how to protect cash against inflation?

Reincarnated

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Do you mean equities are overvalued?
P/E are at historically highs, SP500 (SPY) dividend at 1.65%. The idea of stocks is to have +risk but more upside potential. If you're certain a recession is coming, it means a downside is higher than upside.

As for real estate, also overvalued:
Money in the bank will generate double the amount you'll get from renting right now, passively. People like to use AirBnb as an example but that's not passive (unless you have a ****ty job, you can manage your properties like an hotel- answering guests, changing sheets, cleaning...).
You can feel great owning properties but they all belong to the bank for 30 years. That's a long time frame. If you invested in NYC in the 90s, you're fine. What if you bought in Detroit? What if you bought only your home and your property taxes went up exponentially above inflation and not your salary? Even if the house went up 3X after 15 years and you're forced to sell, you won't have anything since you just paid interest. Even if you had your house fully paid, you won't be able to buy 3 similar houses.

My cousin bought a nice apartment abroad. 5 years ago it was valued at $250k and he didn't want to sell. Now he wants to but the best offer ain't even $100k. Good luck waiting till it goes back to $250k.
A deceased uncle had 15 properties in a small but very rich town. He would rent during high season (two months out of the year) since there was no demand for the rest of the year. Due to a crisis in early 2000, tourism in that town went down and he couldn't rent the properties for years, losing most of it since property taxes were outrageous.
Another friend of mine has 5 properties in Patagonia (extreme south of the world). He used to travel the world with that income, even with high inflation (that Argentina is known for). Now he can't.

Check survival bias. You can read about successful cases but you won't see the graveyard of people who didn't made it.

What I like about real estate is the "safety" it provides since it's a very tangible asset and it's not like it can be stolen easily. If you have 10 small apartments in city centre at some busy capital (year round residents), I would say it's a safe bet that will always make money. The economy can tank and rents can go to half but you'll still have income. I would stay away from leverage and pay a mortgage in 10 years max. Getting a 30-year mortgage is great when interest rates are at zero.

As for crypto, most lost 99% of its "value". Most are rug-pulls. Just like ponzi schemes, who entered early, made money out of new suckers. Many made some money, just to risk everything thinking they would make even more money...just to get rekt. I met a young guy who lost all his savings.


I don't know your age OP, but my retirement plan is to buy two apartments in some nice city in Europe. One to live, another one to rent. Income from it is to pay for maintenance of the one I live (HOA, property taxes, etc). That way I know I always will have a roof over my head. As for other investments, do what you think it's right.
Lot of really good wisdom in this post. And no I meant that the proportion of a typical fund's allocation of assets to bonds or equities (based on a given fund's typical allocation) is skewed towards bonds at a level not seen since 2009. I happen to think the S&P is relatively appropriately valued right now, I think that fact could be part of an argument that any cut in rates would be an amplified tailwind for equities, but at the same time am of the opinion that Powell will give us 0 cuts this year, something the market disagrees with.
 

BeExcellent

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Listen @jaygreenb I know exactly what you are saying. The Orange County example is an obvious pipe dream that was fine 30 years ago or more.

I don’t know how much ready cash you have, I don’t know your risk tolerance level, I don’t know your level of knowledge or sophistication or ability in negotiations or in the trades. I don’t know who you know in lending, what kind of income you have, what kind of income you need, how comfortable you are with self management, how willing you are to travel, etc. etc.

You have rent controls now in many cities whereas that wasn’t true before as much as now.

Those factors all matter after location location location. Your tolerance for BS matters. Real estate is not a hands-off investment unless you own indirectly in a REIT or limited partnership etc.

I do know that real estate is the single best inflation hedge there is. As the dollar inflates, prices rise. Housing is no different, market fluctuations aside.

I don’t need to think. I’m not the one freaking out about liquid cash sitting idle eroding in value as we type.

The flipping game is alive and well especially in luxury markets. The private lending game is alive and well. Etc.

If you are priced out where you live? Find something elsewhere. I can’t tell you what or how to buy. I don’t know where you’re located in CA, and I don’t know the local laws or the local values, both of which affect your situation.

Frankly it’s dumb to ask me to tell you how you are supposed to buy without knowing anything about your ability and your mindset and your risk tolerance and your work ethic. Im not doing a market analysis for you at all anyway.

I am actively buying by the way. But not in markets where the numbers are crap, and I am doing so according to my customized game plan.

What I am telling you is that opportunities exist. If you can’t find them or can’t capitalize on them that’s on you. You do seem to have narrow parameters on what you think is possible, and that always blinds one to opportunity.
 

jaygreenb

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Listen @jaygreenb I know exactly what you are saying. The Orange County example is an obvious pipe dream that was fine 30 years ago or more.

I don’t know how much ready cash you have, I don’t know your risk tolerance level, I don’t know your level of knowledge or sophistication or ability in negotiations or in the trades. I don’t know who you know in lending, what kind of income you have, what kind of income you need, how comfortable you are with self management, how willing you are to travel, etc. etc.

You have rent controls now in many cities whereas that wasn’t true before as much as now.

Those factors all matter after location location location. Your tolerance for BS matters. Real estate is not a hands-off investment unless you own indirectly in a REIT or limited partnership etc.

I do know that real estate is the single best inflation hedge there is. As the dollar inflates, prices rise. Housing is no different, market fluctuations aside.

I don’t need to think. I’m not the one freaking out about liquid cash sitting idle eroding in value as we type.

The flipping game is alive and well especially in luxury markets. The private lending game is alive and well. Etc.

If you are priced out where you live? Find something elsewhere. I can’t tell you what or how to buy. I don’t know where you’re located in CA, and I don’t know the local laws or the local values, both of which affect your situation.

Frankly it’s dumb to ask me to tell you how you are supposed to buy without knowing anything about your ability and your mindset and your risk tolerance and your work ethic. Im not doing a market analysis for you at all anyway.

I am actively buying by the way. But not in markets where the numbers are crap, and I am doing so according to my customized game plan.

What I am telling you is that opportunities exist. If you can’t find them or can’t capitalize on them that’s on you. You do seem to have narrow parameters on what you think is possible, and that always blinds one to opportunity.
Fair enough, there is opportunity everywhere in every industry if you are skilled at what you do and you can properly identify what that opportunity is, agree with that full on. Vast majority of people are not skilled. My point really was market conditions change and strategies in the past aren't necessarily what will work in the future. Different trends result in different opportunities.

Relax with the little boy comments, I'm not priced out of anything. Personally do not like real estate right now and think there are better places I would rather be allocated, TBills included. Not looking for guidance or advice. I believe rates are going to be elevated a lot longer than most people realize and that is going to cause a lot issues in multiple sectors. My preference is to be in multple assets that are highly liquid, not tied to cheap debt and not a sitting duck for for massive tax grabs or draconian regulation. You seem to think Real Estate is the only way to make money, maybe its your employee mindset, hard to think independently outside a narrow window. Do whatever works for you though!
 

2rings

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I did not read any of the answers in this topic but I think we are all screwed. I think there is no way to protect your money anymore unless you have a billion dollars or more. My guess is that most families less than billionaires will be wiped out by deliberate design.

by the time they begin seizing guns and real estate and freezing bank accounts while destroying the Dollar, that is practically everyones nest egg right there. They sometimes have claimed silver is a safe-haven and precious metals like gold, but gimme a break, look who big brother is.

this stuff is going to wipe most of us out by design.
 

BeExcellent

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Fair enough, there is opportunity everywhere in every industry if you are skilled at what you do and you can properly identify what that opportunity is, agree with that full on. Vast majority of people are not skilled. My point really was market conditions change and strategies in the past aren't necessarily what will work in the future. Different trends result in different opportunities.

Relax with the little boy comments, I'm not priced out of anything. Personally do not like real estate right now and think there are better places I would rather be allocated, TBills included. Not looking for guidance or advice. I believe rates are going to be elevated a lot longer than most people realize and that is going to cause a lot issues in multiple sectors. My preference is to be in multple assets that are highly liquid, not tied to cheap debt and not a sitting duck for for massive tax grabs or draconian regulation. You seem to think Real Estate is the only way to make money, maybe its your employee mindset, hard to think independently outside a narrow window. Do whatever works for you though!
The thread asked about inflation hedge. Real estate is quite adept for that. No need to talk down to me dear. I have multiple wealth strategies and have not been anyone’s employee since 2000. I am in business and investments. Things change. Having flexibility to pivot is important.

And my close circle of friends includes some of the financial elite if you use standards around here. People worth tens and hundreds of millions of dollars. I joke that I am a “baby millionaire” next to them, lol.

You’ll figure things out I’m sure.

Cheers
 

jaygreenb

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The thread asked about inflation hedge. Real estate is quite adept for that. No need to talk down to me dear. I have multiple wealth strategies and have not been anyone’s employee since 2000. I am in business and investments. Things change. Having flexibility to pivot is important.

And my close circle of friends includes some of the financial elite if you use standards around here. People worth tens and hundreds of millions of dollars. I joke that I am a “baby millionaire” next to them, lol.

You’ll figure things out I’m sure.

Cheers
Just returning your energy right back to you dear. Surprised at you age you still internet millionaire sports car elite circle flex. Which you came in with after I was talking about interest rates like it gives you special credibility. Amateur hour. You'll figure it out one day, I'm sure
 
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BeExcellent

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Just returning your energy right back to you dear. Surprised at you age you still internet millionaire sports car elite circle flex. Which you came in with after I was talking about interest rates like it gives you special credibility. Amateur hour. You'll figure it out one day, I'm sure
I started in this thread giving advice. You got snarky. That’s fine. You are not interested in advice. I’m certainly not freaking out about the climate. I simply adjust. Anyone reading can see exactly what’s going on.

Wishing you every success.
 

jaygreenb

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I started in this thread giving advice. You got snarky. That’s fine. You are not interested in advice. I’m certainly not freaking out about the climate. I simply adjust. Anyone reading can see exactly what’s going on.

Wishing you every success.
Lets revisit our first interaction. Below is my comment stating my case why I disagreed with gold liquidity levels and possible interest rate effects on RE and my reasoning behind it. Nothing snarky or disrespectful, just my opinion. Nobody knows and just pointing out additional variables I personally will pay attention too. The snarky lines later were just mirroring back your behavior.

Then lets look at yours. I pulled out my favorite condescending, passive aggressive, internet rich flexing, little boy implying lines.

I’m not the fraidy cat one worried about the sky falling. You are.

I’ve got a 7 figure net worth. All I have to do is pivot. And put the top down and go for a drive in my exotic car. Not a care in the world.

But no. None of us here have any idea what we are doing. Clearly. SMH.

Apparently you were not alive in the early 1980s.


Have to disagree with you here, gold is one of the most liquid assets on the planet. You can sell it almost anywhere in the world in any currency at anytime for close to spot. You make take a hit on premiums but can easily be offloaded quickly in any metro area. If you own paper gold, can be done anytime during market hours. If you have size, potentially different issues with transport/portability. Respectfully, nothing remotely close to real estate. Physical also is a bearer asset with nothing financialized tied to it.

Owning real estate outright is a different ball game than using leverage, there is a lot more flexibility. In your example of rates going to 20%, if using debt you really do not think that impacts commercial or residential prices? What does that do to borrowing costs and cap rates? The on top of that commercial is variable rate, what happens in a city like SF where there is a glut of space then have to refi doubling your costs. Market will not support that level of rent raises

Real Estate is a great tool for building wealth, without a doubt. A lot of people get blown up too. Like anything you have to know what you are doing
You’re a bright guy OP and you are asking the right questions. I built my net worth through real estate investing as a strictly cash flow investor. I paid attention to everything because when I started around 2005 I had a high income but no assets outside my own home.

I also supported a family of 5 solely on my income. Private schools, organic food, nice things. Not an inexpensive proposition. I had to be very smart and at times quite shrewd.

Yes you need to “get it”. Pigs get slaughtered in any investment arena. Hell. There was a time around 1999-2000 time frame where precious metals tanked. So you could have lost your ass there too. If you were young and held on of course you’d be fine now. I had 100 shares of Google at $110 a share 20 years ago. Oh well huh?

Why are you asking for advice only to swat down the advice people give you? I’m not the fraidy cat one worried about the sky falling. You are. I’ve got a 7 figure net worth. All I have to do is pivot. And put the top down and go for a drive in my exotic car. Not a care in the world.

I have a friend fighting stage 4 cancer. The home he owns in a prestigious area he can AirBnB for income, it’s nearly paid off and it’s worth 2.5M. He can downsize after he gets through the cancer thing, buy something small outright, invest the rest and he’ll live modestly but be set for life. So he’s pretty happy he has that asset. He’s 58. I could retire tomorrow but it’s silly to leave a decent six figure income potential on the table when I can be completely debt free and retire before 60 (and ski and travel and enjoy the good life.)

But no. None of us here have any idea what we are doing. Clearly. SMH.

Apparently you were not alive in the early 1980s.
 

2rings

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Nice find jaygreen.

I was also thinking that there could be a real shift away from big city properties. I was looking at videos of these ghost towns in the USA that are abandoned and forgotten towns. You can probably buy an entire ghost town and fix it up for the same price as one building in SF or NYC.

I mean we are talking a whole township with historical infrastructure already in place, with history, it just needs to be fixed up. If you fix it up you can declare yourself mayor or sheriff of the township. You could probably rename the whole town. Then you need to attract new people to live there but I am serious, in todays world this could very well be the next new phase of American real estate development.

Think of the difference though: own a whole town and be a Mayor, or own a big city building and be unknown.

That 70% off SF building looks like something to look into as well but remember, people are practically fleeing SF and many others fleeing Chicago and New York, and it is probably not just a brief moment in history. If these big cities suffer substantial damage and lasting problems become systemic it could be a long term problem.

You sure you want a SF building if it is like a zombie apocalypse? In a few years a lot of big cities are going to resemble zombie Tranq encampments with peoples limbs all infected like a true zombie drugland.
 
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jaygreenb

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Nice find jaygreen.

I was also thinking that there could be a real shift away from big city properties. I was looking at videos of these ghost towns in the USA that are abandoned and forgotten towns. You can probably buy an entire ghost town and fix it up for the same price as one building in SF or NYC.

I mean we are talking a whole township with historical infrastructure already in place, with history, it just needs to be fixed up. If you fix it up you can declare yourself mayor or sheriff of the township. You could probably rename the whole town. Then you need to attract new people to live there but I am serious, in todays world this could very well be the next new phase of American real estate development.

Think of the difference though: own a whole town and be a Mayor, or own a big city building and be unknown.

That 70% off SF building looks like something to look into as well but remember, people are practically fleeing SF and many others fleeing Chicago and New York, and it is probably not just a brief moment in history. If these big cities suffer substantial damage and lasting problems become systemic it could be a long term problem.

You sure you want a SF building if it is like a zombie apocalypse? In a few years a lot of big cities are going to resemble zombie Tranq encampments with peoples limbs all infected like a true zombie drugland.
Sounds like a giant undertaking to rehab run a town but if you are passionate about building a community, can't fault someone for trying! I do think groups of people will continue to form different types communities with common interests. Seems all people are becoming more polarized to whatever ideology they have.

SF and NYC real estate is too valuable to completely go away forever but may be some time before a course correction. NYC in the 70's and 80's was extremely bad until I think Guilliani became mayor and became very strict on crime. Really cleaned it up though
 

Fruitbat

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Little bit of care with investing entirely with S+P. Technology heavy. Outside the US we see the US market as a tech weighted play. Technology shares are negatively correlated to rates, so really this index will benefit more as inflation falls.

UK is a value play, big dividend players and heavy on banks, commodity producers, healthcare and oil. This is more of an inflation hedge index. Asian markets more about industrial production.

diversity geographically and by sector. US investors also have the dollar problem, in that dollar has been historically strong so overseas invesment always comes with the risk of a weakening greenback reducing returns.

emerging markets have most of their debt dollar denominated so these are actually a good play for US investors, as weakening dollar hurts investors in dollar terms, this helps the balance sheets of EM companies so there’s offset.

US markets are trading off high multiples. It’s a very expensive market. Far better valuations elsewhere. I’m not buying anything except Nasdaq type US shares presently. A lot of future growth is priced in elsewhere.

I like EM and Japan currently. Just opinions.

echo other comments on commodities, and commercial property as inflation hedged
 

2rings

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Sounds like a giant undertaking to rehab run a town but if you are passionate about building a community, can't fault someone for trying! I do think groups of people will continue to form different types communities with common interests. Seems all people are becoming more polarized to whatever ideology they have.

SF and NYC real estate is too valuable to completely go away forever but may be some time before a course correction. NYC in the 70's and 80's was extremely bad until I think Guilliani became mayor and became very strict on crime. Really cleaned it up though
Check it out check it out
A mystery buyer purchased a ghost town

i would do it too if I had the $$$

In the world today i think these ghost towns are how to hedge against inflation
 

jaygreenb

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Check it out check it out
A mystery buyer purchased a ghost town

i would do it too if I had the $$$

In the world today i think these ghost towns are how to hedge against inflation
Interesting read, wonder what the plans are for it. I lived in LA for a few years and drove through those areas, little north on the way to vegas. Pretty barren and rural.
 

2rings

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Yeah I have heard of the ghost towns in Nevada. They are probably more common than we realize.

Imagine getting a massive loan for around $10 million to outright purchase a ghost town and another few million for restoration and upkeep during the first few years of attracting new residents into the town.

I think it is a good possibility.

In todays America I would imagine residents of new townships might want walls and security around their towns to keep everyone safe from whatever the hell is happening here with the invasion and cartels coming into America.

If people abandoned big cities to relocate into self sufficient townships with their own government, currencies and defense.
 

EyeBRollin

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In todays America I would imagine residents of new townships might want walls and security around their towns to keep everyone safe from whatever the hell is happening here with the invasion and cartels coming into America.
A small town with a wall around it? Sounds dystopian.

If people abandoned big cities to relocate into self sufficient townships with their own government, currencies and defense.
Instead, the opposite is happening. People are flocking to big cities. They are building new shvt on every corner.
 

2rings

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Places like NYC a lot of people are fleeing to safer areas. Hopefully those safer areas stay smart and not fall for all of the woke nonsense that ruins cities.

There are a ton of these workers near my place who are all from El Salvador working construction jobs illegally. You want to know the safest country in Latin America? It is El Salvador. There are no murders in over a year there. Yet they keep coming over the border saying they are fleeing El Salvador for their lives. They are lying.

About the walls, that is what happens when countries are ruined, the wrong people get in control and then violence and rape, murder it all becomes so common that people wisen up to protect themselves. They build walls and any barriers to defend themselves from animalistic/tribal killers and rapists.

it is identical to what happened in South Africa how they rape and murder whites - they even dismember the raped bodies and eat them raw.
a common sense write up about it all is here:

^^That is the same thing they are doing in the USA. That is the SA that google does not want any Americans to know about. It’s fully real to want to protect yourself when the land is lawless.

i will be in my secure ghost town. Nice and safe with walls and protection tyvm.
 

EyeBRollin

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Places like NYC a lot of people are fleeing to safer areas. Hopefully those safer areas stay smart and not fall for all of the woke nonsense that ruins cities.
NYC is consistently among the top of safest large cities in the United States. Has been for the last couple decades.
 

zekko

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The thing that annoys me about the price of housing and real estate going up is that it just means I have to pay higher property taxes, since I have no plans of selling my house.
 
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