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Paycheck-pot. Rule #3: The apocalypse rule

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Fukuokasan

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First i shall remember it.

This rule is from Unscripted
CHAPTER 48
YOUR LAST BUSINESS EVER
(IF YOU WAN
T)

The apocalypse rule holds that the only catastrophic threat to your principal investment has to come from a global financial apocalypse.

I consider a financial apocalypse to be hyperinflation of our fiat currency or the collapse of our banking system. On the contrary, a bankruptcy or a financial fraud perpetrated by a small company is not apocalyptic to the banking system but apocalyptic for the investor.

The apocalypse rule means your investments should only be trusted to largely recognized megalithic companies subject to considerable governance and rules of transparency. The phrase “too big to fail” comes to mind as a criterion. And if such a failure does occur, we’re looking at a total collapse of the world banking system. At this point, we’re no longer talking about a financial apocalypse but a real apocalypse where societal hyperrealities fall apart.

For example, here is the list of institutions that hold my cash and/or paycheck-pot assets:

Fidelity, Vanguard, JP Morgan, Bank of America Blackrock.

Notice that none of these is a tiny, unknown company small enough to be shielded from public scrutiny. Each of these entities is large enough where a failure (or a large-scale fraud) in any of them would inject systemic risk into the world banking system. In other words, if Vanguard’s umbrella of shareholder-owned companies fails, I know we’re looking at a worldwide failure in the banking system and, perhaps, an event so large that the world will never be the same.

My question is. If I can't invest from my country in one of this companies, because they don't give the service of investing in funds to receive regular monthly income. Which others companies are comparable to this ones? Investing throw Banco Santander follow this rule? How can i recognise "to big to fail" companies?
 

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MJ DeMarco

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My question is. If I can't invest from my country in one of this companies, because they don't give the service of investing in funds to receive regular monthly income. Which others companies are comparable to this ones? Investing throw Banco Santander follow this rule? How can i recognise "to big to fail" companies?
They would be the largest companies in your country that offer investment services, or in your case, Europe.

In Europe I'm guessing that Deutsch Bank, Credit Suisse, -- not sure if Banco Santander. / BBVD offer such things.

One caveat you have to determine is the risk of these banks relative to your country's monetary policy and internal politics. If your country starts talking about austerity, that is when it's time to be concerned, IMO.
 

NanoDrake

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I'm assuming you are Spanish so you can always legally go to Switzerland and use their anti fragile banking system.
this is not a tax advice neither an investment strategy, consult your experts blablablabla
 

GoGetter24

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I don't see how holding all one's liquid assets in one highly indebted, warmongering nation, denominated no doubt in their currency, which after having just elected it's most 'hardcore' right-of-center president since Reagan, has done the opposite of reigning in the country's sovereign debt, is in any way consistent with keeping one's wealth safe.

If I was worried about financial breakdown, the obvious go-to solution would be global diversification, over-weighting countries with low risks of confiscation and low taxes. Which the US aint.

We're all overdue, unfortunately, for a nasty one. 10 years is about the average time between recessions. Currently the US is still at sub-inflation interest rates, 10 years after the last one, having held it at zero for 8 years. What do you think's going to happen this time? 'Too big to fail so bail them out' is all very nice, until someone yells 'the emperor has no clothes' and calls the bail bond worthless, and then the S really HTF.

I'd feel much much more comfortable knowing I had gold coins stashed in a vault in 3 countries most of my countrymen couldn't even point out on a map, or even more hardcore -- drill-buried in random GPS locations, if I was wealthy and looking to avoid getting wrecked along with everyone else when the time comes.
 

NanoDrake

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We're all overdue, unfortunately, for a nasty one. 10 years is about the average time between recessions. Currently the US is still at sub-inflation interest rates, 10 years after the last one, having held it at zero for 8 years. What do you think's going to happen this time? 'Too big to fail so bail them out' is all very nice, until someone yells 'the emperor has no clothes' and calls the bail bond worthless, and then the S really HTF.
If you are in 'MURIKA, stock up ammo and batteries

If you are in Europe, watch MADMAX and start practicing
 

GoGetter24

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If you are in Europe, watch MADMAX and start practicing
Pretty much. I think the rest of the world is going to be fairly OK actually. Take Africa for instance: the quantity of sub-saharan conflict has been steadily decreasing for a long time now. Arguably an increasingly attractive place to invest. And billion people have left poverty since 1990 due to Asia's development. Even places like Saudi are starting to open up.

Europe on the other hand, can look forward to... probably what those places are leaving. I don't envy them.
 

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