Help Me Out

[BadJuju]

I am just a simple student hoping to move out from my mom's place next month, but I am concerned about my future. I have about $6,500, which is more than it seems since I live in a low-cost area. I have read a great deal of the posts here, which has really helped to increase my understanding of the forces at work; however, I still feel mystified about how all of this is going to go down over 2009. I realize that we are approaching the Poom phase of the Ka-Poom theory, but what I do not understand is how you guys expect for it to play out over the year.

How vast of an inflationary force are we talking here? And when do you guys think it is set to ignite? Do you think inflation will be really bad in 2009 or will it slowly creep its way up over the year and into 2010?

Do you think it will be possible for a person like me that subsists on government grants for college to live on his own for the next year? I intend upon buying all the food I will need for a year soon simply for the fact that it would be cheaper now than later to do so. Aside from that, I simply have rent/utility concerns.

Thank you for all your help. It has been really great to read your work.

[LargoWinch]

Re: Help Me Out

BadJuju, its quite simple actually.

Stay away from debt (that means no car leases etc. - if you cannot buy it cash don't buy it), save as much as you can and invest those savings in cash with a sprinkle of inflation edges (gold, crude oil, silver, grains etc.) like 1/5 of your portfolio (above that; it is speculation at your own risks).

I almost forgot: find a rich wife.

[BadJuju]

Re: Help Me Out

BadJuju, its quite simple actually.

Stay away from debt (that means no car leases etc. - if you cannot buy it cash don't buy it), save as much as you can and invest those savings in cash with a sprinkle of inflation edges (gold, crude oil, silver, grains etc.) like 1/5 of your portfolio (above that; it is speculation at your own risks).

I almost forgot: find a rich wife.

I abhor cars, so that will not be a problem! :p I am a rather frugal person, but my desire for independence necessitates more spending than I would like; however, it is a trade-off. I will take your advice when it comes to inflation hedges.

Alas, that is why I am so concerned about being able to afford independence! Cannot get a rich wife living with your parents. :rolleyes:

Thank you.

[Slimprofits]

Re: Help Me Out

And when do you guys think it is set to ignite?

I think a key market (non-currency event) driver will be Spring and Summer levels of driving here in the U.S. If as I anticipate, Americans get right back on the roads in May, than our demand for oil will play a significant role in igniting it. And why wouldn't we if the national average is under $2.50? Yes, I've heard all of the arguments about levels of unemployment and don't think they will matter this summer. People that in previous summers would have spent money on other stuff, will simply allocate more for gasoline this summer. I think the folks that disagree (especially in this community) are probably extending their own financial prudence and acumen to millions of others that don't have similar characteristics. If unemployment continues to rise into next Spring and Summer though, you won't find me making the same argument.

Wholesale and retail gasoline prices have already been going up for the last 3 - 4 weeks.

Another source of fuel for the inflation will be the end of the Great American Fire Sale (copyright Itulip.com).

[Guest]

Re: Help Me Out

BadJuju -

I say this with full respect for you as at your age to have your eyes wide open to all of these issues means you will be a wise man indeed at the age of 40 or 50. However having said that it's possible all these preoccupations (should I stock up on food now because it's cheaper than in the hyperinflation? etc.) are really just a bit silly. First of all, there is a considerable amount of groupthink going on here about WHEN the "hyperinflation" **must** happen. Nothing is cast in stone to happen, and most certainly nothing is cast in stone as far as any timeline.

You can find yourself hunkering down for a "massive inflationary event" and then be regularly crestfallen as all your canned goods and the money squirrelled away in gold coins fails to find it's moment of glory, because the inflationary event stubbornly refuses to show up for YEARS. Could be six months, could be FIVE YEARS before those investments are gloriously validated by events. I'm reading that gold for example, will just do a lot of violent jinking around for the next SIX YEARS, and will only ignite and soar like a firecracker out in 2015.

What are all these people clinging to their overweight gold positions going to do to control their spiraling impatience, if this premiere disaster hedge just yo-yo's around for another half a decade? Best response IMO is to decide which line of work you want to be in which is best insulated from any and all adversities, or for example **where you want to live**, and then take steps on these apparently very mundane questions in the meantime. Forget HYPERINFLATIONARY ARMAGEDDON". Reading these pages for weeks on end for example, exposes so much latent disaster pending, that it quite naturally will instill this deep seated conviction that a terrible armageddonish event is about to break on us **real soon**, and then when it does not materialise next month, we shift our expectations forward for the next fiscal quarter after that, and so forth.

The reality of the unfolding financial maelstrom may not impact your life more than a very modest amount - one example of where it's effects could be magnified, is depending on whether you are in a vulnerable employment sector or not - just as an example of a highly mundane consideration having far more immediate impact on your life than all those horrific sounding macro considerations. The destruction of your purchasing power may very well not show up until you are thoroughly sick and tired of waiting around with the gold and k-rations for it to show up. Then when you've gotten completely nauseated by the endless suspense and finally chucked all of this breathlessly suspenseful stuff, it shows up and decimates everyone!

Forget all that stuff. Put a little insurance away and get back to living as much of your normal life as possible. No-one needs to help you out. You don't need the help you imagine you need. The best thing you can do is figure out what your deepest ambition in life is and pursue that. Let the gold and k-rations and gun permit and escape plans moulder in the cupboard and they may just wind up sitting there for a good number of years before this thing really breaks. What if you are hunkered down for armageddon with the gold and the bullets and the carefully pre-purchased non-perishable food rations, and you suddenly witness another stock boom breaking out? Like in six months to a year, or in eighteen months?? ??? :eek: :eek: :eek:

[krakknisse]

Re: Help Me Out

Forget all that stuff. Put a little insurance away and get back to living as much of your normal life as possible. No-one needs to help you out. You don't need the help you imagine you need. The best thing you can do is figure out what your deepest ambition in life is and pursue that. Let the gold and k-rations and gun permit and escape plans moulder in the cupboard and they may just wind up sitting there for a good number of years before this thing really breaks. What if you are hunkered down for armageddon with the gold and the bullets and the carefully pre-purchased non-perishable food rations, and you suddenly witness another stock boom breaking out? Like in six months to a year, or in eighteen months?? ??? :eek: :eek: :eek:

I second the opinion that you should live as normal as possible. However, I would not be as optimistic as Luke. I think it is more of mindset. I would think of having fun while doing things that increase your safety. That way, you could live a "normal" life without fear eating you up. I would adjust some of my lifestyle choices and free time allocation a little. For example, why don't you put some potatoes in a bucket on the fire escape, and a few tomatoes in the window sill? If you had always thought of learning to shoot, join a friendly gun club - but more for the social aspect. If you don't have an affinity for guns, don't. Have a little fun with being "Sergeant Quartermaster" for your own little barracks. For one week, write down everything you buy and spend money on, esp. grocieries. Then, slowly buy just a few extra items of the grocieries you use the most of. Find some physical activities that you enjoy, and do them a little more than you otherwise would. Continue to be frugal, even if you get some extra income.

This is the "non-doomer soft approach to doom". These are really sensible things at any point in time - the impending sense of doom just makes it prudent to put a little more emphasis on them. Like turning a supertanker around - just a few degrees of change early on will put you in a better spot later down the road.

The problem is that no one has a crystal ball. Lot's of people headed for the hills just before Y2K - which was silly. But as far as I can see, global society is creaking in its fundaments, so I would take this much more seriously than Y2K.

I think the key thing here is to realize that there is no safe haven. It is all a question of relative safety. And have fun.

[c1ue]

Re: Help Me Out

JuJu,

I'd look at your nest egg and consider these things:

1) Are you going to need it to live on? pay for education? etc?
2) What are your future goals?

If you don't need the money short term, then were I you, I'd be keeping an eye out for the investment for this coming decade.

Because while $6500 may not seem much in an era of Googlionaires and multi-billionaires, you can still turn it into something which will backstop you for a long time.

The investment of the '80s for me was Starwood in 1984 - or more correctly Hotel Investors Corporation (HOT). I bought $638 worth using summer fast food earnings; I sold my HOT in early 2007 having seen my original $638 turn into $21000 + 20+ years of fairly consistent dividends.

I bought it with what in retrospect was a stupid thesis: high dividends, but it worked out due mostly to luck: HOT was acquired by Starwood Capital due to its unusual tax status and became the Starwood hotel chain we know today. But I DIDN'T know that when I bought it.

The investment of the '90s for me was Citigroup in 1991. The $1500 I put in then became over $45000 plus 15 years of excellent dividends - I exited that position in late 2007. My thesis then was much more correct: I saw that the big banks were not going to be allowed to fail and put my money on the up and coming one.

The investment of the '00s for me? It was a negative. I foresaw the rise of AMD but got too cute and put all of my very considerable Y2K gain into calls in 2000 and 2001 and got spanked (even before the Internet bubble burst). Easy come easy go.

Now I'm looking for the investment of the '10s. TBT? Something else? It is out there.

So don't think your $6500 is nothing. It doesn't have to be.

[strittmatter]

Re: Help Me Out

JuJu,

The advice already given here is great stuff, and you are in a much better "spot" than you may realize.

I think that as we speak, there are 1000's of souls out there that have suddenly become more willing than ever to grasp the same type of direction that you are. Many are several years your senior, many are not in as positive financial condition as you are, but worst of all - they are out of time. Here are three things that helped/help me:

learn to try like heck to distinguish the true from the false
understand and use the time-value-of-money, quarters make dollars and so on.
the more I learn, the more I realize what else I didn't know

It's not an event, it's an ongoing process.

[BadJuju]

Re: Help Me Out

Thanks for the commentary, everyone. I will proceed down the track with cautious optimism; however, I intend upon converting about $500 into inflation hedges next week. And then a week after that, I will be moving out to start a new life on my own. :eek: Hopefully, soon thereafter, I will get a girlfriend. I have not had a date in years, which is principally because I secluded myself and turned into a hermit.

My principal concern with this whole fiasco is a breakdown in society. I can handle reduced living standards. I am a man with simple tastes that has lived in relative poverty (to the standards of the US) for as long as I have been alive. My computer and the Internet are my greatest luxury, but I am growing weary of both. I cannot afford a car, but I would not want one. Just give me a place to sleep and food to eat and I will be content with creating my own happiness. The thought that society could come apart as a result of this is of deep concern to me, though. While I feel that the Western world needs a reality check to make them realize that their level of consumption is unsustainable and unethical, the thought that civilization could fall apart is really sobering and quite saddening to me. Compared to many of you, I am a pauper with few resources to weather the storm. I have only got my mind and my will to survive.

Excuse me for the rant, but this is the rant and rave section!

[Sapiens]

Re: Help Me Out

Learn contract law.

Find a lawyer to be your front dog.

Get people indebted to you.

Collect your vig.

Cannot get simpler than that.

[vinoveri]

Re: Help Me Out

Learn contract law.

Find a lawyer to be your front dog.

Get people indebted to you.

Collect your vig.

Cannot get simpler than that.

you forgot -
ignore/lose your conscience and sell your soul

[Guest]

Re: Help Me Out

Sapiens was a Pterodactyl in an earlier life.

[tombat1913]

Re: Help Me Out

BadJuju -

I say this with full respect for you as at your age to have your eyes wide open to all of these issues means you will be a wise man indeed at the age of 40 or 50. However having said that it's possible all these preoccupations (should I stock up on food now because it's cheaper than in the hyperinflation? etc.) are really just a bit silly. First of all, there is a considerable amount of groupthink going on here about WHEN the "hyperinflation" **must** happen. Nothing is cast in stone to happen, and most certainly nothing is cast in stone as far as any timeline.

You can find yourself hunkering down for a "massive inflationary event" and then be regularly crestfallen as all your canned goods and the money squirrelled away in gold coins fails to find it's moment of glory, because the inflationary event stubbornly refuses to show up for YEARS. Could be six months, could be FIVE YEARS before those investments are gloriously validated by events. I'm reading that gold for example, will just do a lot of violent jinking around for the next SIX YEARS, and will only ignite and soar like a firecracker out in 2015.

What are all these people clinging to their overweight gold positions going to do to control their spiraling impatience, if this premiere disaster hedge just yo-yo's around for another half a decade? Best response IMO is to decide which line of work you want to be in which is best insulated from any and all adversities, or for example **where you want to live**, and then take steps on these apparently very mundane questions in the meantime. Forget HYPERINFLATIONARY ARMAGEDDON". Reading these pages for weeks on end for example, exposes so much latent disaster pending, that it quite naturally will instill this deep seated conviction that a terrible armageddonish event is about to break on us **real soon**, and then when it does not materialise next month, we shift our expectations forward for the next fiscal quarter after that, and so forth.

The reality of the unfolding financial maelstrom may not impact your life more than a very modest amount - one example of where it's effects could be magnified, is depending on whether you are in a vulnerable employment sector or not - just as an example of a highly mundane consideration having far more immediate impact on your life than all those horrific sounding macro considerations. The destruction of your purchasing power may very well not show up until you are thoroughly sick and tired of waiting around with the gold and k-rations for it to show up. Then when you've gotten completely nauseated by the endless suspense and finally chucked all of this breathlessly suspenseful stuff, it shows up and decimates everyone!

Forget all that stuff. Put a little insurance away and get back to living as much of your normal life as possible. No-one needs to help you out. You don't need the help you imagine you need. The best thing you can do is figure out what your deepest ambition in life is and pursue that. Let the gold and k-rations and gun permit and escape plans moulder in the cupboard and they may just wind up sitting there for a good number of years before this thing really breaks. What if you are hunkered down for armageddon with the gold and the bullets and the carefully pre-purchased non-perishable food rations, and you suddenly witness another stock boom breaking out? Like in six months to a year, or in eighteen months?? ??? :eek: :eek: :eek:

Contrarily,

I think that you have the right idea. Don't listen to people who characterize you as a paranoid doomer because you prepare for the worst.

If you don't mind eating freeze dried food then buy it, you'll be prepared for the worst and you'll save money. Suplement that with some fresh vegetables and you'll have a good well balanced diet. Think about this, if things are fine how much are you going to regret buying extra food? Now if things are bad how much are you going to regret not having it? I sleep better these days knowing that I'll be able to keep us alive for 6 months without waiting in any breadlines.

A gun is a good investment, armageddon or not things happen. You'll make a one time investment in something that you'll likely have the rest of your life.

Precious metals are a smart investment. Don't throw everything you have into coins but for goodness sake keep some around. Don't hedge completely for inflation and don't hedge completely for deflation, keep cash and PM's both. Same as the guns and food, maybe you need them maybe you don't.

Guns, Gold and Groceries Baby!

[LargoWinch]

Re: Help Me Out

Dried food is a rip off.

Chunky soup has a shelf life of 3-4 years and costs much less than dried food.

Dried food: $22/day (ouch)

Chunky soup & co. $6/day.

Do the math.

...

Also, guns are nice, but a generator and a water purifier are essential and higher in the list of "must have" than the gun and ammo.

PS: TG1200 generator for $150 or so and swiss water purifier for $100 or so.

[metalman]

Re: Help Me Out

whatever you do, don't follow my lead and park your money under your house... along with your truck.