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This is scary as I moved to all cash a couple of years ago. I still don't understand how there can be a bubble in money. All I see around me is house and stock

This is scary as I moved to all cash a couple of years ago. I still don't understand how there can be a bubble in money. All I see around me is house and stock prices going up incredibly. Does a money bubble popping result in high inflation making my money in the bank worthless. Fuck. First I got burned in stocks, then in real estate, and now cash?

pjc50 10y ago
See my comment below: https://news.ycombinator.com/item?id=12461647 https://news.ycombinator.com/item?id=12461647 A "money bubble" caused by too many people wanting to keep assets in cash (rather than make investments) is deflationary. The apparent deflation is caused by the reduction in availability of credit. So the central banks are backfilling, like pumping air into a deflating balloon. It's not arithmetically possible for everyone to hide from all risk forever. It's got to end up somewhere. Diversify, don't just hold one asset class.
GFK_of_xmaspast 10y ago
Why on earth would you ever think it's a good idea to move to all cash?
- philovivero 10y ago
  > Why on earth would you ever think it's a good idea to move to all cash? It's right there in the comment: > Fuck. First I got burned in stocks, then in real estate....
ianai 10y ago
What could happen is your cash becoming more valuable in a deflationary spiral. My take is you're incurring the opportunity cost today on your cash reserves. Your present value is based on a belief that the future will be deflationary over inflationary. You could model this with an estimation of the present value of your cash holdings as a function of how long you hold it and your expected inflation rates.
- cloakandswagger 10y ago
  This is an extremely risky proposition, because under no circumstances will the Fed ever permit long term deflation. They will literally mail cash to individual households or have cash giveaways before that happens. Or, more simply, they ask Congress to pass a law stating that all cash reserves over a certain amount are heavily taxed or confiscated entirely. My suggestion: 10% notional gold 10% physical gold & silver 10% Bitcoin 40% equities 30% cash
  - ianai 10y ago
    True and printing money is too easy a thing to bet against. We are truly in weird times.
sosborn 10y ago
> First I got burned in stocks, then in real estate, and now cash? My advice to you is 1) Diversify 2) Stop trying to outsmart the market. These things are cyclical in nature and it can be difficult for individual players to 1) buy on the low end of the cycle and 2) sell on the high end.
- vadym909 10y ago
  That is what I thought I was doing. I bought a house in 2010 and sold at the then peak in 2013 :-(.
  - havetocharge 10y ago
    So exactly how did you get "burned" in real estate? Sounds like you made profit.
    - vadym909 10y ago
      I got burned with my 1st house- buying in 06, and did just OK with buying again in 10 and selling in 13, but 'lost' (did not make another) 50% by not holding it long enough.

pjc50 10y ago

See my comment below: https://news.ycombinator.com/item?id=12461647 https://news.ycombinator.com/item?id=12461647 A "money bubble" caused by too many people wanting to keep assets in cash (rather than make investments) is deflationary. The apparent deflation is caused by the reduction in availability of credit. So the central banks are backfilling, like pumping air into a deflating balloon. It's not arithmetically possible for everyone to hide from all risk forever. It's got to end up somewhere. Diversify, don't just hold one asset class.

GFK_of_xmaspast 10y ago

Why on earth would you ever think it's a good idea to move to all cash?

philovivero 10y ago
> Why on earth would you ever think it's a good idea to move to all cash? It's right there in the comment: > Fuck. First I got burned in stocks, then in real estate....

ianai 10y ago

What could happen is your cash becoming more valuable in a deflationary spiral. My take is you're incurring the opportunity cost today on your cash reserves. Your present value is based on a belief that the future will be deflationary over inflationary. You could model this with an estimation of the present value of your cash holdings as a function of how long you hold it and your expected inflation rates.

cloakandswagger 10y ago
This is an extremely risky proposition, because under no circumstances will the Fed ever permit long term deflation. They will literally mail cash to individual households or have cash giveaways before that happens. Or, more simply, they ask Congress to pass a law stating that all cash reserves over a certain amount are heavily taxed or confiscated entirely. My suggestion: 10% notional gold 10% physical gold & silver 10% Bitcoin 40% equities 30% cash
- ianai 10y ago
  True and printing money is too easy a thing to bet against. We are truly in weird times.

sosborn 10y ago

> First I got burned in stocks, then in real estate, and now cash? My advice to you is 1) Diversify 2) Stop trying to outsmart the market. These things are cyclical in nature and it can be difficult for individual players to 1) buy on the low end of the cycle and 2) sell on the high end.

vadym909 10y ago
That is what I thought I was doing. I bought a house in 2010 and sold at the then peak in 2013 :-(.
- havetocharge 10y ago
  So exactly how did you get "burned" in real estate? Sounds like you made profit.
  - vadym909 10y ago
    I got burned with my 1st house- buying in 06, and did just OK with buying again in 10 and selling in 13, but 'lost' (did not make another) 50% by not holding it long enough.