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How is this guy wrong in hedging against the declining dollar and rising price of commodities? At a time when all central banks are de-dollarizing and buying go

How is this guy wrong in hedging against the declining dollar and rising price of commodities? At a time when all central banks are de-dollarizing and buying gold, wouldn't this be the perfect hedge? I know for a fact that most fund managers (at least in India) have been converting as much as 10-20% of their portfolios into gold and other commodities.

Mo3 3y ago
He is in debt, in US dollars, to buy cash flow generating real assets like rental property. He is effectively shorting the US dollar, inflation corrodes the debt value and at the same time boosting the asset value.
- chiefalchemist 3y ago
  Right. It's good debt. It's the type of debt rich people do to get richer. He's got assest that more than likely appreciate greater than the interest on the debt. It's not like he's run up $1B in high interest credit card debt buying needless shite at TJ Maxx. This is one of the key differences between rich and poor. Rich use debt to their advantage. Poor use debt to stay poor, lose ground.
roenxi 3y ago
US dollar debt overall is still selling, assuming that it all comes through treasury securities [0]. That is still a reasonable uptrend on the Grand Total line. Although China appears to be nope-ing out. It is entering an interesting phase because it isn't immediately clear from the stats who is on the other side of the tax havens like Luxembourg, Ireland and the Caymans. Brave people, without a doubt. I'm cynically assuming retirement funds but not really putting any weight behind that wild stab. [0] https://ticdata.treasury.gov/resource-center/data-chart-center/tic/Documents/slt_table5.html https://ticdata.treasury.gov/resource-center/data-chart-cent...
itsoktocry 3y ago
>How is this guy wrong in hedging against the declining dollar and rising price of commodities? At a time when all central banks are de-dollarizing and buying gold, wouldn't this be the perfect hedge? How could he be wrong about a strategy that bankrupted him? What does the market tell you? I see the DXY on an upward path for 20 years. De-dollarization is overblown. >I know for a fact that most fund managers (at least in India) have been converting as much as 10-20% of their portfolios into gold and other commodities. 10-20% of a basket of various commodities is a pretty standard allocation, if a bit high. It's certainly not some major defensive hedge.
Lio 3y ago
Markets can stay irrational longer than you can stay solvent, as the saying goes. With regard to India is that an unusual position because Indian fund managers can use gold to purchase oil cheaply from Russia? Other fund managers won't have to option to purchase commodity oil below market rate.
- red-iron-pine 3y ago
  Same with China. 20% discount on oil + markups on essentials. on an economy-wide scale this is pretty sweet, and will continue as long as Russia stays at war. I think India is weary of Russia, but these are deals they can't say no to.
throw0101d 3y ago
> How is this guy wrong in hedging against the declining dollar and rising price of commodities? This guy has a track record for being wrong: * https://awealthofcommonsense.com/2023/12/rich-author-poor-readers/ https://awealthofcommonsense.com/2023/12/rich-author-poor-re... No normal person should be doing any kind of hedging. If you want to save 'successfully' (e.g., for retirement) follow Buffett's advice and just buy index funds on a monthly basis (DCA) with a company match (in a 401(k) for US readers).
ringofchaos 3y ago
Can you give some examples? what category of funds I am not aware of any gold portfolio in traditional equity and debt mutual funds in India
- ixaxaar 3y ago
  on no these are like fund houses, HNI family fund house clusters etc. The news is more than a year old BTW. (I was trying to sell an asset management SAAS to these).

Mo3 3y ago

He is in debt, in US dollars, to buy cash flow generating real assets like rental property. He is effectively shorting the US dollar, inflation corrodes the debt value and at the same time boosting the asset value.

chiefalchemist 3y ago
Right. It's good debt. It's the type of debt rich people do to get richer. He's got assest that more than likely appreciate greater than the interest on the debt. It's not like he's run up $1B in high interest credit card debt buying needless shite at TJ Maxx. This is one of the key differences between rich and poor. Rich use debt to their advantage. Poor use debt to stay poor, lose ground.

roenxi 3y ago

US dollar debt overall is still selling, assuming that it all comes through treasury securities [0]. That is still a reasonable uptrend on the Grand Total line. Although China appears to be nope-ing out. It is entering an interesting phase because it isn't immediately clear from the stats who is on the other side of the tax havens like Luxembourg, Ireland and the Caymans. Brave people, without a doubt. I'm cynically assuming retirement funds but not really putting any weight behind that wild stab. [0] https://ticdata.treasury.gov/resource-center/data-chart-center/tic/Documents/slt_table5.html https://ticdata.treasury.gov/resource-center/data-chart-cent...

itsoktocry 3y ago

>How is this guy wrong in hedging against the declining dollar and rising price of commodities? At a time when all central banks are de-dollarizing and buying gold, wouldn't this be the perfect hedge? How could he be wrong about a strategy that bankrupted him? What does the market tell you? I see the DXY on an upward path for 20 years. De-dollarization is overblown. >I know for a fact that most fund managers (at least in India) have been converting as much as 10-20% of their portfolios into gold and other commodities. 10-20% of a basket of various commodities is a pretty standard allocation, if a bit high. It's certainly not some major defensive hedge.

Lio 3y ago

Markets can stay irrational longer than you can stay solvent, as the saying goes. With regard to India is that an unusual position because Indian fund managers can use gold to purchase oil cheaply from Russia? Other fund managers won't have to option to purchase commodity oil below market rate.

red-iron-pine 3y ago
Same with China. 20% discount on oil + markups on essentials. on an economy-wide scale this is pretty sweet, and will continue as long as Russia stays at war. I think India is weary of Russia, but these are deals they can't say no to.

throw0101d 3y ago

> How is this guy wrong in hedging against the declining dollar and rising price of commodities? This guy has a track record for being wrong: * https://awealthofcommonsense.com/2023/12/rich-author-poor-readers/ https://awealthofcommonsense.com/2023/12/rich-author-poor-re... No normal person should be doing any kind of hedging. If you want to save 'successfully' (e.g., for retirement) follow Buffett's advice and just buy index funds on a monthly basis (DCA) with a company match (in a 401(k) for US readers).

ringofchaos 3y ago

Can you give some examples? what category of funds I am not aware of any gold portfolio in traditional equity and debt mutual funds in India

ixaxaar 3y ago
on no these are like fund houses, HNI family fund house clusters etc. The news is more than a year old BTW. (I was trying to sell an asset management SAAS to these).