LarryS

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About LarryS

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  1. Investing to minimize inflationary effects

    Thank you for the insights, Betsy. One bit of advice that caught me off guard was for the high-percentage cash position. Originally I thought cash would be unappealing, since even 3% inflation basically results in a 3% loss in purchasing power each year. How would one stay ahead of inflation while holding a lot of cash? Would money markets adjust fairly quickly to inflationary pressures?
  2. Much to my chagrine, a close relative has recently converted ALL her investments to cash. Isn't cash a terrible place to be in an inflationary period? Being as we're already underway inflation-wise, and given things are more likely to get worse than better (IMHO), what is a good strategy for someone in her position? She is just at retirement age (66) and in good health, so mitigating volatility is a priority on-par with preserving purchasing power. I'm thinking short bonds, short CDs and precious metals are probably the best value-preservers, but I wonder about real estate, commodities, even stock index funds as they all strike me as more inflation-resistant and thus safer for the next several years than cash. Any insights or advice regarding good asset classes, and how to time moving funds into them (evenly over a year or two, one big up-front move, etc.)? --Larry
  3. Gold strategy

    My business has a non-trivial amount of cash accumlated over 20 years that I would like to protect from the (IMHO) soon-to-be-worse financial crisis and inflation. I'm thinking of converting a significant portion from a money-market fund (Dreyfus) to GLD, an exchange-traded fund that holds gold. Any advice on if this is a good idea? I realize this is riskier than cash due to price fluctuations, but I can't imagine what gold is going to have to do, long run, with the irresponsibility our government is showing. Also, if it was your money, would you jump in with both feet, or dollar-cost-average (DCA) over a period of time? If DCA, how often/how long would you buy? For example, would you only switch 50% of your cash to GLD, and convert that amount 20% at a time over five months? Etc.? Thanks, --Larry
  4. Post-meltdown investing advice?

    Nice work, Betsy, on sliding only 3% last week! Two follow-up questions: (1) Any recommended sources for understanding call options? (2) You mentioned moving equity/stocks half into gold... what about shorter/liquid items like money markets, cash, and short-bonds?
  5. I'm a buy-and-hold investor (still 20+ years from retirement), so I'll sit tight with the index stock funds in my IRA. However, when governments start firing up the money-printing presses to "save" us from disaster, I worry about my cash positions due to inflation. Is anyone here seriously worried about inflation? Is moving cash to precious metals or other currencies a prudent move? I have to say I'm surprised gold hasn't shot up during this whole mess. What about real-estate? Do you think things are going to get much worse before they get better? Also, pointers to any articles or reactions from Objectivist-admired economists would be appreciated! --Larry
  6. Futures Markets

    I share the opinion that a private company in a free market should be able to do whatever they want. My point of inquiry is that the Time article paints the fact that a producer shouldn't be on the purchasing end of a future's contract. I was trying to think of a scenario where a producer (say a farmer growing corn) would be on the *purchasing* end of the contract... they most typically would be on the selling end. I was not able to think of a scenario where a producer would want to be on the purchasing end. If they thought prices were going to rise, wouldn't they just hold the commodity off the market? And if they thought prices were going to fall, they certainly would want to lock in a higher price (as a seller) now. So I can't see any scenarios where they would want to be on the purchasing end of the contract. Further, by being on the purchasing end of the contract they seem to expose themselves to (unfair) charges of bidding up the price of their commodity. So, other than attempting to bid up the price of their commodity, is there a scenario where a producer would want to be on the *purchasing* end of the contract? I'm an admitted newbie to futures, but am getting tired of "speculators" and now "hedgers" being blamed for high oil prices and I want to be able to pen a rebuttal. Thanks!
  7. Futures Markets

    I had a friend ask about an article at Time (http://www.time.com/time/business/article/0,8599,1834888-1,00.html) purporting that the oil companies are "manipulating" the market by bidding up their oil using futures contracts. The article is replete with errors, but the one thing I'm unclear on is this: is there any legitimate scenario where an oil company would sign on as the BUYER in an oil futures contract? It seems to me they would just hold the oil off the market if they believed the price would rise in the future (on a given proposed contract). And if they believe the price would drop in the future, they certainly wouldn't buy a contract that would ensure LOWER returns than they could get now. Am I missing something? --Larry
  8. I recently saw Atonement, and found it very poignant. I'd be interested in discussing it and tragedies in general with other Objectivists.
  9. Investment theories and strategies

    Savings, to me, implies high liquidity and a near-zero chance of significant loss. Investing, conversely, trades liquidity and/or safety for the chance of higher long-term returns. I suspect this would be a continuum with liquidity and risk low on the one side, and higher (in various combination) on the other end. A rough list progressing from pure-savings to pure-investment: gold buried in the back yard, cash under the mattress, money markets, savings accounts, CDs, stocks, mutual funds, bonds, real estate and maybe commodities or options. --Larry
  10. Retirement investing

    I am considering a couple of changes to my investing philosophy. ------------- Point #1: Diversifying to some international stocks seems a good idea to me. Any suggestions on allocation and specific vehicles? ------------- Background: I used to buy into the fact that there wasn't a big difference between US and foreign investing, as much of the world economy was tied to US performance. Post 9/11, however, I think the US markets especially have a bit of a risk premium priced in that foreign gov'ts might not. Further, it seems the growth potential of foreign gov'ts that are increasingly free might be an argument to diversify some. ---------------- Point #2: "Autopilot" investing (see my original post above) seems the best option for a lay person. However, if I could find/buy advice from a reliable reason-based expert, I'd wouldn't mind tuning my investments once a year or so. Any suggestions for expert advice? ---------------- Background: Mr. Salsman occassionally has something to offer here on the forums, but it's a bit sporadic. And there's a LOT of investing advice in the world that I wouldn't trust with my children's allowance, to say nothing of my retirement! Thanks in advance for any advice!
  11. Retirement investing

    My investing philosophy has been largely shaped by Objectivist lecturers and by John Bogel, the founder of the Vanguard family of funds. Currently, my (lay-person's) plan is to invest 100% in US stock index funds, until I have 10 or 20 years left to retirement. Then I plan on converting 5-10% of my stocks to short-term corporate bonds each year until retirement. I have equity in my home as well so I have some exposure to real estate as well. However, recent posts by Richard Salsman indicate that he doesn’t think the US stock market is going to do much, at least in the next couple of years, given the facts that the dollar is depreciating (i.e. gold price is climbing), the Fed is intent on raising interest rates to stifle production, etc. My question is this: is my retirement plan still decent advice for a lay person with a 20+ year time-window? Or is Mr. Salsman’s advice from early 2005 (see here) better advice? Or have things changed since even then making other options more prudent? Thanks in advance for any advice. --Larry
  12. Are gold prices a concern?

    I remember a quote from a lecture at an Objectivist conference where the price of gold was referenced as a distilled indicator of the health of the economy. With the price of gold rapidly increasing over the past year or two, I wonder if that's a warning sign? Is action appropriate, such as moving long-term investments out of stock index funds, etc.? Or is the price, while higher, not dangerously so? Thanks in advance to any economic gurus for their advice! --Larry Steinbecker