My all-time guru Ray Dalio dropped that bomb at the annual meeting of business and political stars of the world at Davos. And he also made a plea to the world on Twitter: “I believe we are on the brink of a terrible civil war ... where we are at an inflection point between entering a type of hell of fighting or pulling back to work together for peace and prosperity.”
He also criticized the current stock market, where everybody wants in, not understanding principles of margin and valuations. “Gold bugs” immediately cheered when he mentioned gold as an asset and discounted Bitcoin due to its volatility. He is appalled by the wealth discrepancies and he believes that we are eventually heading into an era of high inflation. He is one of the most humble and incredibly smart super-rich people in the world and to hear from him such an intensive warning about the current state of our western society should be a signal to everyone to listen and … act upon it.
What is another proven asset which did well at times of inflation? You got it, real estate. Obviously, only in the case that we do not “rebuild our broken society” by revolution and/or war. I experienced war and its devastating effect on the people myself in Yugoslavia in 90th when I participated in the effort to identify victims of mass executions. Myself a political refugee from the communist regime, I experienced the re-distribution of wealth by revolution when the private residential property of my family was confiscated by the leftist mob. I hope that we will never get there, but I believe that inflation is present already now and that real estate is a good hedge against it. Residential real estate should also protect you if our politicians enforce on us "Great Reset".
Everybody agrees on two paradigms that are currently feeding the Canmore seller’s market. The first of them is the shift to work from home and the second is to be able to get out of your home and enjoy nature at the time we are locked down in today (and future) pandemics. Even now, Canmore offers incredible LIFESTYLE. The previous big cities strategy of “Work Hard, Play Hard”, where you were able to hop on a Friday afternoon plane to Scottsdale and be back in the office Monday or to leave for an all-inclusive Westjet vacation week in Mexico in case of normal mortals, is not anymore guaranteed. Canmore real estate gives you a hedge against inflation, and is a great diversification for the time when “cash is trash”. You can hear his short 5 min interview at this CNBC link.
This year Davos brought some pretty depressing discussions. 30 min Targets and Pathways to Economic Transformation chaired by Ray Dalio is one of the examples. He tried to explain that we have a situation where we have a huge wealth gap, a government debt that has no chance to be re-paid and we are still printing money, China is rising as a new undemocratic superpower, we have a politically fragmented society at home. And to compare our situation to similar situation of civilizations in history. Very rarely societies were able to peacefully transform without wars and revolutions, with devastating effects. He is sure that we need something like Marshall’s plan. When questioned for examples in history that lead to successful transformation, he was able to find only one example in President Roosevelt. He stressed that we cannot just redistribute the wealth, that we have to increase productivity and find buy-in for the turnover across the divide. I realized how some of the panelists did not get it. Namely, Master Card and Rockefeller Foundation reps repeatedly mentioned how Climate Change Unity and zero emissions in 2050 will be the panacea to save the current society. Pretty depressing. Reminds me of the phrase we hear in communist schools: "Communism is Soviet power plus electrification".See for yourself at “Targets and Pathways to Economic Transformation” The Davos Agenda. Targets and Pathways to Economic Transformation > The Davos Agenda
As always, when I mention Ray Dalio, I always recommend that you all read his series about the rise and fall of empires, I call it “a cycle of life of empires”. And hold your breath. And prepare for the bumpy road ahead of us! https://www.principles.com/the-changing-world-order/.