A 10,000 foot view of what is happening in the global economy and where smart money is investing.
It’s not news to say that nothing in the economy is going well. And I mean nothing.
The latest numbers from the bureau of labor statistics show that inflation is up 8.3% year over year.
But that number is a misnomer. It’s widely known that the CPI numbers from the Federal Government are “optimistic” at best. The calculations are opaque as is the reporting, so remember that the numbers you are being told can vary wildly from state to state and time of year.
It’s also a misleading number because CPI is an average of inflation across a dozen or so industries and economic sectors. You could have a DECREASE in cell phone plans, but then an INCREASE in overall food prices and the numbers would be averaged out. But if most of your expenses are in food, gas and clothing then you are encountering a MUCH higher rate of inflation than the average is letting on.
The inflation hitting your wallet could be 10, 20 or even 40%!
All that to say. It’s going to get worse before it gets worse.
The government printed A LOT of money over the past three years and that bill is coming due. The Fed has injected over 10 trillion dollars into the economy in the form of PPP loans, Stimmy Checks, Bailouts and other hornswaggle. In fact, the chart for the M2 money supply (the total supply of money in the economy in the form of liquid cash or near money) looks like a memecoin chart.
It takes time for all the money to sift down into the economy and start affecting the price of goods. The elites know a bunch of liquidity has flushed into the market so stocks take off, but then as the money sifts down into the economy these dollars have become high velocity money and it hits consumer goods hard and fast.
This is coupled with a global supply chain problem that is it’s own Gordian Knot of bad policy, covid lock downs, vaccine mandates, systemic inefficiencies and plain old screw ups.
For instance the Port of Long Beach, California. It handles 80 million tons of cargo on a good year but back in 2021, longshoremen working at the port had their hours cut.
This apparently had to do with in-fighting between the union, the port and the state of California on how to handle the back log. Supply chains are the definition of rigid and complex. Any disruption to a supply chain can have implications that last years.
As a Man Of Order this is the time to steel yourself and meet the problem head on. You can do that by making the necessary life adjustments now to weather the storm later. But there is a saying from Warren Buffet, the Oracle from Omaha, that rings true as we teeter on the edge of a multi-year recession.
“Be fearful when others are greedy and greedy when others are fearful.”
This is your moment to make life changing wealth. If you keep your powder dry and laser focus on improving your financial position you can sweep the floor and capitalize on a once in a generation fire sale on financial assets.
Other Men Of Order have covered the basics on shoring up your finances. Check out their work here and here. I’m going to break down the not-so-secret sauce on the basic tenet of investing to point you in the right direction.
Everything should be researched to the fullest before taking a position on any investment, just like you would for anything in your life. Let’s break down what’s going to happen:
Real Estate. I hate to say it but Real Estate is not going to dive as much as many are hoping. There is still a dearth of new homes and the rising interest rates are going to keep real estate out of reach for many.
But if you keep an eye out, there will be opportunities to purchase starter homes, duplexes or vacation property. Keep in mind during these years of tightening you’ll need a high credit score and a large down payment to make the deal happen.
Crypto. The bear market for Crypto is going to be dark and full of terrors. On the plus side, that means when the blockchains start another bull run, which is determined by the Bitcoin Halving, the gains will be massive.
But the crypto market cycles don’t coincide with the traditional stock market and will probably recover slower than Wall Street. In any case, keep your crypto in a cold wallet until the bears go back into their dens.
Stonks. The question isn’t when will stocks tank, the question is how low will they go? Some are saying this recession will outpace the 2008 crash by an order of magnitude. For the safest plays, stick to mutual funds. Buying individual stocks will reap larger gains but you’ll need to give them more attention so you don’t get wrecked.
Precious Metals. It’s never a bad idea to have some precious metals on tap in case shit hits the fan. As a store of value Gold and Silver are kind of meh but no financial analyst is going to say that owning a bar or two of Gold is a BAD investment. Make your gold purchases through reputable sellers and get in the habit of self custody.
High Tech Commodities. The demand for materials to make batteries is going to increase over the next decade as global green initiatives ramp up the electrification of everything that moves. Lithium, Cobalt, Nickle and their mining companies are going to see an upside that other commodities won’t.
When you see a lot of fear and worry in the market, that’s your cue to take note of whats happening in the world. The paper hands and the failures are getting wrecked but the smart money is timing their purchases. Don’t try to catch a falling knife, wait for things to flat line. Then make methodical investments that make sense for your risk tolerance.
Who Dares Wins.