3 ms·

I apologize for being blunt, but you have it backwards. A the adage goes: buy low sell high. In what people equate with "good economic times," prices are high,

by dwg 5y ago

I apologize for being blunt, but you have it backwards. A the adage goes: buy low sell high. In what people equate with "good economic times," prices are high, but in hard economic times everything is on sale! That said, firstly and foremost we should all make sure to have enough savings to ride out hard economic times—including personal ones. That is, enough to pay our monthly expenses for a year or so, in case we become unable to work or we do not want to take income from investments (because say, the market is down). How long you should be able to last is a mater of individual comfort level, but IMHO, no less than 6 months. Too much savings in the bank however—and this I believe relates back to the point being made by the original commenter—is actually not good. That money is losing value, and therefore so are you. You should invest it somehow, but that's not the only way. Another way is taking on debt, if that debt is the sort that generates a profit. We're not talking about car loans here (unless of course your a car dealer). Please forgive me if I misinterpreted your point, but I felt it important to make this clarification.

jwalton 5y ago
> but in hard economic times everything is on sale! In sufficiently hard economic times, everything is on sale because no one has any idea what will still be around tomorrow and what is going to drop to zero.
- dwg 5y ago
  Putting war and personal risk of injury or forced relocation aside, which go beyond hard economic times, anyone with a sufficiently long-term view will not fall trap to "not having any idea about what will still be around tomorrow and what is going to drop to zero."
marcusverus 5y ago
> A the adage goes: buy low sell high. Don't forget the other adage--Don't time the market. > That said, firstly and foremost we should all make sure to have enough savings to ride out hard economic times—including personal ones. That is, enough to pay our monthly expenses for a year Having a year of expenses is good practice in general. I'm not sure that qualifies one as ready for actual hard times at a societal level--not just a stint of unemployment, but global depression, accelerating price inflation, or even general European war and the rationing that could follow. > Too much savings in the bank however—and this I believe relates back to the point being made by the original commenter—is actually not good. That money is losing value, and therefore so are you. There are ways to save that protect you (somewhat) from inflation. Like short term bonds (ex: from treasurydirect.gov). > Another way is taking on debt, if that debt is the sort that generates a profit. We're not talking about car loans here (unless of course your a car dealer). Unless there is some full-proof investment scheme that you're aware of, this would essentially be gambling. If you take on debt and your profit-generating scheme fails (which is certainly possible in the "hard times" scenario that OP has envisioned), then you're worse off--you've got debt to service, on top of everything else.
- bratwurst3000 5y ago
  There could be contracts that generate future value but oneself needs money atm to fullfill it. I know still gambling… but with little risk depending on the conditions
- dwg 5y ago
  Thanks for the clarification marcusverus. > Don't forget the other adage--Don't time the market. I did mean to to imply trying to time the market. The commenter wrote "Your advice might be okay for good times (investing, buying land, houses)." To me this says that it's OK to invest in good times but not bad. This in fact boils down t a form of attempted market timing—and the worst kind at that! Of course you should buy when times are good, but should also not stop buying when times are bad. If anything, bad times should be viewed as an opportunity. Hopefully you've prepared well to be in a position to take advantage! > Having a year of expenses is good practice in general. I'm not sure that qualifies one as ready for actual hard times at a societal level--not just a stint of unemployment, but global depression, accelerating price inflation, or even general European war and the rationing that could follow. I also did not intend to imply that having a years worth of expenses qualifies as preparation for "actual hard times." I was responding to the above comment, not the OP. That said, a year of expenses could be stretched for an awfully long time if needed. > There are ways to save that protect you (somewhat) from inflation. Like short term bonds (ex: from treasurydirect.gov). Naturally. This is an investment, which you should not avoid. We are saying the same thing. The only difference is that the commenter does not recognize debt as being good in some cases, but I would argue that not all debt is dangerous. If that were the case our economy would cease to function! > Unless there is some full-proof investment scheme that you're aware of, this would essentially be gambling. If you take on debt and your profit-generating scheme fails (which is certainly possible in the "hard times" scenario that OP has envisioned), then you're worse off--you've got debt to service, on top of everything else. No fool-proof scheme, and not gambling. If you have made solid investments, including those based on debt, and have given yourself enough runway to ride out hard-times (and of course this includes your debt repayments), then you should have no reason to panic or feel burdened.
  - dwg 5y ago

by dwg 5y ago

jwalton 5y ago

> but in hard economic times everything is on sale! In sufficiently hard economic times, everything is on sale because no one has any idea what will still be around tomorrow and what is going to drop to zero.

dwg 5y ago
Putting war and personal risk of injury or forced relocation aside, which go beyond hard economic times, anyone with a sufficiently long-term view will not fall trap to "not having any idea about what will still be around tomorrow and what is going to drop to zero."

marcusverus 5y ago

> A the adage goes: buy low sell high. Don't forget the other adage--Don't time the market. > That said, firstly and foremost we should all make sure to have enough savings to ride out hard economic times—including personal ones. That is, enough to pay our monthly expenses for a year Having a year of expenses is good practice in general. I'm not sure that qualifies one as ready for actual hard times at a societal level--not just a stint of unemployment, but global depression, accelerating price inflation, or even general European war and the rationing that could follow. > Too much savings in the bank however—and this I believe relates back to the point being made by the original commenter—is actually not good. That money is losing value, and therefore so are you. There are ways to save that protect you (somewhat) from inflation. Like short term bonds (ex: from treasurydirect.gov). > Another way is taking on debt, if that debt is the sort that generates a profit. We're not talking about car loans here (unless of course your a car dealer). Unless there is some full-proof investment scheme that you're aware of, this would essentially be gambling. If you take on debt and your profit-generating scheme fails (which is certainly possible in the "hard times" scenario that OP has envisioned), then you're worse off--you've got debt to service, on top of everything else.

bratwurst3000 5y ago
There could be contracts that generate future value but oneself needs money atm to fullfill it. I know still gambling… but with little risk depending on the conditions
dwg 5y ago
Thanks for the clarification marcusverus. > Don't forget the other adage--Don't time the market. I did mean to to imply trying to time the market. The commenter wrote "Your advice might be okay for good times (investing, buying land, houses)." To me this says that it's OK to invest in good times but not bad. This in fact boils down t a form of attempted market timing—and the worst kind at that! Of course you should buy when times are good, but should also not stop buying when times are bad. If anything, bad times should be viewed as an opportunity. Hopefully you've prepared well to be in a position to take advantage! > Having a year of expenses is good practice in general. I'm not sure that qualifies one as ready for actual hard times at a societal level--not just a stint of unemployment, but global depression, accelerating price inflation, or even general European war and the rationing that could follow. I also did not intend to imply that having a years worth of expenses qualifies as preparation for "actual hard times." I was responding to the above comment, not the OP. That said, a year of expenses could be stretched for an awfully long time if needed. > There are ways to save that protect you (somewhat) from inflation. Like short term bonds (ex: from treasurydirect.gov). Naturally. This is an investment, which you should not avoid. We are saying the same thing. The only difference is that the commenter does not recognize debt as being good in some cases, but I would argue that not all debt is dangerous. If that were the case our economy would cease to function! > Unless there is some full-proof investment scheme that you're aware of, this would essentially be gambling. If you take on debt and your profit-generating scheme fails (which is certainly possible in the "hard times" scenario that OP has envisioned), then you're worse off--you've got debt to service, on top of everything else. No fool-proof scheme, and not gambling. If you have made solid investments, including those based on debt, and have given yourself enough runway to ride out hard-times (and of course this includes your debt repayments), then you should have no reason to panic or feel burdened.
- dwg 5y ago