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Debt Bubble???

If there are consequences to an unsustainable debt level, and some may argue that there are no consequences, what asset classes will hold up best if the debt bubble bursts? Is anyone making any preparations for such a crisis?

Comments

  • Hard assets - equities, real estate, gold, etc.
  • Quality international equities, US MLPs, utilities for me.
  • edited October 20
    Anything but cash here. (bonds only if ultra-short or rate-hedged)
  • edited October 20
    Thanks for the responses. Real Estate? I've sworn off R.E., but can't help tracking Ryman Hospitality. RHP. It's down -0.68% on the day, while the markets generally are surging today. Monday, 20 October at 2:40 p.m. in the East. Stock Rover sees 31% upside with that puppy as of this moment, to a share price of $115.25. Eleven of thirteen analysts rate it a strong buy. I might have to break my own prohibition regarding Real Estate.
    **********************************
    Quality international equities, US MLPs, utilities for me. (@rforno)
    Yes, my newest addition falls into that basket: EWS iShares Singapore ETF. Already up more than 30% in '25. I waited too long to uncover that guy.
  • edited October 20
    wrong - wrong - wrong on debt bubble.

    CNBC reported "President Donald Trump’s tariffs will cost global businesses upward of $1.2 trillion in 2025, with most of the cost being passed onto consumers, according to a new analysis from S&P Global." Not worried about how much will be passed to consumers but Treasury for sure will collect around 1.2 Trillion (give and take some)."
  • edited October 20
    @Crash said “Real Estate?”

    Real estate is an interesting idea. I’ve toyed with it - but no significant investment at present. Real estate investments (REITS, OEFs, ETFs, CEFs) take very different paths because it’s such a diverse area. Do you want to focus on residential single family, multi-family developments, mobile home parks, hotels, farmland, retail or commercial storage or office complexes?

    That last one (offices) has been a bit of a dog since Covid as many workers learned they prefer to work from home. Tech companies helped enable that shift. Jamie Diamond recently opened a beautiful new J.P. Morgan facility in NYC (here) he hopes will help bring back / retain workers. He’s known to believe more gets done in collaboration on site than remotely.. The new complex has gym facilities, upscale restaurants and a pub for after hours. Sounds splendid.

    I’ll mention I’ve been very happy for several years with Cohen & Steers. I’ve got sizable stakes in RAPAX and LPXAX. The first one has plenty of real estate exposure as that’s an area where they have a lot of experience. Some of their CEFs are good provided you know when to get in and when to get out.
  • edited October 20
    In our accumulation phase we "experimented" with quite an assortment of real-estate exposure. Of structured commercial reit-type investments, all but one were real losers.

    However, we were very fortunate to have been associated with a number of directly-managed real estate ventures, which turned out to be quite rewarding. The first involved the sale of our first home in SF, and the move to our present home. The sale of our first home was well above our expectation, leaving us with a decent amount to reinvest. And along came an invitation from an old friend with a lot of real estate experience to-

    Join in partnership with him and his wife to buy a well-located four-unit apartment house in San Francisco. The four of us really learned the hard way about the work required and the human-relation aspects (trauma?) of renting to other people. The four of us did all of the maintenance and repair on the four units, and we all worked our butts off. The property value steeply appreciated, and we sold after about four years at a significant profit. That profit, in turn, provided us with dry powder in later real-estate opportunities.

    By then I was working as the manager of a small-appliance repair station- one of a dozen or so owned by an Oakland, CA family. Strictly by luck, the family corporate offices were co-located with my operation, and I became very close to the company treasurer, who was a son of the business founding family.

    An opportunity came when the building in which our San Jose operation was located came up for sale. My wife and I were invited to partner in purchasing that property, which had a locked-in tenant, as it was a company operation. Again, we enjoyed good income from that investment, and again, the partnership was dissolved and the property sold for a very good profit some years later.

    By then, I was working as a radio technician at 911, which was located in the SF "Hall of Justice". That building was also SF police headquarters, and there I met and worked with a fair number of police personnel. Along came a police detective who frequently partnered with a real-estate operator in funding second-mortgages. Again, we were invited to join in that operation, and again, we did very well income-wise.

    The surplus income from all of those situations was invested in various American Funds, which as they grew became our prime source of investment appreciation and income for many years.

    Anyone who thinks pure luck isn't a major factor in getting through life just has no clue.

  • edited October 20
    >>>>>Anyone who thinks pure luck isn't a major factor in getting through life just has no clue.<<<<<

    Truer words were never spoken. Don’t get me going on the luck factor. But part of the luck factor is seizing opportunities when they arise. And that is just what you did. It is the unlucky people in life who just can’t seem to catch a break that let opportunities pass them by over and over again. My favorite book of all time just happens to be The Luck Factor by Max Gunther.
  • Chance favors the prepared mind - Louis Pasteur

    Luck is the residue of design - Branch Rickey

    Dooby dooby doo - Frank Sinatra
  • edited October 20
    +1 @Junkster

    Louis Rukeyser: ”Hair today. Gone tomorrow.”

    Nice! @Old_Joe
  • In my case "Gone yesterday."
  • "That rug really tied the room together." ---Jeffrey Lebowski. Despite himself, The Dude abides.

    I remember reading here at MFO that (CrossingBridge) David Sherman severely dislikes REITS, because at any moment, new shares can be created, thus diluting one's investment in that R.E. entity.
  • It's been my experience that REIT promoters are quite capable of many slimy behind-the scenes operations such as failing to do proper maintenance on the properties. Another twist is paying excessive fees to maintenance providers who have "special" relationships with the REIT promoters.

    Sometimes after the REIT is "locked in" you find out that for various reasons that were not discussed in the REIT info package the REIT property suddenly loses significant value due to "unforeseen" circumstances, such as massive overbuilding of competitive rental properties.

    Let me be clear: I am NOT suggesting that all REIT promoters are involved in Trump-like rip-offs. But it's very hard to know in advance who the bad guys will be.
  • edited 3:03AM
    Debt bubble: "How Countries Go Broke." Ray Dalio.
    I just bought this item and started in. Lots of charts, graphs. Ugh. Not my cup of meat. And his style is appropriate to his explanations, so I can't complain. It's just very plodding and detail-focused. He does indeed possess a cogent theory about it all: short-run cycles and long-run cycles. I want to bring attention to it because I'd bet he's correct about it all, even if I'm finding it an uninteresting read. :)

    image

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