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Why 'bad times' are the best times for investors

BostonCoin news Feb – March 2020

Navigating the sink holes of life

Those in geographically unstable areas will be familiar with sinkholes: where the earth suddenly gives way beneath your feet, and sometimes swallows an entire building. These may be unfortunate for the building owners or occupants, however, it does create new opportunity for stabilisation and construction jobs. We like to look on the bright side.

One of our good friends and mentors invested heavily into Caterpillar (NYSE: CAT) just as the Gulf War was breaking out. Most of the US stock market was dropping as fast as the bombs came down, and fears of a protracted war had most investors running scared and selling off stocks. We asked Bob why he chose to invest into Caterpillar, a seemingly boring truck company. “Once the bombs have finished dropping, they are going to need dozers to move all the rubble. They are going to need to truck in new building supplies. A war-torn country needs to rebuild, and they’ll probably use the world’s biggest and best.”

We had to concede his point. We also admired that Bob didn’t invest into weapons manufacturers; only into companies which helped to recreate. Weapons may be profitable, but ethically questionable, and it doesn’t take too much effort to discover an ethical company which makes profits from bad times.

At present, things may seem bad all the time. However, this period of history is not so different from anytime in the past. There have been conflicts since Cain & Abel’s first pissing competition, and they are unlikely to go away (despite the best efforts of ex-presidential candidate Marianne Williamson).

Wherever there is conflict, fear, panic or dropping markets, there is also an opportunity for profit. As stated in the book ‘Who’s Taking Your Money?’, “there is always a boom on somewhere.”

A little over twenty years ago, in 1999, people thought the “millennium bug” or “Y2K” would obliterate the world’s computers. Doomsdayers foresaw planes dropping from the sky, banking systems wiped out and a dystopian “Mad Max” future. But we all survived.

The year following 2000, the world faced 9/11 terrorist attacks and threats of anthrax. We survived. In 2002, it was West Nile Virus. SARS was the big medical beat-up of 2003. The next year, we had bird flu. The following year, it was E. Coli. Bird flu gave way to Swine Flu in 2009. A few years later in 2014, the world feared Ebola. The next year it was “Disney measles”. Zika virus was our top fear in 2016 and now in 2020 we run from the corona virus (COVID-19), and the possibility of a major economic slowdown in China.

There is always a boom on, somewhere

When the developed world started outsourcing to China and India, many lamented the jobs lost locally. It seemed that local manufacturing jobs were all going to overseas “sweat shops”.

As the old proverb says, ‘A bad sailor curses the wind. A good sailor adjusts his sails.’ Those who saw the change in the wind and took action by investing into China, India and other emerging economies made good profits since 2000.

The complainers are probably still complaining. As conflicts, crashes, outbreaks of disease, famine and war look likely to continue for as long as there are humans, you would be wise to look to the horizon and see the opportunity to take action; ethically and responsibly.

Here’s why COVID08* is worse than COVID19

Yes, death is sad, and the cost of human life is immeasurable. Politicians and investors are instead measuring the impact of COVID19 on businesses, jobs and financial markets.

With thousands of Chinese factories shut down, retail goods may be unavailable, and jobs will be lost. Restaurants, hotels and airlines will feel the pinch as people stay home.

Whilst COVID19 (the new corona virus) may be a trigger event, we must remember that the financial instability in 2020 markets started over a decade ago with the GFC.

As a knee jerk reaction to #GFC1, governments created billions of dollars from thin air to bail out stupid or irresponsible corporations.

This was #COVID08: the *Creation Of Virtually Infinite Dollars (2008)

Reserve banks have put more money into circulation since GFC1 than for the previous hundred years. This has resulted in asset bubbles in almost every market, and the devaluation of paper money 🧻 💵

“You can’t spend yourself out of debt” is wisdom to a college student that is lost on governments and reserve banks.

Ever since the Creation Of Virtually Infinite Dollars started in 2008, the world has been piling up the tinder for #GFC2, and waiting for someone to drop a match.

Perhaps someone will create a cure for COVID19 tomorrow, and it won’t be the trigger event to slip the world into recession. But COVID08 means there •will• be a trigger event.

It may be a terrorist attack, an assassination, or a natural disaster. Sooner or later something will click, and Reserve Banks will have to admit they can’t keep printing fictitious money forever.

Invest for safety. The COVID08 virus has been working slowly, with only a few symptoms, but soon, with debt piling on unsustainable debt, the whole paper system will crash.

This is why Bitcoin and other cryptocurrencies came into being after #GFC1. The endless proliferation of worthless fiat currency is doomed to fail, just as it did in Roman times, and more recently in Germany, Zimbabwe and Venezuela.

(*Thanks to Vern at the Rum Rebellion. Stay safe from all viruses: biological, financial, natural and man-made. Invest into defensive assets and good health.)

What is on the other side of the sink hole?

Most of us have no idea what lies ‘somewhere over the rainbow’ or even ‘through the looking glass’. We often talk about going ‘down the rabbit hole’ as if it is a bad thing; however, it gave Alice a new perspective on life. If Neo had taken the blue pill, ‘The Matrix’ would have been a very short movie. There is a certain humanness in wanting to discover what’s on the other side, even if it may be scary or uncomfortable.

Most of us live in (blue pill) blissful ignorance and have no idea what it