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9/22/2017 12:11:25 AM
Posted: 8/31/2005 12:15:17 PM EDT
Okay, for the last year or so I have been slowly donning the tinfoil hat in the belief that we may be headed for another Great Depression. Housing prices seem out of control, energy prices going through the roof with many of the other countries economies stagnate at best. With the recent impact of Hurricane Katrina, which has just obliterated the economy of a major city and many smaller ones on the gulf coast, what can I do to help protect myself from economic fallout. Perhaps this should be in the survival forum, but I figured I would get a better response here.
Link Posted: 8/31/2005 12:20:49 PM EDT
Learn how to cook.

Drop your extra expenses such as entertainment/tv/etc and pay down debt.

Keep a months worth of reserve cash at home in a safe.

Get the basic camping gear. Tent, bags, lighting, cooking equiptment.

Buy in bulk. Costco/Sams Club. Eat less processed crap and more whole foods.

Run all your errands when it's convienent. If you got to hit walmart on the way home stop there before going home and changing.

Programmable thermostat. Blow in some insulation in the attic.

Link Posted: 8/31/2005 12:22:10 PM EDT
Gold, Silver, goods and keep most of your assets in cash.
Link Posted: 8/31/2005 12:25:19 PM EDT
Housing prices don't RISE during a depression. They and other prices fall as jobs and money become scarce and it becomes a buyer's market.

If you want to hedge against fuel prices then buy a call option or two. If the price of oil and gasoline rises, the call option will appreciate in value and offset the higher costs you have to pay at the pump.

Otherwise, don't worry. The economy was in pretty good shape even during the high oil prices, and what is a $30b disaster to a country with a GNP of $17t-$18t?
Link Posted: 8/31/2005 12:26:55 PM EDT
I am so glad that my lease includes energy costs in the rent.
Link Posted: 8/31/2005 12:29:11 PM EDT
Invest in building material stocks, Home Depot, Lowes, lumber companies and large equipment rental/leasing companies. Our economy is large enough that this will be easily absorbed. The new building and repair effort will make up it;s own mini boom for many industries
Link Posted: 8/31/2005 12:33:44 PM EDT

Originally Posted By raven:
Housing prices don't RISE during a depression. They and other prices fall as jobs and money become scarce and it becomes a buyer's market.

If you want to hedge against fuel prices then buy a call option or two. If the price of oil and gasoline rises, the call option will appreciate in value and offset the higher costs you have to pay at the pump.

Otherwise, don't worry. The economy was in pretty good shape even during the high oil prices, and what is a $30b disaster to a country with a GNP of $17t-$18t?



What's a call option?

never heard of that!
Link Posted: 8/31/2005 12:35:55 PM EDT
Link Posted: 8/31/2005 1:12:04 PM EDT
[Last Edit: 8/31/2005 1:12:51 PM EDT by TxLewis]

Originally Posted By macman37:

Originally Posted By raven:
Housing prices don't RISE during a depression. They and other prices fall as jobs and money become scarce and it becomes a buyer's market.

If you want to hedge against fuel prices then buy a call option or two. If the price of oil and gasoline rises, the call option will appreciate in value and offset the higher costs you have to pay at the pump.

Otherwise, don't worry. The economy was in pretty good shape even during the high oil prices, and what is a $30b disaster to a country with a GNP of $17t-$18t?



What's a call option?

never heard of that!



A call option is a right to buy something for a predetermined price, regardless of that item's price at the current time.

In other words. Think of it like this. Say you go to the gas station to buy a call option. You might pay them 50 cents for the right to buy a gallon of gas at $3.00 at any time before the option expires (say 1 year)

Then in two months, if gas is at $4.00 you excercise the option, and the gas station gives you the gallon of gas for $3.00. Your total cost is $3.50, you just saved $.50

But if the price of gas is $3.00 anyway, you did not gain anything, and lost the $.50 premium you paid for the option.

Usually, you can buy options on equities, commodities, almost anything. But, options are very standardized. So, say for gasoline, it may be for 1000 gallons, and you may have to arrange for delivery.

Now, the other thing to consider is that most options are not exercised. They are usually traded. So If you bought your $3.00 call option on gas for $.50 and the next month the price of the gas goes to $4.00, you have an intrinsic value of $1.00 So you could sell if for $1.00. Another part of the value is the time value of the option. In other words the farther away in time it is for the option to expire, then the more time value it has. Basically, if it expires next week, and the price of gas is $4.00 there is not much chance it will go higher, so not much time value. But if it expires in 10 months, there is alot of time to go buy, where the price of gas could rise, so the option has more value, thereby getting a higher price on a sale.

Hope this helps, if you need anything clarified, let me know.

TXL
Link Posted: 8/31/2005 1:17:20 PM EDT
Buy ammo, dude.
Link Posted: 8/31/2005 1:38:42 PM EDT

Originally Posted By raven:
Housing prices don't RISE during a depression. They and other prices fall as jobs and money become scarce and it becomes a buyer's market.

If you want to hedge against fuel prices then buy a call option or two. If the price of oil and gasoline rises, the call option will appreciate in value and offset the higher costs you have to pay at the pump.

Otherwise, don't worry. The economy was in pretty good shape even during the high oil prices, and what is a $30b disaster to a country with a GNP of $17t-$18t?



Yeah but do they rise just BEFORE a depression........lots of economists seem to think that if this bubble burst impact on the economy could be huge because of the % of interest only loans written in the past 5 years.......also there are so many bubbles that are getting ready to burst that could have huge impacts on the economy.......thanx though....good info...keep it coming..
Link Posted: 8/31/2005 1:38:52 PM EDT
[Last Edit: 8/31/2005 1:42:34 PM EDT by raven]

Originally Posted By macman37:

Originally Posted By raven:
Housing prices don't RISE during a depression. They and other prices fall as jobs and money become scarce and it becomes a buyer's market.

If you want to hedge against fuel prices then buy a call option or two. If the price of oil and gasoline rises, the call option will appreciate in value and offset the higher costs you have to pay at the pump.

Otherwise, don't worry. The economy was in pretty good shape even during the high oil prices, and what is a $30b disaster to a country with a GNP of $17t-$18t?



What's a call option?

never heard of that!



A call option is a security whose value is derived from the price of another underlying asset, like a stock or a commodity like oil. There are two kinds of options: call options and put options. Call options appreciate in value when the underlying asset rises in price, put options appreciate in value when the underlying asset falls in price.

Huh?

OK, think of options this way: they're like insurance contracts. Except what you're insuring yourself against is the risk of loss you could incur if the price of an underlying asset your fortunes are tied to changes drastically one way or the other.

Let's say you run an airline, and a major expense for you is fuel. Your profits aren't very good, and if oil prices keep rising, so do your costs, and you could lose money. You want to eliminate that risk, that uncertainty that comes from not knowing what fuel costs are going to do. So you spend some money to buy some call options on crude oil. The price of buying an option is called a premium (like an insurance contract). Now you hold call options, which will rise in value if the price of crude oil rises (but will fall in value if oil prices remain stable or fall, however, you cannot lose any more than the initial amount of money you paid for the premiums should that happen).

Let's say oil prices DO rise, and with them go your operating costs. That shrinks your profits. However, the rising oil prices also cause your call options to appreciate, and if you bought enough call options the profits made from the options will offset the higher expenses you incurred from the rise in fuel prices. If not, you're out the money you paid to hold the call options, but to you, that was worth the peace of mind of knowing if fuel prices skyrocketed, you wouldn't lose your shirt.

Understand?
Link Posted: 8/31/2005 1:39:54 PM EDT

Originally Posted By Jasba:

Originally Posted By raven:
Housing prices don't RISE during a depression. They and other prices fall as jobs and money become scarce and it becomes a buyer's market.

If you want to hedge against fuel prices then buy a call option or two. If the price of oil and gasoline rises, the call option will appreciate in value and offset the higher costs you have to pay at the pump.

Otherwise, don't worry. The economy was in pretty good shape even during the high oil prices, and what is a $30b disaster to a country with a GNP of $17t-$18t?



Yeah but do they rise just BEFORE a depression........lots of economists seem to think that if this bubble burst impact on the economy could be huge because of the % of interest only loans written in the past 5 years.......also there are so many bubbles that are getting ready to burst that could have huge impacts on the economy.......thanx though....good info...keep it coming..



Good point.
Link Posted: 8/31/2005 1:40:49 PM EDT

Originally Posted By mcnielsen:
Buy ammo, dude.



Instead of gold, silver, etc I'm thinking more guns and ammo would be worth more as resale items should we be headed towards another depression. Recent cases of looting in New Orleans has shown that the population is very unstable, and given an economic downturn people who can provide the means to protect yourself may become very valuable indeed.......
Link Posted: 8/31/2005 2:03:37 PM EDT
Thanks for the assist, TxLewis & Raven
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