Tuesday, October 15, 2019

The Four Gs Of Investing In 2020

With less than three months left in 2019, it is time to start thinking seriously about next year which promises to be the most tumultuous period in American history since that little disagreement in the 19th century between the North and South. No matter what happens next year and regardless of who wins, things are about to get ugly. If Trump can rally his base and pull out one last win for the Grand Old Party, the Left will lose their remaining shreds of sanity. People who are convinced Trump is a crypto-Nazi in spite of being embarrassingly obsequious toward Israel, endlessly concerned with trying to placate blacks with "criminal justice reform" and touting low black unemployment and his grotesque appeals to the homosexual community, are not going to abide by the results of an election where Trump wins, even if he wins both the electoral college (possible) and the "popular vote" (nearly impossible). On what passes for the Right, it is going to be difficult to see a Trump loss as anything other than a coup. Since the 2016 election, the bulk of the government, the Democratic party, the media (but I repeat myself), the popular culture, the business community and many "Republicans" have worked to undermine and ultimately remove Trump from office. See this video from Project Veritas. The impeachment in search of a crime is proceeding but it won't succeed in removing Trump from office.

That brings me to the topic today. How should a red-pilled family invest in 2020? Using assumptions that I think are pretty solid, that 2020 and beyond is going to see rapidly escalating instability, and we are on the precipice of a serious meltdown, the traditional ideas of investing are not going to cut it. The primary reason for that statement is a simple fact that most people don't think about: most of your "wealth" only exists in an electronic ledger somewhere. For example, most people invest via their employer's retirement plan and invest in mutual funds. Some people invest directly in stocks via a brokerage account. Very few people own physical shares of stock via a stock certificate. You can have a million "dollars" in your 401(k) but that is only valuable as long as the assumptions we all agree to keep working. If the power goes out, good luck converting your pixel wealth into food.

(I am no longer a registered investment adviser and what follows is not actual investment advice and is provided for entertainment purposes only)

A proper investment strategy for 2020 can be boiled down to "The Four Gs", which are:

Guns, Grub, Gold and Ground

Allow me to break it on down for you.

Guns

It doesn't matter how much food you have stored or how many gold doubloons you squirrel away if someone else can walk in and take them. Guns are the most commonly understood necessity for the person anticipating a meltdown because every sensible person knows that when the dogs slip the leash, all bets are off. Protecting yourself, your family, your neighbors and your property requires the means to do so. A lot of guys are just LARPing as operators thinking we are headed for some sort of mass armed conflict, I think things are just going to disintegrate and you are going to be left to fend for yourself.

My expectation is that things are going to start collapsing soon. Probably not in 2020 or right afterward but in the next ten years. So we have some time to stockpile firearms and ammo and stuff to fix and maintain your firearms but we don't have unlimited time. I have said before that Trump's election bought us some extra time but that time is running out. There is never going to be a better time to purchase firearms and accessories than right now. For example, through last weekend Classic Firearms had Polish made 30 round AK magazines for $4.99. That is crazy and sure they are plastic and you get what you pay for but a perfectly functional 30 round mag for five bucks? Come on. Or at Palmetto State you can get 30 round AR PMAGs for $8.99. Last month you could get 21 round Beretta APX magazines for less than $30. But 18 months from now it might be completely illegal to import, sell or even possess a 30 or even 11 round magazine. Assuming you can buy them at all, do you think the prices will get lower?

A secondary utility of firearms, often forgotten by tacticool operators looking for the most dope AR set-up, is that firearms can be used to hunt game and put food on the table, assuming you live somewhere game is still plentiful. Ideally you would want at least a .22 and a dedicated deer rifle but in a pinch you can easily kill a deer with a .223 or 7.62x39. Not that I would because it is illegal but I could load up a rifle right now and drive around for 15 minutes and get shots at several deer from my car. At sunup around these here parts I often see a dozen deer in a matter of ten minutes and a single decent sized doe is enough meat for my family for a while. Rabbits, turkey, ducks, squirrels. There is a lot of food wandering around but only if you have a way to harvest it. I might add that the time to figure out how to dress out a deer you shot is before SHTF.

Having extra ammo might also be something you can barter with provided you are very careful about your trading partner. You don't want to resupply someone with ammo that will be used to rob or kill you. That is why you need to build relationships now so you know who you can (probably) trust.

I might add a bow of some sort in this category, there is definitely something to be said for being able to shoot a deer silently. Even a crossbow, if legal in your area, for the simplicity of use.

A personal pet peeve is the tendency of a lot of people to buy dozens of different kinds of guns, all using different ammo. You should have enough guns to do what you need (a semi-auto high capacity rifle, a hunting rifle, some handguns, a few shotguns for hunting/defense and some .22 or other rimfire). Having weird, exotic caliber toys is fine for summertime but winter is coming. You are better off having a handful of firearms you can shoot well and have plenty of ammo for.

Grub

Food is going to be an issue soon. Our food supply system relies on cheap fuel and a functioning infrastructure. A single semi-serious weather event can leave a grocery store stripped bare in a matter of hours and unless the resupply trucks show up your grocery is going to have nothing but pickled herring and mayonnaise (both of which are actually pretty nutrient dense). A major energy disruption would mean that the trucks would stop rolling and/or fuel prices would skyrocket which in turn would mean food prices would rise drastically and food availability would be severely hampered. No more fresh bananas in Indiana in January for $.29 per pound. Then throw in a disruption to the food stamp system and you have people in food crisis in a hurry. Hungry people do crazy things, that is why the first G is so important. Your normally peaceful, law-abiding neighbor will do things he normally wouldn't if his kids are starving, imagine what some of the more criminally inclined urban folks will be willing to do.

Having food you can rely on is very important, as is water which might be an even bigger deal depending on where you live. I have a well and a generator so I can get water from the ground and there are lots of creeks, rivers and ponds around me that I can get water from using a portable water filter. If you live in a suburb or worse yet a city, you can find yourself with nothing to drink in a matter of hours and that is fatal in a hurry. You can't just run to a golf course and get water from a water hazard that ducks and geese are pooping in unless you want to die of a waterborne illness or parasite. Think about where you would get water if the power went out. If you don't have a ready answer, you have a problem. Don't assume you can go to Walmart and get jugs of water, if there is a significant interruption in water supplies, everyone will be thinking the same thing and even if they haven't run out, it could get ugly. Like Black Friday ugly but with people who are far more desperate.

Food should be in two categories, food you would eat more or less immediately in the event of a short-term disruption and food that will carry you through over a longer or even indefinite shortage.

What if things go sideways more or less permanently? Again, you will be in trouble unless you find a way to get food in perpetuity without running to Kroger. Gardening and canning will be important, as will sustainably raised animals. Properly managed, livestock like goats, rabbits and chickens can thrive and reproduce on a very small piece of land. Smaller cattle that efficiently convert grass to meat works as well but the big commercial breeds that rely on grain less so. Bees are a great idea, they pollinate crops and also provide honey which is very healthy and sweet plus it lasts forever.

Food is another great barter item. If you can provide fresh eggs or milk or vegetables, maybe your neighbor can provide you with something you are short on. Again, be careful who you trade with. "I'll give you X in return for Y" can quickly turn into "I'll just shoot you, take Y and keep X for myself".

Gold

In speaking of gold, I am using the term fairly loosely to refer to any sort of real, hard currency. Gold itself is pretty pricey right now. A single 1 ounce gold coin is more than $1500. I would prefer 1/10 ounce gold coins as they are more affordable now and will be more usable later. What are you going to trade an entire ounce of gold for? My preference is silver, it is cheaper and easier to trade. This is based on the assumption of using these coins for trade in a SHTF situation, not as a hedge against inflation or a long term investment.

Holding a significant chunk of actual cash is a good idea. If things collapse it will probably be a progression. I imagine that credit card processing will fizzle out pretty quickly but many businesses will keep taking cash, at least for a while. With interest rates for modest amounts in savings at a bank functionally zero, keeping your cash reserves in a safe at home makes a lot of sense. This is especially true if you are like me and used to work for a bank and realize how little actual cash relative to deposits your local branch has on hand.

The banking system holds all of us hostage. The online free speech platform Gab has been constantly fighting for ways for people to financially support the platform. Over 50 banks, online processors (like Paypal) and credit card companies have all refused to allow people to send money to a perfectly legal online platform because Gab allows people to speak freely. It is just a matter of time, probably in the next year or so, especially if Trump loses, that financial institutions will start refusing to do business with the "wrong" sort of people on a widespread scale. This is also why you should be stockpiling the first G now, you might be able to order whatever gun or ammo you want online today but in a year or two credit card processors might refuse to process payments to online retailers that sell firearms and ammo, or local gun stores.

What about bitcoin and the various other crypto-currencies? I think they are great for making payments anonymously and outside of the system. As an "investment"? Yikes. The other big problem is that if things go belly up, you probably won't have ready access to the internet so that bitcoin won't be worth much. I can't imagine someone letting me buy a hog in return for a make-believe cryptocurrency that only exists online.

Ground

There is an old saying about land: they ain't making more of it. Being a property owner is the ultimate form of wealth. If you have all of your "wealth" tied up in make-believe assets in the stock market and in equally make-believe "money" that only exists as a series of pixels on a computer screen and you live in an apartment somewhere, you have nothing.

Granted, you only "own" your property as long as you keep paying your property taxes. In that sense no one owns anything, the government can seize your property at will if you don't follow their rules. So much for the Fifth Amendment. But still, property in the form of land is probably the most secure investment around provided you also have the means to defend it. See, that is why the first G is Guns. Your property is where your family will live, where you will store your food and stuff like coins and ammo, where you will have your garden and your chickens. You have to have a place to stay and you have to be able to protect and defend it. Having a bunch of gold coins and freeze dried food with nowhere secure to keep it and no means of protecting it just makes you a really attractive target.

Many people who think like I do still live in urban or suburban areas. For people like that, having somewhere to go when SHTF is critical. As I like to say, the time to bugout is right now rather than waiting for things to go sideways and maybe getting stuck but there are still lots of people who are staying put for family, job or just inertia. You better have a rock solid plan where you plan on going and how you are going to get there because in a time of serious instability living in an apartment building in a city is going to be lethal. If your "neighbors" don't kill you, starvation or dehydration will. Ideally you should have somewhere you can shelter in place, indefinitely, that is well outside of walking distance from an urban area.


We already have a decent sized piece of property but it is landlocked by a neighbors farm and he isn't selling. My goal is to buy a larger, vacant property nearby that has some woods on it where we can raise some animals that are not vulnerable to predators. That is going to be challenging as the Amish community continues to swell. When we bought our house about 8 years ago, we rarely saw any buggies other than our neighbor across the street. Now? On a Sunday it is like a parade on our road. Our dogs used to go crazy when buggies went by, now they barely notice. There are already hundreds of young Amish without a place of their own and they are building houses on every scrap of spare land they can find, even buying "English" places and converting them to Amish homes. That means property that went for $2000/acre is now upwards of $8000/acre and climbing fast. So additional land is going to have to be farther away than I might like.

For most of my adult life I worked in the investment and banking world but the world I worked in is based on a world that no longer exists. "Investing for the long term" in inflated equities that only exist in cyberspace is not going to get it done. Pay off your debts and start investing in real stuff. If you have an employer sponsored plan, like a 401(k), with a company match, go for it but take it with you when you leave that employer. Even though I am decades away from "retirement age", and therefore should be considered a long-term investor, I am tailoring my plans with a 5-7 year time frame. That is when I am assuming multiple things are going to implode in succession (the debt, unfunded mandates like Medicare) so I am also not expecting to see traditional investments strategies be worth much. I might be wrong but you aren't going to do too badly by tightening your belt and staying out of debt.

The Four Gs are designed to help ensure your basic survival and if your investments aren't doing that, what good are they? A million bucks on a statement from an IRA isn't going to mean much to a person who starves to death.

Clown World is upon us. Be prepared.


-----

As I stated earlier, I am not an investment adviser and the preceding was provided for entertainment purposes only and should not be construed as an investment recommendation.


2 comments:

  1. Great intro article - solid principles. When I selected calibers, I selected calibers that were in general, common use. Nothing oddball.

    ReplyDelete
    Replies
    1. Yep. I would love to have a 10mm but the ammo is kind of hard to come by and expensive. What I really need is to get better at the guns I have instead of buying every new fad that comes along.

      Delete