Recession is at the door step with the escalating US-China trade war, ASX jitters, iron ore price falling, AUD falling, RBA and Government don’t know what to do except cut interest rates to negative and robbing pensioners of their life savings, unemployment going up, wages stagnant, retail dying, rental falling, empty ghost apartments, default rate increasing.
What are some strategies to hedge against a probable AUD/ASX crash for the lay ozbargainer?
Work harder and buy gold.
Recession
The media have been talking about this for years. It’s not going to happen.
Like rain in a drought!
What are some strategies to hedge against a probable AUD/ASX crash for the lay ozbargainer?
How exposed are you?
It's a tricky question, traditionally you could have stuck it in the bank, even if it earned no interest it would be pretty secure (minus inflation of course). But now with the bail-in laws they snuck through last year which gives the banksters power to steal depositors savings in a 'crisis' it's not even safe there. You could have taken it out and stuffed it under your mattress but last week the same crooks in government put forward draft legislation that puts limits on cash transactions. They set it at 10K for now but the agitators who pushed for that are also talking about 5k or even 2K limits, with a potential 2 year jail term for all dissenters. Others have mentioned gold and other PM's but I'm not convinced that it will be the traditional safe haven that it's always been. There's just not enough of it to cover the whole global economy whereas previously it was only single countries that got into trouble. So perhaps a balanced approach is the way to go, some stocks (etfs, lics, blue chips), keep some cash, get some cryptos. If anyone has a well thought out strategy taking all of the above into account I'd love to hear it as well.
But then I was listening to a pundit the other week and even they weren't sure how long the current train-wreck can be kept going. They can just keep lowering interest rates and printing money for a lot longer..or not. Oh and that reminds me, they are now also talking about negative interest rates so we might be getting charged to keep our money in a bank, which we can't take out because they made cash illegal, so then they can take what they want when the system crashes through bail-in legislation. :) Am I being too cynical? :)
lols, someone sent me this this morning which I didn't watch until after I made the above post…gotta love synchronicity. :)
28 minutes.
Am I being too cynical? :)
No.
Government announces plans to divert some funds to helping Australia's poorest? Consternation, "damn socialists," etc.
Government lays plans to protect big interests? Silence.
Buy a foreign currency you believe will not crash or take up a short position on AUD
Buy local goods with local inputs so to negate foreign cyrrencies
What are you actually after? Do you have a large value of local assets to diversify, or are you an average schmo like me worried about super returns, and costs of imported goods and overseas travel?
Because there are answers for the first option, but not many for the second…
I'm guessing it's the second and for the second, there's not much of a consequence other than lousy prices on imported goods.
I'm with you two (tshow and mskeggs).
Bunker down, limit my exposure to what is out of my control. That involves limiting or ceasing overseas travel, and assessing purchases carefully.
Other than that, keeping excess funds in offset to the mortgage.
I might not be winning on the investment side, but I am limiting my potential losses.
Buy some Australian Equities Bear Hedge Fund from BetaShares. It aims to exactly mirror ASX 200 index. So the index goes down, Bear Fund goes up and vice versa.
As for a crash in AUD. We're already at a 10 year low. Remember the last GFC? AUD shot up crazy because we're the best performing developed country. Don't you think it's more likely to go up?
Anyway, if you think AUD is going down, you can protect yourself by simply purchasing some ETF linked to overseas market.
Sell everything you own and then wait for the true bargains.
The safest and most traditional 'hedge' against falling stockmarkets is gold.
Beyond that, you get into slightly more complex structures and assets depending on what exactly you're hedging against - the assets you'd buy to hedge against a falling AUD are different from what you'd buy to hedge against falling ASX is different from what you'd buy to hedge against a global recession, etc.
Hedge against falling AUD? Buy other currencies or assets denominated in other currencies.
Hedge against falling ASX? Buy shares in companies of foreign companies.
Hedge against global recession? Actually back to gold…. though you can try various combinations of shorts, etc.
Hedge against some kind of apocalyptic Great Depression type of event, water? canned food?
@dofdaus
Recession is at the door step with the escalating US-China trade war, ASX jitters, iron ore price falling, AUD falling, RBA and Government don’t know what to do except cut interest rates to negative and robbing pensioners of their life savings, unemployment going up, wages stagnant, retail dying, rental falling, empty ghost apartments, default rate increasing.
This is just an alarmist laundry list of bad things which may or may not happen.
Further, some of these are purely political commentary rather than anything based in reality.
Recession is at the door step
I've had pop-ups in my browser saying Australia is heading for recession 'Next quarter' for the last five years.
Australia's annual growth rate is curently 2.9% - a long way from 'recession'. The generally accepted definition of 'recession' is consecutive quarters of negative growth. It is not impossible that this may occur in Australia in the near future, but the parameters for 'recession' and the mechnaisms to deal with such in western countries has changed vastly since the last 'recession' (27 years ago).
Even should consecutive quarters supply negative growth, this is unlikely to be a hair-pulling defenestration-inducing situation.
with the escalating US-China trade war
"With"? Are you suggesting this sabre-rattling is tied to a possible recession in Australia?
This political posturing will blow over, as more people realise the idiot man-child is as unsubstantial as a midsummer zephyr.
ASX jitters
Just a cliche. The ASX always has 'jitters'. Every stockmarket has jitter if you go looking for them. The ASX has just hit a record high. So much for jitters.
iron ore price falling
Yes. And then rising. And then falling. Such is the nature of commodities. Apparently the price of horse and buggy whips has been falling too.
AUD falling
And then rising. And then falling. And, as smarter people than I have pointed out here, in some ways a lower AUD is a good thing overall.
RBA and Government don’t know what to do except cut interest rates to negative and robbing pensioners of their life savings
This is purely a partisan political comment.
Regardless of politics, I feel successive governments, and the Reserve Bank have had some clue over the last 30 or so years. Australia has been spared the worst effects of the GFC, and maintained consistent growth for decades. The rise of the ASX (and, one could argue, our absurd property values) further emphasises this.
Your comment is just a cheap and hyperbolic dig at recent political campaigns. "Robbing pensioners of their life savings"… seriously… sounds like a bad Today Tonight headline.
unemployment going up
There has been a very small recent increase in unemployment. There has also been a corresponding increase in actual employment. Nett effect: status quo. Overall Australia's unemployment levels are fairly close to historical lows.
wages stagnant
Wages have been pretty stagnant for decades now. It has been one of the prices we have paid for low inflation, low unemployment, low interest rates, high property values. Nothing new here.
retail dying
More hyperbole. Things are always tough in retail. Businesses always fail. Sometimes at a higher or faster rate that at other times.
Interesting that the 'fall in profit' of the CBA is announced as a disaster yesterday. From $8 billion profit to $7 billion profit. Only a dividend of $4.xx / share. Boo-hoo. Not quite 'dying'.
rental falling
Good. About time. The endless profits of escalating property values has to have some kind of limitation at some time. If this is a start, then it's a good thing. Somehow I doubt it, however. The government, the opposition, the major financial players all have a vested (political) interest in keeping the middle and wealthy classes happy.
empty ghost apartments
WTF? So… a few speculative investors in higher-risk areas cannot rent out their speculations? Boo-hoo again. Not the end of the world for 99% of us.
default rate increasing
The base interest rate goes up, it goes down. This has been one of the primary controlling mechanisms which has given us recession-free economy for 27 years.
Apart from the obvious political nonsense in your post, there is such a current of 'short-termism', and alarmism, and 'whatever the 6:30 programs are highlighting this week -ism'.
Other people on this thread have good advice if you are really concerned: diversify your investment portfolio, spread to harder assets (like precious metals), buy tents, canned foods, propane, toilet paper.
But really, I feel your rant is mostly politically-motivated, exacerbated by reading too much News Ltd, and watching too many 'current affairs' shows.
Problem is government and RBA are addicted to debt and inflated assets. Wouldn’t be surprised if they turn on the easy money taps once they run out of ideas. Watch moms and pops super and life savings get eroded once interest rates turns to negative…
Next RBA rate cut is predicted to be in October. Is the RBA slashing interest rates to zero and likely negative a push to moms and pops investors to move their life savings deposits out of banks to prop up the bubble-ish property and shares market?
I've been following Clime MD John Abernethy (https://www.clime.com.au/john-abernethy/) who suggests buying shares in emerging or developing economies but the AUD is now sub 0.7 USD and dropping, so we won't get bang for buck there. Any other suggestions?
Bumping my old thread. Did anyone miss the boat?
Eneloops, purchase Eneloops.