Being a futurist is difficult and potentially embarrassing.

Making short term economical predictions is foolhardy, unless you produce carefully worded statements that always end up correct in retrospect.

I bought big on the sharemarket a the lowest point of the Global Financial Crisis, and my buying was leveraged. Then a short while later, there was a new, deep low point. After a decade of waiting for such an opportune moment, I was too keen, and lacked the caution required.

Tomorrow I am selling all my shares except for gold. But only if they go up in value, even a little. I need that psychological feel good factor of winning, even if I have only improved upon what Friday’s prices would have given me.

But the reasoning is solid:

• Inexperienced investors are gambling on travel-related stocks, thinking everything will come right quickly
• The sharemarket is still very volatile, months into the pandemic, indicating nobody is certain of anything
• Trump’s Tulsa campaign rally is symptomatic of a lack of care from leaders that will easily trigger a second wave, or a first wave that keeps going. At some point the bad news of things worsening will cause a big drop on Wall Street
• But mostly, CLOs have me worried…

After the housing crisis, subprime CDOs naturally fell out of favor. Demand shifted to a similar—and similarly risky—instrument, one that even has a similar name: the CLO, or collateralized loan obligation. A CLO walks and talks like a CDO, but in place of loans made to home buyers are loans made to businesses—specifically, troubled businesses. CLOs bundle together so-called leveraged loans, the subprime mortgages of the corporate world. These are loans made to companies that have maxed out their borrowing and can no longer sell bonds directly to investors or qualify for a traditional bank loan. There are more than $1 trillion worth of leveraged loans currently outstanding. The majority are held in CLOs.
https://www.theatlantic.com/magazine/archive/2020/07/coronavirus-banks-collapse/612247/

Governments are propping up businesses as best they can during the pandemic, but on the other side there will be a lot of failures, where debts to banks cannot be paid. CLOs are the same as the home loads of the GFC – sold so many times that nobody knows what they really are, and they are really risky loans that perhaps should not have been made. And certainly not loans anyone wants to be carrying in this climate.

The big risk, as speculated in the above article, is that the government won’t bail out banks this time. Even if it does, the uncertainty preceding such a decision could be disastrous to the share market.

I’m buying gold.