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#5643278 - 05/01/12 11:55 AM Re: Gold Price Hits $500/oz. [Re: tth2]
Hamlet Offline
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Registered: 11/02/09
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I think that the only option for Apple's corporate treasurer in that situation would be equities.

Big multinational stocks are the only tangible asset class big enough and liquid enough.

If I've got so much money that hard commodities are not an option, I'm buying Coke, Proctor and Gamble, Microsoft, Exxon, Berkshire Hathaway, etc.

They will be getting crushed too, but if we continue to have any economy at all, they will have some value.

 Originally Posted By: tth2
Seriously, imagine that Apple`s corporate treasurer is way ahead of the curve and realizes he needs to put his $100 billion of cash somewhere else. It would be really freaking hard to invest that much cash somewhere in some kind of form where it would be available on short notice, even at a loss. I somehow can`t see Apple (or if some massive mutual fund cashes out of equities) parking all that cash in warehouses of precious and industrial metals, and acres of timberland, even if there was enough of it to buy. The haircut if they had to exit any such investment quickly and in large volume would dwarf the haircut they would take from your hypothetical Treasury default.

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#5643289 - 05/01/12 12:00 PM Re: Gold Price Hits $500/oz. [Re: Hamlet]
tth2 Offline

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 Originally Posted By: Hamlet
I think that the only option for Apple's corporate treasurer in that situation would be equities.

Big multinational stocks are the only tangible asset class big enough and liquid enough.

If I've got so much money that hard commodities are not an option, I'm buying Coke, Proctor and Gamble, Microsoft, Exxon, Berkshire Hathaway, etc.

They will be getting crushed too, but if we continue to have any economy at all, they will have some value.

 Originally Posted By: tth2
Seriously, imagine that Apple`s corporate treasurer is way ahead of the curve and realizes he needs to put his $100 billion of cash somewhere else. It would be really freaking hard to invest that much cash somewhere in some kind of form where it would be available on short notice, even at a loss. I somehow can`t see Apple (or if some massive mutual fund cashes out of equities) parking all that cash in warehouses of precious and industrial metals, and acres of timberland, even if there was enough of it to buy. The haircut if they had to exit any such investment quickly and in large volume would dwarf the haircut they would take from your hypothetical Treasury default.

Okay, actually Apple wasn`t a good choice because theoretically they could put their cash into anything they want, even if it seems unlikely that their corporate treasury policies would allow them to put all their cash into equities.

Let`s use an example like insurance companies and pension funds like CALPERs, who by law could not put huge chunks of their funds into equities or illiquid assets like real estate and commodities. What are they gonna do?

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#5643322 - 05/01/12 12:19 PM Re: Gold Price Hits $500/oz. [Re: tth2]
delekkerste Offline

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 Originally Posted By: tth2
Let`s use an example like insurance companies and pension funds like CALPERs, who by law could not put huge chunks of their funds into equities or illiquid assets like real estate and commodities. What are they gonna do?


Get crushed? \(shrug\)

No matter how you slice it, a lot of people are going to get :spoon:ed one way or another, regardless of what the government tries (inflation or deflation) once we reach the tipping point. I'm sure there's going to be all kinds of weird :spoon: going down that is very difficult to even conceive of in the current environment. hm
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#5643336 - 05/01/12 12:26 PM Re: Gold Price Hits $500/oz. [Re: delekkerste]
VintageComics Offline

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Think outside the box.

It's very likely that if all conventional markets fail that someone somewhere might think up of a place to hold people's money, much like the bundled bad mortgages that put us in this mess in the first place.

Not necessarily a "good" place, but a new place.

I don't think financial architects have any sort of problem scheming up a new idea if they need one.
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#5643353 - 05/01/12 12:32 PM Re: Gold Price Hits $500/oz. [Re: VintageComics]
delekkerste Offline

James Bond wears a Rolex...the rest is just product placement.

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 Originally Posted By: VintageComics
Think outside the box.

It's very likely that if all conventional markets fail that someone somewhere might think up of a place to hold people's money, much like the bundled bad mortgages that put us in this mess in the first place.

Not necessarily a "good" place, but a new place.

I don't think financial architects have any sort of problem scheming up a new idea if they need one.


Exactly. I don't understand some of the static thinking here; obviously this is going to be quite a dynamic process as it evolves over time, which will result in countless changes to the present status quo. \(shrug\)
_________________________
"Stability begets instability...the more stable things appear, the more dangerous the ultimate outcome will be, because people start to assume everything will be all right and end up doing stupid things." - Dr. Hyman Minsky

"Buy because you love it, because the next generation in all likelihood ain't gonna love it as much as you did." - Gene P.

"No asset is so good that it can't become a bad investment if bought at too high a price." - Howard Marks

Price is what you pay, value is what you get.

It's not what you buy, it's when you buy.

It's better to be thought a fool than to open your wallet and remove all doubt.


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#5643613 - 05/01/12 02:16 PM Re: Gold Price Hits $500/oz. [Re: delekkerste]
FFB Offline

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My mind keeps going back to what happened to Treasurys when S&P downgraded them - cash flooded into Treasurys.

I agree with Tim - UST is the last refuge for money. We are the world's reserve currency, so people have to buy dollars to conduct international trade. The consequences of "bond vigilantes" taking the UST to task would be so severe that there is no incentive to do it, since the bond vigilantes will get crushed along with everyone else if the UST tanks. Anywhere they would put their money would get obliterated if the UST tanks, so why tank it?

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#5643811 - 05/01/12 03:12 PM Re: Gold Price Hits $500/oz. [Re: FFB]
delekkerste Offline

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 Originally Posted By: FFB
My mind keeps going back to what happened to Treasurys when S&P downgraded them - cash flooded into Treasurys.

I agree with Tim - UST is the last refuge for money. We are the world's reserve currency, so people have to buy dollars to conduct international trade. The consequences of "bond vigilantes" taking the UST to task would be so severe that there is no incentive to do it, since the bond vigilantes will get crushed along with everyone else if the UST tanks. Anywhere they would put their money would get obliterated if the UST tanks, so why tank it?


Again, you are describing a set of circumstances that exists now, but may not in the future if things evolve the way I think they will. I'm also not sure why you would think the bond vigilantes would get crushed if the UST market tanks when they'll be making triple digit returns on their leveraged shorts and CDS positions. In any case, if it comes down to the government having to either print or restructure/default, do you and Tim really think people are just going to leave their money in place because there is allegedly no place to go? If we can put a man on the moon, I guarantee you people will figure out alternative places to put their capital.

Like I said, I'm bullish on US Treasury debt with the economy rolling over, and it was no surprise to me that a symbolic, but ultimately meaningless, gesture like a one notch ratings downgrade by one rating agency did not tank the market. A future crisis is inevitable, but nowhere near upon us at the moment, which is why the market can behave as it has been behaving. But, to extrapolate that notion indefinitely into the future would be a mistake - there will come a day when Japan borrows the yen that breaks the market's back and when the U.S. borrows the dollar that gets the bond vigilantes in motion...eventually.
_________________________
"Stability begets instability...the more stable things appear, the more dangerous the ultimate outcome will be, because people start to assume everything will be all right and end up doing stupid things." - Dr. Hyman Minsky

"Buy because you love it, because the next generation in all likelihood ain't gonna love it as much as you did." - Gene P.

"No asset is so good that it can't become a bad investment if bought at too high a price." - Howard Marks

Price is what you pay, value is what you get.

It's not what you buy, it's when you buy.

It's better to be thought a fool than to open your wallet and remove all doubt.


My ComicArtFans.com Online Comic Art Gallery

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#5643979 - 05/01/12 03:57 PM Re: Gold Price Hits $500/oz. [Re: delekkerste]
Transplant Offline

WARNING!!! This member is passive aggressive. Please beware of sharp fingernails.

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And that point will definitely and definitively be some time in the next year to twenty-five years, without a doubt. Probably.
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#5643984 - 05/01/12 03:58 PM Re: Gold Price Hits $500/oz. [Re: Transplant]
VintageComics Offline

You don't get one.

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Registered: 05/16/04
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 Originally Posted By: Transplant
At that point will definitely and definitively be some time in the next year to twenty-five years, without a doubt. Probably.


I'd ask a lawyer.
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#5644102 - 05/01/12 04:36 PM Re: Gold Price Hits $500/oz. [Re: VintageComics]
FlyingDonut Offline

I sold the first CGC book ever on eBay and all I got was this stinking title.

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