I’m no financial guru, so please take what you are about to read with a pinch of salt. This is not meant to be taken as expert advice. Just an honest opinion of what I would do in these turbulent economic times if I could still afford to keep my house.
I would not sell it. Why?
First of all I’d be selling in a depressed market, that means I would be selling it at a fraction of its real value. Secondly, because of this saying:
Bad money drives out good money
Bad money in this case would be the declining value of cash because governments all over the place are printing money (and in the process creating humongous deficits) in order to:
When that starts to happen increasingly, investment funds stop flowing into paper assets/ exotic financial instruments and run to the safety of tangible assets like gold, other precious metals, oil, and -yes – real estate, all collectively known as commodities (good money).
Because demand will have returned to commodities, their prices will shoot up as further pandemonium ensues.
It seems that in the panic we have all forgotten about past horror stories of hyperinflation. What I’m seeing now with rescue packages worries me because those are the very actions that can lead to hyperinflation. Yet we all seem to be merrily oblivious of the monster that might befall us.
Most of us alive today have never experienced hyperinflation (except Zimbabweans) and that painful experience may be just around the corner.
I don’t buy the story about inflation going down “because the economy is slowing down”. That’s talk of inflation from a completely different dimension. These are the reasons I think your house may pick up value sooner than you think.
If you had spare cash, now would be a good time to pump it into real estate. Property is cheaper and it will always be a good store of value.
If this does not happen you can rightly dismiss me as a bumbling quack who should stick to computer code. but I have the gut feeling that we are headed in that direction. Don’t get me wrong, the good times will be back, infallible human ingenuity will again find new ways to create great sums of money out of thin air. This will not happen before the crucifixion passes through.
One day it might be written in history books that the biggest economic blunder made in the 21st century was to not let financial institutions fail and let the markets correct themselves.
Without meaning to toot my own horn, I correctly predicted over a year ago that the overheated Chinese stock market would collapse and cause mayhem. This was largely overshadowed by the crisis that began in the US.
All the while, others were saying such a thing was impossible. Perhaps that’s because they honestly did not see it coming. So let’s not be too hard on our gurus. It’s important to be careful about whom to take advice from. This blog post by Dave Duarte backs me up on that front.
Let’s remember that it’s not nice to fool with mother nature.
Micheal Moore’s next movie looks at Wall Street and what he dubs the “biggest swindle in American history.” He’s called on people from banking, brokerage and insurance industries to come forward to talk about their experiences and what went on as the crisis unfolded.
“Based on those who have already contacted me, I believe there are a
number of you who know ‘the real deal’ about the abuses that have been
happening. You have information that the American people need to hear,” he
writes on his website. He’s promising them confidentiality. You can bet the portrayal will not be
flattering. The real issue is, how balanced will he be?
Read all about it in this New York Times article.