Comments on: When corporates trade through the sovereign http://blogs.reuters.com/felix-salmon/2010/09/22/when-corporates-trade-through-the-sovereign/ A slice of lime in the soda Sun, 26 Oct 2014 19:05:02 +0000 hourly 1 http://wordpress.org/?v=4.2.5 By: Meriwether http://blogs.reuters.com/felix-salmon/2010/09/22/when-corporates-trade-through-the-sovereign/comment-page-1/#comment-18714 Thu, 23 Sep 2010 09:13:44 +0000 http://blogs.reuters.com/felix-salmon/?p=5452#comment-18714 “If Greece devalues, for instance, the sovereign will find it impossible to service all its euro-denominated debt…”

Stop this insanity. There is no way they can devalue. They don’t have their own currency. You don’t honestly suppose they will leave the EUR?

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By: TFF http://blogs.reuters.com/felix-salmon/2010/09/22/when-corporates-trade-through-the-sovereign/comment-page-1/#comment-18706 Thu, 23 Sep 2010 00:32:35 +0000 http://blogs.reuters.com/felix-salmon/?p=5452#comment-18706 Was just considering this question myself…

Clearly the default risk on longer-term US Treasuries is non-zero. Fiscal sanity in this country is cowering in the corner, beaten alternately by the borrow-and-spend crowd and the spend-and-borrow crowd. Maybe Washington wakes up before this oliphaunt comes crashing down. Maybe not.

So what then is the “gold standard” for wealth preservation? If I had sufficient accumulation to retire comfortably, and wished to minimize risk, what would be the best strategy? Broad diversification? Gold itself?

What risks would a 60/40 split between top-quality multinational dividend stocks and top-quality multinational corporate bonds face? (The latter could be diversified across foreign currencies to minimize inflation risk.) Is there an economic scenario that would pull down low-leverage companies such as P&G, J&J, Nestle, Unilever, and Coke? Is there any investment that would hold up BETTER than these in the event of a US sovereign default and major economic crash/inflationary depression?

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