Thursday, December 3, 2009

Investments vs. Junk you don’t really need.

Anonymous said...

Thank you Ferfal. I could not agree with you more. While preppers remain a minority in the US, more and more are getting sucked into buying more and more stuff they don't need. I find it interesting that both the commenters are attempting to justify their purchases. The thing is, the dollar is weak right now but if the economy collapses, the dollar will be very strong for awhile. It will be what people want to hold as the price of everything collapses. THEN would be a good time to buy this stuff as people attempt to unload it to get DOLLARS to buy food. Perhaps the greatest value of your blog, besides all the great info, is in your mindset. You help people prepare with their feet planted firmly on the ground. Kudos.



While I was reading your comment I was on the phone with a real estate agent that manages a small floor my grandma owns.
Its in a not so nice part of town, but the price is reasonable and its close to the train and bus stations.
That small apartment floor cost my late grandfather around 30.000 USD or so, its been generating around 250 dollars a month and I just settled next year’s contract for 300 USD.

Nothing to brag about but still pretty good considering that the area has gone down steadily these last few years, now full of prostitutes and thugs, a rather rough area around Constitucion station(reason why I have an agent instead of taking care of it myself). The other flat she rents is located in a nice area and makes 40% more, didn’t cost much more than that when he bought both many years ago.
That my friends is as investment. Something that has real market value and generates profit. Generates profit, being the key word for something to be called investment.

1000 glass jars for canning may be considered an investment by some experts. Unless those jars come alive as in Disney’s “Beauty & the Beast” and start working in the nearest call center for you, they are not.
And the resale/barter potential in a questionable and terrible unlike future is also a farfetched supposition to say the least.
I’m not saying that you should stock piles of paper currency (you’d be in a tough spot if it devaluates) but make realistic investment, not suppositions based on fantasies.

Emergency cash at home, precious metals, and real estate, those are good ways of preserving your wealth. Piles of tools and yardsale junk for when you set your stand in “Barter Town”… after SHTF of course, or lizard food to for trading when the lizard men from outer space invade, those are a waste of money.

FerFAL
Edited to add: Just received this email


Hi FerFAL,

I read this message on the Survivalblog about liquors as a barter item : http://www.survivalblog.com/2009/11/letter_re_distilled_spirits_fo.html

It's about stock-piling some bottles (5cL) of alcohol such as vodka, whiskey etc to diversify from gold and silver as a mean of exchange during a crisis (depression, war etc). The guy presents good arguments.

I read the barter chapter in your book but I didn't find anything about alcohol and tobacco. I think it might not be a good idea to buy large amount of these products, even if there's a STRONG market out there, because you can become a target...

What is your opinion on these two "would-be" barter items ?

If you quote my message, call me "Canis Lupus". Remember the guy (or one of the guys) who wanted to translate your book in french ? :-)

@+
E.


Hi man, yes I remember you. :-)
Unfortunately the French market would be too small and I doubt it would cover the cost of the translation. It would be a different story for someone with a large publisher, but in my case I make comparatively few sales.

About your question,

Sure! Its a GREAT idea to sell booze and tabaco! If your name is Canis Lupus Walker and your old man is Johnnie Walker I'd say stay in the family business! You're making a lot of already. Any chance your last name is Marlboro?... :-)

Sorry, but try to see the point I'm making. Everything is more complicated after a crisis, not easier, and you cant begin to imagine how hard it would be after a complete collapse for a small business.

As of right now I'm sure sounding like a jerk, so tell you what: To everyone that believes I'm wrong, try starting now.
All these wonderful businesses no one every though of... (well, apart from Mr. Walker, Mr. Marloboro and Mr. Budwiser) just start them now, see how easy or how hard it is to have a production line, suppliers, clients, how much profit you actually make.

Serious folks. As of right now sales in general have gone down around 30%-40% for most goods and services in the areas where the crisis has affected the most.
You think the big alcohol and tobacco companies will just disappear into thin air?

No dude, they restructure and more likely destroy any weaker competition.

Start now. Horse shoe maker, tanner, arrow maker, moonshine distiler or whatever you have in mind, start now and see how you do. If you do well, expect profit to go down 50% or worse during a real crisis. Most business weren't that lucky and simply had to close.
You dont make money during a crisis by competing against market giants, you make money by finding and satisfying the new niche and opportunities the crisis creates.

These "would-be" barter items, as you wisely put them. Think for a second, "would be" according to who? You're going to base your investments on some supposition from a fiction novel?

Hope that helped, take care and keep things real, ok? ;-)

FerFAL

8 comments:

Loquisimo said...

I know that on one "homesteading" forum I'm on, there's a whole subforum called "work at home business" full of people who bought their survival homestead without thinking of how to pay bills, and who are now trying to sell crafts on Ebay to feed themselves. While I like the idea of having a homestead, I'd buy land less than 20-30 miles from a significant city so that I would be able to earn money from the city folk while living alone with chickens squawking in the background. :)

Some people attempt to make a living from agriculture, one guy sells lamb meat and is perpetually broke due to low prices. Some people have 100 acres, you really don't need more than 5 or 10. That's doable even in some places in California.

Personally, I went bankrupt trying to start a business, and as yet it doesn't mean living under a bridge, at least not the section of law I'm using. But if an American makes more income than a certain amount, he is forced by law into a repayment plan.

That means that your creditors still get paid, and you are effectively in debtor's prison. Congress brought back (virtual) debtor's prisons because people were running up debts and then shedding them effortlessly. So the big banks made sure they still got paid.

I personally can't understand the big attraction to canning, get a freezer, they're really efficient now, and run it off a solar panel.

FerFAL said...

Thanks Loquisimo, mi thoughts too.
Easy to say this or that is a gold mine or "worth its weight in gold", until you actually do it, that is.

FerFAL

Anonymous said...

my motto on making money is "if it was easy everyone would be doing it" fer i really enjoy your blog. you are wise beyond your yrs.thx a lot

Anonymous said...

Many people expect food shortages due to weather, wage pressures and overly heavy government regulation. Some of the new laws coming up in the U.S. may banktrupt many small farmers.

What good is a freezer and generator if the shelves in the store are empty?

The thing to keep in mind when reading FerFal's excellent advise is that much of the world was experiencing booming economic times while his country faced it's problems. Things are different this time around as much of the world is in the same econommic slumping boat and unable to offset the problems in any one particular country.

Home canned food often tastes much better and is a way to avoid GMO foods. GMO food may be very bad for you - look it up.
Home canning is what allowed my grandparents to survive during The Great Depression and saved them money in the decades afterward, especially the 1970's. If you don't mind doing the work, you save money. It's a better way to pass the time than watching TV.

The guys says: "The thing is, the dollar is weak right now but if the economy collapses, the dollar will be very strong for awhile. It will be what people want to hold as the price of everything collapses."

Prices of what you want may fall but prices of what you need will rise due to supply and demand.

A collapse of a currency or economy is not the same thing as inflation or hyper-inflation which is caused by government printing too much money and causing it's purchasing power to drop.

Anonymous said...

I'm the guy you referenced and I think you misunderstood my comment. I'm looking for the currency to strengthen, not collapse. Here's why:

1. Dubai showed yet again that when there is a crisis, people want to hold USD. I don't believe Dubai is the last crisis we'll see. I dont' even think it's a major one.

2. China has been buying up every commodity in sight. Why? Do they believe the American consumer is going to start shopping again? How with 17% U6unemployment? The American consumer may want to shop, but he can't. Maybe they're going to kickstart domestic consumption. That would be a good long term solution, but short term they have the same problems we do. What happens to the commodity complex when, not if, China stops buying?

The price of much of what I need is not going up but already falling. Dairy products are an example. Milk and cheeses are down approximately 40% year over year. Eggs are down 20%. Meat isn't rising, nor are many vegetables.

What is rising is anything with inelastic demand that is imported. This is painful to consumers because oil is the biggest product with inelastic demand that we import, but the price of oil is not rising due to supply and demand but rather currency manipulation. Demand is down, price is up and that's why the price of oil is rising more slowly than the dollar is falling.

I don't mean to be critical, but you took a potshot by assuming I don't know the difference between an economic collapse and a hyperinflation. I do. I'm worried about the first. I couldn't care less about the latter because I simply do not see it as a realistic threat. I could be wrong. Often am. God Bless.

Anonymous said...

No potshot intended. Too early for me to be posting perhaps.

Much like in housing, people (China Co. included) dont' want to "give it away" so they will hold onto their stockpile as long as they can helping to decrease supply and support the price from falling further.

Commodities like gold and copper face price pressures from mining it (increases in fuel, equipment and wages due to inflation of the money supply, not to mention popular future tariffs) that must be passed on, in the face of that many miners will go out of business restricting the scarcity holding up the price due to a decrease in demand. I too could be wrong, no crystal balls, just observations, theories of money and interpretation.

Canis Lupus said...

These "would-be" barter items, as you wisely put them. Think for a second, "would be" according to who? You're going to base your investments on some supposition from a fiction novel?

I would say that there are products that will always find consumers, especially addictions such as tobacco, alcohol and such. What about "confort" items such as TP (toilet paper or toothpaste) ? Was it expensive during the 2001_AEC ?

The thing to keep in mind when reading FerFal's excellent advise is that much of the world was experiencing booming economic times while his country faced it's problems. Things are different this time around as much of the world is in the same econommic slumping boat and unable to offset the problems in any one particular country.

GOOD POINT ! There aren't many safe havens now... "Economic growth" might disappear from our vocabulary, because ressources are getting scarse

China has been buying up every commodity in sight. Why? Do they believe the American consumer is going to start shopping again? How with 17% U6unemployment?

Because they KNOW that ressources are getting scarse, they don't care about the average US consumer. They have mountains of TB & cash, and they prefer to have hard assets instead of toilet paper as the dollar collapse.
By the way, it's sometimes cheaper (economicaly, socialy, diplomaticaly etc) to buy something rather than sending troops to get it for free.

It's a power game !

Anonymous said...

I "invested" in a lot of food for y2k. when i ate it the food cost 3 x's as much. when we say INVEST we are not necessarily talking about selling for a profit. I have "invested" in lots of ammo over the years. it's woth 10x's what i paid now. my food and ammo was a much better "investment" than my gold and silver.