Is the U.S. Headed Towards a Post-Pandemic Deflationary Disaster?

In this series of posts, our goal is to explain economic concepts so you can better understand the risks to your assets, whether you hold them in cash, stocks, mutual funds, real estate, or gold.

In a previous post, we discussed how the trillions of dollars in new money being injected into the U.S. economy by the Federal Reserve have sparked fears of an inflationary disaster. But while inflation could become a problem in the not-so-distant future, economic history suggests there is a more pressing—and perhaps more dangerous—concern: Deflation.

In simple terms, deflation is a drop in the prices—as opposed to inflation, where prices rise. The economic phenomenon can be caused by an increase in goods and services, a decrease in the supply of money and credit, or—as is the case during this pandemic—a decrease in demand.  

If falling prices sound like an attractive scenario, think again. While a moderate drop in prices can promote consumption...

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Monetary Inflation: What Is It, and Do I Need to Protect Myself?

In a scramble to keep the economy from plummeting into a depression during the COVID-19 crisis, the US Government signed off an unprecedented $2.3 trillion in relief to support households, employers, financial markets, and state and local governments. And discussions continue on providing a second stimulus package worth an additional $1 trillion.

For the most part, this money is coming essentially out of thin air.

But conventional wisdom has held that governments cannot simply create money on such a massive scale and continue propping up the markets without triggering inflation.

Should investors be worried? To understand whether inflation is likely to become a risk in the near term, let’s take a closer look at what inflation is, what causes it, and how you can protect yourself. 

Inflation: An Overview

In 1990, the average cost of a new home in the U.S. was $79,100, and the average income was $17,710. Only 29 years later, the median price for a new home is $329,750,...

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Covid-19 Investor Update Part 4: Boutique Hotel in Puerto Rico and a Colombian Coffee Farm

We previously published Part 1 of our Covid-19 Investor Update, focusing on our Pineapple Farm in Panama.  In Part 2, we looked at multiple Agricultural investments in Colombia. Part 3 focused on a few of our Multifamily investments in the United States.

This is the final Part 4 update on a boutique hotel investment in Puerto Rico and our Coffee Farm in Colombia. So let’s jump straight in.

Plaza Colon Hotel and Suites, Old San Juan, Puerto Rico

In Q2 2019, alongside many of our Alliance members, we invested in a boutique hotel opportunity in Plaza Colon. This Opportunity Zone syndication project consisted of taking a 40,188 square foot property and converting it into a high-end hospitality offering comprising 60 hotel rooms and 4 luxury 2&3 bedroom Hotel Residences. With the additional development of a 3,500 square foot commercial space on the ground floor that will feature a restaurant and retail space to capitalize on foot traffic from the cruise ships docking just...

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The Stock Market Is Broken! Here's What You Should Do To Prepare.

In my last post, I wanted to ensure people understood the Monetary and Fiscal policy tools that can be used to help us out of the Covid-19 recession (or probable depression).

Today, I want to turn my educational post to the definition of what it means to be in either a recession or a depression:

Recession: a period of temporary economic decline during which trade and industrial activity are reduced, generally identified by a fall in GDP in two successive quarters.

Depression: an extended recession that has years, not quarters, of economic contraction.

For context, there have been 33 recessions since 1854. But the more relevant period to look at are the 11 recessions since 1945, the end of the Second World War. The average contraction period for those 11 recessions was 11 months from peak to trough. And it took, on average, just under 5 years for the expansion phase to play out post-recession.

For additional context, there has only ever been one depression, The Great Depression of...

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Covid-19 Investor Update Part 3: Impact To Our Multifamily Apartment Investments

This past week, we published Part 1 of our Covid-19 Investor Update, focusing on our Pineapple Farm in Panama.  In Part 2, we looked at multiple Agricultural investments in Colombia. Our Part 3 today is focused on a few of our Multifamily investments in the United States.

Multifamily (also known as Apartment Buildings of 5 or more units for newbies) investments are the foundation of our wealth from a Real Estate investment perspective.  We believe value-add multifamily investments are the best asset class for medium-term cash flow AND long-term growth of our overall net worth. For those of you unfamiliar with this investment strategy....quick education:

What is a Value-Add Multifamily Syndication Investment and why you should invest in them

Let’s break it down. A real estate syndication investment is a way for investors like us to pool our financial capital to invest in properties and projects much bigger than we could afford or manage on our own. I add my...

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Covid-19 Investor Update Part 2: The Impact To Our Colombia Agriculture Investments

A few days ago, we published Part 1 of our Covid-19 Investor Update, focusing on our Pineapple Farm in Panama.  In Part 2 here, we are looking at multiple Agricultural investments in Colombia. Our Part 3 update will be a focus on our Multifamily investments in the US.

Let’s jump in and understand what happened to our investments in Colombia over the last month.

Our Teak Sawmill Investment in Monteria, Colombia

Colombia's Covid-19 shut-down started on Monday March 15th when the government blocked entry to the country for all foreigners and closed the schools, quickly followed the following week by a 19-day quarantine which finished on April 13th.  On Monday March 23rd, the government also suspended international flights for 30 days, presumably after all citizens and residents had returned home. As part of Colombia’s nationwide restrictions, pet owners were authorized to take animals outside for 20 minutes and one person per family could leave to purchase...

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Covid-19 Investor Update Part 1: Our Panama Golden Pineapples Are Still Being Eaten Across Europe...

Karen and I have talked a lot over the last few years about our Maslow’s Hierarchy of Needs Investment Strategies, our thesis being that everyone needs healthy food and affordable shelter, no matter the market conditions:

And also the reasons why Investing in agriculture gives us a great hedge against the volatile stock market.

But this Covid-19 Black Swan is challenging all investor assumptions at the present time. Nobody can predict how much Helicopter Money will be dished out to soften the blow of the economic shutdown or what that means for the shape of the economic recovery.

So we decided to delve a little into the actual investments we hold and discuss any early indications as to the impact of Covid-19 on our portfolio. In Part 1, I’m going to be discussing our Panama Golden Pineapple investment in Panama, Part 2 is our agriculture investments in Colombia and then Part 3 will be a focus on our Multifamily investments in the US.

Let’s get to it. Starting in...

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Helicopter Money Is Finally Here

I hope you are all healthy and social distancing and staying safe.

Karen and I have been fairly silent over the last month or so, like many of you, responding to the events swirling around us while trying to maintain a healthy dose of optimism for the future. We know this period will pass, like many of the other bleak periods in human history. We just don't know what the new world looks like. It will definitely be different than the world we left in late 2019. And I'm sure different opportunities will abound for us all.

But the reason I’m writing this post is because I’ve received calls from a half dozen people over the last 10 days asking if they should start ‘buying on the dip’ or start to ‘invest against the herd’ etc.  

Movement of the DJIA between January 2017 and March 2020, showing the all-time high on 12 February, and the subsequent crash during the COVID-19 pandemic

Remembering that Free advice is not always worth the...

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When Investing, Focus on Process, NOT the Outcome!

This is a short blog post because a) your time is valuable and b) this simple universal truth as to why everyone in our Global Investor Alliance will succeed in building wealth over the long-term…

If you consider any field of activity where different probabilities play a role, the outcome is largely unknown because of the many variables that you cannot control.

Research has also identified a common trait among successful performers in any field, that they all value process over outcome.

Let’s apply this to investing for a second. Across the internet, you will see many claims by so-called experts and gurus in investing that highlight the outcome; you will make X amount in so many months or years. Rarely do they detail the process used to get to this outcome (hint: sometimes the claim isn’t really true and often times, it was a set of factors that aligned for them which might not align for you!)

Now of course the result or outcome does matter, as that is the...

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Stock market returns from mutual fund investments fail to be lucrative

If you’re a typical investor today, now holding 70-100% of your invested capital in the stock market, then you’ve got nerves of steel or total blinders on or both. I admit the seemingly endless upward climb of the market does light up the “easy money” greed button in most of us that's hard to resist.

But, in your gut, you may also have a growing anxiety that most of these gains are not based on anything real in terms of business fundamentals; rather, they're driven by media hype, emotional sentiment, and Fed buying behind the scenes. That’s a recipe for a house of cards that can topple on a whim, as we often experience when corrections occur.

You see, often things that seem alluring and lucrative on the surface are something altogether different when you take a closer look. Like a poorly laid foundation, the tell is in the cracks and crevices (in this case, in the spreadsheets). So, let’s get out our magnifying glass and take a...

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