We realize it’s only the START of 2019 …
But 2019 is the LAST year of the second decade of the 21st century.
And with our annual goal setting workshop coming up this weekend, we’re in the mood for thinking ahead. Like a decade ahead.
Perhaps you should too …
After all, real estate investing is based on long-term commitments … to markets, to properties, and often to financing.
Right now, there are more than a few reasons to think there are probably some MAJOR shifts coming … things which are important to consider in today’s investing decisions.
Consider this recent headline …
U.S. economy could slip from top spot in 2020 and keep slipping, analysts say – MarketWatch, January 14, 2019
“Standard Chartered predicts that China’s GDP will overtake the U.S. next year. What’s more, within another decade, India is pegged to push the U.S. even further down the list”
Think about that.
This isn’t some routine wave in an economic cycle. This is a complete global shift of economic (and probably military) power and influence.
Virtually NO ONE investing today has ever done so in a world where the United States and its almighty dollar aren’t the undisputed dominant economy and currency.
Of course, we’ve been talking for quite some time about preparing for the possibility of the U.S. dollar losing its unique and powerful position as the world’s reserve currency.
There are several internal and external forces working against it, in spite of recent relative strength.
In fact, Russia just dumped all its dollar holdings and traded them for Chinese yuan …
Russia Buys Quarter of World Yuan Reserves in Shift From Dollar – Bloomberg, January 9, 2019
These are both MEGA-trends … major shifts that are gradually taking place over a long period of time.
Back in 2016, Business Insider published an article about four mega-trends that could change the world by 2030 … including the U.S. losing top status.
Of course, we’re only a few years in. But IF you’re paying attention, you’ve been watching these trends slowly and surely develop.
Most people don’t even see it happening, much less have any understanding of what it might mean to them … or how to prepare.
We think that’s a mistake.
There’s an old investing adage which says, “the trend is your friend.”
In other words, it’s generally a losing proposition to invest against the trend. It’s just too powerful. Especially a mega-trend.
Sure, you can be contrarian and buy when others are selling or vice-versa.
But that’s just navigating cycles. If you get it wrong, you can simply wait it out because time often heals those wounds.
But a mega-trend isn’t a cycle. It’s a major long-term shift in the landscape. It fundamentally changes the way the world works.
The gradual erosion of the United States exclusive status is a powerful mega-trend.
Artificial intelligence is another.
In a recent news report, a leading expert predicts AI will displace 40 percent of world’s workers as soon as 2035.
That kind of disruption has the potential to impact economies, political systems, and your real estate investments.
So when thinking about the New Year ahead … we encourage you to start thinking about the next decade as well. Because big change is on the horizon.
Fortunately, real estate moves slowly … just like a mega-trend.
And because real estate is a permanent and essential part of human existence, there’s likely to be investment opportunity … so long as private property rights survive.
So what might all this mean to YOUR real estate investing?
It’s obviously way too much to unpack in a weekly newsletter, but here’s some food for thought as we approach the 3rd decade of the new millennium …
U.S. real estate could grow in appeal as a preferred wealth preservation haven for foreign investors.
Sure, the U.S. economy and dollar might get knocked out of the top spot. But the U.S. has a long and stable history of strong private property rights.
The same can’t be said for some these up and coming economies.
However, if the dollar loses reserve status, then dollar-denominated asset prices … along with interest rates … could surge in response to inflation.
So anyone who uses long-term fixed debt to acquire real estate BEFORE it happens could end up a two-time winner.
Rising prices against fixed debt makes equity happen. We like it.
The key is to pick markets and product types likely to see increased demand if economic conditions become more challenging for working class folks.
Of course, if economic conditions improve then all the better. But best to prepare for downward pressure.
These are themes we’ve been talking about for years … because the mega-trends driving them have been slowly developing for quite some time.
Be careful not to let routine cycles, political winds, or investing fads blind you to the mega-trends underneath it all. Mega-trends transcend all those things.
The good news is mega-trends move slowly.
So IF you’re paying attention, you’ll almost always have plenty of time to adjust your position to capture opportunity and mitigate risk.
The even better news is real estate is a tangible, essential asset … with a unique status. All stakeholders in society have a vested interest in keeping it valuable.
Not all investments can say that.
Of course, all investing involves risk. But so does NOT investing.
So it’s a matter of being strategic and taking well-calculated risks … which is why we think it’s critical to keep a keen eye on mega-trends as well as cycles.
When you play off the big picture, it smooths out short-term gyrations which can sucker Pollyanna investors to jump in … or spook skeptical investors into missing out.
Of course, we hope you’ll join us.
But whether you do or don’t, we encourage you to get together with smart, experienced investors and discuss the way the world is changing …
… and how YOU can best position yourself to survive and thrive as the future unfolds.
Until next time … good investing!
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