Higgenbotham wrote:Regarding the Ann Barnhardt rant(s), I think Marc Faber laid out a decent strategy in the video I posted where he cautions against doing too much of anything.
I happen to know a trader who had ALL his money in an MF Global account. What he got back was automatically transferred to PFG by the CFTC!!! Can you believe it??? Whereupon, he lost almost all of his remaining money.
I've always said regarding futures accounts, put no more than single digit percentages of your net worth into futures accounts. And the above is the reason and has been the reason for a long time before MF Global blew up. The risk has been there for a long time lying dormant. After all, how long did the PFG fraud remain hidden?
There is nothing out there that is completely safe in this environment and putting large percentages of savings into anything is risky. I could just as easily envision a situation where all US Treasury debt receives an across the board haircut, while segregated futures account cash balances remain exempt from any haircut. The irony in that one would be that many investors may believe at this point that if they put their futures account balances in t-bills that will keep them protected from fraud.
I've also cautioned people against too much "mattress money" because you never know if the government will recall the currency and require that you take any notes you want redeemed to a designated bank to exchange them for new currency. And in the bank you may find a friendly government rep tabulating transactions by SS number who will register anyone who has more than X amount of total currency exchanged for "further investigation".
Very wise investment-risk-management advise, Higgs. I cannot disagree with any of it; and yes, even "quite safe" investments such as T-bills and even "under-the-mattress cash" (to also count that as an investment of sorts) can be subject to risk, in these very volatile times, such as via possible haircuts and currency controls. The mantra of putting one's eggs in sufficiently different baskets, both in terms of those who hold the eggs and the types of eggs chosen (provided that they seem to be "good eggs," of course), is not only very wise, but not super-hard to do, even for a casual or novice investor. Thanks for sharing. —Best regards, Marc