Most Profitable Trade Idea for coming Global Slowdown/Recession

Discussion in 'Trading' started by BrandNewTrader, Jul 26, 2006.

  1. I wanted to start this thread to toss around some creative ideas about how to make the most money during the next few years during the coming global slowdown and US recession. If you don't think this will happen, that's fine - but this thread isn't to discuss whether that will happen, this thread is to discuss HOW TO MAKE THE MOST $$$ when all the shit starts hitting the fan (btwn Q3 2006 and Q1 2007) and proceeds to shower the entire globe with more and more shit (1 to 2 years after the first major shock/crash/etc).

    Assume that the combination of higher oil prices, the housing slump, and higher core inflation force conditions that plunge us into a global recession (again, if you disagree that's fine. We can argue about it in the Economics forum). Equity markets plunge, defaults go up, the dollar plunges, etc, etc.

    What's the best way to make the most money during these events? I'm already building a position in out of the money SPY puts, and the same goes for oil, corn, and POSSIBLY gold (another question mark since things have changed. is gold still an inflation hedge?) but I'm not experienced enough to know how to deal with the debt, credit or currency markets. (Debt isn't so simple, will bonds go up, or down? Not simple like in the past given the risk of a major dollar devaluation and emerging markets diversifying out of US treasuries, especially CHINA).

    Any macro traders have any good ideas or care to share their views? When the sht hits the fan, I want to get rich.
  2. Cheese


    If the sh*t does hit the fan, you'll do no better than get yourself completely covered in sh*t.
  3. Dollar cost average into a large handgun collection.

    Compatible bullets would be good for diversification also.

    :D :D :D

    If the black swan comes to town, the one with the most guns will reap the biggest gains.
  4. He's talking about global recession, not global depression. I would liquidate everything and hold gold under my bed mattress with an arsenal of weapons on the side in the event of global economic collapse.
  5. Buy the guns, people won't be able to stomach a recession at home much less a global recession...

    With the state of fiat currencies around the world, global recession = global depression.

    Like I said: "IF THE BLACK SWAN..."

    Like he said: "this thread is to discuss HOW TO MAKE THE MOST $$$ when all the shit starts hitting the fan (btwn Q3 2006 and Q1 2007) and proceeds to shower the entire globe with more and more shit (1 to 2 years after the first major shock/crash/etc)."
  6. Pick a round number for the index you want to short. i.e. 1200 points for the S&P. That's your line in the sand. If the index makes a new weekly low below that point, go short. Cover if you get a new weekly high about it. Repeat until you catch the major move.

    Admitedly I prefer this stategy for getting long during a bear market, but it should work in both directions. When you're confident that the market is overbought or oversold, this strategy gives you the disipline make money.

  7. I'm conflicted, do I take the jokes as traders just taking advantage of an opportunity to talk some sht or are you guys trying to implicitly send me a message? Whoever pointed out that I wasn't talking about a global depression is right. I will have the guns and the generator, etc anyway, as I am also aware of the fiat money scheme and notice that same awareness slowly creeping into the public domain. It do did a tiny bit of good to remind me to explore alternatives to the dollar. Does this mean many fiat currencies should be avoided? Although that's a farfetched play (that we have a global depression and many major economy fiat currencies become worthless) but still a worthwhile exercise for any professonal speculator.

    And thanks for the "go short" advice guy - Really insightful stuff! I guess you can explain this whole long/short thing to me then, cuz i have no clue, i just like trading because i get to watch lots of different moving numbers on a background with all sorts of different colors. yay!

  8. bsmeter


    If you want to be safe, buy silver, not gold. Remember the US goverment ( Roosevelt ) out lawed the private holding of gold ( unless you were well connected and rich ). If you have a ton of gold and the well meaning government bans its possesion, it's the same as having no gold. With the current well meaning American government, anything is possible. :D
  9. Well, the most obvious things (beyond shorting the S&P) are:

    -- short real estate
    -- long resession-resistant sectors such as food and health services
    -- short the cyclicals

    More speculative:

    -- short US dollar
    -- long US bonds
    -- long precious metals

    Less speculative:

    -- play the spread "long value / short growth" betting that the high P/E stocks will fall faster than the low P/E stocks
  10. Well, I think part of the reason that occurred was because the dollar was pegged to gold at about $35 an ounce and you could actually redeem your gold for cash from the govt. It was unpegged in 71 ('73?) and been floating since.

    They had to outlaw it because they collateralized all of the us dollars in circulation witht he gold in the treasury vaults. So they needed as much gold as possible, which meant reducing the incentive for the public to hoard it (one of the reasons why they bought it back at $35 an ounce from the public).

    Silver is a possibility. Precious metals could do well, but they're already at historical highs which makes them less attractive (to me) than agricultural commodities that are at historical LOWS and will probably be the next "market" to absorb all of the return-seeking excess liquidity that's currently in precious metals and equities. Watch out for CORN, sugar, cotton, coffee, and CORN. Did I mention CORN?
    #10     Jul 27, 2006