Perhaps Kyle Bass is right. Perhaps we are all buggered and everything is FUBAR. Perhaps what we really need is not VIX protection, CDS and variance swaps, but guns and ammo and a defensible place to hide with arable land and reliable water. Oh and some luck, too. And perhaps one NEEDS Gold, preferably lots of it, either to barter with, or to rather recursively pay one's private army to protect one's errrr ummm Gold, oh and presumably one's spouse too. Mr Bass, being in Texas, seems in the right place to achieve all these things, though one could go further and imagine all of the great unwashed engaging Mr Bass's private army in what might be thought of as The Alamo, Part II. And while we can sit over another beer and conjure all manner of future frightening tail probabilities, we needn't try too hard as we can just touch the popcorn button on the microwave, press ">PLAY>" on the DVD remote, and watch Mad Max 1,2, or 3 or the The Postman (yuck), or any manner of Disturbing Dystopian Visions (DDV) about what the future might resemble.
At the moment, however, I have far less conviction than Mr Bass. Perhaps my bank will spontaneously combust, and my neighbors will loot my humble abode and my wine cellar, (or worse), and I will have been rather unprepared. What I DO know at present are two things: one is that my in-box is increasingly filled with Gold related rubbish and scams replacing of all variety, replacing the Nigerian 501 scams of yesterday, which is in itself a telltale of errrrr welll something. And second, that while everyone is paying thru the nose for left-tail protection, many investors are vastly underweight as are risk-parity portfolios, and as vols drop, they become MORE underweight. So if I were to offer any advice, it would be thus: wait until those guns, ammo and jerry-cans go on-sale before backing up the truck.
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ReplyDeleteSpeaking of AGRO, recently heard that Cargill started liquidating some farms/silos etc which i thought was indeed interesting since they seem to own huge chunk of the food chain if not virtually all of it.
ReplyDeleteRe FUBAR etc spent quite a bit of time thinking of it but came to a conclusion that unless you indeed can afford your own army (how about their families?) plus huge piece of farm land, water etc it's nearly impossible to prepare for armageddon i.e. anything you do seems to add to your survival horizon only marginally. Say it's winter and you are the only house in the neighborhood that is heated as you were prepared for disruption of gas/power delivery and got something else going on. How long before you get "visitors"?
The problem with not buying insurance because it is expensive when the fire is 500 meters away is that your house might just burn down.
ReplyDeleteOf course, the fact that the guy that is frantically selling insurance has half of his house on fire is what I would be more worried about.
Makes me wonder about some of the hedge funds buying European banks on "cheapness" and hedging with sovereign CDS sold by the same banks.
Let me grab some popcorn, should be amusing to watch.
"A Boy And His Dog".
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