Tuesday, September 23, 2008

Ask the expert

Several panicked multimillionaires and financiers asked me recently if they should liquidate all their investments and go to cash.

My answer? "Beats me" :-/

Standard questions:

1) are you going to be able to time the bottom? what's your investment timescale?

2) what kind of cash? Treasuries? Swiss Francs? Renminbi?

Generally I'm not a big believer in timing the market. On the other hand, I can think of numerous plausible scenarios for the next couple of years in which (some kind of) cash is by far the best asset. I can't think of very many in which it's not :-(


Anonymous said...

amateur investor here. How does one exactly buy renmimbi?

Anonymous said...

They're asking a physicist??? Don't they know that the whole crisis was *created* by physicists and mathematicians?

Gold, buy gold.

Anonymous said...

Buy mortgages 5c on a dollar :)

Seth said...

buzzlightyear: the crisis was created by ex-math/physics types using bastardized models under guidance from "poker player" bosses. The poker players knew what the game really was, the quants were there in large measure as "geek glamor". Both for marketing benefit (my geeks are smarter than your geeks) and also somewhat as dressing up old investment ideas in new costumes.

For some useful perspective on the role of statistics in this mess see Taleb's recent essay.

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