[2020] A little stock market sense

[Ralph Sir Edward]

Germany's problem was a war debt owed internally. The UK very nearly ran into a similar situation with its Napoleanic War debt when the Bank of England ran out of gold to back its currency, and would have had a real mess if the Rothschilds had not ridden to their rescue.

You overlook the point that gold, conceptually, is an external currency. In both those situations, currency was supposed to be convertible to gold. There was not enough gold to back up the currency in circulation, which caused the circulating currency to be "discounted" to gold.

 

[Carolinian]

that's right, being the world's reserve currency has its perks. a run on US debt is not impossible but it's a lot harder than if you are a defeated WWI European country with onerous reparations owed in foreign currency.

The number of dollars held as reserves by other central banks has been falling for several years. On the other hand, central banks are buying gold at record levels for the last few years.

THere is another problem with being a currency held widely around the world. If foreign holders start dumping dollars, it is easy to start a run on the dollar. That is why foreign central banks who are dumping dollars do it in small enough batches not to start a run. They also do it in ways that it is not apparent like the Chinese dumping dollars through their shadow banks instead of through their official central bank.

Currencies in private hands can impact currency values. In the runup to the euro many experts were scratching their heads about why the Deutschmark was declining in value. This was moving the opposition direction than the fundaments indicated. Finally The Economist magazine identified what was causing this under the radar. Deutschmarks were the second most favorite hard currency after the daollr being held outside the banking system. Holders of those DM's were often in countries outside the EU and when the euro came in would not be able to convert their marks. Everyone with non-banked marks from households with mattress money to criminal gangs with stashes of cash in marks rushed ton convert them to dollars. While this was not enough for anything close to triggering a run on the DM that would casue a hyperinflation, it did demonstrably reduce the value of the DM on the market. There are a whole lot more dollars being held around the world than there were DM's in non-bank stashes. If there is a widespread movement to excchange those dollars for any other currency, whether a fiat currency or a monetary metal, it would be felt in the dollar's value. would it be enought to trigger hyperinflation? I hope we never have to find out. Those holdings of dollars abroad are both banked and unbanked. In the situation with the DM, it was only the unbanked currency that created the problem as the banked currency could seamlessly transition to euros, unlike the unbanked currency. There are quite a few countries where local banks will set up acocunts or even CD's in dollars. In the two European counties I have maintained personal acounts, one could maintain accounts in dollars. In one bank, they would set up accounts in local currency, dollars, or euors and in the other it was local currency, dollars, euros, and Swiss francs.

 

[letsgobobby]

The number of dollars held as reserves by other central banks has been falling for several years. On the other hand, central banks are buying gold at record levels for the last few years.

THere is another problem with being a currency held widely around the world. If foreign holders start dumping dollars, it is easy to start a run on the dollar. That is why foreign central banks who are dumping dollars do it in small enough batches not to start a run. They also do it in ways that it is not apparent like the Chinese dumping dollars through their shadow banks instead of through their official central bank.

Currencies in private hands can impact currency values. In the runup to the euro many experts were scratching their heads about why the Deutschmark was declining in value. This was moving the opposition direction than the fundaments indicated. Finally The Economist magazine identified what was causing this under the radar. Deutschmarks were the second most favorite hard currency after the daollr being held outside the banking system. Holders of those DM's were often in countries outside the EU and when the euro came in would not be able to convert their marks. Everyone with non-banked marks from households with mattress money to criminal gangs with stashes of cash in marks rushed ton convert them to dollars. While this was not enough for anything close to triggering a run on the DM that would casue a hyperinflation, it did demonstrably reduce the value of the DM on the market. There are a whole lot more dollars being held around the world than there were DM's in non-bank stashes. If there is a widespread movement to excchange those dollars for any other currency, whether a fiat currency or a monetary metal, it would be felt in the dollar's value. would it be enought to trigger hyperinflation? I hope we never have to find out. Those holdings of dollars abroad are both banked and unbanked. In the situation with the DM, it was only the unbanked currency that created the problem as the banked currency could seamlessly transition to euros, unlike the unbanked currency. There are quite a few countries where local banks will set up acocunts or even CD's in dollars. In the two European counties I have maintained personal acounts, one could maintain accounts in dollars. In one bank, they would set up accounts in local currency, dollars, or euors and in the other it was local currency, dollars, euros, and Swiss francs.

sorry this is all part of goldbug fantasy land, the von Mises Institute school of thought etc. A run on the dollar is something that would take decades even generations to unfold. it isn't impossible, but foreign countries holding marginally fewer dollars isn't proof it's happening especially when the dollar as measured by the USD index is hovering near 25 year highs.

 

[RENTER]

Why is necessary to have a winner and a loser?
Such a negative world view!

Takes the gambling out of the market by hedging your risk. Sell the winner buy the loser. With fraction trading and commission free trades it is much easier to do today. It is call catch a falling knife. Keep selling the winner and buy the loser until it turns around and the loser becomes the winner and the winner becomes the loser.

Also as you play catch a falling knife, if the loser pays dividends, you are buying more shares which will increase your dividends.

 

[letsgobobby]

Takes the gambling out of the market by hedging your risk. Sell the winner buy the loser. With fraction trading and commission free trades it is much easier to do today. It is call catch a falling knife. Keep selling the winner and buy the loser until it turns around and the loser becomes the winner and the winner becomes the loser.

Also as you play catch a falling knife, if the loser pays dividends, you are buying more shares which will increase your dividends.

you know most stocks over time are losers and the majority of index gains come from a relatively small number of stocks which go up 100 or 1000 fold... so your "method" manages to get exactly those two things wrong...

 

[rapmarks]

Takes the gambling out of the market by hedging your risk. Sell the winner buy the loser. With fraction trading and commission free trades it is much easier to do today. It is call catch a falling knife. Keep selling the winner and buy the loser until it turns around and the loser becomes the winner and the winner becomes the loser.

Also as you play catch a falling knife, if the loser pays dividends, you are buying more shares which will increase your dividends.

I mean you the winner and the rest of us losers. That’s how you address the rest of us

 

[Carolinian]

sorry this is all part of goldbug fantasy land, the von Mises Institute school of thought etc. A run on the dollar is something that would take decades even generations to unfold. it isn't impossible, but foreign countries holding marginally fewer dollars isn't proof it's happening especially when the dollar as measured by the USD index is hovering near 25 year highs.

I would remind you that I pointed out that central banks are moving slowly and carefully to reduce their dollar holdings because a run on the dollar is not in their interest. An exception might be China if they decided to use it for assymetric warfare, but they would suffer a lot of economic damage, too. The biggest risk of a run on the dollar lies in the billions of dollars out there in private hands, both banked and unbanked. In many countries, bank acounts, CDs, loans, and other products can often be held in a variety of currencies and the dollar is usually one. Local people often held foreign currency accounts, It was not just expats. Even though the local currencies have been stable for a while, the memories of rapid declines are still fresh enough that most local people prefer to keep their savings in hard currencies, the dollar, euro, or Swiss franc., which is why local banks have accounts and CD's in other currencies.

The dollar's value held steady from the 1790s to 1913 and has been gradually declining since. Today's dollar has the purchasing power of aout 4 cents in 1913 money. In my lifetime, it has dropped quite a bit. Today's dollar is worth about what ten cents was when I was in high school. As out national debt mushrooms, it is not going to get any better. If we can knock down the national debt, our inflation problems can be whittled down, but that is going to be tough to accomplish.

The loss of value varies among fiat currencies, some better than the dollar and some worse. The currencies that merged into the euro are now hard to compare, but using two that did not go into the euro illustrates the point. When I was in high school, the British pound was $2.80 and the Swiss franc was 23 cents. Now the pound and the Swiss franc are worth a little more than a dollar. The Swiss franc held its value much better than the dollar and the British pound much worse.

 

[letsgobobby]

I would remind you that I pointed out that central banks are moving slowly and carefully to reduce their dollar holdings because a run on the dollar is not in their interest. An exception might be China if they decided to use it for assymetric warfare, but they would suffer a lot of economic damage, too. The biggest risk of a run on the dollar lies in the billions of dollars out there in private hands, both banked and unbanked. In many countries, bank acounts, CDs, loans, and other products can often be held in a variety of currencies and the dollar is usually one. Local people often held foreign currency accounts, It was not just expats. Even though the local currencies have been stable for a while, the memories of rapid declines are still fresh enough that most local people prefer to keep their savings in hard currencies, the dollar, euro, or Swiss franc., which is why local banks have accounts and CD's in other currencies.

The dollar's value held steady from the 1790s to 1913 and has been gradually declining since. Today's dollar has the purchasing power of aout 4 cents in 1913 money. In my lifetime, it has dropped quite a bit. Today's dollar is worth about what ten cents was when I was in high school. As out national debt mushrooms, it is not going to get any better. If we can knock down the national debt, our inflation problems can be whittled down, but that is going to be tough to accomplish.

The loss of value varies among fiat currencies, some better than the dollar and some worse. The currencies that merged into the euro are now hard to compare, but using two that did not go into the euro illustrates the point. When I was in high school, the British pound was $2.80 and the Swiss franc was 23 cents. Now the pound and the Swiss franc are worth a little more than a dollar. The Swiss franc held its value much better than the dollar and the British pound much worse.

these are all arguments for owning diversified portfolios of profit-making companies - not gold.

 

[RENTER]

you know most stocks over time are losers and the majority of index gains come from a relatively small number of stocks which go up 100 or 1000 fold... so your "method" manages to get exactly those two things wrong..

you know most stocks over time are losers and the majority of index gains come from a relatively small number of stocks which go up 100 or 1000 fold... so your "method" manages to get exactly those two things wrong...

you can't be more wrong but enjoy your laugh

 

[RENTER]

I mean you the winner and the rest of us losers. That’s how you address the rest of us

Where the hell did you get that from? But don't bother. I don't want to waste any more of my time. Good luck with your positive view of the world.