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Keep Your Powder Dry

There are a few basic facts that point to life getting increasingly worse over the coming months. One of the main indicators is produced by the Baltic Exchange. This company covers international transport. And international transport is collapsing. More and more container ships are simply not sailing because they do not have a commercially operational load. China, the worldís largest exporter by quite some distance, is no longer exporting anywhere near the quantity of goods it used to export. Factories and small businesses have closed by the million in the country. Workers have been laid off, and the country has economically collapsed mainly due to the covid lockdowns.

China used to be responsible for over 30% of world trade. That figure has been cut by over 40% recently. That is a major cut back, and that will reflect on the shelves of the recipient countries.

You might wonder whether that is all that important. Maybe you dont buy goods made in China, but rather a lot of people do. And rather a lot of companies from the West outsource their foundries to China. With major factories in China closed down, those goods are not getting made. In short, there is a knock-on effect which is creating a world-wide recession.

I have been saying for some considerable time that buying real estate is not the way to make money, or even to act as some kind of security against adverse conditions. You have to have bought during the bad times to have real estate work in your favour.

At the age of twelve I tried to assist my mother in buying a property just outside Hertford for £15,000. I showed how the deal could be done, but the bank manager couldnít handle being told how to work a deal by a kid who had not even reached his teens. That property is now worth several million. Thatís how you leverage real estate.

A decade later I tried again. This time the bank manager wouldnít lend me any money but he did appreciate my maths, and he lent to my mother. The property was bought for £5,000. A couple of years ago that property was valued at over a million.

You dont make money by buying over-priced houses. You wait for crashes, and buy when the market is looking bleak and totally wrung out.

I bought a three bed apartment with a sea view for £3,500. I bought another right on the sea front for £21,000 including the furniture. Three years before, the previous owner had bought when prices were going up, and everybody was buying. He paid £47,000.

Take note. Be warned. Wait till this collapse hits bottom. It will. This collapse looks like being a real humdinger. When it does finally hit bottom there will be some amazing deals out there.

Keep your powder dry. Iíll tell you when itís time to buy. Iíve been doing this for over 60 years and Iíve never yet got it wrong.

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