This is the minimum route: you migh well start moving from shares to bonds earlier, but not later than 10 years before you retire. Peak oil is not an energy crisis. It is a liquid fuel crisis.
But say all my savings were in bonds and I just retired. Then according to my very naïve reading of the following article, they would still be going down in value, wouldn't they?
Bond prices fall as investors scramble for cash
U.S. Treasuries mostly fell on Friday as the ever-worsening credit crisis had investors selling out of even lower-risk government debt in a mad scramble to turn any investment into cash. U.S. stocks plunged on Friday, following an equities rout on Thursday and then a global stocks tailspin overnight. Normally, stocks weakness would spur buying into safer-haven government debt, but analysts said the outlook has become so dire that investors were selling anything they can, including Treasuries, to get their hands on cash. Only short-term Treasury bills, which are considered pretty much a cash equivalent, were able to catch a bit of a bid. "We are not used to seeing stocks implode and Treasuries sell off (at the same time)," said Josh Stiles, senior bond strategist at IDEAglobal in New York, adding "but people are saying they don't even want to be in Treasuries now, they need the cash."
U.S. stocks plunged on Friday, following an equities rout on Thursday and then a global stocks tailspin overnight.
Normally, stocks weakness would spur buying into safer-haven government debt, but analysts said the outlook has become so dire that investors were selling anything they can, including Treasuries, to get their hands on cash.
Only short-term Treasury bills, which are considered pretty much a cash equivalent, were able to catch a bit of a bid.
"We are not used to seeing stocks implode and Treasuries sell off (at the same time)," said Josh Stiles, senior bond strategist at IDEAglobal in New York, adding "but people are saying they don't even want to be in Treasuries now, they need the cash."
That's why bonds are called fixed income securities as opposed to variable income securities (shares or cash equities, which pay dividends).
If you hold a bond to maturity you know exactly how much money you're getting and on which dates (normally every 6 months) unless the bond issuer defaults. A vivid image of what should exist acts as a surrogate for reality. Pursuit of the image then prevents pursuit of the reality -- John K. Galbraith
One of the "innovative" features of finance in recent years is the use of equity-style investment techniques with high turnovers and more focus on bond price than on the income. That may have been a very bad idea precisely because of the default risk. A vivid image of what should exist acts as a surrogate for reality. Pursuit of the image then prevents pursuit of the reality -- John K. Galbraith
a lot of financial advisers are parroting 'cash is king', which i can only take to mean that any investment vehicle is inherently not suspicion-free.
everyone know that's paranoid, because cash dwindles in value unless it's growing faster than inflation, but these are times in economic history like no other, so it appears under the mattress is safer than any of these oh-so ex-respectable banks and brokerage houses.
personally i think buying tools and seeds while one still freely can is the one sure way to invest. that kind of bank is harder to crumble or flood.
brokerage...the name says it all.
go-for-brokerage, more like.
as a boomer, i watched the survivors of the war, the emerging middle class, my parents' generation, the last age of petro-innocence, and they were the 'sunset effect' of the cheap energy boom that led to so many people feeling entitled to a comfortable retirement, cushioned with nice dividends from the 'endless growth' economy, which has revealed itself during our boomer adulthood to be built on sand, (middle eastern variety), more myth than sustainable reality.
this financial independence in the golden years has boosted worker productivity, as families used to support the old, now there's service industry to do it.
this also led to the atomisation of families, people going to retire far away, because they didn't need to huddle so much.
all this is about to shift back, i think, and i beleve it will do wonders for our mental health, as often disconnected from their roots, young working parents attempt the demanding job of raising children without much family day-to-day support, and so often lack energy and quality time to really bring them up well, leading to much adolescent unhappiness and acting out...
silver lining... The person who says it cannot be done should not interrupt the person doing it. Chinese Proverb.
No. The liquidity premium has gone through the roof. Cash is the most liquid asset. A vivid image of what should exist acts as a surrogate for reality. Pursuit of the image then prevents pursuit of the reality -- John K. Galbraith
