The perfect hedge

[Assaada]

Well there are plenty of forums on finances, but i prefer to post it here, as there seem to be quite a lot of smart people thinking out of the box.
Now here, what it is about and where i ask your intellectual power:

We are living now already for some months the 'financial crisis' which was more or less reduced to financial institutions, until the moment you want to sell, or get sold, your home in the U.S. (well i' m european).
But to me this banking crisis is spreading to the 'real' economy and there is no improvement in view.(recession)
Northern Rock in the U.K., and now Bear Sterns in the U.S.
And how many Bear Stearns' are still to come?
If banks are no more ready to lend money among themselves, why should we as indivuals lend money to them?
Now, imagine a similar situation to the 1929-1935 would happen?
(Don't say it will never happen again, in my view all signs are pointing to it)
So my question is: What in your view is the perfect hedge in such a
time, where the whole financial industry comes to stand still, financial assets are worthless (Like Bear Sterns from >160 to 2 USD in less than 1year and a half). Do you really buy t-bonds or notes from a country with huge deficit?
Is gold the alternitive, but even then it has to be physical, as you don't trust anybody anymore? Or buy farming land, so you can grow your own potatoes in bad times?
Just think to your extreme, because future reality could be unimaginable today! Does anybody of you know, how smart people sheltered their assets during the great depression?

Let me know your personal perfect hedge!

Assaada

[1000feet]

I'm with potatoes.

[Mayo]

Well potatoes & corn & salad & all that you need for survival is a good option.

Today hedge funds are escaping dollar & most of US investments and putting it into oil & gold & other consumables (wheat grain, corn, ...) and thus are making short term instability. The current bubble will burst sooner or later, although in the long run (10-20 years) the prices of commodity will rise. The oil and gold bubble when get burst will produce many many Bear Stearns-like companies to go in deep bear state maybe even dieing like Stearns died.

[Mayo]

Dollar Fall Is Catalyst For Predatory Global Government

[prasunsen]

The economy does not consist only from USA... Neither from the western society. When the US and Europe are in crisis, look outside the "box" - Asia, Africa, Latin America are growing.

When one business is falling down, another one is growing. You can always find good place for your cash, just be creative.

[1000feet]

Originally Posted by Mayo

Today hedge funds are escaping dollar & most of US investments and putting it into oil & gold & other consumables (wheat grain, corn, ...) and thus are making short term instability.

If any hedge funds are investing in gold now they have a lot more confidence than experience. The time to buy stable/low-return investments is before everyone else leaves the stock market!

[Ninja]

If I was rich, I would put my money in shares of solid companies that have nothing to do with banks. Coca cola and microsoft, for example: no way those two are going out of business anytime soon. They might drop in value because they produce luxury products that people will buy less of in times of crisis, but I doubt they will go belly up and take all my money with them.

[jimbos123456]

Hi there the reason these banks, and hedge funds are going under is because of derivatives. According to the bank of international settlements there is hundreds of trillions of the stuff floating around in financial land. These banks can report so called profits due to accounting rules but really be in the red, because of derivatives. Derivatives are complex instruments that are difficult to understand even for the people that own them, let alone the common person on the street. The banks and funds "to big to fail" expect to be bailed out by central banks like the fed. I expect the politically connected elites to be bailed out while the people get little to nothing. A very safe method to help the common man out would be for example to close our bases in over +200 foreign countries costing us trillions, and to just send out that saved money as a tax return. That would help out the common person while causing zero inflation or deficit borrowing. Unfortunately you can bet the corrupt politicians won't be doing anything ethical any time soon!

I would only want federal reserve notes in physical cash in case my local bank defaulted, so I don't have to wait weeks or months to get the money from fdic. FDIC is underfunded to begin with so if there was a bank run the first people to use their money get much more purchasing power, over those that get their money last. If I were you I would keep the bulk of your savings in physical precious metals bullion, foreign currency bonds, gold and oil stocks, oil trusts, and an offshore bank account in a stable country that minds it's own business like switzerland not likely to be involved in the real estate blowup. Foreign currencies that are likely to appreciate against the declining dollar are canadian dollars, euros, swiss francs, and chinese yuan. I plan on selling all of my commodities holdings when the dow/gold ratio is like 1980, gold silver ratio is at 1 to 16, and gold/silver/oil come close to hitting their 1980's high adjusted for the proper amount of inflation. The consumer price index is such a joke please whatever you do don't believe it.

I think this recession should last a good 4 years or longer. After it's over I plan on buying common stocks again that become undervauled in the usa and abroad, and hopefully a repossessed 5 bedroom luxury home that droped 50% from a bank desperate to sell their foreclosure.

[Trezker]

Originally Posted by Ninja

If I was rich, I would put my money in shares of solid companies that have nothing to do with banks. Coca cola and microsoft, for example: no way those two are going out of business anytime soon. They might drop in value because they produce luxury products that people will buy less of in times of crisis, but I doubt they will go belly up and take all my money with them.

But you'll be burned when people in general moves over to real operating systems and realise that drinking pure water and juice makes them feel a lot better than the junk Coca cola is selling.

[Ninja]

Originally Posted by Trezker

But you'll be burned when people in general moves over to real operating systems and realise that drinking pure water and juice makes them feel a lot better than the junk Coca cola is selling.

One man is smart, many men are idiots. I'm not worried