also.

PS, you clearly don’t understand the short process if you think you’ll lose it all with one rally. There is no way the homebuilders are going to rally that much. The key is to not over-extend yourself. You’ve been scared off by too many risk-averse advisors. If you limit your short exposure to 40% of your portfolio for example, you could weather approximately a 40% rally before getting a margin call. There is no chance the homebuilders are going to rally 40% in the next couple of years and you know that. Even if you get a margin call, you have to cover some of your shorts at a loss, but that doesn’t mean you’ll lose everything.

As for puts, I recommend going for more long term expiration dates (Jan08 and beyond). With this time frame, short term rallys will have no affect on your portfolio as long as you don’t need the money in that timeframe. I suggest droppping maybe 10% of your portfolio on puts. This way, absolute worst case you lose 10%, bid deal. But the potential upside gains are enourmous. You have to take a little risk if you want to make money, that’s how it works. But 10% of your portfolio is not much of a risk. Plus, you’ll enjoy watching the housing crash even more if you have a little money bet on it.