8/28/11: August and the Economy Part 4 – Can a Bad Economy Create Great Investments?

Whew.  Here we are at our fourth and final installment of the August and the Economy series.  How are you holding up?  Our brains are swollen.

But, to keep the rally going, we’ve called on some very smart and outspoken money managers.  As we’ve said before (and will say again), too many real estate investors operate in their own world – which is far and away from the world of traditional financial planning, economics and paper assets.  Real estate investors are deal junkies.

However, there’s a lot to learn from paper asset and commodities guys.  And our guests for this episode are no exception.

Sitting at the silver (which some argue is a hotter commodity than gold) microphones, looking for the silver lining in the cloud of recession hanging over the U.S. economy:

  • Your silver tongued host, Robert Helms
  • Your on-his-way-to silver haired co-host, Russell Gray
  • Returning guest, the ever energetic and outspoken President of Euro-Pacific Capital, Peter Schiff
  • First time guest, alternative investment money manager, Ty Andros

With all that silver talk, you’d think this episode is about commodities.  And certainly both of our guests are concerned about the dollar and bullish on metals.  But today’s discussion is much bigger than that.

Peter Schiff has become well known for his very accurate prediction of the financial meltdown as chronicled in his best selling book, Crash Proof 2.o which is on our Recommended Reading list.  He’s been contending with many of the mainstream financial pundits for quite some time.  We like him because he makes Austrian economics easy to understand.

Since we last interviewed Peter a year ago, a lot has happened.  We check in with Peter this episode to get his current thoughts on recent events and where he sees the dollar, commodities and real estate all heading.

Ty Andros is also a money manager, but where Peter focuses primarily on non-U.S. stocks, Ty puts a lot of emphasis on commodities.   So as you might imagine, he has a lot to say on the state of the U.S. dollar and its affect on commodity values.

We care about what stock guys think about businesses because businesses are who employ our tenants.  We want to know which industries and areas are most likely to have good prospects for stable and growing employment.  People with jobs make better tenants.

We also care about commodities for a couple of reasons.  First, if our currency is dropping in value, then we need to find alternatives to hold our liquid reserves – somthing that will retain purchasing power.  After all, that’s all a currency is good for: buying stuff.

Commodity trends are important for other reasons also.  Rising commodity prices are one of the first symptoms of inflation, which will later show up in unemployment (when costs go up, but prices can’t be raised yet, companies will lay off people to reduce labor costs and offset their rising costs of raw materials).  Also, rising commodity prices make new buildings more expensive to build, so as replacement costs rise, current buildings are more attractive.

The point is that all this economic stuff really does directly matter to real estate investors.  And most don’t ever pay any attention to it.  So dare to be different!  Listen in to these compelling commentaries and expand your own thinking…right here on The Real Estate Guys™ radio show!

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