this is a question that struck me for some reason on my drive home today. i wondered, what if there were a total financial meltdown? how would i fare? my answer was not too well. all my money is in financial instruments from hedge funds to direct equities and the remainder in real estate. if there were a total meltdown, akin to a run on the banks for all markets in general, then stocks might collapse, illiquid assets like real estate would immediately lose their market, especially becuase mortgage loans based on perceived market values would evaporate.
i started to wonder, what would be safe and shouldnt i have some money in whatever that is? but what would be safe? maybe commodities. well i kind of have some funds there. currency? who leaves money in that? and what if the dollar got crushed in the process? seems unlikely given that in times of worldwide uncertainty there is a flight to relatively safe assets. i’ve heard people say gold in the past but not totally sure i understand what drives and maintains gold over time. seems like owning a bunch of barrells of oil is where i’d want to be but how do you do that?
anyway, this seems like a good time to ask ourselves whether we’re safe while many of us sit on real estate that seems highly over valued and continue to pump our money into the markets chasing better returns.