Saturday, August 01, 2015
The final frontier, or...
It was always about the money.
Get on with it man!
This blog post has been a long time coming, since Ive been back from Cancun for moths and haven't written a word about themselves conference. The tone of this symposium was very different than the Chile trip. Santiago was primarily political in nature, and the importance of diversifying yourself beyond your home jurisdiction. Financial information was covered of course, as any good Plan B has to include preserving your wealth, and blunting the political threats to it. Still, my main takeaway from the first symposium was the confirmation that my fears were not irrational, and that very smart, rich, powerful people had the same concerns I did, and I include both the attendees and the speakers in that statement. I consider the trip life-altering, a borderline conversion experience. Simon Black was also converted - to never attempting this again. As someone who's worked these events extensively, I understood his exhaustion.
Cancun's focus was almost entirely about money, with a smattering of politics thrown in. The pacing and size were different as well, much like a band recovering from playing sold out shows at the Meadowlands with an acoustic set at the Roseland Ballroom. I enjoyed both trips, but Chile was the one I enjoyed most. This is natural, as I am both broke and highly opinionated. Of course I'd enjoy hearing from Dr. Ron Paul and Nigel Farage speak on politics. I say this even as I left Santiago stricken, overwhelmed with the realization I was a fraud and didn't belong. Still, I actually needed Cancun more. Having your point of view reflected back to you is wonderful; having Congressmen and European parliamentarians, along with 499 other people doing the same, all of whom are more successful than you, is even better. Being forced to confront your inner doubt and your failings? That's probably more important over the long term.
Once I landed in Cancun, I found the van for the Marriott hotels, and rode to the beach. I started a conversation with one of my fellow attendees, and I'm glad I've learned the art of conversation. As the event didn't start until the next day, there was a small, informal cocktail party that evening, and as usual, my fellow attendees were the best part of the trip. It was here that I had the chance to speak with our host, Mr. Black. Unlike myself or Scott, he doesn't believe the world is coming to an end, only that change is coming. This new world will be fraught with dangers and ripe with opportunities, and those who prepare will not only survive, but thrive.
1) What will happen to money: Of the main themes, this was by far the most familiar. Money is not wealth; it is a proxy for wealth. We trade small pieces of paper (or numbers on a computer screen) to get things that can create more wealth or goods and services to consume. These proxies can only be used under specific circumstances. A Euro in China has no value until is traded for another piece of paper anymore than a Yuan can be used in New York, save for a certain section of Queens and Downtown Manhattan. Because the world is in so much debt, money and its proxies: CD's, bank balances, bonds, stocks, credit default swaps, and the like will not be honored at par at some point in the near future. The holder may get something back, but at a reduced value. This statement includes government promises of every stripe: Social Security, public pensions, Medicaid, etc. Every monetary asset or expectation you have is someone else's future debt. If only you demand repayment on a given day, fine, but if everyone wants to be repaid at the same time? No. The short term trend is inflationary, as nations try to print their way out of debt. The long term is different; as these debts are seen as the un-payable shams they are, the future is decidedly deflationary, a much scarier notion than inflation.
2) How do you preserve your money? Without stepping on topic #3, the two best ways to do this is top take the fiat currency in your possession an covert it into another, stronger currency or buy goods that hold their value. This will translate into gold for most people, but it could be anything from precious metals, to multinational stocks, to fine wine to real estate. When I say real estate, I don't mean rental properties per se. I mean condos in Miami Beach, for example, that stay vacant. Middle Easterners treat these apartments as a safe haven similar to gold. You have to pay to store gold, so why not pay a monthly maintenance fee and property taxes instead? At least you can party on Ocean Drive.
3) How do you make more money? This was the topic that interested me the most, naturally. It's also the topic that went to strange places. The answer is simple: spend. (huh? Yes, really) This all so includes available credit, called using leverage. Spend someone else's money, put your own into gold. The key is in what you buy. Since all money is essentially worthless, buy performing assets or create them - create a busines. Here we were given ideas. The strangest was investing in a loan businesses that uses fine wine collections as collateral. People are cash poor but asset rich, and they'll borrow in this fashion. Another possibility given was to buy websites at double the yearly cash flow, giving you 50% return. This seemed the best solution for me, along with using my sterling credit rating to buy rental properties. I don't have the cash to do this right now, but there are opportunities at many price levels. All these actions involves risk , the largest of which is believing the system won't completely collapse. Of course if it did, we're all screwed anyway, and setting up a safety plan is a whole series of different plans, none of which I have the money to set up. Effectively, I can use my resources to set up a homestead or cash flow properties or buy a businesses, but not both. If the businesses, real estate, whatever worked out, I could use that to set up a safe landing place, but I'm getting off topic.
Get on with it man!
This blog post has been a long time coming, since Ive been back from Cancun for moths and haven't written a word about themselves conference. The tone of this symposium was very different than the Chile trip. Santiago was primarily political in nature, and the importance of diversifying yourself beyond your home jurisdiction. Financial information was covered of course, as any good Plan B has to include preserving your wealth, and blunting the political threats to it. Still, my main takeaway from the first symposium was the confirmation that my fears were not irrational, and that very smart, rich, powerful people had the same concerns I did, and I include both the attendees and the speakers in that statement. I consider the trip life-altering, a borderline conversion experience. Simon Black was also converted - to never attempting this again. As someone who's worked these events extensively, I understood his exhaustion.
Cancun's focus was almost entirely about money, with a smattering of politics thrown in. The pacing and size were different as well, much like a band recovering from playing sold out shows at the Meadowlands with an acoustic set at the Roseland Ballroom. I enjoyed both trips, but Chile was the one I enjoyed most. This is natural, as I am both broke and highly opinionated. Of course I'd enjoy hearing from Dr. Ron Paul and Nigel Farage speak on politics. I say this even as I left Santiago stricken, overwhelmed with the realization I was a fraud and didn't belong. Still, I actually needed Cancun more. Having your point of view reflected back to you is wonderful; having Congressmen and European parliamentarians, along with 499 other people doing the same, all of whom are more successful than you, is even better. Being forced to confront your inner doubt and your failings? That's probably more important over the long term.
Once I landed in Cancun, I found the van for the Marriott hotels, and rode to the beach. I started a conversation with one of my fellow attendees, and I'm glad I've learned the art of conversation. As the event didn't start until the next day, there was a small, informal cocktail party that evening, and as usual, my fellow attendees were the best part of the trip. It was here that I had the chance to speak with our host, Mr. Black. Unlike myself or Scott, he doesn't believe the world is coming to an end, only that change is coming. This new world will be fraught with dangers and ripe with opportunities, and those who prepare will not only survive, but thrive.
1) What will happen to money: Of the main themes, this was by far the most familiar. Money is not wealth; it is a proxy for wealth. We trade small pieces of paper (or numbers on a computer screen) to get things that can create more wealth or goods and services to consume. These proxies can only be used under specific circumstances. A Euro in China has no value until is traded for another piece of paper anymore than a Yuan can be used in New York, save for a certain section of Queens and Downtown Manhattan. Because the world is in so much debt, money and its proxies: CD's, bank balances, bonds, stocks, credit default swaps, and the like will not be honored at par at some point in the near future. The holder may get something back, but at a reduced value. This statement includes government promises of every stripe: Social Security, public pensions, Medicaid, etc. Every monetary asset or expectation you have is someone else's future debt. If only you demand repayment on a given day, fine, but if everyone wants to be repaid at the same time? No. The short term trend is inflationary, as nations try to print their way out of debt. The long term is different; as these debts are seen as the un-payable shams they are, the future is decidedly deflationary, a much scarier notion than inflation.
2) How do you preserve your money? Without stepping on topic #3, the two best ways to do this is top take the fiat currency in your possession an covert it into another, stronger currency or buy goods that hold their value. This will translate into gold for most people, but it could be anything from precious metals, to multinational stocks, to fine wine to real estate. When I say real estate, I don't mean rental properties per se. I mean condos in Miami Beach, for example, that stay vacant. Middle Easterners treat these apartments as a safe haven similar to gold. You have to pay to store gold, so why not pay a monthly maintenance fee and property taxes instead? At least you can party on Ocean Drive.
3) How do you make more money? This was the topic that interested me the most, naturally. It's also the topic that went to strange places. The answer is simple: spend. (huh? Yes, really) This all so includes available credit, called using leverage. Spend someone else's money, put your own into gold. The key is in what you buy. Since all money is essentially worthless, buy performing assets or create them - create a busines. Here we were given ideas. The strangest was investing in a loan businesses that uses fine wine collections as collateral. People are cash poor but asset rich, and they'll borrow in this fashion. Another possibility given was to buy websites at double the yearly cash flow, giving you 50% return. This seemed the best solution for me, along with using my sterling credit rating to buy rental properties. I don't have the cash to do this right now, but there are opportunities at many price levels. All these actions involves risk , the largest of which is believing the system won't completely collapse. Of course if it did, we're all screwed anyway, and setting up a safety plan is a whole series of different plans, none of which I have the money to set up. Effectively, I can use my resources to set up a homestead or cash flow properties or buy a businesses, but not both. If the businesses, real estate, whatever worked out, I could use that to set up a safe landing place, but I'm getting off topic.
