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During Deflation

17 Oct

Cash is one of the few ‘safe’ investments you can make in this scenario. Over the normal course of investing, most investors focus on their return on capital. This time around, the focus is simply on return *of * capital. While many wouldn’t consider this an investment, having physical cash notes saved and on hand can be crucial during extreme situations including: bank failures, a collapse in credit, or the government defaulting on its debt.

Shorts:
Housing/Avoid Real Estate
Gold/Unless extreme circumstances and using as currency.

Equities/Traditional investments will start to suffer as underlying companies will see lower margins and losses. Not to mention, highly leveraged companies.

Leverage/short the equity of companies that have poor balance sheets and are highly levered.

Pay Off Debt:  ‘Paying down debt’ doesn’t sound like an investment, it most definitely is during deflation.  In a period where literally every single dollar matters, each dollar of debt can become crippling.

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3 Comments

Posted by on October 17, 2015 in Uncategorized

 

3 responses to “During Deflation

  1. Brittius

    October 17, 2015 at 7:43 pm

    Reblogged this on Brittius.

     
  2. rogerunited

    October 18, 2015 at 7:25 am

    Paying down debt is always an investment as it increases your disposable income. At least that’s how this po’ boy sees it!

     
    • Soffitrat

      October 18, 2015 at 2:44 pm

      Yep. People aren’t getting this. Pensions are a primary concern.

       

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