The 'Black Swan" that'll bust a lot of people

Money market funds breaking the buck. That's FF for the next surprise out of left field, that few people believe will ever happen. Worse yet ,few believe how much of impact this will have on folks, both investing, and on saving pyschology. As Constanza would say - "Worlds are colliding."

Its funny what you say. I think its all playing into the hands of equities. Cash deposits are thought of as risk free but perception is moving towards being higher risk. Same for money market funds. Bonds factor in a lot of risk free, but inflation is becomeing more of a reality so same again. Hedge funds, designed to hedge risk, are more risky today and more of a dirty word. Commodites havent fully factored in a slowdown. Where do investors literally put their money? A bank? I say less so. Gold yes, there is a secular story there IMO. Property...do way. I cant think of any other asset to allocate capital and savings to apart from maybe collectibles. Pure equity with strong balance sheets actually is less risky than people percieve IMO, especially with the FED and other CB's actively trying to underwrite the market. If they succeed then I think it could result in a stronger recovery than many factor in. It is still too early to form any view of success IMO.

Edited by Tor, 27 March 2008 - 06:26 PM.