No. of Recommendations: 33
- War in Europe: Likelyhood in general, maybe country-specific
- Currencies: Which ones others think might be more safe/stable vs. less safe/stable ones, and hopefully new points I donīt think of
- Jurisdictions: E.g. what they think about holding EUR/NZD... at Schwab etc. versus holding them in a bank in their "home" country; maybe comments about the it seems to me nearly non-existing coverage for IBKR Ireland customers (I think thatīs all European IBKR customers), contrary to IBKR US and all European banks
On those subjects, I'm happy to offer my uninformed opinions.
I think war in Europe is likely, indeed already taking place if you use a definition like "adversary state killing people in your country and performing lethal acts of sabotage". But even if correct, that's not useful information, as it could remain at a relatively background level (except for those directly involved) or become huge. I know folks who live near the Suwałki gap, on the Lithuanian side, and let's just say I'm glad I don't live there. I assume an "event" there is in the 50/50 range. I anticipate multiple small events in different locations, each just shy of an undeniable casus belli, with a gradual escalation and a ton of hybrid/deniable attacks. (incidentally, I think operation spiderweb is likely to be used as a playbook for deniable state attacks or terrorist attacks in future)
For currencies, the US dollar is likely to remain pre-eminent in terms of liquidity and financial use, but seems very likely to lose some purchasing power, perhaps quite a lot. The Euro has some structural flaws but looks like it will endure. There may be another crisis or two, but it will survive those. I'm holding my cash largely in sterling at the moment, with some others. Being a simple stand-alone sovereign issuer, the UK risks are very simple to understand: the pound might fall some. Other than that you're fine. The problem with NZD is that the country is small. If a global scale hurricane starts blowing, a small economy can be sideswiped quite badly even without intent. A terms of trade shock could it it quite hard.
For jurisdictions, I agree that risks seem large enough that a bit of diversification makes some sense. My current plan is to move some assets to a Saxo account in Europe, perhaps half. Even though Saxo isn't perfect, they seem closest to what I prefer. I have some assets at a "wealth management" bank, but they are always very annoying and I don't want to put more there.
As for the risks this is intended to reduce: For example, if I withdraw money from my IB UK account, whose parent firm is in the US, is that a "remittance" out of the US subject to the new 3.5% remittance tax, and thus in effect a seizure of 3.5% of my wealth? I don't think so, as I think (?) a "remittance" requires that the payee be a different person, but the fact that it's already a serious question means I have received the mural memo. If I (or any other non-US person) want to keep what wealth I have, I need to move as much as I can out of the reach of an unpredictable US.
If one wanted a one-click resilient asset but didn't mind US domiciled financial securities for some reason, I'd pick WIP. A mix of inflation-protected bonds from sovereign issuers in a wide variety of non-US currencies. Biggest currency weights something like 1/4 Euro and almost 1/5 sterling, then a long tail. The mere fact that it's a fund creates vulnerabilities, but the underlying assets should in theory be a considerably better store of value than (say) gold.
I am disappointed by the board --- and I am disappointed by myself, having letting me drawn so easily into that.
I wouldn't feel too bad on either front. These are very difficult subjects to discuss, and it is natural that they will spark other related thoughts and (yes) feelings. Many foundational axioms of investing in recent decades have been, quite justifiably, called into question or flat-out disproved. I think we can give ourselves a bit of slack, but yes, a return a little more towards investment subjects is probably apt.
I still like the old MI board motto: be nice to others, but feel free to beat an idea within an inch of its life. The phrasing may be a bit extreme, but the notion of maintaining the distinction is worthwhile. If someone says something plainly false, it's cool to point out the fact and reference a link tied to objective reality, but do let's try not to mock the person for having believed it. We *all* believe *something* that ain't so.
Jim
