We will only know in hindsight what the correct hedge was to protect “buying power” against inflation.
There are many collectibles that hold up quite well, but you need to know what you are doing. (Coins, stamps,antiques,etc)
For most people just having CASH in the bank would be security, which many people haven’t got.
I wouldn’t worry about gambling on what MIGHT outpace inflation.
Just having some dollars to take a hit would be a step up for many.
The best advice is to live below your means and prepare for the worst earthquake/hurricane/storm/tsunami that you could ever imagine, and hope that it only rains. (A 99c umbrella can protect you from that)
I posted the below on another thread:
As I advise my closest friends, at this time, I tell them to get cash in the bank that is FDIC insured to weather whatever storm might be brewing. As much as possible. When you have liquid cash available you can withstand financial curveballs that get thrown at you.
I know people with 2 years (or more) of liquid living expenses in cash, and they still have income streams today.
They have a ton of equity and dont care if home prices go up or down, they aren’t moving away (yet)
I think that people who cannot get into a similar situation are just living beyond their means, and will be “a slave to the man” most of their lives. Living paycheck to paycheck and planning for “retirement” doesn’t work for everyone.
Most people never know the joy of financial freedom, some learn it too late in life. If the storm doesn’t come, you still have YOUR money in the bank, plus some interest.
Better to be prepared than be caught off guard.
Having toys, possessions, stocks, cars, equity etc. won’t pay the bills, allow you to buy food, travel, or enjoy life until it’s turned in to CASH.
Do you know what I think the governments biggest fear is ?
I’d say it’s that people stop spending money. Lowering interest rates sole purpose is to get people to spend money TO STIMULATE THE ECONOMY… Does it really “keep people in jobs” ??
If the govt REALLY wanted to be helpful,
They would let the housing market collapse without intervention. we need an economic cleansing and entire generation or two to understand pain & reality. Reward the people who didn’t buy because they knew they couldn’t afford to.
They would encourage saving by raising interest rates so there was an incentive to save, not spend.
Let people save most of their income and tax them when they spend money on CRAP.
They would rewire the social INsecurity system that is broke like many pensions funds.
Approximately 4% of San Diego homes are on the market today and are virtually unsalable at what people “think” their homes are worth. The other 96% are fooled about their “equity”. Imagine if 10% of homeowners want to cash out at the same time, it impossible as there are nowhere near enough buyers UNLESS the prices are in line with affordability and/or it is attractive to an EDUCATED investor so that they get a return commensurate with their risk.
So as long as there are people afraid of missing out and willing to pay more than someone else, there is a market.
At an auction an unlimited number of people can watch while 2 (two) bidders push a price to the moon.
Does it REALLY eastablish a value that the rest of the world has to agree with ?
The stock market is a legalized pyramid scheme. On a micro scale, you would be thrown in jail for “trading stocks”.
On a macro scale, “everyone’s doing it”
The stock market defies logic. Bad news can make stocks rise, good news can make them fall. It’s all about “Wall Street expectations” Can they beat the street.
That being said, people can definitely make money from the market, EXACTLY like in houses, but not everybody can make money all the time.
No tree grows to the sky. There is a forest fire once in awhile and ALL trees burn down.
It’s a game. Not everybody wins. People end up broke for one reason or another, or in a state of health that money cannot fix.
Play the game if you wish, but if you don’t define your own rules, you are just in with the sheep, following the herd, soaking in the propaganda.
AS A DISCLAIMER, If you got this far, I’m not sure that I believe all of the above, but I enjoyed writing it.
Just think about what COULD happen, and be prepared.
I welcome any rebuttals 😉
