Explanations of Marty Schwartz measures in the 87 crash?

Discussion in 'Trading' started by Daal, May 1, 2005.

  1. Daal


    He says on pg 268 of market wizds 1 that on the day of the crash after he liquidated all his positions with a $315,000 loss.

    Then he want to his bank and took his gold out of his safe deposit box, does anyone know the reason?Why were the gold being affected?
    He also says he started buying T-bills and preparing for the worst, why?On pg 267 he says that the bonds were sinking rapidly at the time
  2. Yes, His fear was an entire financial system meltdown. It came closer to happening than most probably know. In that scenario, hard assets, gold, silver, etc. will be the only thing people will want to own. The purchase of T-bills was the typical flight to quality trade, that is in situations of great uncertainty, investors will only want to own the safest most secure investments.
  3. A guy like Shwartz doing that is like Ken Lay selling his Enron before any scandal broke. Some of us are in a position to detect the risk before others.

    Speaking of safe, would you consider Bank CD's (under 100k) FDIC insured, to be as safe as a T-Bill?

    If not, why.
  4. Banjo


  5. Daal


    But didnt he said bonds were sinking at that time, I dont understand why he didnt keept all his money as gold and silver and liquidated the T-bills
  6. agpilot


    To Daal
    In the first post it reads that he took his gold out of the safe-box. It does not say he got rid if it. At least that's what the first post says... You also have to remember that it was very hard to sell (or buy) anything unless you were on the floor. Personal computers were not hooked in like they are now.. It wasn't until 3 years later that I got a 1200baud phone type modem... that 1200K is not quite broadband. The computer links were weak on even a slow day.. Using your phone was almost as worthless... Brokers just simply stopped answering their phones... It was mass confusion and grid lock... By luck I didn't have too much in that day but it was somewhat grim watching FNN (before CNBC).. After noon lunch I drove to my friendly local bank and withdrew $18,000 just to have some real cash in my pocket. in case the big boys couldn't pull it back up. Trying to make contact with any brokerage firm that day was a sad joke. I don't blame him for taking his gold out of the bank because there was talk about closing all banks in country on TV. They closed banks before and that day started to look like another 1929-1930 bust.
    Ps I started investing in the early 1960's and Oct 1987 was as nasty as I've seen or ever want to see.
  7. DBN2005


    T-bills are issued every week, so the secondary market will have bills maturing in less than a week (liquidity would pose no problem)...the problem w/ cd's is if a bank goes into default it usually takes the FDIC months to sort out if bank gets closed, sold ect....Unfortunately,FDIC doesn't pay out the day a bank defaults on CD interest or maturities.
  8. My grandpa was Jewish and he always kept gold coins in a safe behind his safe. He told me that it is worth to always have some gold coins just in case something happens. I have followed his advice.:D