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overtheedge
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Post-Lehman era coming to an end

- Alasdair Macleod - Finance and Eco.

I tend to dismiss the maunderings of those who suggest that HNWIs move or could move their investments with the changing economic tides.

We forget that HNWIs have their money tied up in high value goods.
The higher the value of the good, the disproportionately lower the number of prospective buyers. By disproportionate think inversely exponential.
Think about it, perhaps the HNWI owns 4.7% of a large corporation. How do you get your value out?
Just how many HNWIs are gonna wanna buy that big house in the Hamptons when all of them are trying to re-mobilize their assets?
It will probably be easier to find a buyer for a partially restore, but operational '71 Ford 3/4 ton on good rubber than a used Bentley.
For the most part, HNWI investments are a string of rotting albatrosses hanging about their necks.
There are exceptions and sometimes there is some salvage value even if it is just catfish bait.

It will indeed be interesting when everyone heads for the exits at once. I would avoid walking next to tall buildings. Terminal velocity for homo sapiens in a head down position can be as high as 180mph. A hard hat won't save you.

And then we forget, much investment monies are in fact leveraged. Small changes in the economic environment can change leveraged to way over-leveraged overnight. How do you spell margin call?
The nouveau riche tend to splurch and buy weird stuff with almost no resale value.
They also forget that buying does not mean bought.
Look to the "lottery effect" for examples.

The more things change, the more they stay the same.
Look to the past history of economic collapses and see how different demographic groups fared.
Many groups did just fine and some gained substantial wealth.

And no. I am not offering any Cliff Notes on how to survive and prosper in a deteriorating economic environment.
I will offer one hint: generational wealth.
Do your own due diligence.

Commented 3875 days ago

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Beginning of the headline :When Lehman collapsed in 2008, the world stopped while the Fed implemented its plan to rescue America's banks and the world's financial system. This was achieved by making unlimited money available to the banks, and the stimulus has continued subsequently through quantitative easing. The post-Lehman era has therefore been one of unprecedented and coincidental expansion of narrowly defined money supply in all five major currencies, the fifth being the Chinese renminbi which has seen additional ex... Read More

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