Get all cash out of the bank

[emmilou]

STOLLY control yourself man

[wheezing donkey]

Stolly, is that your 18 year old? No wonder Allan T keeps getting excited!!

[harrymoon]

Pebbles looks 'takeable' to me

Nice belt!

[TheHeathens]

Now I've never told people to put all their money in gold. I've just explained why gold is king, as part of a discussion on the economy. I don't tell them either that diversification is king, or necessarily good which you seem to imply. Diversification can lead to economic ruin as well, if you invest in the wrong things.

I'm not implying that diversification is good - it is good (and the FSA agrees - they could uphold a complaint for misselling against advisers if there was no diversification). The whole point of diversification is to lessen the impact on your portfolio if things go belly up - a case of not putting all of your eggs in one basket.

The best example of this is commercial property - between 2000 and 2006 the returns exceeded average UK share returns. I know of at least 3 financial advisers who used to write investment bonds solely investing in property funds, which was fine when the returns were good.

However, about a year ago, people started withdrawing money from the funds because they suspected the end of the bubble - subsequently proven to be correct. Because of the illiquid nature of property (if people withdraw too much money, they have to sell a property), companies started imposing notice periods of 6 - 12 months (i.e you couldn't get your money out for that period) and property prices crashed. Those people whose advisers advised that they invested solely in property lost on average 24% (the sector average) of their investment in 2007 and a further 12% already this year. There's nothing they can do about it as they can't withdraw the money (or switch funds) due to the notice period.

Property is a special case (you don't have notice periods on most other investments) but it does highlight the need to spread your investments across different areas.

One last point I'm not the only one who thinks things are bad. You stated that 'we're not quite at depression stage yet.' Since we've only had one depression in the last century(that I can recall) you too believe things are bad, and are one of the doom and gloom merchants.

You are the king of spin, aren't you! What I actually said was we're probably heading for recession (we're not there yet) but it's not 'quite at depression stage yet' meaning that the way you've been going on, one would assume we were in a depression! I can't see us getting to that stage.

[dominion]

Apparently.....

You'd have lost less money by drinking £1000 worth of lager and recycling the cans than investing in Northern Rock, HSBO etc.

http://www.spectator.co.uk/coffeehou...-turmoil.thtml

I'm off to Tesco to start investing!

[TheHeathens]

So I decide I want to invest in gold. I can buy gold straight at the price it's offered or I can invest in a fund. If I buy it straight from the dealer, the gold is in my possession.

If it's in a fund it's kept somewhere else.Now let me see: Since the gold is kept by someone else I'd have to pay storage charges. So there goes some of my gold in costs. I've also got to pay someone to manage the gold fund. There goes some more of my gold in management fees. Then there's security. It costs a lot to guard the gold. And what about insurance. You'd have to insure it if it was in someone Else's possession.

The above shows your misunderstanding of mutual funds. Collective investments (funds) lower the costs because you are sharing them with other people. Coincidentally, the BlackRock fund actually invests in shares gold mining companies and not physically in gold itself.

A gold exchange-traded fund (ETF) tracks a gold prices index, but is backed by allocated gold held in a vault on behalf of the investors. It allows people to participate in the gold bullion market without actually taking delivery of the gold.

The price of the shares in the ETF rise and fall in line with the gold price but you can short-sell (in the media at the moment!) to gain from falls in the market. Because it's a tracker fund, it requires very little management and fees are low.

The average fees for a gold ETF are about 0.4% per annum - I dare say that just insuring the gold alone would cost a lot more than that per year as an individual investor. If you bought gold though Bullion vault, it would cost you 0.92% per annum in fees (for them to hold and insure it for you, in addition to their commission) - more than double the price.

[CL]

I'm not implying that diversification is good - it is good (and the FSA agrees - they could uphold a complaint for misselling against advisers if there was no diversification). The whole point of diversification is to lessen the impact on your portfolio if things go belly up - a case of not putting all of your eggs in one basket.

The best example of this is commercial property - between 2000 and 2006 the returns exceeded average UK share returns. I know of at least 3 financial advisers who used to write investment bonds solely investing in property funds, which was fine when the returns were good.

However, about a year ago, people started withdrawing money from the funds because they suspected the end of the bubble - subsequently proven to be correct. Because of the illiquid nature of property (if people withdraw too much money, they have to sell a property), companies started imposing notice periods of 6 - 12 months (i.e you couldn't get your money out for that period) and property prices crashed. Those people whose advisers advised that they invested solely in property lost on average 24% (the sector average) of their investment in 2007 and a further 12% already this year. There's nothing they can do about it as they can't withdraw the money (or switch funds) due to the notice period.

Property is a special case (you don't have notice periods on most other investments) but it does highlight the need to spread your investments across different areas.



You are the king of spin, aren't you! What I actually said was we're probably heading for recession (we're not there yet) but it's not 'quite at depression stage yet' meaning that the way you've been going on, one would assume we were in a depression! I can't see us getting to that stage.

Diversification is not necessarily good, which you seem to insist on. And I'm not interested in the opinions of an interfering and meddling regulatory body,like the FSA. If a person invests in 4 companies and they all fail then his diversification wasn't good. You seem to be implying that if you spread your money around enough, then that in itself will secure success. Your position is deterministic.

We are in a recession already and it's obvious to most people. We don't need to wait for government figures to know that. The question is will we reach a depression in the next few years. The answer to that depends on what our government does from now on. It isn't looking too promising.

[daz h]

Diversification is not necessarily good, which you seem to insist on. And I'm not interested in the opinions of an interfering and meddling regulatory body,like the FSA. If a person invests in 4 companies and they all fail then his diversification wasn't good. You seem to be implying that if you spread your money around enough, then that in itself will secure success. Your position is deterministic.

We are in a recession already and it's obvious to most people. We don't need to wait for government figures to know that. The question is will we reach a depression in the next few years. The answer to that depends on what our government does from now on. It isn't looking too promising.

There is one word that will make or break the current situation.
Confidence

They are going to try and throw all this money at it , 600, 700 800 billion whatever but if confidence is lost then it will all spiral rapidly out of control.
My industry is cutting back for the first time since the late eighties. Large companies are laying people off. Not good for confidence.

You can chuck all the money you like at this problem but in the end the goverment, bank of england, bush whatever cannot and dont know how to stop the spiral if it comes quickly.
Bradford and Bingley have basically been saved from going bust. You dont need many more before a meltdown occurs.
The yanks are saying there is three trillion dollars worth of bad debt.

No one knows what will happen because we have never been in this situation before.

[CL]

The above shows your misunderstanding of mutual funds. Collective investments (funds) lower the costs because you are sharing them with other people. Coincidentally, the BlackRock fund actually invests in shares gold mining companies and not physically in gold itself.

A gold exchange-traded fund (ETF) tracks a gold prices index, but is backed by allocated gold held in a vault on behalf of the investors. It allows people to participate in the gold bullion market without actually taking delivery of the gold.

The price of the shares in the ETF rise and fall in line with the gold price but you can short-sell (in the media at the moment!) to gain from falls in the market. Because it's a tracker fund, it requires very little management and fees are low.

The average fees for a gold ETF are about 0.4% per annum - I dare say that just insuring the gold alone would cost a lot more than that per year as an individual investor. If you bought gold though Bullion vault, it would cost you 0.92% per annum in fees (for them to hold and insure it for you, in addition to their commission) - more than double the price.

I know all this, but you're missing My point. My comments are not based on normal conditions, they're based on a worse case scenario I.e. the collapse of the pound. In that case it's no good having gold in a fund or shares in a gold mining company in South Africa.

[CL]

There is one word that will make or break the current situation.
Confidence

They are going to try and throw all this money at it , 600, 700 800 billion whatever but if confidence is lost then it will all spiral rapidly out of control.
My industry is cutting back for the first time since the late eighties. Large companies are laying people off. Not good for confidence.

You can chuck all the money you like at this problem but in the end the goverment, bank of england, bush whatever cannot and dont know how to stop the spiral if it comes quickly.
Bradford and Bingley have basically been saved from going bust. You dont need many more before a meltdown occurs.
The yanks are saying there is three trillion dollars worth of bad debt.

No one knows what will happen because we have never been in this situation before.

Daz H I think we do know where it could end and it's too terrifying to contemplate. People on here think we've been exaggerating the consequences of the credit crunch over the last few months, but now the reality is hitting home.

We really need to get this government out now. They haven't changed their policies one little bit, and because of that they're going to take the whole country down with them. The problem is replacing them with what.