What goes up in crash, de/inflation, and depression?

Discussion in 'Options' started by TimeCorrosion, Nov 25, 2009.

  1. I am trying to hedge in case of war, market crash, inflation, deflation, and depression. What do you think will preserve value or even increase in value in those scenarios?

    Defense sector tends to go up in war times (like WWIII); commodities go up during inflation; but pretty much everything goes down in crash, deflation, and depression.

    Any simple way to hedge against all these disasters?
  2. MTE


    Buy OTM calls and puts. Calls will hedge aganst inflation and puts will hedge against crash/depression.

    As for the World War III...if that should happen then I don't think your investments will be very high on the list of priorities.
  3. Guns and cans of baked beanz... Maybe gold, but unlikely to help a lot, really.
  4. Own and run a secluded farm, outside of wherever the war happens. Be fully self sufficient (livestock, crops etc.). Plenty of guns and ammo. Keep some physical gold in stashes across the globe, e.g. Canada, Switzerland and Australia.
  5. MTE


    Sounds like a plan! :)
  6. I hope everyone heeds your advice because I'm stocking up on dolla...err.. toilet paper.

    In all seriousness, you're right, gold isn't likely to help you and the CBs know this. It's just like real estate, the Nasdaq, and tulips. It's no different. Why would anyone rather own shares of Yahoo who, at the time, paid no dividend, over entire countries (market cap) paying double digit dividend yields? It's the same reason they want gold over things....

    If sh*t hits the fan would I rather have my water purifier or your gold-plated tungsten? ;)
  7. Lots of Prozac!
  8. I would have thought that warm glowiing feeling would have been enough :D
  9. dmo


    As you say, pretty much everything goes down in a deflationary depression. You might want to look at some of the January 2012 puts, which would do quite nicely if your scenario came to pass any time in the reasonably near future.
  10. The obvious answer would be to look at history to find what instruments were present during times of past similar distress, that performed well in a hedging function. Gold and silver, for starters. What kind of industries? Anything vice-related. Booze, porn, smokes, pawn shops and pizza. Why pizza? It's not good for you, but it's cheap.
    #10     Nov 25, 2009