Soros, Buffet, Icahn and many other “big shots” are calling it out! Economic “Winter” is looming, identified by deflation, economic depression, high levels of bankruptcy and unemployment. Sounds chilling” 🥶? “Winter” has historically been the biggest wealth expansion in history 🤔! Are you ready, to score big 🤑?!
We are not talking about the upcoming festive holidays and snowfall season but rather about the economic cyclical stage known as “Winter”. In the 1920s, Russian economist Nikolai Kondratiev (Kondratieff) developed a theory that prices, interest rates, foreign trade productions in capitalist countries moved in long waves of 50-60 years. This meant that “great depressions” were a natural part of the capitalist system, and were followed by periods of recovery. The winter phase includes deflation, a troubled financial system, collapsing commodity prices (except gold, which mostly goes up), rising interest rates, currency crises, a bear market for stocks and a clearing of debt. Go, dive deeper into “Waves”!
Central banks have been heavily cutting interest rates – “Quantitative Easing” - to stimulate economic growth – and preventing an eminent depression (Kondratieff’s “Winter”). Low-interest rates promote inflation, rather than deflation. When rates are low, people and countries take on more debt, the system certainly isn’t cleared of it, low-interest rates are generally also good for stock markets.
Central banks may be viciously interfering with the natural “clearing” of debt and excess that should happen to economies every 50-60 years temporarily but the eventual clearing will likely be all the more ugly! Resetting all asset markets (stocks, commodities. real estate and businesses) alike including a downfall of Gold as the unicorn recession hedge.
A final deep depression, debt deleveraging and economic crisis will probably see a 20 percent-plus fall in GDP, 15 percent-plus unemployment, and a stock crash that could fall as far as 89 percent for the Nasdaq, Dow, and most international stock markets according to Dent Research. Other analysts even forecast a complete monetary system “reset” with the introduction by IMF of the SDR (Special Drawing Rights) system, replacing the USA dollar as the global trade currency. The good news is the worst is considered to happen between 2020 and 2023 and turn up one by one after 2023.
Where Is The “Wealth Expansion”?
Okay so if it all looks like “doom and gloom” of a giant recession maybe even a depression how is this a great time for wealth creation 🤔? Well, there are plenty of opportunities if you just know where to look! We are certainly not implying these aren't going to be very tough times, but smart wealth builders know how to harvest opportunities in every economic environment. In short, all times are good times if you just know how to position yourself to find the good that's already there. What really happens during a recession or depression is that lots of money will be reported as “lost” but in reality, it is just being transferred. The money doesn’t disappear or evaporate, it ends up in someone else's hands 😮.
The big question is- how can you be one of those it is being transferred to? If you are prepared, you can have the means to be a part of the solution and not get stuck in the problem. The secret to making money during the recession, is first to be “wide awake” and going against the grain of the “sleeping impulsive mass”, emotionally buying during hyper periods when they should be selling and avoiding the market altogether and buying all-time low when the mass ultimately starts to panic and dispatching assets at bottom prices. This is how the wealthy prepare for “Winter”. Secondly is knowing to read the waves and to know when a change in strategy is necessary.
The Stock & Commodity Market
Because the rich know that the big crash is coming they start the big “sell-out” of their stocks for cash, while the general public just has their pension, 401K or any form of retirement plan, saving or insurance plan sitting there in the market as a “buy and hold forever plan”. Who buys at this time? Again the sleeping sheep who, misled by the great blow up in prices and frantic media, emotionally buy at an all-time high (buying from the rich for top prices) thinking and expecting to make money on greater upswings when in reality this is when the market is most certainly about to bust! So money gets transferred from the mass to the few in the knowing enlarging their wealth. Most of the times the cash is being poured into the commodity market in Gold as to hedge for the losses on the stock market. But with a big reset of the monetary system expected also the commodity market, even gold and silver - are expected to take a loss this time around. Ultimately when the stock and commodity markets start crashing and the panic “sell-out” of the mass starts the rich who got out early with top cash can now rebuy many stocks, options, and commodities for bottom prices and make huge, huge gains when prices start rising again come “ Spring”.
Most recently this is seen as many Big Companies are buying back their own stocks, aka CEOs are taking big fixed company loans on the lowest interest rates known in history. With this multitude of cash, they are buying stocks they personally own as individuals at top market prices with the money borrowed by the company. Making huge, huge cash liquid to prepare for the big “Winter” market sell-out.
Real Estate & Business Market
Once the Fed starts raising the interest rates and banks start closing the “money lending faucets” both businesses and individuals start having problems making payments (higher interests) and start defaulting on payments. Consumers start spending less and less because a greater portion of their income is going into paying for the rising interest rates on their loans. Defaults and lower sales ultimately lead to bankruptcy for many businesses and unemployment skyrockets putting the already downward spiral on steroids.
With no money to make mortgage payments, the otherwise “pricy” real estate is now being sold at auctions for scraps due to foreclosure both residential and commercial real estate. Again moving money from those losing their homes to the rich with cash at hand buying the properties for pennies on the dollar. Those who once owned these properties are now desperately looking for an affordable place to rent. If you bought real estate during foreclosure "Winter" sell-out you just might be that savior investor, offering affordable rentals and making cash flow even during “Winter”. Subsequently, bigger businesses with cash can now buy their competitor's inventory on a bridge of bankruptcy for peanuts. Again transferring wealth from one hand to the other. Remember money never, ever gets "lost" it just conveniently changes from one hand to the other.
In the “Spring” when real estate prices start rising again many investors can leverage their properties with loans on the now highly appreciated values or simply fix and flip again both for top gains. Businesses free from some of their competitors can now position themselves for great gains with cheap labor force and cheaply bought real estate, inventory, and equipment. And so the money-making machinery starts rolling back, as it always does, in “Spring”.
Want to prepare and be on the front row for the big "Winter" sell out?
The Bottom Line
Keeping your cool ❄ during a time of crisis and preparing well before “sh*t hits the fan” is key to take advantage of the market when it is in a “panic freeze”. When more normalized conditions return as they always do in economic “Spring”, savvy investors can be left with unbelievable gains. Stocks start to go up. Real Estate starts appreciating. Businesses start producing. So those that are able to repeat their earlier successes in subsequent downturns end up even richer with more exorbitant wealth 💰💰💰 than ever before.
Some hate “Winter” because all is dying or hibernating, wet and freaking cold and feels like a hardship. While others just skate, ski and snowboard the heck out of it! What are you going to do? As Tiffany Haddish would hilariously put it "You Ready? She Ready!" 😜😏
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