Such an odd time we live in. Never before have I been so impatient, nay, excited for the next economic downturn in the USA (which is imminent).
As some of you know, I sold my paid-off house at a tidy profit last year with the intention of rolling that cash into some international rental real estate properties, ideally in SE Asia.
After putting in some time and research, I quickly realized that purchasing investment real estate in another country, particularly a country you don’t visit very often, is much more complicated than I thought. I would still be able to do it, but the amount of personal time and travel it would take on my part was more than I was willing to spare last year (or this year).
So, with a heavy heart, I reluctantly made the decision to instead look within the United States for this rental property. I’m actually trying to liquidate all of my American assets and get rid of them, so this was a direct violation of that.
Yet, I figured I could purchase a cheap, small apartment building or two, hang onto that for 5-10 years, then sell and roll that over into my international investments. It would be a mid-range investment instead of a long-term one. And I also justified it by the fact that I literally have no American assets anymore with the exception of my businesses (which will be moved to other countries soon under my five flags plan) and a buttload of American Dollars (for reasons I’ll explain in a minute). I have no American stocks, bonds, or equities of any kind, for the first time in my life. The American stock market or bond market could tank tomorrow (and both will, soon), and I wouldn’t give a shit. It’s a pretty good feeling.
Just to be clear, I didn’t say I have no stocks, just no American stocks. I have plenty of stocks in my speculation portfolio; they’re just not American companies.
But I digress. I started looking at apartment properties in several different American cities just as I was seeing signs of a slowdown in the real estate markets all over the US (and Canada too). Properties started staying on the market longer. Properties started drastically dropping their prices in order to get sold.
And I was right. Real estate has been slowing way down over the past six months or so. I was fortunate enough to sell my house right at the peak.
Purchasing something that is going down in price is not a good idea. Moreover, and more importantly, buying assets when they are at artificial or temporary lows is one way to make a lot of money very quickly. As Robert Kiyosaki and many others have pointed out, many millionaires and even billionaires are made during massive recessions and depressions. These are the men who, when the economy tanks, have A) lots of cash to spend and B) very little debt (and/or the ability to borrow a lot of debt).
So the economy crashes, everyone freaks out, but these guys jump for joy and buy everything in sight at 80%+ discounts. Two or three years later when the economy rebounds, the assets shoot back up in value, and these guys sell at massive profits. It’s awesome.
This means that during the good times, you need to pay off your debt and horde as much cash as you can, so when the next recession/depression comes around, you’re ready to buy.
I’ve been able to capitalize on this kind of thing indirectly, like when I sold my real estate before the 2008 collapse and instead bought gold. Real estate got murdered and gold took off. I did well.
This time around, I’m in an even better position. Instead of buying real estate now, I’m just sitting on my cash and waiting, waiting, waiting. Waiting for the stock market to crash. Waiting for the bond market to crash. Waiting for real estate to crash. Waiting for anything to crash, really. Never in my life have I been so impatient about the next economic downturn.
Seriously. I glance at the stock market or bond / real estate markets, still see decent (although fake) numbers and I’m all like, “Dammit! Crash, you fucker! C’mon! Crash! Daddy needs to get his dream house in Australia! Hurry up!”
I’ll be honest. It feels very weird to sit on this much cash that is not allocated to a specific savings account purpose or to a specific investment bucket. My entire financial life is very organized and compartmentalized. So, for a while at least, I have this new investment bucket I’ve called “Wait For The Crash.”
I’m now even considering doing this on a regular basis as part of my long-term financial plan. In other words, setting aside an emotionally uncomfortable amount of cash during good economic times so I can buy everything I see during bad times.
What I’ll Buy
Next is the issue of what I’m actually going to buy when the economy takes its next dump.
I’m certainly going to purchase real estate. That means that I need to know what a good deal actually is. This means that I need to pick out two or three areas and pay close attention to real estate prices of small apartment buildings and rents in those areas now, so that if a sudden price reduction comes along, I’ll be able to identify it.
As I stated earlier, I don’t want American assets long-term, since I think owning long-term assets in a civilization on the decline isn’t exactly a smart or good idea. So I’ll pick up some cheap real estate with the objective of selling it and rolling it over into international real estate within 5-10 years afterwards. At that time I’ll be living in Oceania / Asia and will more easily be able to purchase and manage international real estate in SE Asia which will be much closer to where I live.
When the stock market crashes (and it will) I will also buy into the Dow, S&P, and/or Nasdaq indexes as a speculation. Right now, the Dow is over 25,000, S&P is at about 3,000, and the Nasdaq is over 8,000; all three at artificially bloated highs, as I’ve talked about here many times before.
If the Dow suddenly plummets to 11,000 or 15,000, then hell yes, I’m going to buy! That will be a happy day! I won’t keep the stocks very long; likely I’ll sell and take my profits within 6 months when the indexes come back up and return to the mean.
When Will This Happen?
I have to address this because any talk of the next economic crash always brings on the question of when this will all happen. As I’ve said before, I have no idea, nor does anyone else, and if anyone says they know exactly when it will happen, they’re either insane or trying to sell you something.
I just know it will happen, and happen relatively soon. If I were to make a wild guess, I would say it could happen any time between tomorrow and two years from now, but again, that’s purely a guess and I’m not making a prediction, because I don’t know.
I’ve always been bad at guessing when things will happen, but my track record in investing is almost 100% accurate for knowing that certain things are going to happen. For example, for years I predicted a massive and terrible economic downturn in 2012. I was right, and it happened, but it happened four years early in 2008.
So I know it will happen, I just don’t know when.
And that’s okay. Until then, I’ll sit patiently, or perhaps impatiently, so I can profit yet again on the corruption of the American government and big business, and the irrationality of the American voter.
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