hedge fund bullish on guns, land, food???

[muldoon]

I didn't want to derail any other threads with this - but someone sent it to me today.  I found it interesting.

http://nymag.com/news/features/all-new/53372/

During the final months of 2008, as the financial markets imploded, talk on trading desks turned to food and water stockpiles, generators, guns, and high-speed inflatable boats. "The system really was about six hours from failing," says Gene Lange, a manager at a midtown hedge fund, referring to the week in September when Lehman went bust and AIG had to be bailed out. "When you think about how close we were to the precipice, I don't think it necessarily makes a guy crazy to prepare for the potential worst-case scenario."

Preparations, in Lange's case, include a storeroom in his basement in New Jersey stacked high with enough food, water, diapers, and other necessities to last his family six months; a biometric safe to hold his guns; and a 1985 ex-military Chevy K5 Blazer that runs on diesel and is currently being retrofitted for off-road travel. He has also entertained the idea of putting an inflatable speedboat in a storage unit on the West Side, so he could get off the island quickly, and is currently considering purchasing a remote farm where he could hunker down. "If there's a financial-system breakdown, it could take a year to reset the system, and in that time, what's going to happen?" asks Lange. If New York turns into a scene out of I Am Legend, he wants to be ready.

He's not the only one. In his book Wealth, War, published last year, former Morgan Stanley chief global strategist Barton Biggs advised people to prepare for the possibility of a total breakdown of civil society. A senior analyst whose reports are read at hedge funds all over the city wrote just before Christmas that some of his clients are "so bearish they've purchased firearms and safes and are stocking their pantries with soups and canned foods." This fear is very much reflected in the market—prices of corporate bonds have been so beaten down at various points that they suggest a higher default rate than during the Great Depression. Meanwhile, while the overall gold market has fluctuated, the premium for quarter-ounce gold coins—meaning the difference between the price for gold you can hold in your hand and that for "paper gold," such as exchange-traded funds—rose to an all-time high of 20 percent. "Gold is transportable, it's 100 percent liquid, and it's perfectly divisible in the context of ounces, bars, or coins," says the head of a California research firm who keeps a supply of it, along with food, water, and guns, on hand. "And most important, there's no counterparty"—i.e., it's an investment beholden to no one, and perhaps one of the few assets that will retain value if the financial system collapses.

While it may look like these Wall Streeters are betting on such a collapse, their embrace of survivalism is an outgrowth of their professional habits of mind: Having observed the economy's shaky high-wire act from their ringside seats, they are trying to manage their risk and "hedge" against a potential fall. "It's like insurance," says an investor who has stockpiled MREs and a hand-cranked radio. "And by the time you need it, it's way too late." Leave it for others to weep for the collapse of the social order. These guys would prefer to be in a high-speed boat or ex-military vehicle, heading off toward their fully provisioned compounds in pursuit of the ultimate goal: to win the chaos.

[harry51]

If a meltdown happens, it'll be when the trucks stop delivering food to the grocery stores and gasoline to the gas stations in cities. When people get hungry, they'll start scavenging as far out from their homes as they can, looking for domestic animals, wild game, provisions to steal, etc. Some will be armed. The gov't may try to keep a lid on by keeping them in their towns and cities, and feeding them like they do disaster victims (hope they do a better job than they did with Katrina).

Prepared ruralites will have to guard their livestock, gardens, fuel, and other property from unprepared ruralites, of which there are many, as well as roving urbanites.

Around the clock watches and other military protocol will be the only means of survival. How long can two people keep it up? Can two people really do it at all, even with dogs to help warn of invaders?

It might be that neighborhoods of prepared ruralites will have to organize, patrol the perimeter routes of ingress, etc. This is just off the top of my head, but it bears thought and action if you're lucky enough to have anyone to organize with.........

[peternap]

Good information muldoon

That's exactly why I put a small portion of my portfolio in gold and silver, not gold stocks or mining stocks, the real thing.

I have had to rethink my food supply though. Diabetes makes it more difficult to store food for me. The wife is still OK but I have to consider similar problems with her.

I have a canoe, kayak, sailboat, two 4x4's, guns, etc.