The Money Mustache Community
Learning, Sharing, and Teaching => Investor Alley => Topic started by: mohawkbrah on December 30, 2015, 05:17:18 AM
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I was a little tyke during 2007/2008 but would it always hold true that if banks collapse under massive debt leverage will the world market always feel the pain. the answer seems obvious, which is yes. but maybe there's certain investments that are safer than others even in a financial disaster? if there are could you list some?
i can only think of one, gold and other commodities. or am i wrong since those commodities are backed by currency.
in the grand scheme of things i like the idea of self-sufficiency and homesteading anyway so i shouldn't really worry as much about these things as i do, but still...
(after re-reading what i typed i don't even make sense to myself so do what you will with this post lol)
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I sure haven't felt the effects of the 8 banks that failed this year.
Or the dozens over the last several years.
https://www.fdic.gov/bank/individual/failed/banklist.html
A bank collapse is a signal, but in and of itself, no, it obviously always doesn't mean market collapse.
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It would depend on the scale of the bank. For example, I can't see any of the big 5 Canadian banks collapsing without major impacts on the market.
In the US, with so many banks, I think many can come and go without affecting the market.
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A large enough bank collapse would always equal a market collapse. And I'm deliberately vague on what "large enough" means.
Not every recession or market fall will be caused by bank failure though. 2000/2001 was tech companies. Right now, energy and mining companies are holding the market back and constitute a large contributor to 2015's poor performance. Emerging Markets have been tanking as well.
One of the best assets to hold in case of a market downturn would be long-dated treasuries. These aren't held in most traditional bond funds. Look at TLT, TLO, or ZROZ if you're really bold.