Understanding How “This Time Is Different” to Make Great Investment Decisions – Week 7

What is Different This Time – A Second Wild Card:

The second wild card is the ripple effects of the stronger US Dollar created by The Fed as it raises interest rates. Raising our interest rates results in a stronger US Dollar.

When the US Dollar strengthens, other currencies lose value relative to the US Dollar. As a result, emerging markets have all sorts of negative economic impacts.

The short-term result is a slowing global economy. A slowing global economy sends ripple effects globally. Exactly how those ripples will impact the USA economy is unpredictable with any precision.

That is the point where this “Normalization” transition could become bumpy. Add a Black Swan Event to the mix and serious problems could occur.

The difficulty is accurately estimating the time required for all of these moving parts to move into harmony. Until that point is reached, our economy is subject to volatility and problems.

It is critical to remember that land is the source of all wealth. Every product that we humans consume originates with land. Not all tracts of land are equal in quality and portfolio management requires every investor to hold some cash for liquidity. But historically, long term the best investment is land.