Your Best and Worse Defenses for Inflation...

[bangL]

Worst: Saving 10% of your income in today's money will worth much less in 20 years.

 

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[gpetukhov]

Real Estate is also a good inflation hedge as build costs go up in an inflationary environment - labour and materials will go up so a house being built today is more expensive

 

[MJ DeMarco]

Inflation is still running hot, and if you look at prices on the ground, it is pretty clear.

Janet Yellen recently stated she regretted using the statement "transitory" to describe inflation and its plight -- as if the deeply sheltered bureaucrat took time to reflect on the real prices on the ground versus the highly manipulated government reports.

I have not seen much movement on pricing downside and everything is still expensive.

Interesting note: I put a $1.79M offer on a house in Arizona 3 years ago (before moving to Utah) and lost the bid to a bigger offer, $1.85M.

I just saw that same house up for sale again today, asking price?

$4,700,000.

 

[IceCreamKid]

I've increased my carpet cleaning pricing by 50% over a span of 3 years. There was initially some resistance, but clients now seem to just accept that obscenely higher prices are the way of life. I don't know how the common paycheck to paycheck American is surviving in today's world.

I'm currently in the process of exiting real estate and transferring all of the funds to high end watches. My watches have always outperformed everything else I've ever invested in.

My rental property portfolio has taken an absolute beating in the past 3 years because I didn't diversify enough. My fault for only investing in blue collar neighborhoods. Lots of money lost due to vacancies and repairs, but big lessons learned.

 

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[Bounce Back]

I've increased my carpet cleaning pricing by 50% over a span of 3 years. There was initially some resistance, but clients now seem to just accept that obscenely higher prices are the way of life. I don't know how the common paycheck to paycheck American is surviving in today's world.

I'm currently in the process of exiting real estate and transferring all of the funds to high end watches. My watches have always outperformed everything else I've ever invested in.

My rental property portfolio has taken an absolute beating in the past 3 years because I didn't diversify enough. My fault for only investing in blue collar neighborhoods. Lots of money lost due to vacancies and repairs, but big lessons learned.

Do you think if you had done afluent neighborhoods but gotten less rent as a ratio of purchase price (often I see on zillow it doesn't scale after average apartment rental price in the area) you would have had less repairs/vacancies? In your city would you have made it up on equity?

I had a rental some years back I got out of after a year or so but it was just taking too much time (didn't use property management) and had a couple expensive repairs needed within that year. The house now that I sold has doubled in value some 4 years since the sale. Now I am considering getting back in and being more long term focused and not necessarily worrying about cash flow from rent so I'd appreciate your perspective.

 

[Oso]

This is goofy af. But collectibles.
When covid initially hit, I unloaded my MTG collection for about 60k. Never thought I'd get back into it.
Now, here I am, with 7 figures in cardboard because I can't stop finding collections at rock bottom prices.
I get the vibe people are panic selling, but the prices are only going up, and people are picking up items at said prices. Shits wild.
If it keeps going at this rate, I'll be selling agency number 2, and hiring a few people to help me flip collectibles full time.
Cheers.

 

[Bounce Back]

This is goofy af. But collectibles.
When covid initially hit, I unloaded my MTG collection for about 60k. Never thought I'd get back into it.
Now, here I am, with 7 figures in cardboard because I can't stop finding collections at rock bottom prices.
I get the vibe people are panic selling, but the prices are only going up, and people are picking up items at said prices. Shits wild.
If it keeps going at this rate, I'll be selling agency number 2, and hiring a few people to help me flip collectibles full time.
Cheers.

I've seen some people who do huge volume in Pokemon cards. My question is always this - do you just not care about counterfeits? Its not like it would be hard to 1:1 copy these things I'd imagine.

 

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[IceCreamKid]

Do you think if you had done afluent neighborhoods but gotten less rent as a ratio of purchase price (often I see on zillow it doesn't scale after average apartment rental price in the area) you would have had less repairs/vacancies?

Probably, but I'll never know. The major mistake was I didn't vet the property management company well enough. They have been around 20 years and had a good reputation, but secretly sold their biz while still keeping the brand name. The new owners will rent your property to anyone with a pulse. I've had multiple occurrences where a new renter moved in and within a month they stopped paying rent.

Now I am considering getting back in and being more long term focused and not necessarily worrying about cash flow from rent so I'd appreciate your perspective.

This is just my perspective, but I wouldn't go back into real estate because watches are:

• More profitable. 15-20% per month profit if you stay active
• Faster speed of transaction than real estate because there's no loan approvals, inspections, appraisers, etc. With real estate I'm guessing the fastest you can buy a property is 30 days. With watches you can buy and sell one in 24 hours.
• You have more control over the value of the asset as opposed to being reliant on market forces
• It opens you up to a higher quality network
• It's fun and has history to it. Here's my daily watch from my birth year:

 

[luminis_]

I'm currently in the process of exiting real estate and transferring all of the funds to high end watches. My watches have always outperformed everything else I've ever invested in.

Do you tend to focus on newly-released watches or vintage? And what brands do you see performing best (I've heard Rolex Daytona's skyrocketed over the past few years and same with Patek Nautilus)

• You have more control over the value of the asset as opposed to being reliant on market forces

Wouldn't it still be impacted by supply/demand? Or is it less "efficient" than say Real Estate because prices can vary widely depending on condition, release year, etc.?

 

[Oso]

I've seen some people who do huge volume in Pokemon cards. My question is always this - do you just not care about counterfeits? Its not like it would be hard to 1:1 copy these things I'd imagine.

You wouldn't believe how difficult creating GOOD fakes is, especially for a game such as Pokémon that has cards with different types of layered "foiling."

MTG is simple as you can take a magnifying glass to the card to confirm the layered ink pattern. Fake cards cannot replicate the ink patterns, especially in older cards.

And faking Yugioh cards is a joke, tbh. If anyone cracks the code to making believable yugioh fakes, they deserve Elon's net worth.

Their processes are sealed. Obviously, anyone can begin printing out a TCG card. It's just cardboard and some shiny shit. But to print one with MTG's art/quality, Pokémon's foiling, etc.

If it were truly that easy to fake cards, you're right: they'd have next to 0 value. Instead, these goofy (and beautiful) Black Lotus I have, combined in their current condition, hover anywhere between 800k-1.2m.

Then if you had the other 8 pieces to finish all of the sets... In just "Power 9," I'm hitting numbers I'd spend years trying to hit with an outright business.

Cheers.

 

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[IceCreamKid]

Do you tend to focus on newly-released watches or vintage? And what brands do you see performing best (I've heard Rolex Daytona's skyrocketed over the past few years and same with Patek Nautilus)

I prefer newly-released because vintage requires a lot of experience to determine value. Rolex, Patek, and Audemars Piguet are the best IMO, but you have to be careful which models you buy because some are valued purely on hype similar to Beanie Babies from the 1990's.

Wouldn't it still be impacted by supply/demand? Or is it less "efficient" than say Real Estate because prices can vary widely depending on condition, release year, etc.?

Supply/demand still matters, but you can influence the value similar to how car dealerships do:

• Buy scratched up watches at a discount then polish it to look new
• Take amazing photos
• Offer a warranty
• Offer a buyback program
• Add a different bracelet/strap to make it stand out

You can see returns of 50-100% if you buy rare models. For example pretend there are only 5 units of a certain model released and only 1 is currently for sale. If you buy the one for sale, you now control the market. The downside is it can take a while to find a buyer, but if you get to enjoy the piece while you have it then who cares.

 

[NervesOfSteel]

The study of precious metals charts ... Forced me to invest in them to beat inflation easily!

 

[theag]

I remember that I was reasonably optimistic about life and my business at the beginning of 2020. But it seems like a few wrong decisions have left me completely in the dust with the absolutely crazy inflation since then.

Those mistakes were:
- Having a B2C business that sells to "normal" people
- Reinvesting profits into the business and thus:
- Not owning real estate
- Not owning much stocks, gold, etc

Not sure how to recover from that at my age (early 30s) in this new world to be honest.

I feel like I'm starting from zero again, or rather, never left the starting block, despite having a reasonably profitable ~1m€ rev business.

A few years ago that would have been considered a success, but now I feel like I'm living in a different reality when looking at RE prices etc. A million is nothing anymore.

Need an absolutely massive business success in a very short time frame just to catch up to the market.

I think my being based in Germany is what's contributing to this doom and gloom attitude, with the weak Euro and structural weaknesses here. So I'm working on a move to the U.S. to at least swim with the inflation current. Living in Europe feels not just like swimming against the current, but doing it in a different river that's slowly running dry.

A business

Raising prices.

Unfortunately there's a limit to that. Basically, if you have a B2C business you are more or less F*cked after some point, because wages are way behind inflation.

Much easier with B2B. Price increases just go down the supply chain until they hit some B2C sucker at the end of the line, who will then slowly go bankrupt.

Real estate

None, but creates a long-term preservation of buying power

Hard disagree with "none". The increases in RE prices have been absolutely crazy. I'd say the defense is built-in. I'm doubtful that there will ever be a housing market crash again. They will just keep it propped up.

If you don't own RE right now, you probably never will (exception: massively outsized business success).

On the other side, to people that own RE, everything in life just seems like a game / monopoly-money to them. I often can't believe how casually those huge numbers are thrown around here.

I've increased my carpet cleaning pricing by 50% over a span of 3 years. There was initially some resistance, but clients now seem to just accept that obscenely higher prices are the way of life. I don't know how the common paycheck to paycheck American is surviving in today's world.

I raised prices 100% over the last 3 years and saw the same resistance but there simply was no alternative. I think it has been too much and I need to lower them again, because sales volumes are starting to suffer. Actually feel bad charging so much.

 

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[NervesOfSteel]

I think my being based in Germany is what's contributing to this doom and gloom attitude, with the weak Euro and structural weaknesses here. So I'm working on a move to the U.S. to at least swim with the inflation current. Living in Europe feels not just like swimming against the current, but doing it in a different river that's slowly running dry.

When the world's strongest nation offers a lavish life to its citizens with the luxury to choose any imaginary gender they please, by being in debt of 34 Trillion USD, I only find this equation to be fascinating!

Unfortunately there's a limit to that. Basically, if you have a B2C business you are more or less F*cked after some point, because wages are way behind inflation.

Much easier with B2B. Price increases just go down the supply chain until they hit some B2C sucker at the end of the line, who will then slowly go bankrupt.

I have done B2B and B2C.

You probably live in Heaven where B2B clients are willing to offer higher price than decided because XYZ happened and price hiked on other ABC factor!

B2B people in Germany are literally stupid as compared to B2B clients in my country where they enter a written agreement for the same "average" price for 2-3 year contract!
Its always the manufacturer's headache to stay hedged for possible price hike in raw materials ! LOL.

B2C client is like a lamb! B2C buys when he needs it at the price when he needs the product! You can easily upsell the B2C customer but try your luck with B2B clients (Germany not included) :lol:

Hard disagree with "none". The increases in RE prices have been absolutely crazy. I'd say the defense is built-in. I'm doubtful that there will ever be a housing market crash again. They will just keep it propped up.

If you don't own RE right now, you probably never will (exception: massively outsized business success).

On the other side, to people that own RE, everything in life just seems like a game / monopoly-money to them. I often can't believe how casually those huge numbers are thrown around here.

You're experiencing FOMO !

get a hold of yourself .. an RE is always profitable on any given day ... if you can give it a decade to grow in its value ..

For instant 100x gains, try Casinos! LOL

I will wait another 5-7 years for the RE industry to crash in my country! It always does in a decade or so! Be clever!

Patience is a virtue my friend!

 

[IceCreamKid]

I think my being based in Germany is what's contributing to this doom and gloom attitude, with the weak Euro and structural weaknesses here. So I'm working on a move to the U.S. to at least swim with the inflation current. Living in Europe feels not just like swimming against the current, but doing it in a different river that's slowly running dry.

I feel exactly the same as you, but I live in California. Inflation + corrupt politicians are ruining the state and I am now at a point where I'm considering leaving. My house is worth $1.3M and I don't feel safe walking around outside. The homeless zombies are multiplying here because fentanyl is cheaper than heroin and 50x stronger.

Basically, if you have a B2C business you are more or less F*cked after some point, because wages are way behind inflation.

Much easier with B2B. Price increases just go down the supply chain until they hit some B2C sucker at the end of the line, who will then slowly go bankrupt.

It took me multiple failures to learn not to sell to normal people in B2C. The margins are thin and they spend so much time/energy trying to negotiate every penny down. These people will scream and create chaos over a tiny amount of money. Not worth it.

Today the only move I see that makes sense in B2C is selling to rich men with an ego. This was a factor in my decision to shift my real estate holdings into watches. The short term goal is to put my money into a safer and more predictable asset than real estate. The long term goal is to ultimately create a biz similar to Home - WatchFund

I'm worried for the future of my country. I feel like I'm seeing this get exponentially harder for the common man in real-time.

 

[Andy Black]

I feel like I'm starting from zero again, or rather, never left the starting block

You're not starting from zero at all. You left the starting block and achieved a lot already.

What needs to happen for you to be happy with your direction?

 

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[MTF]

I feel exactly the same as you, but I live in California. Inflation + corrupt politicians are ruining the state and I am now at a point where I'm considering leaving. My house is worth $1.3M and I don't feel safe walking around outside. The homeless zombies are multiplying here because fentanyl is cheaper than heroin and 50x stronger.

If you were to sell the house and move to, say, Tennessee, where prices (I guess) are at least 2x lower, how does that make you feel? How does an average person in California these days looks at what they get there vs what they can get somewhere else, even though they would no longer live in a "cool" state?

 

[theag]

You're not starting from zero at all. You left the starting block and achieved a lot already.

What needs to happen for you to be happy with your direction?

My main problem is being way behind the market. My business isn't worthless, but it's currently simply not good enough for this new world with 10-20% yearly inflation. As long as that's the case I won't be able to afford even a simple middle class lifestyle. And middle class lifestyle isn't exactly the goal of the fastlane.

I'm working on improving the business (going international and focussing more on digital services vs physical products), which should help with general scale and margins. Next step will be rolling the profits from the current business into a new one with much higher potential, either by selling it or just using the cashflow to fund the new one.

 

[MTF]

My main problem is being way behind the market. My business isn't worthless, but it's currently simply not good enough for this new world with 10-20% yearly inflation. As long as that's the case I won't be able to afford even a simple middle class lifestyle. And middle class lifestyle isn't exactly the goal of the fastlane.

I'm working on improving the business (going international and focussing more on digital services vs physical products), which should help with general scale and margins. Next step will be rolling the profits from the current business into a new one with much higher potential, either by selling it or just using the cashflow to fund the new one.

Is the digital service a B2B service?

 

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[theag]

Is the digital service a B2B service?

No, unfortunately it will still be B2C. Basically I'm trying to get the most out of this business before I either sell it or use it for more or less passive cashflow.

 

[MTF]

No, unfortunately it will still be B2C. Basically I'm trying to get the most out of this business before I either sell it or use it for more or less passive cashflow.

So the next step is to escape B2C completely or get into B2C for rich people?

And why is your business not good enough? Product quality? Or the targeted audience who can't keep up with inflation?

 

[ZackerySprague]

Here are my best defenses, and worse defenses for inflation, in order of strength.

This, of course, is purely my opinion based on 50+ years of experience on this planet Earth.

Feel free to comment, add your thoughts, or add your rankings.

And then, adjust your strategy now and in the future.

Notice how these strategies all fall-in line with a Fastlane strategy.

BEST DEFENSE (IN ORDER OF POWER)	ACTIONABLE DEFENSE
A business	Raising prices.
Rental property	Raising rents.
A specialized skill	Raising your return on labor rental
Real estate	None, but creates a long-term preservation of buying power
Personal influence	Increase that rates at which you exert influence (A YouTube channel with 1 million subscribers can help you beat inflation!)
A sales job	Sell more at higher prices through indirect association of the patriarch business
Hard assets and commodities	Buy gold, silver, gas, hard assets.
Commodity investments	Buy commodity assets on an exchange, like DBC, futures, etc.
Stockpiling supplies	Buy life's necessities and store for later user
A money system	Increase return on cash via raising interest rates.
A part time job	Increase return on your time through higher labor costs
WORST DEFENSE	ACTIONABLE DEFENSE
A government paycheck	Nothing.
A pension, social security	Nothing.
A salaried job	Nothing.

Feel free to add in anything I might have forgotten!

Or add your thoughts or opinion.

Just learned that at my salaried job, the entire department is going away. All Stealth Delivery positions will be eliminated in 2 years or less. I got lucky when they laid me off. Blessing in disguise.

 

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[theag]

So the next step is to escape B2C completely or get into B2C for rich people?

For my next business I will most likely not do B2C again yea. But that is probably a few years down the road. Who knows what will happen until then.

I think the sweetspot customers for a self-funded online-service/SaaS business are small- to medium-sized businesses that will sign up on their own, without requiring contract negotiations / enterprise sales. But we'll see... Might also go more into the real estate or any other "offline" business route, just to be able to use leverage to scale up faster.

And why is your business not good enough? Product quality? Or the targeted audience who can't keep up with inflation?

It's a niche in a huge market, so in theory a nice business. Decent barrier to entry due to manufacturing complexity and other streamlined business processes.

Main challenge is scaling it with low revenue per customer. Need to sell a shit ton of $20-50 widgets or services to get anywhere.

Products are not consumable and product quality is so good that there aren't many reorders, so potential for recurring revenue is low. Restarting every year/month at basically zero is tiring.

Although we get a lot of word-of-mouth, growth is very dependent on advertising, which has gotten more difficult over the years due to all the data privacy stuff.

In a nutshell, nice "lifestyle business", but the path to getting it to a size that I would consider a reasonable fastlane exit number in todays inflated environment (~$100m) is extremely hard or more likely impossible.

 

[JordanK]

Inflation seems to be easing in Ireland. Haven't noticed anything crazy in the last few months.

 

[IceCreamKid]

If you were to sell the house and move to, say, Tennessee, where prices (I guess) are at least 2x lower, how does that make you feel?

It would be nice to get a much nicer house for the same dollar, but I'd be leaving a ton of family behind. My family ties are strong here and it would make me sad to leave them behind.

How does an average person in California these days looks at what they get there vs what they can get somewhere else, even though they would no longer live in a "cool" state?

I don't think most of them ever pause to truly reflect on this. Since the cost of living here is extremely high everyone sorta just puts their heads down and grinds through their daily work.

I see 2 types of people in California now: those who own assets that benefit from inflation and those who do not. It was always this way but now it's extremely obvious.

We have pockets of communities called Teslanaire neighborhoods. The entire block is composed of people who became millionaires by investing in Tesla stock early on.

 

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[MJ DeMarco]

GOLD has reached multi-decade, 20+ year highs. Peter Schiff's dream might finally be coming true.

The bureaucrats and their bureaucratic reports refuse to show meaningful improvement on inflation.

Duh, do these people buy food or insurance at all?

 

[Kevin88660]

I've increased my carpet cleaning pricing by 50% over a span of 3 years. There was initially some resistance, but clients now seem to just accept that obscenely higher prices are the way of life. I don't know how the common paycheck to paycheck American is surviving in today's world.

I'm currently in the process of exiting real estate and transferring all of the funds to high end watches. My watches have always outperformed everything else I've ever invested in.

My rental property portfolio has taken an absolute beating in the past 3 years because I didn't diversify enough. My fault for only investing in blue collar neighborhoods. Lots of money lost due to vacancies and repairs, but big lessons learned.

Do you mind sharing more on your expertise and lessons in watch investing as well as rental real estate investing?