My fellow retards,
Phon/ongod believes many phrens in the DAO do not properly evaluate investments—still they are probably better than the average human who walks this earth. DAO phrens likely understand that on a long enough time frame, fiat is doomed. This is not to suggest that empires will fall and their currency will become worthless. Nobody needs to make those predictions, it is a matter of fact. Fiat will fail slowly because it is designed to do just that. Fiat is engineered by central bankers in their big thinking caps to fail by 2% each year. The past year has been an anomaly, as it is failing too quickly. They have decided to raise rates to slow down the pace of failure, but they still want it to inch closer with each passing day.
Your deacon contends that it is logical to look for investments outside of fiat given the current state of endless debt-financed government largesse. The DAO knows this. Most everybody in crypto knows this. Unfortunately, many walk the streets unaware they hold failing assets. Global governments are taking on debt at an incredibly fast pace. Numbers matter not. When weighing the growth of debt compared to GDP, it is impossible not to realize that more problems lie ahead.
Does your allocation of investment funds take into account risk reward scenarios for black swan events?
What do you mean, deacon sir?
You may have found crypto because you were a gold bug. If so you understand how fait fails, thus you want exposure to precious metals. You predict that gold and silver will skyrocket if empires fail, so you open a brokerage account and buy the GLD. You now have exposure—you are ready to be a king when everything collapses.
Did you take into account that GLD is merely a claim on some gold stored in some vault? You are not holding the precious metal, but an IOU. When Burry shorted the subprime market in 2007/2008 he ran into an interesting situation. He was right—everything was propped up and ready to tumble. What he was wrong about or did not understand was the counterparty risk for an institution to actually pay him his winnings. Banks packaged mortgages into MBS (mortgage backed securities), they then took slivers of MBS from multiple originations and packaged them together into CDS (collateralized debt obligations). This allowed them to create a host of derivative products built on the same failing underlying. The exposure to all of these products ended up at AIG (not all, but a vast amount). There was no way for one institution to pay out all the insurance bets against these failed products. People did not take into account counter party risk.
This is now evident with FTX, BlockFi, and other failing crypto companies. You can be right about a lot of future events and still be wrong because the person who pays you for being right doesn’t have the cash.
Back to the risk/reward thesis on investing in this market: If you believe that empires will fall, GLD is a terrible bet. You have counterparty risk and will never get your gold. Much better off are you to buy physical gold. Even better would be silver, or very small gold coins, because in the scenario where gold skyrockets it will be hard to barter with a one-ounce gold coin. It does not make good currency because it is not readily divisible.
If you expect that scenario, perhaps food is a better investment. If you think empires will fall, then surely supply chains will be halted. Your local grocery store has food for two days in a normal scenario. If you’re in a major metropolis you’ll be much better off with canned food, or bags of rice than a handful of gold coins—at least you can eat and survive the initial fall out.
If you think humanity is heading back towards an anarchist state (hopefully not!) then survival gear / hunting gear is likely much more valuable than gold. A common caliber ammunition such as .223 or .556 would be better barter material than a gold coin.
Elves suggest you map out the scenarios you expect and then allocate your portfolio accordingly. Most likely scenario is that there will be no fed pivots in 2023 because inflation is not slowing down—it may do so temporarily, but it will pick back up because the system is designed to inflate supply and devalue the currency. Governments around the world are addicted to printing. Rates will be elevated for a long time. Treasuries yielding 5% are likely better than your gold play. Tech seems to be a bad investment as the cost to take on and service debt is increasing. There will be more layoffs, more unemployment, higher cost of capital. Now is the time to be defensive, map out scenarios you believe will take place, and then allocate your funds in a logical manner. Still, the most important allocation is where you invest your time. Much better to grow your skills than anything else. Love to you all.
Phonon is the focus.
phon/ongod out.