The Long Dick Of Inflation
I don't know if you've heard, our economy is heading into a fucking death spiral. While we are locked inside worried about a fuck ton of bullshit our collective lives are about to be flipped upside fucking down. Inflation my friends is almost at 7% and some experts believe the real inflation rate is well over 10%. What does this mean for me and you? Let me explain.
Inflation makes everything cost more - not because it's worth more - because our money is worth less. So your pay doesn't go as far - you spend more of your pay on groceries - gas - utilities. That leads to less fun money. Less fun money leads to less going out money - less shopping money - less wants being satisfied. We'll come back to the fun money trickle down in a second, but first, let's talk assets.
So inflation is through the fucking ceiling, what do I do with my savings? If you have savings - my non professional financial advice would be to ... get them the fuck out of cash. Let's say you have $10'000 saved up - that $10'000 can buy much less of a home, much less of a car, much less of a stock index, and much less of crypto currency (c'mon you knew I was gonna talk about it) than it could last year. Now some of those assets have actually increased in value and some have simply remained the same in value and the underlying currency you use to buy the assets is just worth way fucking less.
I'll use real estate to illustrate what I'm talking about. Let's say you own a house that you bought for $100'000 and it's now worth $150'000. You might think, "holy fuck I'm an investing genius", but before you go and give a master class on flipping houses let's look further. Let's say the housing market saw a price increase across the province from the same period of time of 45% . That would mean that your home outperformed the broad market by 5%. However, you might look and see that more locally the houses have increased in prices 55%. In this case it would mean that your home actually underperformed the market by 5%.
Okay so back to the problem of your money - where do you put it? I'm not going to give you specifics but you'd like to look for any asset class that is out pacing inflation. Pretty much you need at least a 10% rate of return. Pfizer and Moderna are both doing great, I have no idea why that would be.
Okay back to the trickle down. So the government and health experts shove some money down your throat so you shut the fuck up and stay inside. You get your $2000 a month which now buys you a bag of potatoes and a t-shirt, it also covers your basement apartment rent which you share with 4 rats. Things kinda open and you go back to work. Work is struggling - all the variable costs have went up for your employer - they have to pay you more - all of their supplies cost more - and people are petrified of going outside still so business is down a bit. So work has to lay people off.
The laid off people spend less and move back in with their parents because they can't afford the basement anymore. The landlord just lost a tenant and is having trouble filling the unit, on top of that his mortgage just came up for renewal and interest rates are much higher now, so he's getting squeezed from both ends and he debates selling the building. This all happens because the government is spending like teenagers at a Vegas strip club and the economy is shut down so our GDP is fucking flat lining.
I could go on and on about how this might go down. The bottom line is that I know we all love worrying about bullshit but this is what is actually going to sink us. Please do yourself a favor and prepare. Find places to put your money that out pace inflation - do your best to find a job that is secure and while you can; invest as much as possible so that you can survive the upcoming financial shit storm. If I'm completely wrong investing isn't a bad thing anyways. I don't think I'm going to be wrong ... but I fuckin hope I am.
Sprinkles Are For Winners.