Yew Jin's Sometimes Blog

A question I have been asking: Did people know they were in a great depression during the Great Depression? Scanning the news over the weekend does not inspire confidence in the finance sector, and somehow seems to conjure images of the Great Depression.

13 Sept 2008 (Sat)
Wall St. Goliath Teeters Amid Fear of Wider Crisis

14 Sept 2008 (Sun)
Lehman failure looms as British bank says it won't bid; could Bank of America buy Merrill Lynch?

Bank of America Said to Walk Away From Lehman Talks

Wall Street Prepares for Potential Lehman Bankruptcy

Derivatives market trades on Sunday to cut Lehman risk

Greenspan: Other big U.S. finance firms may fail

However, remember that this is not all doom and gloom, because the world did recover from the great depression. Looking at all the uncertainty, the smart decision is to pull your money out of investments and ... what ...
Buy treasury bonds? Yeah, trust the US government.
Buy Asia investments? Yeah, as if Asia is going to be spared a global recession.

No, I think the wise man will look at options to invest for the long-term, because the instinctive reaction to move money to a safer investment vehicle is ultimately futile - what alternative do you have that is truly "safe" at this point in time? If everything goes bust, we all go bust (with or without having moved money to "safe" investments). You might as well assume the markets will recover, and invest accordingly.

In other words,

Expected Utility = P(markets recover) Utility(Investments) + P(markets do not recover) * 0.0 (everything is practically worthless)

and since Expected Utility = P(markets recover) Utility(Investments), you might as well be concerned only with Utility(Investments).

What happened to the social class during the Great Depression?

Investment Strategies That Worked in the Great Depression

Google search for [investing in recessions]

Also if you have a long-term view on the finance sector - UYG (Ultra Financials ProShares)

or not - SKF (UltraShort Financials ProShares)