017-2020 The Road to Ruin

Title: The Road to Ruin (The Global Elites’ secret plan for the next financial crisis)

Author: James Rickards

As much as I value it to read investment books that paint a bright future, I obtain as much value from reading investment books that paint a rather bleaker picture of our future.

Why?

To get perspective on different investment approaches, and adjust my portfolio if I ever so desire. It’s the exact same what companies do when they run their business. In many cases they don’t only hire a new leader for their business, but also have an exit strategy should it reach a point that they need to part ways.

Also, it gives you a little sense of reality, away from the clouds that the opportunistic investments paint. Because not everything works out all the time, so we take a little more time to reflect on whether the investment should be worth our time and money. We need to dream, but also be realistic.

Different authors give a different outlook (and different investment strategy) and the one written in the book is one for wealth preservation, and caution.

Only a few months back I lived in a third-world country which, however, had a financial sector that was functioning superbly. Most banking has already switched to mainly online, however not completely since it was still in third-world levels to some degrees. Then I came to a first world country, where (mainly in this country) cash was largely still king. My initial thought was, it would be so much more efficient if we were just digital.

Now, reading the background to this book, I see that holding back from becoming completely absorbed in a digital world is maybe not so great, specifically when then contents of this book become reality.

One Money. One World. One Order.

  • Floating Exchange Rates definitely make global trading subject to volatility. Daily events can change the exchange rate of a country better or worse. However, with one world currency, trading could bring some stability to the system, especially when currencies are not covered by gold as they were before.
  • Bringing everyone to the digital platform enhances efficiency, however, when the state has the power to stop trading and shut accounts in the event of a crises, you effectively have nothing to fall back on to. Therefore, as states gain more control to reduce the impact of financial crises, we really learn who has control over the money in our online accounts.
  • Another way control can be held over more people is by bringing them closer to the cities in concentrated masses. Compared with being widespread around the country, the state simply needs to exercise.

This already gives me the creeps that something like this could happen. Some might say this is not really in our close future, and others might say that it may be closer than most think. It’s something we’re definitely not hoping to have come experience. Imagine the state of “V for Vendetta” happening in Europe.

Giving us this background, the author introduces us to invest in asset classes that preserve wealth as well as they have done in the past for some other families. One of the methods he elaborates this in the best is the Rule of Three’s, as was applied by a family for the last 900 years in Italy, Palazzo Colonna. 1/3 invested in land, 1/3 invested in art and 1/3 invested in gold.

If we switch over to the portfolio structure that is suggested in the book, the structure is as follows:

  • 10% physical gold & silver – tangible
  • 30% cash – tangible
  • 20% real estate – tangible
  • 5% fine art – tangible
  • 10% angel and venture capital – intangible
  • 5% hedge funds – intangible
  • 10% bonds – intangible
  • 10% stocks – intangible

From the above structure we see that 65% consists of tangible assets (inside your control that cannot be blocked by bank closures) and are therefore mainly aimed at wealth preservation. The remaining 35% is included in markets to try and set off some of the market inflation created every year.

Summary:

There are many different investment strategies, some focused on growth, some on wealth preservation, some of a combination of the two. It is up to us to determine which one works for us, and then work towards building our own financial plan. The insight is something that is worth keeping in the back of our minds since the future is always uncertain, and being prepared is something we could work prepare for. The book is somewhat tricky to follow, but still holds a good rating of 3.6/5.

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