“In theory, these two powerful geologic formations – suddenly and without warning – could simply swallow up your editor (and his teddy bear) and save the world from suffering through any future editions of the Rude Awakening. And yet, your editor never loses a wink of sleep worrying about this possibility.

Instead, he muses about the way that small incremental changes over time can produce surprisingly dramatic results.”

It is important to keep risk and reward in focus in a lot of human endeavors, not just with investments. Seismic events are worth heeding as well. Rather than just the gradual movements that you describe, faults often move in jerks, the major ones relieving stress until it is given enough time to move again. If I remember right, the Hayward Fault has a period between major earthquakes of something like 130-140 years and it is nearly 10 years overdue for a major slippage. Geologists feel that the 1906 San Francisco earthquake relieved a lot of stress in this system, but that the resting phase is complete and the spring has been set for a repeat performance. You might want to consider moving out of that area, because living there is like carrying around a loaded gun with the safety off. Maybe Dan Amoss can work up some information on some good insurance companies with exposure in this area, for potential short selling opportunities. Some of these insurors are no doubt ready to bite the dust anyway, even without an earthquake. A major quake could really shake up your routine, to say the least. I keep wondering every New Years Eve, if the next year will bring bad news on the seismic front.

http://en.wikipedia.org/wiki/Hayward_Fault_Zone

Even if the idea of a major earthquake does not cause much worry, maybe it is better to phrase it this way – Would the idea of having a hundred hydrogen bombs go off beneath you at the same time make one worry. If this does it, then it is time to consider a move.

Gary

I have been following your dilemna and have had the same questions. I have come up with a few answers to my questions and maybe they’ll help you find your answers. I took my liquid net worth and invested around 30% in gold bullion, 5% in silver bullion, 10% in mining stocks, 10% cash, 20% foreign currencies, 15% energy stocks and the remaining 10% I went in with my brother on a small piece of remote land with an old working windmill that pumps water, a little cabin stocked with dry food goods, and solar power.
I know the last part may seem “out there” but it sure does feel good knowing you’ve got a place to escape to if the need arises and it’s very relaxing just to visit.
I like feeling safe as do most people, when we’re faced with so many uncertainties and I feel the investments I listed above are appropriate for now. Hopefully this will be of some use to you.

Have a good day,

Daniel