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"It's Time To Hold Physical Cash", Fidelity Manager Warns Ahead Of "Systemic Event"
As Jamie Dimon recently noted while discussing the perils of illiquid fixed income markets, the statistics around “tail events” can no longer be trusted.
In other words, 6, 7, or 8 standard deviation moves that in theory should only happen once every two or three billion years may now start to show up once every two to three months. Evidence of this can be found in October's Treasury flash crash, January's fantastic franc fuss, and last month's Bund VaR shock.
Why is this happening? Simple. There’s no liquidity left and the idea of efficient markets facilitating reliable price discovery is an anachronism.
Today’s broken, “mangled” (to use Citi’s descriptor) markets come courtesy of: 1) frontrunning, parasitic HFTs, 2) the post-crisis regulatory regime which, to the extent it’s well meaning, was conceived by people who never had any hope of evaluating the likely knock-on effects of their policies, and 3) central banks, who have commandeered sovereign debt markets, leaving a trail of illiquidity and shrunken repo in their wake.
Meanwhile, equity and fixed income bubbles continue to inflate on the back on central bank largesse and the only two options for rescuing a highly leveraged world are writedowns and/or inflating away the debt.
So what is a savvy investor to do in this powderkeg environment? Simple, says Fidelity’s Ian Spreadbury: own gold, silver, and physical cash.
Via The Telegraph:
The manager of one of Britain’s biggest bond funds has urged investors to keep cash under the mattress.
Ian Spreadbury, who invests more than £4bn of investors’ money across a handful of bond funds for Fidelity, including the flagship Moneybuilder Income fund, is concerned that a “systemic event” could rock markets, possibly similar in magnitude to the financial crisis of 2008, which began in Britain with a run on Northern Rock.
“Systemic risk is in the system and as an investor you have to be aware of that,” he told Telegraph Money.
The best strategy to deal with this, he said, was for investors to spread their money widely into different assets, including gold and silver, as well as cash in savings accounts. But he went further, suggesting it was wise to hold some “physical cash”, an unusual suggestion from a mainstream fund manager.
He pointed out that a saver was covered only up to £85,000 per bank under the Financial Services Compensation Scheme – which is effectively unfunded – and that the Government has said it will not rescue banks in future, hence his suggestion that some money should be held in physical cash.
He declined to predict the exact trigger but said it was more likely to happen in the next five years rather than 10. The current woes of Greece, which may crash out of the euro, already has many market watchers concerned..
Mr Spreadbury's views are timely, aside from Greece. A growing number of professional investors and commentators are expressing unease about what happens next..
“The problem is that people are struggling to work out how to diversify if QE programmes stop,” he said.
Mr Spreadbury added: “We have rock-bottom rates and QE is still going on – this is all experimental policy and means we are in uncharted territory.
“The message is diversification. Think about holding other assets. That could mean precious metals, it could mean physical currencies.”
As The Telegraph notes, this is "an unusual" piece of advice coming from "a mainstream strategist" and it suggests the "serious people" are starting to realize that a certain tin foil hat fringe blog — which can already count LIBOR manipulation and HFT proliferation as examples of conspiracy theories turned world-changing conspiracy facts — may be correct to warn that if the current state of affairs persists for much longer, the "market" may one day be halted and simply never reopen.
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Indeed annie. However I think that they will try and get a confrontation going with Russia (they failed in Syria, and Obana loves Iran) to "convince" the US public that of course the Fed has to print moar. It's wartime !
If Russia checkmates Obama and his Admin cackling hyenas again, the the Fed will try to keep it aloft until the afer Jan 2016. Not much later is possible,
There he goes again .... Tyler, trying to talk down the market .... trying to be the catalyst .... that precipitates the implosion .... trying to talk gold up .... trying to end the Greek stalemate .... don't get me wrong .... I agree with these eventualities .... but. they will happen when we least expect it .... until then .... it's the broken clock syndrome .... well, maybe that doesn't fit .... you know I mean !
No, it's me. I am the catalyst. I have held cash out on the sidelines and I own physical gold. I have been tempted many a time in the last 2-3 years to say fuck it, I'll buy some stocks, but I just don't believe one whit in any of it. When I finally break down and buy the stoks, that's when it all comes crashing down. You can set your clock to it.
Come on Roolz, buy some stocks so we can get this party started...
No wait! I'm still prepping! Hold off til next year at least.
Sounds like my strategy; buy high, sell low.
he's saying he's shorting tbe Market and had been bleeding as a result. that's tbe translation.
TalkToLind's Charmin Index was created for those who are unfortunate enough to hold their wealth in USDs:
$1.00 = 0.6 roll of Charmin and falling.
Six tenths of a roll...of toilet paper??? Damn it sucks to hold FRNs.
Dollars provide liquidity while Charmin mops it up. Also. you can stretch a dollar but you can't squeeze the Charmin. But for some strange reason Mr. Whipple and Janet Yellen look like they were separated a birth.
Speaking of TP, your 'asterisk' icon is Vonnegut's asshole Pilgrim, but you knew that... I enjoy his novels also.
Clever
You must have known Kurt Muy Bueno - hehe
Pancho, Vonnegut is great, kind of a later day Twain, but he ends up as something of a sad character. He starts out with almost a libertarian bent (see Harrison Bergeron) but his own personal demons and the state of the world seem to have discouraged him over time. For example, Galapagos is disapointing as the moral of the story is that man must become stupider rather than smarter in order to survive. It's a strange, sad thing for such a brilliant man to propose.
Smedley, "Vonnegut" ist Deutsch nicht Spanicsh. But it's good to meet a fellow graduate of the Fake Foreign Language Academy. Care to join me in singing the school song in PsuedoEsperanto?
Since I have no idea whether I've been insulted or not - I'll Just move along. Google translate can only carry me so far. As for the Icon - I haven't a clue- it's all good by me
When I insult a person they know it. We're good. My icon is Kurt Vonnegut's line drawing of an asshole. I use it because I believe in truth in advertising.
Wonderful...Excellent.
LMAO...
(Now is there a line drawing of a...oh...nevermind.)
Man, I'm saving a bunch of older wrinkly one dollar bills to wipe my ass with..they're soft and supple and they have a picture of ol' George to boot!!
PS... Don't try using the sacawiga dollars... I still have one of those suckers lodged in my ass...
I have found "Dreams of MY Father" on the sale floor of book stores to be useful and cheap arse wipe.
If the grid is taken out, we may be back to salt as currency.
There is always gold and silver.....and for those with neither, salt...
Hard liquor.
It always appreciates with age.
Does day 2 count as aged?
Unlike hard lickers like ellen degenerate.
"He [Spreadbury] pointed out that a saver was covered only up to £85,000 per bank under the Financial Services Compensation Scheme – which is effectively unfunded – and that the Government has said it will not rescue banks in future... ..."
Has Spreadbury not heard of "bail-ins"? They exist to fill the space left after government opted out of any more bank "bail-outs".
The risk of being bailed-in is possibly the best reason for keeping physical cash under the mattress instead of in a savings account earning 0.5% pa.
No wonder there's a push to outlaw cash altogether.
So now every one is again trying to figure out where to run and hide where?
Ten people and resources to feed only nine. What happens to the tenth and why?
If you are not solving this problem then which problem are you trying to solve?
Utopia – A bliss or a curse? : just a thought from thinair
Ten people and resources to feed only nine. What happens to the tenth and why?
The Romans would Decimate to have adequate resources for the Nine..
But there is another solution...
Create, produce or acquire resources for Twenty so that you can have plenty for the Ten.
Greed is the reason that Roman troops, conscrips and slaves were decimated.
The elite lived well beyond what they produced. Actually they needed, not decimation, but elimination as they were parasites upon the labors of the productive.
But the stateist never wants to hear that solution.
Biggest doom and gloom report.....buy gold......buy silver......the sky is laways falling.....of course it will it always does....every graph put up doesn't match 2008...but the sky is falling......
....soon, a few zeros are going to FALL off your net worth. LOL
I will laugh.
...and laugh again about those who were not prudent to prepare.
So a guy shows up and says I run a 4£B fund. my name is Ian Spreadbury: I immediately
1. Call security
2. Know that my Harvard frat bro Chumley is pulling my leg
3. Think, where the fuk do these Brits come up with these names or
4. Say Cheerio Ian, can I take you to the steam room and help you manage that fund yuk yuk
What if a sand nigger or an EMP takes out the power grid, where's your shit coins now bitches!
....for the last 6000 years,
GOLD! Everywhere you want to be. (TM)
Yea but just remember those sand niggers are on a CIA payroll. Terror (TM)
If the power grid goes, the whole fucking market goes too. WTF you think happened after 9/11? I recall markets closed for well over a week AND remember too how much physical papers disappeared in the Building 7 collapse. There were also a shit load of certificates which were ruined in the NYC flood. Gold will be valuable where there's a market. Bitcoin will also survive, so stop your shiny - only love festival please.
If the grid goes, bitcoin goes.
My gold had a boating accidemt. My bitcoin, not so much
Hold cash is "news"?
To whom?
/sarc
Zerohedge, how come the same people who had no problem riding the wave since 2009, suddenly have begun to realize that they were wrong? Haven’t you heard about “The Plan B”.
Ten people and resources to feed only nine. What happens to the tenth and why?
If you are not solving this problem then which problem are you trying to solve?
Utopia – A bliss or a curse? : just a thought from thinair
fromthinair - A pertinent question. here are my answers.
Normalcy bias has worked out just fine for me so far!
Hold physical cash? Between your knees!?
Nicholson, in "Five Easy Pieces", "You want me to hold the chicken, huh?"
https://www.youtube.com/watch?v=6wtfNE4z6a8&t=1m22s
>>>Hold physical cash? Between your knees!?
its called the JAP Birth Control method
Yes, this is good advice as long as you can keep the cash SECURE. Already, I have preached how one should take delivery of their Phyzz and store it in their own safe, outside the banking system. Cash continues to talk, at least for now. Of course you must be careful in the 41 states where civil a$$et forfeiture remains in effect, further raping any dignity of what was America. Travel with care and do not give these crooked highway revenuers any easy means to know you are covering your butt. They will instead lie to boost their careers and cost you so much, maybe too much to get it back. There's a very hot place in Hades awaiting these globalist scum.
Someone cautioned, maybe it was on ZH. It would be far far the wiser to prepare a year early,than a moment too late. And I believed that then, and I believe it now.
Sell Gold
Buy stock
& keep stock for life
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;-)
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I didn't say it
He did --------------------------------------> W.Buffet
Should the Big Crunch happen any time soon, tangible assets would be most valuable, but that may not be shares or cash money, but physical commodities traded in this Weimarian environment at the day´s market price. Of course you cannot plow in all your billions to such as a huge pile of potatoes, without an existing infrastructure backup and a private army, when hungry hoards come to visit.
.
Another 'Bond Guy' finally wakes up. Interest rates can only move up from the zero band, so he will need to hawk something else.
I love FIAT - that nice bouncy quality to it - perfect for making mousepads. Only thing is nobody uses PC's anymore.
Fiat, metals, in a safe within your line of vision is the only way to go.
Sure seems to me that owning valuable and productive assets is more important than owning assets whose price is dependent on a market.