First off, this is in no way financial advice. This is information that is freely available on the internet and is just my interpretation. Should you use this, it is at your own freewill. This post will continue to be edited should it take off, each time with the moderators approval.
Great, now that’s out the way, here we are. I figured I’d compile some thoughts surrounding the sensible management of everybody’s (soon to be) newfound wealth. This isn't a doomsday prediction, just an awareness of how to best prepare.
I know…”Sensible? I’m an idiot?”
You may be an idiot but you shouldn’t be stupid.
TL,DR at the bottom and again, just my findings. I may be entirely wrong and will edit any mistakes accordingly.
Background
Everyone is waiting for a MOASS. They have learnt how to hold through dips, mentally strengthen themselves against market manipulation, filter out any media B.S and more. There is much understanding on the process of HODLING as GME rises and even some great posts on effectively and strategically exiting your position. Though I believe even further understanding is required.
In a perfect world, the MOASS happens, the market crashes and although retail investors are blamed, the real truth is known that the HF instigated it. The DTCC prints more money to cover and we all receive our tendies. Great right?.... Right? Regardless of who tanked the economy the stark reality is that it’s f**ked. In any normal situation (if there ever has been), this would be sort of okay and the economy would recover.
Remember Economics 101? You print more money and inflation goes up. The United States economy is ‘already dancing on a knifes edge’ with respect to inflation. I could go into explicit detail behind the workings of it, but some ape has already compiled a brilliant explanation:
Why Michael Burry is calling the Big Short 2.0
You still with me? Great.
The idea that the stimulus cheque further contributes to inflation is fact. This creates inflation as people buy goods within the consumer price index (CPI). Limited goods with higher demand = increased prices.
You may have heard of bond yields spiking etc recently in the media? Well yeah, I don’t trust anything they say now either, but bond yields are important. If inflation is higher than bond yields. (Bond yields are just effectively the interest earned back from loaning the government money)
The big banks will just decide to not invest in them. They would make more money investing in the stock market with a future potential ie. Tech stocks (our friends TSLA, AAPL, GOOG?) Why are people always forewarning a huge drop in TSLA? I believe this exact reason.
The Economic bubble
From my understanding, GME could be the needle that pops the economic bubble. The image below shows just how much cash has been printed.
These colourful lines show how money circulates. Blue line is supply. Orange is how well its circulating the economy and the grey bit is inflation. You give a stimmy out, the circulation goes up and again, inflation.
My aim there was not to demonise the stimulus cheque. It is a necessary lifeline for A LOT of people and couldn’t give two fucks if it tanks the economy in doing so. People need to eat and survive rather than live in $235 million dollar penthouses. I’m just highlighting the economic effects.
So, going back to the original purpose of this post. What can you do to protect your tendies in the possibility of an inflationary event? It seems that the higher the squeeze, the higher the likelihood of market turmoil.
Before, your tendies may have gotten you 5 Lambos but what if now it only gets you 3?
I don’t know about you, but I still want 5… one for each colour of the alphabet.
Michael Burry
Well, this ape has given warning of this for a while now. I thought his tweets referred to GME crashing the market but it seems something much bigger. Like the effects the MOASS will have. Fortunately this smart cookie tweeted a wonderful little graph on the best investments to hedge against inflation.
Remember when he said he acquired a fuck ton of farmland? The man is a doomsday prepper.
The below graph shows the better investments to hedge against inflation:
Conclusion
I can’t give advice on tax. I know nothing about it. I do know that $500 to hire a tax advisor is worth its’ weight in SLVR… I mean gold… Argh fuck forget it.
Do some research on the above and below links. Gather understanding on where to best put your money after the tax man has collected.
Also, Cars is 10th on the list… Maybe Lambos aren’t such a bad idea???......
TL,DR: More printed money means big inflation. The GME MOASS could potentially pop the economic inflation bubble. 10 tendies might only be worth 7 because of inflation. Reinvest to hedge against the inflation.
Ape hold. Ape Strong. Ape Together.
Edit 1: I see some talk around BTC. Bitcoin is a difficult thing to predict in the wake of a crash, especially as it now sits at all time highs.
The theory is that the government would do everything it can to drive down the price of Bitcoins to protect their own currency?
How would they do that?
Outright banning it. If you get your money and decide to buy an untouchable, alternative store of value, I can see the government getting a little pissed off its' not being spent. China have already banned it, India are looking to and most banks are 'experimenting' with the idea of replacing banknotes with digital tokens. So basically copying it and competing. Time will tell.
Links:
A good portion of this post stemmed from the below post. Go over and show support. He has the most wrinkles here, not me.
Why Michael Burry is calling the Big Short 2.0
Nice understanding of investing against inflation.
I liked this particular post explaining some of Burry’s tweets
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