Magical Inheritance of Judgement, Skill and Expertise?

Discussion in 'Wealth Creation & Management' started by Agnostic, Sep 20, 2014.

  1. Agnostic

    Agnostic Active Member Silver Stacker

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    I have read and heard a number of exit plans which go something along the lines of: I will buy some ounces here and there and accumulate a stack. Then there will be a collapse/reset/hyperinflation. And then with my ounces I will be able to buy a big house/rental properties/farms/hotels/businesses.

    From memory some of the SBSS videos talked about buying property and businesses in the collapse. I think there are quite a few other promoters of this theme.

    I have a few problems with this model.

    1a. Some people impute almost magical properties to their few ounces. So in their life up to this point, they have generally spend most of their money and don't have much to show for it. However they do have a few hundred ounces of silver, held in a dog's breakfast of bits and pieces. Worth perhaps A$6000 ATM. Suddenly this will be able to buy massive quantities of property? I don't think so. Sure it is easy to imagine it buying 3, 5, even 10 times its current value, but even then its only effectively $60k. A house is worth $600k. There is over a hundred years of house price data available and it has not dropped that bad, ever.

    1b. Why will someone who has only accumulated relatively meager savings, suddenly become a conservative house owner. Because house ownership involves much more than just buying the thing - it requires ongoing responsible saving for the maintenance, rates, insurance etc.

    2. Buying and managing rental properties requires serious skill. There is a reason why most investment property owners only have one rental. And that they only hold it for 3-7 years. This skill is not going to come overnight. If for some reason a stacker suddenly is able to convert his metal into a rental property portfolio, and doesnt have purchase or rental management experience, I suggest he will not have that portfolio in 5 years time.

    3. Running a farm? Another skill set entirely. Years of experience required. Knowledge of machinery, human resource management, the seasons, chemicals, insects, harvest, storage, the list goes on.

    4. Business - extremely challenging. An easy way to move your savings to other people's pockets if you make mistakes.

    Hence my suggestion is, if you really want to take part in "the greatest wealth transformation of all time", get started building practical skills in property, business etc NOW.

    And who knows, if it doesnt all collapse, maybe you will do okay with your efforts anyway ;)

    All the best,

    Agnostic
     
  2. smk762

    smk762 Active Member Silver Stacker

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    A fool vs his money, and the eventual breakup. It would be wise to invest in personal skills as much as anything else. If you aren't earning, you're spending. If you aren't learning you'll be sending your money to someone who did, so they can do it for you.
     
  3. hyphenated

    hyphenated Active Member

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    I don't disagree.

    There is every reason to diversify, and assuming that you have a lock on the coming apocalypse (whether it be Zombies or Inflation) is not a wise strategy - as long as you don't bet on *all* the horses. There is every reason to dip into what you hope to be immersed in - one rental property at least gives some exposure to the pitfalls of a portfolio. Bit more difficult becoming acquainted to farming, although starting at the bottom and working *for* a farmer is as good a way as any, provided you get a wider view than a row of produce. Lifestyle blocks are out there, whether it me Mangoes, Logans, Cocoa or Lychees up here (There's a Dragonfruit farm for sale a few miles away from here, which might be a good play given the growing interest from down south).
     
  4. sammysilver

    sammysilver Well-Known Member Silver Stacker

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    Diversification is a bet each way, minimal returns. Put all your eggs in one basket, and keep a close eye on your basket. Develop your own strategy, leave others to their own. Put your model out there if you are so intent on criticising others.
     
  5. errol43

    errol43 New Member Silver Stacker

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    Now if you own your home and a rental property..Then you would probably be in the best position..

    If and when the collapse comes, any bit of rental income would be helpful for food costs.

    The trouble is no one can predict what consequences there will be. Big Farms may be replaced by everyone having to grow their own food.

    There is so many scenarios that it is impossible to know if you are running down the right road.

    Will it be war, financial collapse, man made climate change, non-man made climate change that brings our current civilization to a grinding non-growth halt.

    As for gold and silver buying a house.. It has happened before in Germany where 1oz gold would buy you a house, no problem.. Will it ever happen again? IMO if the US cant pay their $17trillion debt plus their other off balance sheet debts, well it would not be impossible for what happened in Germany could well happen in the US and other places..Derivatives IS THE GRIM REAPER that few people have ever heard of and even if you do know about them . To get your head around the $700,000,000,000 amount bet by the major 5/10 banks is a daunting task and even some of the world's richest men admit they don't have a clue.

    Carry on stackers you might well be on the right road and don't know it yet.

    Regards Errol 43
     
  6. Kawa

    Kawa New Member

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    That's just Bullshit.
     
  7. sammysilver

    sammysilver Well-Known Member Silver Stacker

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    What's your alternative? Specifics, not generalisations!
     
  8. boston

    boston Active Member Silver Stacker

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    Not necessarily accurate.

    There were houses in Rose Bay (Sydney) that were changing hands for 5 pounds back in the 1930's depression. Think it can't happen again?

    That $600k house may well be worth <$200k if a severe enough depression were to happen - and all indications are, that it is just around the corner.
     
  9. nonrecourse

    nonrecourse Well-Known Member

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    Actually your wrong but that is nothing new :lol:

    http://www.barrypopik.com/index.php...eggs_in_the_one_basket_and_watch_that_basket2


    Kind Regards
    non recourse
     
  10. nonrecourse

    nonrecourse Well-Known Member

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    Unless the British invade again I don't think we will be going back to pounds :p and..... In the 1930's 5 pounds was a hell of a lot of money.

    Kind Regards
     
  11. petey

    petey Active Member Silver Stacker

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    I love personal freedom, so I encourage everyone to do what suits them. But often on this topic I think the word "diversification" is poorly defined, or at least interpreted differently between the members.

    NR - if I've listened to your story intently, you and your wife have multiple investment properties, mostly commercial - and you also have a business and some "savings" in physical. Whether or not that is accurate doesn't really matter for the sake of this post.

    Some may say that if you are "all in" on any type of property, then all of your eggs are in one basket.
    Others may say that if you have multiple commercial properties then you are well diversified.
    Others may believe that you need both commercial and residential properties in order to consider your investments well diversified.
    Others again think that these properties need to be in different states or countries before considering well diversified.
    ...and so on and so forth.

    So while I fully understand the point that many are trying to make, maybe you're all essentially making the same point. :lol:

    So in the example above I'd say that you are quite well diversified, NR. If your business is Australian based with Australian customers you're to the Aussie economy for sure, but if you have income from commercial and residential properties in different areas, a business and some savings in physical I'd suggest you are better diversified than most.
     
  12. sammysilver

    sammysilver Well-Known Member Silver Stacker

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    Mark Twain's novel Pudd'nhead Wilson (1894) is frequently cited for a similar line, probably inspired from Carnegie: "Put all your eggs in the one basket andWATCH THAT BASKET."

    Who would have thunk that when reading Tom Sawyer and Huckleberry Finn as a kid, that Huck was black.
     
  13. boston

    boston Active Member Silver Stacker

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    True.

    However, the pre-depression price of a lot of the Rose Bay properties was circa 500 - 1000 pounds. Rose Bay was/is a reasonably affluent suburb sandwiched between Point Piper and Vaucluse.

    Whilst not totally accurate for a comparison, the average wage for a male factory worker in Victoria was in 1920, 204 pounds. In 1930 for a male manager/clerk the wage would have been 364 pounds.

    5 pounds would have been circa 2 weeks wages for a male factory worker at the 1920 level or <1 weeks wage for a male manager/clerk. Sobering what could actually happen to house prices.

    http://guides.slv.vic.gov.au/content.php?pid=14258&sid=95522
     

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