Market Perspective

Don’t Just Survive, Thrive – Week 11

Posted by on Jan 17, 2013 in Ned Massie, Perspective | 0 comments

Is Gold Real? The financial world is being flooded with money by all of the central banks.  But distortions in the market take a long time to resolve so while the world is highly liquid, the marketplace is still dysfunctional.  During highly liquid and dysfunctional markets such as this, investors and speculators herd together and all chase the same assets looking for “yield”. But wise investing requires not following the herd.  A comment one of my favorite economists shared with me several years ago was “In uncertain times gold is actually a bad investment because if the worst thing happens you cannot eat a bar of gold”. His recommendation was agricultural or forest land.  Both are hard assets that retain value in inflationary times.  Even better, on agricultural land one can grow food.  While you cannot live very long eating a tree, the value of your timber long-term exceeds the rate of inflation. The best news, with about half of Virginia’s land being in forest, the balance is either crop or pasture land.  Therefore, it is possible to invest in a good piece of rural land that has both timber and cropland. To take advantage of the inflation that is coming as a result of the dysfunctional market, you should buy one really high quality tract of land at today’s very attractive price.  Select well and that tract will provide many benefits to you over the next several years. Our goal is to help you thrive, not just survive your way through this historic time period.  Call us, we enjoy making folks look brilliant....

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Don’t Just Survive, Thrive – Week 10

Posted by on Jan 10, 2013 in Ned Massie, Perspective | 0 comments

We Can Measure FEAR Current turmoil in Africa and the Middle East confirms that the world in which we live is amazingly unstable.  Many Americans are tired of our country being the world’s sheriff, but now we see that in the absence of a sheriff … thugs rule and the result is chaos.  In this dangerous world only a fool worries about being loved, an adult prefers that America be respected.  No real American apologizes for our freedom of speech. Damaging to our economy is that the Obama administration appears to be following a playbook entitled “How to Discourage Business from Expanding in the United States”.  If one made a list of tasks needed to DISCOURAGE business expansion in the USA, his administration has demonstrated their superior ability to accomplish everything on that list. Yet no one running for public office has been willing to talk straight with the American people and address the fact we are still in a financial crisis.  The facts are that we are in an epic financial crisis created by folks we elected to office who bought votes with promises that cannot be met regardless of the tax rates levied. As the only adults in the government, The Federal Reserve continues to force feed the economy by trying to encourage people with money to invest that money, not to save it.  The most recent version is the third attempt at quantitative easing (QE3). Quantitative Easing is a nice word for The Fed buying our own country’s debt.  With a dysfunctional government because the president is unable to lead and a Senate that has not held a budget hearing in three years, the only institution of our government that is functioning regarding the economy is The Fed. As a result: In a “normal” American economy, at any one moment there is approximately $2T in money markets or other savings type facilities; Since the fall of 2008, that number has been hovering around $9 Trillion; Therefore, the value of the fear in the American economy is equal to about $7 Trillion. My mantra is “Never bet against The Fed”.  But the logical outcome of this continued dysfunction and epic crisis is INFLATION the likes of which the USA has only read about in world history books.  Uncorrected, this always ends ugly. To take advantage of what is coming you should buy one really high quality tract of land at today’s very attractive price.  Select well and that tract will provide many benefits to you over the next several years. Our goal is to help you thrive, not just survive your way through this economically historic time period.  Call us, we enjoy making folks look brilliant....

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Don’t Just Survive, Thrive – Week 9

Posted by on Jan 4, 2013 in Ned Massie, Perspective | 0 comments

Dangerous Distortions A functioning market is like a flowing stream of water.  So long as nothing is put into the stream to distort the flow of the water, the stream functions without a flaw.  However, place a barrier in that stream and all sorts of problems occur including erosion.  Likewise, put too much water in the stream and other problems will occur. Every government action is a distortion impacting the economy.  Massive new programs at a minimum create massive uncertainty, thereby distorting decision making because it is hard to make a decision when you do not know the rules of the game. Increase taxation at best takes money out of the hands of the consumer and investor putting it into government coffers where it is wasted on bureaucracy and inefficiency.  Historically this is picked up in the multiplier effect of government spending (0.70) versus private enterprise alternatives, all of which are much higher than 1.0. As Dr. Kindleberger would have predicted, the financial crisis of 2007 – 2008 had its roots in Clinton’s desire to increase home ownership to include those buyers historically unqualified to service the debt.  The bubble that was created burst in 2008 and we are living with the consequences. To take advantage of the result of the current market distortions you should buy one really high quality tract of land at today’s very attractive price.  Select well and that tract will provide many benefits to you over the next several years. Our goal is to help you thrive, not just survive your way through this historic time period.  Call us, we enjoy making folks look brilliant....

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Don’t Just Survive, Thrive – Week 8

Posted by on Dec 27, 2012 in Ned Massie, Perspective | 0 comments

Watch Out for Paradigm Shifts Paradigm is a word used to refer to how some process works or a part of the economy functions.  Example – early in my career the normal paradigm was that companies needed 250 square feet of office space to accommodate one employee.  As a result, most counties required four parking spaces per 1,000 square feet of office space so that those four employees could also park their cars.  One of the forces that intensified the Savings and Loan Crisis in 1986-1992 was the fact that technology began to shift the paradigm of the amount of office space needed because of “hoteling” employees, their laptops becoming their office, etc.  As the amount of office space per employee was reduced, there was less demand for office space, creating a paradigm shift. Prior to this shift, President Carter changed the rules allowing Savings and Loans to make commercial real estate loans (remember Dr. Kindleberger) so a surplus of office buildings were built.  The effects of that paradigm shift combined with surplus capital was of painfully memorable proportions and destroyed the S & L industry. Paradigms constantly shift in a vibrant economy.  That is why centrally planned economies consistently fail…they cannot anticipate paradigm shifts.  But when a number of significant paradigms shift simultaneously in an environment where other distortions have also occurred (such as too much easy credit distorting values)…that is the making of a financial crisis. It is impossible to predict accurately either the absolute peak or the absolute trough of a market cycle.  But it is possible to use them to your advantage…buy low and sell high. The guide points are these…you make your best investments in the trough of the cycle when everyone wants to sell and you want to sell when things are just so good everyone wants to buy.  It sounds easy, but is hard because emotionally you want to do the reverse. The land market has bottomed…we see it in our databases.  To not just preserve your capital but to thrive in this historic economy, right now is when you want to buy one really high quality tract of land.  Not just any tract of land, but one that is high quality. Our goal is to help you thrive, not just survive your way through this economically historic time period.  Call us, we enjoy making folks look...

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Don’t Just Survive, Thrive – Week 7

Posted by on Dec 19, 2012 in Ned Massie, Perspective | 0 comments

China Watch During this financial crisis, China has grown to become the second largest economy in the world behind the USA.  It is now larger than Japan which is suffering from population decline and a rapidly aging population.  Both have been and will continue to be negative to Japan’s economic growth. Many of Obama’s appointees and supporters celebrated China’s appearance of economic recovery following the 2008 financial crisis.  How many times was China held up as an illustration of the benefits of a centrally planned communist government? Now reality is crashing around the Chinese as they have produced too much of everything, forced their banks to make bad loans (sound familiar?) and for the third time in 20 years their banks are now bankrupt.  The good news is that their financial system may be isolated enough that the damage to the world economy from their banks’ collapse is minimized. My estimate is that the impact of China’s slow motion economic collapse will be centered in the arena of commodity prices.  As China collapses and the talking heads’ projected soft landing becomes hard, commodity prices should decline…probably significantly.  Add in the Euro debacle and the decline in commodity prices could be substantial. Therefore, to me making an investment in commodities today is extremely risky.  A speculator may gamble on prices increasing but logic suggests the opposite will occur.  But that does not necessarily mean that we will not see significant inflation here in the US. While lower commodities will provide some downward pressure on the rate of inflation, the real problem we face is how The Fed will unwind what it has had to do to support the USA economy.  If I were Dr. Bernanke, I would actually prefer inflation to deflation and act accordingly. To take advantage of the result of these market distortions, you should buy one really high quality tract of land at today’s very attractive price.  Select well and that tract will provide many benefits to you over the next several years. Our goal is to help you thrive, not just survive your way through this economically historic time period.  Call us, we enjoy making folks look...

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Don’t Just Survive, Thrive – Week 6

Posted by on Dec 11, 2012 in Ned Massie, Perspective | 0 comments

Europe Watch As a student I was taught that a camel was a horse designed by committee.  The Euro has to be in the category of another equally, poorly thought out idea created by a committee. Sold as a way for the European countries to compete economically with the USA, the Euro to me appears to be a disaster that has found its place to happen.  If it survives, what comes out of this crisis will be radically different than what went into this financial crisis. More importantly to investors, the evolution of the Euro will be slow (a committee decision by 20+ independent legislatures guarantees that effect).  Slow means a significant amount of time with a lingering downward pressure on the world economy. My analysis suggests the Euro will decline relative to the dollar.  With the European Central Bank (ECB) behind the curve for most of the crisis and now playing catch up to The Fed, I cannot conceive of any outcome other than a Euro value below the Dollar. This will negatively impact the manufacturing portion of our USA economy.  But the relative strengthening of the Dollar will provide some other benefits to us such as in the reduction of the price of oil.  Paradigms will shift and distortions will occur.  What should you do? To take advantage of the result of these market distortions you should buy one really high quality tract of land at today’s very attractive price.  Select well and that tract will provide many benefits to you over the next decade. Our goal is to help you thrive, not just survive your way through this economically historic time period.  Call us, we enjoy making folks look...

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