choose what the best course of action is to protect yourself and your family. Drawing on my MBA in finance and background in commercial real estate lending I will families now owe over $7 trillion in mortgage debt! and as a result the real estate market is experiencing a strong bubble in most major metropolitan areas.
Table of contents
- The Global Housing Bubble
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Have at least some portion of your portfolio short in stocks. Peter Schiff and Porter Stansberry and I agree there is a crisis and that a reset is needed. They argue there will be inflation or hyperinflation; I argue that we will have deflation. If you can't determine which of us is right, short stocks. Stocks don't like rising inflation or deflation, but deflation is the worst.
Put a percentage of each category in your portfolio in cash. Or, keep some stocks that pay high dividends and hedge them with leveraged shorts and ETFs to protect their capital value while you collect the dividend. They again may rise in the early stages, but they ultimately fall for years. Long-term and short-term interest rates were the lowest in the last century for the entire s deflationary downturn.
It's a great time to borrow for sound long term infrastructures and business investments. Gold likes it when governments print money, and governments are doing just that. Yet, gold has been flat for 18 months. You predict it might fall further. Governments are fighting deflation. If government stimulus fails, we will have deflation, not inflation. Our point was proven when the U. That wasn't supposed to happen.
It was proof they were actually fighting deflation and losing the war. It makes sense to have a little gold or silver. Gold could also be considered the fear trade, and the U. With all these global crises, wouldn't we see the U. Gold is sensitive to financial crises. When the crisis sets in and we see debt deleveraging and banks in trouble, gold will smell deflation, and it will go down again, as it did in late You mentioned that sitting with cash, specifically the U.
Doesn't your cash deflate at the same time? Your cash buys more because prices are down. Consumer prices, especially financial assets, real estate, commodities, gold, stocks and beachfront property, go down. If you hold cash during inflation, your purchasing power goes down. In deflation, your purchasing value goes up. Few people understand this simple reality as almost none of us were alive in the deflation of the s.
In our last interview , you recommended two strategies: Do those two strategies still hold? I would not buy emerging countries now because their bubbles are bigger than ours. When the world crashes, they're the tail on the dog and will go down as much or even more, despite having good demographic trends. Energy independence for the U. Would energy commodities, specifically natural gas, survive a downturn? Natural gas has moved counter to oil for the most part. Natural gas providers' earnings may hold up better, but their price-earnings ratios will go down because the whole world sees risk everywhere.
A general economic downturn puts pressure on all purchases. If you are holding stocks for dividends, yes, be in those types of sectors. But don't expect any major sector to go up when the whole world is crashing. Won't the dividends of commodity-oriented, needs-based companies go down along with the rest of the market? The best companies, if their earnings don't go down a lot, will try to keep their dividends up to bolster their stock price. The dividends will decline or hold steady, at best.
The Global Housing Bubble
However, the price-earnings ratio, the value of your stock, can still go down. Because of the government stimulus. Without this massive stimulus, we would have seen a depression. They will do the same thing again. I differ from most people in that I believe in the broader economy. It needs a winter season. It needs to deleverage debt, rebalance and reset entitlements, to get real about the demographics. If we make those adjustments, we will come out of this, especially when demographic trends improve again.
We just have to take some pain, and nobody is willing to take pain. As in , there will come a point where short-term stimulus will not offset the meltdown in debt and financial assets. Central bank stimulus has created a whole new set of financial asset bubbles that will have to burst. That is its consequences, not rising inflation that most goldbugs who do understand the financial and debt crisis warn about. The Boomer generation is moving into its retirement years. Will the pain and resetting last through the end of the Boomers' lifetimes or is it a shorter, quicker occurrence?
If we get a trigger and things fall apart, it will be really steep in the next few years. But the demographic trends don't turn back up until the early s in the U. Japan gets worse after ; China after There will be a reprieve, and then the economy will get better 7 to 10 years from now. Between now and then, apart from government stimulus, we will have no growth. This is true even for emerging countries. Good demographics can't help them when commodity exports are so important to their best jobs, industries and stock markets. Stocks are getting very overvalued, very bubbly. We're not telling people to pull out of stocks yet, but we expect to issue a strong sell signal between late January and early May.
Long-term trends are easy for forecast; the short-term trends and key trigger points are harder. You have to make calculated guesses. Economist Robert Shiller recommends measuring a stock's price against the average earnings of the last 10 years. That indicator says we're as high as in all the great peaks except for the tech wreck in early That's the most extreme I've seen in my whole career.
My favorite driver is margin debt. It's gone up higher with every bubble. It will peak in the next few months. When that turns the other way, it's over. In , it peaked late in and dropped like a rock throughout You have to notice when it appears to be peaking and make a calculated bet to get out. You'd rather be a little early than a little late. Even in bubbles, stocks go down in a burst faster than they went up as the bubble built. It takes five to six years to build most bubbles. In a bust, those gains can be lost in 18 to 30 months.
We're not getting out of stocks quite yet and certainly not out of gold. I would wait for a bounce to start selling gold. I like to trade the commodity. We do sectors, not individual stocks. That shouldn't have happened. Gold has been wounded, but it's due for a bounce.
Buy or sell from our eBook library and store.
Europe, and maybe Japan, are likely to increase stimulus again. Gold will like that, at first. Don't waste thousands of dollars on hiring someone to show your home for you. Let me to teach you how to decide if now is the right time to sell and how to do so to maximize your profits. It's NOT as hard as you think. In fact once you've read the eBook, you will be pleasantly surprised just how relatively simple it is. Now is the time to buy the eBook using the secure shopping cart - click here now! If you are afraid that your job might be in jeopardy you need to read this eBook before it is too late!
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I know of many good real estate professionals and investors who have made millions in real estate. It is simply a matter of seeing the real estate market's big picture and learning the techniques in this eBook to get started. Now, in case you have any remaining doubts at all, I want to make it foolproof for you. You see, I completely guarantee your satisfaction! Because once you actually apply the easy-to-understand strategies and techniques explained in How To Prosper In The Changing Real Estate Market to work for you, I'm confident you'll be delighted by the results you can attain.
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I look forward to you having a strong financial picture, because if you don't, you are risking too much! All Rights Are Reserved. So is now the time to buy Real Estate? How do you determine what is a good deal? Read this eBook to learn the techniques to determine if the real estate you might consider buying is a fair price. I would be surprised if there aren't some significant downward adjustments What is clear is that the downside risks are larger than the upside.
The eBook looks great! I am recommending your book to all of my associates. I am sorry I missed out. I would like to own my own home. I am currently renting in the area I would like to live. However, I will need a loan in order to buy something. Whether I do it now or wait for prices to drop. In a way it seems better to try to lock in a lower interest rate sooner than wait for prices to come down, which may mean a smaller loan at a higher rate. I am working on qualifying for a NACA loan, which does not require a downpayment, and allows you to buy the interest rate down as far as.
I am also looking into the possibility of buying a multi-family home so I can have some rental income to offset the loan. I am interested to hear if others in this forum are in a similar situation and how you are approacing the possibility of positioning yourself to own. I am also interested to hear what people think of a NACA loan, vs.
I know that CM advocates for people getting set up well in advance of the collapse, and as I think about it, going through a first time home buyer class, realizing that having clear title to a property matters and if the system is in chaos, it might not be easy to get clear title. So I guess I am leaning towards trying to buy something sooner than later. But would very much like to hear what others are thinking, particularly those who are in a similar situation.
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That said, loans are a horrible idea if everything goes kaplooie I'm an engineer in construction who never got a loan, still living in an owned mobile home on rented land, 47 years old and never spending wildly, always trying to save. Yag, one big question is location. Is your location at least some-what walkable or have decent public transportation. There will be a signifcant need for walkable urbanism now and in the future. Obviously, the lots might be expensive, and depending on the city could be in overheated areas or even bubble territory.
So it might not be the best time to buy. Just know in the long run, walkable locations will be highly sought. Look for old street-car neighborhoods or areas laid out before the 's. Finally, it sounds like you want to buy a duplex or triplex of some kind. That's great to start out, just consider if you can further expand like adding a cottage unit in the back-yard. Gives you a little extra income and depending on how things unfold, that little cottage might end up as your home. All depends on cost of construction, market and yadda I'm not driving a car these days, which is a good thing in the long run.
I'm searching for a place to relocate to, and one of the must-have requirements is being able to walk, bike, and have accessible public transportation. The city I live in Tucson now has the highest crime rate in AZ. Using their bus system has been an education in reality. I always wonder how those people will deal with what's coming down, especially those with babies stuffed in multi-seat baby carriages. Throw in the rapidly depleting water supply and a power outage when another record high hits it's F today and it will be insane.
Add to that the fossil fuels falling off the Seneca cliff and there will be a massive exodus out of the SW. Trump better finish that wall of his the new iron curtain? The more income and savings you can establish the better off you will be. Only buy during a recession. In most cases, Central banks drop interest rates during recession to stimulate the economy.
You really don't want to buy something that is going to cost a small fortune to renovate or needs to be torn down to make it energy efficient. Be sure the area you are looking to buy doesn't have restrictive zoning regulations. Ideally you want to be able to operate an outdoor wood boiler so you can heat your home using biomass or coal if there is supply issues with Oil, NatGas, or electricity.
Some towns are banning outdoor boilers and even wood stoves FWIW: A ideal place is somewhere with a moderate climate: Mild winters, and not excessive summer temperatures. Plenty of rainfall ie rarely in a drought Away from coasts hurricanes and Tornado alley. Away from any nuclear power plants, Chemical plants, or potential military targets ie Miltary base, Airport, Defense contractor Mfg facility, Federal gov't offices or property.
Best approach it so scout out potential spots that fit your criteria, using vacation time. You can use google maps while at home to learn about potential areas. See what stores and businesses are located there. Look online for properties for sale ie Realtor. When you think you found a potential spot, build a list of properties you interest you and then go to visit the areas during your vacation time. Also monitor the areas local weather reports, local news ie does it have a crime problem?
Should be relativily flat so you don't have to deal with a steep driveway or need excessive excavation to build a home, or difficulty getting a modular home built on site. Also want a sufficient flat area to grow crops, add outbuildings. Should have lots of trees that you can harvest for firewood or construction materials. Trees can also be used to hide your home from the street if you are concerned about security. Generally criminals perfer to find easy targets that they can spot from the street. On a paved road that does have any wooden bridges, and the road should be on steep hill.
You may need to frequency use the road in bad weather. In a long term economic crisis, funding for roads will likely shrink and if a small bridge is damaged it might take years to get repaired if repaired at all I've seen it happen when a small bridge was damaged and impassible and left unrepaired for years stranding people on the otherside.
Ideally find property that already has well, and access to grid power. Before you sign off on buying the land, pay to get the perk test for a septic system. If your buying a property with a home, make sure the septic is up to spec get an inspector to examine the septic system. Check for any easments on the property, Can you build a driveway to the roard?
Are there any zoning or conservation easements that will prevent you from building your new home, or retrofiting ie historic building? It can be expensive if you need to truck in materials that are distance from your property. Do you need to retrain yourself so you can find a job that you can work at home or find a local job? Try to take advantage of free online learning presentations For instance Youtube is loaded with free training videos.
While your waiting to find an ideal property start spending time learning useful skills to be self-reliant. Instead of watching TV, watch homesteading videos. Plant a garden with different types of edible plants: Even if your living in an apartment, you can grow potted plants on a balcony or window sill. Learn how to build and maintain fences.
Your going to need to learn some skills anyway. So why not make good use of your time until you are able to afford property and find an idea property. Find out what areas around you can have a mobile home not permanent or permanent. Be sure to confirm what size lot is necessary. Then look for a piece of property there on deep discount.
Be sure to look for tax sales, too. When you get the property, then build a septic system with two split inputs, going to two possible house locations. No kidding, they go for that little. Then step by step put down a concrete slab on the other one that CAN later serve as a foundation for your real house; then save up to build a foam insulating concrete form house on the slab, without debt. About the time your concrete house is ready, you'll be more than ready to move out of the mobile home.
Frankly, if I were to try to take all that advice into consideration at once I would be massively confused and realize that I would have to immediately eliminate most of the US from consideration. No coasts, no tornado alley, no arid areas, no extreme weather, near good water, low real estate prices, on easy transportation corridors, good employment possibilities, etc.
In the interest of keeping it simple, I would make only a few suggestions. First and foremost, live beneath your means. Never believe what a real estate agent says you can afford. You cannot have "clear title" to land unless you own it outright. If you must finance, get the lowest interest rate and shortest term possible.
Don't wait around for a recession that may be a decade or more in the future. Relying on what so-called experts tell you about our shared economic future is highly speculative. The sooner you buy, the sooner you start building equity. The lower you buy, the faster you can build capital. In general the region that would be most friendly to your economic well-being would be the east that was settled before the industrial revolution, gets good rain, has an in-place sustainable infrastructure and is forested with hardwoods.
Distances are shorter to most things you need and there are folks around who have those old time skills. Plus, there are many poor areas where real estate is still cheap. Of course, all that depends on whether you have a reliable, if not highly lucrative, source of income. If you are young enough you may have time to learn a trade and begin earning a living from it.
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If not, you will have to apply your already learned skills in an area where they are salable. And, of course, beginning on a new property means lots of hard labor before it is self sustainable. Be honest with yourself. Can you work a full time job where you earn your living and then come home and work hard to develop the homestead. It is a long term proposition. Where will you be healthwise 25 years from now? Can you sustain a high level of physical and mental functioning for that long? And then, what about kids and family?
It turns out kids are expensive. Bottom line, set your expectations of income low and be willing to work your ass off. There is no easy way out unless you are born wealthy or stumble upon wealth along the way. Those two options are unlikely for most of us. Finally, be wary of sustainability gurus. Many years ago I became enamored of Eliot Coleman, the ag guru. It took me a while to realize that he has built his mini empire on the backs of very cheap or free labor of youthful idealistic summer interns.
That pattern seems to be true of virtually all of those who offer a way of sustainable living. Look behind the scenes. As "deep throat" wisely advised, "follow the money. Years ago I visited Shelburne farms in Vermont. They do some experimental sustainable agriculture there that is quite impressive, until you realize that it exists on a former Vanderbilt estate that has long term trust income to support its ventures.
Its a stunningly beautiful place on the edge of the Green Mountains overlooking Lake Champlain with the Adirondacks in the background. Most of us can't pick up that kind of place on the cheap or have the staff and infrastructure to keep it going. If you planning a slab construction you need to figure out all of the drain locations before pouring the slab. You would at least need to have the home plans draw up and get a building permit before you can pour the slab. Also need to work out the details of where the septic tank and drain field will need to go. A basement also serves as an emergency shelter in case of severe weather or war.
A basement usuallys stays cool during the summer heat, so if end up on a grid down you have a place to go to avoid the heat. Installing radiate heating pex tubing is also a recommend. In fact, it also implies that you make sure your wastewater can handle both. That does cost a little more up front, saves a lot down the road. And your building permit is going to have to be good for a stand-alone slab that also happens to be good enough for a house later.
Design it yourself first, then take the rough design down to permitting, and see if that's even possible. Some counties may prohibit doing things that way; some won't care. If he wants a basement, he should do what he wants That's a design detail he needs to decide on himself. That said, a lot of property sometimes is on a slope; so if you can put the mobile home on a flat, and the basement slab on the basement level of the house, some ways down the slope, and the septic field farther down