I've always taken the view that if a huge, catastrophic event were to happen (e.g. Australia is invaded and has war on their own soil) then investment returns will be irrelevant anyway.
I think it's unlikely, though, so I figure saving and investing is a good way to improve my own financial position, and also improves my ability to assist my children into their adult lives.
A "potentially catastrophic geopolitical development" could happen tomorrow. Or next month. Or next year. Or next decade. If "potentially catastrophic geopolitical developments" are to be taken into account, it makes purchase decisions very tricky.
Not really. You don't have to time some notional "catastrophe market", and manage to go "all in" just before WW3 breaks out.
Rather the idea is to spread the allocation of investments (geographically, sectorally, etc.) such that a non-trivial portion of your assets is always likely to survive catastrophe.
For a lot of people, it's more basic even than that: avoid overallocation to any one source of risk. That was driven home to me in the 2001 tech wreck: I lost both my job and a small paper fortune in stock options during the death throes of a hitherto-solid NASDAQ-100 company. Most of the stock options had yet to mature, and a few months from the end were underwater anyway, but I had failed to cash out and diversify with those few options that I did have access to.
What I did suggest was that Mike was way off base for disparaging more conservative investment approaches that others might take with respect to the present Australian economic outlook. The trip in the way-back machine was only intended to highlight why that might be important, not to predict a specific future outcome.
(And note, I have no truck with knee-jerk economic bears either.)
More generally, I would suggest that potentially catastrophic geopolitical developments are too casually disregarded by mainstream Australian retail investors today (and very likely by their index-conscious superfund providers as well). I know I'm not as well diversified with respect to Australian real estate market risk, or Australian stock market risk, or Australian currency risk, nor the political risk associated with Australian superfund holdings, as I should be. And I sincerely doubt most of the bulls on the forum are either.
Interesting comment sober.
I can understand what's being stated but I do understand where Mike is coming from.
The movers & shakers tend to be the most positive minded yet at times can be arrogant , they are the types of people who do rake in the $$. Though, every so often a step back is needed by others they trust & mentor to put things in realistic viable perspective so that the individual is not feeling that he's totally invincible to any factors that are certainly beyond their control.
Does shit happen ? Yes it can & wen it does their world can be destroyed or they can get through it & start picking themselves up piec by piece.
Wealth promotes a degree of arrogance even between siblings who are in bizness together I've seen 2 brothers who set up & had a sucessful company together bicker over crap, one takes off & never speaks to him for over like 15+yrs he sets up his an sucessful bizness, it's only when he gets a terminal diagnosis he makes peace with his bro. Meanwhile , he dies before he gets time to enjoys his wealth. Yeah Shit happens in different ways.
Newjerk? can you try harder than dig up another person's blog. My first promo was with Billabong and my name in English is modified with a T, am Perth born but also lived in Sydney to make my $$ It's Absolutely Fabulous if it includes brilliant locations, & high calibre tenants..what more does one want? Understand the power of the two "P"" or be financially challenged Even better when there is family who are property mad and one is born in some entitlements.....Understand that beautiful women are the exhibitionists we crave attention, whilst hot blooded men are the voyeurs ... A stunning woman can command and takes pleasure in being noticed. Seems not too many understand what it means to hold and own props and get threatened by those who do. Banks are considered to be law abiding and & rather boring places yeah not true . A bank balance sheet will show capital is dwarfed by their liabilities this means when a portions of loans is falling its problems for the bank.
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